Paradigm Shift
Phase 1

DNS CONSULTANTS
D S MANJUNATH
TOC, LEAN, SIX SIGMA
&
INNOVATION
Typical Challenges Faced by Water
Business
• It’s getting more difficult by the day isn’t it?
• We are struggling to meet ...
Typical Challenges Faced by Water
Business
• There is increasing pressure to reduce prices /reduce
costs and be more compe...
Philosophy
• "I smile and start to count on my fingers:
• One, People and Associates of Cauvery factory are
good
• Two, Ca...
Philosophy
• Biggest enemy of Cauvery factory are Policies
procedures and cost accounting.
• Cauvery factory to match the ...
Philosophy
• Cauvery factory to Focus on weak link/bottleneck But
in Practice Department focuses on Strong Link.
• Paramet...
Un-desirable effects (UDEs)
Gap Analysis(UDE)
• Low sugar cane productivity.
• The biggest culprits is High Production cost.
• Increasing raw material...
Gap Analysis(UDE)
• Price competition between Sugar ,Gur and Khandsari
• Local efficiencies are overpowering global
effici...
Gap Analysis(UDE)
• The poor synchronized effort of scheduling of signals
from market to individual farmer.
• Limited load...
Gap Analysis(UDE)
• the Low yield of sugarcane, short crushing season.
• Indian sugar mills do not have sugar plantations ...
THEORY OF CONSTRAINTS
Constraint 1
• To have market research to arrive at national demand
for sugar.
• This Constraint to be addressed by Commis...
Constraint 2
• To promote Global efficiency over Local efficiency.
• This Constraint to be addressed by Commissioner for
S...
Constraint 3
• The Govt Policies ,Procedures and cost accounting
• This Constraint to be addressed by Commissioner for
Sug...
Constraint 4
•

•
•
•
•

To have new national policy on sugar supply chain.
This Constraint to be addressed by Commissione...
Constraint 5
• To have new national policy for fixing sugar cane
price for farmers based on sugar price of market.
• This ...
Six Sigma Initiatives.
DNS CONSULTANTS
Capacity utilization
• The
capacity utilisation is around 50%.Huge
opportunity to improve capacity utilisation.
• The proj...
Recovery(Extraction rate)
• The extraction rate is around 10.But we can achieve
around 13.
• The project to be headed by O...
By- products
• The by-products are 1 power generation,2 Bio
fertilizer,3 Methane extraction,4 Carbon credits
under CMD.
• ...
Transportation of sugarcane
• The transportation cost component is high.
• The project to be headed by Operation Head.
• T...
Product mix
• The product mix
• The project to be headed by Marketing Head.
• The team to consist of operation head,qualit...
Lean concepts

LEAN CONCEPTS
Production cost
•
•
•
•

The production cost of sugar factory is very high.
The project to be headed by Operations head.
T...
INNOVATION
Sugar market mechanism
• This
innovation project to be addressed by
Commissioner for Sugar, Govt of Karnataka.
• Sugar is ...
Sugar levy practice.
• This
innovation project to be addressed by
Commissioner for Sugar, Govt of Karnataka.
• The Governm...
Flexibility
• This
innovation project to be addressed by
Commissioner for Sugar, Govt of Karnataka.
• Its not the best pra...
New tools
• This
innovation project to be addressed by
Commissioner for Sugar, Govt of Karnataka.
• Its not the best pract...
Conclusion.
• Sugar cane Supply chain of Govt Of Karnataka will
be on world map for establishing efficient supply
chain fo...
Value chain of sugar
• Productivity parameter
• For every 100kg of sugar 45 kgs of molasses is
produced.
• Each tonne of m...
Value chain of sugar
•
•
•
•
•
•

