Godrej Security Solutions Viable Vision Journey Continues even in … · 2018-04-14 · Godrej Security Solutions Viable Vision Journey Continues even in Slowdown June 11, 2014

1© 2014 TOCICO. All rights reserved.

TOCICO 2014 Conference

Godrej Security SolutionsViable Vision Journey Continues

even in Slowdown

June 11, 2014

Presenters:

Mr. Rahul NaikGodrej Security Solutions

Mr. Ramnish GaikwadVector Consulting Group



Agenda

CompanyBackground

TOC execution in Institutional Business

TOC execution in New Product Development

Overall Experience



Agenda

CompanyBackground



Overall Experience

• Godrej Group

• Godrej & Boyce

• Godrej Security Solutions



Godrej

• Ardeshir Godrej, our founder, was a lawyer who turned into an entrepreneur and started his business with locks

• He was an inventor and a visionary

• His inventions, manufactured by his brother Pirojsha Godrej, were the foundation of today’s Godrej, a household name in India

• One of India’s most trusted brand, Godrej enjoys the patronage and trust of millions of consumers worldwide

was born in 1897

Ardeshir Burjorji Sorabji Godrej (1868-1936)



Godrej

• Is today a 117 year old and the largest privately held company in India

• Spread over 3000 acres of land in Vikhroli, Mumbai alone

• Global operations in 16 countries & presence in over 60 countries

• Over 100 manufacturing locations in India and overseas

• Dedicated Godrej Parivar of over 23000 employees



Godrej

Godrej in everyHome & Workplace

VALUESVALUES

Integrity

Trust

To ServeRespect

Environment

VISIONVISION MISSIONMISSION

EnrichingQuality of LifeEveryday Everywhere



Godrej Group

Office & Consumer Products Group Office & Consumer Products Group

Godrej & Boyce Mfg. Co. Ltd.

AppliancesAppliances

Industrial Products Group Industrial Products Group

Corporate ServicesCorporate Services

Godrej Infotech Ltd.Godrej Infotech Ltd.

Lawkim Ltd.Lawkim Ltd.

Godrej Consumer Products Ltd.Godrej Consumer Products Ltd.

Godrej Industries & Associate Cos.

Godrej Industries Ltd.Godrej Industries Ltd.

Godrej Agrovet Ltd.Godrej Agrovet Ltd.

Godrej Sara Lee Ltd.Godrej Sara Lee Ltd.

Godrej Properties & Investments Ltd.Godrej Properties & Investments Ltd.

Godrej Group



Diversified Conglomerate

Nearly 40% of India's population use a Godrej producteveryday either in Homes, Offices or Infrastructure Projects



Godrej & Boyce Businesses

Office and Consumer

Products Group

Godrej & Boyce

OtherBusinesses

IndustrialProducts

Group



Godrej & Boyce Businesses

Office and ConsumerProducts Group



Godrej Security Solutions

Godrej Security Solutions is the pioneer & leader in this field in India

GSS operates in 2 distinct markets

Domestic Institutional Business International Business

With an annual turnover ofRs. 850 Cr. (approx $150mn)



Domestic Institutional Business

• Supplying Physical Securityproducts to Financial andNon-Financial Institutions, Jewelers,Diamond Merchants, Post Offices,etc.

• Operating from one Plant andextended contract manufacturingfacilities.

• Close to 700 dealers handling thefront end.

Dominant Market Share



International Business

Trusted across the globe

• Supplying physical security across various geographies

• Presence in 50+ Countries

• Products with Global Certifications



Product Portfolio

PHYSICALSECURITYPRODUCTS

A Class Apart



Agenda

CompanyBackground



Overall Experience

• Key challenges facedprior to TOC execution

• TOC solution deployed

• Results



Key Challenges:Domestic Institutional Market Scenario 2010

Demand > Supply

• Market demand was growing at20% YOY

• GSS was unable to supply as perdemand leading to emergenceof other competitors

• Market share had decreased from62% to 58% before TOC

• GSS was evaluating addinganother plant to overcome supplysituation before TOC

Physical Security Domestic Market (Rs. Cr)

0

500

1000

1500

2000

2500

3000

3500

1

2

~350

225

20082010

20%CAGR



Key Challenges:Domestic Institutional Market Perspective

•Expansion driven primarily by the Financial Inclusion programmeof the Government of India

•Customers’ Tolerance Time to open a Branch was crashingfrom earlier 2-3 months to 1 month (including Public Sector Banks)

• Significant damage due to delay in opening a new Bank Branch

• Loss of revenue to the Bank and Market Share - unable to get firstmover advantage

