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Note: Solve any 4 Cases Study’s
CASE: I Pushing Paper Can Be Fun
A large city government was putting on a number of seminars for managers of various departments throughout the city. At one of these sessions the topic discussed was motivation—how to motivate public servants to do a good job. The plight of a police captain became the central focus of the discussion:
I’ve got a real problem with my officers. They come on the force as young, inexperienced rookies, and we send them out on the street, either in cars or on a beat. They seem to like the contact they have with the public, the action involved in crime prevention, and the apprehension of criminals. They also like helping people out at fires, accidents, and other emergencies.
The problem occurs when they get back to the station. They hate to do the paperwork, and because they dislike it, the job is frequently put off or done inadequately. This lack of attention hurts us later on when we get to court. We need clear, factual reports. They must be highly detailed and unambiguous. As soon as one part of a report is shown to be inadequate or incorrect, the rest of the report is suspect. Poor reporting probably causes us to lose more cases than any other factor.
I just don’t know how to motivate them to do a better job. We’re in a budget crunch, and I have absolutely no financial rewards at my disposal. In fact, we’ll probably have to lay some people off in the near future. It’s hard for me to make the job interesting and challenging because it isn’t-it’s boring, routine paperwork, and there isn’t much you can do about it.
Finally, I can’t say to them that their promotions will hinge on the excellence of their paperwork. First at all, they know it’s not true. If their performance is adequate, most are more likely to get promoted just by staying on the force a certain number of years than for some specific outstanding act. Second, they were trained to do the job they do out in the streets, not to fill out forms. All through their careers the arrests and interventions are what get noticed.
Some people have suggested a number of things, like using conviction records as a performance criterion. However, we know that’s not fair—too many other things are involved. Bad paperwork increases the chance that you lose in court, but good paperwork doesn’t necessarily mean you’ll win. We tried setting up the team competitions based on the excellence of the reports, but the officers caught on to that pretty quickly. No one was getting any type of reward for winning the competition, and they figured why should they bust a gut when there was on payoff.
I just don’t know what to do.
Question:
1. What performance problems is the captain trying to correct?
2. Use the MARS model of individual behavior and performance to diagnose the possible causes of the unacceptable behavior.
3. Has the captain considered all possible solutions to the problem? If not, what else might be done?
CASE: II How Did I Get Here?
Something was not right. John Breckenridge opened his eyes, saw the nurse’s face, and closed them once more. Cobwebs slowly cleared from his brain as he woke up from his brain as he woke up from the operation. He felt a hard tube in his nostril, and tried to lift his hand to pull it out, but it was strapped down to the bed. John tried to speak but could make only a croaking sound. Nurse Thompson spoke soothingly, “Just try to relax, Mr. Breckenridge. You had a heart attack and emergency surgery, but you’re going to be OK.”
Heart attack? How did I get here? As the anesthesia wore off and the pain set in, John began to recall the events of the past year; and with the memories came another sort of pain – that of remembering a life where success was measured in hours worked and things accomplished, but which of late had not measured up.
John recalled his years in college, where getting good grades had been important, but not so much as his newly developing love for Karen, the girl with auburn hair who got her nursing degree the same year as he graduated with a degree in software engineering. They married the summer after graduation and moved from their sleepy university town in Indiana to Aspen, Colorado. There John got a job with a new software company while Karen worked evenings as a nurse. Although they didn’t see much of each other during the week, weekends were a special time, and the surrounding mountains and nature provided a superb quality of life.
Life was good to the Breckenridges. Two years after they were married, Karen gave birth to Josh and two years later to Linda. Karen reduced her nursing to the minimum hours required to maintain her license, and concentrated on rearing the kids. John, on the other hand, was busy providing for the lifestyle they increasingly became used to, which included a house, car, SUV, ski trips, and all of the things a successful engineering career could bring. The company grew in leaps and bounds, and John was one of the main reasons it grew fast. Work was fun. The company was growing, his responsibilities increased, and he and his team were real buddies. With Karen’s help at home, he juggled work, travel, and evening classes that led to a master’s degree. The master’s degree brought another promotion—this time to vice president of technology at the young (for this company) age of 39.
The promotion had one drawback: It would require working out of the New York office. Karen sadly said goodbye to her friends, convinced the kids that the move would be good to them, and left the ranch house for another one, much more expensive and newer, but smaller and just across the river in New Jersey from the skyscraper where her husband worked. Newark was not much like Aspen, and the kids had a hard time making friends, especially Josh, who was now 16. He grew sullen and withdrawn and began hanging around with a crowd that Karen thought looked very tough. Linda, always the quiet one, stuck mostly to her room.
John’s new job brought with it money and recognition, as well as added responsibilities. He now had to not only lead software development but also actively participate in steering the company in the right direction for the future, tailoring its offerings to market trends. Mergers and acquisitions were the big things in the software business, and John found a special thrill in picking small companies with promising software, buying them out, and adding them to the corporate portfolio. Karen had everything a woman could want and went regularly to a health club. The family lacked for no material need.
At age 41 John felt he had the world by its tail. Sure, he was a bit overweight, but who wouldn’t be with the amount of work and entertaining that he did? He drank some, a habit he had developed early in his career. Karen worried about that, but he reassured her by reminding her that he had been really drunk only twice and would never drink and drive. Josh’s friends were a worry, but nothing had yet come of it.
Not all was well, however. John had been successful in Colorado because he thought fast on his feet, expressed his opinions, and got people to buy into his decisions. In the New York corporate office things were different. All of the top brass except the president and John had Ivy League, moneyed backgrounds. They spoke of strategy but would take only risks that would further their personal careers. He valued passion, integrity, and action, with little regard for personal advancement. They resented him, rightly surmising that the only reason he had been promoted was because he was more like he president than they were, and he was being groomed as heir apparent.
On November 2, 2004, John Breckenridge’s world began to unravel. The company he worked for, the one he had given so much of his life to build was acquired in a hostile takeover. The president who had been his friend and mentor was let go, and the backstabbing began in earnest. John found himself the odd man out in the office as the others jostled to build status in the new firm. Although his stellar record allowed him to survive the first round of job cuts, that survival only made him more of a pariah to those around him. Going to work was a chore now, and John had no friends like those he had left in Aspen.
Karen was little help. John had spent nearly two decades married more to his job than his wife, and he found she was more of a stranger than a comforter as he struggled in his new role. When he spoke about changing jobs, she blew up. “Why did I have to give up nursing for your career?” she said. “Why do we have to move again, just because you can’t get along at work? Can’t you see what the move did to our kids?”
Seeing the hurt and anger in Karen’s eyes, John stopped sharing and turned to his bottle for comfort. In time that caused even more tension in the home, and it slowed him down at work when he really needed to excel. John would often drink himself into oblivion when on business trips rather than thinking about where his life and career were going. On his last trip he hadn’t slept much and had worked far too hard. Midmorning he had been felled by a massive heart attack.
All of this history passed through John Breckenridge’s mind as he woke after the operation. It was time for a change.
Question:
1. Identify the stressors in John Breckenridge’s life. Which ones could he have prevented?
2. What were the results of the stress? Would you consider these to be typical to stress situations and lifestyle choices John made, or was John Breckenridge unlucky?
3. Assume you are a career coach retained by John Breckenridge to guide him through his next decisions. How would you recommend that John modify his lifestyle and behavior to reduce stress? Should he change jobs? Do you believe he is capable of reducing his stress alone? If not, where should he seek help?
CASE: III The Shipping Industry Accounting Team
For the past five years I have been working at McKay, Sanderson, and Smith Associates, a mid-sized accounting firm in Boston that specializes in commercial accounting and audits. My particular specialty in accounting practices for shipping companies, ranging from small fishing fleets to a couple of the big firms with ships along the East Coast.
About 18 months ago McKay, Sanderson, and Smith Associates became part of a large merger involving two other accounting firms. These firms have offices in Miami, Seattle, Baton Rouge, and Los Angeles. Although the other two accounting firms were much larger than McKay, all three firms agreed to avoid centralizing the business around one office in Los Angeles. Instead the new firm—called Goldberg, Choo, and McKay Associates—would rely on teams across the country to “leverage the synergies of our collective knowledge” (an often-cited statement from the managing partner soon after the merger).
The merger affected me a year ago when my boss (a senior partner and vice president of the merger) announced that I would be working more closely with three people from the other two firms to become the firm’s new shipping industry accounting team. The other team members were Elias in Miami, Susan in Seattle, and Brad in Los Angeles. I had met Elias briefly at a meeting in New York City during the merger but had never met Susan or Brad, although I knew that they were shipping accounting professionals at the other firms.
Initially the shipping team activities involved e-mailing each other about new contracts and prospective clients. Later we were asked to submit joint monthly reports on accounting statements and issues. Normally I submitted my own monthly reports to summarize activities involving my own clients. Coordinating the monthly report with three other people took much more time, particularly because different accounting documentation procedures across the three firms were still being resolved. It took numerous e-mail messages an a few telephone calls to work out a reasonable monthly report style.
During this aggravating process it became apparent—to me at least—that this team business was costing me more time than it was worth. Moreover, Brad in Los Angeles didn’t have a clue about how to communicate with the rest of us. He rarely replied to e-mail. Instead he often used the telephone tag. Brad arrived at work at 9:30 a.m. in Los Angeles (and was often late), which is early afternoon in Boston. I typically have a flexible work schedule from 7:30 a.m. to 3:30 p.m. so I can chauffeur my kids after school to sports and music lessons. So Brad and I have a window of less than three hours to share information.
The biggest nuisance with the shipping specialist accounting team started two weeks ago when the firm asked the four of us to develop a new strategy for attracting more shipping firm business. This new strategic plan is a messy business. Somehow we have to share our thoughts on various approaches, agree on a new plan, and write a unified submission to the managing partner. Already the project is taking most of my time just writing and responding to e-mail and talking in conference calls (which none of us did much before the team formed).
Susan and Brad have already had two or three misunderstandings via e-mail about their different perspectives on delicate matters in the strategic plan. The worst of these disagreements required a conference call with all of us to resolve. Except for the most basic matters, it seems that we can’t understand each other, let alone agree on key issues. I have come to the conclusion that I would never want Brad to work in my Boston office (thanks goodness he’s on the other side of the country). Although Elias and I seem to agree on most points, the overall team can’t form a common vision or strategy. I don’t know how Elias, Susan, or Brad feel, but I would be quite happy to work somewhere that did not require any of these long-distance team headaches.
Question:
1. What type of team was formed here? Was it necessary, in your opinion?
2. Use the team effectiveness model in Chapter 9 and related information in this chapter to identify the strengths and weaknesses of this team’s environment, design, and processes.
3. Assuming that these four people must continue to work as a team, recommend ways to improve the team’s effectiveness.
CASE: IV Conflict In Close Quarters
A team of psychologists at Moscow’s Institute for Biomedical Problems (IBMP) wanted to learn more about the dynamics of long-term isolation in space. This knowledge would be applied to the International Space Station, a joint project of several countries that would send people into space for more than six months. It would eventually include a trip to Mars taking up to three years.
IBMP set up a replica of the Mir space station in Moscow. They then arranged for three international researchers from Japan, Canada, and Austria 110 days isolated in a chamber the size of a train car. This chamber joined a smaller chamber where four Russian cosmonauts had already completed half of their 240 days of isolation. This was the first time an international crew was involved in the studies. None of the participants spoke English as their first language, yet they communicated throughout their stay in English at varying levels of proficiency.
Judith Lapierre, a French-Canadian, was the only female in the experiment. Along with obtaining a PhD in public health and social medicine, Lapierre had studied space sociology at the International Space University in France and conducted isolation research in the Antarctic. This was her fourth trip to Russia, where she had learned the language. The mission was supposed to have a second female participant from the Japanese space program, but she was not selected by IBMP.
The Japanese and Austrian participants viewed the participation of a woman as a favorable factor, says Lapierre. For example, to make the surroundings more comfortable, they rearranged the furniture, hung posters on the walls, and put a tablecloth on the kitchen table. “We adapted our environment, whereas Russians just viewed it as something to be endured,” she explains. “We decorated for Christmas because I’m the kind of person who likes to host people.”
New Year’s Eve Turmoil
Ironically, it was at one of those social events, the New Year’s Eve party, that events took a turn for the worse. After drinking vodka (allowed by the Russian space agency), two of the Russian cosmonauts got into a fistfight that left blood splattered on the chamber walls. At one point a colleague hid the knives in the station’s kitchen because of fears that the two Russians were about to stab each other. The two cosmonauts, who generally did not get along, had to be restrained by other men. Soon after that brawl, the Russian commander grabbed Lapierre, dragged her out of view of the television monitoring cameras, and kissed her aggressively—twice. Lapierre fought him off, but the message didn’t register. He tried to kiss her again the next morning.
