MADURA GARMENTSIndia’s Leading Apparel Company AchievesExceptional Results as First Retailer in India toImplement SAP® Apparel and Footwear

Being first comes second nature to Madura Garments, a divisionof Aditya Birla Nuvo Limited – a flagship company of the AdityaBirla Group. The company’s spirit of leadership can be countedin 3,500 retail outlets spanning the country, annual sales in excessof US$11 billion, and a spectacular growth rate of over 20% peryear. And also counted among its assets is the ownership of inter-nationally recognized premier brands like Louis Philippe, VanHeusen, Allen Solly, Allen Solly Women’s Wear, Peter England,and SF Jeans. Madura Garments has recently entered into alicensing arrangement with international brand ESPRIT in India.

Taking Business to the Next Level

After consolidating its market leadership within India and dominating the menswear category, Madura Garments made incisive forays into global markets, and today is a preferred globalsupplier for such international brands as Marks & Spencer, Tommy Hilfiger, Polo, Ralph Lauren, s.Oliver, and other discerning buyers. “With so many firsts,” says N.P. Singh, vicepresident of information technology at Madura Garments, “it is not surprising Madura won Images’ ‘Most Admired ApparelCompany’ survey award in 2001, 2002, and 2004.”

In 2000, the acquisition of Madura by the Aditya Birla Group fueled new growth opportunities for the company. It was time totake Madura into the next level – moving into new product categories like women’s wear and accessories and expanding intooverseas markets like the Middle East. But to get there, a wholehost of challenges had to be overcome, including the reengineer-ing of processes, and that led Madura Garments to add anotherfirst – the SAP® Apparel and Footwear (SAP AFS) application.

“In the SAP Global Delivery model we found an

excellent combination of adaptability, skills, and

links into the SAP Services ecosystem at a winning

price-benefit ratio.”

N.P. Singh, Vice President of Information Technology, Madura Garments

SAP Customer Success StoryConsumer Products – Apparel and Footwear

SummaryMadura Garments, India’s leadingapparel company, has annualsales over US$11 billion and ayearly growth rate of over 20%.To respond quickly to its dynamicbusiness needs, Maduratriggered a major IT reengineeringinitiative, relying on the SAP®Global Delivery model to replaceits outdated technologies andbecoming the first company inIndia to deploy the SAP Appareland Footwear application.

Web Sitewww.maduragarments.com

Key Challenges• Lack of updated, real-time

information for decision makingand poor visibility into supplychain due to nonintegrated systems

• Difficulty in modifying systemsfor new-product development

• Impending technology obsoles-cence of legacy systems

• Need to respond quickly andflexibly to business requirements

Project Objectives• Facilitate integrated, company-

wide information system withintranet to bridge enterpriseinformation gap

• Establish coordination betweendemand, supply, and production

• Enable data warehousing forconsumer, design, and competitor analyses

• Make IT platform available 24/7

Solutions and Services• SAP Apparel and Footwear

(SAP AFS)• SAP Global Delivery• SAP Ramp-Up program

AT A GLANCE

Why SAP Solutions andServices• Standard features and best

practices that meet functionalrequirements, including SKU definition flexibility and support

• A proven product from theworld’s largest enterpriseresource planning softwareprovider

• Flexibility, speed of deployment,and availability of experts, thanksto global delivery services

Implementation Highlights• First installation of SAP AFS in

India• Implementation primed by the

SAP Consulting organization andSAP India

• Successful big-bang go-liveapproach

• Completion on time and withinbudget with zero escalationcosts

• Leveraging of skills and knowl-edge provided by consultantsfrom SAP Global Delivery

Key Benefits• Homogeneous system

environment• Standardized processes• Integrated supply chain visibility• Faster and smarter decision

making• Quicker response to customers• Strong foundation for the future

Implementation PartnersSAP Consulting and PwC (now IBM Business ConsultingServices)

Existing EnvironmentMultiple legacy systems supported by multiple platforms

Database, Hardware, andOperating System

Oracle; IBM and Sun; MicrosoftWindows NT, IBM AIX, and SunSolaris

First Things First: A Detailed Strategy to Tackle the

Challenges of Change

As Madura grew, so did its information systems, resulting in a higher strain on its IT infrastructure. To meet its growth objectives, a detailed study was undertaken to assess the needs of internal customers, look at Madura’s business strategy for thenext decade, and then align both with a solution deploymentstrategy.

