Capital Maharaja reaps benefits of implementing SAP in tea industry

After implementing SAP, the world’s premier Enterprise Resource Planning (ERP) tool, across its group of companies in 2012, The Capital Maharaja Organisation Ltd. recently became the first to implement SAP within the tea industry.

Six months since the project went live, the Group’s Management is elated with the unprecedented array of benefits it has received from the implementation. 

SAP allows a company or a group of companies to unify diverse business processes to better manage its operations and many back-office functions. Having never been used in the Sri Lankan tea industry before, The Capital Maharaja Organisation was able to implement the SAP system to cater to the unique requirements of the industry.

The tea industry is volatile in every way as it varies not only from market to market but from order to order. The fluctuations in the weekly auction prices compound the challenges of providing the best quality at the right price within the time specified by the customer. SAP manages this process end to end in a manner that ensures A.F. Jones the best margins, through improvement in purchasing, blending and packing while ensuring that the finest quality tea is exported to its global customers.

Group Director Eshini Mudalige, who was behind much of the decision-making on the road to implementing SAP within the group, revealed that the group wide SAP implementation process began in 2012 when the organisation conducted an extensive study into available software solutions. However, the Group’s tea companies – Harrisons, Colombo and A.F. Jones – did not find the best fit through any of the ERP solutions at that time, as none of them were able to meet the unique requirements of the tea industry. With the Legacy system providing the tea companies with adequate information, the Group decided to leave that system in place and conduct further studies into how SAP could be optimised for the future.

“In nine months, we implemented nine models of SAP across 19 of our group companies including MTV, MBC, S-Lon, etc. What was unique was that we didn’t stop our operations even during the cutover. So the implementation process of this system did not hamper productivity and business,” she added referring to the SAP implementation in 2012. “SAP granted the Group a better information management system, vast improvement in processes, a centralised consolidated server structure, significant cost reduction, uniform chart of accounts, and an accounting structure that could be used across the whole Group.” Mudalige added that SAP also allowed for greater transparency in transactions with alerts being sent to the management in the event certain processes weren’t followed.

The implementation also had minimal critical issues after going live, and the team’s hard work culminated in the Group securing the regional SAP ACE award.

Out with the old, in with the new

However it was evident in 2016, that the tea companies still needed a change as the Legacy system had its limitations and they had already seen the advantages of the SAP system in the other Group companies.

Having used the ASAP methodology for the other Group companies, the Group decided to use the SAP new methodology termed ASAP AGILE, which is a quicker process; taking just 90 days.

“It was a marriage of the requirements of the users with what SAP could deliver. Our initial objective was to meet around 60-70% of their requirements but we were able to deliver on absolutely all their expectations. The dedication of the team was amazing. Their drive and commitmaent was incredible and their attention to detail was what made this such a success.”

Another critical factor was the involvement of the internal auditors in every process. After the master data and cutover data were added to the system, internal auditors checked the data and certified it before handing it over to the users.

Bringing tea back to the top

Group Director and Head of the Capital Maharaja Tea Operation, Angelo Patrick was unwavering in his support and commended the team on their efforts over the past 6 months. “Tea was once the premium export industry, but the industry is obviously not at the lofty heights it once was, but I really believe an initiative of this nature could bring it back to its former glory,” he stated.

He explained that tea was a complex industry and the processes themselves remain quite complex which meant that, initially, SAP did not have the right specifications suited to handle the industry with all its intricacies. However, the team managed, through their innovative and imaginative expertise, to tailor-make the system to cater to all of the industry’s specific needs. Working with the system for six months has only reinforced his believes. 

“The tea industry is in trouble at the moment but surprisingly we have managed to expand our market base over the last three years. I think the industry as a whole stands to benefit from SAP greatly and it is up to us now to take it to them,” he added.

Evangelising SAP

Group Chief Information Officer Saman Perera, who first took the call to take the tea companies into the SAP fold, stated that his team went into great detail studying the processes while mapping out the solutions. 

“We didn’t develop everything from scratch but used the existing functions of SAP to match it with the tea industry’s requirements. We implemented four modules for the industry – the Materials Management module for tea procurement, Production Planning module for blending and packing operations, Sales and Distribution module for shipping and sales activities while overall back office accounting through Finance and Controlling module,” Perera said.

The use of the AGILE ASAP methodology allowed the users to see the system from day one, allowing them to be fully prepared for the system from the first day of use.

He added in six months of use it has been proven to help tea executives to make their decisions quickly and accurately.

The CIO also echoed the sentiments of Angelo Patrick, reiterating that the next step was to take SAP beyond the Group companies and to help other tea vendors in the country. He stated that all the practices required for the tea industry was built into the system, assuring that the team now stood poised and ready to take this innovative solution to the rest of the industry.