cutting costs & changing mindsets (3)

7/31/2019 Cutting Costs & Changing Mindsets (3)

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Cutting costs and changingmindsets

Case 8.1 Pg 129-131


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CUTTING COSTS & CHANGINGMINDSETS

Together we can was thenew maxim being heardacross RanbaxyLaboratories Limited,Indias largestpharmaceutical company.

The promise was mademore than a year backwhen project CRUSOE was

born. Project Crusoe standsfor Creatively Releasing,Unleashing SubstantialOperating Efficiencies.


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Why was it started?1. It was started as a cost

efficiency exercise. Butsoon positioned itself asa change enablingHuman resourceexercise in the company.

2. It was initiated forreal-business benefits.

3. It was started foridentifying those sectors

that needed a re-lookand enable a positivechange in these sectors.


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How was project Crusoeimplemented ?

1. It was implemented in nine phases.2. Each phase incorporating four projects over a period

of3 months.

3. The project will concentrate on various important

areas such as:

#raw material sourcing.

# marketing.

#distribution.#research and development.

# packaging.

#ads and promotions .


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How was project Crusoeimplemented ?

4. The director of the company was appointed as theteamleader for the project on a full time basis.

5. The project Crusoe consisted of many waves, eachconcentrating on different sectors.

6. Each wave comprised of20-25 executive members withthe youngest member aged 21 and the oldest aged 50.

7. Each Crusoe crusader was responsible for taking theownership of the project and its implementation.


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Works of the team

1. Challenge everything that

was accepted as norm.2. The members must

benchmark, question,examine(ponder), suggestand implement better

systems within limited time.3. The team members had

weekly reviews and debatesand constant brainstorminggenerating many new ideaswhich gave birth to conceptsthat could be practically

applied to business & notjust discussed and shelved.


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The Initial step1. Theoretical concepts and mental suggestions were

experimented with new technologies such as online

forward auction and reverse auction .

Forward auction:

The seller puts an item up for sale and Multiple buyers bid for the item,

and one or more of the highest bidders buys the goods at a price

determined at the conclusion of the bidding.

Reverse auction:

A buyer puts a contract out for bid and multiple sellers offer bids on

the item, competing to offer the lowest price that meets all of the

specifications of the bid.

RESULT:

It re-affirmed that e-business delivers cost reduction,

efficiency and also improves velocity of transactions,

delivering improved performance. It was proved that e

sourcing produced 7-8% savings in the cost incurred. Shortcut to3898283_f520(1).jpg.lnk


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The Initial step

2. The company also realizedthat cutting down cost

can be effected if there is

a cultural change within

the business. Project

Crusoe is infusing a better

culture cause when there

is no pain (no downsizing

of employeesinvolved),

everybody is enthusiasticto give their best for their

company.


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Functions of the waves The core focus of each wave was

to challenge the cost of businessoperation.

While some waves focused on

bringing about cultural change in

the way of doing business.

Some other waves moved a step

ahead and they brought a change

in the business models.

Four such waves identified 5

different areas of expenditure.

425 projects were identified

which were likely to generate a

savings up to 10%.


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Implementation1. The 1st step of

implementation started atemployee level, so as to

change their mindsets and

attitudes towards the various

changes brought in by the

projects results.

2. The initiative of this was

taken by Power & Fuel team

who created innovative

postersto communicate toevery Ranbaxian, the

benefits of saving power

and fuel, even in their

personal lives.


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Success of the project in the short

run

Short Run:The short run is a period oftime in which the quantity ofat least one input is fixed and

the quantities of the otherinputs can be varied. And alsothe variations in outputs arepossible only to a certain limit.

# The success of this project in

short run is very minimal.Though project Crusoe wouldnot be a complete failure ithas only negative successduring the short run.


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Success of the project in the shortrun

1. The team CRUSOE has identified 425 projects which are

likely to generate 10% savings. But it is not possible to

complete all these projects within a short span of time.

2. The cultural changes at the organisation could not be

put to practice in a very less time.

3. The change in the business models and strategies

cannot be effected in a short term period itself.

4. The Project Crusoe also experimented with new

technologies and obtained satisfying results out of it. Butthe level of technology is assumed to remain unchanged

in a short run.


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Success of the project in thelong run

Long Run:

The long run is a period oftime in which the quantitiesof all inputs can be varied.Hence in long run all thecost are variable and noneare fixed.

# The project Crusoe in a longterm would have achievedmost of the expected effect,hence it has more chancesof being a success in thelong run.


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Success of the project in thelong run

1. Any majorcultural changes to be effected in an organization can be

achieved only by a long term project.

2. Project Crusoe experimented with new technologies and obtained

satisfying results through it . Such technologiesalong with the

methods involved in it can be implemented only in a long term

project.3. A large expenditure for the assets, land and man power can be

provided only in the case of a long term project.

4. Initiating multiple projects in different stages and making them

successful is only possible during a long run.

5. The testing methods involved in proceeding with the project iscomparatively cheaper in a long run project than a short run

project.

In order to bring even a project of this level into existence it requires a

long running company which has already stabilized itself in the market.


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cutting costs & changing mindsets (3)

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