MANAGEMENT CASE

INTER-ORGANISATIONAL SYSTEMS IN A CONSUMER

PACKAGED GOODS NETWORK: CASE OF GODREJ
CONSUMER PRODUCTS LIMITED (GCPL)

Anjali Kaushik

This paper reports a case study ofthe inter-organisational systems (lOS) at Godrej Consumer Products
Limited (GCPL). The paper provides valuable data on planning oflOS and its effect on supply network
competitiveness. GCPL has taken specific initiatives to integrate distributors, retailers and the suppliers
across its extensive supply networks. This study shows that different supply chain partners in an actor-
based business network may require separate information system planning and design. This case presents a
differentiated analysis of the design elements (e.g. relationships, processes, systems as well as change
issues) from the perspective ofa major player in the Indian Consumer Packaged Goods (CPG) Industry.
This study highlights the needfor coordination among various lOS initiatives and between network partners
and business managers ofthe key actor. It also focuses on the qualitative and quantitative benefits achieved
for all partners through strategic planning oflOS and adds valuable information to the business relevance
oflOS investments.

Key Words: Supply Chain, Inter-organisational Systems (lOS), IT Value, Critical Success Factor
(CSF), Consumer Packaged Goods (CPG), India

INTRODUCTION When planning systems have greater impact upon

organisational processes, especially across a number of
s organisations rely more on collaboration with
k the partners to enhance their position in business,
hey look beyond their traditional information
system boundaries. Many organisations use IT-based
organisations, planning must be inter rather than intra-
organisational (Finnegan et al., 2003). However, little
formal thought is given to the planning oflOS processes
(Finnegan et al., 2003). Kumar and Dissel (1996)
inter-organisational information systems as a strategic
recognised that the inter-organisational structures,
tool to link partners in the supply chain. GCPL is such a
design, implementation and operation of IDS are inter-
case study from the Consumer Packaged Goods (CPG)
dependent. This means that inter-organisational system
sector in India. GCPL has successfully implemented
development is affected by more factors besides
three IT based lOS initiatives with dealers (Sampark),
technology. Of these factors, planning is regarded as a
with suppliers (Sahayog) and with retailers (Sampoorna).
most important factor in influencing the success ofinter-
The main objective 'of these lOS is standardisation of
organisational systems (Finnegan et al., 1998). It is
inter-organisational processes and optimization between
important to carefully plan for and architect these
the partners. This case study discusses the drivers for
systems, understanding that the nature of these systems
planning, methodology and the CSF's for these lOS
is quite different from planning at the organisational
initiatives. It is hoped that the findings would provide
level. There are concerns on amount and nature of
insights for other organisations that plan to implement
information to be shared between the organisations, trust
lOS in their Supply Chain Networks.

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

80. Kaushik

between the partners, security concerns, roles and between the trading partners. These interactions are not
responsibilities of people across the organisations, just complicated by their volume and variation in the
infrastructure requirements, technology platform and processes, but also by the complexity inherent in the
modelling of inter-organisational processes. The dependencies existing between the parties in time and
management ofa process across the organisation in itself space (Power, 2006). Organisations have been deploying
adds to the complexity. The cultures across the information technologies as a means of improving
organisations are different; therefore, there is a need for information flows. Literature in the area ofsupply chain
cultural alignment in integrating processes across the management often proposes an extensive set ofbenefits
organisation. Not much work has been done in the area for the organisations which choose to invest in the
of lOS planning. This study discusses the drivers and technologies which are designed to enable more effective
lOS planning issues for GCPL. processes with trading partners (Ballou et al., 2000;
Cachon and Fisher, 2000).
The GCPL study also discusses the CSF's which
maybe important in the lOS domain. CSF occupies a These systems are enabled by different inter-
prominent place in IS research field. Rockart (1979) organisational systems (lOS). lOS are Information
defines CSFs as those few key areas ofactivity in which Communication and Technology (ICT) based systems
favourable results are absolutely necessary for a that transcend legal enterprise boundaries (Bakos, 1991;
particular company to reach its goals. For obvious Konsynski, 1993). The boundary-spanning aspect
reasons, the critical success factors are the areas of implies a level of cooperation and coordination well
activity that must receive due attention from the beyond that of the traditional arms-length relationship
management. CSFs have been one of the earliest and that exists between organisations acting as free agents
mostactively researched topics in the IS field. As a result in the market. lOS exist to support and implement
of such research efforts, we know a number of factors, cooperation and strategic alliances between two or more
which influence an information system's successful organisations. lOS are strategic assets as they enable new
implementation, e.g. commitment of top management business models. Kumar and Dissel (1996) define lOS
and adequate funding. These factors are applicable to as software and system manifestation of inter-
lOS, since it is also a sort of IS. However, lOS are more organisational relationships. lOS represent a pattern of
complex and multifaceted than the traditional interdependent relationships between the activities of a
information system in terms of technological and given firm and those of the other firms (Kambil and
management issues. The GCPL case study brings out Short, 1994). lOS affect organisations at many levels
certain CSF's that may need to be addressed for (Sumoi, 1994) and these systems go beyond mere
successful lOS implementation and adds new insights electronic data inter-connection and deal with the people,
to the existing literature in lOS domain. policies and procedures (Konsynski,1992) as well as
power relationships (Webster, 1995).

LITERATURE REVIEW
Inter-organisational Systems (lOS) and
Supply chain collaboration has been strongly advocated Collaboration
by the consultants and academics since the mid-1990s
Johnston et al., (1988) define an lOS as an automated
under the banner of concepts such as Vendor Managed
information system shared by two or more companies,
Inventory (VMI), Collaborative Planning Forecasting
to facilitate the creation, storage, transformation and
and Replenishment (CPFR), and Continuous
transmission of information. An lOS differs from an
Replenishment (CR). It is widely accepted that creating
internal distributed information system by allowing
a seamless, synchronized supply chain leads to an
information to be sent across organisational boundaries
increased responsiveness and lower inventory costs.
through communication technology. The strategic value
Several seminal studies have identified the problems
of lOS has been well recognised for its real-time
caused by lack of coordination and to what extent
interaction, higher transaction accuracy, more efficient
competitive advantage can be gained from a seamless
and quicker payments (Hendon and Nath, 1994), rapid
supply chain (Lee et al., 1997; Chen et al., 2003). The
response, reduced search costs, reduction in inventory
management of supply chains is characterised by high
and tighter links to customers (Johnston and Vitale,
degrees of difficulty, attributed in large part to the
1988). These benefits enable all parties to have high
complexity ofthe multiple relationships and interactions
operational efficiency and capability (Angeles et al.,

VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

 Intetr-Organisational Systems in a Consumer Packaged Goods Network. 81

2001), and more and more corporations tend to adopt improvements. One of the benefits of a Supply Chain
lOS in order to gain competitive advantages. The above Network is the increased flexibility of linking actors
definition of lOS encompasses many systems such as together. This provides a more agile arrangement for the
extranets, EDI, Internet EDI, B2B e-commerce and e- network to produce from actual customer requirements
SCM. What they differ on are just the technologies used, as a starting point, and not on the basis of assumed or
scope ofapplication, stakeholders and so on (Grossman, forecasted customer needs. Fawcett et al., (2008) did a
2004). study of 51 firms to understand the practices and
requirements for supply chain collaboration. Majority
Current lOS literature focuses on describing the role
of the firms (86%) identified information sharing and
ofinformation technology in enabling the transition from
system integration as the topmost requirement for
inter-firm competition to cooperation (Kumar and Dissel,
collaboration in the supply chain network. Supplyl
1996). As organisations move towards closer, more
demand networks invariably involves more than one
collaborative .economic relationships, information
organisational unit and often integrates business partners
technology and lOS play an enabling role in making this
such as customers, suppliers, and service providers with
transition feasible (Clemons and Knez, 1988; Clemons
and Row, 1992; Reich and Huff, 1991). a company's information infrastructure (Alt and Fleisch,
2001). It is important that the supply chain network are
There are a number of reasons for the formation of planned and coordinated properly; else it may result in
inter-firm collaborations (Guglan and Dunning, 1993). suboptimal performance for different partners in the
These collaborations are formed for sharing of large value chain.
investments, pooling and spreading of risk and access
to the complementary resources (Guglan and Dunning,
1993). Economies ofscale, specialisation, rationalisation Gap in Terms of Good Planning in lOS
and in some cases the motive ofneutralising competition Most ofthe early research in IS planning was theoretical;
by co-opting are also cited as possible reasons for these essentially developing better conceptual models for the
partnerships (Kumar and Dissel, 1996; Jaiswal and internal IS planning (McFarlan 1971, IBM 1975,
Kaushik, 2005). Further, increasing the return on McLean and Soden 1977, King 1978). These models
investment by a geographically wider diffusion of the have evolved over the time in light of the changing
firm's products and services and thereby increasing the organisational role of IS (Ward et a/., 1996).
product life cycle expectancy may also play an important
role. Reduction in supply chain uncertainty is an Business organisations are increasingly getting
important possible motive for the virtual vertical networked with their business partners and they need to
integration (Konsynski, 1993). This in turn helps in incorporate the network issues in their lOS planning
gaining cost, cycle time and quality advantages over the process. lOS planning requires addressing the problem
competing supply chains in the Industry (Kumar and of finding how diverse systems and platforms will be
Dissel, 1996). The key strategic advantage is through integrated to meet the organisational requirements. The
collaboration within the supply chain to compete with conventional methodologies fail to explicitly address
other chains in the industry. such integration issues because they are from an era when
organisations created their own information systems and
Supply Chain Network has been defined as a
cross-platform integration was not a primary need. These
structure of interdependent relationships between the
shortcomings are in part because ofthe significant shifts
activities of a given firm and those of other firms in its
in business practices and technological capabilities in
competitive environment that influence each other's
the last few years (Kaushik, 2005). In addition, some of
strategies (Kambil and Short, 1994). Competitive
the IS planning models may not have strong theoretical
success, to a large extent, now depends on how well the
roots, which might make it difficult to augment them to
entire supply network delivers value to its ultimate
suit in new contexts.
consumers, relative to its competing. supply chain
networks (Christiaanse and Kumar, 2000). Often- As there is a move towards systems which have
mentioned features of such a network are a strong inter- greater impact on the organisational processes, especially
organisational design and an interactive and dynamic across a number of organisations, planning needs to be
set of relationships acting in concert with one another inter- rather than intra-organisational. There are factors
for a common goal, bringing together core capabilities such as increased role of information, reduced
of different organisations to accomplish business transaction and coordination costs and economics of a

VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

82.Kaushik

network and its effect which make the planning and majority of organisations experience difficulties in
environment with business partners different. The earlier lOS planning. An analysis of planning activities of the
theories are abstract approaches to the network structure respondents showed that they are more concerned with
and classification and do not provide comprehensive help the systems issues than with cooperation issues. This
in answering the practical questions. lOS for supply demonstrates the infancy of the lOS planning process
chain requires addressing the problem to find how and illustrates the importance ofdeveloping appropriate
diverse systems and platforms would be integrated to method for dealing with lOS planning in a network.
meet the organisational requirements. Practice also
As lOS become more complex and started to have
shows that as a rule business participate in several
significant impact, situations where one organisation
networks simultaneously and are involved in different
develops a system and simply extends it to others will
value chains for different products and services. These
be inadequate. This is especially true oflOS that require
networks may be independent or they may mutually
alteration ofbusiness processes to achieve greater benefit
influence one another. In the process, they use different
(Swatman and Swatman, 1992). Limited research has
IS/IT applications, depending on the business processes
been done in the area of lOS planning for Supply Chain
to be coordinated.
Networks. Most of the earlier frameworks do not
While a few inter-organisational system planning consider managerial and organisational problems,
models have been put forth in the recent years, each of change 'management issues in defining how planning
these models has its own weaknesses. For example, the should be done. The conventional IS planning
industry framework for e-business (Kalakota and frameworks may help the business strategic pl~Jo
Whinston, 1996; Kalakota and Robinson, 1999) is a understand how to rapidly plan IS applications at .firm
broad-based framework that examines the significance level but may prove inadequate when considered for
of technologies in the e-business. The focus of this inter-organisational systems. Therefore, though some
framework is to explain e-commerce technologies and studies have been done in the inter-organisational
their capabilities. The framework does not provide domain, no comprehensive study seems to have been
sufficient details to serve as a tool for lOS architecture done that fills up this gap in the literature. This case study
planning. Similarly, Zwass framework (1996) is a attempts to bring out an approach to lOS planning in an
general-purposed model which focuses upon the nature actor-based supply chain network.
of e-commerce infrastructure, services and products.
This framework also fails to address the concerns and Inter-organisational Systems in ePG Industry
requirements oflOS architecture planners. Raghunathan
and Madey (1999) suggested an lOS planning framework Researchers in inter-organisation systems have
which focuses on the development of e-Business developed a variety oftheoretical arguments to explain
Information System (EBIS), providing a three- the formation and structure of lOS enabled alliances
dimensional coordinate axis to classify business models between the organisations. These arguments are usually
and to establish lOS architecture for a particular model. derived by adapting and extending existing theories of
While the Raghunathan and Madey (1999) framework the organisation from intra to inter firm behaviour.
focuses on the information architecture for e-commerce Bensaou and Venkatraman (1996) examine different
and is useful in aligning e-commerce information theories for inter-firm cooperation. The lOS in a
systems to business needs, it fails to adequately address vertically integrated supply chain has sequential
how the overall architecture ofe-business systems should dependency i.e. the output of one unit becomes input
be planned and designed. of the other unit (Kumar and Dissel, 1996). For
example, the marketing plan becomes input to
Finnegan, Galliers and Powell (1999) conducted a production and/or purchasing plans. With sequential
study to understand the lOS planning practices of large- inter-dependence, there is a direct directional
sized organisations in Ireland and the UK. Their study dependence between the units (Robey and Sales, 1994).
is largely exploratory in nature and the focus is on
documenting the lOS planning processes followed by This case study provides evidence that in a vertically
the companies with a view to improve upon them. The integrated firm, lOS add value at all points in the supply/
study indicated that lOS planning is still in its infancy demand chain. This information is valuable.
and is largely ad-hoc. It also revealed that the companies Traditionally, the lOS in such supply/demand chain was
are still relying on the traditional IS planning approaches driven by the key actor. The evidence from this case study

VISION-The Journal of Business Perspective • Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

 Intetr-Organisational Systems in a Consumer Packaged Goods Network • 83

suggests that lOS planning, design and implementation second set of data about the Supply Chain initiatives
including cost sharing may be collaborative as all the was collected through the interviews and discussions
players stand to gain in supply network. It also discusses with its Chief Information Officer (CIO) and senior
the issues involved and the critical success factors executives from its IT, finance, marketing and operation
(CSF's) in the implementation of these lOS. This case functions. A total of seven interviews were conducted
study examines the lOS usage and its effect on the finn's across the functional departments. Apart, there were
competitiveness closely. two sessions from across the functional areas where
senior executives from the functional areas and the CIO
METHODOLOGY explained their processes end to end. Interviews and
qualitative insights were also obtained from the dealers
Due to complexity of lOS planning process and the and suppliers of GCPL. Two of the suppliers, five
uniqueness of each Supply Chain Network, it is difficult distributors and three retailers were contacted for the
to suggest a single best method for planning of inter- purpose of this case study. The third set of data on the
organisational system. For example, there is no best post-implementation scenario was collected from
approach in integrating the external supply chain with the various published documents and industry analysis
internal production and inventory management processes. reports (see www.indiainfoline.com;
In such a situation, the case study research method is often www.godrejcp.com). as also interviews and discussions
employed (Eisenhardt, 1989; Benbasat et al., 1987). Case with senior executives at GCPL. Specifically, the post-
research is particularly suited to the situations where implementation information was collected from the IT
current theories seem inadequate (Eisenhardt 1989; Yin head, senior managers in production, marketing and
1989). It gives a possibility to be close to the studied object purchase departments. The case study examines the
(firm), enabling inductive and rich description. Case supply chain network re-design issues at GCPL for
research is also a strong method in the study ofprocesses integrating its extensive supply chain. The details of
as it allows the study ofcontextual factors and the process the lOS planning strategy and the planning process are
elements in real-life situation. Case study has been also discussed as part of the case study.
recommended as a suitable approach for the study of
networks (Halinen and Tornroos, 2005).
CPG SECTOR IN INDIA
This paper is based on a case ofthe Godrej Consumer
The CPG segment ranks among the leading
Products Limited (GCPL) which is a leading CPG
implementers of Information Technology (IT) in India.
company in India. GCPL was selected for case study
Some of the prominent areas where CPG organisations
for the following reasons: First, GCPL is a major player
harnessing the power of IT include supply chain
in the CPG industry in India. Second, it has successfully
management, dealer management, customer relationship
formulated and implemented an lOS strategy for its
management and sales force management. The size of
supply chain and realised significant benefits for all
the CPG industry in India is close to INR 500 billion
partners in the network. Third, if we observe the
which is approximately US $ 11.5 billion
performance ofCPG companies in India especially since
(www.indiainfoline.com). Low margins and high
October 2008 (which represents the current economic
volumes characterise the CPG sector. While the level of
downturn), GCPL has the most positive performance and
disposable incomes determines the overall sector growth,
has outperformed the Sensex compared to the other
the market has already been segmented and sub-
players in the CPG industry.
segmented. Companies have launched products at a
To get through the description of this case study, number of price points to drive up volumes. New
several informants who had good access to the study products are being launched in niche segments, and old
issues and the case network were taken. The primary products re-Iaunched. Brand equity drives the customer's
data for this study was collected during 2006 - 07 and purchase decisions, and is the key to gaining market
was later updated. In this case study the first set ofdata share. Also, competitive pressures have hiked the
about the case company's structure and business advertising budgets ofmost players. Besides, a profusion
performance was collected from its published ofpromotional schemes are being offered. Most players
documents and the website. The secondary data was are struggling to maintain top line growth, despite
also collected from various relevant industry incurring heavy advertising and sales promotion
publications, industry reports, magazines etc. The expenditures.

