Note: This case-study has been written by a member of The EdgeMakers. Using this article for printing, publishing & training purposes (without due permission from Directors of The EdgeMakers) is strictly prohibited.
CASE STUDY – UNFAMILIAR SITUATIONS.
M.S. Kumaran (The EdgeMakers)
NAME OF THE COMPANY : RHINO AND WHALE (Fiction)
PROBLEM TO BE PROBED : GROWTH IN SALE WHILE DE-GROWTH IN
AND SOLVED PROFIT RATIO
The company has been making an average profit of 4.75 crore every year since, its inception on 1975. A multi national company which was dealing in manufacturing textiles having almost 25 branch offices allover India having its Head Office at Mumbai has been in the good books of the Industry, however, started showing some reversals, from 2000 onwards.
Although they were in the highly competitive market, the company has been doing good sales in view of its quality products. The company made a 10% increase in sale during 2000, when for the first time it faced a reduction in the profit to 3 crore.It revamped its sales machinery along with reviewing the cost structure at every level and strictly avoided any addition in that respect. During the year 2001, the company made another 10% increase in the sale, but, to their utter dismay the profit went down to 2 crore.
An in depth study was done at every level and at every department of the company to block all the loop holes, presumably which may eat into the profit ratio of the company. With renewed efforts the company made another 10% increase in sale during 2002, when again the profit showed a downward trend to 1 crore.
The management continued its efforts to find out the cause and brought in strict control on all its sleuths of money dispositions simultaneously registering another 10% increase in the sale. The company yet showed a gloomy picture of the financial results running for a crore of loss for the first time, in 2003.
Realizing the failure on the part of the company to locate the cause of the inversely proportionate profit structure, the company has decided to appoint a consultant to find out the real cause of the problem and the remedy for the same.
The solution:
The consultant has studied the problem and analyzed the various aspects connected with it and they have minimized the entire problem into a pointer, that is, ‘more sale and less profit’
They have divided the total team into mini ones and entrusted the job of visiting all the offices spread over along the country to collect various data and information in connection with their functioning and the modalities which they follow to bring in the sale.
They took almost one month to finish this job. It is imperative on the part of the consultant to complete the job within two months which the company on its own failed to solve for four years. In other words to achieve the target within the shortest time
They analyzed, discussed and debated on various points to pool the alternatives and evaluated certain conclusions after taking into account of various criteria and constrains.
They could observe a common feature in the collected data that every offices has got heavy closing stock in spite of the fact that the company followed a well-knit system of indenting stocks according to the orders booked. They could smell, now, the crux of the problem has to do something with the idle inventory which was held by the branch offices. They consulted the logistics department and gathered that they used to send unintended stocks, often to accommodate a full load on the truck whenever they send the goods. These unwanted stocks were kept aside by the offices and they got accumulated in accordance with such loads. These idle stocks actually cost heavy expenditure on the company for no returns which actually caused reduction in profit.
In other words there was this situation of ‘more sale, more loads and more idle stocks’
The consultants suggested a proper distribution system whereby each office received only what it wanted and that any additional stock is diverted to the needy office or to the factory for redistribution. The Branch offices ensured that they held only the required buffer stock and nothing more than that at any given time. The very next year company has started limping back to profit making and the consultant did their job for positive results.
Keynote points for discussion
Why there is an unfamiliar situation?
Which are the areas the company checked and failed to locate the problem?
What is the depth study the consultant has to prepare for?
How the analysis was done by the consultant and hypothesis formed
How did the consultant achieve the synthesis and then crack on the issue and
Finally arrived at the solution?
Case - Processing
Objective
Reverse the downward trend in the profit ratio of the company.
Assumptions
1. There should be no procedural or structural changes during the period.
2. There should be no policy changes financially or otherwise.
Pooling the alternative
Higher cost in administration, manufacturing or incidental expenses (1 & 3)
Changes in the discount or incentive structure. Involving heavy outflow of finance.(1&3 )
Increase in transportation cost on account of raw materials or finished goods or waste disposals.(1&3 )
Unnoticed wastage, if any, on the energy utilization, materials or labour at various levels (1&3)
Miscommunication or lack of communication vertically or laterally which has caused losses.(1&3)
Delay or denial, if any, on the part of various departments in policy implementation of the company(1&3)
System of Indent formulation , compilation and transmission to the Logistics
department (1, 2&3)
Lack of coordination between Logistics and Branch Offices on account of stock distribution(1,2&3)
Bottlenecks, if any, at the administrative level concerning sanctions and processing(1&2)
Idle Stocks held by various offices where the input cost s already incurred(1,2&3)
Evaluation Criteria
Studies done at Company level during the last four years need not to be repeated.