PDS
Sugar cane price(advance)
Sugar cane (later)
Processing cost
By products cost
Sugar ...
Facts
• he brand that was till now marketed as packaged drinking
water (cleaned through reverseosmosis) will now be availa...
Facts
• India is the world's number two Sugar cane grower
after Brazil and the sugar sector is the country's
second most i...
Facts
• Indian packaged water market is 10000 crores.
• The market has been growing for the last three years
at an unimagi...
Facts
• Strengthen presence in traditionally weak areas by setting up
12 new bottling facilities at acost of Rs. 150 crore...
Technological development
• The break away seal
• Keeping in mind the consumer's need to recognise a genuine
product that ...
Technological development
• Purification Process
• At BISLERI plants, water undergoes multi - stage purification
process t...
PROTECT YOUR HEALTH WITH BISLERI
WHICH USES6 STAGES OF PURIFICATIO
•
•
•
•
•
•
•
•
•
•

CHLORINATION
: Kills micro organis...
Bottled Water Analysis
Bottled Water Analysis
Strengths
• Core business of company.
• Availability of Bisleri in all over India with solid infrastructure
facility.
• Fo...
Weakness
• Lack of brand loyalty as MNC's are entering the market like
Nestle's Purelife, Pepsi'sAquafina.
• Lack of Globa...
Threats
• Numbers of players like Kinley and other local players are
present in the market havealready captured the market...
Opportunity
• Indian bottled water industry is still at growth stage.
• Influence of tourists and expatriates.
• Bisleri a...
PEST analysis
•
•
•
•
•
•
•

Political Analysis
Government failure to provide safe drinking water.
Laws encouraging ground...
PEST analysis
•
•
•
•
•
•

Social Environment
Scarcity of water.
Health conscious people.
Population growth rate
Technolog...
Facts
•
•
•
•
•

Brand
BISLERI-40%
KINLEY-28%
AQUAFINA-11%
OTHERS-21

Company
Italian -Parle
CoCo- Cola
Pepsi co
Plant capacity
•
•
•
•
•
•
•

Crushing capacity of sugar plant -5000 MTS per day.
Captive power generation Capacity of Dis...
Market Share
Water
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Water
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Water
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Water

