www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Godrej Security Solutions
- Tripling profits in 2 years
Presented By: Mr. Rahul Naik – Godrej Security Solutions
Mr. Shailesh Ranjan – Vector Consulting Group
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
� TOC implementation in Retail business
� TOC implementation in New Product
Development
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
� TOC implementation in Retail business
� TOC implementation in New Product
Development
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Godrej Security Solutions
• Godrej Security Solutions (GSS) is part of Godrej & Boyce Group with an annual turnover
of Rs. 750 Cr. (approx $150mn)
• GSS operates in two market segments:
– Institutional:
• Supplying physical security products to Banks, Non-Financial Institutions,
Jewelers, Diamond Merchants, Post Offices, etc.
• Operating from one Plant and extended contract manufacturing facilities
• Market share of 62%
• Close to 600 dealers handling the front end
– Retail:
• Selling Home Safes to end consumers through distribution channel
• Operating with 1 imported vendor and 7 local vendors
• Market share close to 80%
• Working through 100 Distributors, 500 Dealers and 4000+ Retailers
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Institution - Product Portfolio
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Retail - Product Portfolio
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
• Key challenges faced prior to TOC implementation
• TOC solution deployed
• Results
� TOC implementation in Retail business
� TOC implementation in NPD
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Key Challenges - Market Perspective
• Significant damage due to delay in opening a new Bank branch
– Loss of revenue to the Bank
– Loses market share (doesn’t get the first mover advantage)
– Increases cost (incur additional rentals)
– Risk of losing license
• Customer’s expectation to open a branch was crashing from earlier 2-3 months
to 1 month (including PSU banks)
• Major skew in demand – around 70% of the demand comes in 2nd half of the
financial year
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Key Challenges - Internal Perspective
• To make a physical security product it requires around 50 number of components.
Some components are made in-house whereas the rest are sourced from more than
40 vendors. Due to multiple sources and each working to optimize its local
efficiency, there was significant de-synchronization at the Assembly
• Coupled with the fact Production preferred making standard products (to look good
on numbers). This led to highly varying production lead times and poor reliability
• Due to highly varying lead time, products were manufactured based on a forecast
(inspite of having a very good order book). Also the tendency to push FG stocks
down the supply chain created major mismatch in stocks. There were surplus &
shortages!
• During the 2nd half of the year when demand used to spurt, the plant used to get
fully loaded. At this time sales were chasing orders even at a discount to meet top
line targets
• As a result GSS market share was declining and growth in sales, profits &
profitability was near stagnant (inspite of market growth)
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
TOC Solution Deployed
• Decisive competitive edge that was built for the Institutional business
– High Reliability with lower lead times
• Build stage:
– S-DBR implemented at manufacturing plant & suppliers
– POOGI projects for capacity release & lead time reduction
• Capitalize stage:
– T/Cu and FOL based decisions to control discounting and improve Throughput
– “Happy Hours” offer to pull ahead demand for the lean season
– Reliability with lower lead time offer to select customers to increase market share
– Throughput based incentive scheme (as opposed to topline based) for Sales
• Sustain stage:
– Capacity management process to have capacities at the right time to handle peak load
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
TOC solution: S&T Tree
1Project Leap Ahead
2:1Reliability Comp. Edge
3:1 Achieve
99%
DDP
3:2 Selling
Reliability
3:3Expanding
client
base
3:4Load
Control
3:5Capacity
Mgmt
Build Capitalize
3:6Doors :
Dedicating
Capacity
for MTA
3:7Doors :
Capacity
Control
Sustain
Base Growth
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Institution – Solution Map
CTLLWarehou
se
Pres
s
Shop
Pickl
ing
Drill
Shop
Mother
Coil
Asse
mbly
Pain
t
Shop
FF
Insp &
Desp
Buffer – 12 to 18 Days Buffer – 6 Days
In-
Tran
sit
Branch
Billing
Dispatch Time – 4
to 15 Days
MTO - Customized
MTA - Standard
MTO - Customized
MTA - Standard
MTO – Both
(Standard &
Customized)
Ven
dorsVen
dors
Mix Environment of both MTA and MTO
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Reliability
• Before TOC: High lead times and highly varying
• After TOC: Lead time as well as variations have reduced dramatically
• Around 50% reduction in lead times; variations also reduced by 7 times
0
100
200
300
400
5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 96% 97% 98% 99% 100%
0
50
100
150
200
250
300
350
5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 96% 97% 98% 99% 100%
Pre-TOC
% of Orders completed in no. of days
Post-TOC
% of Orders completed in no. of days
80% of Orders
completing in 80 days
80% of Orders
completing in 40 days
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Daily Production (Rs. Cr. Per Day)
Output of the Plant has more than doubled.
