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SAP ACE AWARD, 2017

Name of the organization: Baani Milk Producers Company Limited

Contact Person & Designation: Hitendra Sharma, Head-IT

Email: hitendra.sharma@baanimilk.com,

Mobile No: +919781703322

Official Address: SCO 37 & 38, First Floor, Urban Estate Phase –II, Rajpura Road, Patiala 147002

Punjab

Nation Building through SAP solutions:

Dairy industry is of great importance to India being a primary and subsistence

source of rural income in many states and secondary source in agricultural

dominates states like Punjab. The country is the world’s largest milk producer. It is

the world’s largest consumer of dairy products, consuming almost 100% of its own

milk production. Dairying has been considered as one of the activities aimed at

alleviating the poverty and unemployment especially in the rural areas in the rain-

fed and drought-prone regions.

A specific Indian phenomenon is the unorganized sector of milkmen, vendors who

collect the milk from local producers and sell the milk in both, urban and non-urban

areas, which handles around 65-70% of the national milk production. This leads to

exploitation of small marginal farmers by these middle men. Objective of Making

Producer Companies is to organize dairy sector in India and strengthen small

marginal farmers and providing fairness, transparency and empowering them to

become self-sustained.

A Producer Company combines the institutional and ideological strengths of

cooperatives (ownership limited to users; limited interest on shares; no trading of

shares; patronage is not capital-based) with the flexibility and autonomy available

under company law. In a Producer Company only milk producer can become

member and owned by user members.

About Company

Baani Milk Producer Company Limited (BAANI MPC) was incorporated on 11 August

2014 under the provisions of sub-section 2 of section 7 of the companies' act, 2013

with its head office located at Patiala in Punjab. Baani commenced its business

operations from 06 November 2014 and is currently operating in eight districts of

Punjab.

Over the span of just about two and half years, Baani has established itself as a

largest Milk Producer Company in Punjab. The Company is owned by the dairy

farmers of Punjab, who work hard to ensure that fresh and pure milk and milk

products are available to the consumers.

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Beyond the production of pure and hygienic milk and milk products, Baani Milk is

dedicated to promote a self-reliant dairy community. Baani Milk enables the proud

farmers to grow in this highly competitive dairy industry.

Objective

Baani with a key objective to create maximum value for its all stakeholders

including producer members by purchasing of milk, processing of milk and milk

products and marketing the same is constantly making endeavours to transform

lives of marginal and small dairy farmers by educating them on smarter methods of

milk production and also by providing them the opportunity to participate in a fair

and transparent dairy business.

Business Operation

Presently, the Company’s milk procurement operations continued in eight districts

of Punjab viz. Barnala, Bhatinda, Faridkot, Ferozepur, Mansa, Moga, Muktsar and

Sangrur. However, Baani extended its procurement operations to cover therein

active 1280 villages with active 1318 MPPs (Milk Pooling Points) under 13 MCCs

(Milk Chilling Centres) as on 31st March 2017. During the year, the Company has

procured 657.11 lakh kgs of raw milk with average collection of 1.80 lakh kgs per

day. At the end of the financial year 2016-17, Total of 40768 were approved

members which indicates high degree of loyalty and patronage toward the

functioning and principles of Baani as a Milk Producer Company.

The ethos of Transparency, Honesty and Timeliness of Company’s’ VMVs has built

confidence of the members in the working of the Company. Growth in membership

during the financial year 2016-17 was recorded at 30%.

Maximizing the productivity was of utmost importance, cost reduction measures

like reduce the logistics cost by instituting automated tracking system to optimizing

logistics efficiency, proper supervision, quality checks and logistic controls were

effectively instituted. Major technological initiative was deployment of GPRS based

DPUs at 660 MPPs for transmit of real time data to SAP ERP and thus replaced

traditional pen drives used for data transmission.

Transparency in Business Operation

Automation in terms of issue of receipt giving details of milk poured quantity, FAT &

SNF and transfer of members’ payment directly in their Bank Account.

Baani invested considerable resources into Information Technology for better

transparency and efficiency in all the processes. Baani achieved a major milestone

on 1st July 2016 when SAP ERP went go live. The highly successful

implementation provided Baani Milk with an integrated and sustainable platform to

move forward.

