(2) How better we can design information systems,
in order to enhance a firm's effectiveness, efficiency and profitability. A strong MNC presence in the FMCG (Fast Moving Consumer Goods) sector, the existence of a wide distribution network, intense competition, the availability of key raw materials, lower labour costs, and a presence across the entire value chain have resulted in a thriving market for FMCG companies. The sector will grow by over 50 percent in rural and semi-urban India by 2010. With the opening up of the Indian market to foreign players, Indian companies have increased their use of IT as a business tool. Indeed, it has become an essential element for these companies to understand the needs of their customers and handle their employees. Many FMCG companies need to consolidate their information base that’s been accumulated from different sources. As these companies have operations spread across India, the major problem they are facing is data integration. In order to bring efficiency to their processes, they are deploying different IT solutions to keep online information about their manufacturing plants, distribution points, distributors and retailers. After identifying the need for integration, companies are deploying software to increase operational efficiency. IT solutions expose weak links in the value chain, increase departmental inter-action, improve processes, and speed-up decision-making. Enterprise hardware continues to keep its lion’s share of IT spending by FMCG companies. Area in the enterprise hardware segment is networking, the demand curve of which is also moving upwards. Many FMCG companies are using PDAs for capturing data either from the supply chain or from retail outlets, especially in rural areas.
Growing ERP market
As per the survey, 27 percent of FMCG companies invested in ERP last year, while 93 percent are planning to invest in the coming fiscal. Companies are deploying ERP systems to optimise the distribution network and improve delivery mechanisms. Implementing IT solutions has led to an improvement in the service levels of these companies vis-à-vis their dealers through the redressal of potential stock-out situations. This has also been made possible due to better visibility of sales, inventory and production in progress data. While companies such as HLL, Eveready, Britannia and Samsung India are depending on vendors to implement the solutions, LG Electronics has deployed solutions developed in-house. Meanwhile, Britannia recently upgraded its SAP application to mySAP, and integrated the same with Lotus Notes. T S Purushothaman, Britannia’s Corporate Manager for IT and Systems says, “The factors that we focus on while taking the decision to purchase are financial strengths, experience, team strength, customer base and references from others. Outsourcing down
Maintenance of IT infrastructure is the principal area of outsourcing among FMCGs, but the trend has gone down. Last year 30 percent of respondents from this sector had outsourced their IT activities; this time around only 22 percent of them intend to do so. The most important factor influencing outsourcing is the desire to reduce costs and focus on core competencies....