Assignments across various Industries adapting same concepts
During the course of my journey, I got an opportunity to work across various types of industries and corporates, large and medium, multinational and Indian, different types of industries encompassing various sectors. When I look back I also notice that I never repeated an assignment in the same industry or sector again. Every assignment was the first time in that industry and in the process we created some new benchmarks for that sector or industry to adopt when we successfully implemented our change initiative. Moreover, as the technology was evolving we used emerging technology for the first time in our assignments and found an excellent ally in the Herald Logic Technology team rising to our requirements smartly. Implementation was also speeded up due to this.
Another interesting development was that we realised that we could use all the three concepts mentioned earlier namely BPR, Lean and TOC creatively in each assignment based on the needs and situation we came across. We didn't pitch ourselves as experts in any specific concept like most other boutique consultants did nor did we flaunt any certificate from any third party for offering our expertise in adapting these concepts. It was I believe the real USP in our approach and we found we got some of our assignments because of this uniqueness. I will share many cases as I move along with my narration of the journey.
Zuari Industries:
This company was incorporated in 1967 as Zuari Agro Chemicals Ltd. It set up its first fertilizer plant in Goa in 1973 with the manufacture of Urea and added NPK in 1975 and DAP in 1984. My friend from Hyderabad, Mr Vijay Shankar, who was earlier working for Nagarjuna Fertilizers in Hyderabad, had moved on to this company around 2001 as head of Finance and he had indicated when we met him in Delhi where he was posted around 2002 that he foresaw a need for our kind of intervention in the fertiliser industry. He casually mentioned that when the time came he would let us know about possibilities in this company. Later he was moved to Goa to head the Finance function and around the end 2004 I got a call from Zuari Industries asking if we would be interested in pitching for an assignment for change management using Six Sigma as they were already in discussion with WIPRO who had a consulting team implementing Six Sigma for their clients. I promptly informed them that we are not exclusively focused on offering Six Sigma but our approach will take care of outcomes beyond what Six Sigma implementation would do and asked for a meeting with their top management team. We were invited to Goa for a 3-day interaction and discussion with the top and middle management team to share our perspectives based on these interactions.
Here a brief description of the fertiliser Industry in India will be useful to understand our approach. This industry receives heavy subsidies from the Government of India, to make sure farmers got fertilizers at a fixed low price across the country. Since the demand for fertilizers exists across the country, many fertiliser manufacturing units were set up across various geographies in the country primarily to produce Urea, which was subsidised. Each manufacturing plant was allotted by the government certain territory to cover in nearby states to keep the logistics cost under control while assuring supply. Most of these companies added NPK and DAP later as they were outside the purview of the subsidy and so they were free to market them on their own terms. To meet the shortfall in supply, sometimes the government allowed these companies to import fertilisers and distribute them in their territory.
The government subsidy was based on the cost structure approved for each unit based on certain capacity utilisation factors and cost of logistics in their territory. The demand for fertilizer was seasonal, peaking during 3 months of monsoon, but the production was continuous throughout the year barring the annual maintenance shut down. Hence it became necessary for the manufacturer to maintain stocks at different locations based on expected demand during the lean period and move the stock around where there was demand during the peak period. Since forecasts are an uncertain activity, the actual demand never followed the forecast at the local level and the industry as a whole had to move stock around, causing additional costs affecting their profitability. Apart from this, the process of getting subsidy was varying from state to state and the paperwork and documentation was laborious, leading to high cost of operations.
Zuari Industries also had another unique problem. They had no storage facility at their plant for finished fertilizer due to space constraint, but they had a railway siding where the railways allowed them to load on a daily basis their output which needed to be moved to their godowns located in other parts of their territory. This required planning with railways the rake requirements and route requirements on a daily basis, which is a very complex task since one had to work with a government agency on their own terms only. All these activities required a lot of manpower and paperwork adding to the cost of operations.
Not surprisingly, Zuari had an IT department which had computerised these manual operations based on existing departmental and functional working, without addressing process simplification. The net result was that computerisation was only a record-keeping exercise post facto and the managers were crying hoarse that they were not getting any reports on time.
We identified that the first area of attention for them to be managing was the supply chain from the factory gate to the end consumer which is the farmer spread across their territories consisting of 3 states of Goa, Maharashtra, Karnataka and a part of Andhra Pradesh. We proposed that, instead of a Six Sigma project as they wanted, we would do a BPR and Lean implementation in their supply chain management and made our proposal accordingly, providing for value pricing as a unique selling offer. Since they were comparing our offer against the offer from WIPRO which was a well-known company, we were not confident of getting the assignment since typical corporate managers tend to play safe and go for a well-known name in such cases.
