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Presentation with an overview of the challenges faced by a typical Indian organization having grown through monopolistic environment of post-independence era to the most recent customer-driven competitive setup. Followed by an in-depth analysis of the problems, root cause study & innovative solutions to tackle them in opportunistic ways.
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Apr 10, 2023Managing Organizational & Management Challenges in India
Managing Organizational & Management Challenges in India
Presented by:
Hardik Dave
Santosh Kumar Sahu
P E Kannan
TVS Motor Company Ltd.
AIMA – Robert Bosch 36th National Competition for Young Managers
1
Apr 10, 2023Managing Organizational & Management Challenges in India
The theme has been broadly explained and discussed through practical
studies conducted in automobile industry, two-wheeler in particular - as an
apt example of India growth story, and reflective of Indian customer
sentiment through the years, and hence can be appreciated better.
Theme of Presentation:
“In the business world the rear view mirror is always clearer than
the windshield.”
– Warren Buffet
2
Apr 10, 2023Managing Organizational & Management Challenges in India
Step 1 •Identifying bottlenecks and mapping related functions
Step 2 •Interaction with functional managers, zero down on major challenges
Step 3 •Cause & Effect analysis, historical study
Step 4 •Structuring Solutions to address challenges
Step 5 •Suggest solutions, get feedback from functions
Approach
Final Presentation
3
Apr 10, 2023Managing Organizational & Management Challenges in India
Maximize stakeholder value
Challenges faced by an organization
Ensure availability ofmaterial
Maximize Revenues/Market share
Competitors’ products
Understanding customer
After sales Service
Market Expansion
Quality of Material
Resource constraints
Time of order – Lean / JIT
Market based pricing
Rising input costs
Manufacturing costs
Protect & Improve Margin
Sales Network / Channels
Optimize Marketing expenses
4
Apr 10, 2023Managing Organizational & Management Challenges in India
Manufacturer dominated market
Customer - centric
Economic Liberalization – 1991-92
JVs with foreign companies
Technology transfer and in-house R&D
High Competition and variety – 2000s
Econ
omie
s of
Sca
le
Inno
vative
Des
ign
& S
tyle
Rise in Disposable income
5
Shift in Market Orientation
Apr 10, 2023Managing Organizational & Management Challenges in India
Customer
Behaviour Pattern of Indian Customer:
Markets – Product
Demand
Maximize Revenues/Market Share
6
Apr 10, 2023Managing Organizational & Management Challenges in India
Sales-split of two wheelers in three broad categories
7
UOM: %
Apr 10, 2023Managing Organizational & Management Challenges in India
Market forces (Threats): Porter’s model
Higher the Volume, Lower the costs
Product Differentiation / USP Create Entry Barriers / JVs
Adopt the substitutes, Diversify
First Mover, Acquisitions, Marketing Strategies
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Apr 10, 2023Managing Organizational & Management Challenges in India
Pri
ce
( Will
ingness
To P
ay)
Competitive Edge = Time Of Launch
PPM / Six Sigma (Perceived Customer Quality)
Hygiene Factor
Quality
Change in Business Orientation
9
“Meeting demand in time, at the least cost”
Apr 10, 2023Managing Organizational & Management Challenges in India
Change in Product pricing
“ Manage cost to maintain / improve margin ”
Traditional pricing
Cost
Margin
= Price
Price
Margin
= Cost
Competitive pricing
Apr 10, 2023Managing Organizational & Management Challenges in India
Percentage change in prices since 2005 (base year)
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Apr 10, 2023Managing Organizational & Management Challenges in India
Cost structure in automobile (2W) industry
12
Apr 10, 2023Managing Organizational & Management Challenges in India
+
+
LabourConsum
ablePower &
FuelDepn R & M Rejection
Interest OthersMaterial
Cost
Conversion
Packing Logistics ProfitTier 2
LabourConsum
ablePower &
FuelDepn R & M Rejection
Interest OthersMaterial
Cost
Conversion
Packing Logistics ProfitTier 1
Total Cost of the product
OEM Material CostManufacturing
costLogistics
CostOther variable
costFixed Cost
Profit
+
Anatomy of cost structure
13
How visible are these costs ???
