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Global Meltdown – Lessons to be Learnt Operations Perspective

Global Meltdown – Lessons to be Learnt Operations Perspective. Team members. Swapnil Galgalikar. Rupesh Zambad. Rakesh Tanwale. Izhar Mushrif. Amit Gautam Sourabh Bafna. Amit Shinde. Vikram Lawand. Prasad Sahastrbudhe. Krishna dhanorkar. Video 1.

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Global Meltdown – Lessons to be Learnt Operations Perspective

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  1. Global Meltdown – Lessons to be Learnt Operations Perspective

  2. Team members • Swapnil Galgalikar. • Rupesh Zambad. • Rakesh Tanwale. • Izhar Mushrif. • Amit Gautam • Sourabh Bafna. • Amit Shinde. • Vikram Lawand. • Prasad Sahastrbudhe. • Krishna dhanorkar. Video 1

  3. Flow of Presentation • Effects of Meltdown • Associated Factors • Available alternatives • Manufacturing Strategies • Learning & the Future Path

  4. Key Elementsof Manufacturing Sector • Steel • Automotive • Textile • Oil & Gas • Chemical

  5. Focus Manufacturing sector : • Automotive sector • Services: • IT & BPO

  6. Automotive Industry

  7. Why automotive sector? • Projected growth of the Indian auto industry translates to 10 -11 % of India GDP by 2016 • Auto- component industry in India expected to be USD 45 billion. • Policy initiative to market India as an attractive manufacturing destination. • Automotive industry promises significant employment opportunities. • Source- SIAM

  8. “India is going to be an automotive hub - a dream destination for engineering industries.”- Mr. Mandlik, General Manager L&T BCCI Seminar- 13 Nov. 09

  9. Automotive Sector During Global Meltdown

  10. The Industry Performance in the Domestic Market during FY08-09 Source: Society of Indian Automobile Manufacturers report and Company Analysis

  11. Alternatives Available • Continue • Shutdown fully/ partially • Divestment

  12. Manufacturing Strategies • Decrease in Sales affects entire supply chain e.g.- Slowdown in Automobile will affect pigment ,paints , resins , solvent and related logistics • Evolving Planning system that addresses changes • Addressing Inventory and converting of stock to cash.

  13. contd… • Identify sub-optimal performance in consumption of material or inefficient processes • De-risking sales is fundamental to operations. • Continuous performance improvement in operations by engaging process improvement teams who work with R& D to make positive changes for cost and material utilization.

  14. contd.. • Improve data collection about customer trends, technology improvements & realistic forecast • Efficient utilization of ERP systems • Production for new markets • Lean Manufacturing • Maintenance Strategies • Changes in scale of production

  15. Effect of Reduced Demand • Under utilized capacity • Production Cut • Inventory piled up • Blocked capital.

  16. GENERAL MOTORS

  17. GM SAGA • GM Closed 13 out of 21 plants. • GM eliminated 74,000 jobs. • GM supply chain crisis still exists. • 20 suppliers have filed a bankruptcy petition in the United States

  18. Learning • To develop a supply base with emphasis on lower cost • Focus on customized production • Ensure quality rather than quantity • Economies of scale • Develop Technical & Human Capabilities • Enhance Technology Management

  19. SERVICE INDUSTRY

  20. Global Meltdown Effects on Services Source: CSO Lower growth of 9.4% in 2008-09 Lead Indicators suggest decline for 2009-10

  21. Dimensions of IT Services

  22. Global Meltdown Effects on IT Services • Reducing Demand • Losses of projects & Contracts • ABN AMRO LaSalle Hyderabad Project Scrapped • Operation cost pressure • Laying off exp & High salaried employees • Infosys Revenue guidance • Decline of 3.1% to 6.7% in Fiscal 2010

  23. “ Many of our clients are reducing their IT Budgets. A survey of our top 135 clients indicated that a Majority of them will downsize their IT budgets. This will impact our growth during current year.” • NarayanaMurthy (Chairman & Chief Mentor) • Source : Chairman’s Speech 28th Annual Gen Meeting

  24. “We are very honestly over-hired” “The situation is still quite challenging, If you look at our customers, they are not really seeing any increase on their revenue side. And because they are not seeing any increase on their revenue side, they will continue to be concerned” • -S.D. Shibulal (COO, Infosys) Source : ONE INDIA NEWS

  25. Infosys

  26. Market Exposure

  27. Impact • Hyderabad ABN Amro section on bench • Postponed revisions in promotions

  28. “We have re-aligned our cost structure to protect margins. The Leadership has led by example & has accepted the highest reduction in their variable compensation. For 2010, we have postponed any revisions in compensation & promotions to remain competitive in the current difficult circumstances” • - Narayana Murthy (Chairman & Chief Mentor) • Chairman’s Speech 28th Annual Meeting: June 20, 2009

  29. Operation’s strategy to reduce overall Supply Chain cost Focus on • Innovation • Performance Mgmt

  30. Learning for service sector • Organization should be flexible enough to reallocate resources from one project to another • Leverage Technology to rationalize costs • Standard package for performance focused customer

  31. Learning for service sector • Stress on Maintenance projects • Focus on Research & Innovation

  32. Summary “To survive in the crisis the winners don’t do different things, they do things differently.”

  33. Thank You !

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