vector consulting toc
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WADIA INTERIOZ
V.I.P.
IIM Calcutta
Nand
Vasan
Vinod
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Case in Brief | Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
V.I.P.2
Losses for 3 consecutive years
PBT of RS.-1.3 crore in the latest year. Increase in absolute losses Y-o-Y
Freight and wages increasing at a rate greater than the revenue 6% in Freight and
Office Furniture Team unable to meet delivery dates 30% on-time project finish
Problem Stat
Strategic Loss Leader with minimum standardization
RFID implementation to organize packaging at implementation cost of Rs.2.5 Crore
Proposed Consult Solu
Low Entry Barriers Price Competitive Industry
Custom Built Vs Mass Production Make to Order, Customization expected
Constrained Vs Excess Capacity Steep timeline requires flexible capacityLarge Volumes as Biz Imperative Production efficiency is a winner amongst players
Customer Tolerance Level Last stage of infrastructure
Marketing Vs Operations High sales targets & customer dissatisfaction from ops ; low
Vendor Dependency 90 % outsourced
Lost Items 46 Lakhs worth material written off
Increasing Freight Experience Increase in 5.66% to 5.90% in-spite of achieving sales econo
Busines
sIssues
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V.I.P.3
Presence in Real Estate, FMCG, Industrial Engg., Appliances, Furniture, Security & Agri-cWadia Group
Case in Brief | Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
Wadia Interioz
Indias largest furniture brand
Home and Office Furniture and solutions for establishments
Office furniture Desk based, Portable and Tile based
90% out-sourced
20 days finished goods inventory and 6-7 WIP inventory
6520%
15%
Consumer Segm
222277
0
100
200
300
400
500
600
FY2015f FY2016f
Outlook- Office FuIndia
Furniture Rs.887.5
Bn
Market Size
25% CAGR85%
15% Structure
Unorganized
Organized
India Office Furniture Market
Good Supply chain management
Cost Minimization
Brand Management
Rs.
178
Bn
Market Size
CRITICAL FACTORS
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V.I.P.4
Projects Should be selected toMaximize Throughput
Lesser Bargaining Power Low
tolerance level
Capacity Utilization Vs Service time
trade off might not help win
contracts
LARGE PROJECTS
Loss of Company USP
Offer trimming may not
service the complete office
requirements of a firm
Reput Furnit
WADI
CUSTOMIZATION STRA
Recommen
dations
Custom Build Vs MassProduction
Do not go for Large
Volume Efficiencies
Increase 3
Lack of pro
efficiencie
Vendor de
service lev
Issues N
Analyzing Consulting Company 1
Case in Brief| Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
Only Undertake Strategic and Large
Projects
Trim Offerings Minimize customization
Offer standard packages
Be a strategic Loss Leader
Issues Addressed
DRAWBACKS
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V.I.P.5
Case in Brief| Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
Marketing Vs Ops Conflict is a major cause of customer
dissatisfaction (Eg) Material Traceability
90% still outsourced, achievable efficiency from RFID is
lower
CUSTOMER DISSATISFACTION
Cost of implementatioRs. 2.5 Crores
Best Case Saving Sce
reduction in write of
Rs. 46 Lakhs
At Zero Maintenance
recoup @ 10% retur
RFID
Recommen
dations
Item loss write offs Customer dissatisfaction from
delivery time due to lost items
Increasing Freight charges
Capa
addr
Vend
issue
Prod
Issue
Analyzing Consulting Company 2
Material Traceability is a
problem leading to customerdissatisfaction
Items should be RFID tagged
Bring down freight charges
Issues Addressed
DRAWBACKS
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V.I.P.6
Case in Brief| Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
CASE-1 Implemented TOC in 1994
60% decrease in inventory
Delivery time reduced from 6
months to 6 weeks
WIP down by 28%
JOFCO wood Furniture company
Achievements
CASE-2 Implemented TO
Lead times cut from
days
Due date performa
from 75% to 95%
TRIUMPH Business Systems
Achievement
Theory of Constraints (TOC) had created enormous benefits to the furniture industry
Theory of Constraints (TOC) has made significant improvements in Operations, Project Schedulinboosts sales and Marketing, Performance Evaluation.