• Escalation in cost - incurring rentals without any revenue

• Risk of license lapsing



Key Challenges:Domestic Institutional Market Perspective (contd…)

•Major skew in demand – around 70% of the demand comes

in 2nd half of the financial year

•Discounting was encouraged (to meet top-line) even when Plant

was loaded in H2, increasing pressure on margins

Loss of market share and stagnant profitability even in a growing market



Key Challenges:International Business Market Perspective

0

20

40

60

2010-11 2011-122012-13

32 34 38

Export Billed Sales (Rs. Cr.)• Business in Export Markets doneprimarily through Dealers• Lead time expectation was of 8 weeks as

against actual lead times of 12 weeks• Business from Dealers was stagnant for the

last 3 years

• Supply unreliability caused heavydamage to Dealers• Dealers were carrying 4-5 months of stocks• Dealers not confident of increasing business

with GSS

Losing Dealers’ Trust



Key Challenges:Supply Chain Perspective

Primarily A-Type Plant

(assembly of around 50 components; 100+ Supply Partners)

• Major de-synchronisation issues

• Uneven load and loss of capacity during the month – productionlow at start and high at end of the month

• Preference to produce standard products (to show betterproductivity)



Key Challenges:Supply Chain Perspective (contd…)

Leading to…

• Unreliability and highly varying lead time (ranging from 4weeks to 12 weeks)

• Frequent expediting due to emergencies from customers

• Relying on forecast to meet demand (inspite of good orderbook position)

• Push to branches based on forecast resulting in mismatch ofstocks



Key Challenges:Supply Chain Perspective (contd…)

Skew in Demand in second half of financial yearcausing…

• Under-utilization during lean season

• Difficulty of Ramp-up in short time during peak season

• Disharmony with suppliers (hiring/firing during overload/underload respectively)

Inherent Systemic Conflicts Leading to Loss of Capacity



S&T Tree

1PROJECT LEAP AHEAD

2:1RELIABILITY COMP. EDGE

3:1ACHIEVE 99%

DDP

3:2SELLING

RELIABILITY

3:3EXPANDING

CLIENT BASE

3:4HAPPY HOURS

OFFER

3:5NON BANKING

SEGMENT ROLL-OUT

3:6LOAD

CONTROL

3:7CAPACITY

MGMT.

BUILD CAPITALIZE SUSTAIN

BASE GROWTH



Decisive Competitive Edgethat was built to provide

TOC Solution Deployed

High Reliabilitywith Lower Lead Times



Solution Framework

MTA(Standard)

Buffer6 Days

CTLL WarehouseMotherCoil

MTO(Customized)

Intransit

BranchBilling

Dispatch Time4 to 5 Days

MTA & MTO

Vendors Vendors

Press Shop Pickling Drill

Shop Assembly PaintShop

FF Insp & Desp

Buffer12 to 18 Days

MTA(Standard)

MTO(Customized)

Product Mix Environment of both MTA and MTO



TOC Solution Deployed (contd…)

Build Stage

• S-DBR implemented at manufacturing plant and suppliers

• POOGI projects for capacity release and lead time reduction

• Buffer Management for Sales to ensure last mile reliability as well

• Dynamic Choking on a daily level to limit WIP

• Managing Demand Skew during second half of financial year

Customer Confidence Restored



Dynamic Choking

Problem• Due Dates are fixed and hence the Release Dates too

• Orders are released to shop floor based on fixed

Release Dates

• Actual Capacity (due to product mix change, rework,

design issues, etc.) is much different than Assumed

Capacity

• Possibility of Interactive Constraints

• Leading to cycles of

• Underload – Loss of precious CCR Capacity

• Overload – Increase in Black Orders (OTIF Drops)

Flawed Assumption• Capacity can be precisely defined in

Planning• Capacity of resources other than CCR

is higher than the CCR irrespective of Product Mix



Dynamic Choking (Contd….)

