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BAHASA Delivering Industry Defying Results

Delivering Industry Defying Results

Vector Consulting Group is a management consulting firm which help companies build unique supply chain and operations capabilities that can be leveraged as a competitive advantage in the market. Vector uses the platform of Theory of Constraints solutions and thinking processes for developing these.

Top  Management Consulting Firm in India | Vector Consulting Group

As management consultants, we help clients build unique supply chain, operations, project execution and sales delivery capabilities.

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Need for Continuous New Product IntroductionsA good product variety is considered necessary to enable a firm to satisfy the wants and needs of different segments of its consumers and, thus, to increase the probability of completing a sale. The growth and expansion of a company are, therefore, often heavily built on its new products. So, it is very common to come across vision statements such as “We need X% of revenue coming from new products” or marketing teams complaining about “Our product range is too outdated; we need newer products to fuel our growth”. Consequently, most companies continuously launch new products to:<ol><li>Meet dynamic changes in demand: Quickly changing trends and consumer habits leave companies no option except to respect these by offering new products.</li><li>Offset the risk of obsolescence: Evolving technology is making it possible for companies to try and cater to customer demands for ‘smaller-lighter-faster’, thereby leading to a shorter life span of existing products (especially devices) of every firm.</li><li>Earn/protect margins: As a business strategy, companies must run ahead of price competition by differentiating their products and introducing new products that can command better margins.</li><li>Build brand image: Periodically, a company developing new products is likely to have a better reputation and can attract consumers more easily.</li><li>Refresh existing products: New versions of existing products give companies an opportunity to re-introduce and create a buzz around core products and also help to attract new audiences who may be drawn to the new offering though they might have been previously unfamiliar with the original portfolio.</li></ol>Too much of a good thing?When companies are riding a wave of growing sales, all new products are met with a lot of excitement. However, the continuous addition of new products to the company’s portfolio can be an enormous challenge for the supply chain due to two major issues:- Disaggregation of demand<figure class="image"><img style="aspect-ratio:1774/878;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//asset-7merchandisinggrid_1716366657.png" width="1774" height="878"></figure>With companies vying with each other to introduce new products and variants in the market across product categories, including garments, shoes, furniture, consumer durables, automobiles, electronics, books, music, and even some industrial products, there is an explosion of variety that is available to the customers. And, each introduction creates a new niche-based segment. For instance, in wall paints, there are a large number of pinks available; and there could be customers who understand the nuanced differences between them and prefer one pink over the others (Mera wala pink!). This phenomenon can be called “Disaggregation of demand”.Demand disaggregation is leading to the formation of what Chris Anderson in, his book by the same name, calls the “Long Tail” of demand – i.e., in some categories, ~20% of SKUs may cover just about 30%-40% sales, and the rest of the 60% of sales comes from the addition of small volumes of sale, each from many SKUs, thus creating the long tail of demand. This phenomenon poses several challenges for the supply chain.<figure class="image"><img style="aspect-ratio:3745/1617;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//asset-14merchandisinggrid_1716366676.png" width="3745" height="1617"></figure>&nbsp;- Dilemma posed by products in the decline phase<figure class="image"><img style="aspect-ratio:1670/1119;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//asset-15merchandisinggrid_1716366691.png" width="1670" height="1119"></figure>To addition to the above, the duration or the slope of the products life cycle of each of the SKUs in the market is difficult to foresee or predict accurately. However, it is an irrefutable fact that sales of all products eventually hit a slowdown. When this happens, each of these products (at the declining phase of its lifecycle) is often seen as the culprit for high inventories. An increase in inventory is naturally avoidable. It occupies space in warehouses, locks up cash, and companies have to discount or eventually scrap this inventory. All these lead to profit leakages.This problem has a bigger impact on suppliers who may not only have redundant FG inventory but also would have planned for RM. When products are discontinued, the suppliers are usually left holding huge leftover inventories at their end. This often leads to issues of trust between vendors and companies, and could manifest as supply issues for other items being procured from the same supplier. A huge lose-lose situation for both parties.The Way OutImplementing a Fixed Merchandizing Grid and Fast Replenishment can help companies overcome the conflict posed by variety and help companies maintain a regular influx of new introductions without worrying about inventory going out of hand.How does this work?Defining the Merchandising GridA fixed Merchandising Grid maps the entire product portfolio and limits the range-based parameters that truly matter to the end customer, thus allowing the company to maximise sales without burdening the supply chain.A common mistake companies make is to replicate products based on what the competition is offering or make product variants based on the different parameters/functions the sales team/other stakeholders consider important. For example, fabric designers might add a particular shade of black fabric with a thin blue line to the product portfolio in search of novelty in design. This may or may not reflect the end customers’ true considerations when they make a purchase, especially since the end consumer is not as knowledgeable as the designer about fabrics, shades or print. He may not be able to distinguish this SKU from another with, say, a thin grey line. So, eventually these cannibalise each other’s sales, reducing volume off-take of both. So, it is very important to have an understanding of the true parameters that are relevant to the end customer.For example, a shoe manufacturer may decide upon the following five parameters to form the merchandising grid:<ul><li>Demographic (e.g., men, women, and kids)</li><li>Occasion of use (e.g., men’s shoes may be formal, semi-formal and casual)</li><li>Style (e.g., men’s formal shoes may be laced-up or brogues)</li><li>Price (e.g., laced up shoes may be offered at &lt;Rs.999; Rs.1000 - Rs.3000; &gt; Rs.3000, etc.)</li><li>Colour (e.g., &lt;999 shoes can be offered in black or tan)</li></ul>After identifying the relevant number of parameters, the company can also decide on the segments of the grid where the company wants to be present. For example, if price is a parameter, the company may choose to be a premium player and ignore the lower price points. Once the relevant grid is defined, the company has to decide what is the number of products that it wants to include in each square of the grid to be able to offer:<ul><li>A relevant choice to the target consumer of each segment</li><li>A variety that does not cannibalise on each other’s sales</li></ul>For example, in the case of the above shoe manufacturer, the company can decide that it needs to offer two choices of black, &lt;Rs. 999, lace - up, formal, men’s shoes, to maximize sales opportunities.Once such decisions are made across the various squares of the grid, the existing products of the company have to be mapped against this grid. (Note: If the number of products in the portfolio is too many, rationalize the list based on volume and frequency of sales before taking this step).While there is nothing like a perfect number of ranges to be offered, there will be significant scope to cut down excess range from certain segments. In that case, a judgement has to be made based on sales and other considerations as to which ones in the range the company wants to keep. Very often, such an exercise leads to the realization that the company can do without ~40% of its SKUs. This range is drop frozen and only used for liquidation, without any additional fresh procurement being done. Also, clear gaps of where new products are needed – and which need to be prioritised – will emerge once the grid is finalised. These can be triggered for new product design and development.Steve Jobs’ product strategy matrix for AppleOne of the most successful examples of merchandising grid-based product portfolio control is demonstrated by Apple. Steve Jobs defined Apple’s company computer portfolio strategy by using only two parameters - the kind of user and the portability of the computer; and decided to have only a single product offering in each of these.<figure class="image"><img style="aspect-ratio:1541/669;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//steve-jobs-product-matrix_1716366718.png" width="1541" height="669"></figure>They have extended this strategy for new category introductions as well. This has ensured that Apple’s supply chain is one of the most agile in the industry, if not the world. An old product starts running out of stock within a week of the introduction of a new model that is expected to replace it. The aspirational inventory turns of a whopping 74 (industry average is 8) enabling Apple to enjoy the industry's highest gross margin and profitability.Most other companies offer a plethora of choices to every possible customer segment, and consequently, their supply chains have become so complicated that they suffer the twin problems of lost sales due to excess inventory of some variants while suffering high inventory and subsequent margin erosion due to discounts on others.By committing to freezing the range as per a defined merchandising grid, companies will protect themselves from the problems associated with demand disaggregation, as they will be limiting the range, not only for production but also for channel partners, distribution, and vendors.Introducing New Products into the GridSince the number of possible slots is frozen, whenever marketing teams take a decision to introduce any new product into this grid, they will also need to decide which product they want to discontinue. Not only that, a discontinuation and liquidation plan for the existing inventory of the product has to be chalked out. Taking these decisions in a systematic and timely manner will allow for a smooth liquidation of the products, even as they are selling in small volumes in the market. This will eliminate issues related to leftover inventory in the supply chain and distribution channel.Reacting to an Emerging Category or Line of BusinessSometimes a new category, not a part of the original merchandising grid, may emerge. For example, an automobile spares company may decide that it wants to be present in the emerging Electric Vehicle (EV) segment. Initially, a new row or column would have to be inserted into the grid. However, over time, some of the older cells that were occupied by increasing obsolescent products (e.g., Internal Combustion engines, in the example of the automobile company) will eventually disappear as the sales of those products reduce and fall below the economic threshold.In case a company enters a new line of business, this may involve the creation of a new portfolio of products. Therefore, a new grid will be defined on the basis of buying preferences of the customers of this business. Management of the range in this grid may initially be a strategic call taken by top management and, will, therefore, be different from range management for steady-running categories. However, over the long run, as the business line matures, the grid will be managed the same way as described earlier.ConclusionOnce the merchandising grid rules are implemented in a company, teams working on new product introductions will automatically be more careful in selecting what range they want to push in the market since it involves the decision to discontinue an existing product. This circumspection can improve the probability of the selected products doing well in the market. Moreover, fixing the merchandising grid approach also allows the entire system to focus on the success of the identified range of the company. Experience has shown that when the merchandising grid is used in a pull or replenishment-based supply chain, it can help.<ul><li>release plant capacity by up to ~20-25%</li><li>reduce inventory across all nodes by ~25%</li><li>improve availability in the market by up to 90%,</li><li>increase overall sales by 20-30%</li></ul>Therefore, plan carefully, and your new products will bring in the revenues and profitability that you anticipated. Think outside the box, but stay within the grid!

