Over the last two decades with the falling trade barriers led to massive

shift of sourcing and manufacturing from high cost developed countries to

China and India. India & China alone have about 2.5 billion consumers – a
high potential market with growing amount of disposable income with
access to plentiful skilled labor, low cost energy, transportation and labor
cost. India become the natural choice for manufacturing hub.

To be successful in today’s competitive markets, business need

manufacturing process that care fast and adapt quickly to change.
Achieving this objective requires integrated solutions that connect supply
chain to factory processes, production equipment, and factory system in a
seamless, customer-centric network.

Over the past decade people have worked hard to reduce excess capacity
and inventory fat. These initiatives have led to improvements in
operational efficiency. They are important steps toward competitiveness.
To create a manufacturing process that is continuously adaptive,
companies must –

a) Intelligently leverage applications and technology to connect

plan –
execute – sense – respond – learn operation.

a) Seamlessly link factory process, production equipment and

factory
system to supply chain operations.
Manufacturing impacts profit margin by helping improve top line sales
as well as reducing bottom line costs. It impacts sales revenue via
enhanced throughput on the shop floor and faster time to market.
There are two types of asset. Fixed asset commonly refer to machinery
to equipment variable assets are raw-material, work-in-process (WIP)
finish goods (FM) & Stores. Any efficiency achievable in these
operations can have significant impact on company’s profitability.
In 1970s was the era of push manufacturing. At that time it was still a
sellers market and companies were focused on building capacity.

This push manufacturing decade was followed by team manufacturing.

Popularized by the Japanese as just in time (JIT) or pull manufacturing,
minimize all waste and produce quality product. Rework was considered
as a worst waste.

The last 1980s and early 1990s witnessed flexible

manufacturing practices. India was to respond to more
volatile market. In manufacturing various options are
available. One has to understand how manufacturing
evolved and then to make the different manufacturing
philosophies to manufacturing methods; namely -
(a) make to stock
(b) assemble to order
(c) make to order
(d) engineer to order
All these methods have value depending upon the needs of business
environment.
Basic requirements of the companies are -
(a) Greater Operational Efficiency
(b) Elimination of waste throughout the organization
(c) Continuous improvement to achieve following benefits:
• Reduce lead time
• Improve delivery performance
• Increase Sales Revenue
• Lower Operational Cost and profits
• Improve customer satisfaction and supplier relations
• Increase inventory turn and drastic reduction in inventory
• Better employee morale and increase employee retention
• Improved quality
• Reduction cost of goods sold, including scrap burden and labor
• Creation of additional working capital for new projects.
• Reduce physical space requirement
• Improve safety
There are many business drivers today that put added pressure on
manufacturers to do more business with less overhead and cost.

Today's increasingly competitive and challenging environment one

can adopt following "TURN AROUND STRATEGIES FOR
INDUSTRY". This will help us to meet increased global
competition more demanding customer, a tighter economy and rising
material cost.
Are Transforming Commitments Right for Your Company ?

Select
Company has a Focus on
Transforming
good alternative Core Business
Commitments

Company lacks a Build Milk core

good alternative Alternatives Business

Environmental change Environmental change

does not threaten core threatens core business
business
 Is your Company at Risk
a) Your company boasts superior performance
b) Your C.E.O. appears on major business magazines.
c) Management Guru pronounce your company as
outstanding
d) You build monument of your success
e) You name monument after your success
f) Your C.E.O. writes a book
g) Your top executive look alike
 The Seven Deadly sins of
Transforming Commitments
1) Delegate the Hard Work
2) Do not sweat the details
3) Repeat what worked last time
4) Half tackles
5) Keep past sell – by date
6) Fail to run the numbers
7) Ignore Core Values
 THE LEADERSHIP CYCLE
Vision
Learning Situation
Loop Analysis

REFLECT
Implement & Issues &

CONCLUDE
Experiment Alternatives

ACT
Strategic
PLAN Priorities

Define Measures and

Plan Rewards

Change Structure Key

Culture
Leadership and Process Changes

People
AND
IN
 VISION
• Vision without situation analysis and system development
ends up painting lovely pictures of future with no deep
understanding of the forces that must be mastered to move
from here to there.

