Simplifying Operations - Way ahead!!!

Why is complexity such an issue for the automotive sector? The automotive industry is over 100 years old, and layers of complexity have been introduced at each turn of its evolution. It has one of the most complicated upstream and downstream value chains for a volume product, which becomes ever more complicated as the industry evolves.

What is the role of local distributors, and what activities should they be focused on? Can centralized direct sale work for OEMs? Is it advisable to consider cross-border mergers?

These are some of the questions and opportunities that knock the operating model of companies in the automotive sector. To secure sustainable competitive advantage, automotive companies should focus on getting fit for the future. For many, this will mean breathing new life into the organisation by simplifying the operating model to strip out unnecessary cost and complexity in the business operations, tax and legal structures. The benefits will include enhanced flexibility, greater operating and tax efficiency, and long-term cost control— all essential qualities, for high performance in a fast-changing marketplace. 

Introducing simplification to an industry in structural change As companies in the automotive sector have grown and evolved over time, so has the underlying complexity of their business models. OEMs and suppliers need to have different strategies for mature markets versus emerging markets. In emerging markets, companies must have the most efficient market access platform to position themselves to benefit from growth opportunities. However, without the right strategy and execution in mature markets, it is clear that companies cannot profit from emerging markets – the persistence of structural cost and complexity in mature market operations will eventually rob all but the most resilient competitors of the opportunity to compete in emerging markets. 

Instead of being equipped to cope with the profound challenges that arise, many companies find their operating models too complex to enable the flexibility and efficiency needed to deliver business strategy. For example, the ability to rapidly analyse and understand trends in the marketplace, and so make decision to reduce inventory and production levels is often hindered by the complexity in the organisation. Further, unwieldy structures complicate the process of doing business with both customers and suppliers, for example in having a consolidated view of business being conducted with potentially “at-risk” (single source) suppliers. 

Many automotive companies are already very aware of the level of complexity within their organisations, and over many years have embarked on projects such as lean manufacturing, which seek to simplify portions of their inventory management and production. While these have been useful steps on the journey towards a more streamlined organisation, companies need to take care. In response to the current environment, some organisations have effectively adapted their operating model by initiating cost cutting and change projects, sometimes without a thorough understanding of the impact each will have on the fundamental way they manage the business. Ultimately the goal may be not only to simplify the existing business, but also to ensure that further growth of the business, be it through acquisitions, entering new geographic markets, or expanding the product line, does not add unnecessary complexity to systems or structures, and supports the overall business model. 

Suggested approach to simplifying the business operating model

1. Simplify the business model - Sustainable cost reduction 

Benefits: 

Improve speed of decision making

Focusing management time on core activities

Alignment between management responsibilities and corporate structure

2. Transforming value chain for optimization - Strategic profit improvement

Benefits:

Supply chain rationalization

Improved business control

Cost savings

- DC

Chess & Stock Management!!!

With time, the inventory paradigm has changed. Strategies have shifted away from stifling "Traditional practices". Redundancies, errors and stock-outs have all had their impact weighed in on the business which demands a huge evolution. This is where Inventory optimizing and real time data analytics make way. Like what I've been hearing most often in business world, "“You want something that when the results come out, and with minimal human intervention, it can execute on those results. It may seek approval for a few items, but will work seamlessly with business systems on most recommendations.” You need to bring in that little bit in the business to deliver goals in these challenging times. 

Inventory and Stock Management are one of the primary concerns of any business world-wide and has always been an important driver of the business, let it be a "boom" situation or "recession" one. In the recession situation, it becomes more critical as we are in the mood of " cutting corners" trying to push that extra buck forward to ensure some decent bottom-line. 

Lots of research, system programs, algorithms have been written and re-written to ensure a perfect inventory control model. But still many of the problems exist because of  market conditions, design improvements, field failures, discontinuance of vendors, shortage of raw material so on and so forth. But the most important factor which is the "King" of all these reasons is "Historical Data". Our previous demand patterns, consumption trends, "back orders" information registered, etc., dictate our future inventory plans. 