Solution• WIP Control rather than precise definition of Capacity

• Due Dates are constant, however Release Dates

are adjusted based on WIP Status

• To deal with Interactive Constraints

• Rope is tied from end of plant rather than CCR

• Capacity is dedicated in both Planning & Execution

Constant WIP (Applicable to Broad Range of MTO/MTA & Mix Environments)

Safe Zone



Managing Demand Skew during second half of financial year : Build-up Planning

Decoupling Supply Chain From Spikes

Supply Chain Injection• Determine key SKUs for stocking (only fast runners

to reduce stock risk)• Planning stock levels based on gap between

demand and capacity during Q3 & Q4• Manufacturing the same during lean season of Q2• Building up key components also during the lean

season

Benefits• Smooth and consistent manufacturing• No major variation of demand for component supply• Reduced risk of hiring/firing• No loss of sale during peak season

Capacity > Average Demand

Capacity < Average Demand

Capacity Line

Average Demand in Lean Season

Average Demand increased in Peak Season




Capitalise Stage

• Reliability with lower lead time offer to select customers to increase

share of wallet

• T/Cu and FOL based decisions for discount control and Project Pricing

• Happy Hours offer in the lean season to pull ahead demand

• New Segment (Non-Banking) Roll-out to increase sales during lean period

Gaining Ground



Why Non-Banking Segment?

• Heavy dependence (92% of business) on Banking and FinancialServices Institutions (BFSI)

• Intense competition (margin pressures) in the BFSI segment

• Business from BFSI primarily (70%) during latter half of thefinancial year

• Excess capacity available post TOC Operations Solution

• Due to demand skew the dealer earnings are restricted to fewmonths whereas the costs are incurred throughout the year

Non Banking Segment Roll-out



Non Banking Segment Roll-out (contd…)

Injection – Increase sales from Non-Banking Segment• Guarantee for Availability (GFA) offer to existing dealers

• No inventory to be carried by Dealer and delivery within 10 days

• Hold stocks of key SKUs at a central location

• Daily tracking and POOGI to improve Sales Call to OrderConversion rate

• Approach 1 segment at a time (too many segments like petrolpumps, places of worship, hospitals, traders, etc. available)



Physical Security – Institutions Non-Banking Segment (NBS) Target Segments

FOCUS PLAY OPPORTUNISTIC PLAY

Jewelers

PetrolPumps

ReligiousPlaces

PrivateVaults

InformationTechnology

Corporate Hospitals

Cash in transitcompanies

GovernmentEstablishments



Non Banking Segment Roll-out (contd…)

Benefits

• High ROI to Dealer as the sales required per month to overcomecosts is very low with no additional investment in inventory

• De-risk by reducing dependence on BFSI segment; no skew indemand in these new segments

• Solution applicable to broad range of B2B companies toincrease sales in new segments

Fuelling the Growth



Sustain Stage• Capacity Management Process to have capacities at the righttime to handle peak-load

• Leveraging TOC solutions to counter unprecedented slowdownseen in 2013-14


Maintain Growth Trajectory



Slowdown Year: 2013-14TOC Driven Business Strategy

Problem

Advantage Capitalised

Solution• Drove Product Upgradation

• Incentivised Banks to upgrade by facilitating with Replacement Offer

• 15% addition to top-line with a healthy bottom-line impact

• Supply Chain POOGI Projects generated ~ 7x capacity increase

• Focus on Retail Segment• Faster introduction of new products resulted in 35% boost to sales over last year

• Thrust on International Business• Take advantage of depreciating rupee

• Increased Sales by 31% over last year on account of reduced lead times and better reliability

Segment Growth Period (last 3 years) Slowdown Year (2013-14)

Bank Branch Openings ~ 7500 ~ 2500

Financial Service Institution Openings ~ 3500 < 500



PRODUCT MIX ENVIRONMENT OF MTA & MTO

Before TOC: High lead times and high variationAfter TOC: Lead time as well as variations have

reduced dramatically

Reliability – Order to Billing Lead Time

0

100

200

300

400

5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 96% 97% 98% 99% 100%

80% of orders completed in 80 days

80% of orders completed in 80 daysPre TOC

% of Orders completed in no. of days

0

100

200

300

400

5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 96% 97% 98% 99% 100%

Post TOC% of Orders completed in no. of days





Daily Production – Rs. Cr. Per Day

Output of the Plant has Tripled with only 15% increase in Manpower (Focused on Bottleneck Stations)

Actual Output

Released Capacity of4 Cr. Per Day

Live Since18th Oct, 2010



WIP Inventory – In Days of Sales

WIP has reduced by more than 60%

Post TOC



Annual Turnover (Rs. Cr.)

