A Rs. 200-Cr Manufacturing & Distribution company in India 800 Domestic Direct Institutional Customers 40 International Customers 500 Domestic Distributors/Direct Dealers 20,000 Retailers 300 Towns in India 700 Manufactured SKUs 125 Sourced SKUs Customized Solutions 5 Mother warehouses 21 Branch warehouses 1 Bonded warehouse 5 Manufacturing Locations 1200+ Components 45 Domestic Suppliers 15 Job Worker Suppliers 10 International Suppliers in 5 countries 3 Tool Repair Suppliers

1. Significant Profit Increase during economic
slowdown through TOC Implementation
A Rs. 200-Cr Manufacturing & Distribution company in
India

2. A very complex operating environment
800 Domestic Direct Institutional Customers
40 International Customers
500 Domestic Distributors/Direct Dealers
20,000 Retailers
300 Towns in India
700 Manufactured SKUs 5 Mother warehouses
125 Sourced SKUs 21 Branch warehouses
Customized Solutions 1 Bonded warehouse
5 Manufacturing Locations
1200+ Components
45 Domestic Suppliers
15 Job Worker Suppliers
10 International Suppliers in 5 countries
3 Tool Repair Suppliers

3. Significant increase in PBT
PBT
Commitment
PBT
to Group
PBT
Apr Apr- 07-08 Apr-Jul
Q1 08-09
Apr- 09-10
H109-10
Apr-Oct Apr-Oct Target
07-08 08-09
May Aug Plan 09-10
Actual PBT : 101% of Plan
52% of PBT Target achieved till Oct 09

4. Cash flows - 100% higher than last year
Commitment
to Group
Apr Apr- Q1 Apr-Jul Apr- Apr- Apr-Oct Apr-Oct Target
May Aug Sep Plan 09-10
• Inventory has come down by 40%
• 1/3rd of FG warehouse space has been released

5. Win-Win Solution: Maximize the return
on inventory for our distributors
Distributor 3 months 6 months
Before
Inventory turns later later
1-4 50 14 0
4-9 49 58 29
9-12 10 15 36
12-24 2 4 50
24-48 0 0 13
48 & above 0 0 1
Average 4 9 13
Inventory turns of distributors increased by more than 3 times

6. Significantly improved sales due to 10-fold
reduction in non-availability
Sales
wk 1-4 wk 17-20 wk 41 - 45
4 Wks Average Sales

7. How did we achieve this?
A win-win can be We switched from a
created by providing a forecast driven mode of
"partnership" that operation to a
delivers superior consumption driven
inventory turns (better mode of operation
availability coupled with dramatically increasing
substantially reduced inventory turns while
inventories), when all increase sales (reducing
other parameters remain shortages while reducing
the same. inventories).

8. Spread of Deployment
% of retail sales covered : 85%
Warehouses covered : 21
Daily SKU Distributor entry: 6000
174 88
240+
121 69
175
8 5 We developed a home grown No. of Distributors
system for daily capture, supply No. of Focus City
113
and alignment of stocks No. of RPL SKU’s
PILOT 2 months 6 months
later later

9. Scope of IDEA
Coverage
N
W E
S
N - S = 2992 kms.
E - W = 2942 kms.
IDEA Distr.
Present
Not Present

10. Sales improvement aided by structured planning
& execution in the field
Defined field
working
improvement
initiative
“Manthan”
Daily distributor
wise secondary
sales reports Structured
weekly reviews
MovAvg BS Weeks MovAvg DS

11. Changing Mindsets : Breaking Myths
Old thinking New thinking
Pushing stocks to a distributor will make With optimum stocks & increased inv turns,
him run distributors will focus on increasing sales

12. Changing Mindsets : Breaking Myths
Old thinking New thinking
Pushing stocks to a distributor will make With optimum stocks & increased inv turns,
him run distributors will focus on increasing sales
We can do many projects simultaneously We take one project at a time, complete it and
then go to next

13. Changing Mindsets : Breaking Myths
Old thinking New thinking
Pushing stocks to a distributor will make With optimum stocks & increased inv turns,
him run distributors will focus on increasing sales
We can do many projects simultaneously We take one project at a time, complete it and
then go to next
Goal is to maximize sales value Maximizing Throughput is the goal

