The Peaking of Multiple Assignments
Between 2002 and 2006 we started getting many assignments purely based on word of mouth and leveraging of our contacts. Whenever we got an opportunity, we would share our experiences with some known CEOs or senior managers of large corporations. As we were working on an assignment, we would get a call from a prospective client based on a reference from an earlier client or from someone with whom we had shared our earlier experiences.
At no point of time did we go around making speculative pitches or sales promotion drives. In fact, we did not even print any promo literature or catalogues or a packaged power point presentation marketing our services. What we had was a short PPT which highlighted the power of our approach to help clients focus on implementing change management concepts like BPR, Lean and TOC along with creative use of Information Technology where the ownership for the ideas rests with the people in the organisation and not that of a consultant. Along with that, the concept of Value Pricing which we used to convince the clients of our commitment to genuinely help them and stake our earnings to successful implementation became our unique selling proposition.
So, with just one or two meetings in a short period of a couple of months, we would be starting our engagement with a new client. My young associate, Rajan Mahendra, egging me on to quickly get and finalise as many assignments as possible also motivated me to look for opportunity wherever possible and close the deal even when we were busy with existing work in hand. I shall narrate below more cases of our assignment across different industry categories in this period.
Vasant Chemicals Pvt Ltd:
Rajan was associated with this old Hyderabad-based medium-sized company, manufacturing a single product DASDA (4-4’ diamino 2-2’ stilbenedisulfonic acid) , a popular optical brightener used in laundry detergents and other industrial applications. He had helped them get an ISO 9001-2000 certificate and the owner, Mr GKB Chowdary, was very impressed with his work. Rajan was sharing with him our association and the kind of work we were doing with other clients. Mr Chowdary was curious to know more about us and asked Rajan to arrange for him to meet all the three of us at his office.
After our meeting, Mr Chowdary met up with one of our old clients, Mr RVS Ramakrishna, MD of ITW, and enquired about us. RVS gave him a strong reference about us and soon Vasant Chemicals signed a contract with us for implementing a change management programme for them. Unlike other corporate clients, this being an owner-managed company, Mr Chowdary got involved in the assignment right from the beginning in all aspects of our engagement, even sitting through the initial workshop sessions and participating in CFT meetings, which gave us additional inputs beyond what CFT members could gather.
The problem faced by the company at the time when we started our association was severe price competition from Chinese suppliers, affecting their market share. At one point they had a near monopoly of the Indian market and a large share of the global market for this product but over the last few years they were seeing erosion of their dominant position. Mr Chowdary felt that, unless some drastic changes were introduced in their operations, Vasant Chemicals would not survive for long. This was the real case for action for the company to take this project seriously and for his personal involvement.
Mr Chowdary was a lawyer by training and came from an agriculture family background and hence he was a first generation entrepreneur with no background in running a business or a manufacturing unit. He started a small unit to produce these chemicals and slowly expanded capacity as demand picked up and became a major player in this business over the next 20-odd years before we met him. Since he was totally involved in his business, he had thorough knowledge of all aspects of his operations which he shared with us during our meetings. Though the company made a single product, DASDA, they had many customers spread all over the world. Out of these, three customers were manufacturers of the optical whitening agents who were buying directly from the company; the rest of their customers were supplied through dealers and distributors located across the world. The three major customers constituted 75% of their business, out of which one of them was a large German company. It was imperative that they had to retain the share of their business at any cost to be in the business. So Vasant had built up capacity to produce DASDA in large quantities and stock it to supply to these three customers on priority while meeting the requirements of others through the distributors.
When we started looking at their operations, two important aspects caught our attention. Since Vasant had grown from small beginnings, when growth came they built up additional capacities in separate sheds located a small distance away from the original shed. Second, the manufacture of the product was a batch process and the various stages of manufacture were located in different sheds, necessitating back-and-forth movement of the intermediate stage work-in-process in mobile tankers in liquid form between the sheds. Moreover, this manufacturing process also required strict adherence to pollution control laws at every stage, causing major logistic challenges.