The next day the international crew complained to IBMP about the behavior of the Russian cosmonauts. The Russian institute apparently took no against the aggressors. Instead the institute’s psychologists replied that the incidents were part of the experiment. They wanted crew members to solve their personal problems with mature discussion without asking for outside help. “You have to understand that Mir is an autonomous object, far away from anything,” Vadim Gushin, the IBMP psychologist in charge of project, explained after the experiment had ended in March. “If the crew can’t solve problems among themselves, they can’t work together.”
Following IBMP’s response, the international crew wrote a scathing letter to the Russian institute and the space agencies involved in the experiment. “We had never expected such events to take place in a highly controlled scientific experiment where individuals go through a multistep selection process,” they wrote. “If we had known… we would not have joined it as subjects.” The letter also complained about IBMP’s response to their concerns.
Informed about the New Year’s Eve incident, the Japanese space program convened an emergency meeting on January 2 to address the incidents. Soon after the Japanese team member quit, apparently shocked by IBMP’s inaction. He was replaced with a Russian researcher on the international team. Ten days after the fight—a little over the month the international team began the mission—the doors between the Russian and international crews’ chambers were barred at the request of the international research team. Lapierre later emphasized that this action was taken because of concerns about violence, not the incident involving her.
A Stolen Kiss or Sexual Harassment
By the end of experiment in March, news of the fistfight between the cosmonauts and the commander’s attempts to kiss Lapierre had reached the public. Russian scientists attempted to play down the kissing incident by saying that it was one fleeting kiss, a clash of cultures, and a female participant who was too emotional.
“In the West, some kinds of kissing are regarded as sexual harassment. In our culture it’s nothing,” said Russian scientist Vadim Gushin in one interview. In another interview he explained, “The problem of sexual harassment is given a lot of attention in North America but less in Europe. In Russia it is even less of an issue, not because we are more or less moral than the rest of the world; we just have different priorities.”
Judith Lapierre says the kissing incident was tolerable compared to this reaction from the Russian scientists who conducted the experiment. “They don’t get it at all,” she complains. “They don’t think anything is wrong. I’m more frustrated than ever. The worst thing is that they don’t realize it was wrong.”
Norbert Kraft, the Austrian scientist on the international team, also disagreed with the Russian interpretation of events. “They’re trying to protect themselves,” he says. “They’re trying to put the fault on others. But this is not a cultural issue. If a woman doesn’t want to be kissed, it is not acceptable.”
Question:
1. Identify the different conflict episodes that exist in this case. Who was in conflict with whom?
2. What are the sources of conflict for these conflict incidents?
3. What conflict management style(s) did Lapierre, the international team, and Gushin use to resolve these conflicts? What style(s) would have worked best in the situation?
CASE: V Hillton’s Transformation
Twenty years ago Hillton was a small city (about 70,000 residents) that served as an outer to a large Midwest metropolitan area. The city treated employees like family and gave them a great deal of autonomy in their work. Everyone in the organization (including the two labor unions representing employees) implicitly agreed that the leaders and supervisors of the organization should rise through the ranks based on their experience. Few people were ever hired from the outside into middle or senior positions. The rule of employment at Hillton was to learn the job skills, maintain a reasonably good work record, and wait your turn for promotion.
Hillton had grown rapidly since the mid-1970s. As the population grew, so did the municipality’s workforce to keep pace with the increasing demand for municipal services. This meant that employees were promoted fairly quickly and were almost guaranteed employment. In fact, until recently Hillton had never laid off any employee. The organization’s culture could be described as one of entitlement and comfort. Neither the elected city council members nor the city manager bothered the department managers about their work. There were few costs controls because rapid growth forced emphasis on keeping up with the population expansion. The public became somewhat more critical of the city’s poor services, including road construction at inconvenient times and the apparent lack of respect some employees showed towards taxpayers.
During these expansion years Hillton put most of its money into “outside” (also called “hard”) municipal services such as road building, utility construction and maintenance, fire and police protection, recreational facilities, and land use control. This emphasis occurred because an expanding population demanded more of these services, and most of Hillton’s senior people came from the outside services group. For example, Hillton’s city manager for many years was a road development engineer. The “inside” workers (taxation, community services, and the like) tended to have less seniority, and their departments were given less priority.
As commuter and road systems developed, Hillton attracted more upwardly mobile professionals to the community. Some infrastructure demands continued, but now these suburban dwellers wanted more “soft” services, such as libraries, social activities, and community services. They also began complaining about how the municipality was being run. The population had more than doubled between the 1970s and 1990s, and it was increasingly apparent that the city organization needed more corporate planning, information systems, organization development, and cost control systems. Resident voiced their concerns in various ways that the municipality was not providing the quality of management that they would expect from a city of its size.
In 1996 a new mayor and council replaced most of the previous incumbents, mainly on the platform of improving the municipality’s management structure. The new council gave the city manager, along with two other senior managers, an early retirement buyout package. Rather than promoting form the lower ranks, council decided to fill all three positions with qualified candidates from large municipal corporations in the region. The following year several long-term managers left Hillton, and at least half of those positions were filled by people from outside the organization.
In less than two years Hillton had eight senior or departmental managers hired from other municipalities who played a key role in changing the organization’s value system. These eight managers became known (often with negative connotations) as the “professionals.” They worked closely with each other to change the way middle and lower-level managers had operated for many years. They brought in a new computer system and emphasized cost controls where managers previously had complete autonomy. Promotions were increasingly based more on merit than seniority.
These managers frequently announced in meetings and newsletters that municipal employees must provide superlative customer service, and that Hillton would become one of the most customer-friendly places for citizens and those doing business with the municipality. To this end these managers were quick to support the public’s increasing demand for more soft services, including expanded library services and recreational activities. And when population growth flattened for a few years, the city manager and the other professionals gained council support to lay off a few outside workers due to lack of demand for hard services.
One of the most significant changes was that the outside departments no longer held dominant positions in city management. Most of the professional managers had worked exclusively in administrative and related inside jobs. Two had Master of Business Administration degrees. This led to some tension between the professional managers and the older outside managers.
Even before the layoffs, managers of outside departments resisted the changes more than others. These managers complained that their employees with the highest seniority were turned down for promotions. They argued for more budget and warned that infrastructure problems would cause liability problems. Informally these outside managers were supported by the labor union representing outside workers. The union leaders tried to bargain for more job guarantees, whereas the union representing inside workers focused more on improving wages and benefits. Leaders of the outside union made several statements in the local media that the city had “lost its heart” and that the public would suffer from the actions of the new professionals.
Question:
1. Contrast Hillton’s earlier corporate culture with the emerging set of cultural values.
2. Considering the difficulty in changing organizational culture, why did Hillton’s management seem to be successful at this transformation?
3. Identify two other strategies that the city might consider to reinforce the new set of corporate values.
CASE – 1
Aravali Hospital was built two years ago, and currently has a workforce of 215 people. The hospital is small, but because it is new, it is extremely efficient. The board has voted to increase its capacity from 60 to 180 beds. By this time next year, the hospital will over three times as large as now, in terms of both beds and personnel.
The administrator, Maya Joshi, feels that the major problem with this proposed increase is that hospital will lose its efficiency. “I want to hire people who are just like our current team of personnel—hardworking, dedicated talented, and able to interact well with patients. If we triple the number of employees, I do not see how it will be possible to maintain our quality of patient care. We are going to lose our family atmosphere. We will be inundated with mediocrity, and we will end up being like every other institution in the local area—large and uncaring.”
The chairman of the board is also concerned about the effect of hiring such a large number of employees. However, he believes that Joshi is over-reacting. “It cannot be that hard to find people who are like our current staff. There must be a lot of people out there who are just as good. What you need to do is develop a plan of action that will allow you to carefully screen those who will fit into your current organisational culture, and those who will not. It is not going to be as difficult as you believe. Trust me. Everything will work out just fine”.
As a result of the chairman’s comments, Joshi had decided that the most effective way of dealing with the situation is to develop a plan of action. She intends to meet with her administrative group and determine the best way of screening incoming candidates, and then helping those who are hired to become socialised in terms of the hospital’s culture. Joshi has called a meeting for day after tomorrow. At that time, she intends to discuss her ideas, get suggestions from her people, and then formulate a plan of action.
Questions
1. What can Joshi and her staff do to select the type of entry-level candidates they want?
2. How can Joshi ensure that those who are hired come to accept the core cultural values of the hospital? What steps would you recommend?
CASE – 2
Leo Medical Diagnostic and Research Center has patented its new invention of poly fiber cardiovascular valve. The product developed is a novel one and can be manufactured at a very low cost. The utility and life of the product in laboratory testing was found to be more than the life of the patients. The product could enhance the life of patient by at least five years. Considering all these factors Leo Medical Diagnostic and Research Center chose to set a unit to manufacture the product. However, the company has a dilemma. As the product is new and requires the acceptance of medical community, it is considering appointing a promotion and sales co-coordinator to manage the promotional and communication efforts of the firm.
Questions
(a) Do you think the number of units of a product to be manufactured is a random number? Explain your reasoning.
(b) How does one determine the number of units of a product to be manufactured in an organisation?
(c) What are the elements you would take into consideration for forecasting the production and sales requirement of the product developed by Leo Medical Center?
(d) How would you go about planning and organising the manufacturing and selling efforts of the organisation?
CASE – 3
Hari Mohan has a position on the corporate planning staff of a large company in a high technology industry. Although he has spent most of his time on long-range, strategic planning for the company, he has been appointed to a task force to reorganize the company. The president and the board of directors are concerned that they are losing their competitive position in the industry because of an outdated organisation structure. Being a planning expert, Hari Mohan convinced the task force that they should proceed by first determining exactly what type of structure they have now, then determining what type of environment the company faces, now and in the future, and then designing the organisation structure accordingly. In the first phase, they discovered that the organisation is currently structured along classic bureaucratic lines. In the second phase, they found that they are competing in a highly dynamic, rapidly growing and uncertain environment that requires a great deal of flexibility and response to change.
Questions
(a) What type or types of organisation design do you feel this task force should recommend in the third and final phase of the approach to their assignment?
(b) Explain how the systems and the contingency theories of organisation can each contribute to the analysis of this case.
(c) Do you think Hari Mohan was correct in his suggestion of how the task force should proceed? What types of problems might develop as by-products of the recommendation you made in question 1?
CASE – 4
Bharat Engineering Works Limited is a major industrial machineries besides other engineering products. It has enjoyed market preference for its machineries because of limited competition in the field. Usually there have been more orders than what the company could supply. However, the scenario changed quickly because of the entry of two new competitors in the field with foreign technological collaboration. For the first time, the company faced problem in marketing its products with usual profit margin. Sensing the likely problem, the chief executive appointed Mr Arvind Kumar as general manager to direct the operations of industrial machinery division. Mr Kumar had similar assignment abroad before coming back to India.
Mr Kumar had a discussion with the chief executive about the nature of the problem being faced by the company so that he could fix up his priority. The chief executive advised him to consult various heads of department to have first hand information. However, he emphasised that the company lacked an integrated planning system while members of the Board of Directors insisted on introducing this in several meetings both formally and informally.
After joining as General Manager, Mr Kumar got briefings from the heads of all departments. He asked all heads to identify major problems and issues concerning them. The marketing manager indicated that in order to achieve higher sales, he needed more sales support. Sales people had no central organisation to provide sales support nor was there a generous budget for demonstration teams which could be sent to customers to win business.
The production manager complained about the old machines and equipments used in manufacturing. Therefore, cost of production was high but without corresponding quality. While competitors had better equipments and machinery, Bharat Engineering had neither replaced its age-old plant nor reconditioned it. Therefore to reduced the cost, it was essential to automate production lines by installing new equipment.
Director of research and development did not have specific problem and therefore, did not indicate for any change. However, a principal scientist in R&D indicated on one day that the director of R&D, though very nice in his approach, did not emphasize on short-term research projects, which could easily increase production efficiency by at least 20 per cent within a very short period without any major capital outlay.
Questions
(a) Discuss the nature and characteristics of the problems in this case.
(b) What steps should be taken by Mr Kumar to overcome these problems?
CASE – 5
The president of Simplex Mills sat at his desk in the hushed atmosphere, so typical of business offices, after the close of working hours. He was thinking about Rehman, the manager in-charge of purchasing, and his ability to work with George, the production manager, and Vipulabh, the marketing and sales manager in the firm.
When the purchasing department was established two years ago, both George and Vipulabh agreed with the need to centralise this function and place a specialist in charge. George was of the view that this would free his supervisors from detailed ordering activities. Vipulabh opined that the flow of materials into the firm was important enough to warrant a specialised management assignment. Yet since the purchasing department began operating it has been precisely these two managers who have had a number of confrontations with the new purchase manager, and occasionally with one another, in regard to the way the purchasing function in being carried out.
From George’s point of view, instead of simplifying his job as production manager by taking care of purchasing for him, the purchasing department has developed a formal set of procedures that has resulted in as much time commitment on his part as he had previously spent in placing his orders directly with vendors. Further, he is specially irritated by the fact that his need for particular items or particular specification is constantly being questioned by the purchasing department. When the department was established, George assumed that the purchasing manager was there to fill his needs, not to question them.