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MILE STONE: SAP GO LIVE ON 01 JULY 2016

Milk and Milk Products:

Baani as a “Brand” in Milk and its Milk Products has been accepted and picking up

its market against other major and local players like Verka, Amul, Super, Saras

etc. during the last one year of its launch in Patiala, Ludhiana, Bhatinda and other

adjoining towns.

In addition to existing 11 SKUs this year Baani has launched 6 more SKUs of

various products. These are 6 Litre PPM pack in FCM and Standard, 200ml DTM,

100gm Curd, Ghee 15 Kg tin and Spiced Lassi in pack of 200ml and 500ml.

Total sales during the year was 27.23 lakh litres of PPM, 1.31 lakh kgs Curd, 2.12

lakh litres Lassi and Ghee 39.61 metric ton. The Company foresees big potential in

marketing of Milk and Milk products, in near future in Punjab and adjoining states.

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End Implementing Agency (EIA): National Dairy Plan1

Baani is also the End Implementing Agency (EIA) for various projects implemented

by Government of India through National Dairy Development Board (NDDB) under

National Dairy Plan 1 (NDP 1). The objective of the Sub – Projects was:-

To help increase productivity of milch animals and thereby increase milk

production to meet the rapidly growing demand for milk.

To help provide rural milk producers with greater access to the organized

milk-processing sector.

These objectives would be pursued through adoption of focused scientific and

systematic processes in provision of technical inputs supported by appropriate

policy and regulatory measures for the following projects:-

A. Village Based Milk Procurement System (VBMPS)

B. Ration Balancing Programme (RBP)

Benefits accrued through SAP

Baani Milk has been formed with an objective of maximizing returns to its members

through professional management and by harnessing capital, markets and

technology thus ensuring business growth without undermining the basic

cooperative character of democratic governance and autonomy.

Milk Pooling Point (MPP) Automation

Milk is procured at the Milk Pooling Point (MPP) in two shifts, morning and evening

where-in members / farmers pour the milk at MPP. All the data is saved in Data

Process Unit (DPU) which automatically captures Milk quantity from Weighing Scale

and Quality parameters (FAT/SNF) from milk analyzer thus preventing any

manipulation with data.

The milk procurement data is then securely transmitted to a middleware application

from DPU. The milk collected from each MPP is sent to nearest MCC (Milk Chilling

Centre) for further consolidation with Raw Milk Reception at Dock (RMRD).

MCC Automation

Weigh balance and Milk Analyzer at MCCs are interfaced together for milk weighing

and testing of member’s milk collection data and actual milk quantity, FAT and SNF

are recorded in a middleware application.

Data Integration in SAP

All the data in from central middleware application is automatically transferred to

SAP database through PI.

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SAP system controls the master data and rate chart by sending it to middleware

application which signals each DPU at village level to pull updated data from

middleware application. DPUs at village level pull the updated information through

GPRS connectivity thus preventing manual intervention.

Payments and Recoveries

SAP system at Baani takes care of payments on Payment cycle to pay the milk bill

amount to members which are due for the payment. While making the payment,

system automatically calculates and adjusts recoveries, incentives and dividend for

Members.

Some of key features of payment module in SAP system:

Different rate masters are maintained based on the milk type (Buffalo, Cow

& Mixed Milk)

Rates are defined based on FAT & SNF Parameters in Rate chart

Rate Chart assigned to each MPP.

Incentives are paid automatically based on the qualitative / quantitative

parameters to Members

Shareholding data is maintained and additional share amount is

automatically calculated for the members as per the milk poured

Payment to the members are automatically transferred to their respective

bank accounts

DPU sends the data through GPRS connectivity. RMRD

Process Integration

Middleware Application

Data is sent over secure VPN

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Recoveries and incentive of a Sahayak is calculated automatically from the

system

Producer Institution Building (PIB)

PIB– System facilitates to enter

1. Online registration of applicants for the membership.

2. Convert application to members based on board approval

3. Share Management which includes - allocation of shares, cancellation and

transfer of shares etc.

4. Member analysis – commitment, deductions, pouring pattern, lean & flush

analysis etc.

Logistics: The inward and outward logistics in Baani is managed by inward and

outward transporters. SAP system facilitates to capture all tanker movements

between MCCs and plant tanker sale and purchase along with its rate fixing and

billing detail. Users and management can see material balancing and variation

reports on daily basis from the system. Milk material cost / expense on logistic /

transportations are booked on inventory so Baani is getting clear picture of cost on

raw milk and processing of same.

