Ep#21 Conversations with Business Leaders: Sharan Bansal, Director, Skipper Limited

Hello and welcome to the Kanto Point Podcast. I am Shubham Agarwal and in today's episode we are going to discuss how to successfully transform the operating model of a company. Now this is the theme that I would like our guest for today, Mrs. Sharon Bunsel, who is the director of Skaeper Limited to discuss with us here today. Well, most companies in the custom manufacturing industry of which Skaeper 2 forms a part, suffer from various persistent issues like problems with vendors, increasing costs, frequently missing components for manufacturing, high inventory, high level of working capital, low overall capacity utilization, long lead time, poor on time performance and at last the unhappy customers. However, Skaeper was able to mitigate all these challenges after adopting the TOC flow principles in its operations. So join me for a discussion with Mrs. Sharon Bunsel to hear from him their learnings from the entire experience. Hi, Sharon, welcome to the Kanto Point Podcast. I want to start by asking you, why did you feel the need that the company needed a change in the first place? Well, I think the biggest problem in engineering business, particularly our kind of engineering business, is that the word itself, it is engineering and it is the customized manufacturing business where we don't have the luxury to produce goods as per our timelines and have it available to the customer when they need it. For manufacturing starts when the customer gives us a relief because 100% of the production is customized, which presents huge challenges in itself to manage the entire supply chain, to make sure that all the different components of the finished product are available just in time so that we are able to meet the customers lead time requirements. We go through the engineering, the prototype, the mass manufacturing, the inspection, the logistics, all of it needs to come together just in time with the right coordination with the customer to make sure that we are fulfilling projects on time. So that is the primary challenge, of course, apart from that, all the other challenges that come with customized manufacturing like that, we typically have low capacity utilization across plants and on the other side we may have a situation where we face over flooding of orders at one time where all the customers want material just in that one month. So when we were not able to do that in the past, we have faced penalties from customers, it has hit our operating margins because of those penalties in a ever competitive industry where already margin guard queues and also the biggest challenges that because of these temporary mismatch of the capacity utilization, we are faced in a situation where many times we have to give up high margin orders because we are not able to commit a delivery schedule to the customer where our required lead time doesn't meet the customer expectations and we have no choice but to let go of that order even though it could have fetched a higher margin for the company. Interesting. So what were the major changes that were implemented to address some of the problems that you have highlighted here? I think one of the challenges we have in our businesses is because we buy only from primary steel producers. So these are typically large steel companies, the steel authority and data team. Their delivery schedule doesn't necessarily match with our delivery requirements all the time or the delivery requirements that are customers demand from us. So one of the first things that Victor did when they came on board was help us decouple the raw material from our entire manufacturing process. They helped us design BPR based on which we were able to identify the key SKUs which we needed to have available in stock at all the time and a system to replenish that based on consumption. Now this was a very important step although we had fears initially we had fears that this would lead to increase of inventory but those were mitigated by helping us reduce inventory in the subsequent stages of manufacturing. And Mr. Sharan could you also talk about the changes in the code manufacturing operations that were brought about? Earlier it was where we were when we were doing monthly planning a large amount of inventory would go into WIP at one time and that again would delay the next set of indents or batches coming into production. By moving into a weekly plan we were able to cut short the size of inventory going into production and focus on finishing those lots faster that was a significant step which helped us bring down the overall data. Also we've gotten into the habit of taking up only clear PRIs into production. So because of the enabling of taking on smaller batches into production we have the luxury to say no to a lot of production where which we feel is not yet clear for mass production. One of the other benefits also was that identifying where the bottleneck is in the plant we were able to subordinate the production as per the bottleneck capacity and I think that also is quite significant because many a times the identification of the right bottleneck would also not happen and company would be in the habit of elevating the constraint needlessly when it may be it wasn't even required. Wonderful. So what has been the impact of these changes on the people in the company because they're the first ones to face the change and change is always sometimes unsettling sometimes very disturbing as well. I would say the daily flow meetings and the weekly plant review and the right structure where you know the focusing on the road ahead instead of overanalyzing the past. I think that created an environment of a lot of positivity and people coming into meetings with enthusiasm with optimism about what they are going to undertake in the coming weeks and that I think was a big shift from the way we earlier carried out review meetings. That is I would say apart from the decoupling of the raw material and the monthly to weekly plant that probably to my mind was the third biggest shift that we had and that's more of a cultural mindset which I'm happy to say that we've continued on in you know across the company divisions where you know the daily flow and the weekly flow meetings are something which are I think a part and parcel of our regular life. Yeah so you've been personally involved in this transformation all throughout right and what I want to ask is did this implementation change any of your personal beliefs? One is of course that management needs to be a science not art. I think that's the first thing for me personally which if you ask me what you see means to me that's what it means that management needs to be a science much more of a science than art. Typically in India I think we've all grown up imagining management to be something which very skilled managers do with a lot of experience and with a lot of flair and a lot of only when it's a capable manager then you have results otherwise no. And I think capability needs to be documented needs to be put into process so that it's maintained. Second one is understanding that whatever you need improved you need to start measuring. I would say a lot of times we don't get into the habit of measurement of the right metrics which is probably the POC journey has brought about to us that if we want to have Puji or ongoing improvement continuously then we need to be in the habit of constantly measuring what we want to see improved. The daily flow and the weekly flow meetings we make it a point to identify what we would like to see measured afresh. We identify challenges and then we understand the right way on how we're going to measure this now. Another significant and I would say more ignored part of management is also removing things which you don't need anymore. While we are on the journey of Puji and constantly improving and introducing new concept, new measurements we also make it a point to remove old reports and old measurements which we don't require anymore. I think, as is just we keep increasing the work of everyone in the team and at the end people just get tired making reports all the time. Right, so how were the results? What are the major benefits that you have realized with the whole transformation? We've certainly been able to crash our lead time initially where we would talk about a lead time of anywhere between two and a half to three months to customers. Now we are confidently able to give a written commitment to our customers for a 45 day lead time. And the effort will be to eventually take this down to a 30 day lead time. And I think we're on that journey. We should be able to achieve that very soon as well. Also, the other benefits has been the increase in plant output. We've seen plant output improved by almost 130%. And better working capital returns. So I'd say that our overall working capital in this system has gone down by at least 20 to 25%. Where despite having the raw material buffer, we are still able to achieve the lower working capital. We only because of being able to turn around our batches much faster and being able to build much faster to work lines. Two things which I think really benefited in the inventory reduction. Of course, reducing the size of the batches. So even though there might be a problem which still holds up a production after the raw material has been created. You know, there might be a customer related issue or there might be an internal engineering related issue. But the problem is now impacting a smaller size batch versus a very large batch which would typically get created early. So I think as humans we all resist change, right? How did you handle the resistance to change? You know, change is obviously very difficult, particularly large organizations like ours. It's it's painful and it requires a lot of convincing and a lot of push from the key people at the top. But I'm happy that the team has come forward and adopted that change with open arms. I think that I would say is probably the biggest takeaway or biggest learning that I've had is that any change which is wealth hot out and which has substance and merit. It can be implemented no matter what the resistance. Great, thank you so much, Mr. Sharan. It was wonderful speaking with you and thank you for taking out time to speak to us on the podcast. For all the listeners, you know if you have any questions or queries, you can write to us on our social media handles or you can write to us on our website as well. The links to all the platforms are in the details to this episode and there are also details about how the transformation happened. Thank you and until next time. Bye bye. (upbeat music)