  1. 1. Paradigm Shift Phase 1 DNS CONSULTANTS D S MANJUNATH
  2. 2. TOC, LEAN, SIX SIGMA & INNOVATION
  3. 3. Typical Challenges Faced by Water Business • It’s getting more difficult by the day isn’t it? • We are struggling to meet the needs of the buyers/customers and competition is closing in. • Our buyers/customers are always complaining and unhappy with due date performance/our collection of products. • We are constantly losing buyer/customers to competition and lost Business is high. • Vendors are complain of losing money heavily and are closing down their factories.
  4. 4. Typical Challenges Faced by Water Business • There is increasing pressure to reduce prices /reduce costs and be more competitive. • There is unprecedented pressure to increase sales realization. • There is a need to launch new products at a much faster rate. • Inventories are high and costs escalating • Managers genuinely try very hard to improve the performance of their areas of responsibility but… • Our Operations Are Very Complex?!!!
  5. 5. Philosophy • "I smile and start to count on my fingers: • One, People and Associates of Cauvery factory are good • Two, Cauvery factory is flooded with conflicts and every conflict can be removed • Three, every situation in Cauvery factory, no matter how complex it initially looks, is exceedingly simple • Four, every situation in Cauvery factory can be substantially improved; even the sky is not the limit • Five, every person in Cauvery factory can reach a full life • Six, there is always a win-win solution
  6. 6. Philosophy • Biggest enemy of Cauvery factory are Policies procedures and cost accounting. • Cauvery factory to match the skill set required to manage the organization efficiently with the skill set available in departments. • Cauvery factory to address the core issue of problem not symptoms • Cauvery factory not to whip the horse that is running as fast as it can • If there are 100 associates in supply chain ,only front end of business associates are all are making money-Curse of SCM of sugar cane growers.
  7. 7. Philosophy • Cauvery factory to Focus on weak link/bottleneck But in Practice Department focuses on Strong Link. • Parameters used to judge the performance of Department are THROUGHPUT,INVENTORY TURNS,OPERATING EXPENSES AND INVENTORY.
  8. 8. Un-desirable effects (UDEs)
  9. 9. Gap Analysis(UDE) • Low sugar cane productivity. • The biggest culprits is High Production cost. • Increasing raw material cost- raw material costs have gone up by around 20% . • Lack of Flexibility to produce ethanol from Bio fuel. • The production capacity is more than demand globally • The department Leaders are efficient in connecting with their bosses and fail to connect with performance parameters.
  10. 10. Gap Analysis(UDE) • Price competition between Sugar ,Gur and Khandsari • Local efficiencies are overpowering global efficiency-Department has a cultural collapse with everyone craving for improving efficiency of his department, but none to work whole heatedly for improving performance parameters(T,IT,OE and I) • Sugar factory is managing New pressures with old tools. • Finance cost of doing sugar business is very high. • We try to improve every where at once but fail to focus on constraint resource.
  11. 11. Gap Analysis(UDE) • The poor synchronized effort of scheduling of signals from market to individual farmer. • Limited loading capacity at ports for sugar exports. • The price of sugar in India is much higher than world market sugar. • Black marketing of sugar by wholesale dealers are rampant in India.
  12. 12. Gap Analysis(UDE) • the Low yield of sugarcane, short crushing season. • Indian sugar mills do not have sugar plantations of their own ( as in the case of west of west India’s) and hence do not have control over the quantity and quality of sugarcane. Supplied by the innumerable cane growers. • This whole scheme of sugar controls is not in the interest of the industry or the economy. • Technology used in manufacturing sugar is obsolete.
  13. 13. THEORY OF CONSTRAINTS
  14. 14. Constraint 1 • To have market research to arrive at national demand for sugar. • This Constraint to be addressed by Commissioner for Sugar, Govt of Karnataka. • The project to start immediately. • The duration of project Two years. • The focus on above constraint will make supply chain of sugar a gold mine .
  15. 15. Constraint 2 • To promote Global efficiency over Local efficiency. • This Constraint to be addressed by Commissioner for Sugar, Govt of Karnataka. • The project to start immediately • The duration of project Two years. • The focus on above constraint will improve the business parameters (T,IT,OE &I) drastically.
  16. 16. Constraint 3 • The Govt Policies ,Procedures and cost accounting • This Constraint to be addressed by Commissioner for Sugar, Govt of Karnataka. • The duration of Two years. • The focus on above constraint will promote harmony and flow of information and material across the supply chain will be efficient.
  17. 17. Constraint 4 • • • • • To have new national policy on sugar supply chain. This Constraint to be addressed by Commissioner for Sugar, Govt of Karnataka. The project to start immediately. The duration of project Two years. The focus on above constraint will make supply chain of sugar globally competitive.