The strategy and recommended solution had to consider a multiplicity of business challenges, beginning with Madura’sproduct-line complexity: volatile seasonal demand for hundredsof SKUs that must be sold in four to six weeks to ensure

freshness of products on the shelves in retail outlets. SinceMadura’s planning-to-sales cycles could be as long as six to ninemonths, forecasting and attributes-based planning andfulfillment had to be improved.

The strategy addressed Madura’s production challenges, including multiple supply sources and increased outsourcing; itsdistribution complexity, populated with multiple distributionchannels using different processes; and its financial requirements,which included multiple countries, currencies, and taxation requirements.

Finding a New Foundation for the Future

Madura’s legacy systems could no longer address these challengesand requirements. “Users across functions identified operationalproblems and absence of timely management information systems as two major issues,” says Singh. Nonintegrated legacysystems could not provide the updated, real-time information

that managers need for decision making. It was becoming almost impossible to support information requirements for new-product development, given the difficulty of modifying existingsoftware.

In addition, multiple legacy systems were being supported bymultiple technology platforms, making integration and modification more complex and harder to accomplish. The aging IT landscape was in danger of becoming obsolete, whilethe cost of maintaining the IT infrastructure was increasing.

Nonintegrated systems could not provide the visibility into thesupply chain that Madura needed to enable more accurate forecasting, efficient coordination between demand and production, and seamless interfaces with its partners, such as distributors and retailers.

Bridging the Information Gap

It became apparent that Madura Garments needed a powerfulenterprise resource planning (ERP) solution and other applications to meet its needs. Madura Garments also requiredan integrated, company-wide information system, includingMadura’s own intranet, to bridge the information gap that hadarisen across the organization and to provide critical MIS toknowledge workers and decision makers. It would also requirethe means to enable the efficient coordination of demand, supply, and production, as well as data warehousing for analysisof consumer trends, design performance, and competitive analyses. And to increase profitability and product turnover,Madura would need to raise its order fulfillment rates, reduce itsstock to a minimum, and shorten its throughput times byautomating its processes.

Madura considered solutions from a number of vendors, butonly one stood out: SAP. In addition to providing support for a broad range of Madura’s business processes, SAP software was a well-known, proven commodity, with more than 200 ERP installations in India alone.

Meeting Madura’s Industry-Specific Needs

Madura Garment thoroughly evaluated the functional fit of SAPApparel and Footwear to Madura’s business requirements – andbecame the first apparel company in India to select SAP AFS asthe application upon which to grow its future.

“By engaging the SAP Global Delivery

model, we had the opportunity to work

with solution experts day in and day out.

SAP’s personalized services ensure

delivery accountability and customized

solutions to fulfill our specific business

requirements.”

N.P. Singh, Vice President of Information Technology, MaduraGarments

“One of the key points that influenced our choice of SAP AFS for our ERP solution was its good coverage of our functional requirements, supported by its standard features and built-in industry best practices and industry-specific templates,” saysSingh.

SAP solutions have a reputation as enablers of improvingbusiness performance, which was a deciding factor for Madura.Furthermore, SAP AFS provided SKU definition flexibility andsupport and enabled planning and execution to be conductedover the entire supply chain based on product parameters.Madura appreciated the solution’s thorough support for retailing,with such features as multistore orders, fast-entry screens, andthe allocation and releasing of stock.

Although an ERP solution integrates all functions onto a singleplatform, these solutions may not adequately support planningand forecasting requirements for high-volume retailers likeMadura. Fortunately for Madura, SAP has two outstanding

solutions: the SAP Advanced Planning & Optimization com-ponent to support Madura’s planning and forecasting needs and the SAP NetWeaver® Business Intelligence component to satisfy the company’s data warehousing and decision-support requirements.

By selecting the SAP NetWeaver Portal component, Madura couldadd a Web-based customer interface on top of its ERP solution,enabling the capture of data from external sources, such asdistributors, retailers, and suppliers, in addition to the collectionof ERP information from within the company.

Madura Selects SAP Consulting and the SAP Global

Delivery Model

For the initial solution implementation, Madura chose the SAP Consulting organization, supported by its implementationpartner PwC (now IBM Business Consulting Services).Subsequently, Madura looked to the SAP Global Delivery modelfor advice and assistance in enhancing its system landscape.

With its global delivery model, SAP can deliver support and services to Madura on a 24/7 basis from multiple locations,including a global delivery center in Bangalore, India. Further-more, with distributed sourcing and staffing, SAP Consultingcan speed up the identification and assignment of solution andindustry experts when and where they are needed.