Turnover has more than doubled

0

100

200

300

400

500

600

700

2010-11 2011-12 2012-13 2013-14

292

443

578637

Live Since18th Oct, 2010



FG Inventory – In Days of Sales

FG has also reduced by 60%

Post TOC



Internal Lead Times

Significant Reduction in Internal Lead Times

Line CategoryEx‐ Factory Quoted Lead

Time (Weeks)2010

Ex‐ Factory Quoted Lead Time (Weeks)

2014

DOORSMTA 4 ‐ 5 ExstockMTO 6 ‐ 8 3 ‐ 4

RPEMTA 5 ‐ 6 ExstockMTO 4 – 5 2‐3

SDLCMTA 9 ‐ 10 ExstockMTO 12 ‐ 14 2‐3

SAFESMTA 5 ‐ 6 ExstockMTO 6 ‐ 8 2‐3



CompanyBackground



Overall Experience

Agenda

• Key challenges facedprior to TOC execution

• TOC solution deployed

• Results



Key Challenges

•Poor Rate of New ProductDevelopment

•High Lead Time of NewProduct Development

•Frequent Priority Changesat Design Department

Limited Growth of New Products



S&T Tree

1PROJECT LEAP AHEAD

2:3NPD COMPETITIVE EDGE

3:11EXPLOITING THENPD CAPACITY

3:12LOAD

CONTROL

3:13CAPACITYELEVATION

BUILD SUSTAIN

ENHANCED GROWTH



Decisive Competitive Edgefor New Product Development to


Churn out moreNew Products ata Rapid Pace



TOC Solution Deployed (contd…)

Build Stage

• Reduce bad multi-tasking:WIP control at Design and Proto-shop

• Full Kit Rule at Design and Proto-shop

• Daily Task Management to ensure Flow

Rising up to the Challenge



Solution Framework

WIP Control

Active Task Management

Prioritization

Full Kit

Design Team and Proto-shop is now operating under CCPM

• Deployed only WIP control coupled with Full Kit

• No software is being used currently for implementation

Robust Process



Output of PSP Institution group has more than tripled

PSP Institution Group Output –Projects Completed Per Month

TOCGo Live

Fewer Projectsin Queue




Output of Protoshop has also almost tripled

Protoshop Output –Projects Completed Per Month

TOCGo Live





CompanyBackground



Overall Experience

Agenda



Profits and Profitability (*Indexed)

During FY11 to FY14, Post TOC not only have Profits quadrupled but Profitability has also more than doubled

Stagnant Profits

Profitability *100

CAGR of 40% in ProfitsPre TOC

Profitability *128

• During FY04 to FY07, both Profits and Profitability were stagnant

• During FY07 to FY11, though Profits grew @ 40%, Profitability was still stagnant

CAGR of 55% in Profits Post TOC

Profitability Post TOC *275

Figs. In Rs. Cr.



Our Experience of TOC Journey…

Synchronised Management

• The entire supply chain i.e. right from Suppliers to Customers is now working on only 1principle i.e. TOC

• Harmony among various departments such as Manufacturing, Purchase and Sub-Contracting Cell

• No preferential treatment to any particular customer

• Output of various product lines is consistent without intervention of TopManagement

• Bandwidth release of Top Management - now able to focus on important initiatives

• Applying TOC principles to limit the number of initiatives/improvement projects at overallcompany level



Our Experience of TOC Journey… (contd…)

Enhanced Overall Efficiency & Effectiveness

• Better overall efficiency at vendors’ plant led to no cost escalations in the last 3 years

• Some of the local measurements actually improved:

• Working Capital Turns has improved by 50%

• Bottleneck Machine efficiencies (CCR) in the high 90s

• Value Added has increased by 60%

• Manpower productivity of the plant has also doubled

• ~ Doubled ROI over the past 3 years

• Space release on shop floor due to WIP reduction, thereby improving house-keeping and safety of workers

• Different Planning Cycles (tools) for material sourcing have been eliminated



Contribution to the TOC Community…

• Shared our experience at TOCICO Conference 2013 in Bad Nauheim,Germany and TOCPA Conference 2013 in Pune, India

• Results of GSS presented to Confederation of Indian Industries & visitsorganized for other companies (thereby influencing them to opt for TOC solutions)

• Based on the GSS experience, 5 other divisions in G&B have opted for TOC

• The new ERP system for G&B shall incorporate TOC principles

• Successful implementations at Vendors have led to them implementing TOC forother customers of theirs



Recognition…

Winning Laurels, but not resting on them…

• GSS & Vector Consulting Group awarded theprestigious AMCF Spotlight Award 2014 forExcellence in Supply Chain Management

• The other shortlisted finalists were EY withBloomberg and KPMG with Ford Motor Co.

• The award is given to a project that has demonstratedhow a consulting firm has added value to their clientand society at large



Thank You

Documents

Godrej Security Solutions Viable Vision Journey Continues even in … · 2018-04-14 · Godrej Security Solutions Viable Vision Journey Continues even in Slowdown June 11, 2014