My Journey As A Consultant - 20

 Organisation Culture Transformation In A Fertiliser Company

Till now most of my change management work that I had narrated earlier involved specific processes and part of the organisation around those processes. In this case of Mangalore Chemicals and Fertilizer Ltd, I got an opportunity to work in a company wide change management using concepts adopted from Japanese management techniques. In the process I also learnt new tools which can be used to facilitate organisational transformation.

I had mentioned K S Madhavan when he, as MD of Tecumseh, had hired us to work at their Ballabgarh Unit. Shortly after we ended our assignment, he retired from the company and decided to start a consulting practice under his own name, KS Madhavan and Associates (KSMA) and invited us to join him as his associates. Shortly after that, he informed us that Mangalore Chemicals and Fertilisers (MCF) had approached him to help them in implementing his approach which  brought about a major cultural change in Tecumseh’s Hyderabad unit after he took over as its MD. He told us that when he presented the Tecumseh success story  in a CII-sponsored seminar, the then MD of MCF, MR D P Mehta, who attended the seminar approached him after hearing his presentation, and sought his help. This was around the middle of 2000 when we were involved with ITCBPL.

KSMA put together a team of five consultants, including me, to work on this assignment.. This was the only assignment I did under the banner of KSMA and it was a great learning experience. One of Madhavan’s strengths was his mastery of Japanese management concepts and Edward De Bono's ideas of Six Thinking Hats and approach to creativity. He had used it in his work life to successfully turn around problem units and one of his major strengths was getting workers to participate actively in organisation transformation. He had in the past used these concepts as a manager where he had worked and this was the first time he had to use the same approach but in the role of a consultant. Since the canvas for this project was large, he wanted to have a team of consultants to assist him. 

To understand what we did, a background about MCF is in order. MCF was a unit of the government of Karnataka which was taken over by Mr Vijay Mallya in the early 1990s. It was till then a loss-making unit but after Mallya’s take-over it started turning the corner. Around 2000, the then MD realised that, in order for MCF to fully turn around, they had to go for radical organisation transformation. So when we started our interaction before giving a proposal, Madhavan had insisted that KSMA have to visit the plant and interact with its people across the organisation and also see for ourselves the state of affairs. MCF agreed and arranged for us to visit the unit over 2 days. During our discussions with a crosssection of personnel, and observations we made when we moved around the plant, we noticed  major issues emerging:

1. The plant was badly maintained and the general housekeeping all over the factory was very poor.

2. All the employees worked in functional silos and they had a high level of interpersonal conflicts and distrust.

3. They had large amounts of materials lying around everywhere in the factory and every department had many storage shelves overflowing with old files and materials stored and they were even indenting for additional space for storing.

4. Finally, the workers and labour unions had adversarial relations with the management and, due to various historical reasons, they were exploiting the weak management which had run the organisation before Mallya took over, and they continued the same even after that.

Based on this appraisal, KSMA proposed a four-pronged intervention. 

1. To streamline the use of space and materials and also get everyone involved in managing it, the Japanese tool of 5S was to be practiced by everyone from top management to the bottom-most workers.

2. To ensure that the plant ran without breakdowns and with most optimum efficiency, Total Productive Maintenance (TPM) was  proposed as the second intervention.

3. To involve everyone across the organisation and to build trust and team-work culture, CFTs would be formed to address various problems which KSMA called as KRAs (Key Result Areas). This was designed more like a Kaizen exercise practised by Japanese management principles.

4. To involve the workers and get them to participate, Mr Madhavan introduced an innovative approach by getting one of the union leaders from Tecumseh, who had benefited from his approach, to work as a consultant in our team to interact with the workers and get them to come on board for this exercise.

Mr Madhavan and I led the KRAs, Rajan Mahendra, who was one of the other consultants, led the TPM exercise with support from one more consultant and Col Subramanian, who had worked with Mr Madhavan in Tecumseh to implement 5S, led the 5S project with help from the union leader to educate and implement the same with active worker participation. 

After conducting the initial round of workshops educating the top management right down to first-line engineers on the concepts and approaches of the above interventions, we got down to the actual work. 5S was taken up as a major initial project involving everyone across the company and, within a month of launching it, the results started showing in terms of organised space and release of unused shelf space and materials. Over the next 6 months, we estimated that they had recovered scrap which could be sold, and useful materials lying unaccounted for in the books,  worth a total of Rs 60 lakhs!!!. This by itself was more than the total fee KSMA was charging them for the complete assignment spread over 2 years!! 

In order to focus on the real problems for both TPM and KRA,  KSMA arranged for a structured exercise and collected a large number of symptoms being touted as problems by everyone. These were grouped into various categories of focused problem statements which became the basis for forming cross-functional teams. We created 12 teams working on various TPM projects across the plants and 20 teams working on the KRAs across the organisation. In the case of TPM, the teams mostly consisted of technical members along with procurement and finance, whereas, in the case of KRA-based problems, other departments were also involved. 

While the 5S exercise moved fast and started showing results quickly, the other two interventions took some time to take off. One of them was that, while we spent 3 days a week at the plant guiding the teams on the steps to be followed, they were supposed to work in their respective teams at least 2 hours per day on this project. We found that this did not always happen due to everyday crises or other priorities. Over time, however,  we managed to get over this hump and moved on. At the same time, a major labour problem was brewing and we had to intervene in this area also, based on Madhavan’s vast experience in that area and our own insights of ground reality gathered by then of the real issues and how to handle them differently from what they were used to. 

The net result was that some of the problems got addressed quickly while some had to wait for the labour trouble to be resolved before progress could be made. But something more interesting started happening, which was the original intention of this assignment. Culture Change. We noticed that, due to working as a team on various problems, the departmental and functional barriers started coming down. We found the team members sharing anecdotes about  how they started addressing routine day-to-day problems differently than before. 

For example, they had a culture called  “AAVI”, short for Avoid All Verbal Instructions. As a result, memos floated around without the actual problem getting addressed. Now the AAVI disappeared since the same people were working together in various CFTs and started addressing such issues quickly across functions. 

Similarly, we started getting feedback on many other previously divisive issues getting sorted out quickly. But while this was happening at the lower level, there were still walls between the senior management personnel who were not directly involved in any of the teams. So we came up with a couple of problem areas which had to be addressed by forming teams only among the senior management personnel and that took care of breaking the walls between them.

I was involved in the project between August 2000 for about a year. I believe we achieved one basic goal of this assignment: to bring about culture change and permanent improvements in many of the problem areas. The company also started performing better over a period and eventually MCF was taken over from the UB group by Zuari Fertilisers and Chemicals Ltd, an Adventz group company. From my personal point of view, I learnt a lot of new ideas and concepts from Madhavan on change management and the tools that can be adopted to deal with it, which I could use in my subsequent work with other clients. I also got to know Rajan Mahendra, who was 20 years younger than me, and we started working together in many subsequent assignments with very interesting results. I will share those in my future posts.

My Journey As a Consultant - 19

 Managing Change in a large Paperboard Mill

Pradeep Dhobale, MD of ITC Bhadrachalam Paperboards Ltd.: “I have a big challenge here. Every department and function has achieved its performance bonus. But the company as a whole has not achieved the financial goals. This is a big paradox. I want you guys to address this problem and help us achieve the corporate goals while achieving functional goals.”