SAP Global Delivery optimizes the correct mix of on-site,onshore, nearshore, and offshore resources driven by cost, skills,availability, risk mitigation, and service productization elements,and it can deliver packaged services from any location in the SAPworld. The combination of speed of delivery and flexibility ofservices is why SAP Global Delivery was a key factor in helpingMadura increase the speed of the implementation, gain controlover and lower the maintenance cost of its IT infrastructure, andimprove its return on investment.

According to Singh, “By engaging the SAP Global Delivery model, we had the opportunity to work with solution expertsday in and day out. SAP’s personalized services ensure deliveryaccountability and customized solutions to fulfill our specificbusiness requirements.” And Madura intends to continue utilizing SAP Global Delivery to leverage emerging product andservice trends to meet its growing business needs.

A Big-Bang Go-Live with SAP Consulting and SAP

Ramp-Up

A core team of 30 members – comprised of 15 consultants and 15 Madura specialists primed by SAP Consulting – was initiatedto administer the implementation operations. Singh reports thatthe implementation team helped solve major obstacles. “For example,” says Singh, “prior to the implementation, the entry ofSKUs into our ERP system was manual and very cumbersome,leading to errors and time delays.” Therefore, the implementa-tion team developed a software module to collect and load dataautomatically into SAP AFS from a bar code scanner.

“The big-bang go-live approach was a

big challenge, considering the complexi-

ties of our business and risk of business

disruption, particularly since ours was

the first site to go live on SAP AFS.

SAP Consulting made sure that we

were successful.”

N.P. Singh, Vice President of Information Technology, MaduraGarments

The team enabled the seamless integration of Madura’s existingWeb-based ordering and point-of-sale systems in its franchiseeshowrooms with SAP AFS. Now that agents, distributors, andfranchisees can place and check the status of orders and accountsonline, Madura no longer accepts offline orders.

At the same time, the implementation team integrated MIS,which supplies managers with back-end data, such as profitabilityinformation across brands and channels as well as sales data andworking capital. The quality of the data is much higher, and it isavailable much faster than before.

Because SAP AFS was available only for limited release, SAPRamp-Up processes were engaged for the implementation. Consultants from SAP India led the SAP Ramp-Up initiative,thereby ensuring that the implementation would be completedon time and within budget, with no escalation in cost related tothe installation. Commenting on the implementation, Singhsays, “The big-bang go-live approach was a big challenge, considering the complexities of our business and risk of businessdisruption, particularly since ours was the first site to go live onSAP AFS. SAP Consulting made sure that we were successful.”

Being First Reaps Impressive Results for Madura

By implementing SAP solutions and choosing SAP Consultingand the SAP Global Delivery model, Madura is reaping thefollowing rewards:

• Following a highly efficient implementation supported by SAPGlobal Delivery and SAP Ramp-Up, Madura is experiencingvalue enhancement through improved planning processes, increased speed of response to changing fashion trends,improved distribution channels, reduced lost sales, and immediate availability of core items.

• In the area of cash liberation, Madura has increased net working-capital turns, including raw materials, finishedgoods, and receivables and payables, as well as improved forecasting models and early flushing of dormant stock.

• In addition to lower IT maintenance costs enabled by SAPGlobal Delivery, Madura has improved the “hit rate” of its designs to reduce dormancy, to lower material costs, to enablebetter price checks for each raw material, and to improve vendor evaluation.

Information islands are now solidly connected, a result of functional transparency inherent in the SAP software. With up-

to-the-minute information from internal and external sourcesimmediately available, Madura’s managers are able to respondquickly and intelligently to market demands. Staying informedabout variances between budgeted and actual amounts enablessenior management to effectively manage top-line and bottom-line growth. And because routine tasks have been automated,managers can spend more time on value-add activities that impact the bottom line.

“Profitability assessments for each showroom, brand, andcustomer can be done in the system,” says Singh. Because functions are seamlessly integrated, the solution can suggest replenishment based on these parameters and automaticallygenerate reports – all without manual intervention.

The value of the software to Madura Garments is evident fromthe numbers:

• Order fulfillment is up from 70% to 90%

• Order release-to-dispatch time is down from 22 days to 18

• Inventory is down from 13% of sales to 11.7%

• Showroom deliverables have been reduced from 55 days to40–45

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“One of the key points that influenced

our choice of SAP AFS for our ERP

solution was its good coverage of our

functional requirements, supported by

its standard features and built-in

industry best practices and industry-

specific templates.”

N.P. Singh, Vice President of Information Technology, MaduraGarments