【正文】 ? Ideas are not capitalintensive ? Should yield payback in not more than one year ? Should be implementable in 36 months Rigorous evaluation of simple ideas… …could yield impressive results ? 3040% reduction in pressible costs (1020% reduction in total manufacturing costs) ? Significant reduction in downtime ? Large reduction in defect rate ? Better reliability and shorter throughput time in deliveries SUPPLY CHAIN – SIGNIFICANT GAPS EXIST From… To… “ Single solution for entire pany” – one size fit all approach ?Define what needs to be offered – Different customer service levels – Product variety and configuration ?Multiple chains within a pany “ Redesign to meet petitive benchmarks” ?Design to meet segmentspecific customer breakpoints “ Pushsystem is the only way Indian supply chains work” ?Pull (wherever possible) based on better forecasting and order management “ IT system will solve all supplychain issues” ?Use IT selectively (not before, but after redesign) for: – Information transparency – Order management and forecasting 2. Supply chain CROSSFUNCTIONAL COMMODITY SOURCING TEAMS HELP REDUCE PURCHASING COSTS 3. Purchase cost reduction ?Imperative to reduce purchasing costs to gain overall cost advantage ?Traditional functional anisations ?Limited engineering and operations inputs into purchase decisions ?Most cost reduction is negotiation driven, rather than totalcost driven Context Some elements of strategy ?Performance specifications “fit for use” ?Inhouse involvement (make vs. buy) ?Supplier discovery ?Sole source vs. multisource ?Contract type, pricing and duration ?Joint cost elimination (transportation, inventory etc.) Composition of sourcing teams ?Cross functional with participation and support from all areas (purchasing, plant, engineering, marketing etc.) and by modity THE TOTAL COST OWNERSHIP (TCO) FRAMEWORK HELPS IDENTIFY COST LEVERS BEYOND PURCHASE PRICE Production capacity Transportation Inventory carrying costs Warehousing Purchasing administration Factory yield RD Damaged product Specifications Warranty expediting Internal and joint levers ?Change specifications ?Load schedules into supplier scheduling system via EDI ?Involve suppliers in design/reviews ?Analyze supplier?s TCO to identify costreduction opportunities ?Evaluate yield improvement potential from alternative specifications ?Consolidate part numbers to build scale Purchase price Traditional Purchasing Levers ?Identify new suppliers (local and global) ?Include nonperformance penalties (., missed deliveries, nonconforming parts) in contracts Illustrative action areas KEY MESSAGES I. Superior operations drives value creation II. Indian manufacturing panies face significant operations challenges III. New tools and mindset req