Business Transformation (BT), a key focus area beyond cost savings

Aran-Group Contact: Anupam Mitra Email: [email protected] Ph: +91 98310 43615/9330144012

About Business Transformation (BT) BT believes in holistic approach and provides very powerful but simple solutio ns to address the needs of end - end supply chain that include operations, dist ribution, projects management, making win/win market offers, management accounti ng and strategy & tactics . BT is a management philosophy which facilitates rapid bottom-line improvement fo r organizations using a proven, break-through solution. The priority of BT is to maximize throughput (and contribution) much faster than the operating expenses without exhausting resources BT Solution Stack Substantial improvements to the business results can be obtained within a short period of time by implementing the concepts of Business Transformation.

The BT Paradigm Very often seemingly complex problems require essentially simple solutions! Considering the enormous complexity of your system it follows that there must be only very few elements that govern the entire system. In other words, the more complex the system is, the more profound is its inherent simplicity. To capital ize on the inherent simplicity we must be able to identify those few elements th at govern the system. The above revelation leads to the point that there has got to be very few critic al constraining factors (could be physical factors such as men, material, machin e or mental models that lead to policy formation) that controls the behavior of the organization & hence its business results. Hence it becomes apparent that th e business plans & initiatives required to accomplish them should also be logica lly based on those constraining factors as they become the leveraging points. Once these leveraging points are properly exploited through appropriate interventions & measures, that truly correlate the local actions (department level) to global results, the Undesirable Effects evaporate (disappear) enabling the organizat ion to make large scale improvements. With this focused approach, now it becomes easier to locate & assign the requisite improvement initiatives such as Six Sigma, TPM, SMED, investment on machinery etc at the right juncture where t he improvement makes the best impact to the bottom line. Needless to say that the above approach requires a paradigm change in the organi zational thinking process, it also becomes all the more compelling to identify the essential build ing blocks for the visioning process. Ideally we require a robust process for defining our vision t hat stems from the true capability of the enterprise & a solid process for working out the implemen tation roadmap. To understand the basic tenet of BT, it is useful to start with an analogy. Visu alize a chain with few links,

We know that the strength of the chain is determined by its weakest link. Hence in order to improve the overall strength of the chain the weakest link nee d to improved first.

BT solution for Managing Production In todays highly competitive business environment, manufacturing companies are vy ing with each other to provide quality products in shorter lead times at cheapest prices. Comp anies are trying to stay ahead of competition by bringing in innovations in their products. But comp etition always catches up and matches the innovation resulting in a price war because the diffe rentiation then comes only from pricing. Companies then try to reduce the prices and improve qua lity of their products. The focus now shifts to improving within by introducing innovative pract ices in their processes like TQM, lean, six-sigma etc. Still most of these manufacturers strug gle with high system inventory, shortages and surpluses of finished products and most importantly ina bility to deliver the products on time. A delivery is no good to a customer if it has not fulfilled his need on-time eve n if it is supplied at the cheapest prices or it is of best quality. Although on -time delivery appears as one of the key measures of performance in any manufact uring setup, it remains a mirage which managers keep chasing without any success . The sales managers usually face a serious challenge while giving order commitmen ts to customers. A decisive competitive edge stemming from reliability in delivery is the order o f the day. Sustaining it and capitalizing on it would require not just a managem ent tool but a complete business model with clear strategy and tactics defined. BT addresses the way to this change using its solution for operations which is k nown as Business Transformation Floor Manager (BTFM). Managing the shop-floor involves: Deciding when to release Raw Material to the floor Deciding which work orders to work on The most problematic area is deciding what the expediting priority on the shop floor is. And most importantly being responsive to the market demand by operating on a sho rter lead time and adhering to promised due dates. Business Transformation Floor Manager (BTFM) is a simple yet powerful so lution to handle production. BTFM uses the following components: A single time buffer to determine priorities known as Shipping Buffer. The buff er is a liberal estimation of the lead time from release of material to the completion o f production/ shipping process, considering common Murphy. Uses planned load to identify and cope with emerging constraints which will lim it the throughput of the process. Setting a release mechanism to ensure that work gets released into the system a t the right time. This will ensure the capacity constrained resource gets material o n time without creating piles of work-in-process. The above model is for planning the shop. The next leap in performance is provid ed by Buffer Management principle which is used for execution and control. Buffe

r management provides the status of the urgency of tasks in queue in front of ea ch work-center. The buffer statistics also provide an indication of rightness of the size of buffer. It also provides information about emerging capacity constr aint in the system.

BTFM solution also provides a very good tool for capacity planning for order due date quoting and future capacity planning. Based on the capacity planning techn ique, some valued orders maybe delivered ontime even at 1/4th the lead time. BTFM can be implemented in Made-to-Order or Made-to-Stock scenarios inc luding mixed environments. BTFM solution has been successfully implemented by numerous companies. Significant improvements have been in their production system: Sharp decrease in inventory (WIP down by minimum 30%) Sharp decrease in lead t imes (Minimum 50%) Sharp increase in Due Date Performance (Cutting late deliveries by minimum 50%) Uncovering plenty of hidden capacity (Minimum 30%) Improved investment efficiency BT based solution for Distribution & Supply Chain No matter how complex the manufacturing process, the foremost supply chai n challenge is developing a good prediction of customer demand, that is, knowing what customers are going to buy, how much they will buy, and where and when the y will buy it. The second challenge, assuming the company first has a good deman d plan, is how to optimally manufacture the right product at the right time, and how to optimally get the products to the proper distribution point to meet cust omer service requirementswhile always considering cost Moreover companies are plagued with problems of: 1. Discounts to retailers, dealers and wholesalers 2. Restricted display space for the product assortment in the face of increasin g competition 3. Faster inventory obsolescence due to shorter product life cycles The BT Replenishment solution involves holding just enough inventories at the distribution location(s) closest to the end user to satisfy the expecte d demands of the market within the time it takes to reliably replenish the distr ibution site(s) with what was actually sold. This approach to management of dist ribution gives a mechanism to Have the right inventory at the right place at the right time Distribution is an environment in which the consumer is far from the producer an d the tolerance time of the customer is shorter than the time the manufacturer c an supply in. The real challenge of any Distribution system is Always be able to serve a consumer Have the right inventory located at the right place at the right time. Even tho ugh Forecast is inaccurate Vendors are unreliable Replenishment time is too long BT Replenishment model provides the following guide lines