As Vipulabh sees it, the purchasing function is an integral part of marketing function, and the two therefore need to be jointly managed as a unified process. Purchasing function cannot be separated from a firm’s overall marketing strategy. However, Rehman has attempted to carry out the purchasing function without regard for this obvious relationship between his responsibilities and those of Vipulabh, thus making a unified marketing strategy impossible.
In his previous position, Rehman had worked in the purchasing department of a firm considerably larger than Simplex. Before being hired, he was interviewed by all the top managers, including George and Vipulabh, but it was the president himself who negotiated the details of the job offer. As Rehman sees it, he was hired as a professional to do a professional job. Both George and Vipulabh have been distracting him from this goal by presuming that he is somehow subordinate to them, which he believes is not the case. The people in the production department, who use the purchasing function most, have complained about the detail that he requires on their requisitions. But he has documented proof that materials are now being purchased much more economically than they were under the former decentralised system. He finds Vipulabh’s interests more difficult to understand, since he sees no particular relationship between his responsibilities for efficient procurement, and Vipulabh’s responsibilities to market the firm’s products.
The president has been aware of the continuing conflict among three managers for some time, but on the theory that a little rivalry is healthy and stimulating, he has felt that it was nothing to be unduly concerned about. But now that much of his time is being taken up by much of what he considers to be petty bickering, the time has come to take some positive action.
Questions:
1. Is George’s view of the situation realistic?
2. How do you evaluate Vipulabh’s position?
3. How might this conflict be associated with factors in the formal organisation?
4. What should the president of Simplex Mills do now?
ATTEMPT ANY FOUR CASE STUDY
CASE I - A CASE OF ALPHA TELENET LIMITED
Alpha Telecom Ltd., a part of Alpha Group was established in 1976 by its visionary Chairman and Managing Director, A. S. Verma. The company started with manufacturing of Electronic Push Button Telephones (EPBT) and Cordless phones in 1985 in Allahabad. On July 7, 1995 Alpha Tele-Ventures Limited was incorporated. A mobile service called 'Web-Tel' was launched in Kochin, which eventually expanded its operations in Andhra Pradesh in 1996.
Till 1994, fixed telephone services were provided by Department of Telecommunications (DoT) which had a monopoly in this business. This was regarded as self-defeating because DoT was a regulator as well as a competitor. With increasing pressure for privatisation, the government agreed to give license to private operators. Finally in December 1996, the bill of privatisation of fixed telephone services was passed. The New Telecom Policy (NTP) with its targets for improving tele-density was an ambitious policy. The NTP planned to achieve a tele-density (number of telephones per 100 people) of 7 by the year 2005 and 15 by the year 2010, which translated into 130 mn lines. The policy also planned an investment of Rs. 4000 billion by the year 2010. The above factors combined with the fact that the domestic long distance telephony was open to private players, led to considerable demand for the company's products. But to get the tenders from Ministry of Telecommunication, Government of India, a license fee was to be paid over a period of 15 years and the viability of telecom projects was also affected by the guidelines that required private operators to earmark at least 10% of their telephone lines for villages. The operating companies did not like the idea of having to pay for the maintenance of lines that might not be used most of the times. The license fee of Maharashtra state was minimum at Rs.643 crores. Thus, Alpha Telenet, a pioneer in every field wanted to avail this opportunity and started the survey for extending the services in Pune. Their marketing survey team provided the statistics of existing customers of DoT, the waiting list of DoT, potential of users for successive years and so on.
Alpha Telenet Ltd. (ATL) decided to start their fixed line telephone operations in technical collaboration with Telecom Italia at Pune in Maharashtra. Initially, they received permission for installing their exchanges covering 0.5 km. of radius which was too small with respect to the cost involved and thus difficult to achieve lucrative returns. After struggling for a year, they finally got permission to set up exchanges covering 1 km. of radius. They set up their exchanges in potential areas in the city. Another problem was that the consumer's mindset fixated was with DoT and they were not ready to accept the services of Alpha Telenet Ltd. This was due to opposite tariff rates for household consumers. Consumers did not rely on ATL as they were private players. ATL initially had attracted the customers from the areas where the waiting line for DoT connections was high. Further, they had provided the connections with wireless CDMA receivers for only Rs. 3000 (movable within the area of 5 km radius) though its actual cost was Rs.15,000. The connection between exchanges by optical fibre ensured high quality of voice and data transmission, which was later to be shifted to the conventional copper wires for consumer connections. The company made the connection using Ring Topology stay connected even in case of line disturbances.
They also installed a Submarine Optical Fibre Cable to Singapore with an 8.4 Tbps (terabits per second) capacity providing high-class worldwide connectivity. Alpha Telenet installed the latest Digital Switches from Tiemens and other devices, which were fully compatible with the equipment of other telecom providers in India. The company installed a digital Geographical Information System (GIS) for network surveillance. A 24-hr Internal Network Management System for technical support and infrastructure maintenance were also installed with a dedicated round-the-clock toll-free call centre to ensure prompt services.
In 1997, Alpha Telenet Ltd. obtained a license for providing fixed-line services in Maharashtra state circle and formed a joint venture with Behrin Telecom, Alpha BT, for providing VSAT services. On June 4, 1998 they started the first private fixed-line services launched in Pune in the Maharashtra circle and thereby ending fixed-:-line services monopoly of DoT (now TSNL). Alpha entered into a license agreement with DoT in 2002 to provide international long distance services in India and became the first private telecommunications service provider. The company also launched fixed line services in the states of Goa, Uttar Pradesh, Gujarat and Delhi.
With the start of basic telephony services in the .state of Maharashtra, residents of the area and others felt a great sense of breaking away from the old and traditional government monopoly. The kind of ill-treatment of customers and also the red-tapism and bureaucracy which prevailed earlier, was about to end. It was observed that no private telecom company wanted to start their operations in less profitable areas like Bihar and other eastern states .
. The tariff plans of the TSNL and Alpha Telenet Ltd. were opposite to each other. TSNLS tariff structure was upwards i.e., price per unit increase with number of calls and vice versa for Alpha Telenet. This was the beginning of the entry of private players in the sector.
1 . Give a critical analysis of the privatisation of telecom sector in India.
2. Highlight the secrets of success of Alpha Telenet Ltd. in terms of technological advancements and service~ provided.
CASE II - GEARING• FOR GROWTH
Premier Differential Gears Pvt. Ltd. (PDGL) was formed in the year 1991 near Noida in the state of Uttar Pradesh (India). The company was established to cater to the ever¬growing needs of the differential gear market for cars, jeeps, trucks, and tractors. It was established under the aegis of the parent company called Premier Gears Pvt. Ltd. which in turn was established in the year 1962 at Noida. The parent company was engaged in the manufacturing of automobile transmission gears. With a modest start in 1961, it had never looked back and by 2006, it became the largest manufacturer of automobile transmission gears in the country. The parent company had employee strength of 2,500 trained and dedicated employees and was producing a range of over 1,000 gears. Premier Gears Pvt. Ltd. was making gears for virtually every major brand of truck, car, jeep and tractor. In 2006, the group company comprised of three firms namely, Premier Gears Pvt. Ltd. (manufacturing Transmission gears, Gearbox assemblies, Laser marking machines, and Material handling equipments), Premier Differential Gears Pvt. Ltd. (manufacturing differential gears) and Elve Corporation (a government recognized export house).
PDGL was manufacturing a wide range of Crown Wheel and Pinions, Bevel Gears, Bevel Pinions, and Spider Kit Assemblies. The installed capacity was 20,000 sets per month. PDGLs focus on quality, fast product development and customer service had enabled it to become an OEM supplier to many car and tractor companies in India, the EU, and Asia. Almost 75% of the total production was exported to a number of countries like Germany, Russia, USA, China, Japan, South Mrica, etc. The domestic OEM and replacement market accounted for the remaining 25% of the company's sales and in a short span of time, the company had become one of the major players in the Indian replacement market. The use of latest technology and comprehensive quality control systems at PDGL go a long way to ensure that customers get exactly what they want.
PDGL was using world class Gleason machines in its manufacturing programme. The raw material for manufacturing gears was in the form of forgings, which were procured from various parts of the country for manufacturing crown wheels and pinions. These forgings were subjected to turning followed by drilling. The drilled crowns and pinions were taken for tapping, which were then rimmed. After this, the teeth cutting procedure was applied which was called broaching. The broached units were then heat-treated. Heat treatment was very critical in producing gears having short tolerance levels. To meet this end, the company had two rotary furnaces and one state-of-the-art Continuous Gas Carburizing Furnace (CGCF) from Aichelin ALD of Austria to heat-treat its products. After the heat treatment, a number of intermediate processes like short blasting, phosphating, lapping were performed which resulted into the finished product, ready for putting company marks to avoid imitation/forgery. The company had developed a state-of-the-art 70-watt ND¬YAG laser-marking machine in collaboration with Quantum Laser (UK), which was used for marking on its produces. Laser marking was environment-friendly and was applied without any force or contact and thus the material was not subjected to any stress. The marked products were" manually pushed onto a conveyer for packing and dispatching. All the above have enabled the company to meet international standards and to produce world¬class gears with the highest performance standards.
The upstream portion of the supply chain at PDGL included a number of forgers located at "geographically dispersed locations in various parts of the country. These forgers were supplying the forgings to PDGL, which were then used in manufacturing the differential gears. All of the raw material was routed to the POGL works through road transport and"" due to large distances, transportation costs were a major issue in increasing the efficiency of this upstream portion of the supply chain. The forgings were supplied according to the drawings and dimensions set by design engineers at the company. The company indeed tried some local suppliers to cope up with the increasing transportation costs but the results on quality front wet satisfactory. To serve this end, the company was planning to develop some local suppliers. It had planned to provide them support in the areas of procuring good material for producing forgings, procuring good quality machines and" training their workforce in the required technical know-how. This was considered as an investment by the company to reduce its inbound transportation costs. To meet the small lot requirements of the forgings, the company was also contemplating to share the truckloads with the parent company. This was feasible because of the geographical proximity of the parent company, which was situated at a distance of less than 15 kms, the similar nature of raw material and same suppliers supplying to both the units.
The internal supply chain at PDGL comprised of various processing stations/lines" through which the forgings were transformed into finished differential gears. The movement of the work-in-progress between various stations was semi-automatic in which the workers manually placed the goods on trolleys/carts. Even the finished units were manually placed on a conveyer; which needed to be pushed to send the units to the packing section. There was a risk of units being damaged in this process. To minimize this risk, the company was planning to have automatic systems for moving the material from one place to another. It was decided to have hydraulic lifts, cranes, electronic escalators and the likes for progression of material from forging to packing. The packing material was stored on first floor as and when it arrived, with the help of casual laborers, which was inefficient and also involved a: risk of some• casualty.
The downstream portion of the supply chain at PDGL included around 10 distributors located evenly in various parts of the country. These distributors were supplying the products of PDGL to number of car, truck, jeep and tractor manufacturers. This portion of the supply chain also included a large replacement market, which accounted for almost half of the company's domestic sales. To meet its distribution needs the company had a panel of transporters, who used to distribute the finished goods. At times, the consignments scheduled for distributors were delayed because of lack of full truckload. One possible solution to this problem was sharing of truckload with the parent company. This was feasible because both the companies shared the same distribution network. The distribution of export consignments was through an intermediary who helped the company in exporting its products to the US, UK, Germany, China, Italy, Turkey, Saudi Arabia, Singapore, Malaysia, Thailand, Indonesia, and Nigeria, amongst other countries. The company's wide export range included replacement gears for internationally renowned automotive manufacturers like Mercedes¬Benz, Mitsubishi, Toyota, Nissan, Clark, Eaton, Fuller, New Process, ZP, Hino, Fuso, Tong Feng, Tata, Leyland, Massey Ferguson, Magirus - Deutz and various others.
There was a shortage of skilled employees. Therefore, the company has recently started training input for all their 400 employees. These training programmes are being conducted in the organization to enhance the skills of the employees and the duration of these programmes were 20 hours per month. On the financial front, the company is continuously moving on the growth track showing better financial results year after year. It has embarked on an ambitious plan to double its turnover by the end of this financial year and to become the world's numero-uno in the automotive gear-manufacturing segment. The current capacity utilization was at a meager 6000 sets against a total installed capacity of 20,000 sets per month.
1. Comment on the upstream and downstream supply chain portions operating in the company.
2. How far are the plans to improve the supply chain efficiency in the company feasible?
3. "Internal supply chain at the company can be characterized by the lack of it". Comment.