The Merchandising Grid can help release plant capacity by ~20%, reduce inventory by ~25% and increase overall sales by 20%. It helps create a rationalized product portfolio that maximizes sales without burdening the supply chain.

Merchandising Grid: The mechanism for product portfolio management

A wide variety of products may burden supply chain and erode profits. Having a Fixed Merchandizing Grid & Fast Replenishment can help. Read to know more

Merchandising Grid: The Mechanism for Product Portfolio Management | Vector Consulting Group

Let’s leapfrog from BS IV to BS VI in three years, the Indian government decided in 2017.‘That’s impossible!’ the auto industry protested. After all, it took Europe nine years to make this same jump! The feat the government was proposing is akin to conquering Mount Everest in one month (most expeditions take at least 2 months), industry experts opined.So, what’s prompting such vehement protests?&nbsp;To answer this, let’s understand the challenges BS VI poses for an auto company, particularly its Research and Development function.Mammoth work contentContextMany Indian auto companies operate across multiple product categories (ex: cars, bikes, SUVs, trucks etc.) and have built a large portfolio of engines over time. A regulation such as this one would affect the entire range of their products. This means that converting all these engine models to BS VI before April 2020 is truly a gargantuan task. The sheer work content itself is overwhelming for conversion to BS VI since all engine platforms require independent design, validation and homologation activities. In fact, most companies would not have seen these many engine upgrades in their entire history.ProblemsMost R&amp;D organizations do not have a clear assessment of their capacities. This is mainly due to the high ‘content variability’ and the non-deterministic nature of R&amp;D projects, where each project is different from the previous one. So, the time and effort required to complete a new project may be much different from the previous one and can’t be predicted. This is in sharp contrast to the highly deterministic and repetitive nature of work in operations, where the time taken to process an individual part is known to the last second, and therefore, the hourly capacity of a machine is known fairly accurately.When the R&amp;D department is unclear about how much capacity is enough and the workload is huge, it tends to take on many more projects than can be handled at a time. Overloading causes R&amp;D to stretch its capacity over many projects and try to do all things simultaneously. The downside of this approach is that while a large number of projects get started, and many move a certain distance, none or only a few of them finish within the regulated deadline. In short, the company gets no return for all the effort invested.Steep learning curveContextA huge shift in technology is needed to meet the demands placed by BS VI norms. Most Indian companies haven’t faced a technological transformation of this magnitude, and that, too, requires completion within such a short time period. In itself, the adoption of a new technology is a risky proposition. A hard deadline such as the one set by the government aggravates the situation because of the enormous pressure on resources.ProblemsBut, surprisingly, most managers do not see this pressure of time as a problem. In fact, they revel in reviews based on rhetoric around stiff deadlines, believing this factor to be the only driver of speed and the best way to control the many uncertainties in project environments. This couldn’t be further from the truth. It has been seen that in any design and development process, where the achievement of output depends on the completion of a certain scope of activities, and there is pressure to achieve this output fast, the scope or the process itself gets compromised.Ironically, wherever there is a scope violation to show faster output, the management tends to overlook it either due to a lack of visibility or unwillingness to check. But, such compromises in the fidelity of the design and development process, when not caught upfront, eventually lead to production issues on the plant and quality issues in the field.In regulatory projects like BS VI conversion, where time is short, and the management is on an overdrive to meet timelines, the above undesirable consequences are very likely. With so many engines and vehicles being converted to BS VI with such tight deadlines, companies can quickly lose control of the number of issues being generated owing to process non-conformance.Integration of engine with vehicleContextThe story never ends with the conversion of an engine to BS VI. After the Proof of Concept (POC) of a BS VI engine is complete, there is still a mountain of integrations and validations awaiting to be done with other non-engine sub-systems of the vehicle variants into which the modified engine goes.As an entire portfolio of engines has to be converted to BS VI, the physical compatibility of the modified engines with existing vehicle variants/vehicle BOMs (bill of materials) has to be checked. In the commercial vehicles segment, where customization is common, and vehicle BOMs exist in thousands, this exercise can become overwhelming. Moreover, the functional performance of the overall vehicle with the modified engine cannot be allowed to deteriorate and has to be validated every time an engine is modified.ProblemsModification of each vehicle variant requires contributions from a large number of teams, often working at different locations on different sub-systems. In this process, there may be iterative changes required in the engine as well as non-engine parts and systems.However, when the flow of work is not controlled, it is very easy for engine teams to get lost in the multiplicity of activities to be done on newer engines as they are picked up for POC and iterations coming from variants already under integration check with non-engine teams. When different non-engine teams also pick up integration work based on their individual preferences and conveniences, the synchronization between them suffers, leading to long stoppages in work whenever a team needs help from another. The stoppages cause teams needing help to open up still more work fronts, further worsening the situation.Escalation in vehicle costContextThe biggest challenge by far is the change in pricing dynamics that this initiative will bring about. The overall vehicle BOM cost is expected to increase by at least 5%-10% post-BS VI conversion. This sharp spike can wipe off most of the profits of the company if it does not pass on the cost to its consumers. However, increasing vehicle prices can result in a sudden dip in sales volume, especially in the non-commercial segment, where consumers can postpone their buying decisions.ProblemsMost auto companies are, therefore, apprehensive about the impact of BS VI on sales volumes. A dip is inevitable they say, unless the price increase is ‘justified’ by additional features (and not just by improved emission parameters). But these additional features will not only add incremental costs to the vehicle’s BOM, but they will also take up additional R&amp;D capacity for testing and validation. So, the already stretched R&amp;D capacity would be further burdened, and lead times get longer. Given that there is a full portfolio of engine models and corresponding vehicle variants to be converted to BS VI, this entire process may eventually jeopardize the achievement of BS VI deadlines for many companies.Summary of woesEnormous workload, a highly uncertain environment and dependence on external suppliers of a typical new product development means that the story of most R&amp;D organizations is already one of multiple conflicts playing out at different levels. But these unresolved conflicts are magnified whenever a regulatory tsunami like BS VI hits them with its mammoth work content and aggressive deadlines.What are these conflicts? Let’s list and describe them, specifically in the context of the challenges mentioned in this article.Conflict 1Firstly, a conflict manifests when a large body of work has to be quickly completed - like when the government enforced the BS VI conversion regulation for all engine models.<ul><li>On the one hand, there is the need to ensure full capacity utilization (avoid any starvation in R&amp;D) by loading all resources to the brim.</li><li>On the other hand, there is a need to prevent capacity diversion from important work by carefully controlling the load and identifying work that should not be done.</li></ul>Conflict 2The major shift in technology across numerous engines and models within a restricted timeline creates a conflict between:<ul><li>The need to meet regulatory deadlines by using aggressive timelines to expedite execution and</li><li>The need to prevent compromises in design and development processes from creeping in due to the aggressive timelines (imposed by management through reviews)</li></ul>Conflict 3The coordination required between many teams working on different sub-systems of the same vehicle variant creates a conflict between:<ul><li>Achieving high resource utilization locally in different R&amp;D teams by letting them take up projects in any manner which suits them best individually and</li><li>Achieving close synchronization between different teams required on the same projects by defining an organization-wide rhythm</li></ul>Conflict 4The change in pricing dynamics, and fear of a dip in sales post-BS VI leads to a conflict between:<ul><li>The need to add features in the vehicle to protect sales from dipping post-BS VI, (which in turn can lead to higher lead times and greater risks of not meeting deadlines) and</li><li>The need to protect deadlines by limiting the scope of work to the bare minimum required for BS VI conversion</li></ul>Criteria for successIf we are to resolve all the conflicts listed above, we need to create a solution that resolves multiple paradoxes. In other words, we need to have a solution which:<ul><li>Minimizes starvation in R&amp;D while preventing overloading and its impact (like causing diversion in capacity)</li><li>Removes the pressure of deadlines from the system while ensuring that resources work at maximum speed</li><li>Maximizes overall resource utilization in R&amp;D while improving synchronisation among teams</li><li>Enables addition in project scope in the form of new feature upgrades wherever required to protect sales while ensuring that deadlines are met despite the expansion of the scope.</li></ul>Theory of ConstraintsDo we have a ‘magical’ solution that can resolve all the above paradoxes at the same time? Yes. Adoption of Theory of Constraints (TOC).We all know that the trick behind even astounding acts of magic is a simple diversion.&nbsp;The&nbsp;<a href="https://vector-next-new.vercel.app/scientific-system-thinking">Theory of Constraints</a>&nbsp;also performs this magic in companies by employing some simple principles of systems thinking. The primary elements of the TOC&nbsp;solution involve the following:<ul><li>Using a good enough assessment of R&amp;D capacity -for limiting projects being worked upon at a time in the R&amp;D pipeline</li><li>A company-wide priority mechanism covering all teams in R&amp;D, parts development, process engineering, and operations to improve synchronisation between individual projects</li><li>Putting a stage-gate mechanism in place to prevent compromises from creeping into the design and development process and</li><li>Managing timelines through high-frequency flow management –changing the focus from chasing deadlines to achieving speed by managing activity completion</li></ul>The end result is shorter lead times (of delivery), higher output and a more agile response to uncertainties that may creep into individual projects.Research and development departments that work on these simple principles are very agile and are not only able to manage their regular R&amp;D work smoothly but are also able to respond competently to sudden regulatory requirements like a quick conversion to BS VI.

In 2017, India wanted to leapfrog from BS IV to BS VI norms - in only three years. How do companies respond to such sudden changes?

The Race from BS IV to BS VI: How to win by solving the woes in Auto R&D

Auto R&D can ensure a quick and smooth transition to BSVI in spite of various challenges? Know how.