Apr 10, 2023Managing Organizational & Management Challenges in India
Control total cost :
Design strategiesSourcing strategiesManufacturing strategiesSales & Marketing strategies
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Apr 10, 2023Managing Organizational & Management Challenges in India
Definition:
Design to cost is a concept that establishes cost elements as management goals to best balance between lifecycle cost and acceptable performance within a scheduled time frame (Ref: Cooper).
It is a process that constrains design options to a fixed cost limit.
The cost limit is usually what the buyer can pay or what the marketplace demands.
An affordable product is obtained by treating target cost as an independentdesign parameter that needs to be achieved during design and development.
Key to Product cost control: Design To Cost
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Apr 10, 2023Managing Organizational & Management Challenges in India
Design to cost
Design to cost plays a major role in setting product target cost
Traditional approach Target cost approach
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Product requirementProduct requirement
Product designProduct design
Get` quote from supplier & settle the price
Get` quote from supplier & settle the price
Make / Buy
Make / Buy
Start development with supplier
Start development with supplier
Process designProcess design
ProductionProduction
Periodic cost reductionPeriodic cost reduction
Product requirementProduct requirement
Arrive at Target contribution
Arrive at Target contribution
Balance target cost & requirement
Balance target cost & requirement
Explore product & process design alternatives &
design
Explore product & process design alternatives &
design
ProductionProduction
Periodic cost reductionPeriodic cost reduction
Make / buyMake / buy
Target costingTarget costing
Cost projections
Cost projections
DFMEA & VA / VE
DFMEA & VA / VE
Apr 10, 2023Managing Organizational & Management Challenges in India
Design Approach:
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Apr 10, 2023Managing Organizational & Management Challenges in India
Design strategies :
Design strategies
Commonize
Managing Wastes (COPQ)
Benchmarking
Value engineering
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Apr 10, 2023Managing Organizational & Management Challenges in India
Sourcing strategies :
Sourcing strategies
Localization
E – Bidding / Group buying
Global sourcing
Maximize fiscal
benefits
19
Apr 10, 2023Managing Organizational & Management Challenges in India 20
MBE (Management by Exception) applied based on Pareto principle in terms of costs booked under different cost centres
Apr 10, 2023Managing Organizational & Management Challenges in India
Seven-step Tool management system
21
Higher the Uptime Higher the volumes
Apr 10, 2023Managing Organizational & Management Challenges in India 22
Higher Volumes
Asset Base
Fixed Costs
Increase Asset Turnover
Maximize margin / unit
Optimum Asset Utilization
Apr 10, 2023Managing Organizational & Management Challenges in India 23
Cate
gory
Pen
etr
ati
on
Brand stature
Hig
h
Low
Low
High
Guerilla Tactics
- Price Penetration
- Sales Incentives
- Aspirational Features
(Wego)
Wild Cards
Check future scope
Dull Bright
(Liquidate) (Spend
more on Mktg.)