CASE III - INTELLIGENT MOVEMENTS: ANYWHERE ANYTIME
Deepak Pai, an engineering graduate and a postgraduate in management from United States, was working in Transport Corporation of India (TCI), the market leader in conventional transportation. He established Speed Cargo as an express cargo distribution company after leaving TCI. Speed Cargo, started with its head office at Hyderabad, as a small cargo specialist in 1989, upgrading itself to desk-to-desk cargo in 1992, cargo management services in 1995 and became a public limited company when it was listed in Bombay Stock Exchange in 1999. The company was maintaining a strong customer base of prestigious companies like Acer, Cadilla, Sony, Panasonic, Titan, Dabur and Hitachi to name a few.
Speed Cargo Limited (SCL), a leader in the express cargo movement pioneered in distribution and supply chain management solutions in India. It differentiated the concept of cargo, from conventional transport industry by offering door pickup, door delivery, assured delivery date and containerized movement. It had a turnover of Rs.3600 million in 2005-06. The company had a strong team of 6400 employees with the fleet of 2000 vehicles on road and an extensive network covering 3,20,000 kilometers per day and a reach of 594 out of 602 districts in India. In addition to this, it was having a well-structured multimodal connectivity and 6lakh square feet mechanized warehousing facility. Warehousing facilities were comprised of the most modern storied system and material handling equipment offering very high level of operational efficiency. The four modes of transport - Road, Air, Sea and Rail were seamlessly integrated, enabling SCL to effortlessly reach anytime anywhere.
The international wing of SCL took care of the SAARC countries and Asia Pacific region covering 220 countries with a specialized India-centric perspective. The company had gone online by connecting 90 percent of its offices to provide web-centric solutions to its customers.
The company also offered money back guarantee to express cargo services. The services offered were customized for corporate, small and medium enterprises, cluster markets, wholesale markets and individuals. The state-of-the-art technology made things easier for the customers whose cargo could be tracked and traced in the simplest manner, because SCL had an effective tracking system. SCL believed that best of technology enabled best of service, and its outlays on providing the IT edge had always resulted in innovative services and solutions. SCL, in its day-to-day operations, used technologically advanced equipments like Fork Lifters, Hydraulic Trucks, Hand Trolly, Drum Trolly, Rubber Pads cushioning, Taper Rollers to move big crates, color codes for identification to delivery what it promised.
Between 1989, when company was born, and 1995, SCL started a unique value added service called Cash-On-Delivery for the advantage of its customers. SCL introduced Call Free Number for the first time in the logistics industry in India. To establish largest network in air and to facilitate faster delivery of shipments, SCL entered into a tie-up with Indian Airlines in 1996; The Company introduced the concept of 3rd party logistics and later started offering complete logistics and supply chain solutions in 1997. The courier service Suvidha later rechristened as Zipp was launched in 1998. The company entered into a tie¬up with Bhutan and Maldives Postal Departments to expand its operations to SAARC countries in 1999. The Speed Cargo Development Center was set up at Pune in India for training of its employees in the same year.
An exclusive cargo train in association with Indian Railways between Mumbai and Kolkata was launched in 2001. Based on a survey conducted by Frost and Sullivan, SCL was conferred the Voice of Customer Award for being the best logistics company in 2003. After simplifying the internal process for faster and better communication, and a smarter way to work, SCL set up its corporate office at Singapore in 2003 to create an international hub with an aim to reach out to the world. The company introduced a mechanized racking system in the automated warehouse at Panvel (Maharastra) in 2004.
SCL was sensitive to the avenues where it could contribute to building a better society. Displaying continuous social responsibility, SCL associated itself with several community development programs and contributed generously to many social causes. SCL was the first to build makeshift houses for 400 families who were affected during a massive earthquake in Bhuj district of Gujarat in India during January 2001. They reached the devastated village the same day to provide food, clothes, medication and water to the affected people.
In 2003, SCL accepted to develop one of the government schools located at Banjara Hills in Hyderabad, and built a building with basic facilities like classrooms, staff rooms and toilets, and provided furniture for students and staff. The housekeeping and security of the school, which was now having 1100 students, was also taken care of by the company. After Tsunami, one of the worst natural disasters that struck South East Asia in December 2004 leaving over 10 lakh people dead and over 4 million displaced, SCL was on the rescue scene as it brought in food, water, clothing, medication, a team of doctors and cooks, and provided the affected people with essential utensils. After rehabilitating the people in Nagapattnam and Cuddalore, it took up the development of a high school in Nagore where 500 students came in from the Tsunami affected families. SCL also actively participated in Kargil contributions and other rescue and rehabilitation works in India.
LOOKING AHEAD
SCL believed that in the age of convergence, it had kept pace with time with its infrastructure, people and technological capabilities for moving cargo to its destination on time, by making intelligent movements in air and sea, as well as on road and rail. The company had experience of handling wide range of materials including confidential papers related to University examination and sensitive goods like polio drops and life-saving medicines. In view of the strengths of its competitors such as DHL, Safexpress and Blue Dart, the company had enhanced services with a greater focus on cargo management and customer satisfaction with the new operations backed by better strategic planning. To achieve its aim, SCL had strategically tied-up with Jubli Commercials, an lATA accredited freight forwarder, which started its operations as Air Cargo Agent.
The company was confident that it was set to become 24 x 7 one-stop solution provider for all freight forwarding services including customs clearance for international cargo. SCL having 40 percent share in express distribution business was developing a huge centralized warehouse on 22 acres of land at Nagpur in India. The centralized warehouse, which was about to be commissioned, was designed as a major hub or express distribution center for 200 smaller hubs as its spokes catering to the needs of its customers across India. SCL believed that it is a concept, a vision and an idea ahead of its time, which looked at a global perspective and was constantly reinventing itself in delivering the future of logistics.
Questions
1. What made SCL a leader in the logistics industry?
2. Discuss the strategies adopted by SCL for its survival in the competitive scenario.
3. Comment on the contributions of SCL to society.
4. What steps the company should take to globalize its network reach?
Discuss the strategies adopted by SCL for expansion.
CASE IV - LOGISTICS OUTSOURCING
Company Profile
Indian Steels Limited (ISL) is a Rs. 6000 crore company established in the year 1986. The company envisaged being a continuously growing top class company to deliver superior quality and cost effective products for infrastructure development. With major customers being from Public Sector Undertakings, the company has established itself well and is said to be considering its expansion plan and proposed merger with another steel making giant in the country.
In 1996, owing to the cut throat competition in the emerging dynamic global markets, ISL emphasized on both effectiveness and efficiency. The company strongly believed in focusing on its core competency (i.e. manufacturing of steel) and outsourcing the rest to its reliable partners. Outsourcing of its outbound logistics was one such move in this direction. ISL out sourced its stockyards and other warehousing services to a third party called Consignment Agent, who was selected on an annual basis through a process of competitive bidding. The CA was responsible for the entire distribution of the products within the geographical limits of the allotted market segment and was paid by the company according to the loads of transaction (measured in metric tonnes) dealt by him. The company also believed in maintaining long-term relationships with the suppliers as well as the buyers. It always prioritized the needs of its regular and important customers over others and this worked out to be a win-win strategy. The case brings out the model of outsourcing logistics the company has adapted for the enhancement of its supply chain competency and thus leveraging more on its core competency which led to increased productivity.
Indian Steels Limited (ISL) is a Rs. 6000 crore company established in the' year 1986. The company envisaged being a continuously growing top class company to deliver superior quality and cost effective products for infrastructure development. The company performed with a mission to attain 7 million ton liquid steel capacity through technological up-gradation, operational efficiency arid expansion; to produce steel with international standards of cost and quality; and to meet the aspirations of the stakeholders. The production started in the year 1988 and initially, it manufactured Angles, Pig Irons) Beams and Wire Rods that were mainly used for constructing roads) dams and bridges. These products were mainly supplied to Public Sector Undertakings such as Railways, Public Works Department (PWD) Central Public Works Department (CPWD) Rashtriya Setu Nigam Limited, Audyogik Kendra Vikas Nigam Ltd. and various foundry units. The company had its headquarters at Raipur with three stockyards (a kind of warehouse with a huge land to store the products).
The company has established itself well and is said to be considering its expansion plan and proposed merger with another steel making giant in the country. The company was awarded ISO 9001, ISO 14001 and ISO 18001 certifications. The temperature in the plant premises is reportedly about 6°C lesser than that of the township, thanks to the greenery being maintained therein.
Logistics Outsourcing
Outbound logistics which basically connects the source of supply with the sources of demand with an objective of bridging the gap between the market demand and capabilities of the supply sources was always a problem for companies operating in this industry. Consisting of components like warehousing network, transportation network) inventory control system and supporting information systems outbound logistics was always playing a key role in making the right product available at the right place, at the right time at the least possible cost. In 1996 owing to the cut throat competition in the emerging dynamic global markets, ISL emphasized on both effectiveness and efficiency. The company strongly believed in focusing on its core competency (Le. manufacturing of steel) and outsourcing the rest to its reliable partners. Outsourcing of its outbound logistics was one such move in this direction.
Recognizing the growing demand for its products from the big, diversified and geographically¬dispersed customers, the company started expanding the number of warehousing stockyards. From a humble beginning, the company today has 26 stockyards; most of them are outsourced. Each of the outsourced stockyards was managed by a third party, which the company referred to as Consignment Agent (hereafter referred to as CA) in the area. The CA was selected on an annual basis through competitive bidding process. The performance of CA was closely monitored by a company representative (full time employee of ISL working in the site of CA). The CA was responsible for the entire distribution of the products within the geographical limits of the allotted market segment and Was paid by the company according to the loads of transaction (measured in metric tonnes) dealt by him. Based on their sales turnover CAs were trifurcated into A, Band C categories. The CAs with a monthly turnover of Rs. 150-200 crore fell under A category) whereas those with Rs. 100 - 150 crore were B and less than Rs. 100 \ crore were C category.
In addition to the company representative) a team of marketing division operated in the town where, the site of CA was located. This department was responsible or estimating the future demand, translating it into orders and sending to the manufacturing plant. Material dispatch was done using either one or a combination of the two modes: Rail, Road. While using rail as the mode of transportation, the company had a choice to book a Normal Rake (a full train with about 35 wagons, each wagon with an approximate capacity of 60 tonnes) or a Jumbo Rake (a full train of about 52 wagons, each wagon with an approximate capacity of 60 tonnes). At times, the company was engaging the services of the CONCOR (Container Corporation of India) where a train of 62 to 70 wagons, each wagon with about 26 tonnes capacity was used for transportation. Instead, if the company decided to send the material by road, the company had a choice between Trailor (25-30 tonnes} and Truck (15-20 tonnes). The choice of transportation mode was based on the quantity of dispatch.
As soon as the material was dispatched from the manufacturing plant, the respective CA used to get a Stock Transfer Chalaan electronically through Virtual Private Network, which was developed by a professional software service provider. In-transit, monitoring was generally done with the help of Indian Railways, if the mode was Rail. Otherwise, truck/trailor drivers were contacted through mobile phone. Transit generally took five to six days, providing time for CA to plan for receiving materials. The CA used to utilize this time for arranging material handling devices like heavy cranes and required labour. The material thus unloaded was reaching the warehousing stockyard where CA was responsible for arranging the materials as per the warehousing norms of ISL.
The company broadly classified materials into Long Products and Rounds. Products falling into each category were further classified by their size, shape and utility and the company used a distinct colour code for this purpose. Each subcategory of material had a specific place for downloading. The company used Bin System for this purpose. While downloading the material in stockyard, the company norms insisted that CA arrange for providing Dunnagt Material. This enabled the CA to store material without 1 direct contact with the land surface and thus reduced the probability of material deterioration. Material was stored in the stockyard until an authorized representative of the customer used to come and collect it. While dispatching material to the customer, a Loading Slip was generated against the Delivery Order. The company" also believed in maintaining long-term relationships with the suppliers as well as the buyers. It always prioritized the needs of its regular and important customers over others and this worked out to be a win-win strategy.
Operational problems were majorly because of uncertainties in transportation, fluctuation in supply of electricity and the load bearing capacity of the soil in the stockyard. Some: more problems were encountered whenever there was a change in CA and these were overcome by training the employees of the new CA and keeping the old CA responsible for the: material in his stockyard for six months after the contract as well. Observations reveal that, at times there were situations wherein CAs had to do those things which they were not legally supposed to do (like subcontracting) because of the pressures mounted by political leaders with selfish interests.
Despite these problems, this model of outsourcing logistics was working out very well for the company. The practices, which were started in the year 1996 have sustained major changes in the environment and are being practiced even in 2006. It has enhanced the supply chain competency of the company by enabling it leverage more on its core competency, which leads to increased productivity.
1. Analyze the case in view of the logistics outsourcing practices of the ISL.
2. Discuss the importance of logistics outsourcing with reference to supply chain management.
3. Suggest strategies for further strengthening the supply chain of ISL.
4. The participants/students are expected to have a clear understanding of Supply Chain and Logistics Management concepts.
5. The issues involved in the case are Sales Forecasting, Strategic Sourcing, Selection of Warehousing Service Provider, Transportation Mode and other nuances in Logistics Management.