VISION-The Journal of Business Perspective. Vol. 13. No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

84. Kaushik

A lower price differential between the organised CASE BACKGROUND

and the unorganised sectors from reduced excise duties
GCPL (www.godrejcp.com') is a major player in the
is now allowing the former to grow at the expense of
Indian Consumer Packaged Goods (CPG) Industry with
the latter. The organised sector also has a superior
leadership in personal, hair care and household and fabric
distribution reach. Although most of the product
care segments. GCPL is apart ofthe Godrej Group which
categories are still in the growth phase, a few broad
is one ofthe largest engineering and consumer products
categories, like detergents, have reached a mature phase
companies in the country. Godrej Group was established
in the urban markets. For the past five years (2000 -
in 1897 and has since grown into more than a $1 billion
05), the organised sector has been focusing on rural
conglomerate. Companies operating under the group
markets, which are perceived to drive future growth in
umbrella are involved in a wide range of businesses -
the industry and which, to a very large extent, are
Godrej Consumer Products Ltd (GCPL) is a part of the
dominated by the unorganised sector players
Godrej Group.
(www.indiainfoline.com). After the slow growth
registered during the period 1999 - 2003 due to price The corporate headquarters ofGCPL are in Mumbai,
wars and below-par monsoons, the CPG industry as a .India. GCPL has state-of-the-art manufacturing facilities
whole is now focusing on extending reach into the high- at Malanpur (Madhya Pradesh), Guwahati (Assam),
growth rural markets, investing in increasing in-house Silvassa (Uttar Pradesh) and Baddi (Himachal Pradesh).
production capacities to achieve lower cost per unit and On the warehousing and distribution side, it has four
improving the efficiency of their marketing Plant Warehouses (PWH), four Regional Warehouses
(advertising, sales promotion and channel (RWH), 33 CFAs (Carry and Forward Agents) and about
management) programmes. 1200 distributors covering around 0.6 million Retailers.
It has more than 300 suppliers. The organisation has
adopted Total Quality Management (TQM) system and
Key Industry Trends and Initiatives
the factories have received ISO certifications. The main
The secondary research on CPG sector in India and product-lines ofGCPL are toiletries, hair care, household
interactions with the business and IT managers at GCPL care, fabric care and body care products. The groups are
indicated that the CPG players in India want to drive based on the product lines, GCPL is amongst the largest
volumes and gain market share more than ever before. marketer oftoilet soaps in India. It is a leader in the hair
To achieve this growth agenda industry players are color category in India and has a vast range ofproducts.
taking various IT and market initiatives around one or GCPL is also the preferred supplier for contract
more areas such as rural marketing, streamlining of manufacturing oftoilet soaps to some ofthe well-known
distribution channels, increasing sales by driving brands in the country.
channel width, re-orienting business focus from brand
The philosophy at GCPL is reflected in their mission
management to business management, deploying IT
- 'we are dedicated to deliver superior stakeholder value
solutions to better manage their procurement and
by providing solutions to existing and emerging
distribution etc. There is a strong MNC presence in the
consumer needs in the Household and Personal Care
Indian CPG market and out of the top 10 CPG
business.' The company achieved a revenue of INR
companies four are multinationals while two others
6573.2 million (146 mn USO) in the financial year 2005
have significant MNC shareholdings. Unlike several
-06. It had a turnover of INR 9,532.3 million in the
other sectors where multinationals have entered after
financial year 2006 - 07. GCPL has a global presence
1991, MNCs have been active in CPG sector in India
and is operating across more than 30 countries in the
even before 1991.
world. GCPL implemented an IT initiative (Sampark)
CPG sector is poised for further growth in India for outbound operations to capture the primary sales. It
because of the emerging opportunities and strong successfully extended this initiative to the suppliers and
fundamentals developing in the economy. The future the retailers to enable end-to-end information sharing
growth may come from newer segments such as the across the supply chain. The new distribution and supply
youth and through increased rural and small town chain system based on a replenishment logic has helped
penetration. Internet and e-commerce may further GCPL to reduce the stock outs at various levels in supply
change the dynamics of this industry helping the chain, thereby increasing the availability ofproducts. It
companies improve their procurement, distribution and has also helped to move from being a traditional "Push"
selling efficiencies. operation to becoming a "Pull" Operation. Continuous
VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

 Intetr-Organisational Systems in a Consumer Packaged Goods Network. 85

communication and data sharing with raw and packaging methodology for IS planning. The annual IS plan is
material suppliers, third party manufacturers and CFAs initiated by the Chief Information Officer (CIa) and
ensures optimal finished product inventory levels and led by the Chairman. The Clf) also participates in the
adequate marketplace availability. Efficient distribution general strategic business planning. Tne IS plan begins
and supply chain management and an efficient collection by taking requirements of IS applications and the
mechanism have contributed to continue working on the projects from all functional departments. The average
negative networking capital. Further, besides significant size of the IS planning team is 12 people. GCPL also
cost optimisation and inventory minimisation, the IT has a large IS department consisting of more than 35 IS
infrastructure contributes significantly towards professionals. The IS planning team consolidates the
Knowledge Management by enabling access to the current requirements and prepares a budget. It also does
archived learning across several functions. The a review on the status of the IS projects which were
introduction ofdata warehousing products has improved initiated in the previous year. The entire information is
the interpretation of sales data and comprehension of presented and discussed with the top management with
market dynamics. The focus of this case study is on the participation from the functional heads where required.
process of lOS planning in GCPL. It highlights the Based on these discussions, the IS plan, projects and
impact of the re-designed lOS in realising value for all priorities are decided. The IS planning document
business partners. includes recommendations on IS policies and
procedures, investment priorities and resource
INTER-ORGANISATIONAL INFORMATION requirements. It does not include detailed issues such
SYSTEMS AT GCPL as application architecture, technical architecture and
service architecture. In 2006 - 07, the annual IT spend
For GCPL, the thrust on IT started about a decade back,
ofGCPL was INR 70 million ($1.56 mn).
when as a group it decided to adopt ERP across the
enterprise. In 1995 - 96, GCPL was one of the early
companies in India to adopt ERP. It selected MFG/PRO STRATEGY FOR lOS PLANNING IN GCPL
as the ERP package. In 2000, GCPL decided to look The main objectives of the lOS plan at GCPL were
beyond ERP and leverage the internet to the maximum standardisation of inter-organisational processes and
possible extent. While ERP MFG/PRO had helped optimisation between the partners. These requirements
GCPL significantly to gain benefits within the led GCPL to conceptualise three IT initiatives Sampark,
organisation; the new IT initiatives were to connect the Sahayog and Sampooma. These IT initiatives were
business partners outside the organisation. The GCPL conceptualised in line with the strategy document
IT team felt that MFG/PRO had also not kept pace with submitted by Accenture, It also had inputs from the
the market developments. MFG/PRO has a de- annual IS plan ofGCPL.
centralised architecture and did not support B2B, dealer
GCPL identified three basic elements for lOS
or supplier networks.
planning in its network: communication, cooperation and
At this time, Accenture was hired to prepare the integration. Communication became the backbone for
'Strategic IT Investment roadmap' for the next five cooperation and integration. GCPL realised that in case
years. The methodology involved a cross-section ofthe of distributors, better connectivity and communication
organisation in co-creating an IT investment roadmap. was of importance. These requirements gave rise to an
Inputs were also taken from the annual IS plan ofGCPL. initiative for Distributor Management System (OMS)
The entire planning effort for the supply chain network called Sampark (a Hindi word meaning communication)
was spread across three programmes. The main for connecting the distributors. In case of suppliers, the
programme was to support integration with distributors. focus was required to be on cooperation. Sampark was
It was extended to ,the suppliers and retailers in the extended through another initiative called Sahayog (a
subsequent programmes so that the entire supply chain Hindi word meaning cooperation) to connect the
was integrated end-to-end. suppliers. This was followed by an initiative called
Sampooma (a Hindi word meaning complete) to integrate
ANNUAL IS PLANNING PROCESS AT GCPL the retailers into the existing IT initiatives. The Sampark
initiative forms the backbone of supply chain. The
At GCPL, the IS planning is an annual exercise. The Sampooma and Sahayog IT initiatives connect the two
company has an existing, well-documented ends ofthe supply chain. All the above IT initiatives and
VISION-The Journal of Business Perspective. Vol. 13. No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