  18. 18. Constraint 5 • To have new national policy for fixing sugar cane price for farmers based on sugar price of market. • This Constraint to be addressed by Commissioner for Sugar, Govt of Karnataka. • The project to start immediately. • The duration of project Two years. • The focus on above constraint will improve the earnings of sugar cane farmers. Which in turn improves sustainability of sugar cane industry.
  19. 19. Six Sigma Initiatives. DNS CONSULTANTS
  20. 20. Capacity utilization • The capacity utilisation is around 50%.Huge opportunity to improve capacity utilisation. • The project to be headed by Operation Head . • The team to consist of operation head, farmers representative • The duration of project 18 months • The improved capacity utilisation will yield higher production. The revenue from additional production will add directly to profit.
  21. 21. Recovery(Extraction rate) • The extraction rate is around 10.But we can achieve around 13. • The project to be headed by Operation Head. • The team to consist of operation head, farmers representative • The duration of project 18 months • The revenue from improved extraction rate will add to profit directly.
  22. 22. By- products • The by-products are 1 power generation,2 Bio fertilizer,3 Methane extraction,4 Carbon credits under CMD. • The project to be headed by Operation Head. • The team to consist of operation head, farmers representative • The duration of project 18 months • The revenue from by-product will add to profit.
  23. 23. Transportation of sugarcane • The transportation cost component is high. • The project to be headed by Operation Head. • The team to consist of operation head, farmers representative • The duration of project 18 months • The new methodology for sugarcane management by mill. Above method will bring down transportation cost.
  24. 24. Product mix • The product mix • The project to be headed by Marketing Head. • The team to consist of operation head,quality head,product development head • The duration of project 18 months • The paragidm shift can be seen in the profitability of My Sugar.
  25. 25. Lean concepts LEAN CONCEPTS
  26. 26. Production cost • • • • The production cost of sugar factory is very high. The project to be headed by Operations head. The duration of project 18 months. The lean concept will manufacture what is required for market by eliminating waste and synchronising manufacturing process.
  27. 27. INNOVATION
  28. 28. Sugar market mechanism • This innovation project to be addressed by Commissioner for Sugar, Govt of Karnataka. • Sugar is sold by sugar factories on the basis of release orders issued monthly by the Sugar Directorate, Government of India. Release mechanism should be discontinued in order to have better cash management and timely payment to the farmers. Price discovery should be done through a transparent Forwards and Futures market. • This will create strong foundation for another 10 years for growth of Sugar Industry in India.
  29. 29. Sugar levy practice. • This innovation project to be addressed by Commissioner for Sugar, Govt of Karnataka. • The Government declares a certain proportion of sugar production as Levy sugar (at present 10% of total production) to be sold under Public Distribution System at pre-determined prices (which is way below the cost of production of the mills). This causes a huge financial burden on the mills. • This will create strong foundation for another 10 years for growth of Sugar Industry in India
  30. 30. Flexibility • This innovation project to be addressed by Commissioner for Sugar, Govt of Karnataka. • Its not the best practice which is important but the next practice which is important. • The flexibility which is one of the hallmarks of the Brazilian sector is completely lacking in India and this may be one of the reasons why the country's sugar industry is in crisis • This will create strong foundation for another 10 years for growth of Sugar Industry in India.
  31. 31. New tools • This innovation project to be addressed by Commissioner for Sugar, Govt of Karnataka. • Its not the best practice which is important but the next practice which is important. • We need more technology and software to address the challenges. • This will create strong foundation for another 10 years for growth of My Sugar.
  32. 32. Conclusion. • Sugar cane Supply chain of Govt Of Karnataka will be on world map for establishing efficient supply chain for sugar . Mandya and Pandavapura sugar factory will double profit in two years.
  33. 33. Value chain of sugar • Productivity parameter • For every 100kg of sugar 45 kgs of molasses is produced. • Each tonne of molasses yields on an average of 250 litres of rectified spirit or alcohol or ethanol. • Packaging of sugar in Jute bags has been made compulsory to subsidize jute industry. Cost of jute bag is very high. • The availability of sugar cane across the year is a concern.
  34. 34. Value chain of sugar • • • • • • PDS Sugar cane price(advance) Sugar cane (later) Processing cost By products cost Sugar price Market 2400/ton Rs 37/Kg