To overcome the limitation of the recommendations 1 and 2, we will try and apply Theory of co
concepts to find an alternative solution addressing maximum possible dilemmas of Wadia Inter
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V.I.P.7
Case in Brief| Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
Target Segmentation and Sales Incentives
Traditional Segmentation
Segmentation with focus on maximum throughput & Target
Segments have a combination of size, customization and
throughput level
Large order with high customization growing market
(commercial SEZ, Industrial Parks)
Large order with low customization - very low market potential
Small order with high customization steady market -Corporate
office of mid-cap firms
Small order with low customization growing market (start ups)
Marketing Vs Opera
Incentivizing sales force to
both target markets Targets based on Th
Target value realizat
with the order delive
Incentivize sales forc
ensure on-time deliv
Designing Mafi
Objective to capture 70% o
Offers which the competito
based on the serving industryFMCG, IT, BFSI, Professional services
Segmentation based on the order size
Large ,Mid ,Small
Large orders at 10% discou
discount for each day dela
Small orders delivery with
Mafia Off
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V.I.P.8
Case in Brief| Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
Critical Chain Project Management (CCPM) Always schedule the order based on the due date (Late start scheduling)
Provide Feeding & project buffers along non critical process & critical chain respectively to ens
This ensures improvement in OTIF (On time in full) delivery & maximum capacity utilization
Drum Buffer Rope (DBR) Scheduling Methodology Identify the constraint in the Manufacturing Process (Lets assume as bending)
Exploit the Bending process as it forms the drum or pace of the system
Schedule should be optimum based on the drums efficiency.
Subordinate all other non constraint process & ensure sufficient resourcebuffer is always available for the bending process (drum)
To ensure proper inventory in the WIP system, a rope is tied & subsequent
orders are optimally planned.
This methodology streamlines the production & procurement process
Buffer Management / Heijunka
Each order WIP status with respect to project due date are identified throughred, yellow & green colors. ( Carried for each WBS to track its components)
This provides top mgmt to focus on the key orders. Six sigma should be carried
out to identify the reason for delay & should ensure process control.
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Case in Brief| Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
Dashboard for forecasting project completion date Processing dates for each module along with buffer should be
stored.
Dashboard should automatically predict the overall project co
customer requirements.
This reduces conflict between Marketing & Operations team
Process control audits can be carried to benchmark the timin
Vendor management Since 90% of the components are outsourced, CCPM will ensure on time delivery.
Vendor Audit should be carried regularly. More non critical process should be
outsourced.
Outsourced components which are considered critical should be manufactured in-house to ensure faster project completion
Avoiding Loss of Missing Parts FG should be shipped based on the WBS & field requirements.
Shipping should be made only when all components of a particular WBS are available.
This ensure zero missing parts.
Most process (like painting) should follow WBS schedulingV.I.P.9
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Case in Brief| Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
Reducing WIP Inventory Removing Non-value added buffers along non-critical path
Overtime work rejection for non-critical path activities.
Full kit planning Production plan must be scheduled only if we have all materials
for the following WBS. This ensures control over WIP & also on raw material
procurement.
Raw material Inventory management Following Class wise (ABC kind) inventory plan for Standard components.
Vendors should maintain safety stock.
Customized components should not be order in large quantity.
Planning should had even procurement buffers while scheduling & BOMshould be released based on WBS
Focusing on project efficiency than process efficiency Most departments focus on their process efficiency as their ou
tons of output/day & paint cost / ton. Because of this, Importa
delayed.
(eg. Paint shop prioritizes noncritical order over critical order)
Efficiency target should be for On time completion rather tha
V.I.P.10
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V.I.P.11
Case in Brief| Industry & the Firm | Solution 1 | Solution 2 | ToC in Furniture | Proposal
Issue Recommendation
Low Entry Barriers Mafia offers
Custom Built Vs Mass Production A mix of both, large and small orders respectively
Capacity Constraint Vs Excess Capacity Resource Buffer Management, CCPM
Large volumes as business Imperative Volume driven from small standard orders
Customer Tolerance Level On time in full (OTIF)
Marketing Vs Operations Conflict Sales incentive and Dash board Model for tracking
Dependence on Vendors Vendor Management, Audits, Moving critical proce
vice versa
Lost Items Heijunka & Shipping as per WBS
Mounting Air frieght/Courier expenses OTIF One freight per order
EXECUTIVE SUMMARY
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Thank You
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