• The individual vision revolves around the charisma of

leader. But when individual vision is translated into genuine
shared vision people excel and learn, not because they are
told to, but because they want to, this galvanises the
organisation.

• Shared vision involves the skills of unearthing shared

"pictures of the future" that foster genuine commitment and
enrollment rather than compliance.
 VISION
Building Shared Vision :

"Service"

"Instant Photography"

"Public transportation for the masses"

"Computing power for the masses"

All above organisations managed to bind people

together around a common identity and sense of
destiny.
 SITUATION ANALYSIS
• Market
• Technology
• Lean organisation

• Productivity
• Quality

• Learning organisation

• Innovation

• Human resource

• ROI
• The likely impact of take-overs on customers, suppliers and
competitors.
 KEY STRATEGIC ISSUES
TO IMPROVE OPERATIONAL PERFORMANCE

New Product To continuously upgrade, design &

develop New Products

Strategy Direct Material

Track Indirect Material

Manufacturing
Cost Power & Fuel

Employee Cost

Scrap (In value)

 KEY STRATEGIC ISSUES
TO IMPROVE OPERATIONAL PERFORMANCE

Inventory reduction in RM, WIP,

Stores on RM consumption
Line setup time reduction
Job Innovation Manpower reduction (Nos.)
Production Increase
(at constant value)

Strategy Education & Training

5 'S'

Quality Management System

Quality Bench Marking &
Improvement Continual Improvement
Customer Returns & C.S.I.
ALTERNATIVELY
ISSUES & ALTERNATIVES
Key Strategic issues
1. Marketing
2. Finance
3. People
4. Cost reduction
5. Process innovation
6. Quality improvement
Key Strategic issues
MARKETING
• Managing customers
• Managing competition
• Managing sales and service
• Managing marketing
Key Strategic issues
FINANCE
• Cost of finance (WACC)

• Working capital turnover ratio

• Recovery of doubtful debt

 FINANCIAL RATIO (BALANCE SHEET)
NET PROFIT AFTER INTEREST AND
EPS HIGHER SIDE IS BETTER
TAX/NUMBER OF SHARES ISSUED

NET PROFIT BEFORE INTEREST &

ROI (RETURN TAX BUT AFTER DEPRECIATION/
ON CAPITAL EMPLOYED FIXED ASSETS HIGHER SIDE IS BETTER
INVESTMENT) + CURRENT ASSETS – CURRENT
LIABILITIES

CURRENT CURRENT ASSETS / CURRENT

HIGHER SIDE IS BETTER
RATIO LIABILITIES

CURRENT ASSETS – INVESTORS /

LIQUID RATIO HIGHER SIDE IS BETTER
CURRENT LIABILITIES

DEBT / EQUITY LONG TERM DEBTS / EQUITY

HIGHER SIDE IS BETTER
RATIO CAPITAL + RESERVE

PROFIT AFTER TAX + INTEREST

DEBT COVER DEPRECIATION / INTEREST +
HIGHER SIDE IS BETTER
RATIO INSTALMENT OF TERM LOAN DUE
IN 1 YEAR
Key Strategic issues
PEOPLE
• Recruitment Process
• Employee Turnover
• Average Age
• Attitude or mind set
• Job Empowerment
• Skill (Education & Training)
• Job rotation
Key Strategic issues
COST REDUCTION
• Direct material
• Indirect material
• Power & Fuel
• Employee Cost
• Scrap / Rework
 Key Strategic issues
PROCESS INNOVATION

• Outsourcing
• Inventory reduction in RM, WIP, Stores, Finish Godown
• Line setup time reduction
• Natural grouping
• Productivity
• Production Increase (at constant value)
• 5 'S'
 Key Strategic issues
QUALITY IMPROVEMENT

• Continuous Improvement
• Bench Marking
• Single piece flow (SPF) system
• Cost of Quality
 PLAN
KEY CHANGES
HOW TO DO IT ?
 CHANGE
LEADERSHIP
CHANGE LEADERSHIP

Initiate actions in following areas :

• Structure and process

• People

• Culture / Values

• Measures and rewards

• Mobilising
1. Organisation and its people are brought to the point
where they accept the changes willingly.
2. People quickly respond to changing markets,
changing technologies, changing competitors and
demanding customers.
• Enabling (Empowerment)
Empowering people to do the new operational work and
to do whatever it takes to serve the customer's
needs.
• Placing
Right people at right place.
• Defining
• Ask the most frightening and fundamental
question to define the organisational goals. e.g.
not just the usual questions about how we can
do this operation better, but whether we
should be doing it at all. e.g. outsourcing.
• Define the standards and objectives from
customer's point of view.
• Define products and services from the point of
view of what the customer wants, not from the
point of view of what the company can do.
• Productivity
• Reduction in manpower.
• Increase in production.
• Plant layout change to minimise material handling.