86. Kaushik

egional arry and

-. arehouse - . ~ Agents Eistributor I-./Retailer I-. Eustomer I
PWH) CFA) ~---"';~--.....I

Figure 1: Supply Chain in the GCPL Network

the current information system investments at GC,PLare

Daily Closing St~k and
in line with the strategy document on IT submitted by , Distribut6rs '. Reeetpt Information Order
/ Confirmation
Accenture earlier.
Factories +
• ,!-
DEALER MANAGEMENT SYSTEM (OMS) Broad Vision
Application
INITIATIVE: SAMPARK
"<, \,
The supply chain for -GCPL consists of movement of ";\. Broad Vision
, \
Datllballt
" \'
Goods from the Plants (factories) to the Plant warehouse \,

(PWH) to Regional warehouse (RWH). From RWH, the ,~

Central , ,--or Carry and Forward
Goods move to CFA and then to Distributor and then to
:'
/......
Regional -"
/-"r
"<,~ :;!f
Databale I
,.1 :
~ ..... ,,,- Agent (CFA)

Retailer and finally to the Customers. While the product \ • Ware house ,) //
Shipping and
flow is sequential, the information flows are automated invoicing
details
through the information system described below so that Location wile
information is available for planning across different 110
stock

points in the supply chain much before the physical /

MIS Reports
movement of Goods. (Input for foreusting)
(Stock Report Fact, erA, Dillt.

PRODUCT FLOW Figure 2: Replenishment Model for Class a Distributors:

GCPL's initiative to integrate itselfwith its distributors Information Flows
called Sampark (communication) successfully
integrates 450 distributors directly and another 750 applications are integrated with a common
distributors indirectly intothe supply chain. One ofthe replenishment engine using internet. The underlying
challenges the company faced 3-4 years back wa.s to business concept behind this information system
bring the distributors into theI'T infrastructure. The initiative is based on replenishment. It monitors the
need came because of the non-visibility of stocks at inventory levels at distributor end and based on that it
the distributor end. GCPL had to entirely depend upon suggests a replenishment plan. The distributor has to
their estimates, intuition and knowledge of the field furnish information on sales to CFA. Information on
force. GCPL has around 1200 distributors of which the current stock levels and Goods-in-transit in-tum
around 400-450 are A-class distributors contributing flows from CFA to distributors as also to GCPL. The
75-80% of the total business. Remaining 750-800 system considers all the above three things to determine
distributors are Band C class distributors. GCPL used the order level by considering the replenishment logic.
Pilot with incremental and phased approach for
Sampark. It was essentially a vendor driven (WIPRO) IT Solution Selection Process
initiative. To start with, GCPL used project pilots at 25
distributor sites. It took G,CPL 18 months from The IT Solution design had to consider the preparedness
conceptualisation to the first roll-out to a distributor. and skill level with the business partners. The initial
Sampark is a combination of more than one product. challenge was that the distributors were not open to
GCPL has used a combination ofbusiness applications sharing the data. Also the technical challenge was that
to integrate its distributors. While all the distributors most of the distributors were using some software or
are running a common, business application, the the other. The distributors felt that GCPL will get
application is different centrally. These diverse insights into their data and they had an apprehension

VISION-The Journal of Business Perspective •.Vol. t 3 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

 lntetr-Organisational Systems in a Consumer Packaged Goods Network. 87

that their data will be shared with other distributors. supplier would like the distributor to share the package
GCPL considered three options to overcome these with any other supplier. The distributor has to customise
challenges. the ERPto meet the overall requirements ofthe supplier.
In most cases, the financial support for the package is
Option 1 was to write 450 interface programmes
also provided by the supplier.
individually for all distributors. The distributors were
using some proprietary software for recording their day-
to-day transactions. Extracting the information from their Implementation Details for the DMS
existing software meant coding about 450 extract
Initially the initiative was Pilot tested on 25 distributors
routines. First this was a big task and then sustaining
and was used for day-to-day billing, invoicing and
450 programmes was another difficulty. Therefore, this
payment processing. At the back-end, GCPL developed
option was ruled out.
a replenishment engine based on Broadvision platform.
Option 2 was to develop web based data entry form The current information system architecture has 450
on .internet. Here, the distributors would come to web- distributors, who use BOTREE as ERP. This solution is
site at the end ofthe day and then fill all the details. desktop based and the software is called Sampark.
However, considering the low quality ofnet connectivity Besides this, GCPLhas 33 CFAs who use MFG/PRO as
at most ofthe distributor locations and the time required ERP. The current system works ontlata from 33 CFAs
to fructify this option, it was ruled out. Also, it would and 450 distributors. The 450 distributors have internet
have been a time consuming process and it was difficult connection and the 33 CFAs are connected on WAN.
to gauge the accuracy of the data entered. This data is collected centrally into the broadvision
Option 3 was to customise a mini-ERP for them. database. Broadvision application layer has got the
GCPL considered this option. Chennai-based BOTREE replenishment formula (Sampark Order Replenishment
specialises in developing ERP for CPG Sector. System).
Therefore, GCPL obtained the BOTREE ERP solution At the end of each day, 450 distributors log on to
from the company BOTREE Software International the BOTREE ERP programme. This initiates the data
Limited based in Chennai (India) and decided to transfer process and takes data and transmits it to the
customise it. It took GCPL 4-5 months to implement central processor. From CFAs also, GCPL gets the sales
and customise the solution at distributor end and data on what has beensupplied to the distributors during
convince them to use it instead ofpackages which they .the day. Based on this data, invoice details are generated
were using earlier.
The second part ofthis was to develop a replenishment Table 1: SAMPARK Project Implementation Details
engine which would run on the data collected by all the
Scope Cover 450 Distributors
mini-ERP of the distributors and generate a sales order
spread across India
which would be processed by the CFA. GCPL has used
Implementation Vendor Driven Initiative (WIPRO),
J2EE compliant commerce server: Broadvision one-to-
strategy/ Incremental and Phased Approach,
one Enterprise for the Central Replenishment engine. This approach Use of Pilot Sites
system works on a portal framework. Deployment ofnew
Timeline 18 Months from Conceptualisation
functionalities is done in a modular way, without affecting to the First Roll-out to a Distributor.
the user interface or security aspects. This typifies the
Resources and Sampark: Internal Team of 5 people.
classical three-tier technical Architecture which can scale team structure Business Led Project
up to cater to practically over a million users. The GCPL .(