CONTACT
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Note: Solve any 4 Cases Study’s
CASE: I Pushing Paper Can Be Fun
A large city government was putting on a number of seminars for managers of various departments throughout the city. At one of these sessions the topic discussed was motivation—how to motivate public servants to do a good job. The plight of a police captain became the central focus of the discussion:
I’ve got a real problem with my officers. They come on the force as young, inexperienced rookies, and we send them out on the street, either in cars or on a beat. They seem to like the contact they have with the public, the action involved in crime prevention, and the apprehension of criminals. They also like helping people out at fires, accidents, and other emergencies.
The problem occurs when they get back to the station. They hate to do the paperwork, and because they dislike it, the job is frequently put off or done inadequately. This lack of attention hurts us later on when we get to court. We need clear, factual reports. They must be highly detailed and unambiguous. As soon as one part of a report is shown to be inadequate or incorrect, the rest of the report is suspect. Poor reporting probably causes us to lose more cases than any other factor.
I just don’t know how to motivate them to do a better job. We’re in a budget crunch, and I have absolutely no financial rewards at my disposal. In fact, we’ll probably have to lay some people off in the near future. It’s hard for me to make the job interesting and challenging because it isn’t-it’s boring, routine paperwork, and there isn’t much you can do about it.
Finally, I can’t say to them that their promotions will hinge on the excellence of their paperwork. First at all, they know it’s not true. If their performance is adequate, most are more likely to get promoted just by staying on the force a certain number of years than for some specific outstanding act. Second, they were trained to do the job they do out in the streets, not to fill out forms. All through their careers the arrests and interventions are what get noticed.
Some people have suggested a number of things, like using conviction records as a performance criterion. However, we know that’s not fair—too many other things are involved. Bad paperwork increases the chance that you lose in court, but good paperwork doesn’t necessarily mean you’ll win. We tried setting up the team competitions based on the excellence of the reports, but the officers caught on to that pretty quickly. No one was getting any type of reward for winning the competition, and they figured why should they bust a gut when there was on payoff.
I just don’t know what to do.
Question:
1. What performance problems is the captain trying to correct?
2. Use the MARS model of individual behavior and performance to diagnose the possible causes of the unacceptable behavior.
3. Has the captain considered all possible solutions to the problem? If not, what else might be done?
CASE: II How Did I Get Here?
Something was not right. John Breckenridge opened his eyes, saw the nurse’s face, and closed them once more. Cobwebs slowly cleared from his brain as he woke up from his brain as he woke up from the operation. He felt a hard tube in his nostril, and tried to lift his hand to pull it out, but it was strapped down to the bed. John tried to speak but could make only a croaking sound. Nurse Thompson spoke soothingly, “Just try to relax, Mr. Breckenridge. You had a heart attack and emergency surgery, but you’re going to be OK.”
Heart attack? How did I get here? As the anesthesia wore off and the pain set in, John began to recall the events of the past year; and with the memories came another sort of pain – that of remembering a life where success was measured in hours worked and things accomplished, but which of late had not measured up.
John recalled his years in college, where getting good grades had been important, but not so much as his newly developing love for Karen, the girl with auburn hair who got her nursing degree the same year as he graduated with a degree in software engineering. They married the summer after graduation and moved from their sleepy university town in Indiana to Aspen, Colorado. There John got a job with a new software company while Karen worked evenings as a nurse. Although they didn’t see much of each other during the week, weekends were a special time, and the surrounding mountains and nature provided a superb quality of life.
Life was good to the Breckenridges. Two years after they were married, Karen gave birth to Josh and two years later to Linda. Karen reduced her nursing to the minimum hours required to maintain her license, and concentrated on rearing the kids. John, on the other hand, was busy providing for the lifestyle they increasingly became used to, which included a house, car, SUV, ski trips, and all of the things a successful engineering career could bring. The company grew in leaps and bounds, and John was one of the main reasons it grew fast. Work was fun. The company was growing, his responsibilities increased, and he and his team were real buddies. With Karen’s help at home, he juggled work, travel, and evening classes that led to a master’s degree. The master’s degree brought another promotion—this time to vice president of technology at the young (for this company) age of 39.
The promotion had one drawback: It would require working out of the New York office. Karen sadly said goodbye to her friends, convinced the kids that the move would be good to them, and left the ranch house for another one, much more expensive and newer, but smaller and just across the river in New Jersey from the skyscraper where her husband worked. Newark was not much like Aspen, and the kids had a hard time making friends, especially Josh, who was now 16. He grew sullen and withdrawn and began hanging around with a crowd that Karen thought looked very tough. Linda, always the quiet one, stuck mostly to her room.
John’s new job brought with it money and recognition, as well as added responsibilities. He now had to not only lead software development but also actively participate in steering the company in the right direction for the future, tailoring its offerings to market trends. Mergers and acquisitions were the big things in the software business, and John found a special thrill in picking small companies with promising software, buying them out, and adding them to the corporate portfolio. Karen had everything a woman could want and went regularly to a health club. The family lacked for no material need.
At age 41 John felt he had the world by its tail. Sure, he was a bit overweight, but who wouldn’t be with the amount of work and entertaining that he did? He drank some, a habit he had developed early in his career. Karen worried about that, but he reassured her by reminding her that he had been really drunk only twice and would never drink and drive. Josh’s friends were a worry, but nothing had yet come of it.
Not all was well, however. John had been successful in Colorado because he thought fast on his feet, expressed his opinions, and got people to buy into his decisions. In the New York corporate office things were different. All of the top brass except the president and John had Ivy League, moneyed backgrounds. They spoke of strategy but would take only risks that would further their personal careers. He valued passion, integrity, and action, with little regard for personal advancement. They resented him, rightly surmising that the only reason he had been promoted was because he was more like he president than they were, and he was being groomed as heir apparent.
On November 2, 2004, John Breckenridge’s world began to unravel. The company he worked for, the one he had given so much of his life to build was acquired in a hostile takeover. The president who had been his friend and mentor was let go, and the backstabbing began in earnest. John found himself the odd man out in the office as the others jostled to build status in the new firm. Although his stellar record allowed him to survive the first round of job cuts, that survival only made him more of a pariah to those around him. Going to work was a chore now, and John had no friends like those he had left in Aspen.
Karen was little help. John had spent nearly two decades married more to his job than his wife, and he found she was more of a stranger than a comforter as he struggled in his new role. When he spoke about changing jobs, she blew up. “Why did I have to give up nursing for your career?” she said. “Why do we have to move again, just because you can’t get along at work? Can’t you see what the move did to our kids?”
Seeing the hurt and anger in Karen’s eyes, John stopped sharing and turned to his bottle for comfort. In time that caused even more tension in the home, and it slowed him down at work when he really needed to excel. John would often drink himself into oblivion when on business trips rather than thinking about where his life and career were going. On his last trip he hadn’t slept much and had worked far too hard. Midmorning he had been felled by a massive heart attack.
All of this history passed through John Breckenridge’s mind as he woke after the operation. It was time for a change.
Question:
1. Identify the stressors in John Breckenridge’s life. Which ones could he have prevented?
2. What were the results of the stress? Would you consider these to be typical to stress situations and lifestyle choices John made, or was John Breckenridge unlucky?
3. Assume you are a career coach retained by John Breckenridge to guide him through his next decisions. How would you recommend that John modify his lifestyle and behavior to reduce stress? Should he change jobs? Do you believe he is capable of reducing his stress alone? If not, where should he seek help?
CASE: III The Shipping Industry Accounting Team
For the past five years I have been working at McKay, Sanderson, and Smith Associates, a mid-sized accounting firm in Boston that specializes in commercial accounting and audits. My particular specialty in accounting practices for shipping companies, ranging from small fishing fleets to a couple of the big firms with ships along the East Coast.
About 18 months ago McKay, Sanderson, and Smith Associates became part of a large merger involving two other accounting firms. These firms have offices in Miami, Seattle, Baton Rouge, and Los Angeles. Although the other two accounting firms were much larger than McKay, all three firms agreed to avoid centralizing the business around one office in Los Angeles. Instead the new firm—called Goldberg, Choo, and McKay Associates—would rely on teams across the country to “leverage the synergies of our collective knowledge” (an often-cited statement from the managing partner soon after the merger).
The merger affected me a year ago when my boss (a senior partner and vice president of the merger) announced that I would be working more closely with three people from the other two firms to become the firm’s new shipping industry accounting team. The other team members were Elias in Miami, Susan in Seattle, and Brad in Los Angeles. I had met Elias briefly at a meeting in New York City during the merger but had never met Susan or Brad, although I knew that they were shipping accounting professionals at the other firms.
Initially the shipping team activities involved e-mailing each other about new contracts and prospective clients. Later we were asked to submit joint monthly reports on accounting statements and issues. Normally I submitted my own monthly reports to summarize activities involving my own clients. Coordinating the monthly report with three other people took much more time, particularly because different accounting documentation procedures across the three firms were still being resolved. It took numerous e-mail messages an a few telephone calls to work out a reasonable monthly report style.
During this aggravating process it became apparent—to me at least—that this team business was costing me more time than it was worth. Moreover, Brad in Los Angeles didn’t have a clue about how to communicate with the rest of us. He rarely replied to e-mail. Instead he often used the telephone tag. Brad arrived at work at 9:30 a.m. in Los Angeles (and was often late), which is early afternoon in Boston. I typically have a flexible work schedule from 7:30 a.m. to 3:30 p.m. so I can chauffeur my kids after school to sports and music lessons. So Brad and I have a window of less than three hours to share information.
The biggest nuisance with the shipping specialist accounting team started two weeks ago when the firm asked the four of us to develop a new strategy for attracting more shipping firm business. This new strategic plan is a messy business. Somehow we have to share our thoughts on various approaches, agree on a new plan, and write a unified submission to the managing partner. Already the project is taking most of my time just writing and responding to e-mail and talking in conference calls (which none of us did much before the team formed).
Susan and Brad have already had two or three misunderstandings via e-mail about their different perspectives on delicate matters in the strategic plan. The worst of these disagreements required a conference call with all of us to resolve. Except for the most basic matters, it seems that we can’t understand each other, let alone agree on key issues. I have come to the conclusion that I would never want Brad to work in my Boston office (thanks goodness he’s on the other side of the country). Although Elias and I seem to agree on most points, the overall team can’t form a common vision or strategy. I don’t know how Elias, Susan, or Brad feel, but I would be quite happy to work somewhere that did not require any of these long-distance team headaches.
Question:
1. What type of team was formed here? Was it necessary, in your opinion?
2. Use the team effectiveness model in Chapter 9 and related information in this chapter to identify the strengths and weaknesses of this team’s environment, design, and processes.
3. Assuming that these four people must continue to work as a team, recommend ways to improve the team’s effectiveness.
CASE: IV Conflict In Close Quarters
A team of psychologists at Moscow’s Institute for Biomedical Problems (IBMP) wanted to learn more about the dynamics of long-term isolation in space. This knowledge would be applied to the International Space Station, a joint project of several countries that would send people into space for more than six months. It would eventually include a trip to Mars taking up to three years.
IBMP set up a replica of the Mir space station in Moscow. They then arranged for three international researchers from Japan, Canada, and Austria 110 days isolated in a chamber the size of a train car. This chamber joined a smaller chamber where four Russian cosmonauts had already completed half of their 240 days of isolation. This was the first time an international crew was involved in the studies. None of the participants spoke English as their first language, yet they communicated throughout their stay in English at varying levels of proficiency.
Judith Lapierre, a French-Canadian, was the only female in the experiment. Along with obtaining a PhD in public health and social medicine, Lapierre had studied space sociology at the International Space University in France and conducted isolation research in the Antarctic. This was her fourth trip to Russia, where she had learned the language. The mission was supposed to have a second female participant from the Japanese space program, but she was not selected by IBMP.
The Japanese and Austrian participants viewed the participation of a woman as a favorable factor, says Lapierre. For example, to make the surroundings more comfortable, they rearranged the furniture, hung posters on the walls, and put a tablecloth on the kitchen table. “We adapted our environment, whereas Russians just viewed it as something to be endured,” she explains. “We decorated for Christmas because I’m the kind of person who likes to host people.”
New Year’s Eve Turmoil
Ironically, it was at one of those social events, the New Year’s Eve party, that events took a turn for the worse. After drinking vodka (allowed by the Russian space agency), two of the Russian cosmonauts got into a fistfight that left blood splattered on the chamber walls. At one point a colleague hid the knives in the station’s kitchen because of fears that the two Russians were about to stab each other. The two cosmonauts, who generally did not get along, had to be restrained by other men. Soon after that brawl, the Russian commander grabbed Lapierre, dragged her out of view of the television monitoring cameras, and kissed her aggressively—twice. Lapierre fought him off, but the message didn’t register. He tried to kiss her again the next morning.