  35. 35. Facts • he brand that was till now marketed as packaged drinking water (cleaned through reverseosmosis) will now be available in a natural avatar.Bisleri International will invest Rs lOO crore for the project which constitutes a Rs40- crore investment in two plants in Uttaranchal and HimachalPradesh in line expansion, Bisleri International chairman Ramesh Chauhan said. The plants willcome up next year. Chauhan said the rest of the investment of about Rs60 crore would go intoinfrastructure development. The investment would be funded through internal accruals
  36. 36. Facts • India is the world's number two Sugar cane grower after Brazil and the sugar sector is the country's second most important agro-processing industry after textiles. • Sugar industry is an agro based industry. • There are 211 Co-Operative Sugar Factories producing over 60% of the total output of sugar.
  37. 37. Facts • Indian packaged water market is 10000 crores. • The market has been growing for the last three years at an unimaginable rate of 80%. The market size of bottled water is expected to surpass the size of soft drinks market very soon in the near future • BISLERI-40%, KINLEY-28%, AQUAFINA-11%, OTHERS-21 • Under the new regulations 48 specifications are to be met for water to become mineral water and for packaged drinking water there are 43 specifications.
  38. 38. Facts • Strengthen presence in traditionally weak areas by setting up 12 new bottling facilities at acost of Rs. 150 crores.
  39. 39. Technological development • The break away seal • Keeping in mind the consumer's need to recognise a genuine product that cannot be tampered with,Bisleri developed the break away seal. The unique cap has been patented and cannot be duplicatedor tampered with. This technology development in the product ensures that the consumer will onlyget a highly safe product when they consume Bisleri packaged drinking water. • Product packaging • To ensure purity of the bottled water, the bottles that are used are blown and filled at the factoryitself, to avoid contamination.
  40. 40. Technological development • Purification Process • At BISLERI plants, water undergoes multi - stage purification process to ensure proper blend of minerals and complete removal of microorganisms and toxic substances. So a habit of drinkingPURE and SAFE BISLERI will ensure a healthy life
  41. 41. PROTECT YOUR HEALTH WITH BISLERI WHICH USES6 STAGES OF PURIFICATIO • • • • • • • • • • CHLORINATION : Kills micro organisms. Remove organic matter. ARKAL FILTER : Removes suspended matter and turbidity. REVERSE OSMOSIS : Removes organic material. Controls total dissolved solids in the water. MICRON FILTRATION : Additional safety measures of filtration. OZONATION : Ensures water remains bacteria free for longer shelf life
  42. 42. Bottled Water Analysis
  43. 43. Bottled Water Analysis
  44. 44. Strengths • Core business of company. • Availability of Bisleri in all over India with solid infrastructure facility. • Focus on customer orientation through low price strategy. • Product differentiation by introducing patented break way seal cap. • Best service and proper response to dealers and customers
  45. 45. Weakness • Lack of brand loyalty as MNC's are entering the market like Nestle's Purelife, Pepsi'sAquafina. • Lack of Global Awareness in brand. • Lack of proper advertising to create brand awareness. • Market coverage is not fully utilized. • Institutional sales are not penetrated properly. • Lack of technological up gradation.
  46. 46. Threats • Numbers of players like Kinley and other local players are present in the market havealready captured the market. • Tough competition from MNC's like Coke & Pepsi. • Fluctuation in sales due to seasonality. • Local manufacturers who refill used bottle Hampers the image of the industry. • Water filters and soft drink industry is a major threat to industry. • Coke and Pepsi are already having strong distribution network in bottle water industry withtheir own fleet of trucks & vans
  47. 47. Opportunity • Indian bottled water industry is still at growth stage. • Influence of tourists and expatriates. • Bisleri as a daughter company of Parle has a strong presence in India. • Unreliable municipal water quality. • People are becoming health conscious.
  48. 48. PEST analysis • • • • • • • Political Analysis Government failure to provide safe drinking water. Laws encouraging ground water exploration. Environmental regulations Economic Analysis Developing Economy. Better infrastructure:
  49. 49. PEST analysis • • • • • • Social Environment Scarcity of water. Health conscious people. Population growth rate Technological Environment Economies of scale.
  50. 50. Facts • • • • • Brand BISLERI-40% KINLEY-28% AQUAFINA-11% OTHERS-21 Company Italian -Parle CoCo- Cola Pepsi co
  51. 51. Plant capacity • • • • • • • Crushing capacity of sugar plant -5000 MTS per day. Captive power generation Capacity of Distillery -250000 KLPD. Capacity of Bio Gas per dayTechnology level- low To provide value addition to sugarcane growers. Provide latest sugar can farming to farmers.
  52. 52. Market Share

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