www.tocpractice.com Fifth International TOCPA Conference 6-7 April, 2013, Pune, India Theory Of Constraints Practitioners Alliance TOCPA Godrej Security Solutions - Tripling profits in 2 years Presented By: Mr. Rahul Naik – Godrej Security Solutions Mr. Shailesh Ranjan – Vector Consulting Group
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www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Godrej Security Solutions
- Tripling profits in 2 years
Presented By: Mr. Rahul Naik – Godrej Security Solutions
Mr. Shailesh Ranjan – Vector Consulting Group
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
� TOC implementation in Retail business
� TOC implementation in New Product
Development
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
� TOC implementation in Retail business
� TOC implementation in New Product
Development
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Godrej Security Solutions
• Godrej Security Solutions (GSS) is part of Godrej & Boyce Group with an annual turnover
of Rs. 750 Cr. (approx $150mn)
• GSS operates in two market segments:
– Institutional:
• Supplying physical security products to Banks, Non-Financial Institutions,
Jewelers, Diamond Merchants, Post Offices, etc.
• Operating from one Plant and extended contract manufacturing facilities
• Market share of 62%
• Close to 600 dealers handling the front end
– Retail:
• Selling Home Safes to end consumers through distribution channel
• Operating with 1 imported vendor and 7 local vendors
• Market share close to 80%
• Working through 100 Distributors, 500 Dealers and 4000+ Retailers
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Institution - Product Portfolio
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Retail - Product Portfolio
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
• Key challenges faced prior to TOC implementation
• TOC solution deployed
• Results
� TOC implementation in Retail business
� TOC implementation in NPD
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Key Challenges - Market Perspective
• Significant damage due to delay in opening a new Bank branch
– Loss of revenue to the Bank
– Loses market share (doesn’t get the first mover advantage)
– Increases cost (incur additional rentals)
– Risk of losing license
• Customer’s expectation to open a branch was crashing from earlier 2-3 months
to 1 month (including PSU banks)
• Major skew in demand – around 70% of the demand comes in 2nd half of the
financial year
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Key Challenges - Internal Perspective
• To make a physical security product it requires around 50 number of components.
Some components are made in-house whereas the rest are sourced from more than
40 vendors. Due to multiple sources and each working to optimize its local
efficiency, there was significant de-synchronization at the Assembly
• Coupled with the fact Production preferred making standard products (to look good
on numbers). This led to highly varying production lead times and poor reliability
• Due to highly varying lead time, products were manufactured based on a forecast
(inspite of having a very good order book). Also the tendency to push FG stocks
down the supply chain created major mismatch in stocks. There were surplus &
shortages!
• During the 2nd half of the year when demand used to spurt, the plant used to get
fully loaded. At this time sales were chasing orders even at a discount to meet top
line targets
• As a result GSS market share was declining and growth in sales, profits &
profitability was near stagnant (inspite of market growth)
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
TOC Solution Deployed
• Decisive competitive edge that was built for the Institutional business
– High Reliability with lower lead times
• Build stage:
– S-DBR implemented at manufacturing plant & suppliers
– POOGI projects for capacity release & lead time reduction
• Capitalize stage:
– T/Cu and FOL based decisions to control discounting and improve Throughput
– “Happy Hours” offer to pull ahead demand for the lean season
– Reliability with lower lead time offer to select customers to increase market share
– Throughput based incentive scheme (as opposed to topline based) for Sales
• Sustain stage:
– Capacity management process to have capacities at the right time to handle peak load
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
TOC solution: S&T Tree
1Project Leap Ahead
2:1Reliability Comp. Edge
3:1 Achieve
99%
DDP
3:2 Selling
Reliability
3:3Expanding
client
base
3:4Load
Control
3:5Capacity
Mgmt
Build Capitalize
3:6Doors :
Dedicating
Capacity
for MTA
3:7Doors :
Capacity
Control
Sustain
Base Growth
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Institution – Solution Map
CTLLWarehou
se
Pres
s
Shop
Pickl
ing
Drill
Shop
Mother
Coil
Asse
mbly
Pain
t
Shop
FF
Insp &
Desp
Buffer – 12 to 18 Days Buffer – 6 Days
In-
Tran
sit
Branch
Billing
Dispatch Time – 4
to 15 Days
MTO - Customized
MTA - Standard
MTO - Customized
MTA - Standard
MTO – Both
(Standard &
Customized)
Ven
dorsVen
dors
Mix Environment of both MTA and MTO
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Reliability
• Before TOC: High lead times and highly varying
• After TOC: Lead time as well as variations have reduced dramatically
• Around 50% reduction in lead times; variations also reduced by 7 times