The next day the international crew complained to IBMP about the behavior of the Russian cosmonauts. The Russian institute apparently took no against the aggressors. Instead the institute’s psychologists replied that the incidents were part of the experiment. They wanted crew members to solve their personal problems with mature discussion without asking for outside help. “You have to understand that Mir is an autonomous object, far away from anything,” Vadim Gushin, the IBMP psychologist in charge of project, explained after the experiment had ended in March. “If the crew can’t solve problems among themselves, they can’t work together.”
Following IBMP’s response, the international crew wrote a scathing letter to the Russian institute and the space agencies involved in the experiment. “We had never expected such events to take place in a highly controlled scientific experiment where individuals go through a multistep selection process,” they wrote. “If we had known… we would not have joined it as subjects.” The letter also complained about IBMP’s response to their concerns.
Informed about the New Year’s Eve incident, the Japanese space program convened an emergency meeting on January 2 to address the incidents. Soon after the Japanese team member quit, apparently shocked by IBMP’s inaction. He was replaced with a Russian researcher on the international team. Ten days after the fight—a little over the month the international team began the mission—the doors between the Russian and international crews’ chambers were barred at the request of the international research team. Lapierre later emphasized that this action was taken because of concerns about violence, not the incident involving her.
A Stolen Kiss or Sexual Harassment
By the end of experiment in March, news of the fistfight between the cosmonauts and the commander’s attempts to kiss Lapierre had reached the public. Russian scientists attempted to play down the kissing incident by saying that it was one fleeting kiss, a clash of cultures, and a female participant who was too emotional.
“In the West, some kinds of kissing are regarded as sexual harassment. In our culture it’s nothing,” said Russian scientist Vadim Gushin in one interview. In another interview he explained, “The problem of sexual harassment is given a lot of attention in North America but less in Europe. In Russia it is even less of an issue, not because we are more or less moral than the rest of the world; we just have different priorities.”
Judith Lapierre says the kissing incident was tolerable compared to this reaction from the Russian scientists who conducted the experiment. “They don’t get it at all,” she complains. “They don’t think anything is wrong. I’m more frustrated than ever. The worst thing is that they don’t realize it was wrong.”
Norbert Kraft, the Austrian scientist on the international team, also disagreed with the Russian interpretation of events. “They’re trying to protect themselves,” he says. “They’re trying to put the fault on others. But this is not a cultural issue. If a woman doesn’t want to be kissed, it is not acceptable.”
Question:
1. Identify the different conflict episodes that exist in this case. Who was in conflict with whom?
2. What are the sources of conflict for these conflict incidents?
3. What conflict management style(s) did Lapierre, the international team, and Gushin use to resolve these conflicts? What style(s) would have worked best in the situation?
CASE: V Hillton’s Transformation
Twenty years ago Hillton was a small city (about 70,000 residents) that served as an outer to a large Midwest metropolitan area. The city treated employees like family and gave them a great deal of autonomy in their work. Everyone in the organization (including the two labor unions representing employees) implicitly agreed that the leaders and supervisors of the organization should rise through the ranks based on their experience. Few people were ever hired from the outside into middle or senior positions. The rule of employment at Hillton was to learn the job skills, maintain a reasonably good work record, and wait your turn for promotion.
Hillton had grown rapidly since the mid-1970s. As the population grew, so did the municipality’s workforce to keep pace with the increasing demand for municipal services. This meant that employees were promoted fairly quickly and were almost guaranteed employment. In fact, until recently Hillton had never laid off any employee. The organization’s culture could be described as one of entitlement and comfort. Neither the elected city council members nor the city manager bothered the department managers about their work. There were few costs controls because rapid growth forced emphasis on keeping up with the population expansion. The public became somewhat more critical of the city’s poor services, including road construction at inconvenient times and the apparent lack of respect some employees showed towards taxpayers.
During these expansion years Hillton put most of its money into “outside” (also called “hard”) municipal services such as road building, utility construction and maintenance, fire and police protection, recreational facilities, and land use control. This emphasis occurred because an expanding population demanded more of these services, and most of Hillton’s senior people came from the outside services group. For example, Hillton’s city manager for many years was a road development engineer. The “inside” workers (taxation, community services, and the like) tended to have less seniority, and their departments were given less priority.
As commuter and road systems developed, Hillton attracted more upwardly mobile professionals to the community. Some infrastructure demands continued, but now these suburban dwellers wanted more “soft” services, such as libraries, social activities, and community services. They also began complaining about how the municipality was being run. The population had more than doubled between the 1970s and 1990s, and it was increasingly apparent that the city organization needed more corporate planning, information systems, organization development, and cost control systems. Resident voiced their concerns in various ways that the municipality was not providing the quality of management that they would expect from a city of its size.
In 1996 a new mayor and council replaced most of the previous incumbents, mainly on the platform of improving the municipality’s management structure. The new council gave the city manager, along with two other senior managers, an early retirement buyout package. Rather than promoting form the lower ranks, council decided to fill all three positions with qualified candidates from large municipal corporations in the region. The following year several long-term managers left Hillton, and at least half of those positions were filled by people from outside the organization.
In less than two years Hillton had eight senior or departmental managers hired from other municipalities who played a key role in changing the organization’s value system. These eight managers became known (often with negative connotations) as the “professionals.” They worked closely with each other to change the way middle and lower-level managers had operated for many years. They brought in a new computer system and emphasized cost controls where managers previously had complete autonomy. Promotions were increasingly based more on merit than seniority.
These managers frequently announced in meetings and newsletters that municipal employees must provide superlative customer service, and that Hillton would become one of the most customer-friendly places for citizens and those doing business with the municipality. To this end these managers were quick to support the public’s increasing demand for more soft services, including expanded library services and recreational activities. And when population growth flattened for a few years, the city manager and the other professionals gained council support to lay off a few outside workers due to lack of demand for hard services.
One of the most significant changes was that the outside departments no longer held dominant positions in city management. Most of the professional managers had worked exclusively in administrative and related inside jobs. Two had Master of Business Administration degrees. This led to some tension between the professional managers and the older outside managers.
Even before the layoffs, managers of outside departments resisted the changes more than others. These managers complained that their employees with the highest seniority were turned down for promotions. They argued for more budget and warned that infrastructure problems would cause liability problems. Informally these outside managers were supported by the labor union representing outside workers. The union leaders tried to bargain for more job guarantees, whereas the union representing inside workers focused more on improving wages and benefits. Leaders of the outside union made several statements in the local media that the city had “lost its heart” and that the public would suffer from the actions of the new professionals.
Question:
1. Contrast Hillton’s earlier corporate culture with the emerging set of cultural values.
2. Considering the difficulty in changing organizational culture, why did Hillton’s management seem to be successful at this transformation?
3. Identify two other strategies that the city might consider to reinforce the new set of corporate values.
CASE – 1
Aravali Hospital was built two years ago, and currently has a workforce of 215 people. The hospital is small, but because it is new, it is extremely efficient. The board has voted to increase its capacity from 60 to 180 beds. By this time next year, the hospital will over three times as large as now, in terms of both beds and personnel.
The administrator, Maya Joshi, feels that the major problem with this proposed increase is that hospital will lose its efficiency. “I want to hire people who are just like our current team of personnel—hardworking, dedicated talented, and able to interact well with patients. If we triple the number of employees, I do not see how it will be possible to maintain our quality of patient care. We are going to lose our family atmosphere. We will be inundated with mediocrity, and we will end up being like every other institution in the local area—large and uncaring.”
The chairman of the board is also concerned about the effect of hiring such a large number of employees. However, he believes that Joshi is over-reacting. “It cannot be that hard to find people who are like our current staff. There must be a lot of people out there who are just as good. What you need to do is develop a plan of action that will allow you to carefully screen those who will fit into your current organisational culture, and those who will not. It is not going to be as difficult as you believe. Trust me. Everything will work out just fine”.
As a result of the chairman’s comments, Joshi had decided that the most effective way of dealing with the situation is to develop a plan of action. She intends to meet with her administrative group and determine the best way of screening incoming candidates, and then helping those who are hired to become socialised in terms of the hospital’s culture. Joshi has called a meeting for day after tomorrow. At that time, she intends to discuss her ideas, get suggestions from her people, and then formulate a plan of action.
Questions
1. What can Joshi and her staff do to select the type of entry-level candidates they want?
2. How can Joshi ensure that those who are hired come to accept the core cultural values of the hospital? What steps would you recommend?
CASE – 2
Leo Medical Diagnostic and Research Center has patented its new invention of poly fiber cardiovascular valve. The product developed is a novel one and can be manufactured at a very low cost. The utility and life of the product in laboratory testing was found to be more than the life of the patients. The product could enhance the life of patient by at least five years. Considering all these factors Leo Medical Diagnostic and Research Center chose to set a unit to manufacture the product. However, the company has a dilemma. As the product is new and requires the acceptance of medical community, it is considering appointing a promotion and sales co-coordinator to manage the promotional and communication efforts of the firm.
Questions
(a) Do you think the number of units of a product to be manufactured is a random number? Explain your reasoning.
(b) How does one determine the number of units of a product to be manufactured in an organisation?
(c) What are the elements you would take into consideration for forecasting the production and sales requirement of the product developed by Leo Medical Center?
(d) How would you go about planning and organising the manufacturing and selling efforts of the organisation?
CASE – 3
Hari Mohan has a position on the corporate planning staff of a large company in a high technology industry. Although he has spent most of his time on long-range, strategic planning for the company, he has been appointed to a task force to reorganize the company. The president and the board of directors are concerned that they are losing their competitive position in the industry because of an outdated organisation structure. Being a planning expert, Hari Mohan convinced the task force that they should proceed by first determining exactly what type of structure they have now, then determining what type of environment the company faces, now and in the future, and then designing the organisation structure accordingly. In the first phase, they discovered that the organisation is currently structured along classic bureaucratic lines. In the second phase, they found that they are competing in a highly dynamic, rapidly growing and uncertain environment that requires a great deal of flexibility and response to change.
Questions
(a) What type or types of organisation design do you feel this task force should recommend in the third and final phase of the approach to their assignment?
(b) Explain how the systems and the contingency theories of organisation can each contribute to the analysis of this case.
(c) Do you think Hari Mohan was correct in his suggestion of how the task force should proceed? What types of problems might develop as by-products of the recommendation you made in question 1?
CASE – 4
Bharat Engineering Works Limited is a major industrial machineries besides other engineering products. It has enjoyed market preference for its machineries because of limited competition in the field. Usually there have been more orders than what the company could supply. However, the scenario changed quickly because of the entry of two new competitors in the field with foreign technological collaboration. For the first time, the company faced problem in marketing its products with usual profit margin. Sensing the likely problem, the chief executive appointed Mr Arvind Kumar as general manager to direct the operations of industrial machinery division. Mr Kumar had similar assignment abroad before coming back to India.
Mr Kumar had a discussion with the chief executive about the nature of the problem being faced by the company so that he could fix up his priority. The chief executive advised him to consult various heads of department to have first hand information. However, he emphasised that the company lacked an integrated planning system while members of the Board of Directors insisted on introducing this in several meetings both formally and informally.
After joining as General Manager, Mr Kumar got briefings from the heads of all departments. He asked all heads to identify major problems and issues concerning them. The marketing manager indicated that in order to achieve higher sales, he needed more sales support. Sales people had no central organisation to provide sales support nor was there a generous budget for demonstration teams which could be sent to customers to win business.
The production manager complained about the old machines and equipments used in manufacturing. Therefore, cost of production was high but without corresponding quality. While competitors had better equipments and machinery, Bharat Engineering had neither replaced its age-old plant nor reconditioned it. Therefore to reduced the cost, it was essential to automate production lines by installing new equipment.
Director of research and development did not have specific problem and therefore, did not indicate for any change. However, a principal scientist in R&D indicated on one day that the director of R&D, though very nice in his approach, did not emphasize on short-term research projects, which could easily increase production efficiency by at least 20 per cent within a very short period without any major capital outlay.
Questions
(a) Discuss the nature and characteristics of the problems in this case.
(b) What steps should be taken by Mr Kumar to overcome these problems?
CASE – 5
The president of Simplex Mills sat at his desk in the hushed atmosphere, so typical of business offices, after the close of working hours. He was thinking about Rehman, the manager in-charge of purchasing, and his ability to work with George, the production manager, and Vipulabh, the marketing and sales manager in the firm.
When the purchasing department was established two years ago, both George and Vipulabh agreed with the need to centralise this function and place a specialist in charge. George was of the view that this would free his supervisors from detailed ordering activities. Vipulabh opined that the flow of materials into the firm was important enough to warrant a specialised management assignment. Yet since the purchasing department began operating it has been precisely these two managers who have had a number of confrontations with the new purchase manager, and occasionally with one another, in regard to the way the purchasing function in being carried out.
From George’s point of view, instead of simplifying his job as production manager by taking care of purchasing for him, the purchasing department has developed a formal set of procedures that has resulted in as much time commitment on his part as he had previously spent in placing his orders directly with vendors. Further, he is specially irritated by the fact that his need for particular items or particular specification is constantly being questioned by the purchasing department. When the department was established, George assumed that the purchasing manager was there to fill his needs, not to question them.