Raghav and I had been interacting with ITC Bhadrachalam Paperboards Ltd (IBPL) since 1996 when we were  working with Glaxo. We had met one of their senior commercial managers on a flight between Bombay and Hyderabad. He was sharing his experience of attending a workshop on BPR recently and was wondering how he could implement those ideas in his function. We shared our experience with Glaxo and emphasised that BPR had to be implemented across all functions of the organization for it to work. 

He was sufficiently impressed with us to invite us to meet his boss, the VP Commercial, to discuss our approach. He in turn arranged for us to have a lunch meeting with his MD, Mr M P Malliwal at that  time, which led to our being invited to conduct a half-day workshop for 55 senior managers of IBPL  on BPR. This was around the end of 1996. Shortly after this, the company got busy with a major Rs. 600 crore project to upgrade their paperboard technology and told us they would get back later once this new project was established. 

Around this time, we were also introduced to Mr Pradeep Dhobale, who was heading the manufacturing operations at the factory in Bhadrachalam. During our meeting, I found out he was from IIT Bombay, a couple of batches junior to me, and we warmed up to our relationship quite well. We thought that this postponement may not lead to an early assignment and parked ITC Bhadrachalam at the back of our mind to be approached later. In the meanwhile, through our first contact in this company, we heard that Mr. Malliwal had retired and Pradeep Dhobale had taken over as the MD.

Towards the end of 1999, we got a call from Pradeep saying that they had invited many consultants like Price WaterHouse, Ernst and Young, KPMG, etc. for a presentation on Change Management to the top management of their company and he wanted us also to make a presentation of our approach and experience. We told him that we were not in the league of the big names he mentioned and, unlike them, we worked with the organisation team to implement BPR and not to give a report. How could we be compared with them? His response: “Look, we have decided to invite you both, so you have no choice but to make a presentation before we can decide on whom to engage.” So we agreed, as we had nothing to lose and everything to be gained, pitted against the Big Five global consultants!!!

We quickly prepared a powerpoint presentation, sharing the insights gained by us till then, working for a few organisations mentioned in the previous posts, and ended with a strong pitch for why we would make a difference to actual implementation with our approach. And we left it at that, knowing that in a large corporation the traditional wisdom of hiring a consultant was to go for a well-known name and play safe. Who would take the risk of hiring two relatively unknown guys with only some recent experience in India, whereas the Big Five came armed with their global experience? So we went back to our work with our clients, knowing we never stood a chance here.

To our astonishment, around March 2000, Raghav got an early morning call from Pradeep asking if we wanted to work with ITC Bhadrachalam and, if so, to drop in the same day at 11AM. This blew our mind, since we had totally given up hopes of any work with the company! 

We hurried to his office and met Pradeep at the agreed time and the first sentence from him was what I have quoted above. By this time, we had also got exposed to concepts of Lean Management and Theory of Constraints and we shared our perspectives on local optima and global optima and avoiding waste and aligning processes to customer needs. So, after a brief discussion, he arranged for us to meet the commercial team to finalise a contract and soon we started a major engagement with one of the big names in the Indian corporate world! We never really learned why we were chosen above the Big Five, but clearly Pradeep had put his head on the block with his belief in us.

Unlike our previous engagements, this assignment covered the complete supply chain from customers to factory to vendors. It was a big canvas and involved very complex operations from procuring to manufacturing to supply and payment collection. The details of this case would be a good case study in change management but, due to our Non-Disclosure Agreements with all our clients, I cannot go into the details here. I can, however, share some interesting insights which became a learning experience for us too.

On the market side, the company had both a strong dealer network who supplied to smaller customers as well as large customers who bought directly from the company. But even the large customers were relatively small players whose end customers were much bigger than them. For example, IBPL supplied high-quality paperboards to converters who made them into packaging materials to be supplied to large consumer products companies like Hindustan Lever, Colgate and many others. Apart from that, they also had their own internal customer in the form of the Paper Product  Division of ITC, which was the biggest cigarette manufacturer in the country, apart from many other agro products for which paper packaging boards were used. 

Traditionally, the paper mills worked on a model in which all customers had to give advance indents of their requirements and this would form the basis for production planning, manufacture and supply. However, as competition increased, the customers found that they had to make constant changes in their business plans and they wanted the paper mills to quickly respond to their changed needs, and this could not be fitted into the advance indent approach. This caused constant friction between the sales and manufacturing teams and we could experience this when our CFT met and there was constant conflict between team members from these two functions during our early deliberations. 

While the end customers were big names for the converters, IBPL as a supplier also was a big vendor on the other side and these customers felt they were getting squeezed between two large corporates. This caused a lot of resentment towards IBPL which was not visible to any one till we took our team to meet them to get first-hand feedback from the customers, which normally gets filtered out when it comes through the traditional sales and marketing team. The most interesting finding was that even those customers whom the company thought were very happy with them had a lot of complaints. This was a major turning point in our approach to come up with a reengineered process.

When the company had expanded their capacity in the factory with a new technology plant, they had also invested in sophisticated automatic computer controlled machinery for cutting paper rolls and a huge storage facility which was totally automated to keep stocks and dispatch to customers. They found that, while they had huge stocks, the orders came for special items due to market changes which were not available in stock and needed to be produced for immediate delivery. The paper cutting facility was also causing a bottleneck due to computerised planning and someone had quietly disconnected the computer so that they could respond manually to sudden changes in the manufacturing plans. 

The most important aspect was the IT system they were using. Only five years before we started our work, the company had invested in a large IT system which was a classic computerisation of their manual way of working. When the reengineering team took a look at the system, they  found that it needed to be completely overhauled to become a system which would be aligned to the BPR recommendations.

It took us six months to finalise the redesign and get it accepted by the management. To give full credit to the  top management team, they were very open-minded to understand the issues raised by the CFT and the redesign suggestions for all their processes. In fact, they went ahead with a decision to invest in a new IT system which would enable the smooth implementation of the BPR team’s recommendations. To their credit, they took charge of the implementation without much active involvement from our side. Our association with IBPL lasted for a year before we signed off, collecting our final payment. I met Pradeep Dhobale  after a couple of years on a flight from Hyderabad to Delhi, when he told me they had implemented most of the recommendations and invited us to come visit them to have a look at the results of our work. That was indeed a very satisfying moment in my life!

My Journey As A Consultant- 18

 Leadership - Key To Successful BPR Implementation

Vetrotex MD, Natarajan: Why don't we shut down the General Store altogether? I can find much better use for the space!

Mr P Natarajan was managing director of Saint Gobain Vetrotex India Ltd. (Vetrotex), part of the French multinational glass manufacturer, Saint Gobain, which was in the business of manufacturing and selling glass fibers for fiberglass products. Vetrotex had bought over this business of Fiberglass Pilkington from the previous Indian owners a couple of years before and completely modernised the plant with the latest computer-controlled glass furnace and increased the capacity for their products. The back-bone of the furnace was the general store which had to always hold stocks of important spares for maintaining the plant and, in the process, over a period of time, they carried an average inventory of nearly Rs 1.2 Crores.

