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VCG employs the 'Theory of Constraints’ philosophy to
bring about quantum jump in
performance of organizations in
its target industry clusters.
We partner with clients till they
realize the targeted benefits.
Complaints
of material
unavailability
despite having
very high
inventory

High skew
of month
end sales

Frequent
expediting in
production
and logistics

Pressure
from dealers
on discounts

Much less
than target
sales from
new products,
despite good
potential

Having the right
inventory at the right
time and at the right
place.
Client: Fleetguard Filters
The aftermarket sales of
Fleetguard has grown by
about 50% year on year since
last 3 years of implementation.
Finished goods inventory
dropped from 40 days
to 20 days...
more...
Client: Liberty Shoes
The production lead time has
dropped from 45 days to 25
days; 33% reduction in WIP
and FG inventory. This has
released cash...
more...
Client: Top1 Lubricants
More than 50% drop in inventory
while availability has improved
to near 100% in all warehouses
more...
100% availability at less than half the current inventory
Many sales people believe
that having huge inventory
at the point of sales or at
the distributors can avoid
unavailability.
As a matter of fact, in cases where many SKUs are to be
managed, high inventory at distributors and retailers leads
to unavailability.
Size Does Matter!
The fashion industry has a holy grail
of “size sets” or “ratio packs”.
Though the over all population distribution may follow the
normal distribution curve for variation in sizes, the sales of
a particular retail shop do not necessarily obey that distribution!
Reality tells us that at a shop and at a day to day level
the arrival can be very erratic. The fluctuations at a shop level
much more than what is seen at a large population level.
TOC Replenishment
in a wholesale-
dominated market,
an oxymoron?
Now imagine the plight of those
companies whose sales are dominated
by wholesalers. I know of one such
FMCG company who sells only 20%
directly into retail and 80% through
wholesale. They do as much as 60%
of the entire month’s sales on the last
day of the month!
Who creates slow
movers?
A company deals with two products – A
and B. A sells 50 units a week; B sells
250 units and which is a fast mover?
Think, answer, and read on...
I’ve met enough distributors and
scores of executives and
managers...
Preventing the demise of a store
Storai, Aug 2009
How is that a store opened by a
retail company with due analysis of
market potential and costs closes
down after few years of operations?
Many retail managers blame it on
costs, store location, competition...
Power of Availability
Retail Images, Sep 2008
The common approach adopted by
companies to meet their targets is to
'dump' distributors and retailers with
very high stocks. It also serves the
purpose of 'locking the capital' of
these entities to prevent him from
buying other brands. Contrary to common
belief, the approach actually increases
unavailability and lost sales!
A better forecasting
tool or a new supply
chain optimiser...
Poor on-time
delivery
performance
even in
periods
of under
load
High level of
expediting and
associated
costs

Month end
skew of
dispatches

Pressure to
reduce
manufacturing
costs

Frequent
customer
complains

Rework
and quality
problems

High work
in process
and finished
goods
inventory

Frequent
problems on
raw material
availability

The
constraint
resource
keeps
shifting

Delivering on-time
with much lower
lead time
Client: Godrej Interio
The Office Furniture Division
(OPOS) of Godrej Interio
achieves on-time delivery
of 99%+, on the original
committed customer dates,
with capacity release
of 30%
more...
Client : A Leading Switchgear manufacturer
Record Production Levels month
on month from the third month,
achieved more than 50% rise
in plant output
more...
Client: Tool and die cast die manufacturer
Die Cast Dies and Panel Tools
manufacturing major increases
on time delivery from below 8%
to more than 90%, while
reducing lead time by 25%
more...
Standing on the Shoulders of Giants
Article by Eli Goldratt, published with due permission.
© Eli Godratt
Given that Toyota is the flagship of
Japan’s industry, one should expect
that Lean would be widely implemented
in Japan. Surprisingly, this is not the
case. It is commonly known in Japan
that less than 20% of the manufacturers
have implemented Lean. How come? It
is not because they did not try to
implement it...
Planning Improvement Projects
Planning WHAT TO improve is as important as
planning WHEN TO and WHAT NOT TO improve
Last month, I made a trip to 2
different plant locations of a
company. Both the locations
produced the same range of
SKUs with almost the same
volume but the difference
between 2 plants was
striking...
Implement MRP or
Lean Techniques
Most projects
delayed
significantly
with budget
overruns
Very high
number of
design
iterations
Low
productivity of
design
resources
Frequent
demand to add
resources.
Frequent
rework at
site
Time to
time,
there are
significant
cash flow
issues
Right
material
not
available
for erection,
while many
material
arrive much
ahead of
time
Delays
by
suppliers
Inadequate
resource
deployment
by
contractors
Customer
complaints
and
expediting
requests.
Top
management
gets
project
delay
information
very late
in the
project
Delivering the full
scope of project within
budget as per initially
committed time.
Client: TRF
The bulk material handling
systems division delivered
30% more output as
compared to last year, from
existing resources. The
design lead time has come
down to 3 months from an
average of 8 months...
more...
Client : Tata Metaliks
Tata Metaliks sets an industry
benchmark in executing Blast
Furnace relining shut down
using CCPM. Blast Furnace
relining shut down completed
in record 23 days (as compared
to typical 40 to 50 day)...
more...
Client: Abhishek industries
Using CCPM, Abhishek Industries
(Trident Group) erects spinning
plant of 30,000 spindles, a green
field project, in record time of
9 months as compared to industry
benchmark of 12 months...
more...
Stop digging if
you are already
in a hole!
One of the biggest problems
impacting the engineering
industry, in India, is retention
of experienced engineers in
the design department. Organizations
are dealing with the situation by forcing
the designers to stretch beyond the official
working hours which in turn is causing burnout
of designers and aggravated problems of
talent retention.
Part 1:
Part 2:
Caught in a Time Wrap!
Light at the End of the Tunnel
Accelerated construction projects
using the Theory of Constraints
Large construction and erection projects
seem to have a dubious record - most
of them are delayed with significant
cost overruns. The problem of delayed
projects is well documented in statistics
released by various government agencies,
not only in India but also in countries like
US and Japan...
Enabling Resource Productivity
in Project Environments
The fact that a person was late as per
planned duration does not necessarily
mean that he was inefficient. At same
time a resource completing work on
planned time does not necessarily mean that
he is efficient.Managers are intuitively
aware about these biases in decisions. So
in many cases, they rely more on their
experience about resources to rate them rather
than just relying on the numbers.
Right for Accounting. Wrong
for Project Management
If we look from accounting point
of view, the relative importance
of tasks is based on the
costs associated with
doing the tasks. From
project management point
of view, the relative importance
depends on location of task along
various paths of project...
Deadline Culture - does it help?
Interestingly, a deadline provides an important piece of information to the resources - How much delay can they afford in starting the task!
"When are you going to finish this task?"
Every person in the corporate world will
relate to the above question as a boss or
a subordinate. The bosses love questioning
while the subordinates don't quite enjoy
answering...
A better planning
tool
© 2010 Vector Consulting Group