As Vipulabh sees it, the purchasing function is an integral part of marketing function, and the two therefore need to be jointly managed as a unified process. Purchasing function cannot be separated from a firm’s overall marketing strategy. However, Rehman has attempted to carry out the purchasing function without regard for this obvious relationship between his responsibilities and those of Vipulabh, thus making a unified marketing strategy impossible.
In his previous position, Rehman had worked in the purchasing department of a firm considerably larger than Simplex. Before being hired, he was interviewed by all the top managers, including George and Vipulabh, but it was the president himself who negotiated the details of the job offer. As Rehman sees it, he was hired as a professional to do a professional job. Both George and Vipulabh have been distracting him from this goal by presuming that he is somehow subordinate to them, which he believes is not the case. The people in the production department, who use the purchasing function most, have complained about the detail that he requires on their requisitions. But he has documented proof that materials are now being purchased much more economically than they were under the former decentralised system. He finds Vipulabh’s interests more difficult to understand, since he sees no particular relationship between his responsibilities for efficient procurement, and Vipulabh’s responsibilities to market the firm’s products.
The president has been aware of the continuing conflict among three managers for some time, but on the theory that a little rivalry is healthy and stimulating, he has felt that it was nothing to be unduly concerned about. But now that much of his time is being taken up by much of what he considers to be petty bickering, the time has come to take some positive action.
Questions:
1. Is George’s view of the situation realistic?
2. How do you evaluate Vipulabh’s position?
3. How might this conflict be associated with factors in the formal organisation?
4. What should the president of Simplex Mills do now?
ATTEMPT ANY FOUR CASE STUDY
CASE I - A CASE OF ALPHA TELENET LIMITED
Alpha Telecom Ltd., a part of Alpha Group was established in 1976 by its visionary Chairman and Managing Director, A. S. Verma. The company started with manufacturing of Electronic Push Button Telephones (EPBT) and Cordless phones in 1985 in Allahabad. On July 7, 1995 Alpha Tele-Ventures Limited was incorporated. A mobile service called 'Web-Tel' was launched in Kochin, which eventually expanded its operations in Andhra Pradesh in 1996.
Till 1994, fixed telephone services were provided by Department of Telecommunications (DoT) which had a monopoly in this business. This was regarded as self-defeating because DoT was a regulator as well as a competitor. With increasing pressure for privatisation, the government agreed to give license to private operators. Finally in December 1996, the bill of privatisation of fixed telephone services was passed. The New Telecom Policy (NTP) with its targets for improving tele-density was an ambitious policy. The NTP planned to achieve a tele-density (number of telephones per 100 people) of 7 by the year 2005 and 15 by the year 2010, which translated into 130 mn lines. The policy also planned an investment of Rs. 4000 billion by the year 2010. The above factors combined with the fact that the domestic long distance telephony was open to private players, led to considerable demand for the company's products. But to get the tenders from Ministry of Telecommunication, Government of India, a license fee was to be paid over a period of 15 years and the viability of telecom projects was also affected by the guidelines that required private operators to earmark at least 10% of their telephone lines for villages. The operating companies did not like the idea of having to pay for the maintenance of lines that might not be used most of the times. The license fee of Maharashtra state was minimum at Rs.643 crores. Thus, Alpha Telenet, a pioneer in every field wanted to avail this opportunity and started the survey for extending the services in Pune. Their marketing survey team provided the statistics of existing customers of DoT, the waiting list of DoT, potential of users for successive years and so on.
Alpha Telenet Ltd. (ATL) decided to start their fixed line telephone operations in technical collaboration with Telecom Italia at Pune in Maharashtra. Initially, they received permission for installing their exchanges covering 0.5 km. of radius which was too small with respect to the cost involved and thus difficult to achieve lucrative returns. After struggling for a year, they finally got permission to set up exchanges covering 1 km. of radius. They set up their exchanges in potential areas in the city. Another problem was that the consumer's mindset fixated was with DoT and they were not ready to accept the services of Alpha Telenet Ltd. This was due to opposite tariff rates for household consumers. Consumers did not rely on ATL as they were private players. ATL initially had attracted the customers from the areas where the waiting line for DoT connections was high. Further, they had provided the connections with wireless CDMA receivers for only Rs. 3000 (movable within the area of 5 km radius) though its actual cost was Rs.15,000. The connection between exchanges by optical fibre ensured high quality of voice and data transmission, which was later to be shifted to the conventional copper wires for consumer connections. The company made the connection using Ring Topology stay connected even in case of line disturbances.
They also installed a Submarine Optical Fibre Cable to Singapore with an 8.4 Tbps (terabits per second) capacity providing high-class worldwide connectivity. Alpha Telenet installed the latest Digital Switches from Tiemens and other devices, which were fully compatible with the equipment of other telecom providers in India. The company installed a digital Geographical Information System (GIS) for network surveillance. A 24-hr Internal Network Management System for technical support and infrastructure maintenance were also installed with a dedicated round-the-clock toll-free call centre to ensure prompt services.
In 1997, Alpha Telenet Ltd. obtained a license for providing fixed-line services in Maharashtra state circle and formed a joint venture with Behrin Telecom, Alpha BT, for providing VSAT services. On June 4, 1998 they started the first private fixed-line services launched in Pune in the Maharashtra circle and thereby ending fixed-:-line services monopoly of DoT (now TSNL). Alpha entered into a license agreement with DoT in 2002 to provide international long distance services in India and became the first private telecommunications service provider. The company also launched fixed line services in the states of Goa, Uttar Pradesh, Gujarat and Delhi.
With the start of basic telephony services in the .state of Maharashtra, residents of the area and others felt a great sense of breaking away from the old and traditional government monopoly. The kind of ill-treatment of customers and also the red-tapism and bureaucracy which prevailed earlier, was about to end. It was observed that no private telecom company wanted to start their operations in less profitable areas like Bihar and other eastern states .
. The tariff plans of the TSNL and Alpha Telenet Ltd. were opposite to each other. TSNLS tariff structure was upwards i.e., price per unit increase with number of calls and vice versa for Alpha Telenet. This was the beginning of the entry of private players in the sector.
1 . Give a critical analysis of the privatisation of telecom sector in India.
2. Highlight the secrets of success of Alpha Telenet Ltd. in terms of technological advancements and service~ provided.
CASE II - GEARING• FOR GROWTH
Premier Differential Gears Pvt. Ltd. (PDGL) was formed in the year 1991 near Noida in the state of Uttar Pradesh (India). The company was established to cater to the ever¬growing needs of the differential gear market for cars, jeeps, trucks, and tractors. It was established under the aegis of the parent company called Premier Gears Pvt. Ltd. which in turn was established in the year 1962 at Noida. The parent company was engaged in the manufacturing of automobile transmission gears. With a modest start in 1961, it had never looked back and by 2006, it became the largest manufacturer of automobile transmission gears in the country. The parent company had employee strength of 2,500 trained and dedicated employees and was producing a range of over 1,000 gears. Premier Gears Pvt. Ltd. was making gears for virtually every major brand of truck, car, jeep and tractor. In 2006, the group company comprised of three firms namely, Premier Gears Pvt. Ltd. (manufacturing Transmission gears, Gearbox assemblies, Laser marking machines, and Material handling equipments), Premier Differential Gears Pvt. Ltd. (manufacturing differential gears) and Elve Corporation (a government recognized export house).
PDGL was manufacturing a wide range of Crown Wheel and Pinions, Bevel Gears, Bevel Pinions, and Spider Kit Assemblies. The installed capacity was 20,000 sets per month. PDGLs focus on quality, fast product development and customer service had enabled it to become an OEM supplier to many car and tractor companies in India, the EU, and Asia. Almost 75% of the total production was exported to a number of countries like Germany, Russia, USA, China, Japan, South Mrica, etc. The domestic OEM and replacement market accounted for the remaining 25% of the company's sales and in a short span of time, the company had become one of the major players in the Indian replacement market. The use of latest technology and comprehensive quality control systems at PDGL go a long way to ensure that customers get exactly what they want.
PDGL was using world class Gleason machines in its manufacturing programme. The raw material for manufacturing gears was in the form of forgings, which were procured from various parts of the country for manufacturing crown wheels and pinions. These forgings were subjected to turning followed by drilling. The drilled crowns and pinions were taken for tapping, which were then rimmed. After this, the teeth cutting procedure was applied which was called broaching. The broached units were then heat-treated. Heat treatment was very critical in producing gears having short tolerance levels. To meet this end, the company had two rotary furnaces and one state-of-the-art Continuous Gas Carburizing Furnace (CGCF) from Aichelin ALD of Austria to heat-treat its products. After the heat treatment, a number of intermediate processes like short blasting, phosphating, lapping were performed which resulted into the finished product, ready for putting company marks to avoid imitation/forgery. The company had developed a state-of-the-art 70-watt ND¬YAG laser-marking machine in collaboration with Quantum Laser (UK), which was used for marking on its produces. Laser marking was environment-friendly and was applied without any force or contact and thus the material was not subjected to any stress. The marked products were" manually pushed onto a conveyer for packing and dispatching. All the above have enabled the company to meet international standards and to produce world¬class gears with the highest performance standards.
The upstream portion of the supply chain at PDGL included a number of forgers located at "geographically dispersed locations in various parts of the country. These forgers were supplying the forgings to PDGL, which were then used in manufacturing the differential gears. All of the raw material was routed to the POGL works through road transport and"" due to large distances, transportation costs were a major issue in increasing the efficiency of this upstream portion of the supply chain. The forgings were supplied according to the drawings and dimensions set by design engineers at the company. The company indeed tried some local suppliers to cope up with the increasing transportation costs but the results on quality front wet satisfactory. To serve this end, the company was planning to develop some local suppliers. It had planned to provide them support in the areas of procuring good material for producing forgings, procuring good quality machines and" training their workforce in the required technical know-how. This was considered as an investment by the company to reduce its inbound transportation costs. To meet the small lot requirements of the forgings, the company was also contemplating to share the truckloads with the parent company. This was feasible because of the geographical proximity of the parent company, which was situated at a distance of less than 15 kms, the similar nature of raw material and same suppliers supplying to both the units.
The internal supply chain at PDGL comprised of various processing stations/lines" through which the forgings were transformed into finished differential gears. The movement of the work-in-progress between various stations was semi-automatic in which the workers manually placed the goods on trolleys/carts. Even the finished units were manually placed on a conveyer; which needed to be pushed to send the units to the packing section. There was a risk of units being damaged in this process. To minimize this risk, the company was planning to have automatic systems for moving the material from one place to another. It was decided to have hydraulic lifts, cranes, electronic escalators and the likes for progression of material from forging to packing. The packing material was stored on first floor as and when it arrived, with the help of casual laborers, which was inefficient and also involved a: risk of some• casualty.
The downstream portion of the supply chain at PDGL included around 10 distributors located evenly in various parts of the country. These distributors were supplying the products of PDGL to number of car, truck, jeep and tractor manufacturers. This portion of the supply chain also included a large replacement market, which accounted for almost half of the company's domestic sales. To meet its distribution needs the company had a panel of transporters, who used to distribute the finished goods. At times, the consignments scheduled for distributors were delayed because of lack of full truckload. One possible solution to this problem was sharing of truckload with the parent company. This was feasible because both the companies shared the same distribution network. The distribution of export consignments was through an intermediary who helped the company in exporting its products to the US, UK, Germany, China, Italy, Turkey, Saudi Arabia, Singapore, Malaysia, Thailand, Indonesia, and Nigeria, amongst other countries. The company's wide export range included replacement gears for internationally renowned automotive manufacturers like Mercedes¬Benz, Mitsubishi, Toyota, Nissan, Clark, Eaton, Fuller, New Process, ZP, Hino, Fuso, Tong Feng, Tata, Leyland, Massey Ferguson, Magirus - Deutz and various others.
There was a shortage of skilled employees. Therefore, the company has recently started training input for all their 400 employees. These training programmes are being conducted in the organization to enhance the skills of the employees and the duration of these programmes were 20 hours per month. On the financial front, the company is continuously moving on the growth track showing better financial results year after year. It has embarked on an ambitious plan to double its turnover by the end of this financial year and to become the world's numero-uno in the automotive gear-manufacturing segment. The current capacity utilization was at a meager 6000 sets against a total installed capacity of 20,000 sets per month.
1. Comment on the upstream and downstream supply chain portions operating in the company.
2. How far are the plans to improve the supply chain efficiency in the company feasible?
3. "Internal supply chain at the company can be characterized by the lack of it". Comment.