I was introduced to Mr Natarajan by one of my business friends, Mr T Muralidharan, MD of TMI. Murali and Natarajan were classmates at IIT Madras and IIM Ahmedabad and, when I was sharing my experiences with Murali post our engagement with Bakelite Hylam in mid-1999, and mentioned to him that I was looking for a prospective client for the next assignment, he promptly called up Natarajan and arranged for me to meet him. When I spoke to Natarajan, he was keen to meet me but he  felt that meeting at their plant, which was outside the city, would not give him quality time with me and invited me to his home for dinner for our first meeting. I was used to meetings over business lunches or dinners with CEOs,  but it was always in a classy restaurant; this was the first time someone invited me home for a business meeting with dinner included!! I felt immediately that I was dealing with an interesting person. 

And that is exactly what Natarajan turned out to be over the next five years of association with Vetrotex over many assignments and innovative outcomes! He was an amazing leader and I quickly noticed that he alone, with his courage of conviction and clarity of goals, carried his team along and made a big difference to the successful implementation of new and radical changes at Vetrotex.

During my first meeting with Natarajan at his home, I narrated our experiences with various clients till then, and the published case studies which had talked about areas of successful BPR implementation. The procurement process was a major area coming up in many cases and our experience with Glaxo, Nagarjuna Steel and a few others had highlighted this. Natarajan shared his own experience of needing to approve a medical bill of ₹25 just because it was a cash purchase made to treat an employee in an emergency at the factory. He said there were many such dysfunctional activities performed by many senior managers in the procurement area, and he had read many case studies of BPR on this subject. He also had an exposure to BPR after attending a few seminars and was looking at ways to adopt those ideas. 

I promptly told him that the process we followed, based on Hammer and Champy’s guidelines in their book, could help him. I also handed over a copy of the book, which I always carried with me to give to prospective clients. He suggested that Raghav, my associate, and I meet him at his factory the following week so that we could interact with other senior managers who would have to come on board before he could engage us.

We met up at the factory as scheduled and, after a series of discussions, everyone agreed that procurement was a major area which needed immediate attention and we were hired to guide them in this project. As per our usual practice, we got together a CFT from among their executives, and did some educational workshops on the concepts of BPR. During one of our meetings, when we accompanied the members to their canteen for lunch, one of the executives rushed back to his desk to pick up his canteen coupons which had to be handed over for his lunch; soon we ended up discussing the cumbersome procedure by which the canteen was managed, where the canteen contractor had to collect all the coupons for breakfast, lunch and dinner (the plant worked 24/7  because the glass furnace could never be turned off) and claim payment from the accounts department after the HR department counted all the coupons and passed his bill.

We immediately saw an opportunity here of demonstrating the power of BPR to the CFT as well as to the whole company and challenged the team to reengineer the entire canteen process as part of their learning. Working with excitement and diligence, the team mapped the entire process from the printing of different types of coupons to their distribution to all employees (during working hours!), and finally the monthly payment to the contractor based on the coupons submitted by him. The team also physically watched the process, including the submission of large bundles of coupons by the contractor. 

Intuitively, one executive quietly asked the HR executive whether they really counted all the little coloured scraps of coupons. The sheepish answer was: “No. We just work out the approximate amount to be paid based on the number of working days and vary it by a bit from month to month so the figures look credible.” When we checked with the contractor he also said the same.

That was an “Aha!” moment for the team. They quickly put together a presentation to the MD and senior managers that completely did away with the entire rigmarole of coupons, and suggested that the contractor be paid based on the number of days of the month with allowance for any major absenteeism or the influx of a large group of visitors on a given day. Employees would have a fixed deduction from their salaries for the cost of meals. The HR executive who had let the cat out of the bag was, of course, apprehensive of being pulled up for not counting the coupons as he was supposed to do. But Natarajan was not bothered about that! Instead, he immediately saw the huge amount of time of purchase, HR and accounts executives the new system would save and gave the order to implement the new process forthwith. An offshoot of this change was the enormous amount of shelf-space that was freed up, which had stored thousands upon thousands of little coupons for any possible audit or re-checking!

The BPR team was thrilled that they had learnt and demonstrated the power of BPR through this impromptu exercise, and jumped into the larger project of reengineering the procurement process with conviction and excitement. And many of their colleagues dropped in at the meeting room of the CFT to thank them for a wonderful idea, and to enquire when the recommendations for the rest of the procurement process would be completed!!

The reengineering of the procurement process at Vetrotex was no different from many of the case studies  published about similar exercises, but adopting those ideas involved major challenges since, by and large, the relationship between vendors and their clients was adversarial and traditionally each tried to exploit the other. Hence, everyone was apprehensive about how it could be done so that the organisation did not lose out in the process. And how to make sure the vendors would play ball. This is where the importance of leadership came into play and Natarajan was very clearly committed and serious about implementing change by coming up-front to address the issues. 

His first reaction as mentioned before was dramatic and gave clarity to the rest of the organisation that he meant business. He also showed that, unless we demonstrated our full commitment to the ideas, how could we get vendors to realise their importance in our scheme of things? We had to show them that they had more to lose unless they came on board to play the game the way we wanted. In fact, we called a meeting of all the vendors involved in store supply and he addressed them personally, sharing our new approach and how we wanted the vendors to be our partners in our procurement process. 

Earlier, Vetrotex had hundreds of vendors for more than 500 categories of items bought annually, with values varying from as low as a few hundreds Rupees to several lakhs of Rupees. Since it was the policy to have multiple vendors for most items, to ensure no supply failures, the total business each vendor got in a year was not very significant in relation to the total procurement by Vetrotex in the year. For example, in the category of electrical items, the annual procurement was as much as Rs. 60 lakhs. Almost all the items were of standard design and sometimes even of a specific brand, and stocked by dozens of traders. But there were nearly 25 vendors for this category alone and so none of them got more than Rs 5 lakhs worth of business annually. Keeping in mind also the distance that vendors had to travel from the market to the factory, it was no surprise that there were frequent supply defaults.

Now the reengineered process recommended by the team involved zeroing in on just one vendor in this category; the very fact that the vendor got all of the Rs 60 lakhs worth of business made it easy for the purchase executives to negotiate the best prices, and the vendor could easily afford an exclusive run to Vetrotex every single day, if required, to deliver the ordered supplies right on time. 

Over the next six months, each category was finalised so that the number of vendors was drastically curtailed. The primary job of the purchase executive changed to identifying these good vendors and working out annual contracts with them, with firm prices for agreed quantities. With development of a suitable computerised system which linked the vendors with the factory, users such as the maintenance executives could directly place indents on the vendor to receive their required supplies. The software also ensured a seamless process for receipt and acceptance, and subsequent payment as per the contract terms. The additional task of the purchase department was then to monitor the performance of the vendors in terms of timely delivery and quality. 

Once the maintenance department, for example, gained confidence that vendors would supply their requirements on time, they started indenting for just their immediate quantities of each item, and the vendor delivered them directly to the department. Suddenly, the role of the general stores to receive and store large quantities of various items, and the task of the maintenance executive to indent from the stores with a paper requisition and send someone over to collect the items disappeared. As the general store started looking more and more empty through this process, the CFT recommended completely doing away with the general store.

