Tata Motors Limited is the world's 17th-largest motor vehicle manufacturing company, fourth-largest truck manufacturer, and second-largest bus manufacturer. The company’s Commercial Vehicles Spares business has partnered with Vector Consulting Group since June 2014 in order to build an agile supply chain that can deliver excellent service to their customers. A good after sales service with excellent availability of genuine parts is crucial for vehicle sales. Ensuring spares availability for commercial vehicles is a major challenge due to the enormous variety of spares (potentially more than 1,20,000 parts) across a portfolio of trucks ranging from sub-tonne to 49-tonne mass movers, and passenger transporters that range from 5-seater mini vans to 81-seater buses. Since it is necessary to maintain this large variety of parts over the long life span of vehicles (7 plus years) , Tata Motors, like most players in this segment, was operating with very high inventory and long lead times.
By implementing the ‘pull’ replenishment model of TOC (as opposed to conventional forecast based model) on 893 vendors and 200 dealers for 26,367 parts that accounts for 95% of the sale, the Spares business has transformed its operations. The following benefits were achieved:
Established in 1987, Fleetguard Filters Pvt. Ltd is a leading Indian manufacturer of heavy duty air, fuel, lube and hydraulic filters, air intake systems coolants and chemical products for on and off highway application. Fleetguard is a Cummins group company with a turnover of Rs.5600 million. It is a supplier to renowned automobile companies and industrial engine and equipment manufacturers. The company implemented TOC company wide to achieve significant improvements in financial and operational performance. They also went on to win several national and international recognitions for their ability to sustain excellence.
Fleetguard Filters is a tier 1 component supplier to key OEMs in the country. The company has a large design, development and testing set-up for engineering filtration solutions and products. They also have to depend on relatively unorganized tier 2 and 3 suppliers to support them in new product design efforts. Their products have to fulfill several conflicting requirements – these should be able to meet new filtration targets, keep vibration low, adhere to pollution norms, and be compact. Before overhauling began, at any point of time, the company would have about 150 projects being executed simultaneously by independent teams. The environment was chaotic; resources were stressed. Going home late and working on holidays was the norm. Things changed dramatically after the company implemented flow principles of TOC (Theory of Constraints with the help of Vector Consulting Group).
Productivity improved three times and iterations were reduced by more than half. Consequently there was a dramatic improvement in reaction time to OEMs. Apart from the great advancement in numbers, what the company best appreciated was the decline in stress levels of people, and improvement in overall harmony.
J.K.Fenner (India) Ltd, the market leader in mechanical power transmission & sealing solutions, has partnered with Vector Consulting Group since September 2014 to achieve enhanced service levels for its customers by building an agile supply chain using the Theory OF Constraints principles. J.K Fenner has transformed its operations to gain a decisive competiive edge in the market by providing higher availability of its products as well as faster and reliable delivery to its customers .The following are the results of the same.
Lucas Indian Service (LIS, established since 1930), after market distribution arm of Lucas-TVS, partnered with Vector (since Aug 2012), for transforming its distribution business through implementation of "Theory of constraints". With the help of TOC principles, LIS has transformed its operations and distribution network to reap the following benefits so far into the implementation. Same-day order fill rate has improved from 50% to 80% Overall inventory has reduced by 25% Sales from regular dealers converted as TOC distributors are growing by an avg. 45% (when compared Apr vs Aug of 13 vs 14)
Mahindra First Choice Services (MFCS) is the largest multi-brand car service company in the country. MFCS kicked off the TOC implementation with Vector, in the Chennai cluster by putting in processes of TOC replenishment for spare parts while creating a hub and spoke model of inventory locations. Within a year of TOC implementation, the following results were realized.
One of the largest distributors of engine lubricants for automobiles in Indonesia. TOP1 sources the oil from USA. With Vector, TOP1 reduced its inventory from 7 months to 2 months in its warehouses in Indonesia, while improving availability to near 100%. Top1 procures most if all its products from US. In the first phase of the roll out of the retail replenishment solution to select retailers, the range of the companys products available at the retailer has more than doubled and the distributors reach has increased by over 50%.
The company supplies rubber parts to Auto first tier suppliers. In one year the sales increased by nearly 50%, and PBT increased from 6% to 18%. It has 100% delivery performance to all its auto parts customers. It has released more than 60% additional capacity in the first 6 months of implementation. Inventory turns improved by 50%
Tier 1 Auto supplier manufacturing radiators for passenger cars and commercial vehicles Most auto parts Tier 1 suppliers struggle to meet the daily requirements of the OEMs. This is not helped by the fact that the daily requirements by OEMs of a part fluctuate widely. Hence, Tier 1 companies are in the constant state of firefighting and chaos to provide the service, leading to loss of capacity, high rejections, high inventory and exhausted managers. Tata Toyo Radiator Limited (TTR), through the deployment of TOC - solutions and thinking with Vector Consulting Group, has been able reverse this scenario. Its service level to OEMs has improved significantly on daily basis. There is now a optimal FG stock for each of its OEMs. TTR has increased its output by over 30% from existing infrastructure. The implementation of the TOC flow Management solution in NPD has doubled the output rate of new products.
KFIL is a leader in automotive and non-automotive casting supplies in India and abroad with manufacturing facilities at Koppal and Solapur. It produces grey iron and S.G iron castings for various applications, such as cylinder blocks, cylinder heads and various housings for automobile, tractor and diesel engines. The Casting industry, of which KFIL forms a part, is associated with very poor (Daily) On Time Delivery (OTD). Therefore, to offset the high lead time and unreliability, OEMs are forced to maintain huge inventories at their end (20-30 days).
After adopting TOC with the help of Vector Consulting Group, the company introduced small batch production system thereby improving its ability to adjust to the customer consumption pattern and deliver as per the requirement of the customers. New product development processes too were revamped according to TOC principles. Consequently, KFIL has managed to achieve the following results:
Mahindra First Choice (MFC), a multi-brand car spare parts company was launched in April 2015. Though it is part of the well-known business house of Mahindra & Mahindra, the new brand faced stiff competition in an already crowded space. MFC partnered with Vector Consulting Group to build a Decisive Competitive Edge based on reliability of availability in their distribution model which can then enable them to grow the business in a sustained manner. In order to accomplish this goal, the company implemented TOC replenishment solution in the entire supply chain. And counterintuitive to the practice of launching a brand with deep discounts and schemes, the company offered no schemes and instead initiated demand creation through a Mechanic Loyalty Program (MLP). Within a year of implementation significant operational and financial results were achieved. The company is now in the process of growing its distribution footprint based on the TOC philosophy.