The Race from BS IV To BS VI: How to Win By Solving The Woes In Auto R&D | Vector Consulting Group

Discover how common misconceptions about change management often derail organizational transformations, and learn strategies to effectively navigate these challenges.

3 myths that derail a transformation program

Discover the common misconceptions that hinder successful transformation programs. Learn why leadership buy-in, tools, and great ideas alone aren't enough for effective change, and explore strategic approaches to navigate organizational transitions effectively.

3 Myths That Derail Transformation Programs | Vector Consulting Group

Can pharmaceutical giants address their unique operational challenges to help them be more flexible on the shop floor, discover hidden capacity, significantly increase output and respond quickly to changing market demands? They can, with a unique 'pull' based approach.

Accelerated pharma manufacturing

Explore strategies for accelerating pharmaceutical manufacturing amidst global demand surges and regulatory challenges with insights from Vector Consulting Group.

Accelerated Pharma Manufacturing | Vector Consulting Group

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API manufacturing in India is less attractive than in China. However, by enhancing operational excellence in manufacturing and R&D, India's API industry can unleash its true potential.

Mighty molecules: Strategies for reclaiming the global API throne

Explore strategies for India to reduce dependency on Chinese APIs and regain leadership in global pharmaceutical manufacturing. Read more insights from Vector Consulting Group.

Mighty Molecules: Strategies for Reclaiming the Global API Throne | Vector Consulting Group

“If a factory is torn down, but the rationality that produced it is left standing, then that rationality will simply produce another factory.” Robert Pirsig, Zen and the art of motorcycle managementWarning letters and their impactAn analysis of the number of warning letters issued by USFDA over the yearsi to pharmaceutical companies across the globe has been increasing over the years.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-1_1715836065.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/Number-of-FDA-warning-letters.png" alt="">In the warning letter, FDA makes it clear that the concerned company must correct the problem and provide directions and a timeframe for the company to inform the FDA of their plans for correction. Failure to address the FDA’s concerns can lead to enforcement actions that have significant repercussions as well as product liability exposure. Therefore when a warning letter is received, company employees, especially senior management (who are already very busy), scramble to address it in the stipulated time frame.It is estimated that a single warning letter leads to a loss of approx. 900 man-hours across the hierarchy. This increases exponentially if there are multiple warning letters received simultaneously. It has to be noted that this will be at the cost of progress on their routine, ongoing tasks.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-2_1715836091.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/Estimation-of-time-needed-to-address-a-single-warning-letter.png" alt="">After this marathon, the remediation procedures that FDA expects companies to implement can be even more expensive than complying in the first place. Moreover, there are long-term repercussions in terms of loss of credibility with regulators - not just the FDA but also other global regulators, leading to increased scrutiny and more inspections. In case of repeat offenders, they often have to pay hefty fines and sign a consent decree of permanent injunction that will bind them to be compliant in perpetuity. All this can impact the company’s business/financial performance, affect company valuations, and reduce the overall reputation.The problemThe major reasons for FDA warning letters are not unknown. About 50% of FDA warning letters pinpoint CAPA (corrective action and preventive action) failuresii. CAPA failures also show up year after year in these warning letters. Most of these CAPA failures are also clearly indicated by the FDA as a failure of root cause analysis.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-3-01-01-01-01_1716452582.png" width="4500" height="4500"></figure>What does not work wellSo, over the years, pharma labs have been using multiple techniques to identify the root cause so that they can take the necessary actions to improve their quality performance. The popular techniques employed include 5-Whys, Fishbone diagrams, Pareto chart, Failure Mode and Effect Analysis (FMEA), decision trees, and brainstorming.A significant chunk of the results of these analyses tends to point to human or analyst error (~40-55%). Therefore, some of the typical actions companies have taken are adopting digital systems for reducing documentation error, putting in next-generation analytical testing technology, automation of few of the quality processes, increasing the level of supervision in the lab, increase in the training of analysts and addition of resources to reduce the load on the system.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-4_1715836178.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/Typical-results-of-analysis-of-sources-of-error.png" alt="">However, experience has shown many of these companies that these steps (always quite expensive in terms of time or money or both), while offering some improvement, do not help sustain high-quality standards consistently. After a while, any improvement that accrued stagnates or even more perplexingly, when something improves, something else seems to deteriorate. Moreover, FDA has increasingly been criticizing the finding of ‘human error’ as the conclusion of root cause analysis as limited or shallow and has been urging companies to take a deeper look.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-5-01-01-01-01_1716452608.png" width="4500" height="4500"></figure>The real root cause: Cognitive overload<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-6_1715836239.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/The-real-root-casue-cognitive-overload.png" alt="">A closer study of the testing environment in pharma companies will indicate that the analysts are often under a situation of significant ‘cognitive overload’. The analysts have the responsibility to<ul><li>conduct all activities of assigned tests as per the TDS (test data sheet) - i.e. collect glassware and documents, arrange for chemicals and reagents, ensure the validity of all solutions prepared till tests are complete, select appropriate equipment (e.g., column), manage instruments, etc.</li><li>generate an audit trail for which they also have to record the equipment used.</li><li>concurrently record various observations in TDS and maintain a separate checklist to ensure no steps are missed.</li></ul>Skips and misses: All this the analysts have to manage in an eight-hour shift by switching between various stages of testing (instrument setting/monitoring, solution preparation, mobile phase, collecting glassware, checking/arranging resources, etc.) and by trying to take advantage of the natural waiting time in some of these stages. Unfortunately, the human brain finds such a balancing act and this level of multi-tasking very difficult to manage. Therefore, occurrences of inadvertent skips and misses became inevitable.Systemic error masked as human error: In addition to such human errors, testing environments also tend to have systemic errors due to<ul><li>missing information in the SOPs set or because of inadequately documented SOPs.</li><li>a process gap or due to a gap in the testing method</li></ul>However, when faced with a melee of different kinds of problems cropping up daily, it is difficult for managers to correctly infer and assign real causality for these errors. So, in this confusion, even systemic errors are mistaken for human error. This inevitably leads to frequent-finger pointing, stress and inability to take timely corrective actions.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-7-01-01-01-01_1716452634.png" width="4500" height="4500"></figure>Direction of solution:Based on these insights, it is obvious that the only option is to first address the cognitive overload in the system to bring down real manual errors to minimal levels. Then the systemic errors due to incorrect methods followed, unclear procedures, etc., will become visible, and actions can be taken to rectify them.While this logic is unrefutably simple, implementing a system-wide, counterintuitive solution that can significantly bring down the cognitive load on analysts without loss of overall productivity is obviously a huge challenge. The key to this is to release capacity by identifying and eliminating significant wastages in the activities of the analysts. Research by Vector has shown that the level of analyst capacity wastage can be as high as 40% in a typical pharma lab.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-8-01-01-01-01_1716452657.png" width="4500" height="4500"></figure>The ‘flow’ focussed solutions that Vector implements for eliminating these wastages and for releasing capacity serve a dual purpose. On the one hand it enables the released capacity to be used for controlling the loading of analysts, and on the other, it will re-set the quality practices of the company to a much higher level of rigour. For instance, improving the STPs (Standard Testing Procedures) by detailing them more thoroughly to remove elements of subjectivity can ensure that a large number of systematic errors are eliminated.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-9_1715836355.png" width="4500" height="4500"></figure>A few pioneering companies have implemented this new approach. Within a few months, they could significantly reduce invalid OOS and bring down lab incidents! Some salient details of the results of the implementation achieved with a major multi-national pharma company’s labs in a year are as below:<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-10_1715836375.png" width="4500" height="4500"></figure>If more companies address cognitive overload, which is the true root cause of their quality issues, it can bring down quality-related inconsistencies and keep companies ‘inspection ready’ at all times. With that, one is sure to see a dramatic dip in the warning letters FDA has to issue.i<a href="https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/compliance-actions-and-activities/warning-letters">https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/compliance-actions-and-activities/warning-letters</a> ii<a href="https://www.taproot.com/fda-warning-letters-capa-and-root-cause-analysis/">https://www.taproot.com/fda-warning-letters-capa-and-root-cause-analysis/</a> iii<a href="https://www.ipa-india.org/wp-content/themes/ipa/pdf/6f.pdf">https://www.ipa-india.org/wp-content/themes/ipa/pdf/6f.pdf</a>

Many generic pharma companies continue to struggle with high levels of invalid OOS and lab incidents, making them vulnerable to adverse observations from the US FDA. Often, 'analyst error' is cited as the reason, but the real reason is something else.