This was as radical and dramatic a process change as the best of BPR legends. Apart from sparing store-keepers to take on other tasks, thousands of square feet of space was freed for future expansion at no cost!! And soon the vendors started talking about this system to their other customers and the latter started visiting Vetrotex to study and adopt the same in their own businesses!!!

Came the time when the company’s annual report and financials were sent to the global headquarters. The global audit team could not understand how the value of spares and other consumables was reported to be zero, and wondered if something fishy was going on. The audit team landed up without notice to investigate this quirky fact. Once Natarajan explained the functioning of the new procurement process, and the resultant massive saving of personnel, money and space, the visitors had to admit that the new system followed at Vetrotex was far superior to what the rest of the organisation was using across the globe. They not only gave a positive report about their visit but also suggested this system be followed in 77 plants across the world run by Saint Gobain Vetrotex!!!!

Following the success of this assignment, Natarajan asked us to help redesign their sales process, along with supply chain management from factory to their customers. They had two types of customers: OEMs and Dealers. Since the glass furnace could never be shut down - the molten glass would solidify and the entire furnace would be scrap - they had to keep producing even when there were no, or few, orders, and then the sales department was mandated to create special promotions to offload the produced material,  and to settle accounts with the customers as per the schemes. It used to take a lot of time and, on many occasions, the effectiveness and profitability of the schemes could never be measured. 

At this stage, I was introduced to a startup incubated at IIT Bombay called Herald Logic (HL). One of the early stage co-founders and investors in Herald Logic was Dr. Ramdas Ramakrishnan, whom I had known when he was working for TCS and Baan in Hyderabad. In fact, he had invited me to address the TCS consultants, sharing my experiences as an independent consultant where I was talking about my holistic approach to business consulting as against the traditional functional approach followed by large consulting organizations like TCS. Later, at BAAN, his boss heard Raghav and me make a presentation on BPR vs. ERP in a seminar organised by a reputed management education institution and invited us to address their IT technical trainees on business process management. Ramdas had good appreciation for our work in the area of BPR. 

In early 2002, he visited my place in Hyderabad and talked to me about his association with Herald Logic and how the technology developed by this startup would help in process management and could be an important tool in BPR implementation. He invited me to visit IIT Bombay where this startup was located, and get a demo of this technology. So, the following week, I visited IIT Bombay and spent the next two days interacting with young techies and the youngster behind the technology, Mr Vishal Gupta. He explained that, originally, this technology was developed to simplify fingerprint analysis for forensic applications as part of his B. Tech. final year project. Later, he and his guide realised that the same technology could be used in dealing with large corporate applications where there was a need to crunch large amounts of data and make sense out of it in real time. When this technology was demonstrated in 2002 at Singapore, during the Stanford University annual competition for disruptive technology, it got the first prize of US $50,000 for the best disruptive technology. But, when the young entrepreneurs went around trying to get corporates to buy their technology, there were no customers willing to put their money up front,  since it wasn't commercially used and proved anywhere yet. 

When I went through their presentation, I immediately realised that, in many of our BPR implementations, the IT part of it was a big time-consumer and the IT solutions often did not match up exactly to our BPR redesign. This technology clearly fitted like a glove to be used in the IT part of the implementation. In a traditional IT system, it used to take anywhere between 6 to 9 months to make the necessary IT changes.This technology of  HL could do it in a couple of weeks since it was designed to sit on top of the existing data and system and capture the necessary data to process in real time as per the process design. It also provided for decision rules and decision support systems to be established by the user, without the need to call the IT department. I was truly excited to help this startup to get real customers and told them that I would talk to my existing customers and see how they could be persuaded to adopt this product. The only condition I put to them was that they should agree to my value pricing model which required that they don't discuss any commercial terms till the clients had experienced the product; I convinced them that, since this was a great product, the customers would then get back with a good price after their actual experience of its benefits. They quickly agreed.

When I returned to Hyderabad, I met Natarajan and apprised him about this visit and shared with him the possibility of using this new technology in our BPR projects in his organisation. His first reaction was: Why should he invest in one more technology, not knowing how it would work? Moreover, globally the group had  taken a decision to implement SAP as a standard ERP tool to be used in all locations and he was not sure he would get support for this technology. Then I told him to  take a trial use of this technology for 3 to 6 months without any commitment and, if they found it useful, then he could decide on the commercial terms. He agreed and I advised him only to reimburse the cost of travel and stay of the 2 young techies for 2 to 3 weeks in Hyderabad for installing the software,  which they could then use as per their requirements. HL would provide online support from their office in Bombay. By this time, internet and online systems were emerging  as powerful game-changers in the IT world. 

Vetrotex decided initially to  use the HL technology in their sales process to monitor the sales promotion schemes for their dealers to push sales, which usually ran for 2 to 3 months at a time. After 3 months, they requested HL to extend the use for another 3 months for another new scheme, while also asking that the same technology be used in their procurement process, which involved setting up the technology in the procurement IT system. 

After 6 months, all the users told Natarajan that this technology was amazing and, in future, they could not manage without it. They urged the management to finalise the commercial terms so that they could continue using it. Natarajan told me that, for finalising the commercial terms, the global IT chief had to come to Hyderabad to see for himself how this new technology was used. 

Soon after, the HL team was called to discuss and finalise the commercial terms. I had told them very clearly not to raise any commercial terms but to leave it to the client to make their offer. During the discussion, the Saint Gobain IT chief admitted that, even if they had SAP, it would take a year or longer to incorporate the features this technology offered, and would cost them coupleof crores of rupees. And, in the end, there was no certainty that the system would work in exactly the same way. 

He then offered to pay user license fees as they  would have paid for SAP, based on 500 total users of Saint Gobain group, with an initial commitment to pay for 25 plus users at Vetrotex Hyderabad. Along with that, they would pay 18% for the annual maintenance contract. All this without HL making any price proposal!

The HL team was totally bowled over. They had hoped to get a princely sum of Rs 5 lakhs and here the first client was offering them Rs 50 lakhs upfront. I told them this was the power of value pricing. For the next 3 to 4 clients too, I advised them not to talk of commercial terms; just ask them to use the technology and get back after 3 to 6 months. Once they had a reference point from these initial engagements, they would in future have a basis for commercial terms to be quoted in the early stages of discussion. 

The final assignment we were asked to take up in Vetrotex was to redesign their manufacturing process where, after the glass furnace, the final products were made for supply to their customers. The focus of this assignment was to establish a supply chain where only customer orders would be  produced and supplied, so that no finished goods stock was maintained at the factory. This was finalised by the team with our guidance in the next 2 months and implemented at the factory. Suddenly they found, at the end of our association, a lot of factory space had been released since both the General Stores and Finished Goods Stores became empty and they decided to convert these spaces to add more manufacturing capacities. 

We regularly visited  Vetrotex for the next 5 years and later also used them for referral to our prospective clients. Natarajan personally wrote to and introduced us to many other prospects, some of whom became our clients later on. I will discuss these in my future posts. During this period, we were also issued a permanent visitor pass so that we didn’t have to waste time at the security gate whenever we entered the factory!! And, every year, when the company issued a special diary to all its important clients and vendors with their names embossed on it, we too were given one of these. This was one of the most honourable and rewarding associations in my consulting experience. Later, when Natarajan moved to another job in Sanmar engineering group in Chennai, he called me up to work with one of its group companies, which I will discuss later.