Description of Consists of Sampark DMS(Distributor

team selected IB¥ MQ series as the middleware which solution Management System); Vendor-Botree
ensures the flow ofdata across all these 450 locations in a components and Software International Ltd.-Chennai
secure framework. suppl iers of
the different
However, one ofthe major limitations ofthe existing components
architecture comes from the fact that most of the
Component- IT Investment Amount
distributors are in fact using a separate ERP for each of Sampark Web SAMPARK:Software cost=INR 4.5 mn
their suppliers, although technically one package would site; Vendor- (0.1 mn USD); Hardware cost= INR
be able to service all the suppliers, the reason being, the BroadVision 10 mn. (0.2 mn USD); SAHAYOG:
supply chain planning relatesto sensitive sales data, no INR 2 mn (0.04 mn USD)

VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

88. Kaushik

to the distributors. Therefore, the distributor knows that EXTENSION OF SAMPARK TO GCPL
he is to receive these invoices in the next few days. The SUPPLIERS: SAHAYOG
distributor marks all the invoices he receives. The
The gap in information flow between GCPL and its
invoices not received represent goods-in-transit. Data
suppliers lead to frequent 'emergencies' and unnecessary
accumulation is done by 2000 hours everyday. The
extra inventory at both the ends. Because of this, it was
replenishment engine starts running by 2200 hours. By
difficult to synchronize procurement with a stable
3-4 am in the morning, everything is set and CFAs get
production environment. Besides, the administrative
the additional stock that i.s to--be shipped to the
efforts required to align the suppliers on GCPL's
distributors. Inventory level is maintained in term of
requirements, launch new products and fulfill
number ofdays, say, in terms of 10 days of sale. It takes
transactional obligations were quite high. The GCPL
the record of last 30 days sales and then the future
management ultimately desired to move towards an
expected sales and orders are generated on per day sales
inventory system which would be completely managed
basis. The Sampark initiative for these 450 distributors
by the Vendor.
and 32 CFA's was completed in 2005.
Sampark was successfully extended to its suppliers
Replenishment for A-class distributors is done on
through a separate initiative called as Sahayog which
a daily basis and for Band C class distributors; it is
means cooperation. Sahayog was planned in year 2004
done on twice a week system. For Band C class
and was commissioned by the end of year 2006.
distributors GCPL did not want to give the ERP
Sahayog was developed on the Broadvision platform.
software. This was because it is not easy to maintain
Besides, the licenses and hardware cost ofBroadvision
the software at so many distributed sites. Also, these
(already incurred for Sampark) and additional
are small distributors and most of them do not even
development effort required for Sahayog was INR 2
have personal computers. The other issues with small
million ($0.04 mn). Based on the distributor's sales,
distributors are lack of IT awareness and lack of IT
GCPL generates orders and informs the regional
staff. These distributors are also located at remote
warehouses on the quantity which is shipped to the
places and providing them technical support would not
CFA. Thus, CFA inventory level is also maintained at
have been easy for GCPL. Based on these
the minimum. The data from the regional warehouse
considerations, for these 750 distributors, GCPL
is shared with the plant warehouse and based on it, the
thought of a different solution so that the investment
plant warehouse decides on the quantity that is.to be
was also minimised. These small distributors call CFA
shipped to the regional warehouse. Based on this, the
two times a week and read the sales and stock data over
manufacturing plants derive the quantity that is to be
the phone. CFA's key in the data by logging on ~o t~e
shipped to the plant warehouse. This information helps
website and then the data is taken backwards like In
GCPL to finally decide on the quantity of different
case ofA-class distributors! This system was deployed
products to be produced at each of the plant. Based on
in 3-4 months. In this way, GCPL is now connected to
this, the supplier is informed of the quantity that is to
all its distributors.
be dispatched. Thus for GCPL, Sahayog is like an
For proper planning and implementation of extension of Sampark. Also, now production is done
Sampark, two consultants Broadvision and Wipro were on the basis of demand which ensures that there is no
hired. While Broadvision was associated with building over production. Therefore, a core IT initiative needs
of the back-end logic for replenishment engine, Wipro to be identified in the business network. This core
was associated with the roll-out on distributor side. initiative will depend on the individual condition of a
Wipro was selected because it had high geographic firm and its business environment. This core initiative
coverage and a good support model. The basis for may be extended to other partners in the network
financial justification of this IT initiative was the through sep~rate planning and design.
anticipated reduction in stocks and the conseq~ent
GCPL has used Pilot with phase in approach to
savings from the reduced inventory levels. The project
extend the Sampark initiative to suppliers. The top 100
team consisted of 5 internal people and the consultant
suppliers are on the portal and are using Sahayog. The
team. Another objective of the project was to provide.
portal has allowed a firm communication ~hannel to ~e
the daily secondary sales and stock information to its
established between GCPL and the suppliers, wherein
field force, so that better informed decisions could be
key tactical information like dispatch and inventory
taken.

VISION-The JoumalofBusiness Perspective. Vol. 13. No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

 Intetr-Organisational Systems in a Consumer Packaged Goods Network. 89

details, finance history is regularly being shared and used implementation of this programme started in March
effectively. The phase I of the Sahayog which dealt 2007.
primarily with 'information sharing' and building trust
The challenge for Sampooma initiative is that the
has been completed and GCPL is now moving to the
retailers will not be using any system and cannot be
next phase of inventory management which is Vendor
connected directly into the network. To get data from
Managed Inventory (VMI).
them, GCPL will be using PDA's and mobile application
for capturing retailing and Non Sampark Distributors'
lOS PLANNING IN GCPL AND data. GCPL plans to use the field force which used to
COORDINATION visit the retailers earlier to get orders to also get the stock
details using PDA's. This data from the retailers would
IT enhances the coordination of economic activities by
be passed on to the distributors with Sampark who will
reducing coordination costs, and can therefore improve
then synchronise the data. Thus there is no overhead in
firm performance and productivity (Shin, 1999). The
terms of extra cost for the retailers. Each A-class
redesign of inter-organisational processes with the use
distributor will serve 200-300 retailers. Also, only those
ofICT plays a leading role in improving coordination
0.1 million retailers would be covered which are under
among the various partners in the business network
the 450 A-class distributors. The Sampooma project got
(Christiaanse and Kumar, 2000). GCPL is also
completed by the end ofyear 2007. Thus, the information
implementing the concept of VMI to overcome the
system planning in the GCPL network consists of
inventory problems in addition to the implementation
extending the Sampark initiative to suppliers and retailers
ofthe lOS initiatives. The planning cycle ofGCPL used
through two more initiatives called as Sahayog and
to be monthly, and this has now become daily. The
Sampoorna. The supply chain planning logic is
improved planning has paid off, mostly in stock
essentially replenishment based and is derived from the
reduction. On an overall basis, inventory level has come
Sampark initiative. Going forward, GCPL is planning
down by almost 50% and sales have gone up (see figure
to change its ERP from MFG/PRO to SAP R/3.
4). The extension of Sam park to suppliers through the
Sahayog initiative has further improved inventory
planning in the GCPL network. Earlier the GCPL MIGRATION FROM MFG/PRO TO SAP R/3
suppliers used to plan inventories on a monthly basis.
In 2000, GCPL decided to look beyond ERP and leverage
After the Sahayog initiative, the planning cycle has
the internet to the maximum possible extent. While ERP
moved to a weekly basis. Therefore, the implementation
MFG/PRO had helped GCPL significantly to gain
of lCT initiatives in the network does improve
benefits within the organisation; the new IT initiatives
coordination between the partners, however, in case of
help to connect the business partners outside the
more than one IT initiative, the coordination between
organisation. The management team at GCPL was of
the individual initiatives is also important; else it may
the opinion that since MFG/PRO had a de-centralised
lead to sub-optimal performance in the network and
architecture it may not support B2B, dealer or supplier
affect the performance of all partners. This is because
networks easily. Also, according to them, MFG/PRO had
the different network modes are dependent on one
not kept pace with the market developments. The success
another in planning and manufacturing their finished
of above initiatives was because of the organisational/
goods and raw material inventories.
top management push and now the expectations are high
from the information systems across the organisation.
INTEGRATION OF RETAILERS TO SAMPARK What is to be shipped is completely generated by the
INITIATIVE: SAMPOORNA system and there is a complete dependence on the system.
In the next phase, GCPL is trying to integrate its 0.1 Therefore, it is critical that the system functions properly.
million retailers through innovative usage of The technical challenge was to ensure that 5-6 software
technologies such as PDA's in a separate initiative called from different vendors (Botree, WIPRO, Broadvision
as the Sampoorna which means completeness and and IBM) work together. If any of the individual
integration in Hindi. This initiative is planned for the applications fails, it would affect the complete system.
year 2007 - 08. The system will be based on Thus, sustaining these diverse systems is a challenge.
replenishment logic again. With this, the retailers will Also, whenever any customisation or up-gradation is
also come into the current IS architecture. The there, it is difficult to incorporate it across all systems.

VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March i009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

90. Kaushik

Therefore, the GCPL team decided to have SAP at the strong and key partners in the pilot phase. The
central level. It believed that SAP would be more robust success with the initial implementations plays a
as it was based on a centralised system. The significant role in extending it to other partners.
implementation of SAP was started around March 2006.
Bringing the distributors into the information
The business logic for the Supply Chain was kept the
systems architecture was a big challenge for GCPL. The
same but the central system was placed under SAP in
distributors were not open to sharing data. Also the
this arrangement.
technical challenge was that most ofthe distributors were
using some software or the other. The distributors felt
CRITICAL SUCCESS FACTORS IN that GCPL will get insights into their data and they had
IMPLEMENTATION OF INTER- an apprehension that their data will be shared with other
ORGANISATIONAL SYSTEMS IN GCPL distributors. GCPL needed a solution that was not a
technical challenge for all concerned and was aligned to
This section does not cover the CSF for traditional IS
the business logic. GCPL also realised that the initiative
such as t.OP management support, communication
can only be successful if the distributors see benefit in
training etc. The insights obtained in the process of
adopting it. Till 1-2 years back, GCPL faced stiff
implementation of the lOS, the interview findings and
resis~an~e to their ~ampark Initiative. However, slowly
the literature review are combined to list some of the
the distributors realised the benefits from the system and
CSF's in implementation ofinter-organisational systems
have started participating actively in it. .
at GCPL. These include shared vision, change
management, cross-organisational project team, inter- GCPL considered various options to overcome the
organisational business proeess re-engineering, process resistance from distributors. Training was considered as
ownership and strong project management. an important element of the strategy in the change
management process. To convince the distributors
• Shared Vision: Before the launch ofthe lOS project,
it is important that the company and its business
~CPL made a team of sales manager and 4 Office;
Executive level people (one for each region) and they
partners share a common vision for these lOS
were made a part of the Sampark initiative. Each of the
systems. It is important to communicate the blueprint
450 distributors was extensively trained by a special team
and the objectives of the lOS with the business
of 13 personnel (drawn from the sales function) with
partners to reach consensus on the vision. The
the help of Wipro. GCPL educated the distributors on
business partners should be asked to give their
the benefits of using the system and assured them of
feedback which should be incorporated wherever
increased Return on Investment (ROI) ~ithin 4 months
possible. The shared vision of lOS among all
of usage. The distributors slowly saw merit in adapting
stakeholders would reduce the divergence ofopinion
to the system and were gradually convinced about that
in the implementation process and in turn lower the
solution and how it would be beneficial to them and to
risk and shorten the period of lOS project.
GCPL. While GCPL benefited by a daily visibility of
• Change Management: Change management is a the retailing information.the distributor benefited from
critical issue in planning information systems in much lower inventory carrying costs.
inter-organisational domain. Proactive change
Like in Sampark, the most critical issue in Sahayog
management requires companies to address the right
was to manage the resistance from' 'both the purchase
structure. policy, processes and performance
department and suppliers. The concern from the purchase
measures with all the entities affected by change.
department was more related to the security of
Companies are handling change management and
information being shared. They were concerned about
project management issues by ensuring regular and
whether a particular supplier could see the price related
focused communication and by organising training
information pertaining to other suppliers. GCPL
for the partners. The implementations are essentially
arranged a detailed demonstration for the suppliers. Once
phased so that the new system is introduced
the suppliers understood the benefits of opening a
gradually and the change can be managed. The
communication channel using internet securely, they
project management team needs to have committed
helped to arrange supplier meets and participated in the
people with strong project and change management
trainings. In order to measure the benefits and evaluate
skills to manage change across the external value the efficacy of Sahayog, Key Performance Indicator's
chain. It is also important to identify and involve

VISION-The Journal of Business Perspective • Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

 Intetr-OrganisationalSystems in a Consumer Packaged Goods Network. \)I

such as number ofout-of-stock instances, administrative setting authorisations for different data needs across
time and raw material (RM) inventory were set and the partners.
measured periodically. Supplier meets were conducted
periodically even after the site went live to take care of BUSINESS IMPACT OF THE RE-DESIGNED
any operational issues and queries. NETWORK
• Inter-organisational Process Re-design: This The initial calculations which were done showed that
implementation has re-organised the push-sales the benefit would be at least 1% of the sales i.e. around
tactic followed before with pull-based operations. INR 60 millions (1.3 mn USD). On an overall basis,
Now, the distributor invests smaller capital, for inventory levels have come down by 50% and sales have
shorter time-periods. Also, product stagnation on the gone up. Payback period with these numbers came close
distributor's end is reduced, and there are fewer to ~ year. To measure the benefits of the re-designed
chances of scarcity of a particular brand in the network, distributors' stocks were monitored. For
marketplace. Invariably, this translates to better instance, the stocks of a distributor in Mumbai came
brand visibility, and higher profits. Though this down from 30 days to 8 days. Also, the sales increased
project took some time to reach wide acceptance, it from INR 1.6 million (0.04 mn USD) per month to INR
is a part of the accepted routine now. 2.4 million (0.05 mn USD) per month. Some distributors
• Process Ownership: It is important for the have reported about 15-20% increase in the number of
processes that cut across various functions to have outlets covered which directly reflects on their top line
an identified process owner, who takes complete and in turn on the company's top line. There is a higher
ownership in defining business requirements in the visibility ofmaterial flow and data flow across the supply
inter-organisational domain. Also active chain. Figure 4 shows the inventory trends for the
involvement of all affected functions should be distributors and retailers from October 2004 to
ensured. The process owner plays an active role in September 2006. The implementation of Sampark
defining requirements and functions and also helps software across 450 distributors and 32 CFA's completed
in the resolution of issues in different stages of lOS in April 2005. With the implementation of Sampark
planning. In addition to helping define business software the inventory levels have decreased across the
requirements and craft "to-be" processes, the process Supply Chain.
owner needs to proactively preempt problems and
play an active role in the resolution of issues. GCPL Improvement in Quality of Service
identified dedicated process owners for all the
Sampark has helped GCPL to considerably strengthen
important processes of Sam park. Additionally, it
the bond of the Company with the distributors by
bore the entire cost for the Sampark initiative.
significantly improving their quality of service to
• Project Management: The critical success factors distributors. Earlier, pressures on the sales force in
(CSF's) for the success ofthe Sampark project have meeting primary sales targets led to unnecessary 'build
been the participation from distributors and up' of stocks at the distributor's end leading to high
continuous support of top management. After inventory carrying costs. High Margins products were
implementation of the above projects, GCPL being pushed in preference to low margin products
realised that for integrating the stakeholders in ignoring market realities. This would invariably lead to
supply chain, the big-bang approach may not work. stock-out conditions for some products. Sampark by its
A pilot and phased approach is more advisable since inherent business logic accurately captures the market
the 'word-of-mouth' spreads very quickly on the realities of the sale of GCPL's products and ensures a
success ofthe system and encourages others to adopt steady stream of 'right' dispatches from the CFA's to
it. The robustness of the system .is very important the distributors. The distributor is no longer besieged
because the dependence of business on the system with unnecessary pile up of stocks and is able to control
is high. The major concerns for GCPL in the above his stocks much more efficiently. The Stock Placement
implementation have been control and security of Accuracy which measures the delivery efficiency has
shared information between the partners and gone up from 70% to +90%. Figure 5 shows the stock
meeting the cross-platform integration needs. The out to sales ratio in the same time frame. It is seen that
concern for control and security of shared overall, there has been a reduction of inventory holding
information has been resolved to some extent by days by 60% and a reduction of Stock-out situations by
VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