Getting to the true root of lab quality problems

“If a factory is torn down, but the rationality that produced it is left standing, then that rationality will simply produce another factory.” Robert Pirsig, Zen and the art of motorcycle managementWarning letters and their impactAn analysis of the number of warning letters issued by USFDA over the yearsi to pharmaceutical companies across the globe has been increasing over the years.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-1_1715836065.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/Number-of-FDA-warning-letters.png" alt="">In the warning letter, FDA makes it clear that the concerned company must correct the problem and provide directions and a timeframe for the company to inform the FDA of their plans for correction. Failure to address the FDA’s concerns can lead to enforcement actions that have significant repercussions as well as product liability exposure. Therefore when a warning letter is received, company employees, especially senior management (who are already very busy), scramble to address it in the stipulated time frame.It is estimated that a single warning letter leads to a loss of approx. 900 man-hours across the hierarchy. This increases exponentially if there are multiple warning letters received simultaneously. It has to be noted that this will be at the cost of progress on their routine, ongoing tasks.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-2_1715836091.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/Estimation-of-time-needed-to-address-a-single-warning-letter.png" alt="">After this marathon, the remediation procedures that FDA expects companies to implement can be even more expensive than complying in the first place. Moreover, there are long-term repercussions in terms of loss of credibility with regulators - not just the FDA but also other global regulators, leading to increased scrutiny and more inspections. In case of repeat offenders, they often have to pay hefty fines and sign a consent decree of permanent injunction that will bind them to be compliant in perpetuity. All this can impact the company’s business/financial performance, affect company valuations, and reduce the overall reputation.The problemThe major reasons for FDA warning letters are not unknown. About 50% of FDA warning letters pinpoint CAPA (corrective action and preventive action) failuresii. CAPA failures also show up year after year in these warning letters. Most of these CAPA failures are also clearly indicated by the FDA as a failure of root cause analysis.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-3-01-01-01-01_1716452582.png" width="4500" height="4500"></figure>What does not work wellSo, over the years, pharma labs have been using multiple techniques to identify the root cause so that they can take the necessary actions to improve their quality performance. The popular techniques employed include 5-Whys, Fishbone diagrams, Pareto chart, Failure Mode and Effect Analysis (FMEA), decision trees, and brainstorming.A significant chunk of the results of these analyses tends to point to human or analyst error (~40-55%). Therefore, some of the typical actions companies have taken are adopting digital systems for reducing documentation error, putting in next-generation analytical testing technology, automation of few of the quality processes, increasing the level of supervision in the lab, increase in the training of analysts and addition of resources to reduce the load on the system.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-4_1715836178.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/Typical-results-of-analysis-of-sources-of-error.png" alt="">However, experience has shown many of these companies that these steps (always quite expensive in terms of time or money or both), while offering some improvement, do not help sustain high-quality standards consistently. After a while, any improvement that accrued stagnates or even more perplexingly, when something improves, something else seems to deteriorate. Moreover, FDA has increasingly been criticizing the finding of ‘human error’ as the conclusion of root cause analysis as limited or shallow and has been urging companies to take a deeper look.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-5-01-01-01-01_1716452608.png" width="4500" height="4500"></figure>The real root cause: Cognitive overload<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-6_1715836239.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/The-real-root-casue-cognitive-overload.png" alt="">A closer study of the testing environment in pharma companies will indicate that the analysts are often under a situation of significant ‘cognitive overload’. The analysts have the responsibility to<ul><li>conduct all activities of assigned tests as per the TDS (test data sheet) - i.e. collect glassware and documents, arrange for chemicals and reagents, ensure the validity of all solutions prepared till tests are complete, select appropriate equipment (e.g., column), manage instruments, etc.</li><li>generate an audit trail for which they also have to record the equipment used.</li><li>concurrently record various observations in TDS and maintain a separate checklist to ensure no steps are missed.</li></ul>Skips and misses: All this the analysts have to manage in an eight-hour shift by switching between various stages of testing (instrument setting/monitoring, solution preparation, mobile phase, collecting glassware, checking/arranging resources, etc.) and by trying to take advantage of the natural waiting time in some of these stages. Unfortunately, the human brain finds such a balancing act and this level of multi-tasking very difficult to manage. Therefore, occurrences of inadvertent skips and misses became inevitable.Systemic error masked as human error: In addition to such human errors, testing environments also tend to have systemic errors due to<ul><li>missing information in the SOPs set or because of inadequately documented SOPs.</li><li>a process gap or due to a gap in the testing method</li></ul>However, when faced with a melee of different kinds of problems cropping up daily, it is difficult for managers to correctly infer and assign real causality for these errors. So, in this confusion, even systemic errors are mistaken for human error. This inevitably leads to frequent-finger pointing, stress and inability to take timely corrective actions.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-7-01-01-01-01_1716452634.png" width="4500" height="4500"></figure>Direction of solution:Based on these insights, it is obvious that the only option is to first address the cognitive overload in the system to bring down real manual errors to minimal levels. Then the systemic errors due to incorrect methods followed, unclear procedures, etc., will become visible, and actions can be taken to rectify them.While this logic is unrefutably simple, implementing a system-wide, counterintuitive solution that can significantly bring down the cognitive load on analysts without loss of overall productivity is obviously a huge challenge. The key to this is to release capacity by identifying and eliminating significant wastages in the activities of the analysts. Research by Vector has shown that the level of analyst capacity wastage can be as high as 40% in a typical pharma lab.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-8-01-01-01-01_1716452657.png" width="4500" height="4500"></figure>The ‘flow’ focussed solutions that Vector implements for eliminating these wastages and for releasing capacity serve a dual purpose. On the one hand it enables the released capacity to be used for controlling the loading of analysts, and on the other, it will re-set the quality practices of the company to a much higher level of rigour. For instance, improving the STPs (Standard Testing Procedures) by detailing them more thoroughly to remove elements of subjectivity can ensure that a large number of systematic errors are eliminated.<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-9_1715836355.png" width="4500" height="4500"></figure>A few pioneering companies have implemented this new approach. Within a few months, they could significantly reduce invalid OOS and bring down lab incidents! Some salient details of the results of the implementation achieved with a major multi-national pharma company’s labs in a year are as below:<figure class="image"><img style="aspect-ratio:4500/4500;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//ls-article-1-img-10_1715836375.png" width="4500" height="4500"></figure><img src="https://qclab.app/wp-content/uploads/2023/06/Parameter-and-improvement.png" alt="">If more companies address cognitive overload, which is the true root cause of their quality issues, it can bring down quality-related inconsistencies and keep companies ‘inspection ready’ at all times. With that, one is sure to see a dramatic dip in the warning letters FDA has to issue.i<a href="https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/compliance-actions-and-activities/warning-letters">https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/compliance-actions-and-activities/warning-letters</a> ii<a href="https://www.taproot.com/fda-warning-letters-capa-and-root-cause-analysis/">https://www.taproot.com/fda-warning-letters-capa-and-root-cause-analysis/</a> iii<a href="https://www.ipa-india.org/wp-content/themes/ipa/pdf/6f.pdf">https://www.ipa-india.org/wp-content/themes/ipa/pdf/6f.pdf</a>

Explore how addressing cognitive overload in pharma labs can resolve quality issues and reduce FDA warning letters. Learn about innovative solutions and real-world results.

Getting to the True Root of Lab Quality Problems | Vector Consulting Group

How can Indian CROs reduce the number of observations and deviations observed during the studies by 40%-50% and generate the final integrated report 25%-35% faster with the same resources while protecting the quality of reports? Find out

Agile CROs can fly high

Explore how Agile CROs are reshaping pharmaceutical clinical trials with speed, quality, and cost-effectiveness, amid rising global demands and regulatory challenges.