Fresh analysis and unexplored area functioning of any department.
Should be connected with financial aspects affecting the element of profit.
Final Evaluation/Solution
Lack of coordination of logistics with Branch offices on account of stock distribution
System of Indent compilation by Branch offices and their proper implementation
Idle stock held by various Branch offices where full cost input is incurred
Results
On the basis of the suggestions offered by the consultants the company has since, revamped the entire distribution system with immediate effect and reverted back to the original stature of earning and augmenting profits.
Monday, September 17, 2007
Efforts are respected but only results are rewarded
Note: This article has been written by a member of The EdgeMakers. Using this article for printing, publishing & training purposes (without due permission from Directors of The EdgeMakers) is strictly prohibited.
Efforts are respected but only results are rewarded
Sandeep Atre (The EdgeMakers)
There are two circuits in Tennis: Amateur & Professional. The difference is simple. Amateurs play for pleasure and for them it is a hobby, while professionals play for winning and in fact rely totally on the sport for their bread (& butter). Professionals have no choice but to be productive. Nobody grows in profession because of trying hard, attempting sincerely or putting maximum efforts. People grow because they achieve targets, attain benchmarks & deliver results.
I don’t think anybody would doubt the reputation of Mohammad Kaif as a hard-worker. In fact, he is one person who you can always count upon for giving 100% but look at his career and you will realize that his greatest problem is that he has not made runs consistently and that’s why he has never been able to cement a place for himself in the team. You may say that this is unfair but then tell me what other measure or criteria would you keep for selection in the team? You cannot rely on observation or halo effect. You cannot say that a person is a good team player that’s why he should be in the team; because being a team-player is a necessary condition and not a sufficient one. It is not about only being great buddies or a pious soul; one has to have an impact on the bottom-line.
There is a simple concept in profession called KRAs (Key Result Areas). They could have easily been called Key Responsibility Areas but what is use of responsibility if the targets are not met?
A classic case emerges in profession when a person doesn’t deliver even after repeated feedbacks, appraisals & warnings. His superior finds himself pretty helpless and doesn’t know what to do? Finally, one day he decides to give a thrash to the culprit. But now the whole scene changes because the culprit takes things personally and claims to be hurt by the treatment. Suddenly he becomes an underdog and gains all the sympathy and the situation leaves the superior with nothing but a reputation for being brutal and inhuman.
The biggest problem in profession is that people don’t understand that it is not a family where togetherness is the purpose or not even a gully cricket team where enjoyment is the aim. It is plain business where creation & contribution are the objectives. Family is bonded by blood-relations, gully-group is bonded by friendship but the organization is bonded by neither of them and thus the only thing that binds it is the interrelated results. And it remains the most blatant truth of profession!
Let’s understand what is business? Let’s assume that there are resources worth 5 units. These resources can be Men, Material, Money, Machines & Methods, and above all, profession’s most important two resources: Time & Thought-stream. If you are hired by a company then your role is to process these 5-units worth resources in such a manner that it produces stuff worth 50 units. The company facilitates the whole processing and takes all the risk and you earn a share of surplus generated in the process. Company keeps one portion as reserves and reinvests another portion back into business.
Now, it is okay if you take time to learn & acquaint yourself with the process but in any month you cannot produce stuff worth ‘less than 5-units’ from the resources worth 5-units. Ideally, you may say that you will recover the loss when you learn fully but company never has the guarantee whether you will stay with the company or not. So, taking learning-curve as an excuse is beyond question in contemporary corporate milieu. You have to produce results and that too ethically and systematically.
Many people think that organizations should show more tolerance towards new people but the question is that after around 20 years of education, people are expected to perform immediately and if they boast of the high-sounding degrees then they have to deliver from day-1. Profession is not charity where intent matters more than the content. Profession is aimed at creating something commercial with tangible outcomes.