This was a very interesting assignment for us and, applying all the principles of BPR, Lean and TOC, we were able to come up with an innovative solution called STREET line manufacturing for a chemical batch process unit. Basically, we rearranged the operations of the facilities located in different sheds to follow a flow based on a despatch requirement plan for each major customer while dedicating three STREETS for the three major customers and the fourth STREET for the rest. This was achieved without moving any of the equipment from the existing sheds but moving the materials in such a way that they followed a specific street for a specific customer. The net result was that we were able to get them to implement a Just-In-Time manufacturing system which was normally followed in a discrete engineering manufacturing organisation and made famous by Toyota Motor Company. This led to significant savings in cost of operations while reducing inventory levels across the line. Mr Chowdary was very happy with the results when we ran a few pilots and based on that renegotiated new contracts with his customers more favorable to both.
While working on this assignment, Mr Chowdary mentioned a major manufacturing problem which had technical issues which they could not solve for the last 20 years and they had to go through some element of trial and error to manufacture it right at that stage. They had tried taking help from the best technology institutes around Hyderabad but could not address this problem. So I suggested that I could introduce him to my IIT Bombay Chemical engineering professors using my alumni status and see if we could get a solution from them. He immediately agreed and asked me to set up a meeting at IIT Bombay with the professors and took me along for the meeting along with his technical team. IIT Bombay promptly assigned two young professors who had specialised in this area who solved the problem in a few months, stabilising the manufacturing process. Additionally, they also contracted with Vasant Chemicals to run an in-company training program for all the manufacturing and other technical staff to upgrade their knowledge and technology in the area of chemical engineering.
Over a period, Mr Chowdary kept calling us whenever he had to take any major decision with regard to running his business beyond the area of our initial work.
Denison Hydraulics India Ltd.
This company is based in Hyderabad and was established by Mr V Janardhan Rao in the mid-1970s. It is known for its products in the field of hydraulics and is the only manufacturer of Vane Pumps used in heavy duty applications like excavators and drilling rigs. Both Raghav Rao and I had known him over the years as a member of our Rotary Club and we occasionally used to exchange notes on our work with him.
One day he called up Raghav and asked him to meet him in his office to discuss his business issues. During the meeting, Raghav suggested that to address his problems we needed to work with his team and he had to engage us over a period of time. He immediately agreed to hire us as consultants and contracted for a period of one year on a monthly retainer with 2 days of our time every week. This was a different type of contract in the sense that, since the client was an old-timer and it was his own business, he found it convenient to hire us like he would hire any other consultant with fixed time and financial commitment!!
This was also another case of an owner-managed company, which had grown from small operations to a large-sized business unit. The main issue with the unit was a large number of products in their manufacturing range with various specifications designed to meet various applications of industrial customers. We found they had more than 3,000 stock keeping units which ended up causing a huge pile up of inventories right from raw materials to finished products. Despite this, they were not able to supply any order in time. Classic problem of many engineering units!
It was clear that we had to implement a Lean Manufacturing programme but the problem was not how to implement it but the owner’s fetish for secrecy. Mr Janardhan Rao’s concept of manufacturing was centred around the belief that every machine should always run to its full capacity and there is nothing wrong in building inventories as Work In Process. But our main problem was that these inventories were not aligned to the requirements of assembly to ship the finished products to customers on time and they had to suddenly stop producing something to make other components to meet an emergency despatch requirement.
We found it very difficult to break this culture. One day, after we initiated a lean flow system in a line, we found a large inventory of a component in front of a machine, which was not even scheduled. When we probed deeper, the worker and supervisor in that section would quietly confess that they got the order from MD to keep the machine running and give him direct production updates. This was happening very regularly and we had to confront Mr Rao with our findings and how his interfering was not going to help. He would say yes to us but could never resist his temptation to keep the machines running. After a few partial successes in some aspects of their operations, but generally getting frustrated with the owner's style of functioning and our inability to change him, we ended the year of our contract deciding not to continue our association with this company any more.
In this post, I have shared two cases of our experience with owner-managed companies and the contrasting styles of the owners, leading to great success in one while there was big disappointment in another. I will continue in my future post the remaining assignments we did with a few other corporates with varying degrees of success.
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