92. Kaushik

60~~. Some of the other benefits from the Sampark strategies for those products facing low demand.
initiative include:
The distributor, on his part, streamlines his
investment strategies, banking his money in smaller units
Reduction in Lead Times for shorter periods of time, on assured sales. Thus, the
Using Sampark, GCPL has reduced the lead-time taken returns. on his investments are higher, freeing up a little
to replenish a distributor. The distributor stock is extra money that can be, for instance, invested in niche
replenished on a daily cycle compared to a weekly cycle marketing strategies or hiring more on-field sales
earlier. In the larger picture, lead times to respond to executives. More sales representatives are able to cover
market demands have also reduced. Since the carrying more area per day, upping their daily target and
and forwarding agents (CFA) are intimated about a increasing the sales. Some concentrate only on visibility-
stagnation or scarcity in advance, precautionary improving tactics such as display, or covering niche areas
measures can be taken days earlier than when following such as salons and other places which are more viable
the traditional methods. Due to lower distribution for lifestyle products - cosmetics and high-end grooming
inventory, GCPL can respond faster to competition via products. There has been overall improvement in the
promotions, new product launches without the concern profits and improvement in customer support and
about stock 'buy-back.' The efficacy of any marketing average response time to the distributors. The integration
campaign/price scheme is now visible on an almost real and re-design ofthe business network has also benefited
time basis. the sales team and there is an almost 60% reduction in
the time spent on collection and compilation ofdata from
the distributors. This has increased the availability of
Commercial and Financial Benefit field working time for the sales team.
The traditional system ofproduct-distribution followed
a 21-day inventory cycle, at the end of which, surplus Benefits from Extending Sampark to Suppliers
products were either recalled or strategically sold. This (the Sahayog Initiative)
practice led to stagnation: the distributor blocked his
capital, and had little incentive to roll offhis stock. Using The integration ofsuppliers through Sahayog initiative
Sampark, the distributor does and shares his billing and has yielded benefits such as improved order tracking,
inventory documentation daily. This updates the carrying reduction in dispatch lead time and quick settlement
and forwarding units, who then replenish only that stock ofoutstanding. There have been two important benefits
which is sold out, and in realistically saleable units. It
also helps to make for forecasting and alternative sales

Inventory at the Distributors

BOO 35

700 30 i.c
'~~/'\
600 ~
C 25 -:::
E .Q
::::s
!!. 500
CD /,:. L-:...
~.
I"---, ~ ~::. V~· t', 20 t
(I)
::::s 10-...
~:. Q
16 400 ~ ~
~".~.
> i' r--..::. 15 '0
Q (I)