Are we actually looking at the right "juke" box to tune our stocks and sales. Can a back order of yesterday repeat itself if stocked well? Can not a design improvement bring down consumption patterns? Will not the product life cycle change if the raw material is changed and/or a new model is launched? Will you stick with your model even if it doesn't sell? Will you like shouting "Oh, My God !!! How did this become obsolete ?. Really, this thing is getting out of hand" everyday?  Will you not like "built-in" systems to manage "Shelf Life" ? Will you not like to build-in data regarding credit checks decisions and what such "Sudden Shocker" Customers don't buy for short periods  in your systems? Will you not like Maximum Retail Price (MRP)  inspectors stop breathing down your neck with MRP violation cases by system controlled MRP syncronization in billing ? These are some of the thoughts. There are many more instances and can be very specific situations which can be related to the business trends eg., seasonal sales or purchases. 

The "Forward Inventory" model works out solutions for the above situations and many more. The explanations illustrated here are for "Replacement Parts Business" scenario. But the model can be applied to a manufacturing scenario too. This is a stand alone model & can be integrated with larger systems like SAP etc., if need be.

- DC

Courtesy: Mr.Mukund Srinivasan

http://www.scdigest.com/assets/reps/exec_brief_network_inventories.pdf

The Superheroes deserve to decide!!!

They keep us safe. They fight our enemies. They die for the country. 

They struggle to sustain in extreme conditions, taking on the bullets as they come. They go through rigorous training and develop near impossible skill sets to function the way they do. They sacrifice a normal life to ensure we can live in peace. That's just the summary of an army man's resume.

Every time we lose a brave soul, we shower him with praises on his act of heroism. Not just the praising and respect, they deserve even more, like Akshay Kumar cam out saying it is in our best interest to ensure a sustainable future for their families after martyrdom. Government don't seem to be doing enough to assist them in monetary terms. May be its time they did.

And even before that, the foremost thing that the defense ministry need to curb is the delay in procurement of weapons and safety vests which is being criticized time and again. Least do we know what's happening in that front so cant be blaming. Let's hope it is all being done well. If not, let it come out well soon. And the second most thing being the accountability of Defense force in decision making which is lacking in nearness. 

Away from the increasing politicization of the recent surgical strikes that the Indian armed forces conducted across the Line of Control (LoC), one aspect that is not properly highlighted in our discourse on the subject is the fact that it was a “strategic decision” — a decision taken at the highest level of the political leadership of the country (involving the Prime Minister of India). Such strikes, as the Congress rightly points out, were carried out in the past (it claims that there were three such strikes in between 2011 and 2014). But the difference between those and that conducted last fortnight is that unlike the recent ones, the past strikes were “tactical” in nature. 

This said, the Modi government has not undertaken any major reforms in the arena of national security in the last two-and-a-half years of its tenure as promised. The military leadership of the country is highly disgruntled that its voice is not being heard in the civilian-controlled Ministry of Defense. A long standing demand for having a Chief of Defense Staff (CDS) or any other equivalent post to be a single-source of interactions between the military and the political leadership has not been met. The country’s intelligence-gathering system is said to be highly fragmented.

All these things are really surprising since many expected that if any government could vitalize India’s national security structure, it was the Modi government. In fact, the BJP’s elections manifesto in 2014 had promised that the Modi government will “reform the National Security Council to make it the hub of all sector-related assessments”, “completely revamp the intelligence gathering system by modernizing the intelligence department”, and “ensure greater participation of Armed Forces in the decision-making process of the Ministry of Defence”. Regrettably, there have been no signs of implementation of such promises, although the present government has competed half of its term.

And that means that behind all the bravado surrounding the latest surgical strikes, India’s national security decisions continue to be ad hoc in nature, a sad scenario for a rising global power.

Hope reform is on its way and for the betterment of the people and the army men alike. 

- DC

P.S. http://www.lifestalker.com/indian-defence-blogs/