However, after a month of making our offer I got a call from the Materials Management chief saying that they had decided to go with us and asked me to come to Goa to finalise the contract while starting discussions with their marketing and distribution team.
Giving the full details of what we did is beyond the scope of a blog but I would like to share some interesting highlights of this assignment. We found the CFT that we had formed taking only the front line employees as members was amazing in sharing insights on their current way of working and contributing to innovative ideas for the redesign process using the latest technology in mobile and online internet which was just emerging around 2004-2005 when we did this assignment.
The top management team headed by then President Mr Raman Madhok were so impressed with the work done and the recommendations that they gave total support for a major IT implementation for which they got board approval for an additional budget allocation.Subsequently, when we faced resistance to change from some of the senior field managers for implementing the redesigned process, they backed us completely and told the field managers that if they didn’t cooperate then serious consequences would follow. And, as mentioned before, Herald Logic came with a very good IT solution using their proprietary Intelli Radar and Intelli Push Technologies which took care of seamless process management of the supply chain in real time.
However, in the course of implementation, the company found that a large number of people had become surplus both in the back office and also in the field. In India, managements are unable to take the decision to let go of surplus people easily and humanitarian considerations play a role in re-deploying people where possible. Our approach in this matter was based on our first experience with Glaxo and later with Bakelite Hylam where we found that retraining and redeployment should be attempted first and if that is not possible provide for a generous VRS package to help people financially while supporting them in any other ways to resettle in their lives.
I did not follow up on this since, as we were completing our engagement, Mr Madhok retired and a new person took over as president in his place and I noticed that he was not showing the same enthusiasm for our work the way Mr Madhok did, and I felt that we would not have much scope for any future work from Zuari and moved on to other greener pastures.
Crompton Greaves Light Motor Division, Ahmednagar.
While working with Zuari Industries, during one of the visits, I was waiting to catch my return flight from Goa at the airport when I was greeted by my old classmate from IIM Bangalore, Mr S C Gupta, who was heading Crompton Greaves (CG) as Vice President of the company in charge of this division. I had bumped into him a few years earlier on my way to Bombay at the Pune railway station after a long time and, when he heard the kind of work I did, he promptly invited me to visit his unit at Ahmednagar. After my visit at that time, though he was convinced that my approach would help them, he couldn't go ahead as CG had taken up a major exercise in implementing a Japanese consultant’s approach to TQM and he said he would get back later.
So when we met again at the Goa airport in 2005, he said he was looking for my business card but could not find it immediately with his secretary and was wondering how to contact me and now here I was! (I always wonder if there is some providence above us pushing us in the direction in which we need to go!) He promptly invited me to come to Ahmednagar at the earliest.
We found the need to visit Mumbai later that month to attend the wedding of Herald Logic founder, Mr Vishal Gupta, and I arranged for us to be picked up from Mumbai by CG to visit Ahmednagar for two days of discussions with their top management team. Shortly after that, we finalized our assignment to implement a lean management program covering everything from their vendors to their customers and their factory operations for the entire light motor division.
The CG assignment showed that we had really arrived as consultants who were taken seriously based on our track record and we could get clients to commit a major assignment covering their complete operations. This was in contrast to the early days when we had to demonstrate the Proof Of Concept with a pilot project in a limited area before the organisation decided to go whole hog across the company. This happened later when we got an assignment from Dr Reddy’s lab, one of the largest pharma companies in india. I will discuss Dr Reddy’s case later.
At CG also, we were fortunate to have an excellent CFT from the front line operations and support staff personnel who gave very good insights to the current way of working and the redesigned process. Needless to say, we had complete support from the top management team lead by the highly motivated Mr S C Gupta and we could get the whole organisation to come on board with the new way of working within a year of starting the assignment. We were even able to get many of their vendors to align their working to the pull-based supply chain management system we had introduced, thereby reducing or eliminating unnecessary inventories across the system. One of the major challenges the company had been facing was delivering customers’ orders on time. After the redesign, they were able to achieve on-time performance significantly.
The details of the work done here are very technical and beyond the scope of a blog. I recently located and went through our final presentation made to CG and found that this was one assignment where we had truly implemented both BPR and Lean as a composite solution in a real-world situation and that justified our approach not to call ourselves as a specialist certified by others!!!
Dr Reddy’ Laboratories Ltd
My young associate I had mentioned earlier, Mr Rajan Mahendra, had worked with one of the smaller units associated with Dr Reddy’s Labs a few years earlier, helping them implement ISO 9001-2000 and also stabilised their processes. Mr G V Prasad of Dr Reddy’s Labs had engaged him then and remembered him when later he took over as Vice Chairman of Dr Reddy’s around mid-2005. When we were at Zuari, Goa, Rajan got a call from Mr Prasad asking him to meet him when he was back in Hyderabad. Shortly after that, we both met Mr Prasad at his office in Hyderabad and he shared a very interesting issue that they were facing.