Freight Vendors Payment

SAP system calculates the freight payment as per the vehicle rate assignments.

And all the Penalties/Recoveries against the materials and advances recoveries are

also considered by the system

Sales & Distribution

Sales & Distribution of milk and milk products is done through a network of

distributors across Punjab. The system provides online facility of sales and

management of milk, cattle feed and milk products etc. Customer enquiries are

entered in the SAP system to generate the quotations of milk products and further

sales order, material requirement planning, crates and credit is managed from the

SAP system.

Asset Management

Company’s assets are managed through SAP system i.e. purchase, tracking,

maintenance and periodic verification of the assets etc. The process of asset

purchase, tracking, maintenance and verification is a system dependent process for

which stock details are maintained at MCC level.

Accounts & Finance

Finance & Accounts system in Baani prepares and manages the milk payments to

the member, Sahayak / LRP commissions, computation of annual price incentive

payments to the vendors and other financial transactions. The member wise

payment data is directly integrated with finance module in SAP system which is

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further processed to calculate all earning & deductions of members and sent to the

Bank in member’s account directly.

Quality

Milk quality data is recorded in the SAP system from the very first point of entering

milk at village level in the form of FAT, SNF , Quality and time , later when milk is

reached at MCC and plant various quality tests data , milk maintenance parameters

, monitoring process and analysis data is available in the system.

Productivity Enhancement Services (PES)

PES services such as feed service, cattle feed demand collection is recorded in the

system. The Animal Health module of Information Network for Animal Productivity

& Health (INAPH), designed by NDDB, captures the entire gamut of activities

related to health that is usually carried out on the animal. SAP system integrates

the service data and from INAPH and consolidates with ERP financial data to deliver

reports from one system.

HR

Human resource management would involve entire life cycle of an employee in the

organization starting with manpower planning, recruitment till full and final

settlement of employees.

Business Intelligence

Baani is using Business Objects and Business Intelligence tool of SAP system to do

daily analysis of milk procurement data, members’ performance, their EMI detail,

milk logistics, product sale & profitability to stay competitive in market.

Saarthi is a unique system

in the Dairy Industry,

specifically designed for

Producer Companies to

accommodate milk

procurement requirement,

and calculates member’s

payment in SAP system,

payments are automatically

transferred in member’s

bank account.

Using SAP solutions we are

able to achieve the

confidence in our producer

members who are also the shareholders of our company that they would come out

of their present situation to a better living condition.

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Maintaining the records of 45000 plus member farmers and building their livelihood

is a perfect example of farmer’s empowerment in India and SAP is helping us

record, analyses and monitors the day to day operations for the nationwide

achievement.

SAP had provided a solution for processing the milk bill to the farmers on time,

which was our biggest challenge in operations before SAP. The direct benefits are

to the members of the company as they are the shareholders and SAP is helping us

to provide 100% transparency in all the business related transactions. This will

eventually increase the patronage from the members which would position the

company as one among the leading dairies in Gujarat.

Award Category Selected: Public Sector, Award for Adopting Digital Initiatives in

Public Sector/Services

Revenue/Budget of the Organisation: Turnover of Rs. 258.26cr in 2016-17.

Targeting 350cr in 2017-18

Number of Employees: 200+

Project Related Information:

SAP Solution(s) implemented: ECC6

Number of SAP users: 35

Project Go-live date: 01-07-2016

Project overview

Baani was part of central SAP implementation project steered by NDDB Dairy

Services. Producer Companies followed the World Bank guidelines and selected

“Zensar Technologies” as an SAP ERP (Saarthi) implementation partner for all the

Producer Companies. Project was funded by World Bank under National Dairy Plan.

It was decided to implement ERP and BI solutions to have a seamless flow of

information between different departments and functions, better control of the

processes and for leveraging advances in IT systems for business gains for the

Baani.

It was expected that SAP ERP will enable Baani to manage their end to end

operations including Milk Procurement, Quality, Sales and Distribution,

Manufacturing, Procurement, Logistics and Supply chain, Finance, Asset and

Human Resource management. ERP application will allow the different units such as

milk pooling points, chilling centers and clusters centers to seamlessly share

information with each other and with the HO.

The ERP will also enable Producer/Member Institution Building and integrate with

existing applications such as Milk Procurement System. BI application will enable

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the senior management to generate customized reports and analyze the business

data for decision support.