There is no place for following sentences in profession:
Well! I tried my best but…
That’s all I can do…
Give me another chance…
Well! It takes time…
Actually what happened was that…
All these sentences suffer from ‘Excuzitice’; it is an infectious disease and can be fatal for career. The most important word in professionalism’s vocabulary is ‘utility’. It is important for everyone to prove his worth regularly. In a corny way, we can say ‘Improving’ is nothing but ‘I m proving’.
There are times when bosses are blamed for being cruel or insensitive but it is no surprise! Ask today’s children’s view about their parents, majority would say that they are interfering & dominating, and that’s why it is important to remember that neither parenting nor leadership is a popularity contest. People get popular because they cater to the likes of the people who make them popular and for leaders it is not at all possible to play to the gallery. A lot of people say that the employees should be treated like adults, that they should be given respect and what not. Yet look around! Our government treats people as adults but everyone can see what they do to the roads, trains, traffic rules and taxes. In environment of such social-distrust, how can you expect bosses to coddle the subordinates…after all, they are leaders…not babysitters. Not to forget, they are also responsible to customers & stakeholders.
This concept can be completely epitomized in one word: ‘Accountability’. When a woman gives birth to a child, whole family takes responsibility of taking care of her and her husband has authority to guide her for doing something or restricting her from another. Yet bearing the child, tolerating the labour pains and eventually delivering the child is done and can only be done by the woman herself. In other words, she is accountable for it. Similarly, in profession, it is important to take accountability of a task, because in profession, there is ample scope for blaming the co-workers, overloads, external variables, market realities and communication-gaps; and you don’t have to succeed instead of them but despite of them. Ultimately, you have to be ready to turn Jesus and being crucified for the sins of your brethren. Can’t help it! So, when you take up a task, be a clincher, breathe it, live it and for god’s sake complete it.
There is a famous joke:
Boss: “This is the task that you have to complete within a week”
Subordinate: “Sir! I will give my heart & blood to this task”
Boss: “I don’t want your heart & blood, just complete the task”
Subordinate: “Sir! I will die for it but will try my best”
Boss: “I guess you didn’t understand! I don’t want your life, just complete the damn task”
Subordinate: “Sir! I will give it everything I have”
This happens almost everywhere and is most injurious to an organization. Mahatma Gandhi said a wonderful thing: “A soldier is not a soldier if he dies in the battlefield; his work is to kill and come back”. So don’t try to be a hero or a martyr, just work it out!
One very important reason for people’s failure in achieving tasks is that they “try to please all the people all the time” which is a sure-shot way to flunk.
Note: This article has been written by a member of The EdgeMakers. Using this article for printing, publishing & training purposes (without due permission from Directors of The EdgeMakers) is strictly prohibited.
Efforts are respected but only results are rewarded
Sandeep Atre (The EdgeMakers)
There are two circuits in Tennis: Amateur & Professional. The difference is simple. Amateurs play for pleasure and for them it is a hobby, while professionals play for winning and in fact rely totally on the sport for their bread (& butter). Professionals have no choice but to be productive. Nobody grows in profession because of trying hard, attempting sincerely or putting maximum efforts. People grow because they achieve targets, attain benchmarks & deliver results.
I don’t think anybody would doubt the reputation of Mohammad Kaif as a hard-worker. In fact, he is one person who you can always count upon for giving 100% but look at his career and you will realize that his greatest problem is that he has not made runs consistently and that’s why he has never been able to cement a place for himself in the team. You may say that this is unfair but then tell me what other measure or criteria would you keep for selection in the team? You cannot rely on observation or halo effect. You cannot say that a person is a good team player that’s why he should be in the team; because being a team-player is a necessary condition and not a sufficient one. It is not about only being great buddies or a pious soul; one has to have an impact on the bottom-line.
There is a simple concept in profession called KRAs (Key Result Areas). They could have easily been called Key Responsibility Areas but what is use of responsibility if the targets are not met?
A classic case emerges in profession when a person doesn’t deliver even after repeated feedbacks, appraisals & warnings. His superior finds himself pretty helpless and doesn’t know what to do? Finally, one day he decides to give a thrash to the culprit. But now the whole scene changes because the culprit takes things personally and claims to be hurt by the treatment. Suddenly he becomes an underdog and gains all the sympathy and the situation leaves the superior with nothing but a reputation for being brutal and inhuman.