He said when Dr Reddy’s Lab was a relatively small and growing company they were able to launch many new products from concept to market in a year’s time whereas now, when they had grown very big with more than 10,000 employees and 12 divisions and global operations, they were struggling to launch a new product even after 5 years. Second, their formulations business in the Indian market was not growing despite having the largest sales force in the industry. Third, all decision-making was taking a lot of time going across various levels and functions, frustrating him and his team. Finally, he also said many of these issues had arisen despite their engaging and implementing many recommendations of Big Five consultants they had engaged over the years. So he decided to call us since he wanted Dr Reddy’s lab to behave like a small company while enjoying the power of a large company.
Hearing this I realised that he was sharing our sales pitch even before we had said anything. So we shared with him the kind of work we were doing over the years and stressed that we could be of help only if he believed that boutique consultants like us could make a big difference to a large organisation like Dr Reddy’s, and he would need to back us up totally, irrespective of any resistance he may face as we went along.
We also told him that, instead of directly appointing us, we needed to get the buy-in of the company’s senior managers who would have to actually work with us. He immediately suggested we meet the senior marketing team for their formulations division selling in the Indian market. And he promptly arranged for us to meet them one by one in the next few days.
During the meeting with the marketing team, I noticed that once they found out we had worked with Glaxo India earlier, they had no doubt about our ability to work with Dr Reddy’s. Further, since we were referred by their Vice Chairman for consideration, no one had any objection to engaging us, only a few questions for clarifications. I had always believed that for the kind of work we did at that time the only way we could enter any organisation was from the top and if one had noticed from my narration of the journey it was always the CEO we approached first and if he got convinced then assignment was on. But we recognised that the CEO does not run the day-to-day work but people do and we needed to get them to buy in first before action took place on the ground.
Once the marketing team agreed to our coming in, we needed to finalise our assignment and we were directed to meet the head of HR and Admin at that time, Mr Saumen Chakraborty. Both Rajan and I knew him from his earlier days with Tecumseh India and we had no difficulty in getting our contracts finalised with his help. Once we started work with the marketing and sales team, Saumen gave us an additional contract to extend our work with other divisions so that they were ready to engage us when we completed our first project with Marketing.
When I look back at what we achieved at Dr Reddy's lab for the sales and marketing operations, I feel very elated even now. This industry followed a set routine for more than 50 years in India in their deployment of their field staff called medical representatives (MR). The routine is so standardised across the industry that the work done by one MR is identical to work done by any other. The only difference was the product they were detailing and the promotional tools given to them. The rest of their operations from the Sales manager at the top to the MR in the field would be identical across this industry.
And here we were assigned to bring about a radical change in their way of working. And we achieved it no doubt by getting them to question everything they were doing using the first principles of BPR that we shared with them. And true to our belief it is always the front line worker who knows what is the best process to follow but he is never allowed to share his views in the traditional hierarchical organisation -- and the pharma industry was very hierarchical indeed.
However, the CFT team here also rose to the occasion and, knowing that the Vice Chairman was really interested in implementing their redesign, came up with amazing ideas for a reengineered process using the latest technology in IT. They called it UNNATI and gave the slogan to drive the project implementation.
The pilot was run in 2005 and the complete roll-out was done in the next year across all the divisions. 15 years later, even today, Dr Reddy’s is following improved versions of Unnati in their sales operations and the rest of the industry has also adopted the practices. I met a senior sales manager from Sun Pharma after a few years of launching UNNATI in Dr Reddy's and he confirmed that even their company had adopted the UNNATI model for their field sales operations. I met a former Senior Consultant with IBM which had to implement the IT requirements for UNNATI as redesigned by us and he said that yes, he still remembers the briefing he got about UNNATI as a flagship project of Dr Reddy’s when they wanted to upgrade their IT infrastructure.
The success of UNNATI spurred Dr Reddy’s to take our help in completely revamping their supply chain and manufacturing operations. We succeeded in implementing Just In Time and Lean in these processes and showed that what was believed could happen only in discrete manufacturing could be adopted in batch process industries too.
We were also engaged to work on reducing the new product launch cycle time but, due to the need to align more than 21 departmental heads to the requirements of this process, the implementation got stalled before we completed our contract.
The above three cases showed that the basic concepts of change management can be creatively adopted only if there is top management commitment and buy-in from the people who are convinced that their ideas would be implemented.