Agile CROs Transforming Pharmaceutical Clinical Trials | Vector Consulting Group

New products are vital for the growth of companies. Increased competition from other companies, changing consumer behaviour, advancements in technology, ensuring freshness of product offerings, diversification of risk, etc. are some of the reasons why new products have to be launched.In environments where market dynamics are rapidly changing, a company is considered healthy and growing only if at least 25%-30% of their overall sales is accrued from their new productsi. This is expected to be significantly higher for companies that deal with lifestyle or technology products. So, firms put in a lot of effort into understanding the market and try to continuously develop new products. However, according to research by Clayton Christensen, Harvard Business School Professor and renowned Author, there are over 30,000 new products introduced into the market every year, and 95% of them failii.\<figure class="image"><img style="aspect-ratio:1000/1000;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//1_1712575368.png" width="1000" height="1000"></figure>What is often not realized is that the success of any new product is dependent not only on its ideation and development stage, but also on the way it is launched in the market. Even a revolutionary product can fail. 75% of consumer-packaged goods and retail products fail to reach the minimum sales expectations after launch. And products that start out strong may also have trouble sustaining success.This article will examine the challenges faced by companies while launching a new product and the tactics needed to ensure that new products of a company have the best opportunity to succeed and sustain in the market.NPL – The ChallengesWhile there could be numerous reasons for products to fail (e.g. legal issues, socio-cultural mismatch, product falls short of claims, etc.), the major cause of failure, for otherwise acceptable new products, tend to be associated with the scale up or roll out.So, if we did a postmortem of a typical failed product, you are likely to see the following issues:<ul><li>Lack of visibility on the shelves at retail counters – The newly launched product is not getting the right placements (both in terms of quantum and the type of outlet). Or after having got the required placements, they are not getting the right visibility. (Note: Products are usually launched with considerable fanfare, ATL/BTL activities to support it. But even if these succeed in catching the customer attention, in most cases these customers will not go beyond their regular, known outlets to try and buy this product)</li><li>Customers could not get the product in many places: Even though the product could be placed in relevant retail outlets and made visible, it became unavailable very soon and vast majority of customers never got the chance to even see it (let alone buy it)</li><li>Delay in addressal of feedback received from the market: There were pockets of customers giving feedback about the new product/ processes, that if included could have prevented the demise of the product. However, company could not act on this in time.</li><li>Customers could not get sufficient product information: Customers did not get a chance to understand how to use the product (new category of product). Or the customers did not understand the products’ new features. This led to loss of interest from consumers.</li></ul>These indicate that if you don’t scale your supply chain quickly, become available consistently, course correct where needed and grab customer loyalty, your product is toast. Further, your competition may launch its own version and walk away with the market. But how can we ensure that these issues don’t happen during/after launch?To identify a solution, we must first understand the nature of new product launches in greater detail.What is the real issue?The most important characteristic of new products launches is that Consumer response to the new product is uncertain. Even though the product may have gone through a market research phase, reality is the only true test of consumer willingness to adopt a new product and there is no trend data available to predict potential sales.<figure class="image"><img style="aspect-ratio:1000/1000;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//2_1712575404.png" width="1000" height="1000"></figure>Because of this, companies are in perpetual dilemma when it comes to launching a new product. “Do they take a cautious approach and launch the product in a select few territories, or do they adopt the big bang strategy and launch it across all their POS?” Both have pros and cons. A smaller launch allows companies to test the trend in demand. Moreover, incorporating any changes to the product or processes without affecting the brand’s reputation is easier if the initial launch is limited. However, a big bang launch means companies can enjoy the first mover advantage in all geographies and increase all sales opportunities before competition gets an inkling.However, very often, this choice is taken out of the hands of companies. Delays in the new product development of the products, and threat of missing the appropriate timing/launch window (could be beginning of a season, a festival, etc.), result in pressure to launch the product when it is ready across as many territories as possible,. The risks of this are easily imaginable, though. Bigger the scale of launch, higher is the level of uncertainty of demand. The sales team also has to be proportionately bigger to cater to this scale of launch. With very little time available to impart proper training to the sales team, the USP of the product is not effectively communicated to the potential consumer of the product. Moreover, there is very little focus on responding to the feedback provided by the consumers. And, in this rush the supply chain is has also not been equipped to respond to demand fluctuations. This increases the possibility of product shortages in some areas where it is selling well (even though it is available in excess in other parts of the supply chain). Patchy availability of the products eventually puts off consumers. This leads to poor adoption of the product and in the company discarding the product as unpopular.Product failures creates a vicious cycle for companies, – as products fail more often than not, there is greater pressure to take up more new products for development to ensure growth of the company! So, finding a way to address these challenges and improve the typical hit ratio of product launches is imperative.<figure class="image"><img style="aspect-ratio:1000/1000;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//3_1712575424.png" width="1000" height="1000"></figure>Direction of SolutionIt is clear that reducing the extent of demand uncertainty during a new product launch will help improve its effectiveness. The best way to reduce uncertainty so as to have better control over the supply chain/sales team readiness is to launch new products in a phased manner- i.e., stagger the rollout across territories/POS.Ensuring effectiveness of new product launchesStaggering the rollout across territories/POS helps companies take the required steps to ensure effectiveness of new product launches:<ol><li>Reduces demand uncertainty by Testing the product: For this the territories and POS should be selected in such a manner that there is adequate representation, this will allow the company to check whether the product is working in those areas before a full roll out. Care also has to be taken to ensure that the product is displayed well (by defining percentage of capital and space for the new product) and there is continuous availability of the new product at the POS.</li><li>Align the supply chain in line with expected demand: This is because when the roll out is phased out:<ol><li>Manufacturing capacity can be stepped up slowly and aligned in line with the demand.</li><li>The distribution channel can ensure adequate stocks for display and repeat sales where there are more sales.</li><li>There is now even the possibility to ensure buffer capacity to manage any sudden spike in demand.</li></ol></li><li>Provide adequate training: With this approach, challenges and overheads related to training will also come down. A relatively smaller sales team to be trained before launch, and so the quality of the training improves, and one can expect improved adherence to your sales strategy, communication guidelines, etc.</li><li>Capacity to analyze and respond to the feedback: In a staggered rollout, there is enough capacity in the system to focus on and respond to the feedback provided by the early consumers for both the product and the marketing collaterals. This can help limit the exposure of the product’s issues to a small set of customers, thereby, preventing a negative perception of the new product to a wider audience. One also will have the agility to resolve these issues in a timely manner, resulting in greater customer satisfaction levels with the new product. Collecting and responding to information on marketing collaterals can help align the marketing spends as per market requirements.</li></ol>Next stepsThe learnings gained from one rollout to be transferred to the next rollout. And the sales team already trained on the product initially can be utilized to further train other teams in other territories during this scale up. Thus, the entire sales team gets trained better to effectively communicate product’s USP/features and help customers adopt the product. Moreover, since the company can implement customer feedback into the product and processes in a timely manner, the brand can quickly gain customer trust and loyalty.When more and more products are launched successfully, the pressure on NPD comes down and they can work in a more focused manner on a more considered number of new products. This will allow them to help launch products in a timely manner reducing pressure on having to take a big bang approach in new product launches.What to expect?Implement this new product launch strategy, and significant improvement in success ratio of new product launches is virtually guaranteed (at least 30% improvement in number of hits) and the company can expect ~ 50% increase in contribution of new products into overall sales. Once consistent availability of the products across all potential outlets continues to be assured find out how by clicking on this <a href="http://new-stage.vectorconsulting.in/en/research-and-publication/articles/managing-distribution-chain-is-there-a-better-way-than-gazing-the-crystal-ball/">link</a>, the product life of each new product is also expected to improve accruing more returns for the company.Referencesi) <a href="https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.590.6072&amp;rep=rep1&amp;type=pdf">CiteSeer</a>&nbsp; ii) <a href="https://www.forbes.com/sites/shamahyder/2019/10/17/how-to-launch-a-new-product-or-service-what-the-latest-research-teaches-us-about-successful-launches/?sh=7cafbe04412a">Forbes.com</a>&nbsp;

According to research, ~95% of new product launches fail. How can companies improve the success rate of their new product launches?

Acing new product launches

Discover essential strategies for successful new product launches. Learn from Vector Consulting Group about mitigating risks and maximizing market adoption for new products.

Acing New Product Launches | Vector Consulting Group

Using the Flow Model of Project management in residential real estate projects, companies can increase IRR from 17% to 21%.