The biggest problem in profession is that people don’t understand that it is not a family where togetherness is the purpose or not even a gully cricket team where enjoyment is the aim. It is plain business where creation & contribution are the objectives. Family is bonded by blood-relations, gully-group is bonded by friendship but the organization is bonded by neither of them and thus the only thing that binds it is the interrelated results. And it remains the most blatant truth of profession!
Let’s understand what is business? Let’s assume that there are resources worth 5 units. These resources can be Men, Material, Money, Machines & Methods, and above all, profession’s most important two resources: Time & Thought-stream. If you are hired by a company then your role is to process these 5-units worth resources in such a manner that it produces stuff worth 50 units. The company facilitates the whole processing and takes all the risk and you earn a share of surplus generated in the process. Company keeps one portion as reserves and reinvests another portion back into business.
Now, it is okay if you take time to learn & acquaint yourself with the process but in any month you cannot produce stuff worth ‘less than 5-units’ from the resources worth 5-units. Ideally, you may say that you will recover the loss when you learn fully but company never has the guarantee whether you will stay with the company or not. So, taking learning-curve as an excuse is beyond question in contemporary corporate milieu. You have to produce results and that too ethically and systematically.
Many people think that organizations should show more tolerance towards new people but the question is that after around 20 years of education, people are expected to perform immediately and if they boast of the high-sounding degrees then they have to deliver from day-1. Profession is not charity where intent matters more than the content. Profession is aimed at creating something commercial with tangible outcomes.
There is no place for following sentences in profession:
Well! I tried my best but…
That’s all I can do…
Give me another chance…
Well! It takes time…
Actually what happened was that…
All these sentences suffer from ‘Excuzitice’; it is an infectious disease and can be fatal for career. The most important word in professionalism’s vocabulary is ‘utility’. It is important for everyone to prove his worth regularly. In a corny way, we can say ‘Improving’ is nothing but ‘I m proving’.
There are times when bosses are blamed for being cruel or insensitive but it is no surprise! Ask today’s children’s view about their parents, majority would say that they are interfering & dominating, and that’s why it is important to remember that neither parenting nor leadership is a popularity contest. People get popular because they cater to the likes of the people who make them popular and for leaders it is not at all possible to play to the gallery. A lot of people say that the employees should be treated like adults, that they should be given respect and what not. Yet look around! Our government treats people as adults but everyone can see what they do to the roads, trains, traffic rules and taxes. In environment of such social-distrust, how can you expect bosses to coddle the subordinates…after all, they are leaders…not babysitters. Not to forget, they are also responsible to customers & stakeholders.
This concept can be completely epitomized in one word: ‘Accountability’. When a woman gives birth to a child, whole family takes responsibility of taking care of her and her husband has authority to guide her for doing something or restricting her from another. Yet bearing the child, tolerating the labour pains and eventually delivering the child is done and can only be done by the woman herself. In other words, she is accountable for it. Similarly, in profession, it is important to take accountability of a task, because in profession, there is ample scope for blaming the co-workers, overloads, external variables, market realities and communication-gaps; and you don’t have to succeed instead of them but despite of them. Ultimately, you have to be ready to turn Jesus and being crucified for the sins of your brethren. Can’t help it! So, when you take up a task, be a clincher, breathe it, live it and for god’s sake complete it.
There is a famous joke:
Boss: “This is the task that you have to complete within a week”
Subordinate: “Sir! I will give my heart & blood to this task”
Boss: “I don’t want your heart & blood, just complete the task”
Subordinate: “Sir! I will die for it but will try my best”
Boss: “I guess you didn’t understand! I don’t want your life, just complete the damn task”
Subordinate: “Sir! I will give it everything I have”
This happens almost everywhere and is most injurious to an organization. Mahatma Gandhi said a wonderful thing: “A soldier is not a soldier if he dies in the battlefield; his work is to kill and come back”. So don’t try to be a hero or a martyr, just work it out!
One very important reason for people’s failure in achieving tasks is that they “try to please all the people all the time” which is a sure-shot way to flunk.
Note: This article has been written by a member of The EdgeMakers. Using this article for printing, publishing & training purposes (without due permission from Directors of The EdgeMakers) is strictly prohibited.
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