Establish Plant/Central warehouse for standard products

 um

At each place and for each product establish the inventory target based on Maxim

forecasted consumption within the average replenishment time, factored b y the level of unreliability of replenishment time. Move from Push to Pull supported by frequent replenishment Implement Dynamic bu r management The expected results out of a typical Implementation Inventory in the system decreases (typically by 50%) Sales Increases (typicall y by 20%) Inventory turns Increase (typically more than double) Internal transfers between regional warehouses drop (typically to almost zero) Obsolescence drops (typically less than half) Relationship between suppliers and client significantly Improve. BT based solution for Project Management Whether an organization manages stand-alone or multiple projects, whether those projects are small or large, whether the customers are internal or external, or whether the nature of the work performed is product development, construction, d esign, IT, or service; most projects are difficult to manage because of two thin gs: 1. They involve uncertainty, and 2. They involve three different and opposing commitments: due date, budget, and content In organizations that attempt to manage multiple concurrent projects with c ommon, shared resources, the job is even more challenging. Managers can quickly find themselves on project overload with continual resource shortages and great d ifficulty in determining which tasks are truly the most important. Some of the typical challenges faced in an project environment are: There are difficulties completing projects on time, within budget and with full content. There is too much rework activity. Promised lead times are longer than desired. Existing project work is not complete before new projects require a shifting in priorities. Project Managers and Resource Managers have frequent conflicts about priorities and resource commitments. Problems in one project cascade into problems in other projects. Some projects are abandoned or completed without the organization gaining the p romised benefit. The organization is too slow responding to important opportunities. Worldwide and cut across all industries the challenges faced by project manager are almost same.

Project Management based on the BT principles provides a paradigm shift in the w ay projects are managed resulting in increase in speed of project delivery and a ddresses the equally important need for reliability in delivering the project as promised. Project management must deal with uncertainty in an attempt to delive r project outcomes with certainty. One way of thinking about how to deal with th is conflict is to develop strategies to avoid expansion of project lead-time (Pa rkinson s Law) while protecting against Murphy s Law. The way to manage for unce rtainty in projects is at the core of improvement of project performance. Using BT, Business transformation Project Management (BTPM) attempts

and successfully achieves to complete projects on time with in the budget and within the scope by : Choke the release of projects Stop spreading safety, hidden and wasted in the tasks. Concentrate safety in st rategic places that protect what is important to the project from Murphys Law. Th is can only happen effectively when resources trust management and project owners to accept that their tasks target durations are not commitments and that the buffers are sufficient to protect the project. Stop the behaviors that waste time in the project. Avoid task due-da te focus and Parkinsons Law. Old habits are hard to break. Project managers must stop publishing dateladen project schedules. Eliminating the disadvantages of Bad Multi-Tasking: Avoid resource multi-taskin g and the lead-time multiplication it results in. Focus on the task at hand. Manag ement must take responsibility for protecting resources from competing priorities that d rive multi-tasking. Account properly for resource contention. Project managers, when buildi ng project schedules must realize resource dependency is as real as task dependency when determining what is critical for the project. Managing the safety effectively during project execution using BT measurements: T rack the consumption and replenishment of buffers. The project team must plan and act to recover when necessary, as dictated by buffer status, but only when nece ssary, in order to avoid unnecessary distraction of project resources who should be allowed to focus on their work. With this methodology, a good number of companies have experienced, reduced proj ect lead times (typically 50%), nearly 100% Due Date Performance, increased turn -around of projects & maximized ROI of projects. On successful implementation of BTPM, companies derive significant competitive edge in the market by promising remarkable reliability (95% & above) on deliveries & in fact commit for penaltie s for delayed deliveries to its customers.

Success Stories Sample Functional Projects and Results Apart from providing holistic solutions, we also delivers projects which are lim ited to functional areas. Following is a list of sample projects which can be de livered within a short span of time:

1 2 3 4 5 6 7 8 Types of Project Manage Order to Dispatch cycle De-Bottlenecking production lines Planning product-mix Pull based replenishment for Retail supply chain Spare Parts inventory management Manage Green field (capacity expansion) projects within time, scope & budget R&D and New product development (NPD) Manage Plant maintenance shut down Expected Results Improved Due date performance (99%+), Reduce leadtime (by 50%), Increased throughput (20%), Reduce Inventory (by 50%) Increased throughput (20%) Increased throughput, Increased profit (10-20%) Improved availability (99%+), improved inventory turns (minimum double), negligi ble cross shipments Increased availability, Reduced spare-parts inventories by 30%, Reduced expediti ng costs Drastic reduction in project lead times (min 20%), Improved ROI Reduced development cycle time (by 20%), early launch of right products Reduction in shutdown cycle time (min 20%), Reduced expediting cost.