CASE III - INTELLIGENT MOVEMENTS: ANYWHERE ANYTIME
Deepak Pai, an engineering graduate and a postgraduate in management from United States, was working in Transport Corporation of India (TCI), the market leader in conventional transportation. He established Speed Cargo as an express cargo distribution company after leaving TCI. Speed Cargo, started with its head office at Hyderabad, as a small cargo specialist in 1989, upgrading itself to desk-to-desk cargo in 1992, cargo management services in 1995 and became a public limited company when it was listed in Bombay Stock Exchange in 1999. The company was maintaining a strong customer base of prestigious companies like Acer, Cadilla, Sony, Panasonic, Titan, Dabur and Hitachi to name a few.
Speed Cargo Limited (SCL), a leader in the express cargo movement pioneered in distribution and supply chain management solutions in India. It differentiated the concept of cargo, from conventional transport industry by offering door pickup, door delivery, assured delivery date and containerized movement. It had a turnover of Rs.3600 million in 2005-06. The company had a strong team of 6400 employees with the fleet of 2000 vehicles on road and an extensive network covering 3,20,000 kilometers per day and a reach of 594 out of 602 districts in India. In addition to this, it was having a well-structured multimodal connectivity and 6lakh square feet mechanized warehousing facility. Warehousing facilities were comprised of the most modern storied system and material handling equipment offering very high level of operational efficiency. The four modes of transport - Road, Air, Sea and Rail were seamlessly integrated, enabling SCL to effortlessly reach anytime anywhere.
The international wing of SCL took care of the SAARC countries and Asia Pacific region covering 220 countries with a specialized India-centric perspective. The company had gone online by connecting 90 percent of its offices to provide web-centric solutions to its customers.
The company also offered money back guarantee to express cargo services. The services offered were customized for corporate, small and medium enterprises, cluster markets, wholesale markets and individuals. The state-of-the-art technology made things easier for the customers whose cargo could be tracked and traced in the simplest manner, because SCL had an effective tracking system. SCL believed that best of technology enabled best of service, and its outlays on providing the IT edge had always resulted in innovative services and solutions. SCL, in its day-to-day operations, used technologically advanced equipments like Fork Lifters, Hydraulic Trucks, Hand Trolly, Drum Trolly, Rubber Pads cushioning, Taper Rollers to move big crates, color codes for identification to delivery what it promised.
Between 1989, when company was born, and 1995, SCL started a unique value added service called Cash-On-Delivery for the advantage of its customers. SCL introduced Call Free Number for the first time in the logistics industry in India. To establish largest network in air and to facilitate faster delivery of shipments, SCL entered into a tie-up with Indian Airlines in 1996; The Company introduced the concept of 3rd party logistics and later started offering complete logistics and supply chain solutions in 1997. The courier service Suvidha later rechristened as Zipp was launched in 1998. The company entered into a tie¬up with Bhutan and Maldives Postal Departments to expand its operations to SAARC countries in 1999. The Speed Cargo Development Center was set up at Pune in India for training of its employees in the same year.
An exclusive cargo train in association with Indian Railways between Mumbai and Kolkata was launched in 2001. Based on a survey conducted by Frost and Sullivan, SCL was conferred the Voice of Customer Award for being the best logistics company in 2003. After simplifying the internal process for faster and better communication, and a smarter way to work, SCL set up its corporate office at Singapore in 2003 to create an international hub with an aim to reach out to the world. The company introduced a mechanized racking system in the automated warehouse at Panvel (Maharastra) in 2004.
SCL was sensitive to the avenues where it could contribute to building a better society. Displaying continuous social responsibility, SCL associated itself with several community development programs and contributed generously to many social causes. SCL was the first to build makeshift houses for 400 families who were affected during a massive earthquake in Bhuj district of Gujarat in India during January 2001. They reached the devastated village the same day to provide food, clothes, medication and water to the affected people.
In 2003, SCL accepted to develop one of the government schools located at Banjara Hills in Hyderabad, and built a building with basic facilities like classrooms, staff rooms and toilets, and provided furniture for students and staff. The housekeeping and security of the school, which was now having 1100 students, was also taken care of by the company. After Tsunami, one of the worst natural disasters that struck South East Asia in December 2004 leaving over 10 lakh people dead and over 4 million displaced, SCL was on the rescue scene as it brought in food, water, clothing, medication, a team of doctors and cooks, and provided the affected people with essential utensils. After rehabilitating the people in Nagapattnam and Cuddalore, it took up the development of a high school in Nagore where 500 students came in from the Tsunami affected families. SCL also actively participated in Kargil contributions and other rescue and rehabilitation works in India.
LOOKING AHEAD
SCL believed that in the age of convergence, it had kept pace with time with its infrastructure, people and technological capabilities for moving cargo to its destination on time, by making intelligent movements in air and sea, as well as on road and rail. The company had experience of handling wide range of materials including confidential papers related to University examination and sensitive goods like polio drops and life-saving medicines. In view of the strengths of its competitors such as DHL, Safexpress and Blue Dart, the company had enhanced services with a greater focus on cargo management and customer satisfaction with the new operations backed by better strategic planning. To achieve its aim, SCL had strategically tied-up with Jubli Commercials, an lATA accredited freight forwarder, which started its operations as Air Cargo Agent.
The company was confident that it was set to become 24 x 7 one-stop solution provider for all freight forwarding services including customs clearance for international cargo. SCL having 40 percent share in express distribution business was developing a huge centralized warehouse on 22 acres of land at Nagpur in India. The centralized warehouse, which was about to be commissioned, was designed as a major hub or express distribution center for 200 smaller hubs as its spokes catering to the needs of its customers across India. SCL believed that it is a concept, a vision and an idea ahead of its time, which looked at a global perspective and was constantly reinventing itself in delivering the future of logistics.
Questions
1. What made SCL a leader in the logistics industry?
2. Discuss the strategies adopted by SCL for its survival in the competitive scenario.
3. Comment on the contributions of SCL to society.
4. What steps the company should take to globalize its network reach?
Discuss the strategies adopted by SCL for expansion.
CASE IV - LOGISTICS OUTSOURCING
Company Profile
Indian Steels Limited (ISL) is a Rs. 6000 crore company established in the year 1986. The company envisaged being a continuously growing top class company to deliver superior quality and cost effective products for infrastructure development. With major customers being from Public Sector Undertakings, the company has established itself well and is said to be considering its expansion plan and proposed merger with another steel making giant in the country.
In 1996, owing to the cut throat competition in the emerging dynamic global markets, ISL emphasized on both effectiveness and efficiency. The company strongly believed in focusing on its core competency (i.e. manufacturing of steel) and outsourcing the rest to its reliable partners. Outsourcing of its outbound logistics was one such move in this direction. ISL out sourced its stockyards and other warehousing services to a third party called Consignment Agent, who was selected on an annual basis through a process of competitive bidding. The CA was responsible for the entire distribution of the products within the geographical limits of the allotted market segment and was paid by the company according to the loads of transaction (measured in metric tonnes) dealt by him. The company also believed in maintaining long-term relationships with the suppliers as well as the buyers. It always prioritized the needs of its regular and important customers over others and this worked out to be a win-win strategy. The case brings out the model of outsourcing logistics the company has adapted for the enhancement of its supply chain competency and thus leveraging more on its core competency which led to increased productivity.
Indian Steels Limited (ISL) is a Rs. 6000 crore company established in the' year 1986. The company envisaged being a continuously growing top class company to deliver superior quality and cost effective products for infrastructure development. The company performed with a mission to attain 7 million ton liquid steel capacity through technological up-gradation, operational efficiency arid expansion; to produce steel with international standards of cost and quality; and to meet the aspirations of the stakeholders. The production started in the year 1988 and initially, it manufactured Angles, Pig Irons) Beams and Wire Rods that were mainly used for constructing roads) dams and bridges. These products were mainly supplied to Public Sector Undertakings such as Railways, Public Works Department (PWD) Central Public Works Department (CPWD) Rashtriya Setu Nigam Limited, Audyogik Kendra Vikas Nigam Ltd. and various foundry units. The company had its headquarters at Raipur with three stockyards (a kind of warehouse with a huge land to store the products).
The company has established itself well and is said to be considering its expansion plan and proposed merger with another steel making giant in the country. The company was awarded ISO 9001, ISO 14001 and ISO 18001 certifications. The temperature in the plant premises is reportedly about 6°C lesser than that of the township, thanks to the greenery being maintained therein.
Logistics Outsourcing
Outbound logistics which basically connects the source of supply with the sources of demand with an objective of bridging the gap between the market demand and capabilities of the supply sources was always a problem for companies operating in this industry. Consisting of components like warehousing network, transportation network) inventory control system and supporting information systems outbound logistics was always playing a key role in making the right product available at the right place, at the right time at the least possible cost. In 1996 owing to the cut throat competition in the emerging dynamic global markets, ISL emphasized on both effectiveness and efficiency. The company strongly believed in focusing on its core competency (Le. manufacturing of steel) and outsourcing the rest to its reliable partners. Outsourcing of its outbound logistics was one such move in this direction.
Recognizing the growing demand for its products from the big, diversified and geographically¬dispersed customers, the company started expanding the number of warehousing stockyards. From a humble beginning, the company today has 26 stockyards; most of them are outsourced. Each of the outsourced stockyards was managed by a third party, which the company referred to as Consignment Agent (hereafter referred to as CA) in the area. The CA was selected on an annual basis through competitive bidding process. The performance of CA was closely monitored by a company representative (full time employee of ISL working in the site of CA). The CA was responsible for the entire distribution of the products within the geographical limits of the allotted market segment and Was paid by the company according to the loads of transaction (measured in metric tonnes) dealt by him. Based on their sales turnover CAs were trifurcated into A, Band C categories. The CAs with a monthly turnover of Rs. 150-200 crore fell under A category) whereas those with Rs. 100 - 150 crore were B and less than Rs. 100 \ crore were C category.
In addition to the company representative) a team of marketing division operated in the town where, the site of CA was located. This department was responsible or estimating the future demand, translating it into orders and sending to the manufacturing plant. Material dispatch was done using either one or a combination of the two modes: Rail, Road. While using rail as the mode of transportation, the company had a choice to book a Normal Rake (a full train with about 35 wagons, each wagon with an approximate capacity of 60 tonnes) or a Jumbo Rake (a full train of about 52 wagons, each wagon with an approximate capacity of 60 tonnes). At times, the company was engaging the services of the CONCOR (Container Corporation of India) where a train of 62 to 70 wagons, each wagon with about 26 tonnes capacity was used for transportation. Instead, if the company decided to send the material by road, the company had a choice between Trailor (25-30 tonnes} and Truck (15-20 tonnes). The choice of transportation mode was based on the quantity of dispatch.
As soon as the material was dispatched from the manufacturing plant, the respective CA used to get a Stock Transfer Chalaan electronically through Virtual Private Network, which was developed by a professional software service provider. In-transit, monitoring was generally done with the help of Indian Railways, if the mode was Rail. Otherwise, truck/trailor drivers were contacted through mobile phone. Transit generally took five to six days, providing time for CA to plan for receiving materials. The CA used to utilize this time for arranging material handling devices like heavy cranes and required labour. The material thus unloaded was reaching the warehousing stockyard where CA was responsible for arranging the materials as per the warehousing norms of ISL.
The company broadly classified materials into Long Products and Rounds. Products falling into each category were further classified by their size, shape and utility and the company used a distinct colour code for this purpose. Each subcategory of material had a specific place for downloading. The company used Bin System for this purpose. While downloading the material in stockyard, the company norms insisted that CA arrange for providing Dunnagt Material. This enabled the CA to store material without 1 direct contact with the land surface and thus reduced the probability of material deterioration. Material was stored in the stockyard until an authorized representative of the customer used to come and collect it. While dispatching material to the customer, a Loading Slip was generated against the Delivery Order. The company" also believed in maintaining long-term relationships with the suppliers as well as the buyers. It always prioritized the needs of its regular and important customers over others and this worked out to be a win-win strategy.
Operational problems were majorly because of uncertainties in transportation, fluctuation in supply of electricity and the load bearing capacity of the soil in the stockyard. Some: more problems were encountered whenever there was a change in CA and these were overcome by training the employees of the new CA and keeping the old CA responsible for the: material in his stockyard for six months after the contract as well. Observations reveal that, at times there were situations wherein CAs had to do those things which they were not legally supposed to do (like subcontracting) because of the pressures mounted by political leaders with selfish interests.
Despite these problems, this model of outsourcing logistics was working out very well for the company. The practices, which were started in the year 1996 have sustained major changes in the environment and are being practiced even in 2006. It has enhanced the supply chain competency of the company by enabling it leverage more on its core competency, which leads to increased productivity.
1. Analyze the case in view of the logistics outsourcing practices of the ISL.
2. Discuss the importance of logistics outsourcing with reference to supply chain management.
3. Suggest strategies for further strengthening the supply chain of ISL.
4. The participants/students are expected to have a clear understanding of Supply Chain and Logistics Management concepts.
5. The issues involved in the case are Sales Forecasting, Strategic Sourcing, Selection of Warehousing Service Provider, Transportation Mode and other nuances in Logistics Management.
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