CASE STUDY OF AN EQUIPMENT DESIGN & MANUFACTURING

COMPANY 

Ms.Urmi Patel the personal secretary of Mr. Siddhant Choksey MD of Siddhant Enterprises rushed into the corner room of Siddhant house and exclaimed “Sir, Mr. Jerry Pinto, financial analyst with Economic Times is refusing to assign “buy” rating to Siddhant Engineering in his weekly stock analysis.

Hearing the same, Mr. Choksey was angry with Mr. Pinto. It was just two years ago, when Siddhant Engineering was the darling of all the PE investors and FIIs. In the last two years, the scrip of Siddhant Engineering had lost its sheen and the scrip was relegated to sell option.

Furious Siddhant dialled his old friend Mr. Ramnathan President BMA (Bombay Management Association) and sought his help to turn around the fortunes of his company Siddhant Engineering.

In came Mr. Himanshu, Senior Partner – SynCore, a leading management consultancy firm, introduced himself as a good friend of Mr. Ramnathan and settled comfortably in the sofa overlooking the serene sea facing corner room of Mr. Choksey.

“Relax! From now on, it is my responsibility to bring back the investors’ confidence in your company’s scrip. It is a personal promise that your financial performance will improve and improve dramatically in the next two quarters”.

Thus began the professional association of SynCore with Siddhant Engineering.

Siddhant, a company with engineering and manufacturing operations, had grown rapidly in the last five years with a CAGR of nearly 50%. The growth in revenues was achieved by a lot of individual dedication and hard work bordering on individual heroism. Somehow, “just-in-time (or its well known counterpart – Somehow-in-time)” was the accepted mantra in the organization. There was no elaborate cost monitoring system.

 As a result of which the profitability of the company did not keep pace with the growth in revenues. In fact the profitability in percentage and actual terms was fast deteriorating. There were no proper processes to support planning and resource management and project execution. The company continued to receive orders on the basis of its goodwill in the market and superior interpersonal relations between the marketing team and the clients.

Inferior product quality along with cost and schedule overruns had become almost a common phenomenon in the company.  There was heavy dependency on outsourced and contract manufacturing. The company was into complex projects and the ability of the company to know about new product launch ahead of competition, was the  key determinant  in garnering higher market share.

Despite the herculean efforts of the sales team, Siddhant Engineering was losing out to competition in getting new business.  Mr. Himanshu along with the SynCore team quickly conducted a situational analysis to know about the operations of Siddhant Engineering.

Challenges: As per the situational analysis, Mr.Himanshu, had to address the following

  • Low “On time” delivery performance.

  • Several instances of short and long supplies.

  • High working capital requirement due to unpredictability in dispatches.

  • Frequent changes in dispatch priorities of customers.

T

he mandate was to achieve operational excellence in project execution and the key objective was to create a harmonious working environment in the company so that they could execute their vision and strategy.

Solution: The project team, guided by SynCore, identified key policies and processes which need to be changed.  

  • Resource utilization was no longer a key measurement for the company.

  • The team realised that it is not important to start working on an order as soon as it is received. Rather it is more important to complete the existing orders. 

  • The scarce resources in design engineering were given a clear list of task priorities so that their efficiency was increased.

  • Regular cross functional team meetings contributed to gaining the much needed clarity on the technical requirements and project specifications.

  • A library of sub-assemblies drawings was created, to speed up the design process.

  • The release of drawings was carefully timed - keeping in mind the fabrication capacity and the site installation plans.

  • Every new order was classified into three categories with predefined process flows for each category.

  • A project management office was created to plan, monitor and expedite the ongoing projects.

  • The communication system in the company was changed from discussing “who is the problem” to “what is the problem”.

  • Efficient use of time, as guided by the daily project buffer reports helped in improving the due date performance of the company to nearly 100%.

  • All the required support (inputs, approvals and resources) were given to the execution team.

 

Results:

  • For the first time in the history of the company, most of the orders were ready before time.

  • The company achieved its highest monthly sales and increased profits by more than 100%.

  • The company was able to generate 30% more output from the same capacity.

  • The company managed to achieve positive cash flow helping it to reduce the interest cost.

  • The operations team was able to complete all the planned dispatches on 31 March at 5 pm!

 

14th April, 9pm, Hotel Trident, the crowd was ecstatic, Usha Uthup was belting out her award winning song “Darling…” as Siddhant Choksey and Jerry Pinto of Economic Times shook a leg while Mr. Himanshu sitting in the corner holding a glass of premium whisky and basking in the glory of making Siddhant engineering a darling of all investors- PEs, VCs and FIIs.

SynCore Consulting Pvt. Ltd 2016 © All RIGHTS RESERVED