• Outsourcing
• Non-productive activities e.g. distribution, cleaning,
gardening, security etc.
• Finish components.
• Tool Room activities.
• Semi-finishing machining operations.
• New Product Development
• Developing new products as per market demand.

• Bench Marking
• Setting world class standard in manufacturing.

• Continuous Improvement
• Adopting mistake proofing techniques.
• Improving machine conditions by Kaizen,
retrofitting, changing hydraulic circuits, converting
the machine in NC / CNC controlled.
• Increasing Ppk.
• Recruitment Process
• Campus interview from reputated
Institutions.
• Succession planning.
• Job Empowerment
• Delegation of authorities.
• Job rotation.
• Average Employee Age
FINANCE

• Minimise cost of finance

• Increasing Working Capital Turnover Ratio.

• Recovery of doubtful debt.

COST REDUCTION

• Motivate and actively involve all employees for

cost reduction.
 MARKETING
Managing Customers
• 90% of customer are reasonable; Only 10% require tactful
handling.
• Business exists only to create customers, more customers
and many, many more customers.
• Satisfied customer become your salesman forever.
• It costs many times as much to get a new customer as to
keep a customer you already have.
• No amount of advertising - leaflets, hoardings, newspaper
etc. - have the credibility which a satisfied customer has.
• There is no such thing as "soft sell" and "hard sell". There is
only "smart sell" and "stupid sell".
 MARKETING
Managing Competition
• If we cannot stand the competition, we should get out of
the business.
• Our policy should be not to compete in price with any
competitor. We manufacture quality product and sell them
and not the price.
• Competition is not an enemy, which has to be feared.
Meet it half way and accept the challenge.
• One way to beat the competition is to serve your
customer better.
• We have strength and we have weaknesses. But so have
our competitors. And, if we sell our strength against their
weakness, we will win.
 MARKETING
Managing Sales and Service
• The best way to increase the sale of a product is to improve the
service.
• If your costs are going up, try lowering your prices by selling
more.
• Out of the small orders of today grow the big orders of
tomorrow.
• Listening to a customer's complaint is 90% of the job, taking
necessary action is another 7% and 3% is following up with him
to ensure satisfaction.
• A business is like a game of tennis and the one who serves well,
seldom loses.
 MARKETING
Managing Marketing
• Business is like riding a bicycle - either you keep
moving or you fall down. The name of game is growth.
You are either growing or giving out of the business.

• There is new business out there, no matter how

depressed the market.

• Better cash management means better profits.

Employees with integrity are the ones who build a company’s
reputation

Without customers’ trust the rest doesn’t matter

We have got a business principle that says “our assets are our
people, our capital are our reputation.” And if any of these
are dismissed the last one the hardest one to regain.

When customers are loyal to our brand [have trust] they are
more apt to listen to your message, read information from
your organization more carefully and be more willing to
accept calls marketing new products and services.

Trust is a key building block in the creation of a company’s

reputation, and as a direct result, its shareholder value
The quality of a business's pool of
managerial talent is a critical driver of its
ongoing success.

In these challenging economic times,

companies need to have in place a strong
cadre of managers, and they need to make
tough decisions about performance.
 MANAGING THE TALENT
• Very few organizations have a rigorous and
consistent approach for managing managerial
talent.
• Most companies struggle, with even the
fundamental task of assessing the relative
performance of their people.
• They are worse at taking appropriate actions based
on such assessments.
• The shortcomings are particularly acute when it
comes to managing underperformers.
WORK LESS, EARN AND ENJOY MORE

Lazy Leave *****

Stars
alone
*****

Excellent
Hard Fire
staff
working Immediately
Officers

Stupid Intelligent
 WHO ARE C MANAGERS
• Managers who deliver acceptable results -
just barely.