ERP RFP was prepared & Bidding was conducted through the National Competitive

Bidding (NCB) procedures agreed with World Bank. Through bidding process &

detailed analysis it was decided to implement SAP system in all Producer

Companies.

Below was the Project Scope

1. Preparing Global Business Blueprint

2. Detailed hardware sizing and specifications for the proposed ERP and BI

3. Configuration & Customization of ERP & BI and development of Global ERP

Template

4. Customization of Global ERP Template for Producer Companies

5. Integration with existing and planned applications PCs

6. Application Testing and OEM Audit

7. Data digitization and migration for PCs

8. Roll out of the ERP and BI solutions at Cluster offices and Head Offices of PCs

9. Capacity building and change management

10.ERP application Maintenance

Over All Project Size

Total turnover of producer companies – more than 3000+ Crore

Total milk collection per day – more than 30 lakh milk collection per day

Total villages to connect to ERP – more than 10000

Total Farmers – more than 3.5 Lakhs

Total Chilling Plant – More than 750

Total staff – More than 2000

Total payment to farmers – more than 250+ crore per month

More than 300 SAP users

One of the main objectives of IT initiative was to implement ERP solution for all

Producer Companies, however keeping the cost very low and meeting requirement

of all present and future Producer Companies. This was achieved by making a

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Global Template by involving stakeholders across all Producer Companies, NDS,

Consultant, World Bank etc.

Earlier, Baani had distributed system with many legacy applications to work,

making reports and farmers payment was a big challenge. Management was

convinced to have single SAP system to fulfil all requirements under one umbrella.

SAP ERP System in Producer Companies is first its own kind of unique system in

Dairy Industry consolidates data from villages (1300 villages in Baani and 45000

farmers pouring milk daily morning & evening. Paying together more than 30 crore

payment in a month with many complex formulas and rules inbuilt), single system

takes care complete requirement of Finance & Costing, Human Resource

Management, Production Planning, Material Management, Sales & Distribution,

Project System, Plant Maintenance, Quality Management , Customized module like

– Milk Procurement System & Producer Institution Building , integration with legacy

software’s etc.

SAP system at Baani takes care of payments on Payment cycle to pay the milk bill

amount to members which are due for the payment. While making the payment,

system automatically calculates and adjusts recoveries, incentives, and dividend for

Members. Payments are deposited in farmer’s bank account to maintain

transparency and avoid any pilferage from commission agent. System allows to

pour milk only from registered members thus avoid any manipulation.

Baani successfully designed and implemented an end to end SAP Dairy Solution in

India and first ERP system approved by World Bank in India.

The project was successfully implemented in Baani on 1st July 2016 with in a very

strict time frame.

Project Highlight

Online Farmers Enrolment

Portfolio and Performance of each farmers

Milk Procurement by connecting all the farmers in SAP

Online Payment to all the farmers from System

Route and Vehicle Management

Material Balancing tool build in SAP

Transparency and Traceability

Sales and Distribution

Crate and Empties Management

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Saarthi became the first ERP

system approved by World Bank

in India and successfully

implemented in Baani and other

Producer Companies.

Key Project or technical

challenges before

implementing SAP solution

Baani MPCL wanted a single

platform for all business process

integration and to manage all

operations more efficiently. To

take effective business decisions

we also needed a centralized

online data which could be

accessed from any location. Milk Bill processing was a big challenge and used to

take 3-4 days to complete the payments one of the biggest concern is addressed

by SAP by reducing the time to one days overcoming the issues with the legacy

system.

Baani MPCL needed a system that would help to manage the entire member

management including their shareholdings and regular payments. Improving the

Sales and Distribution process and mainly making payment to the vendor/members

immediately on the due date. The business connects over 45000 farmers who are

the members of the company, spread across thousands of villages. The business

initiates better lively hood for the poor farmers so that they also grow along with

the organization.

Other technical challenges

Training to field staff

Integration with milk procurement data from villages

Single system to bring in milk procurement data to calculate farmers

payment

Making Global template for multiple stakeholders

Customize modules and integration with legacy applications

Master data – from top to bottom i.e. SAP to village level

Milk Material balancing at different level

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Calculating farmers/members payment with complex earning and deduction

for commission agents and logistic vendors

Creating PIB module and managing members shareholding & EMI deduction

detail

Key Organisational or Business or National challenges before

implementing SAP solution

This was a national project funded by World Bank so taking approval and following

World Bank guidelines was a big challenge. Producer Companies are a new concept

which has been experimented first time in India. Initially we didn’t find any suitable

product to fulfil Producer Companies requirement.