14. Changing Mindsets : Breaking Myths
Old thinking New thinking
Pushing stocks to a distributor will make With optimum stocks & increased inv turns,
him run distributors will focus on increasing sales
We can do many projects simultaneously We take one project at a time, complete it and
then go to next
Goal is to maximize sales value Maximizing Throughput is the goal
Sale can be increased by adding more and Sales can be increased by focusing on few
more SKUs SKUs which give highest T

15. Changing Mindsets : Breaking Myths
Old thinking New thinking
Pushing stocks to a distributor will make With optimum stocks & increased inv turns,
him run distributors will focus on increasing sales
We can do many projects simultaneously We take one project at a time, complete it and
then go to next
Goal is to maximize sales value Maximizing Throughput is the goal
Sale can be increased by adding more and Sales can be increased by focusing on few
more SKUs SKUs which give highest T
Sale can be increased by schemes only Sales can be increased by Local area
marketing

16. Alignment of Supply chain partners
7
Imported
traded
product Tool Repair Suppliers
6 suppliers prioritize their work
Local 31 based on time buffers
traded Component & component status in CFG
product suppliers
suppliers
IDEA All other partners supply
based on the penetration
18 2 of stock buffers in different
Job-
Raw warehouses
material
workers
suppliers
3
Tool repair
suppliers

17. Changing Mindset : Breaking Myths
Old thinking New thinking
Achieve monthly production value Produce to availability as per penetration of
Buffer in the warehouses

18. Changing Mindset : Breaking Myths
Old thinking New thinking
Achieve monthly production value Produce to availability as per penetration of
Buffer in the warehouses
Batches based on EOQ calculations Batch size is as low as possible

19. Changing Mindset : Breaking Myths
Old thinking New thinking
Achieve monthly production value Produce to availability as per penetration of
Buffer in the warehouses
Batches based on EOQ calculations Batch size is as low as possible
Multiple Priorities based on urgencies Single priority system based on buffer
communicated by different stakeholders penetration in the warehouses)

20. Changing Mindset : Breaking Myths
Old thinking New thinking
Achieve monthly production value Produce to availability as per penetration of
Buffer in the warehouses
Batches based on EOQ calculations Batch size is as low as possible
Multiple Priorities based on urgencies Single priority system based on buffer
communicated by different stakeholders penetration in the warehouses)
Delivery commitment is given w/o checking Delivery commitment is given based on
resource availability available protective capacity

21. Changing Mindset : Breaking Myths
Old thinking New thinking
Achieve monthly production value Produce to availability as per penetration of
Buffer in the warehouses
Batches based on EOQ calculations Batch size is as low as possible
Multiple Priorities based on urgencies Single priority system based on buffer
communicated by different stakeholders penetration in the warehouses)
Delivery commitment is given w/o checking Delivery commitment is given based on
resource availability available protective capacity
Suppliers supply material based on monthly Daily / weekly supply based on penetration of
schedule buffer in the warehouses

22. Changing Mindset : Breaking Myths
Old thinking New thinking
Achieve monthly production value Produce to availability as per penetration of
Buffer in the warehouses
Batches based on EOQ calculations Batch size is as low as possible
Multiple Priorities based on urgencies Single priority system based on buffer
communicated by different stakeholders penetration in the warehouses)
Delivery commitment is given w/o checking Delivery commitment is given based on
resource availability available protective capacity
Suppliers supply material based on monthly Daily / weekly supply based on penetration of
schedule buffer in the warehouses
To keep the resources occupied all the time Employ resources for improvement programs
for production & Training during lean demand periods

23. New Measurements
People Measurement
Management Committee Throughput, PBT and Cash Flow
Senior members of Sales
team (RMs & BHs) & Throughput
Marketing team
Senior members of
• Manufacturing, PPC
• Purchase Throughput Rupee Days (TRD) Loss
• Quality Assurance
• Design & Engineering
Sales team members Secondary sales value
“Rupee-Days” of outstanding value
Members of other functions No. of Reds & Blacks in various
warehouses