Case Study 4 – Sustainable Organization

Introduction

The company was established in 1981 into Manufacturing of Fabrication components to OEM’s and having a present turnover of Rs. 20 Crores. Their main business is to supply products to Mechanical Sheet Metal Fabricated Products. The Owner Mr. Arvind Khandelwal has started is business with one unit at Bhandup and then over the years the company has a world class manufacturing unit at Nasik. Mr. Arvind Khandelwal is very committed person and very quality conscious. He has himself developed with growing pace and learned a new technique of business to ensure the customer requirements has been met. After handling the business of over 20 years to his two sons their business had a very good technological enhancement by bringing automated machineries and advance technology. With the level of commitment and values transferred from father, Mr. Darshan and Druv had taken over the business very well. With total investment of around 10 crores in new technology, they have reached to a sale of around 20 crores in 5 years.

 

They have increased their man power from 20 peoples to 150 peoples and also appointed managers, supervisors and executives at various levels. Both the brothers were deeply involved in day to day operations and there was no review mechanism with all levels of employee.

They have started implementing ERP with the help of all team members They have also started their new unit nearby with huge investment to scale up their business.

Scenario

Suddenly the business started falling down and first indication of decline was the cash flow which was usually very well maintained was a major crunch. The productivity has gone down and the customer was not happy with the product quality and delivery The value for money was not felt by customer. The internal iteration rate has also gone up. They have started implementing ERP which got delayed due to multiple problems in the organization. Some of the multiple problems were:-

 

  • There was stock mismanagement
  • High rejection and customer recall and more customer service cost
  • The profit has shown the negative trend and they have to borrow the finance to manage working capital.
  • The organization was managed by two brothers and there was second line available but there was no involvement of employee
  • The costing was never done since last 5 years. Supplying in old rates only
  • The future financial planning was exuberant against the actual reality, imbalance financial equation
  • The cost of manufacturing was high
  • There was a gap in thought process between two brothers but it was never brought on surface
  • Customer dissatisfaction
  • Both the brothers were overburdened with the operational load
  • Accountability parameters were not set for second and third level employee

Change Management Process

Gap Analysis (System)

Gap Analysis (Thought process – Variance between Strategy and deployment)

  • Changing thought process – Management/ employee
  • Discipline
  • Prejudiced mind – no 360 degree review
  • No justification in target setting
  • Roles and responsibilities
  • Insecurity
  • Trust
  • No review mechanism
  • Proper selection process
  • Openness to learn new techniques
  • Delegation
  • Lot of changes in policies very frequently
  • Lot of improvement initiation in less time and not bothered about the employee readiness
  • Following customers, competitors and neighboring factories for implementing change, ERP etc
  • Lot of restrictions and controls on employee for securing technology (SMC) – which they feel like bringing more discipline
  • Wrong Value system transferred to managers
  • Regular interaction with management members to initiate change management
  • Define Strategy and road map for change
  • Define Organization structure
  • Define roles and resp.
  • Process Mapping
  • Regular meeting with HOD
  • Define KPI for each process (MIS)
  • Define Time line to achieve KPI
  • Define Review mechanism with HOD, Management members
  • Document Process mapping (SOP, procedures)
  • Hand over the Documents and MIS to management
  • If required initiate the ERP implementation