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Global Meltdown – Lessons to be Learnt Operations Perspective
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Swapnil Galgalikar. Rupesh Zambad. Rakesh Tanwale. Izhar Mushrif. Amit Gautam Sourabh Bafna. Amit Shinde. Vikram Lawand. Prasad Sahastrbudhe. Krishna dhanorkar. Video 11
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Effects of Meltdown Associated Factors Available alternatives Manufacturing Strategies Learning & the Future Path
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Steel Automotive Textile Oil & Gas Chemical
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Manufacturing sector : Automotive sector Services: IT & BPO
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Automotive Industry
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Projected growth of the Indian auto industry translates to 10 -11 % of India GDP by 2016 Auto- component industry in India expected to be USD 45 billion. Policy initiative to market India as an attractive manufacturing destination. Automotive industry promises significant employment opportunities. Source- SIAM
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“India is going to be an automotive hub - a dream destination for engineering industries.” - Mr. Mandlik, General Manager L&T “India is going to be an automotive hub - a dream destination for engineering industries.” - Mr. Mandlik, General Manager L&T BCCI Seminar- 13 Nov. 09 BCCI Seminar- 13 Nov. 09
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Category Industry Sales (Nos.) 2008-092007-08Growth Commercial Vehicles 415652503218-17.4% Passenger Vehicles 15253131533268-0.50% Total19409652036486-4.7% Source: Society of Indian Automobile Manufacturers report and Company Analysis
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Continue Shutdown fully/ partially Divestment
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Decrease in Sales affects entire supply chain e.g.- Slowdown in Automobile will affect pigment,paints, resins, solvent and related logistics Evolving Planning system that addresses changes Addressing Inventory and converting of stock to cash.
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Identify sub-optimal performance in consumption of material or inefficient processes De-risking sales is fundamental to operations. Continuous performance improvement in operations by engaging process improvement teams who work with R& D to make positive changes for cost and material utilization.
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Improve data collection about customer trends, technology improvements & realistic forecast Efficient utilization of ERP systems Production for new markets Lean Manufacturing Maintenance Strategies Changes in scale of production
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Under utilized capacity Production Cut Inventory piled up Blocked capital.
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GM Closed 13 out of 21 plants. GM eliminated 74,000 jobs. GM supply chain crisis still exists. 20 suppliers have filed a bankruptcy petition in the United States
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To develop a supply base with emphasis on lower cost Focus on customized production Ensure quality rather than quantity Economies of scale Develop Technical & Human Capabilities Enhance Technology Management
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SERVICE INDUSTRY
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Lower growth of 9.4% in 2008-09 Lead Indicators suggest decline for 2009-10 Global Meltdown Effects on Services Source: CSO
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SCOPECOST QUALITY TIME
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Reducing Demand Losses of projects & Contracts ◦ ABN AMRO LaSalle Hyderabad Project Scrapped Operation cost pressure ◦ Laying off exp & High salaried employees Infosys Revenue guidance ◦ Decline of 3.1% to 6.7% in Fiscal 2010
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Source : Chairman’s Speech 28 th Annual Gen Meeting “ Many of our clients are reducing their IT Budgets. A survey of our top 135 clients indicated that a Majority of them will downsize their IT budgets. This will impact our growth during current year.” Narayana Murthy (Chairman & Chief Mentor)
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Source : ONE INDIA NEWS “We are very honestly over-hired” “The situation is still quite challenging, If you look at our customers, they are not really seeing any increase on their revenue side. And because they are not seeing any increase on their revenue side, they will continue to be concerned” -S.D. Shibulal (COO, Infosys)
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Hyderabad ABN Amro section on bench Postponed revisions in promotions
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“We have re-aligned our cost structure to protect margins. The Leadership has led by example & has accepted the highest reduction in their variable compensation. For 2010, we have postponed any revisions in compensation & promotions to remain competitive in the current difficult circumstances” - Narayana Murthy (Chairman & Chief Mentor) Chairman’s Speech 28 th Annual Meeting: June 20, 2009
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Focus on ◦ Innovation ◦ Performance Mgmt Operation’s strategy to reduce overall Supply Chain cost
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Organization should be flexible enough to reallocate resources from one project to another Leverage Technology to rationalize costs Standard package for performance focused customer
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Stress on Maintenance projects Focus on Research & Innovation
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“To survive in the crisis the winners don’t do different things, they do things differently.”
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