My Journey As A Consultant - 17

 Reengineering Before Internet Days

When we started working to implement Business Process Reengineering in our client organisations, we had to manage with available technology; the internet was a far cry away from being a norm as it is today. Also, many of the tech solutions like smart phones were unheard of and mobile phones were just getting launched and were very expensive to use. The nearest device to affordable wireless communication technology was the Pager, which allowed short messages to be sent between two parties. The only technologies of interconnected desktop computers available were WAN and LAN, but they required wired networks to be established everywhere, which had practical feasibility issues where  two locations were far apart. 

The Department of Telecommunications (DOT) was the only agency capable of providing VPN service, and this was prohibitively expensive for many organisations to consider for networking across various distant locations. MRP softwares was available but could be affordable only for very large organisations; ERP was just being introduced and there was a wide choice of ERP suites available from various vendors. Many of these vendors were promoting their products with a selling proposition that if an organisation installed their software, the processes would be reengineered without need to go for a formal BPR exercise. And, as was bound to happen, many of these packages ended up becoming expensive solutions since, in the absence of a prior BPR exercise, many organisations ended up tweaking these softwares to align with their current manual processes and hence a seamless software process got broken in implementation. 

When we started working in such organisations where they had already implemented MRP or ERP before we entered, we had to prepare the organisation to reverse many of the customisations which they had already paid for!!! 

Apart from that, many organisations had invested in computerisation which involved simply dumping all the current manual way of working into a computerised way of working; hence they had usually a paper trail coexisting with the computer data trail. And, in the absence of networking and process focus, the same data were getting entered in different locations using the paper trail. Despite such limitations as seen from today’s perspective, we could come up with some original solutions in many of our early assignments prior to  the advent of the internet. I share here the examples of interesting ideas which got implemented in those days.

In the first assignment at Hyderabad Batteries, when the team analysed data of past quotations, they found that 80% of the tenders were coming from 4 or 5 major customers who had standardised their system requirements around certain specifications. The team therefore came up with an idea that, for such tenders, there was no need to design the solution from scratch, and a checklist of standard specifications could be incorporated in the software they had developed for making the quotation. One of the team members, Mr. Narayana, was from the accounts department and he had no idea of the technical aspects of the product the company was offering. One of the team members suggested that we had to make the process for making an offer “Narayana Proof”, which implied that the accountant should be able to prepare a quotation based on the checklist!! This also enabled standardising the Bill Of Materials (BOM) for procurement and manufacture without wasting time, once the order was confirmed for these 80% cases. The technical persons needed to play a role only in the remaining 20% cases where the customer requirements deviated from the standard list. 

In the next assignment at the Apollo Diagnostic Centre, apart from the issue of standardised report delivery using the 80-20 rule, we had a major logistics problem to address. Since ground floor space was in demand for consultants to see their patients, the sample collection room was on the ground floor and the testing lab was located on the second floor exactly above the sample collection room. Since the samples had to be taken 2 floors up, the house keeping person would wait for several samples to be accumulated before carrying them two floors up the stairs. This caused a major part of the delay to begin with. When the report was finally prepared in the lab on the second floor, the same house keeping person had to bring it back down to be delivered at the reception on the ground floor. So he would similarly wait for all the reports for the day to be ready before bringing them down all together, which caused another major delay. 

The team observed that both the sample collection room and the lab had windows located below one another on the two floors, and wondered if this could in some way be used to speed up sample delivery to the lab. So Raghav and an enterprising friend of his installed an eight-inch plastic tube between the windows and designed an electric lift to carry the samples from the ground floor to the second floor within this chute as soon as the sample was taken. This minimised the long delay between sample collection and lab analysis. The rest of the process could be completed seamlessly in the targeted 30 minutes using computers. This was another out-of-the-box solution that the BPR team could come up with while working on BPR. 

In the case of Glaxo, compulsions of a proposed VRS forced the team to look at the option of using third party contractors for some of the activities done by their own employees, and also empowering the field managers to take administrative decisions on a day-to-day basis while using the computerised process for these actions to do random statistical audits to check misuse. In the absence of networking between far away locations, the data was moved from these locations to the head office by courier every day, or every few days, by floppy disk or other media available to the central computer centre for processing and updating. 

In the case of the Nagarjuna Steels assignment, we were faced with a major challenge regarding daily cash purchases for urgent or low-value items. The factory was located at Patancheru, 30 km away from the nearest market at Secunderabad. The present system was that, every day, one of the purchase executives would come all the way to the factory to report for duty and, with the list of cash purchases given to him, would come all the 30 km back to the city to buy and go back 30 km again after all purchases were made. Sometimes, some of the items would not be available during his visit and he had to make another trip the next day for the same item. This involved a lot of waste of time in commuting. And when we computed the cost of buying the cash purchase items, in many cases it was several times more than the actual value of the item. 

During the team discussions, the member from purchase pointed out that there was a vendor for small engineering and store items who visited the factory every day, took orders for these items and delivered them the next day and collected his payment once a month. So why not offer this vendor the increased business of making all the cash purchases? This would free the purchase executive to more useful work at the factory. So, once the purchase team member discussed this proposal with the vendor, the new process was recommended to the management which cleared it forthwith. In the process, we introduced a category of vendor called “buyer” in the reengineered process!

When we were working with Bakelite Hylam on the second assignment involving field sales operations at Delhi as the pilot project, we had the most interesting ideas coming from the team. Delhi had a sales office located in Defence Colony area in the middle of the city. It was headed by a Branch Manager and he had a team of field sales personnel for different business divisions. They had close to 20 field people along with a few office staff to provide administrative and clerical support and a receptionist-cum-telephone operator. 

All the employees had to report to the office at 9.30 am every day, and, based on their sales call routine or responding to urgent calls from customers, they would move into the market and had to come back by evening to submit the call reports before going home. Sometimes they would be delayed in reaching the office in the evening, in which case they would inform the office and submit the call report the next morning. The interesting finding was that the receptionist-cum-telephone operator was fielding many of the customer calls on her own, with all the correct information needed, in the absence of the concerned field salespersons, and she would inform them when they came back to office about the call for any follow up. The team realised that the current way of working involved a lot of waste of time in commuting between home, office and field work. The call rates were hence low. Moreover, as the number of staff increased, the office space was getting cramped and they had proposed to move to a larger place, which was awaiting approval. 

During the discussion, the team observed that many a time the same geography was getting covered by different sales persons representing the various divisions, and in some cases the same customer was met by more than one salesperson representing different divisions. Many felt that this waste of time and resources should be eliminated in the reengineered process. Someone asked why the sales people should report to the office every day; why couldn’t they go to the field directly from home and inform the office by phone for any urgent follow up from the back end based on their customer needs? This way they could meet more customers per day. Another member suggested that when the office needed to contact the field person, they could send a message by pager to him and he could call back the office from the nearest public phone. In this process, the role of the telephone operator-cum-receptionist became very important and she became part of the sales team. In fact, the team came up with a reengineered process where each field person would cover all customers in his geography and all divisions closest to his home, and all of them would only come to the office every Saturday for a meeting with the sales manager to review operations for the last week and plan for the next week. Suddenly, the need for additional office space vanished and, as the call rates improved, the sales performance also improved significantly in the next 3 months. The management immediately asked the marketing chief to implement the same pilot model across all other territories.

