Mr T a B Barathi - Wheels India Ltd

8/2/2019 Mr T a B Barathi - Wheels India Ltd

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….T.A.B.Barathi Vice President (Supply chain

Wheels India Ltd.

CII_ Cost Management Seminar14thJune11

Total Cost Management in

Supply Chain

CII_Cost ManagementSeminar_14thJune11



Supply Chain

A simple arithmetic :

• Price of a ton of steel == approx. Rs.40000 .00/-

• Annual Procurement Qty . >>>> 2,50,000 mt

• Total Spend on Steel procured >>> Rs.1000 Crores. /-

• Savings to the organization >>> Rs. 25 lacs

• Increase the reduction to rs.100/- mt - Price at Rs.39900 /- mt

• Savings to the organization >>> Rs. 2.5 crores.

• Almost a bout 8% of PBT of an engineering industry CII_Cost ManagementSeminar_14thJune11


Supply ChainCommodity Price trends : Aluminum _ LME basis

Commodity Price trends : Cold Rolled Steel _ Indian Origin

Commodity Price trends : Zinc – LME basis





Supply Chain

Commodity Price trends : PP - Plastic



Supply Chain

Strategy1.Cost Elimination

2.Cost Reduction

3.Cost Replacement- Alternate

product


1. Analyze Supply and Demand

2. Shop Smart at right time

3. Minimize Transactional Costs

4. Manage and Optimize Your Inventory

5. Reduce Lead Times

6. Utilize Bulk Discounts

7. Reduce Shipping Charges

8.Collaborate with Suppliers

9.Ask for Employee Suggestions

10. Eliminate Paper Flow

10 Cardinal Steps of Cost reduction

Assess theCurrent

Spend

Assess thesupplyMarket

Decide

Sourcing

Strategy

Identify

Suitable

Suppliers

Negotiate

&

Finalize

Implement

&

Evaluate

Strategic SourcingStrategic Sourcing-- A way ForwardA way Forward



New Initiatives in SCM

VMI

LeanSupplyChain

ModuleSourcing

e -Sourcing

Consolidation

approach

EVI (early vendorInvolvement)

LogisticsConsolidation

Global

Networking

New Initiatives in SCM

Vendor Managed Inventory ( VMI ) :

• An Inventory Optimizing tool.• The manufacturer (buyer) has access to Vendor’s Stock data.

• Buyer manages the pattern of replenishment ordering.

• Min & Maximum level of consumption is agreed , thereby

replenishment levels are maintained.

• The vendor holds the stock as his Inventory .

• Critical and Long lead time items are managed under VMI.

Other tool of VMI : ( Consignment inventory )

• Supplier places Inventory at Customer’s location .

• Retains the ownership of Inventory

• Payment is not made until the items are actually sold/ consumed.

Aggregation Concept –A TVSexperience

11

Concept of Group Buy - Project planning

• Lead Role will be taken by the Group Company which has higher spend in the

Category.

• Data on the spend pattern is collated from all Group companies.

For each Category of items and total volume, competitive offer will be invited

from potential suppliers.

• All the offers, received from the suppliers, will be carefully evaluated based on

the TCO concept (Total cost of ownership and not on the unit r ate only).

Aggregation Concept –A TVSexperience

12

Concept of Group Buy - Project evaluation

• Detailed discussions will be held with individual suppliers by a panel

representing members from each company jointly and look for opportunity to

understand each other’s expectations and optimize the TCO.

• The panel will closely examine the offers and the outcome of the discussions

with each supplier are narrowed down and identify the most prospective supplier

for the subject commodity





Supply Chain

Remember

Every penny spent

is an Opportunity to SAVE

Mr T a B Barathi - Wheels India Ltd

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