Other challenges:

Challenge in creating RFP

Challenge in finding out right product (ERP)

Connectivity in rural areas

Finding a dairy partner for SAP implementation

No bidding format initially with World Bank

Bid received almost double of budget kept for ERP implementation

Very strict time line

Managing PMO office for multiple stakeholders

Change management

Data upload from chilling centres - as end user do not understand the

importance of sending data to central server

Value Related Information:

List Short and long term impact / Benefit Achieved:

All the Business Process is on a single platform “ SAP “

Transparency across all the business process

3.5 Lacs Farmers target qualification and registration in the system, by

eliminating the paper work by 90%

Maintaining the portfolio and performance of all the farmers for Strategic

decision on to increase the cattle productivity.

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Connected all the broken business process and network into SAP and with

SAP Orchestration to collect 30 Lakhs Litres connecting 10,000 + Village

every single day

All the payment of the farmers are calculated and release by SAP, this is a

unique solutions built in SAP to have a better control on the heavy volume

error free payment, this is reduced the cycle from 5 days to 5 hrs.

Daily regulars updates are sent, digitally through SMS to all the Farmers on

their performance status

“Shares Management” of all the farmers are maintained in SAP, which has

reduced the errors in multiple folds and formed a strong bonding between

Dairy and Farmer

Better Inventory control on Gain & Loss for each and every movement of the

milk, which was not possible before SAP, it from 0% control to 100% control

Faster sales cycle to customer and Farmers , for Milk and Cattle feed by 20%

respectively

Automating the milk collection from the 45000 members from 1300 villages and

paying them accurately with 100% transparency.

Implementation Related Information:

As part of NDS initiative under NDP 1 (National Dairy Plan) to form Producer

Companies in five states i.e. Rajasthan, Gujarat, Andhra Pradesh, Utter Pradesh &

Punjab, NDS IT had a target to computerize all Producer Companies.

These Producer Companies are having together more than 10000+ villages, 700

chilling plants, 3.5 lakhs farmers, 2000 employees to connect. These companies are

large in milk procurement together more than 30 Lakhs litre per day and 300 to

1000 crores turnover, paying together more than Rs 250+ crore in a month to their

farmers.

Objective of IT initiatives in Producer Companies was to bring transparency,

fairness, avoid pilferage in farmers pouring milk to the company by IT intervention,

and give Producer Companies robust IT infrastructure to support their business to

remain competitive in market, enable them to become world class companies in

near future. It was envisaged that Producer Companies should have latest

technology in terms of all IT hardware & software to run their business

independently.

The global template was developed first at the NDDB-NDS and the further

implementation of the individual PC’s were like a roll-out. This has helped in

reducing the time actually taken for completing the implementation and Go-live.

It is the first time in India that a dairy solution is developed with complete data of

its member including the maintenance of the shares each member holds.

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Feedback Related Information:

“SAP provides authentic, central, reliable and timely information, which enabled

Top Management to take timely key business decision and to formulate future

strategic planning.” [Narinder Singh Bahga, CEO- Baani, 9872621263, 15th Feb,

2018]

“SAP facilitated transparency in our business process and helped Baani to be proud

being part of Digital Revolution of the country.” – [Kanwaljit Singh, CFO-Baani,

9592068090, 15th Feb, 2018]

“SAP Implementation in Baani was instrumental in removing several decentralized

and legacy applications.” – [Hitendra Sharma, Head-IT, 9781703322, 17th Feb,

2018]

Steps Ahead is Digitalize “Cow to Customer”

1. Equip all the farmers with smart phone App for all transaction.

2. Handle all the sales process through Cloud by C4C and Sahayak on Service 4

cloud

3. Cattle Management on SAP

4. Replace proprietary Data Processing Units with Smart devices.

5. SAP S/4 HANA implementation.

6. Bring total control on the business process in terms of Vendor/customer

accounts and masters to reduce costs.

7. Being always online such that the top management can view day to day

report for being agile to take decisions.

8. Getting transparency of data among different departments so that time and

money can be saved on available Inventory and procurement.

9. Getting in new technologies for monitoring and controlling to save time and

cost in business operation.

10.Implement the dash boards for the senior management for quick decision

making.

11.To bring down the per transaction cost.

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Enclosures/Attachments

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