As we can see from the above cases, remarkable process reengineering can be done even without significant IT enablement, provided the focus is on the outcome. Later, when IT technology had evolved considerably, we carried these experiences with us when we moved on to other organisations, giving us greater leeway to come up with more innovative solutions.

My Journey As A Consultant - 16

Organisational Dynamics and Change Management

We (to client company CEO): As discussed last week, we are here to discuss our engagement for the next phase of our BPR intervention.

Client CEO: And I would be delighted to finalise this. Problem is, my Chairman has just sacked me!

As we were engrossed with the Glaxo assignment, we did not focus on getting a new assignment till we felt we had reached a stage where we could talk about the results from the implementation of BPR there. However, whenever we met any corporate honcho whom we knew, during our flights in and out of Bombay and at the airports, we never failed to talk about the exciting work we were doing as BPR consultants, particularly about our focus on implementation. 

One of the Glaxo directors in charge of manufacturing invited us to participate in a two-day seminar on change management organised by the Organisation of Pharmaceutical Producers of India and present a talk on our experience with BPR in the pharma industry. This led to a couple of enquiries from some pharma companies. One of them was Pfizer India. 

The VP Manufacturing of Pfizer met us after our talk, gave us his card and said he was a good friend of the Glaxo manufacturing head who had referred us. He was clearly impressed with our experience,  and said his organisation would get in touch with us soon. We were naturally thrilled, and said we looked forward to it. Sure enough, towards the middle of 1996, as we were completing our engagement with Glaxo, we got a call from the HR department of Pfizer India asking us to come to Bombay for a meeting with senior managers of the company to discuss BPR, and they said they would arrange for our stay and pay for our travel expenses. 

On the appointed day, we met with the senior managers among whom the finance director was showing a lot of interest in our work. After a series of meetings with various managers, we were asked to meet the management committee which had to make a  decision. During the meeting with the MC, I noticed that the CEO was quite hands-off on this subject and told the remaining members who represented each of the key functions to take a call. I realised that this was not a good sign since, in our view, without the commitment of top management at the CEO level, no BPR  could happen. Very soon, we also noticed that they were not sure why and where they needed to take the first project and there was a kind of passing the buck around going on right in our presence. Finally, they decided that they would take it up in the marketing area and the marketing chief clearly seemed not quite pleased with it. They even finalised a date and arranged for us to organise an educational workshop for a cross-section of their managers before starting the assignment. However, one day before we were to leave for the assignment, we got a call from the HR head saying that they had decided to postpone this project to a future date and they would get in touch with us later. 

However, the manufacturing head who had referred us in the first place called us privately to confirm that they had no real consensus on the project, and it would not materialise. This was our first encounter with organisational dynamics and change management!!

We were also talking to a few large companies in and around Hyderabad, and we got invited to participate in a couple of workshops organised by educational institutions and professional bodies. I also presented a paper based on the Glaxo experience in these symposiums, and IIM Bangalore, my alma mater, invited me to present a case study based on the Glaxo experience of BPR to their PGP students. However, we were not getting any new assignments till the end of 1996, which was surprising as well as frustrating. The heady feeling post the Glaxo engagement started mellowing to the realisation that we had no fallback to get new work when we were busy with current work and we needed to address this in future. So we persisted with our contacts and, towards the beginning of 1997, we got a break with Nagarjuna Steels, which was part of the Nagarjuna Group in Hyderabad, and the reference came through the CEO of Nagarjuna Finance who had earlier engaged us. 

While working with Glaxo we realised that  the bills payment process is a subset of the procurement process and, if a major BPR exercise was undertaken in the procurement process, it would have a significant impact on the company. We therefore convinced the CEO of Nagarjuna Steels to engage us to reengineer their procurement process. We soon finalised a contract on similar lines to Glaxo, wherein we were to spend two days a week at their factory located at Patancheru about 30 km outside Hyderabad.

This project was going well and we were able to recommend, with the help of CFT, some innovative ideas for simplifying the procurement process. As and when the management approved a set of proposals, it was taken up for implementation without waiting for complete recommendations covering all the areas. This was also giving credibility to the power of BPR to change the organisation and there was full cooperation from everyone including all the key vendors who had to come on board post BPR. 

But suddenly everything went out of the window, as they say, when one morning, six months after the start of our engagement, the CEO informed us that Nagarjuna Steels had been taken over by another steel company called Pennar Steels, and the new management told us that, since they had to focus on the merger issues, they had no time for this project and decided to terminate our contract. Not surprisingly, the new management also refused to pay the balance amount due to us for the work already done and implemented! We finally managed to use our contacts with some key people in the city from our IIT and IIM network who knew the senior management of Pennar and convinced them to settle our dues suitably. 

Two lessons were learnt from this. When dealing with corporates, too long an engagement is not a good idea and we should focus on quick results to get our money fast. And, second, it is important to build on our network of contacts to both get assignments and, if necessary, help in getting the final payments which became an issue with some assignments later on.

Raghav Rao had been the CEO of Shriram Refrigeration in Hyderabad before he started out on his own. One day, towards the end of 1997, he was making a presentation on our BPR experiences at a CII-sponsored programme when the current CEO of the same company, now known as Tecumseh Products of India, expressed his interest in discussing how we could help him, since he had been engaged in major change management initiatives ever since Tecumseh took over Shriram Refrigeration along with the compressor division of Whirlpool at Faridabad. In addition, they were putting up a new project at nearby Ballabgarh to manufacture compressors for refrigerators on a very large scale. During our meeting with him in Hyderabad, he  wanted us to work with the team at Faridabad and Ballabgarh first and finalised an assignment for us to work 2 days a week there. 

As we started working, we noticed that  the CEO, who had been recruited after Tecumseh took over, was working on one side and his other VPs, who came from the original Shriram Refrigeration background, were pulling in a different direction. At the same time, some expatriate managers from Tecumseh USA were assigned to help in setting up the new plant and they were pulling in one more direction. I particularly noticed that, while they were somewhat agreeable to working with Raghav, since he was their old boss, I never got their acceptance! Moreover, they also did not agree to our standard approach to implement BPR but instead made us address some of their current manufacturing problems at Ballabgarh. 

During the course of our work, we identified some issues which showed the local management in very poor light, and this led to a backlash from them in the form of finding fault with us and our capability to work in their unit!!! However, the CEO, who was based at Hyderabad, was quite pleased with our work and appreciated the fact that he was made aware of issues which were otherwise being hidden from him by the local management team. We realised that we were really getting caught up in major corporate dynamics working in the background, and we completed our first contracted period, collected our payments, and did not seek any further work from them. Soon, we got news from the company that the CEO had been replaced by the VP who was based out of their Faridabad unit, and the CEO was continued as an adviser without executive responsibility!! Thus went another assignment without much value contribution despite our sincere efforts, just because of organisational dynamics.

