Published on July 29, 2019
In supply-chain parlance, Theory of Constraints (TOC) refers to identifying constraints and managing them to ensure the right inventory and material flow in the right stocking point (stores and warehouses) at the right time. To know how Tata companies are effectively using this aspect of TOC, a seven-member delegation from Voltas (UPBG, DPG & M&CE), led by C Kamatchisundaram, visited Infiniti Retail and Titan for a two-day Excellence Practice Implementation Champion (EPIC) Best Practice sharing session.
Voltas employees visited the Infiniti Retail office in Mumbai on July 18, 2019. In 2013-14, Infiniti Retail’s business was threatened by the ‘deep discounting’ model adopted by online shopping players. To compete against them, Infiniti Retail decided to embark on a transformation journey and identified ‘demand forecasting’ as one of its primary focus areas. Alongside other initiatives, Infiniti Retail chose to adopt and customise the TOC supply chain model, developed by Goldratt Consulting for Titan. The online tool helped Infiniti Retail change its business model and optimise inventory by reducing product shortages, decreasing merchandise overstock and improving inventory turnover.
Stakeholders at Infiniti Retail shared the approach towards handling of slow-moving SKUs, new product introduction strategies, the optimum product range for each store, and their buying strategy. The delegation from Voltas received insights on granular details, including time taken to kick-start the project, implementation period, total and software cost, return on investment and vendor negotiations.
The Voltas delegation visited Titan in Bengaluru on July 19, 2019. Titan’s supply chain mechanism, in the initial days, was managed exclusively through forecasting methodology. It led to high inventory cost as each store had to maintain an inventory of thousands of SKUs against average daily sales of around 50 SKUs. Further, with the periodic introduction of new products, it was imperative to ensure the right product variant at the right store. To overcome the incumbent problems, Titan implemented Goldratt Consulting’s TOC solution to accelerate its supply chain responsiveness and improve inventory management. The use of TOC helped Titan reduce its inventory turnover and improve efficiency.
In terms of intangible benefits, use of this approach helped the company to continually refresh its product portfolio and gave a fresh look to the stores, apart from leading to a motivated team of store managers and staff. It, in turn, ensured data-backed decision making at the store level.
People from Voltas found the visit an exceptionally enlightening one and were positive about exploring the feasibility of the tool to improve its supply chain processes.
About the EPIC Programme
EPIC carries forward the Tata Best Practices Programme by helping companies adapt Best Practices from the group through a structured collaborative process, under the guidance of Subject Matter Experts (SMEs) from Best Practice organisations. EPIC is a platform that brings together the provider and the receiver companies together to enable successful adaptation and implementation of best practices.