CHANGE: TO BE OR

NOT TO BE

Amit Manwade AM-304

Milind Gokhale AM-317

Nilesh Kataria AM-320

Pratik Sharma AM-323

Rajavardhan Reddy AM-328

Agenda

Case

Facts and Interpretations

Unknowns and assumptions

Problem Statement

Probable Solutions

Best Solution and justification

Learnings / Takeaways

Overview

Entities in the case :

Mebrisk India – An FMCG Company

Adip Arya – Assistant Manager (commercial)

Kevin Mathais – New Director of operations of

Mebrisk India

Hemant Trivedi – Adip’s boss and GM

(commercial)

Parthiv Vyas – Old Director of Operations and

Finance of Mebrisk India before Kevin

Overview

Scenes: Adip and Kevin debated and argued for 3 days

over why “Plan Revamp” was done and was it

worth?

Adip meets Hemant for guidance

Hemant starts explaining the need for Plan

Revamp then

Adip also remembers last 3 years and his effort in

implementing “Plan Revamp” initialised by old

director of Mebrisk – Parthiv Vyas

Hemant explains to Adip the need for Change and

steps involved in the Change

Company Conditions

Before Parthiv Vyas (Before 1997):

Tug-of-war between sales and production

The Performance parameters of the company include – Man hrs per tonne, Machine hrs per tonne, idle capacity reduction.

Factories produced what they desired irrespective of what market needed, giving more focus to performance indicators.

Difference between sales forecasts and actual sales used to be 60%.

Unsold stock pile up in company’s inventories.

Closing stock of large packs while demand is unmet for smaller pack sizes of products.

Commercial dept. playing as a mute moron in the company.

Working capital was 33% of turnover.

There was no flow of information between teams and lack of a system for faster data collection.

Company Conditions

1997 – 1999 [Changes during Parthiv Vyas]

Zero/negative working capital

JIT inventory at all factory locations and vendor supplied management

Putting in place an information system to collect and report daily sales, daily stocks, supplier positions in real-time.

Wiring the entire company (Costly V-Sat connections).

Daily production planning.

Establishment of ZSPs (Zonal Stock Points) and managing ad-hoc sales requirement.

Disadvantages: It increased management cost

The IT implementation and wiring was very costly during the time when it was undertaken.

Company Conditions

2000 and onwards [Kevin Mathais point of view]

The Plan Revamp was indeed very costly and

unnecessary.

With working capital reduction, space should also be

reduced.

No need of stockpiling items at ZSPs. Move it to

stockiests or factories.

Move production planning back to the factory.

Sales should not tell manufacturing, what to produce

and how much to produce.

Facts and Interpretations

The company had spent 17 Crores on the plan revamp

Parthiv vyas came from a company which had commercially driven environment (Delaware)

Tug-of-War every year between sales and production depts. -Interpretation Commercial dept needed to be active.

The production and sales plans not in sync

Performance parameters followed in the company in factories : man hours per tonne, machine hrs per tonne and idle

capacity reduction. - Interpretation - The focus was on man hrs per tonne in the factory and thus the factory produced what they wanted irrespective of the market need. [Performance indicators were given more preference over stocks/inventory Reduction]

Things implemented by Parthiv vyas in Plan Revamp were : Zero or negative working capital, - JIT inventory management, connect everyone (factories, depots, regional offices, head office) for the faster data flow. through VSat connections, Daily Production Planning.

Ground Realities - Unknowns and

Assumptions

Who will be managing the zonal offices –

Company itself or some intermediary party.

Assumption is that the ZSPs were managed by

company.

When Kevin suggested to move all stocks

directly to Stockiest (who is a third party

person), it was assumed that they will simply

accept it to keep a big chunk of stocks.

Problem Statement

How to achieve the co-ordination between

suppliers, production unit and sales in a

dynamic environment?

Was Plan revamp undertaken by the company, a

complete waste?

To change or not to change further to the

revamps put in with great efforts?

Solution: Auto Replenishment

Have the stocks stored at distributors.

Production unit will be aware of the inventory position at the stockists.

Sales will forecast the requirement in details like packaging, product sizing, product variances demand and provide it to the production team.

On the basis of above production team will prepare the production plan.

This can be achieved through end-to-end communication using IT.

Top 3 learning / takeaways

Business strategy should be market driven.

Change is inevitable in order to adapt to the

changing environment.

Transition from one state to another should be

smooth.

Thank You

Amit

Manwade

AM-304

Milind

Gokhale

AM-317

Pratik

Sharma

AM-323

Nilesh

Kataria

AM-320

Rajavardhan

Reddy

AM-328