Steps to ensure excellent IRR in real estate projects

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IntroductionJust-In-Time (JIT), a production philosophy pioneered by Toyota in the 1970s, it became popular with Toyota’s rapid growth and was quickly adopted globally by major OEMs during the 1980s and 1990s. The implementation of JIT by these OEMs attempted to integrate their operations with their suppliers and vehicle dealerships into a seamless supply chain.&nbsp;Implementing JITOnce JIT is implemented, a supply chain management system is expected to showcase the following characteristics/benefits:‘Pull’ based inventory movementInventory movement will be ‘just in time’ in the entire supply chain and is based on pull from the previous node or “bin availability”. For instance, when a bini signals that it needs replenishment, it initiates the movement of materials from the supplier or storage area to the production line. This movement is typically rapid and aligned with the production schedule. Forecasts will be used only for high level planning. E.g. for raw material planning but not for actual RM procurement or for planning production. The idea is that any movement of inventory before the actual need for it can generate excess inventory, and any movement later will create shortages.Frequent DeliveriesSuppliers, OEMs, and dealerships would practice frequent and small deliveries. For e.g., raw materials will be received just-in-time for production at the production line.Smooth and stable production flowA smooth and continuous production flow is expected to be seen at suppliers and OEMs without frequent stoppages or disruptions.Reduced/Stable Inventory LevelsSuppliers, OEMs, and dealerships will have very limited stock of raw materials, work-in-progress, and finished goods. These levels will stay stable – no large variability across the supply chain.Lean ManufacturingLean manufacturing principles, actively identifying and eliminating waste, focusing on value-adding activities, and optimizing processes is followed by the OEM and all suppliers.Continuous ImprovementCompanies/entities will have a culture of Kaizen (continuous improvement) and encourage employee involvement in identifying and implementing process enhancements. Actions such as standardization, quality initiatives, set-up time reduction, etc., are taken to reduce variability in the system and improve synchronization.To sum up, by emphasizing precise production and timely delivery of goods without excess inventory, JIT‘s pull mode of operations promises efficiency and reduced costs for suppliers, OEMs and Dealerships. The reports of benefits experienced by many international vehicle manufacturers in their operations attracted many large Indian OEMs to adopt JIT as well.However, even a small dipstick survey can indicate that all is not as expected.The challengesWhile most OEMs (75%) have implemented JIT practices in their processes, their supply chain partners have not been roped in JIT. This means the JIT implementation is not end to end in any Indian OEM’s supply chain. One exception seen is of an MNC OEM in India who has done a zero inventory model at dealer level, with real demand from end consumer demand triggering inventory movement. Some have also done a demand-pull replenishment for only spare parts from their OEM warehouse to dealers. However, most follow a hybrid push-pull system – i.e. of monthly/weekly forecast based ordering from dealers, scheduling monthly production requirements from suppliers with daily inventory movement to OEM plants as per demand.&nbsp;Poor stability in the supply chain – expediting and firefightingMoreover, the stability that a JIT supply chain is expected to offer is not realized. As per 90% of respondents in this survey, JIT is partially and ineffectively implemented by their firms. The lack of stability can also be seen in two parameters - the level of expediting and the variability of the inventory profile.With significant expediting and firefighting (75% of the respondents of this research indicated that JIT system involves a lot of firefighting), attempt is made to ensure 1-2 days of full kit at OEMs and suppliers but time to time kits are incomplete for production. The availability of full kits is found to be only 75% at OEMs and 70% at suppliers for assembly. Even if one item is not available, the plan has to be changed. Consequently, the production plan adherence is poor especially at suppliers (only 80-85%).<figure class="image"><img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-40711-pm_1703587034.png"></figure>Poor stability in the supply chain - inventory variability&nbsp;At the same time, even though suppliers (Tier 1) are included by most of the OEMs in a JIT partnership, there are clear signs that the inventory benefits are skewed towards the OEMs. Thus, while the OEM may have only one day or one shift worth of inventory, the suppliers hold 10-12 days of inventory for OEMs, even when they are only a few hours away from the assembly plants of the auto OEM. Similarly, dealerships maintain 1-3 months sales worth of stocks depending upon the season.&nbsp;<img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-40801-pm_1703587085.png">90% of the survey respondents also reported that in the current practice, the inventory stays in the supplier’s books till it is inwarded in the OEM’s facility while it moves to the dealership account on a factory exit basis from the OEM. The trend is common across all OEMs surveyed and 90% of the suppliers affirmed this practice. Similarly, 85% of the Tier 1 suppliers tend to follow the same practice of inwarding with their suppliers.Further, the inventory of the entire supply chain goes haywire from time to time. For example, after COVID-19, the dealer inventory of the OEMs ballooned, and the reaction of OEMs for production correction had a significant lag (about 6-7 months of lag). After COVID, the glut in the market was followed by shortages since OEMs could also not ramp up when demand picked up. This infamous ‘bull-whip’ effect is part of every economic downturn.Combination of push-pull inventory movementA closer look at the supply chain can show other indicators to show that inventory movement is not fully ‘pull-based’. Many OEMs get inventory from suppliers in JIT. However, production in the entire supply chain (according to 100% of suppliers and OEMs surveyed) is based on forecasts rather than actual consumption or demand.<figure class="image"><img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-40901-pm_1703587145.png"></figure>However, market demand fluctuates, and these forecasts don’t match reality (accuracy is 60%-80%). Consequently, issues such as rescheduling, searching for missing components and daily expediting ensues. It is not uncommon for 15%-25% of the full kits needed for the day to be incomplete at many OEMs in spite of regular full kit meetings. Expediting by the OEMs leads to a change in what is demanded daily from the supplier vis-a-vis the order schedule. There is up to 25% variation experienced by suppliers with OEM schedules.<figure class="image"><img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-40930-pm_1703587175.png"></figure>Because plant scheduling and material planning of suppliers is based on the monthly or weekly forecast of the OEM, the suppliers’ ability to respond quickly to OEMs’ daily production plan changes is restricted. Even though the supplier keeps significant inventory buffers to try and prevent the situation (10-12 days), there is often a mismatch in what can be supplied and what the OEM demands; therefore, suppliers often fail to meet changing requirements at a daily level. It must be noted here that while some of this inventory kept by the supplier is by design, some is due to a change in plan by the OEM (made as per plan but not lifted yet). The Tier 1 supplier has a similar relationship with their vendors.Real problemThese findings from this research point to<img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-41018-pm_1703587221.png">&nbsp;As can be seen in the study, in spite of JIT (or because of it), a majority of Indian Auto OEMs are struggling to effectively manage demand - especially at the SKU level, across various time horizons. Shorter product cycles, changes in regulations, and an accelerated introduction of new components into the market are aggravating demand fluctuations. In this environment of high demand variability across products, companies do not have the ability to do demand levelling, i.e. having a cadence of SKUs across time periods (Heijunka). Without this levelling, adhering strictly to a JIT-based approach (bin availability-based inventory movement) throughout the supply chain becomes difficult. Any attempt to do so is detrimental since small disturbances will have a cascading effect on the operations of all entities in the supply chain.Hence, a system has been established in India where JIT/bins are used within OEM’s operations and for moving inventory from suppliers to OEMs. So, large auto OEMs maintain little or no inventory (1 shift or day’s inventory inside their premises). However, they require suppliers to keep an adequate stock of supplies at warehouses near OEM assembly lines. Moreover, since production at the supplier is not based on JIT but on forecasts (inevitably inaccurate), this also leads to the accumulation of inventory. Wherever suppliers are larger than their own vendors, a similar situation ensues.Direction of solutionHow, then, can the automotive supply chain be improved? It is well accepted that a pull system is superior to a forecast-based approach because it minimizes waste, reduces excess inventory, and ensures production or ordering aligns precisely with real customer demand. So, any Direction of Solution proposed should protect these advantages and offer a practical and effective end-to-end pull system in this industry that offers a win-win-win (win for all partners).In an environment of inherently high variability, trying to eliminate it altogether, as attempted by the Heijunka, is impractical. However, variability can be dampened considerably with the help of buffers. For such a buffered system to be implemented and to make sure that this system responds to market demand with agility and also, the following steps have to be taken:<img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-41201-pm_1703587324.png">The most effective starting point to implement a system of 'buffers replenishing buffers' will be on the demand side of the auto OEM. We can mitigate demand spikes at the dealer level by transferring inventory from the OEM to the dealer based solely on consumption rather than adhering to fixed sales targets/forecasts.This will involve the OEM creating a central warehouse to maintain FG inventory that can absorb fluctuations in demand from dealerships during the supply lead time. Production at the OEM should be driven by actual consumption from the warehouse (a fall in buffer level or norm), rather than on sales forecasts. This will improve load balancing and operational flow at the plant.Component suppliers can also maintain an FG inventory from which they supply the OEM's RM inventory based on daily consumption. The suppliers should transition to pull-based production, producing based on actual off-take from their FG warehouse rather than using monthly schedules. This will decouple them from any fluctuations in the OEM’s manufacturing plans as well. A similar system, which helps reduce supply lead-time and ensures adequate availability of feeding components from Tier II vendors, can be established.<img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-41252-pm_1703587376.png">2 Implement an execution-based priority method to deal with variability in demand and capacity so that the system gets clear signals on what to focus upon when total demand across products exceeds capacity&nbsp;Procurement and production based on daily consumption rather than forecasts will allow for better responsiveness to changing demand patterns. However, since demand is not levelled, it is possible that total daily demand across products exceeds capacity at an entity (which is not a problem in an environment where demand is levelled). So, in this situation, a priority system is needed to identify which products to produce/dispatch, etc. For every item, a target inventory can be set based on ‘paranoid’ consumption during replenishment time (the maximum forecasted demand during the replenishment time factored by the fluctuations in the replenishment time). The prevailing level of stock, as compared to this target level of various products/buffer levels, can be used to signal priority using simple colour codes. For example, on a daily basis, some FG SKUs will have lower stock compared to the target level while others may have higher stock. A color-based priority system will, in this situation, signal the following:<figure class="image"><img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-41323-pm_1703587410.png"></figure>Naturally, Red SKUs should be prioritized over Yellow and Green. This system is important as reacting to small quantity consumption is clearly inefficient. Thus, the colour system provides the necessary flexibility for these decisions.<figure class="image"><img src="https://images.vectorconsulting.in/storage/editor_uploads//screenshot-2023-12-26-at-41323-pm_1703587410.png"></figure>&nbsp;&nbsp;3 A method of periodic changing of norms of the buffers by intelligent sensing of any change in demand patterns both in near future and recent past.The colour-based system can also trigger adjustments in inventory norms. For instance, if sales rates consistently exceed supply rates or supply, the norm can be increased. A mechanism can also be put in place to adjust the norm in preparation for known jumps or drops in sales (e.g. major promotional events by the OEM). This method of tracking priority zones of SKUs and periodic changing of norms of the buffers by forward and backward sensing of demand needs can be put in place (giving very high transparency in the system) with the help of end-to-end IT infrastructure.ConclusionThe study highlights the limitations of JIT (Just-In-Time) manufacturing. Clearly, implementing JIT is not advisable in the current automobile industry environment, as demand variability is high across products, and companies are unable to level demand as Toyota once could. Attempts by OEMs to avail themselves of the inventory benefits of JIT have resulted in the creation of two separate worlds within the supply chain: a JIT world at the OEMs and a non-JIT world at partner organisations. This has led to stock pileups with partners in the supply chain, resulting in increased costs and low capital turnover for suppliers and dealers, often leading to friction in relationships.To implement a pull system that can benefit the entire supply chain, a solution is proposed involving buffering and intelligent decoupling to absorb variability in the system. This approach ensures seamless flow, provides flexibility, and aligns the supply chain with market movements without increasing inventory levels in the supply chain.&nbsp;i Bins are storage locations or containers used to hold a specific quantity of components or materialsii VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity, describing the unpredictable and challenging nature of modern business environments

Our study on India's auto industry could not find any end-to-end JIT implementation in the supply chians of auto companies. We explore why and propose an alternative pull system with buffers and smart decoupling to  overcome the limitations of JIT while securing its advantages.

Just-In-Time or Just Not There? Reevaluating India's Automotive Supply Chain Dynamics

