Saturday, October 30, 2010
A better approach is to focus on building competency in cost management rather than cost reduction. Cost management programmes tend to be more longer term but also, crucially, offer more flexibility in dealing with changing business conditions, for instance, by allowing faster response times demand level shifts and better influencing their competitive drivers.
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Tuesday, October 5, 2010
That’s the finding of Capgemini Consulting’s 2010 Global Chief Procurement Officer (CPO) Survey released today.
Almost 80 percent of professionals say top management expects them to improve the overall value contribution of the Procurement function.
Based on responses from over 150 global companies across Europe, Asia and the Americas, the survey reveals there is a clear and emerging focus on strategic initiatives that can enhance the value delivered by procurement.
These strategies include proactive value creation through innovation; contribution to corporate sustainability objectives; developing reciprocity agreements with suppliers; increasing speed to market and a focus on Total Cost of Ownership.
Cost reduction continues to be a major focus area with over 40 percent of respondents reporting savings targets at nearly 10 percent for 2010.
Strategies that Procurement executives are employing to achieve these targets include contract re-negotiation, tighter contract compliance, global sourcing, hedging and moving to outsourced procurement services.
There is a continued trend towards centralised procurement operating models with over 40 percent of the surveyed companies favouring this model and another 50 percent favouring a centre-led/hybrid model.
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Monday, October 4, 2010
The burden of licensing and involvement of the bureaucracy has significantly reduced in India, since 2000. In terms of the companies’ perception of the burden, India is rated better than China and Brazil on business regulation. Licensing is no more a requirement in India, after liberalisation. Only in few areas of manufacturing or services is licensing applicable, as in the case of 3G services, etc ------
India’s commercial taxation system is unusually complex, especially where indirect taxes are concerned. While income tax, excise and customs duty are set by the Central Government, states and municipalities also levy their own taxes and provide discretionary exemptions to attract investment. Although the tax policy and many tax rates are set by the Centre, states and municipalities also levy their own taxes, which can overlap with state taxes. A manufacturer has no option but to take professional assistance to understand the tax structure.-------
Weak infrastructure remains a significant cost factor for companies, although most infrastructure indicators are showing an improvement. For the efficient running of any industry, good infrastructure is of prime importance. Infrastructure helps in improving efficiency, quality, cost, and service. The basic infrastructure for any industry comprises good roads, power, water, telecommunications, finance, raw materials, components, and logistics. In India, availability of these facilities is not the mark even in established industrial estates.------
Sunday, October 3, 2010
At the end of the first decade of the 21st century, Indian manufacturing companies are at par with the best in the world from a quality perspective. The next step will be to gain scale.
India has the largest number of companies, outside of Japan, that have beenrecognised for excellence in quality. Twenty-one companies have received the Deming Excellence award and 153 companies have bagged the TPM Excellence award for their total productivity management practices from Japan Institute of Plant Maintenance (JIPM). As many as 165 companies have been recognised for the Confederation of Indian Industry (CII)-Exim Bank award for business excellence (equivalent to European Foundation for Quality Management awards); about 80 per cent of these are manufacturing companies. Sundaram-Clayton, Sundaram Brakes Linings, TVS Motors, Brakes India, Sona Koyo and Indo-Gulf Fertilisers are among the few Indian companies that have won both the Deming and TPM awards.
This has happened because in the last decade Indian manufacturing companies have imbibed world-class practices in manufacturing management by educating their employees, both managers and shop-floor staff with the help of global teachers who have brought in the best manufacturing management techniques. These practices have shown positive results in bringing down customer returns to below 50 parts per million (ppm), and have reduced manufacturing costs by 15-20 per cent over the decade.
Sundaram Clayton of the TVS group became the first company to get the Deming prize in 1998, after having put in 10 years of significant efforts to imbibe the total quality management (TQM) culture. The TVS group found a lot of commonalties between its culture and the one prescribed by TQM — and its companies became fully aligned to bring about “continuous improvement” into their fold. Many Deming Award winners are from the automotive and automobile component sectors, with Tata Steel being the most recent claimant in 2008. Tata Motors, among many others, is pursuing the Deming awards
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