~ 300 >-
j
CD
10 !'0
a: 200

100
5 j
::::s
Z

0 - ..... ..... I..- "-' '-- ---' I..-

- --- '-- I..-
- '-- '-- - o
~~~~~~~~~~~~~~~~~~~~~~.
o~/~~/ <:I~/ ")t6'/ «J>/ +~/ ~/ ~,/ ")~~/ ")~/ ~O/ ~~/ 06-/ ~~/ ~~/ ')tI'/ «J>/ ~/ ,.~/ ~,/ ")~~/ ")~/ ~Ot,/
Period
-------. . Disirii~or Sicik-----------------.-Retafiing-----------~':: NLI1lber-~-----

(As mn) (Rs mn) Days of

Figure 4: Inventory Trends October 2004-September 2006

VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

 Intetr-Organisational Systems in a Consumer Packaged Goods Network. 93

8.00% r· 81
%

7.00% ~
I
!

6 00% j
. I
5.00% I
I

4.00% I
I
3.00·;' -I
I
I
2.00·;' ~
I 32%

1.00%1
i
I
I

0.00% 1--~--. . . - --r----.--.-..------

~ ~ ~ q q q
g ~ ~ ~ : j ~
o

Figure 5: Stock ont- Sales Ratio October 2004-September 2006

from Sahayog. One, it has significantly reduced the planning requires addressing the problem offinding how
number of follow-up's by suppliers (by at least 60- diverse systems and platforms will be integrated to meet
700/0). This is because most of the purchase related the organisational requirements. The conventional
information or the supplier's financial history is always methodologies fail to explicitly address such integration
there on Sahayog for the suppliers to access. The issues. The case study findings focus on some of these
suppliers also record the dispatch related information issues and identify how they impact the lOS planning.
as soon as they dispatch the goods. This helps GCPL Specifically, it focuses on the need for a separate lOS
to plan much more efficiently. This information planning for different value chain partners; analyses the
supplied by the suppliers is used in the inventory process re-design and change management issues and
planning process. GCPL has now moved from a emphasises the need for coordination amongst various
monthly planning cycle to a weekly planning bucket lOS initiatives and between the network partners and
because of Sahayog. The unplanned emergencies business managers of the key actor.
caused due to lack of information on material
The end to end integration as in the case of GCPL
availability have also come down significantly.
provides a more agile arrangement to produce from the
Through the Sampoorna initiative, GCPL aims to actual customer requirements as a starting point, and not
extend the replenishment to the last link in the supply on the basis of assumed or forecasted customer needs.
chain, thereby improving the efficiency. This provides GCPL identified three basic elements to it's IS planning
a more agile arrangement for the network to produce strategy in the business network: communication,
from actual customer requirements as a starting point, cooperation and integration. Communication became the
and not on the basis of assumed or forecasted customer backbone for cooperation and integration. Based on this
needs. This is expected to give benefits such as saving understanding, GCPL identified integration with
ofup to 30% oftime in order taking process at the retailer, distributors as a backbone initiative and then extended it
increase in accuracy level of billing information and successfully to the suppliers and retailers. To start with
better reach of all the range of products. GCPL restricted the scope of lOS planning to select
processes and expanded the application coverage in future
CONCLUSION as per the requirements. The channels to various value
chain partners were planned for separately. The decision
This research uses a case study method to examine the regarding sourcing ofapplications for an internal and inter-
lOS between GCPL and its business partners. Business organisational process need to be taken in the light of a
organisations are increasingly getting networked with number of factors including the nature of application,
their business partners and they need to incorporate the number of users, skill level available with the channel
network issues in their lOS planning process. lOS partners and the cost ofownership etc. It was also observed
VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

94. Kaushik

that the companies find it difficult to support and integrate REFERENCES

different programmes for the channel partners such as
Alt R. and Fleisch E., (2001), "Business Networking Systems:
distributors, suppliers etc. Therefore, one major objective Characteristics and Lessons Learned," International Journal
of lOS plan was seen to be standardisation ofapplication ofElectronic Commerce, 5.2, pp. 7 - 27.
and processes with the channel partners. GCPL used pilot
Applegate, L.M. and Gogan,· J.L., (1995), "Electronics
with phase in approach to lOS planning. The same may Commerce: Trends and Opportunities," Harvard Business
be recommended for other actor-network based supply School Case Series, Case-9-196-004.
chain networks.
Benbasat, I., Goldstein, D.K. and Mead, -M.,-(1987) "The Case
Change management is a critical issue in planning Research Strategy in Studies of Information Systems," MIS
Quarterly, September, pp. 369 - 86.
lOS. Proactive change management requires companies
to address the right structure, policy, processes and Cash, J.L. Jr. and Konsynski, B.R., (1985), "IS Redraws
performance measures with all the entities affected by Competitive Boundaries," Harvard Business Review, 63.2,
pp.134-142.
change. The implementations are essentially phased so
that the new system is introduced gradually and the change Choe, J. (2008), "Inter-organisational Relationships and the Flow
can be managed. GCPL has completed its integration with of Information through Value Chains," Information and
the distributors and has realised significant benefits from Management, 45.7 (November, 2008), pp. 444 - 450.
it. Only some of the benefits from integration with the Christiaanse, E., and Kumar, K., (2000), "ICT Enabled
suppliers are documented as part ofthis case study as this Coordination of Dynamic Supply Webs," International
initiative has been completed recently. The programme Journal ofPhysical Distribution and Logistics Management,
30.3, pp. 268 - 285.
to integrate retailers is in the progress. This is a limitation
as comprehensive discussions and learning's from the Earl, M. 1., (1993), "Experiences in Strategic Information
other two initiatives could not be included for the purpose Systems Planning," MIS Quarterly, 17.1, pp. 1 - 24.
of this case study. The research confirms the benefits of .Eisenhardt, K.M., (1989), "Building Theories from Case Study
lOS already discussed in the literature such as increased Research," Academy ofManagement Review, 14.4, pp. 532-
coordination, shorter sales, production turnabout time and 500.
greater monitoring capability. It identifies CSF for Finnegan, P.; Galliers, R.D.; and Powell, P., (1999), "Inter-
organisations which want to adopt lOS with their business organisational System Planning: Learning from Current
partners. These CSF include: shared vision, change Practices," International Journal 0./ Technology
Management, 17, pp. 129 - 144.
management, cross-organisational project team, inter-
organisational BPR, clear process owner for the lOS Finnegan, P.; Galliers, R.D.; and Powell, P., (2003), "Systems
processes and strong project management. Planning in Business-to-Business Electronic Commerce
Environments," Information Technology and Management,
The limitation of this research is that though the 4.2/3 (April-July), ABI/ INFORM GLOBAL, pp. 183 - 198.
author has done a detailed study of lOS implementation, Galliers, R. D., (1993), "IT Strategies: Beyond Competitive
the insights may not be complete since it is single case Advantage," Journal ofStrategic Information Systems, 2.4,
study based. Also, the study maybe more biased pp. 283 - 291.
towards the CPG sector and may have missed on some Galliers, R. D., (1993), "Towards a Flexible Information Systems
of the more general planning issues and CSF's in lOS Architecture: Integrating Business Strategies, Information
domain. It is believed that with some more lOS studies, Systems Strategies and Business Process Redesign," Journal
the list of the factors can be modified. Also, different ofInformation Systems, 3.3, pp. 199 - 213.
countries have different cultures and business practices. Halinen A and Tornroos J-A., (2005), "Using Case Methods in the
It needs to be tested whether the CSF's and planning Study of Contemporary Business Networks," Journal of
issues in respect of a CPG company in India are Business Research, 58, pp. 1285 - 1297.
applicable to companies operating in other industries Henderson, J. C., and Sifonis, J. G., (1988), "The Value of
and countries. Strategic IS Planning: Understanding Consistency, Validity
and IS Markets," MIS Quarterly, 12.2, pp. 187 - 200.

NOTES Holland Systems Corporation ( 1986), "Strategic Systems

Planning," document. #MO154-04861986, Ann Arbor, MI.
1. I Express my thanks to the Chief Information Officer, Mr
Mani Mulki, other Senior Managers of GCPL; distributors Hsu, C. and Pant, S., (2000), Innovative Planning for Electronic
and suppliers of GCPL for sharing their insights for the Commerce and Enterprises: A Reference Model, Kluwer
purpose of case study. Academic Publishers, Norwall, MA.

VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

 Intetr-Organisational Systems in a Consumer Packaged Goods Network • 95

IBM Corporation (1975), Business Systems Planning- McFarlan, F. W., (1984), "Information Technology Changes the
Information Systems Planning Guide, publication #GE20- Way You Compete," Harvard Business Review, 62.3, pp. 98 -
0527-4,. 103.

Jaiswal, M.P. and Kaushik, A., (2001), "ERP Systems Extended to McLean, E.R. and Soden, (1977), J. V Strategic Planning/or MIS,
B2B Enterprise," Vision - The Journal of Business John Wiley and Sons, Inc., New York.
Perspective, 5, (Special Issue).
Min, H. and Galle, W. P., (1999), "Electronic Commerce in
Jaiswal, M.P. and Kaushik, A., (2005), "Realising Enhanced Business-to-business Purchasing," International Journal of
Business Value due to Business Network Re-design through Operations and Production Management, 19.9, pp. 909 -
Extended ERP Systems: Case Study of HLLNet," Business 921.
Process Management Journal (Emerald), '11.2, pp. 171 - 184.
Niederman, F., Brancheau, J., and Wetherbe, J., (1991 ),
Kalakota, R. and Whinston, A.B., (1996), Frontiers ofElectronic "Information Systems Management Issues for the 1990's,"
Commerce, Addison-Wesley, Reading, MA. MIS Quarterly, 15, pp. 475 - 495.
Kalakota, R. and Robinson, M., (1999), E-Business: Roadmapfor Pant, S., and Hsu, C., (1999), "An Integrated Framework for
Success, Addison-Wesley lnfonnation Technology Series, Strategic Information Systems Planning and Development,"
Addison-Wesley, Reading, MA. Information Resource Management Journal. 12.1, pp. ]5 - 25.
Kambil, A. and Short, J.E., (1994) "Electronic Integration and Pant, S., and Ravichandran, T., (2001), 4~A Framework for
Business Network Redesign: A Roles Linkage Perspective," Information Systems Planning for e-Business," Logistics
Journal ofManagement Information Systems, 10.4, pp. 59 - Information Management, 14.1, pp. 85 - 98.
83.
Porter, M. E., (1980), Competitive Strategy, Free Press, New
Kaushik, A., (2005), "Efficacy of Existing IS Planning Modelsfro York.
e-Business," Alliance Journal ofBusiness Research, 1.1, pp.
Porter, M.E. and Millar, V.E., (1985), "How Information Gives
55 - 61.
You Competitive Advantage," Harvard Business Review,
King; W. R., (1978), "Strategic Planning for Management 63..4, pp. 149-160
Information Systems," MIS Quarterly, 2.1 (March), pp. 27 -
Raghunathan, M. and Madey, R.M., (1999), "A. Firm-level
37.
Framework for Planning Electronic Commerce Information
King, W.R., (1988), "how Effective is Your Information Systems Systems Infrastructure," International Journal ofElectronic
Planning?" AIlS Quarterly, 2.1, pp. 27 - 37. Commerce, 4.1, pp. 121.
Lederer, A.L. and Putnam, A., (1986), "Connecting Systems Rockart, J. F., (1979), "Chief Executives Define their Own Data
Objectives to Business Strategy with BSP," Information Needs," Harvard Business Review, 57.2, pp. 81 - 94.
Strategy: The Executives Journal, 2.2, (Winter), pp. 75 - 89.
, Swatnam, P.M.C. and Swatnam, P.A., (1992), "EDI System
Lederer, A. L. and Sethi, V., (1996), "Key Prescriptions for Integration: A Definition and Literature Survey,"
Strategic Information Systems Planning," Journal of Information Society, 8, pp. 169 - 205.
Management Information Systems, 13.1, pp. 35 - 62.
Ward, J. and Griffiths, P., (1996), Strategic Planning for
Lee, A.S., (1989), "A Scientific Methodology for MIS Case Information Systems, (2nd Ed.), John Wiley and Sons,
Studies," MIS Quarterly, 13.1, pp. 33 - 50. England.

Martin, J., (1982), Strategic Data-Planning Methodologies, Zwass, V., (2003), "Electronic Commerce and Organisational
Prentice-Hall Inc., Englewood Cliffs, NJ. Innovation: Aspects and Opportunities," International
Journal ofElectronic Commerce, (Spring), 7.3, pp. 7 - 37.
McFarlan, F. W., (1971), "Problems in Planning the Information
Systems," Harvard Business Review, 49.2, (March/April), Online Resources
pp. 75 - 89.
www.godrejcp.com

www.indiainfoline.com

VISION-The Journal of Business Perspective. Vol. 13. No.1 .-January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016

96. Kaushik

APPENDIX-l

~%~; 41%

7%

• Hindustan Lever Umited

Colgate Palmolive India Umited
• Marico
• Godrej
•
.ITC Limited
• Dabur India Umited
Procter & Gamble
Nirma Umited
• Smithkline Beecham
• Reckitt & Colman

Figure 1: ePG Industry Players in India

Anjali Kaushik ([email protected]) is an Engineer, an MBA and a PhD in the area of Information Systems from Delhi University.
Presently, she is an Assistant Professor at Management Development Institute, Gurgaon in the area of Information Systems. She has
almost) 4 years ofconsol idated experience in the area of IT Business consulting and Research across corporate and academ ics. Prior to
joining academics, she was heading the vertical research group in International Data Corporation (India) Limited. Her areas of research
and training include e-business, IT strategy, information security and e-Governance. She is active in business consulting and has
authored books and publications in national and international journals.

VISION-The Journal of Business Perspective. Vol. 13 • No.1. January-March 2009

Downloaded from vis.sagepub.com at UNIV OF TENNESSEE on June 4, 2016