IntroductionJust-In-Time (JIT), a production philosophy pioneered by Toyota in the 1970s, it became popular with Toyota’s rapid growth and was quickly adopted globally by major OEMs during the 1980s and 1990s. The implementation of JIT by these OEMs attempted to integrate their operations with their suppliers and vehicle dealerships into a seamless supply chain.&nbsp;Implementing JITOnce JIT is implemented, a supply chain management system is expected to showcase the following characteristics/benefits:‘Pull’ based inventory movementInventory movement will be ‘just in time’ in the entire supply chain and is based on pull from the previous node or “bin availability”. For instance, when a bini signals that it needs replenishment, it initiates the movement of materials from the supplier or storage area to the production line. This movement is typically rapid and aligned with the production schedule. Forecasts will be used only for high level planning. E.g. for raw material planning but not for actual RM procurement or for planning production. The idea is that any movement of inventory before the actual need for it can generate excess inventory, and any movement later will create shortages.Frequent DeliveriesSuppliers, OEMs, and dealerships would practice frequent and small deliveries. For e.g., raw materials will be received just-in-time for production at the production line.Smooth and stable production flowA smooth and continuous production flow is expected to be seen at suppliers and OEMs without frequent stoppages or disruptions.Reduced/Stable Inventory LevelsSuppliers, OEMs, and dealerships will have very limited stock of raw materials, work-in-progress, and finished goods. These levels will stay stable – no large variability across the supply chain.Lean ManufacturingLean manufacturing principles, actively identifying and eliminating waste, focusing on value-adding activities, and optimizing processes is followed by the OEM and all suppliers.Continuous ImprovementCompanies/entities will have a culture of Kaizen (continuous improvement) and encourage employee involvement in identifying and implementing process enhancements. Actions such as standardization, quality initiatives, set-up time reduction, etc., are taken to reduce variability in the system and improve synchronization.To sum up, by emphasizing precise production and timely delivery of goods without excess inventory, JIT‘s pull mode of operations promises efficiency and reduced costs for suppliers, OEMs and Dealerships. The reports of benefits experienced by many international vehicle manufacturers in their operations attracted many large Indian OEMs to adopt JIT as well.However, even a small dipstick survey can indicate that all is not as expected.The challengesWhile most OEMs (75%) have implemented JIT practices in their processes, their supply chain partners have not been roped in JIT. This means the JIT implementation is not end to end in any Indian OEM’s supply chain. One exception seen is of an MNC OEM in India who has done a zero inventory model at dealer level, with real demand from end consumer demand triggering inventory movement. Some have also done a demand-pull replenishment for only spare parts from their OEM warehouse to dealers. However, most follow a hybrid push-pull system – i.e. of monthly/weekly forecast based ordering from dealers, scheduling monthly production requirements from suppliers with daily inventory movement to OEM plants as per demand.<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//1_1708591358.png"></figure>Poor stability in the supply chain – expediting and firefightingMoreover, the stability that a JIT supply chain is expected to offer is not realized. As per 90% of respondents in this survey, JIT is partially and ineffectively implemented by their firms. The lack of stability can also be seen in two parameters - the level of expediting and the variability of the inventory profile.With significant expediting and firefighting (75% of the respondents of this research indicated that JIT system involves a lot of firefighting), attempt is made to ensure 1-2 days of full kit at OEMs and suppliers but time to time kits are incomplete for production. The availability of full kits is found to be only 75% at OEMs and 70% at suppliers for assembly. Even if one item is not available, the plan has to be changed. Consequently, the production plan adherence is poor especially at suppliers (only 80-85%).<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//2_1708591390.png"></figure>Poor stability in the supply chain - inventory variability&nbsp;At the same time, even though suppliers (Tier 1) are included by most of the OEMs in a JIT partnership, there are clear signs that the inventory benefits are skewed towards the OEMs. Thus, while the OEM may have only one day or one shift worth of inventory, the suppliers hold 10-12 days of inventory for OEMs, even when they are only a few hours away from the assembly plants of the auto OEM. Similarly, dealerships maintain 1-3 months sales worth of stocks depending upon the season.&nbsp;<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//3_1708591415.png"></figure>90% of the survey respondents also reported that in the current practice, the inventory stays in the supplier’s books till it is inwarded in the OEM’s facility while it moves to the dealership account on a factory exit basis from the OEM. The trend is common across all OEMs surveyed and 90% of the suppliers affirmed this practice. Similarly, 85% of the Tier 1 suppliers tend to follow the same practice of inwarding with their suppliers.Further, the inventory of the entire supply chain goes haywire from time to time. For example, after COVID-19, the dealer inventory of the OEMs ballooned, and the reaction of OEMs for production correction had a significant lag (about 6-7 months of lag). After COVID, the glut in the market was followed by shortages since OEMs could also not ramp up when demand picked up. This infamous ‘bull-whip’ effect is part of every economic downturn.Combination of push-pull inventory movementA closer look at the supply chain can show other indicators to show that inventory movement is not fully ‘pull-based’. Many OEMs get inventory from suppliers in JIT. However, production in the entire supply chain (according to 100% of suppliers and OEMs surveyed) is based on forecasts rather than actual consumption or demand.<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//4_1708591437.png"></figure>However, market demand fluctuates, and these forecasts don’t match reality (accuracy is 60%-80%). Consequently, issues such as rescheduling, searching for missing components and daily expediting ensues. It is not uncommon for 15%-25% of the full kits needed for the day to be incomplete at many OEMs in spite of regular full kit meetings. Expediting by the OEMs leads to a change in what is demanded daily from the supplier vis-a-vis the order schedule. There is up to 25% variation experienced by suppliers with OEM schedules.<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//5_1708591453.png"></figure>&nbsp;Because plant scheduling and material planning of suppliers is based on the monthly or weekly forecast of the OEM, the suppliers’ ability to respond quickly to OEMs’ daily production plan changes is restricted. Even though the supplier keeps significant inventory buffers to try and prevent the situation (10-12 days), there is often a mismatch in what can be supplied and what the OEM demands; therefore, suppliers often fail to meet changing requirements at a daily level. It must be noted here that while some of this inventory kept by the supplier is by design, some is due to a change in plan by the OEM (made as per plan but not lifted yet). The Tier 1 supplier has a similar relationship with their vendors.Real problemThese findings from this research point to<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//jit1_1708592057.png"></figure>&nbsp;As can be seen in the study, in spite of JIT (or because of it), a majority of Indian Auto OEMs are struggling to effectively manage demand - especially at the SKU level, across various time horizons. Shorter product cycles, changes in regulations, and an accelerated introduction of new components into the market are aggravating demand fluctuations. In this environment of high demand variability across products, companies do not have the ability to do demand levelling, i.e. having a cadence of SKUs across time periods (Heijunka). Without this levelling, adhering strictly to a JIT-based approach (bin availability-based inventory movement) throughout the supply chain becomes difficult. Any attempt to do so is detrimental since small disturbances will have a cascading effect on the operations of all entities in the supply chain.Hence, a system has been established in India where JIT/bins are used within OEM’s operations and for moving inventory from suppliers to OEMs. So, large auto OEMs maintain little or no inventory (1 shift or day’s inventory inside their premises). However, they require suppliers to keep an adequate stock of supplies at warehouses near OEM assembly lines. Moreover, since production at the supplier is not based on JIT but on forecasts (inevitably inaccurate), this also leads to the accumulation of inventory. Wherever suppliers are larger than their own vendors, a similar situation ensues.Direction of solutionHow, then, can the automotive supply chain be improved? It is well accepted that a pull system is superior to a forecast-based approach because it minimizes waste, reduces excess inventory, and ensures production or ordering aligns precisely with real customer demand. So, any Direction of Solution proposed should protect these advantages and offer a practical and effective end-to-end pull system in this industry that offers a win-win-win (win for all partners).In an environment of inherently high variability, trying to eliminate it altogether, as attempted by the Heijunka, is impractical. However, variability can be dampened considerably with the help of buffers. For such a buffered system to be implemented and to make sure that this system responds to market demand with agility and also, the following steps have to be taken:<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//6_1708591534.png"></figure>The most effective starting point to implement a system of 'buffers replenishing buffers' will be on the demand side of the auto OEM. We can mitigate demand spikes at the dealer level by transferring inventory from the OEM to the dealer based solely on consumption rather than adhering to fixed sales targets/forecasts.This will involve the OEM creating a central warehouse to maintain FG inventory that can absorb fluctuations in demand from dealerships during the supply lead time. Production at the OEM should be driven by actual consumption from the warehouse (a fall in buffer level or norm), rather than on sales forecasts. This will improve load balancing and operational flow at the plant.Component suppliers can also maintain an FG inventory from which they supply the OEM's RM inventory based on daily consumption. The suppliers should transition to pull-based production, producing based on actual off-take from their FG warehouse rather than using monthly schedules. This will decouple them from any fluctuations in the OEM’s manufacturing plans as well. A similar system, which helps reduce supply lead-time and ensures adequate availability of feeding components from Tier II vendors, can be established.2 Implement an execution-based priority method to deal with variability in demand and capacity so that the system gets clear signals on what to focus upon when total demand across products exceeds capacity Procurement and production based on daily consumption rather than forecasts will allow for better responsiveness to changing demand patterns. However, since demand is not levelled, it is possible that total daily demand across products exceeds capacity at an entity (which is not a problem in an environment where demand is levelled). So, in this situation, a priority system is needed to identify which products to produce/dispatch, etc. For every item, a target inventory can be set based on ‘paranoid’ consumption during replenishment time (the maximum forecasted demand during the replenishment time factored by the fluctuations in the replenishment time). The prevailing level of stock, as compared to this target level of various products/buffer levels, can be used to signal priority using simple colour codes. For example, on a daily basis, some FG SKUs will have lower stock compared to the target level while others may have higher stock. A color-based priority system will, in this situation, signal the following:<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//7_1708591604.png"></figure>Naturally, Red SKUs should be prioritized over Yellow and Green. This system is important as reacting to small quantity consumption is clearly inefficient. Thus, the colour system provides the necessary flexibility for these decisions.<figure class="image"><img src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//8_1708591628.png"></figure>The colour-based system can also trigger adjustments in inventory norms. For instance, if sales rates consistently exceed supply rates or supply, the norm can be increased. A mechanism can also be put in place to adjust the norm in preparation for known jumps or drops in sales (e.g. major promotional events by the OEM). This method of tracking priority zones of SKUs and periodic changing of norms of the buffers by forward and backward sensing of demand needs can be put in place (giving very high transparency in the system) with the help of end-to-end IT infrastructure.ConclusionThe study highlights the limitations of JIT (Just-In-Time) manufacturing. Clearly, implementing JIT is not advisable in the current automobile industry environment, as demand variability is high across products, and companies are unable to level demand as Toyota once could. Attempts by OEMs to avail themselves of the inventory benefits of JIT have resulted in the creation of two separate worlds within the supply chain: a JIT world at the OEMs and a non-JIT world at partner organisations. This has led to stock pileups with partners in the supply chain, resulting in increased costs and low capital turnover for suppliers and dealers, often leading to friction in relationships.To implement a pull system that can benefit the entire supply chain, a solution is proposed involving buffering and intelligent decoupling to absorb variability in the system. This approach ensures seamless flow, provides flexibility, and aligns the supply chain with market movements without increasing inventory levels in the supply chain.&nbsp;i Bins are storage locations or containers used to hold a specific quantity of components or materialsiii VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity, describing the unpredictable and challenging nature of modern business environments&nbsp;

Have automobile companies in India really implemented Just In Time (JIT)?