I was focusing since 1996 on getting work from another major company based out of Hyderabad, Bakelite Hylam. I had met the previous MD a couple of times before he was replaced  with a new MD in the year1997. Anand Mundkur was an IIM Calcutta alum from one of the early batches and I got to meet him through one of his business school classmates who was known to me closely. He liked the idea of using BPR in Bakelite Hylam as he had just taken over as MD and found many of the problems he was facing were linked to work practices which were decades old. Also, Bakelite Hylam, which was a pioneer in the decorative laminates business in India and had built the brand name “Hylam” as synonymous to laminates, was  losing market share (and losing money!) to much smaller companies which had mushroomed across the country due to the differential excise policy benefiting small units over large companies at that time, as well as the relatively low technology involved in laminates manufacture. Anand wanted us to work in the area of improving the entire supply chain from procurement of materials to manufacturing to market, where the focus would be to respond quickly to demand at the retail end. 

This was the first assignment of this kind for us and the whole CFT was very kicked to work with us in coming up with great recommendations with our guidance. After the redesign was presented  to the Management Committee, we noticed the play of organisational dynamics in the MC meeting. Most of the members of the MC were old-timers in the company, while Anand was seen as an outsider; we noticed, along with Anand, a reluctance on the part of the old-timers to accept this change. Implementing the CFT’s recommendations meant that the manufacturing department, which had always held sway over other departments in the company, would have to work as per the needs of the market, thus lowering their perception of power in the company hierarchy. During the course of this meeting, after some heated discussions, the VP Manufacturing resigned and the CEO had to take the hard decision of not only accepting this but also stating to the rest that he was going ahead with the implementation and those who were not coming on board were welcome to leave too!!

The implementation involved some work practices that required workmen to come on board too. So we actually ended up spending time addressing the workmen in small groups in all the three shifts, pointing out the advantages of the new approach to the company and hence to them personally. After a few hiccups, we managed to get the new process rolling, though we could see some internal efforts to slow the progress by finding faults using old yardsticks of work. 

Finally, we managed to get everyone on board and started implementing the new supply chain model based on pull, as against the old model of producing to forecast and using sales push to sell whatever stocks were generated, often giving away large discounts for cash generation. The improved results started showing up in the form of reduction in inventory across the factory, while the sales started increasing. At this point, Anand realised that the field sales operations would also have to be substantially altered, to align with the new way of working. He therefore assigned us to make this happen in the most difficult territory of Delhi and North India. 

With the help of a CFT that we created at the Delhi sales office, we came up with a novel approach to field sales management. The distribution channels were increased extensively and, combined with the new supply chain management system, showed a three-fold increase in sales in the next three months, with the same manpower! The company was very pleased and decided to roll out this new method across the country.

Once this was done, we thought we had done a great job when a third assignment was given to us to reengineer one of their major industrial products called Resins, used for bonding applications, for which this company was well known.

We did not realise that, while we were showing great results, there was trouble brewing for both the CEO and us in the background. Bakelite Hylam was part of the GP Goenka group and, when we started work, one of the Unit Heads had come over and met us. He wanted us to maintain parallel communication with him directly, which we had point blank refused to do at that time, since our engagement was done by Anand. During the meetings over implementation, some of the senior managers who were old-timers even accused us of disturbing their comfort zones in their current roles, which were changing post BPR. The net result was that they were carrying tales against both the CEO and us to the group management at their head office in Calcutta. 

Not surprisingly, one fine day, Anand Mundkur found he was replaced by another person and when we landed up on our routine visit that day there were two CEOs in the same office and we were told that there was a change in the top management and our services were no longer required!!! Later on, this new CEO was also replaced by a third one and, by the time he could complete six months on the job, Bakelite Hylam was going downhill very fast and was sold to a new group which  eventually closed down the company and sold the real estate assets to some builders and moved on.

After three such consecutive experiences, which we considered failures despite the improvements we had created, we were a little unsettled, and felt that we should be more careful in starting work in future with any corporate, till we were sure such experiences would not get repeated. But the need to make a living out of this profession does not give you the luxury of picking and choosing, and we hoped things would improve, as times were changing, and the compulsion to implement BPR would force companies to take such change management initiatives more seriously. 

And that is what happened subsequently, when we got work from some very enlightened CEOs and their companies.

 

My Journey As A Consultant - 15

 Managing Change in a Large Corporate

Glaxo Jt. MD: We want you to ensure all bills are ready for payment by their P.O. due date (usually ranging from 30-45 days) and the number of employees in the Bills Payment department, which has come down from 20 to 12 after the VRS, should have a token 10% reduction.

We: Sorry, your targets are not acceptable to us.

Glaxo Jt. MD: ???

We: Firstly, we will target that ALL bills should be ready for payment within 7 days, irrespective of when they are due to be paid. And, second, we will eliminate the need for a bills payment department!

Glaxo Jt. MD: !!!

 

Glaxo was our first experience working for a large MNC corporate assignment. The first thing that caught our attention was the size. We were used to smaller organizations in Hyderabad, where the number of employees was not more than 300 to 400. But here we were dealing with an organisation with more than 5,000 employees and multiple divisions located in various locations across the country. Glaxo India was also an old company, established in India before Independence, and was part of large MNC having global operations headquartered in England. While the Indian operations had considerable autonomy, certain operational norms had to be aligned with global norms. This was more so in matters of managing finance and operating systems. 

Being an old company, they also had legacy systems coexisting with modern practices. Glaxo India was already using Cobol-based computerised accounting systems and they were in the process of upgrading their IT infrastructure at the time we started our work. They had a full-fledged computer department with programmers well versed in legacy system programming, and they had computerised most of the financial management and accounting systems, which produced reams of paper reports as required by various departments. 

Recently, they had started implementing an MRP package called MFG PRO to align their reporting systems to the requirements of their global headquarters, and when we started our work we found that they had multiple platforms of IT systems which were stand-alone and required link programming everytime data needed to be moved between the systems. 

By and large, Glaxo had IT systems which had computerised the manual way of working, while the paperwork based on traditional functional silos was still the backbone of operational control. Hence, they had a large number of clerical and supporting staff in back-end functions performing work the way they were designed several decades ago. In all these, financial control was the key to their operations and hence, like any traditional organisation at that time, there was no focus on processes. Though they had been exposed to concepts of TQM recently, adopting the process mode of working was still a far cry away when we entered the scene. 

Another aspect of such an old organisation was the strong sense of power the functional heads felt over their subordinates, with the concept of command and control being deep-rooted. Hence, some of these managers resented it when one of their key subordinates was pulled out from their control to work as a CFT member in our project and they used to pester these individuals for not focusing on their day-to-day work. However, since we had direct access to the MD and Joint MD, we used this to address such pin-pricks so that our team members could work unfettered. 

After our first meeting over 3 days with all the VPs, the management gave us a formal appointment letter clearly spelling out goals for the project. We felt these goals were not aggressive enough and we suggested that we would work for more challenging targets -- goals which should look impossible to achieve. 

The first project was taken up at their oldest plant at Worli in their pharma division and the goal set was to ensure that all bills were processed and ready for payment by their due date (based on the payment terms of the order) and the bills payment department, which already had a reduced strength from 20 to 12 after their VRS,  should have a further token 10% reduction. Of course, these goals were influenced by the Ford Motor case that we had used as a reference. Our reaction is stated at the beginning of this post!

