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8/10/2019 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


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-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


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


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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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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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


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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