• They scrape by , and perhaps even

progress incrementally, but they rarely
create anything bold or innovative.

• They don't inspire others.

Note that the 'C' refers not to the person, but to the
individual's performance in a given job.
WHO ARE NOT C MANAGERS
• Grossly incompetent

• Unethical managers

(Companies need to remove them

without hesitation)
 'A' PERFORMERS
Create significant value for their companies directly and
through their leadership of others. The objectives with
‘A’ performers are to accelerate their development and
do everything to retain them.

'B' PERFORMERS
The solidly contributing majority of a company's
managerial force. Collectively, they are critical to the
success of the business. They should be developed and
affirmed so they realize more of their potential and feel
valued for their unique contributions.
 EXPLICIT ACTION PLANS FOR
EACH C PERFORMER
One of three types of actions needs to be
taken
• Improve the C player's performance in the job
to atleast a B level.

• Move the C player to a job that better matches

his or her skills.

• Ask the C performer to leave the company.

 START AT THE TOP
• Upgrading the talent pool must start with commitment from
the top.

• The CEO and other senior managers can be directly involved

and can ensure the integrity of the process.

• Companies should not push the talent review process

beyond the top few hundred people until it's working very
well at that level.

• Decisively dealing with C performers isn't a onetime

housecleaning or downsizing. It's about constantly holding
the company's performance bar high and making sure that
the company's leaders live up to that standard. Nor is it about
being tough on people; it's about being relentlessly focused
on performance.
WHAT ABOUT 'A' & 'B' PERFORMERS
• Accelerate their professional development through a
steady stream of challenging job assignments.

• Encourage their involvement in tasks outside their

jobs so they are connected to a broader network and
build a stronger sense of belonging.

• Assign mentors to nurture their development and to

help retain them.

• Offer candid feedback about their weaknesses and

praise them for their distinctive strengths.

• Recognize and reward their contributions.

 CULTURE
"The rules of governance (and self-governance) for
effective business enterprise are determined by
their culture, not their organisational structure."

• Culture of obedience
• Culture of Authority
• Relentless pursuit
• Bottomless resources of imagination
• Smooth team work
• Individual autonomy
 CULTURE
Cultural improvement calls for -
• Quality of people's attachment to their work and to
each other.
• Willingness to --
• Perform up to the highest measure of
competence
• Always take initiatives and risks
• Adopt to change
• Make decisions
• Work cooperatively as a team.
 CULTURE
• Openness, especially with information,
knowledge, and problems.
• Trust, and be trust worthy
• Respect others (customers, suppliers and
colleagues) and oneself.
• Answer for our actions (accept
responsibility).
• Judge and be judged, reward and be
rewarded, on the basis of performance.
MEASURES AND REWARDS
• Measures :
• Identify the process results that we want to
measure. This will accurately predict our business
performance. Organisation must focus on these key
process results.
• Measure customer satisfaction - effectively keeping
managers in touch with market place.
• Performance measurement processes should be
designed on the assumption that people have the
potential to do the new work. These processes
should be supportive not punitive
MEASURES AND REWARDS

• Reward
• Promotion.
• More authority.
• Recognition.
• Training
DEFINE PLAN
IMPLEMENT
&
EXPERIMENT
THE ACTIONS
CONTINUE ON THE
"LEARNING LOOP"
TO SUMMARISE
FOLLOW
"FLAG SYSTEM"
 FLAG SYSTEM
Reduce Machining Time
100
50 60

0 40
100 80 60 40 20 0 1 2 3 4 5 6 20
Improve 0
machining 50 Machine Improve
Improve Simulta- cutting
methods 0 Operation neously technology

4
200 200 200
100 100 100
0 0 0

4
40
Improve 20
machinery 0
jigs and 100 Improve Improve Improve
tools 50 machinery jigs tools
0
100 100 100

4
50 50 50
0 0 0

4
Change
lot sizes 10
5
0
123456

Position
workers
10
optimally 5
0
123456
Reduce
interme-
diate stock105
0
123456
Whenever I interview a manager who
made transforming commitments –
successful or not – I always close with
the same question, “What would you
have done differently?” Almost all
reply the same: I would have started
earlier and moved faster than I did.