Godrej Securities Solutions
Godrej Securities Solutions, a division of Godrej & Boyce, is a market leader in the business of providing physical security products. Godrej Securities Solutions is a pioneer in providing security products such as safes, strong-room doors, safe deposit lockers, and record protection equipment, premises security solutions, home safes, and marine solutions. Banks, NBFCs, jewelers, corporates, defense establishments, and retail consumers of home safes are some of its customers. In October 2010, the company adopted the Theory of Constraints (TOC) framework for revamping the supply chain of its Physical Securities Business with the objective of improving on-time delivery performance, reducing lead-time, and enhancing the availability.The project was also expected to have a significant impact on the bottom line of the division.
Results achieved within two years of implementation are as given below. In the first two years, the profits increased by three times, and has quadrupled in the third year. The sales has also doubled in three years. The profitability has increased significantly, while ROCE has tripled. Institution Business : On-time performance improved to more than 90%, while the production lead time reduced by over 50%. Lead-time to customers reduced by 50%, while variability in lead-time reduced seven times. Output in the plant almost tripled, and this has been achieved with significant reduction in overtime and with the least addition of manpower. Work-in-progress inventory reduced by more than 50% and finished goods stock reduced by 50%. Rate of new product introduction increased by 200%.
Retail Business: Availability of all items is in the range of 90%. Number of distributors have almost tripled, along with doubling of range at the distributor. Number of retailers increased four times, along with doubling of range at the retailer.
Overall Result: Profitability has almost tripled.
With 3 times more output from the same capacity and reduced working capital requirement, we were able to improve our ROCE by three times.
A: We provide physical security solutions (such as safes, lockers, strong room doors) for banks, institutions and retail. These products require assembly of more than 50 components. Some of these are made in-house, the rest are sourced from suppliers. We used to have significant desynchronization of these components at assembly leading to loss of capacity.
In 2010, we started the implementation of Theory of Constraints processes by partnering with Vector Consulting Group. After deploying the flow concepts of TOC, synchronization of these components at assembly improved dramatically. We started achieving the record output almost every day of the month.
Moreover, fire-fighting reduced significantly. This released the bandwidth of management to focus on improvements in the manufacturing line set-ups and working on capacity release projects that further increased output.
A: Earlier we always thought higher WIP leads to higher output. We realized that this is not correct. One of the biggest paradigm changes we implemented is the system of pull, where inventory was pulled into the system based on the daily gap in a pre-defined WIP level, which was set at half of the previous levels. The lower WIP ensured focus on fewer orders, thus increasing flow.
A: The biggest challenge was to change the established mindset of managers to the new way of working – moving from monthly to daily planning, aligning production to working on sales orders rather than focusing on local output. When people saw dramatic improvements in inventory and output in a very short-time, the initial scepticism gave way to infectious enthusiasm.
Video Case Study
Godrej Electricals & Electronics : Rapid Execution Of Infrastructure Projects
In this video, senior management of Godrej Electricals and Electronics, discuss the real problem facing their industry and explain how a thrust on execution vis-à-vis their erstwhile focus on supply billing, helped turn around this struggling business.