Helping companies beat downturn blues means big bucks these days, and consultants make hay as the sun still shines!
It’s time for the budding consultant firms to help mid-cap companies sort out process -related issues so that they do not lose market share while the pie has obviously shrunk.
"The consumer goods market has perhaps reduced by around five per cent, but for a company that has a 5-7 per cent market share, it should not spell havoc", said Kiran Kothekar, one of promoters of Vector Consulting Group (VCG) who broke from Siemens four years back to start his own management consulting firm with a group of friends.
But, helping companies take quantum jumps in sales, ensure better returns on investment, and that too at little or no additional cost is no small sweat though.
VCG is using the the Theory of Constraints(TOC), propounded by the well-known physicist Eli Goldratt in the 1980’s that assumes every organisation has a leverage point which can be exploited to give a quantum jump in improvement in a relatively short time. "We are the pioneers in bringing in the TOC for application on the Indian industry," said Satyashri Mohanty, co-promoter of VCG.
VCG is currently breaking grounds in another aspect of management consulting as well, linking fees with performance or lets say tangible results that are achieved by the company. "Our approach is implementation-heavy in place of being recommendation-heavy. We handhold the client through the process of change management and design solutions for them," Mohanty said.
The big guns of Indian consulting charge nearly 70 per cent of their fees for recommendations while bulk of the onus of implementation lies with the company. As a younger firm in the horizon, VCG has turned the table otherwise, the bulk of its fees are from accountability for the results. The firm that operates in three verticals, consumer goods, custom manufacturing, and engineering and construction, makes commitments for significant improvements in operational leverages like improving inventory turns, 100 per cent availability of products at point of sales, 100 per cent on time delivery for products and projects.
And how does TOC help? Pune-based Fleetguard Filters Pvt Ltd,makers of filters and coolants for trucks, managed to grow by 15-20 per cent during the downturn and achieve a 20-day inventory from an earlier 4-5 months inventory. It has been increasing sales in the replacement market by 60 per cent year-on-year for the last three years with inventory turns of 23 while the normal industry average is of 2-4 inventory turns. "The point of purchase availbility improved by 100 per cent by adopting a rapid replenishment model", explained Kotekar. This has come without investing on capacity enhancement or setting up a new facility.
"The problem inherently lies in the way companies operate. Instead of going in for cost cutting exercises across departments and investing on strengthening the IT backbone, or spending on advertising to get that extra customer to the store one can simply focus on increasing sales by making the product available at the right time. The profits automatically follow", Kotekar said.