Since we were dealing with a large organisation we had to bring people across different functions and levels on the same page and had proposed 4 levels of workshops, one each for Top Management consisting of all Directors and VPs, next for all GMs and DGMs, next all middle managers and finally the front line executives covering all the functions, since bill payments affected everyone. This was spread over the first two days followed by one session with the trainers who were supposed to educate the rest of the organisation. We had also suggested that we would spend 2 days a week every week till the redesign was finalised and accepted, and subsequently visit regularly to follow up on implementation of the pilot project. During the two-day visit, the CFT would work full time with us and they had to make suitable administrative support for the team to work under our guidance for the rest of the week too, since they had to collect data from various departments and specialists. 

We were provided accommodation at the company’s guest house in a block of premium flats at Malabar Hills where, in the neighbouring apartment, the MD himself resided, and we had the advantage of occasionally interacting with him in the evenings, briefing him on the progress and also addressing issues of getting some critical information. We also had a caretaker-cum-cook,Sundaram, who had worked there for long years and made sure we were at home away from home. 

Every Wednesday and Thursday of every week, we were at their Worli plant working with the CFT and, over the next three months, the bills payment process redesign was finalised and presented to the management. Without going into the details of the case, it is necessary to state that, while the situation at Glaxo was no different from the Ford Motor company case or any other reengineering case being reported at that time, the main difference was that the purchase orders released by Glaxo at that time had some vague terms for payment clauses like payable as applicable for taxes and duties which used to cause major back and forth movement of bills between the accounts payable and the purchase department, requiring amendments to be issued and delaying the payments. Also, since the departments were located in different adjacent buildings or different floors in the same building, the paper trail had to move across these buildings, for which the administrative department had to provide what was popularly called “Dak” (Postal) service internally. 

When the team presented their findings, there was, as expected, complete disagreement from the heads of various departments to let go of their power to control. While the top management was totally in agreement with the recommendations, we needed the buy-in from the operating departments before the implementation could happen. I remember Raghav had to intervene passionately with his observations that the current practices required heroic responses from all the employees and still no one was satisfied. What was proposed would make everyone comfortable and the control aspect would be addressed more effectively using IT systems, since now we were proposing IT as an operational tool rather than an information tool. 

Around this time,  Mr M H Nayak was brought in as the head of the commercial department, and, fortunately, was completely convinced that the proposed system would be far better than what they were currently following. So he took a stand that he would take personal responsibility for implementation and report the results of a pilot involving major bill payments to large suppliers, using the pilot to emphasise the usefulness of the proposed system for the rest of the bill payments. 

A major problem was that the Thane factory had its own computer system, and the data from there was not compatible with the head office system. The stores' incoming quality and material acceptance reports were therefore sent to the commercial department on paper printouts, and entered again into the head office system. We therefore had to work with the computer teams of internal programmers, and the MFG PRO implementation team from outside, to develop the necessary link programmes to connect up the disjointed functions to make a seamless process from placing a good and complete purchase order, through receipt and acceptance at the Thane factory stores, to bill payment. The IT team took another few months to complete their work and M H Nayak took charge of the implementation, starting with all the old purchase orders and rectifying them to conform to the new norms, and releasing fresh purchase orders. 

After six months, Nayak called for a meeting of top management and presented his report on implementation. When they had started the project, they had on average 600 high-value bills pending every month, which were overdue by more than 1 to 2 months. At the end of the first month of the project implementation, they had brought it down to less than 200. At the end of 3 months, they had brought it down to less than 50. And, by the 6th month, they had brought it down to three and these too were delayed due to problems from the vendor end. 

The most important announcement Nayak made was that they were making all payments now in 3 to 4 days from the date of receiving the bill and he was able to demand discounts from all vendors for payments made ahead of the contracted due date. And the whole bill payment processing operation was being done by just two people, one from the commercial and one from the accounts, who had to arrange the cheque which was also now getting printed by the system. 

There was a stunned silence for a few seconds and then the joint MD started clapping and the rest of the audience joined in. Once all the commotion subsided, the Joint MD announced that he felt that the consultants and the CFT needed to get together for one more team meeting -- but this three-day meeting would be held in a luxury resort in Goa, along with their wives!  Of course, no serious work was done on this trip which made up for all the hard work put in by Naik and the CFT! 

A spin-off of the project was the accounts team-member reporting that, earlier, most of the accounts personnel used to sit late every day. Now the pharma division accounts staff were going home early and the other divisions had started demanding the same system be implemented in their division too!!

While we were working on the implementation of the reengineered bills payment process, we were given one more assignment by Glaxo. They were planning to close down their branch offices located in all the major metro cities and give VRS to nearly 250 people working in these offices at the end of the year 1995. These field offices were supporting the nearly 1,300 medical representatives working in the field all over the country, apart from managing the inventories of products sold in those markets. The company had already taken a decision to appoint C&F (Carrying and Forwarding) agents for handling the inventories from factory to market to release expensive real estate in these metro cities. 

The whole plan was supposed to be done secretly and announced and implemented within a very short time at the end of the year. 

Since the Glaxo top management had, by then, assessed the power of BPR that we brought to the first assignment, we were asked to help them use concepts of BPR to achieve this major restructuring smoothly and effectively within the short time available.  

This time we proposed that, in order to develop an effective plan within the shortest time, as well as to maintain secrecy while getting the redesign finalised, the consultants and the new CFT which was proposed should stay together in a hotel for 10 days, so that they could focus on the task without any of the routine work distractions. This was agreed to, and we had the unique experience of working 12-14 hour days, first training the CFT, which included marketing persons from outside Bombay, in the BPR principles and then getting down to really radical restructuring of the existing, cumbersome processes involved. We were empowered to request the presence at the hotel of even the senior-most managers for discussion whenever we felt it necessary.  

The field offices had to deal with many administrative functions while giving logistics support to the medical representatives and field sales managers. This included both material support and financial support, apart from keeping records of personal information. Since the field offices were to be closed, we had to come up with a solution which combined a centralised cell consisting of 20 people at the head office providing these services along  with outsourcing third party services to handle both logistics and money-related services. We even co-opted an MNC bank to provide money transfer services directly into the accounts of all the field representatives while speeding up the process of field management by empowering the field managers to take local decisions using BPR principles. 

On December 31 evening, the VRS was completed and on January 1st morning the new system came into operation. As could be expected, there was considerable chaos across the head office where the sales managers, who had already been briefed about the changes, were getting besieged with field issues and were rushing to the central BPR cell to address their individual problems on priority. I must give full credit to the top management of Glaxo, that they stood firmly by the decision to implement the new system and informed everyone to bear with all interim problems they may face till the new system settled down. It took about a month and, by that time, the field personnel noticed that they were getting their services faster than before and the accounts settlement was happening in the same month. The management had earlier given 3 months’ imprest as advance to field personnel to deal with delays in account settlements, and they were now able to manage with just 1 month’s advance, reducing the working capital requirements. Even salary payments were getting credited directly on the due date and the field reps started expressing their happiness with the new system.

We were involved with Glaxo for close to 15 months, starting May 1995 till August 1996. During this period, we completed two assignments. We had a bonus clause in our payment terms. Glaxo not only paid us the bonus but also gave us an additional bonus of a holiday retreat at Goa with our spouses along with the CFT team!