Readiness of the Plant is upto the level of Rs. 3.3 Cr. Per Day
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Sales (Rs. Cr. Per Month)
Sales per month has more than doubled
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
WIP Inventory (in Days)
WIP has reduced by almost 50%
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
FG Inventory (in days)
FG has also reduced by almost 50%
12
7 6.5
6
Pre-TOC FY11 FY12 FY13 (Projected)
Post-TOC
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
� TOC implementation in Retail business
• Key challenges faced prior to TOC implementation
• TOC solution deployed
• Results
� TOC implementation in NPD
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Key Challenges
• Home safes is a completely new product category in the Indian market with poor market
penetration
• Manufacturing was based on forecast and distribution of home safes in the supply chain
was “Push” based. Due to which there was:
– High unavailability at Plant Warehouse and Branches (only 35 – 40% availability)
– Surpluses and stock-outs inspite of having very high FG inventory (35 to 40 days)
• Distributors were carrying 45-60 days of stock. This locking of capital limited the range
being displayed/serviced to the retail counters. Also this locking of capital limited the
number of retailers being serviced by the distributor
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
TOC solution deployed
• Decisive competitive edge that was built for the Retail business
– Inventory Turns competitive edge
• Build stage:
– S-DBR implemented at all suppliers. Manufacturing to replenish CWH buffers (as
opposed to forecast)
– Distribution to branches & distributors based on replenishment (no more Push)
– Seasonality handled through building stocks prior to season
• Capitalize stage:
– Inventory Turns offer to Distributors & Dealers
– Incentive to retailers to increase Range at its counter
• Sustain stage:
– Capacity management process to have capacities (with protection to handle
variations) at the right time
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
TOC solution: S&T Tree
1Project Leap Ahead
2:2Inventory Turns
Comp. Edge
3:8Produce
To
Availabilit
y
3:9Inventory
Turns
Selling
3:10Capacity
Control
Build Capitalize Sustain
Base Growth
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Retail – Solution Map
CWH,
Bhiwandi
(Mumbai)
Branch
Warehouse
Branch
Warehouse
Branch
Warehouse
Supplier
1
Supplier
2
Supplier
1
Sub Contracted
Imported
CWH, Vikhroli
(Mumbai)
Supplier
1
Supplier
2
Bought out
CoCo
Disributor
Dealer
TOC Replenishment Solution
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Retail Availability
High availability is sustained in the high Nineties
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Retail Sales (Rs. Cr. Per Month)
Substantial increase in Sales, growth of around 45% p.a. (CAGR)
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Retail – Reach & Range
Released capital & better availability has led to significant increase in
Reach and Range
Released capital & better availability has led to significant increase in
Reach and Range
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
� TOC implementation in Retail business
� TOC implementation in New Product
Development
• Key challenges faced prior to TOC implementation
• TOC solution deployed
• Results
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Key Challenges
• Poor rate of New Product Development
• High lead time of New Product Development
• Frequent priority changes at Design Department
• As a result growth from New Products was limited
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
TOC solution deployed
• Decisive competitive edge that was built for New Product Development
– Churning out more new products at a rapid pace
• Build stage:
– Reduce bad multi-tasking: WIP control at Design and Proto-shop
– Full kit rule at Design & Proto-shop
– Daily task management to ensure Flow
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
TOC solution: S&T Tree
1Project Leap Ahead
2:3NPD
Competitive edge
Enhanced Growth
3:11Exploiting
the NPD
capacity
3:12Load
control
3:13Capacity
elevatio
n
Build Sustain
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
NPD – Solution
FULL KITActive Task
Management
Prioritization
WIP Control
• Design Team & Protoshop is now operating under CCPM
− Deployed only WIP control coupled with Full Kit
− No Software is being used for implementation
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
PSP Institution Group (Output)
Output of PSP Institution group has more than doubled
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Protoshop (Output)
Output of Protoshop has also more than doubled
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
AGENDA
� Company Background
� TOC implementation in Institutional business
� TOC implementation in Retail business
� TOC implementation in New Product
Development
� Overall experience
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Overall GSS Financial Results
100
170
284
2010-11 2011-12 2012-13
(Projected)
*Profits
Profits have almost tripled since implementation of TOC.
Profitability (PBT/Sales) of GSS has doubled in 2 years
CAGR of 66%
* Indexed
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Our experience of TOC journey…
• The entire supply chain i.e. right from Suppliers to Customers are now working
on only 1 principle i.e. TOC
• Applying TOC principles to limit the number of initiatives/improvement projects
at overall company level
• Bandwidth release of Top Management: Now able to focus on important
initiatives
• Output of various product lines is consistent without intervention of Top
Management
• No preferential treatment to any particular customer
• Harmony among various departments such as Manufacturing, Purchase & Sub-
Contracting Cell
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Our experience of TOC journey…
• Better overall efficiency at vendor’s plant led to no price rise in the last 2 years
• Some of the local measurements actually improved
– Working Capital Turns improved substantially
– Machine efficiencies (CCR) in the high 90s
– Manpower productivity of the plant has substantially improved
• Space release on shop floor due to WIP reduction, thereby improving house-
keeping and safety of workers
• Different planning cycles (tools) for material sourcing have been eliminated
www.tocpractice.comFifth International TOCPA Conference
6-7 April, 2013, Pune, India
Theory Of Constraints Practitioners Alliance ●●●● TOCPA
Thank you……