White Spaces
(Capitalize on market opportunities)
Focus on Market Expansion activities
Stars
Marketing based on rival moves
(Or maintain Status Quo)
Protostars
Brand vs. Penetration Matrix: Basis for determining Marketing activities
Apr 10, 2023Managing Organizational & Management Challenges in India
Model to estimate Sales & Marketing Spend
24
Apr 10, 2023Managing Organizational & Management Challenges in India 25
Areas Challenges Solutions
Sales & Distribution
• Servicing orders on time –
Logistics
• High variety
• High attrition of sales staff
• Improper financial decision
making, thereby inadequate
working capital
• High dependence on metros
• Scientific planning of logistics,
transport in SKD/CKD form
• Order clubbing – Milk Runs
• Role of OEM in recruitment,
compensation
• Financial planning support by
OEM
• Expansion in rural markets
(SKD/CKD)
After Sales service
• Retention of skilled manpower
• No intervention by OEM in
recruitment process
• Availability of proper gadgets &
tools
• Customer complaints
• New Technology for customers /
service personnel
• Basic HR policy can be mandated
& monitored by the OEM
• One-time subsidy for purchase of
proper gadgets & tools
• Easy access to company
technicians by dealer staff for
complexities
• Handy literature for reference
Sales & Service
Apr 10, 2023Managing Organizational & Management Challenges in India
Cost Efficiency
Maximize Stakeholder Value
Revenue Growth
Price Availability BrandServiceQuality
Operations Management
Processes
People Management
Asset Management & Optimization
Innovation Processes Work Culture
Organization Structure System & Process Flows
Financial
Customer
Internal Process
Learning & Growth
Market ExpansionFinance
Marketing
Operations / R&D
Strategy
(through all the functions)
Solu
tion Fe
edback
26
Apr 10, 2023Managing Organizational & Management Challenges in India
STANDARDISE THE PROCESS AND IMPLEMENTATION
STANDARDISE THE PROCESS AND IMPLEMENTATION
CORPORATE OBJECTIVES/ STRATEGIC GOALS
CORPORATE OBJECTIVES/ STRATEGIC GOALS
DEPARTMENTS/FUNCTIONS = DECISION UNITS
DEPARTMENTS/FUNCTIONS = DECISION UNITS
FUNCTIONAL
OBJECTIVES/
TARGETS
FUNCTIONAL
OBJECTIVES/
TARGETSBASED ON DECISION PACKAGEBASED ON DECISION PACKAGE
ACTIVITY-1ACTIVITY-1 ACTIVITY-2ACTIVITY-2 ACTIVITY-3ACTIVITY-3
ACTIVITY PLANNING/MAPPING OF
COST DRIVERS
ACTIVITY PLANNING/MAPPING OF
COST DRIVERS
EVOLUTION OF METHODS/COSTSEVOLUTION OF
METHODS/COSTS
BASIS OF RESOURCE
ALLOCATION
BASIS OF RESOURCE
ALLOCATIONCOST- BENEFIT ANALYSIS (PERFORMANCE MANAGEMENT)COST- BENEFIT ANALYSIS (PERFORMANCE MANAGEMENT)
MEETS FUNCTIONAL OBJECTIVES?
MEETS FUNCTIONAL OBJECTIVES? NO
YES
Bu
sin
ess P
rocess R
een
gin
eeri
ng
: A
Str
uctu
red
A
pp
roach
27
Apr 10, 2023Managing Organizational & Management Challenges in India 28
Features Traditional Mass Production New ways of Mass ProductionMarket dominance • Producer – governed • Driven by customer wants
Production • Low-cost, consistent quality,
standardised products
• Affordable, high-quality, customised
products to suit demand
Market trends • Homogeneous markets with low
product variety
• Stable demand
• Long product life cycles
• Heterogeneous markets and segments of
one brand
• Demand fragmentation
• Short product life cycles
Productivity and Innovation
• Operational efficiency premier –
Separate Innovation & Production
• Long runs - Standardisation
• High inventories: build to plan
• Insulated development / Vendor is
only a low-cost producer
• Total process efficiency premier -
Integration of innovation and production
• Lot sizes of one – Flexible production
• Lean / JIT: make to order
• Integrated Development / Vendor is a
design partner
Labour Relations • Lack of investment in worker skills
• Poor management /employee
relations
• High utilization of and investment in
worker skills
• Sense of community
Mass Production Challenges – Sum-up
Apr 10, 2023Managing Organizational & Management Challenges in India 29
Design to Cost
Innovation: Develop new product with customers and suppliers
simultaneously
Smaller Supplier Base, lower managing costs & better control
Global supply chain management with modern methods
Manufacturing strategy: Mass Customisation, Lean Manufacturing, Agile
Manufacturing
Use of E-Business tools for effectiveness of time, effort and costs
Performance Measurement and effective reporting structure – Reflective of
organisation objectives and goals
Empowered work teams with sufficient autonomy and responsibility
Concentrate on businesses or sectors which are relatively recession proof, and
have them as a part of product portfolio
In a nutshell:
Apr 10, 2023Managing Organizational & Management Challenges in India
Thank you
30
“Knowing is not enough, we must apply.
Willing is not enough, we must do.”
- Johann Wolfgang
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