Group 6

TI-TECH (A)

QUESTION 1

ORDER SELECTION

CRITERIA FOR SELECTION BY DEPARTMENTS

Job is challenging and fits Ti-Techs capabilities Job is long run and competitive and job scope is clear and company has prior experience with same Operations Overall contribution before sales, general and administrative expenses is 20% of product price

Marketing

Job must be similar to what Ti-Tech had done before The design is simple and the cost estimate reliable The job has good payment terms The market has future scope and adequate delivery time Price is not the primary factor in customers decision

PROCESS OF JOB SELECTION

(Marketing Dept) Get Ti-Tech on the bid-list of potential customersGet The Request for proposal (RFQ)

(Operations Dept) Used estimators to estimate the duration for completion and delivery date

(Marketing Dept) Modification of the quote to reflect market conditions

IMPLICATIONS BY THE METHOD FOLLOWED

No job diversification

Lead time increases by intra departmental

verification and estimation process

Quality

over

price

doesnt

satisfy

all

customers

Progress payments wanted to focus more on

labor costs to meet labor requirements

QUESTION 2

ORDER SELECTION RECOMMENDATIONS

New orders to be taken with the consideration that delivery schedules are not hampered

Profit expected per projected shop floor hours required should be maintained optimally

They should be on the lookout for new opportunities that are available .They should keep adapting and building new capabilities.

They should enter Market area which has potential for further development

Avoid excessive dependence on a single customer

The contracts with customers should not be fixed. During contracts with long duration ,the payment terms should be negotiable so that any change in labor or material costs can be accommodated.

The company should concentrate on profitable growth

QUESTION 3

ACCOUNT MANAGEMENT

Account Management Features at TiTech

Sales

managers handled both fabrication sales and metal sales Staff with close relationships with customers handled accounts personally Most of the management people handled 2-3 functions including sale Sales along with marketing made sure that TiTech is on the bid lists

CORRECTIVE ACTIONS

Customer Hendricks represented for 15-20% sales each year Two other companies accounted for 10-15% sales

As per organizational chart no Key Account Manager was allocated for these accounts. Marketing Dept. was handling these accounts. Hence the organization structure should change to incorporate key account managers

Project budget estimation for key accounts should be done with higher markup on labor

As these are time consuming projects, the uncertainty in the labor costs have direct impact on the bottom-line

Order processing in Marketing and Operation dept. not in sync

Operations wanted technically challenging work and marketing wanted job similar to what ti-tech had built before. Tie both the departments goal to lifetime value of customer. By accepting the order how the customer can be retained and increase subsequent business for the company

QUESTION 4

PRICING DECISIONS

PRICING TILL NOW

Cost + basis
Two

estimators calculate the cost of manufacturing

COG 80-85%
Contribution before S,G&A 20%

SUGGESTIONS FOR IMPROVEMENT

Shift to Value Based Pricing More aggressive for first-time customers / new market opportunities Robust system for Competitor Analysis Target Pricing for Standard (Proprietary) Line of Products

QUESTION 5

OVERALL STRATEGY

OVERALL STRATEGY
Explore newer industries and diversify portfolio(Max 20% and 30% from a player and a market respectively) Alleviate pressure due to erratic pricing and market conditions Ti-tech will be future proof and cant be held to ransom Focus on maintaining close relationships with clients Most key accounts were based on relationships with certain employees Required specifically for custom made jobs

Attain COGS average of 80% with upper limit of 85% without jeopardizing quality
Reduce expenditure in certain heads viz. manufacturing overheads et al Improve the Bid Success Rate from 15%

Pick and choose bids which are likely to be fruitful More Involved in proprietary contracts rather than custom made contracts
Synergies in manufacturing processes and cost allocations Ease of training and maintaining workforce Creating a sales force that can augment current business

STRATEGY BEHIND JOB SELECTION

Operations Marketing

Technically Challenging job In sync with Ti-techs high image quality Repetitive job and long run job Experience with similar products Progressive payment Overall contribution before sales, general & admin expenditure near 20% Specifications and job scope clear

Job similar to what Ti-tech had been doing Design Simple and cost estimate reliable Progressive payments etc. Market area has potential for further development Leeway on delivery time

Marketing and Operations are not kept in sync as a result inefficient order processing ensues

RECOMMENDATIONS
Pick up jobs which leverage Ti-techs technical expertise Have more synergies between the operating and the marketing teams for efficient working Dont put too much pressure on the operations team to trim down the costs Dont put too much emphasis on the bid success rate Continue with quality orientation rather than volume orientation