equipment manufacturing industry case study

Equipment ManufacturingUnresolved Conflicts

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A typical company in the equipment manufacturing industry deals with following chronic conflicts

but very long lead time to deliver other equipment

High FG inventory of equipment which are not

immediately wanted

despite having a separate team for supply chain management

Most of the sales capacity in branches is used up in

material follow up


despite having high non-moving inventory of spare parts

Frequent complains for delayed services


High parts inventory but the assembly never has all the parts required on the daily basis.

?


Some organizations in equipment manufacturing space have been able to create a harmonious supply chain with near perfect parts availability at reduced inventory , while releasing capacity of sales for customer acquisition.

Case Studies1. KOEL

2. Godrej Securities

3. Godrej MHE


Kirloskar Oil Engines Ltd. (KOEL)KOEL is the flagship company of the Kirloskar Group.

Have four state of art manufacturing units in India that offer world class service.

KOEL is an acknowledged leader in the manufacturing of diesel engines, agricultural pumpsets and generating sets.


ResultsKirloskar Oil Engines Ltd.

Indicators Before (March 2013) After (March 2014) Remark

Debtors (Receivables) ~ USD 12 Million ~ USD 4 Million Reduced by 67%

Inventories ~ USD 14.6 Million ~ USD 12.5 Million Reduced by 15%

Credit Days (G-OEMs) 21 Days 7 Days Reduced by 67%

Cash to Cash Cycle [Payables - (Inventory + Receivables)]

Cash Negative Cash Positive Cash Rich

Availability of engines at G-OEMs ~ 78% on Daily Basis ~ 99% on Daily Basis

Order to Dispatch (Ex-works) 35 - 45 Days ~ 7 Days Reduced by 80%


Godrej Security SolutionsGodrej Security Solutions is a company in India that provides mechanical & electronic security systems for banks, offices, homes; CCTV cameras & more.

Offers diverse security product solutions including technologically advanced sphere like cameras, substance detectors, X-ray baggage, scanners, biometrics & access control systems , burglary & fire resistant safes, road blockers, marine solutions etc.

The plant in Mumbai is rated as one of the finest and largest factories in India.


ResultsGodrej Security SolutionsThe first

2 years, the profits increased by

and has quadrupled

in the 3rd year

3 times

The sales has also doubled in

3 years

The profitability

has increased significantly, while

ROCE has

tripled


Results (Institution Business)Godrej Security Solutions

Output in the plant almost

tripled, and this has been achieved with

significant reduction in overtime and with the

least addition of manpower

Lead time to customers

reduced by 50%, while variability in lead time reduced

seven times

On time performance

improved to more than 90%, while the production lead time

reduced by over

50%Work

-in-progress inventory reduced by more than 50% and finished goods

stock reduced by 50%

Rate of new product introduction increased by

200%


Results (Retail Business)Godrej Security Solutions

Number of distributors

have almost tripled, along with doubling

of range at the distributor

Availability of all items is in the

range of

90%Number

of retailers increased four

times, along with doubling of range at the

retailer


Results (Overall Business)Godrej Security Solutions

Profitability has almost

tripled


Godrej Material Handling EquipmentEstablished in 1963 and part of Godrej & Boyce Group, GODREJ-Material Handling Equipment, is India’s largest lift truck Manufacturer.

The Forklift range of the company includes electric, LPG and diesel counterbalanced forklifts up to 25 ton capacity, warehouse trucks and special trucks for specific applications


ResultsGodrej Material Handling Equipment

Area Parameter Improvement

Operations

On-Time Performance Now 85%

WIP in Days Reduced by 33%

Output (Export Line) Increased by 54%

Output (Domestic Line) Increased by 24%

Manpower Productivity (Mandays per Truck) Increased by 10%

FG (count) Reduced by 75%

PurchaseRM Availability Now 97%

RM Inventory (Rs. Cr.) Reduced by 17%

RM Inventory (in Days) Reduced by 44%