Q: What actions have you taken to improve overall performance?
A: We are unlocking the hidden value in our supply chain by using the Theory of Constraints (TOC) approach. We have been able to reduce our finished goods inventory (in days) by around 25 percent in B2C business (in implemented phase) while improving the availability of products at the retail point. We are now putting special efforts to increase the depth of distribution in the country. Using the pull methods of TOC and innovative display mechanisms, we are able to reach out to small furniture retail points in the country. The efforts are helping us sustain a growth of 15 to 20 percent in various product categories.
Q: What is the nature of collaboration you have with vendors?
A: We have taken special initiatives to improve productivity of our vendors. Their shop floor planning and execution process has been revamped to align with our systems. Our managers, along with Vector Consulting Group, have implemented TOC processes on their shop floors as well. This initiative has helped reduce our suppliers’ working capital (in days) by 30-40 percent coupled with reduction in their supply lead-time by 50 percent and improvement in order due date performance to 95 percent. We have also staggered our consumer schemes to reduce spikes in demand.
Q: Are you able to convince your suppliers to add capacities when required?
A: With improvement of flow in the entire supply chain the real constraint resources are revealed easily. This has helped the vendors to focus on few work centers and do improvements to increase the available capacity. With these techniques, we have seen suppliers’ output increasing by at least 30-40 percent without any additional investment. Only after exploitation opportunities are exhausted do we ask our vendors to add capacity, that too only at the constraint resource. Such an investment is miniscule compared to the monetary gains. Thus, suppliers get the confidence since their investment is low and are exposed to minimal risk.
Q: Usually the relationship of a company with its suppliers is full of mistrust. Were you able to circumvent this during your TOC journey?
A: In the entire journey we took steps to proactively help vendors. Instead of following the ‘big brother’ approach of giving aggressive targets and jeopardizing their business, we have chosen a partnership approach. We have worked closely with the vendors to improve their shop floor as well as their overall business, thus ensuring that they gain before we gain. This has helped eliminate the mistrust.
Q: What were the major benefits?
A: The major benefits were –
– Growth of 15%-20% in various products.
– Suppliers’ working capital reduced by 30%-40%.
“We Have Worked Closely With The Vendors To Improve Their Shop Floors As Well As Their Overall Business, Thus Ensuring That They Gain Before We Gain.”