We have developed bespoke solutions for equipment manufacturing or custom manufacturing companies to help them identify and address constraints in operations, sales, spares &amp; services, or new product development that limit consistent sales and profit growth.&nbsp;Working with companies like Laxmi Machine Works (LMW), Godrej Material Handling, RPG Raychem, Kirloskar Oil Engines Ltd. Bajaj Electricals (Luminaries Division), amongst many others, we have helped clients bring about excellence in equipment delivery, turbo-charge their sales &amp; business development efforts and set new benchmarks in after-sales services.&nbsp;

An equipment manufacturing or custom manufacturing company’s ability to grow its sales and profits consistently is limited by constraints in the following areas like Operations, Sales, Spares and Services and New Product Development:

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Our unique solutions for auto OEMs and auto components manufacturers help them overcome constraints that hinder their organizational performance in new product development, manufacturing, distribution and sales.&nbsp; &nbsp; Over the years, we have worked with companies like Tata Motors – Commercial Vehicles (Spare Parts &amp; Services Division), Ashok Leyland, International Tractors Ltd. (Sonalika Tractors), Fleetguard Filters, JK Fenner (India) Ltd to set new industry benchmarks in operational performance in different areas of business.

We offer consulting services to organizations engaged in manufacturing and distribution of automobiles or auto components. Our consulting methodology focuses on identifying the leverage point of an organization for intervention.

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Our unique solutions for auto OEMs and auto components manufacturers help them overcome constraints that hinder their organizational performance in new product development, manufacturing, distribution and sales.&nbsp; &nbsp; Over the years, we have worked with companies like Tata Motors – Commercial Vehicles (Spare Parts &amp; Services Division), Ashok Leyland, International Tractors Ltd. (Sonalika Tractors), Fleetguard Filters, JK Fenner (India) Ltd., to set new industry benchmarks in operational performance in different areas of business.

Auto and automotive business consulting services from Vector Consulting Group can enable companies to grow profits consistently whether the industry is going through an economic boom or a downturn.

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Our solutions for consumer goods or consumer packaged goods (CPG) companies have helped companies expand their range &amp; reach in the market and create pull from influencers while improving overall supply chain and distribution efficacies.&nbsp;Our interventions in Sales &amp; Distribution, New Product Development, Inventory Planning, and CRM programs have delivered quantum business results for companies like Bajaj Electricals (Consumer Products), VIP Industries Ltd., Godrej Interio, Polycab, Pidilite, Godrej Security Solutions, and many more.&nbsp;

Organizations producing, distributing, and making products available at retail points can be consumer goods companies or consumer packaged goods companies (CPG). Such companies could develop a constraint in areas like Internal Operations and Distribution, External Distribution, Sales Bandwidth, Retail Operations and New Product Development.

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Textile manufacturers or fashion garment retailers could develop a constraint in Operations, Sales, Retail operations or Sampling. Our unique solutions for textile manufacturing or fashion garment retailing help organizations facing operational challenges in operations, sales, or sampling management. We have worked with Blackberrys, Westside Retail, Arvind Fashions, Trident Group (Home Textiles), and Raymonds, amongst others, to improve their On-Time-In-Full (OTIF) performance, availability at retail store level, reduce overall inventory and working capital deployed in the business. Some of our clients have set new industry benchmarks.

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Vector Consulting Group provides consulting services to textile firms to drastically reduce lead time in operations and sample making, increase capacity utilization, reduce lead time and improve sales.

Textile and Garments Consulting Services in India | Vector Consulting Group

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Our solutions for organizations involved in pharmaceutical research &amp; development, production, export, and distribution of medicines help them address ongoing challenges or constraints in operations, R&amp;D, distribution or management of QC labs. &nbsp;Our innovative solution has helped Ajanta Pharma, Lupin, and Strides resolve their lab quality issues, reduce R&amp;D lead time and improve delivery performance while enhancing the productivity of resources.

Organizations working in the area of Life sciences, especially those dealing with research, development, production, export or distribution of pharmaceutical drugs and formulations, can have an ongoing challenge or a constraint in Operations, Research & Development or in Distribution to International Warehouses.

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While the pharmaceutical industry faces many unique challenges, the fairly healthy gross margins this industry enjoys have made it possible for businesses to thrive during good times and remain viable even through tough times. However, with unprecedented and increasing competition, business complexity, velocity and volatility of markets, companies are now struggling with stressed supply chains, profit erosion, and continuously lowering returns.

Vector Consulting Group offers consulting services to enable life sciences and pharmaceutical companies improve output from R&amp;D and manufacturing, reduce inventory, lead time and improve overall profits.

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BAHASA As part of the alliance, TIS Inc—one of the technology firms in Japan, has acquired a 20% stake in Vector. The alliance paves the way for Vector to expand its footprint in growing markets, including Indonesia, Japan, and Thailand.

BAHASA Vector Consulting Group announces capital and business alliance with TIS Inc.

As part of the alliance, TIS Inc—one of the technology firms in Japan, has acquired a 20% stake in Vector. The alliance paves the way for Vector to expand its footprint in growing markets, including Indonesia, Japan, and Thailand.

Vector Consulting Group announces capital and business alliance with TIS Inc.

Vector Consulting Group announces capital and business alliance with TIS Inc

BAHASA The article talks about ways to create a new culture that facilitates ideation and criticism to dismantle the formal and informal systems supporting a hierarchy-driven culture.

BAHASA How to create a culture of criticism to facilitate innovation?

The article talks about ways to create a new culture that facilitates ideation and criticism to dismantle the formal and informal systems supporting a hierarchy-driven culture.

How to create a culture of criticism to facilitate innovation?

BAHASA  The article explains how India's generic pharma business, despite facing challenges recently, can maintain its 'number one' tag.

BAHASA  India can continue to be number one in generic pharma business

The article explains how India's generic pharma business, despite facing challenges recently, can maintain its 'number one' tag.

India can continue to be number one in generic pharma business

BAHASA  Vector Consulting Group, India's largest homegrown management consulting firm, announced its foray into the Indonesian market.

BAHASA  Vector Consulting Group expands its footprint and launches operations in Indonesia

Vector Consulting Group, India's largest homegrown management consulting firm, announced its foray into the Indonesian market.

Vector Consulting Group expands its footprint and launches operations in Indonesia

Scientific Systems Thinking

To overcome the above weaknesses of conventional business diagnostics, Vector uses a thinking process approach that combines the philosophy of deductive reasoning methods of the Greek philosopher, Aristotle; the&nbsp;Theory of Constraints approach of the Israeli physicist and management guru, Eli Goldratt; the rules of scientific experimentation of Sir Francis Bacon; and the philosophy of science as propounded by the Austrian-British philosopher, Karl Popper. We call it the Scientific Systems Thinking.

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BAHASA Enabling Companies to solve chronic industry problems.

BAHASA VECTOR DIGITAL LABS

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Enabling Companies to solve chronic industry problems.

VECTOR DIGITAL LABS

BAHASA View Case Study

BAHASA After a company-wide implementation of TOC, the company enjoyed a CAGR of 25% in the last 10 years.

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After a company-wide implementation of TOC, the company enjoyed a CAGR of 25% in the last 10 years.

Find out how companies can implement a Demand-Driven Replenishment Model, to boost first pick rate, reduce inventory, and enhance dealer satisfaction, while optimizing supply chain efficiency and customer retention.

Royal Enfield

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Ajanta Pharma deployed a new dynamic pull-based scheduling approach in operations and supply chain and managed to release 15%-20% capacity and improve OTIF performance for their US warehouses to 99%.

Bahasa Ajanta Pharma Ltd.

Ajanta Pharma Ltd.

Discover how Vector Consulting helped Ajanta Pharma improve agility and efficiency by abandoning forecast-based planning and adopting a dynamic manufacturing approach.

Ajanta Pharma - Dynamic Manufacturing Transformation | Vector Consulting Group

Enhance supply chain with Vector Consulting Group's innovative strategies optimizing distribution networks to drive business growth.

Supply Chain & Distribution Excellence | Vector Consulting Group

Breakthrough for a leading global generic drug manufacturer: 72% drop in Invalid Out-of-Specification (OOS) results, a 68% drop in analyst errors, and a 45% drop in lab incidents. How did we achieve this?

A large generic drug manufacturing company - Quality labs

Discover how Vector Consulting helped a top generic drug manufacturer reduce invalid OOS and lab incidents by addressing cognitive overload and systemic errors.

Generic Drug Manufacturer - Reduce Invalid OOS & Lab Incidents | Vector Consulting Group

Unlock the potential of R&D strategies with Vector Consulting Group's solutions that harness innovation, streamline operations, and drive sustainable growth.

Enhancing R&D for Strategic Growth | Vector Consulting Group

This men's fashion retail company adopted an innovative Rapid Supply Chain model. Result: Daily availability of inventory at stores is now at 80%, and sales are up by 40%.

Blackberrys

Vector Consulting Group's case study on Blackberrys on implementation of a rapid supply chain with a low inventory model for achieving higher sales with lesser discounts.

Blackberrys - Higher sales with lesser discounts | Vector Consulting Group

Some results achieved by this office furniture major include:  OTIF jumped to 90%, lead times reduced by 30%, and a 30% jump in sales.

Godrej Interio - Office Furnitures

Learn how Vector Consulting helped Godrej Interio revolutionize its supply chain using TOC principles, ensuring speed and reliability with a seven-day Express Delivery program.

Godrej Interio - Transforming Supply Chain | Vector Consulting Group

Enhance efficiency and precision in specialized industries by implementing Vector Consulting Group's custom manufacturing solutions.

Custom Manufacturing Solutions | Vector Consulting Group

Explore Vector Consulting Group's  sales process transformative solutions that leverage R&D insights to streamline operations and reduce lead times.

Enhance Sales & Reduce Lead Time in R&D | Vector Consulting Group

After a company-wide implementation of TOC, the company enjoyed a CAGR of 25% in the last ten years

Fleetguard Filters Pvt. Ltd.

Mr. Niranjan Kirloskar, MD, Fleetguard Filters shares how they radically changed their supply chain and operations and the key steps they took to achieve and sustain excellence over the last decade.

Disrupting the Aftermarket for Competitive Advantage

Discover how Vector Consulting Group partnered with Fleetguard Filters Pvt Ltd, achieving remarkable improvements in financial and operational performance.

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