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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

Transcript of Godrej Security Solutionstocpractice.com/wp-content/uploads/sites/default/... · • Godrej...

Page 1: Godrej Security Solutionstocpractice.com/wp-content/uploads/sites/default/... · • Godrej Security Solutions (GSS) is part of Godrej & Boyce Group with an annual turnover of Rs.

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

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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

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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

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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

• 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

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Institution - Product Portfolio

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Retail - Product Portfolio

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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

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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

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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)

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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

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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

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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

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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

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%

0

50

100

150

200

250

300

350

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

Pre-TOC

% of Orders completed in no. of days

Post-TOC

% of Orders completed in no. of days

80% of Orders

completing in 80 days

80% of Orders

completing in 40 days

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Daily Production (Rs. Cr. Per Day)

Output of the Plant has more than doubled.

Readiness of the Plant is upto the level of Rs. 3.3 Cr. Per Day

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Sales (Rs. Cr. Per Month)

Sales per month has more than doubled

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

WIP Inventory (in Days)

WIP has reduced by almost 50%

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

FG Inventory (in days)

FG has also reduced by almost 50%

12

7 6.5

6

Pre-TOC FY11 FY12 FY13 (Projected)

Post-TOC

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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

• Key challenges faced prior to TOC implementation

• TOC solution deployed

• Results

� TOC implementation in NPD

� Overall experience

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Key Challenges

• Home safes is a completely new product category in the Indian market with poor market

penetration

• Manufacturing was based on forecast and distribution of home safes in the supply chain

was “Push” based. Due to which there was:

– High unavailability at Plant Warehouse and Branches (only 35 – 40% availability)

– Surpluses and stock-outs inspite of having very high FG inventory (35 to 40 days)

• Distributors were carrying 45-60 days of stock. This locking of capital limited the range

being displayed/serviced to the retail counters. Also this locking of capital limited the

number of retailers being serviced by the distributor

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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 Retail business

– Inventory Turns competitive edge

• Build stage:

– S-DBR implemented at all suppliers. Manufacturing to replenish CWH buffers (as

opposed to forecast)

– Distribution to branches & distributors based on replenishment (no more Push)

– Seasonality handled through building stocks prior to season

• Capitalize stage:

– Inventory Turns offer to Distributors & Dealers

– Incentive to retailers to increase Range at its counter

• Sustain stage:

– Capacity management process to have capacities (with protection to handle

variations) at the right time

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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

2:2Inventory Turns

Comp. Edge

3:8Produce

To

Availabilit

y

3:9Inventory

Turns

Selling

3:10Capacity

Control

Build Capitalize Sustain

Base Growth

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Retail – Solution Map

CWH,

Bhiwandi

(Mumbai)

Branch

Warehouse

Branch

Warehouse

Branch

Warehouse

Supplier

1

Supplier

2

Supplier

1

Sub Contracted

Imported

CWH, Vikhroli

(Mumbai)

Supplier

1

Supplier

2

Bought out

CoCo

Disributor

Dealer

TOC Replenishment Solution

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Retail Availability

High availability is sustained in the high Nineties

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Retail Sales (Rs. Cr. Per Month)

Substantial increase in Sales, growth of around 45% p.a. (CAGR)

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Retail – Reach & Range

Released capital & better availability has led to significant increase in

Reach and Range

Released capital & better availability has led to significant increase in

Reach and Range

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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

• Key challenges faced prior to TOC implementation

• TOC solution deployed

• Results

� Overall experience

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Key Challenges

• Poor rate of New Product Development

• High lead time of New Product Development

• Frequent priority changes at Design Department

• As a result growth from New Products was limited

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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 New Product Development

– Churning out more new products at a rapid pace

• Build stage:

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

– Full kit rule at Design & Proto-shop

– Daily task management to ensure Flow

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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

2:3NPD

Competitive edge

Enhanced Growth

3:11Exploiting

the NPD

capacity

3:12Load

control

3:13Capacity

elevatio

n

Build Sustain

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

NPD – Solution

FULL KITActive Task

Management

Prioritization

WIP Control

• Design Team & Protoshop is now operating under CCPM

− Deployed only WIP control coupled with Full Kit

− No Software is being used for implementation

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

PSP Institution Group (Output)

Output of PSP Institution group has more than doubled

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Protoshop (Output)

Output of Protoshop has also more than doubled

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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

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Overall GSS Financial Results

100

170

284

2010-11 2011-12 2012-13

(Projected)

*Profits

Profits have almost tripled since implementation of TOC.

Profitability (PBT/Sales) of GSS has doubled in 2 years

CAGR of 66%

* Indexed

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Our experience of TOC journey…

• The entire supply chain i.e. right from Suppliers to Customers are now working

on only 1 principle i.e. TOC

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

at overall company level

• Bandwidth release of Top Management: Now able to focus on important

initiatives

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

Management

• No preferential treatment to any particular customer

• Harmony among various departments such as Manufacturing, Purchase & Sub-

Contracting Cell

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Our experience of TOC journey…

• Better overall efficiency at vendor’s plant led to no price rise in the last 2 years

• Some of the local measurements actually improved

– Working Capital Turns improved substantially

– Machine efficiencies (CCR) in the high 90s

– Manpower productivity of the plant has substantially improved

• 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

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www.tocpractice.comFifth International TOCPA Conference

6-7 April, 2013, Pune, India

Theory Of Constraints Practitioners Alliance ●●●● TOCPA

Thank you……