Turnaround at Rockers Inc.

1. Leadership Meeting to Assess the Situation

The more Jim, MD of Rockers, and his team thought about it, the more convinced they became.
Rockers has very little choice, but to rejig its business model and leap frog on many frontiers, if
it were to regain financial strength and retain market share. The situation demanded a whole
new way of collaboration across the value chain, integration of business units, adoption of
technology, and above all dealing with customers.
Several questions still remained to be answered, like: What is the competition up to? Where to
begin from? Which areas to focus on? What practices to adopt? The team decided to hire a
consulting firm to conduct a study, come out with the recommendation and partner during the
implementation. They decided to form a core team for internal assessment before initiating
this.
The meeting was over, but Jim was re-thinking the feedback from various functional units,
which were as follows:
Good products and extended warranty are no longer enough to win the game. Customers
want end-to-end solutions and even beyond. They want integration of products and systems
into their web- intelligent solutions.
Customers want unique ownership experienceEveryone wants user-friendly, quick fast, real-
time, one-stop solution.
Our products are good. We can price them higher provided we have bundled them with
services.
Providing services are different from selling products. It is nightmare to meet service levels for
national and global customers without systems in place. Co-ordination is draining energy of our
team-members.
Nothing else makes sense if the consumer-whether industrial or domestic isnt happy. We can
go on ploughing money into R&D, but it will not help. We have to understand our end-users
better, put them at focus and align our business models.
Our margins are declining. Partly this is because of inefficiencies in operations. Some facilities
are short of factory space to store products and some are underutilized.
Business Case

Many of our suppliers are not aware of the quality requirements. Rejection of the raw material
on account of quality or quantity deviations is increasing
Recently, we acquired companies to fill the gap in product-portfolio. It is good news for
business but our IT is not really kicked off. Different versions of ERP- supply chain systems, PLM
and CRM are running in different enterprises. We are working in Silos! Every time we need to
report performance to the board, we need to collate information from various branches and
then slice and dice for insights. Lots of efforts are going waste.
Jim is convinced that Rockers is in real need for re-engineering in the business processes and
relook at the technology strategy digitizing the processes to realize the value from its assets and
be competitive in the market place.

2. About the Company
Rockers is a leading company operating in two segments: Power Systems and Industrial
Systems. It has manufacturing operations in 26 countries and presence in over 100 countries. In
FY 13 it had turnover of USD 21.6billion.

2.1 Power Systems
This unit designs, manufactures and markets the electrical products and services related to
power generation, transmission and distribution. Its power systems include Generator Sets,
Power Plant Instrumentation Control Systems, Medium and Low voltage Switchgears,
Switchgear components, Transformers, Circuit breakers, LV switches, and Panel Products. The
production facilities are located in Belgium, Canada, Hungary, India, Indonesia, Ireland, France,
UK and USA.
Customer base: Data Centers, Mining, Marine, Oil and Gas firms, and Industrial users
internationally.
Units performance is below par since 2011. Return on assets has been eroding. Operating
margin was negative in FY-13. This performance is the result of mix of internal and external
factors.
The external factors are driven by the changes in customer expectations and technological
landscape. Customers no longer want just products. They want integrated solutions customized
to their needs turnkey solutions, services to optimize performance, reliability and efficiency,
while minimizing environmental impact. Many demand risk sharing service contracts.

Industry is also witnessing an increasing focus on using the Digital Technologies to build an eco-
system of smart applications and services. Other external factor that is hitting the margins is
the rising cost of the material inputs and quality issues in raw material received from the
suppliers. There are instances when the commodities are being shipped without proper
inspection, and there are many instances of incorrect quantity and wrong parts being received
at the company stores. Some of the suppliers are not ISO certified and there is low awareness
of the companys quality requirements among suppliers.
Then there are internal factors -operational inefficiencies delaying the production, high
inventory levels blocking the working capital, underutilization of the capacity in some units
increasing overheads, and high rejection rates of the products, intensifying the problem. There
were instances when delays in production led to delay in supplies and imposition of liquidated
damages by customers. In some cases products got rejected due to improper design against
order specifications received.
Recent acquisitions by Rockers:
1. A Local US based firm, specialist in IP based equipment diagnostics tools and technologies
hardware and software capabilities, for Power Gen equipment.
2. A top grade privately held firm providing field services each in US, Canada and UK. This firm
has certified technicians, licensed engineers and professional support personnel trained on
Power Gen Equipment and Industrial equipment.

2.2 Industrial Systems
Product Portfolio includes electric motors, turbo chargers, industrial engines, alternators,
drives, and SCADA systems.
Major customers for the unit are: Construction firms, Compressor OEMs, firms in the business
of Rail, Marine, Oil & Gas and Defense
The Industrial business has grown over the years through the introduction of new products for
different markets-product improvisations, adaptation to local markets and launches. Rockers
need to continue its focus on the technological innovation for continued expansion of the
product range to serve the global and local markets. It has to focus on developing products that
are compliant with the energy emission regulations and high on efficiency. Challenge however,
is to standardize the process of building new products say turbochargers across different units
to reduce time to design new products and product development cost.

Rockers also need to re-look its business model to enhance the customer experience. It has
been focusing on traditional model of selling the products through its dealers and providing
after-sales services on demand. But, in present times, the customers of Rockers demand one
stop solution to their needs and reduced Total Cost of Ownership. Leading players are providing
various preventive and predictive maintenance services, asset management etc. with the goal
that their customers have high equipment uptime and reduce overall cost of ownership. Many
leading players are even providing technical consulting services regarding product sizing, energy
management etc. Industry is also witnessing an increasing adoption of digital technologies to
collaborate with service providers/dealers to provide services to the customers. These
technologies enable improvement in efficiency and effectiveness of the field staff, among other
advantages of increasing throughput.
Like Power Systems unit, this unit is also facing issues in supplier management, quality issues of
incoming material, piling up of inventory and quality issues of finished goods.
Recent Acquisitions by Rockers:
1. A Swedish group, a power electronics and engineering company engaged in the
manufacture of variable speed drives, soft starters, shaft power monitors.
2. An Indian firm into SCADA and Industrial Drives
3. A Privately held consultancy firm providing engineering solutions in condition monitoring
to Industrial equipment including noise, vibrational, structural and process analysis.
3. Disparate ERP systems posing challenges for both the units
Acquisitions and partnerships have been the growth vehicle for all the three Units. While this
was great a news for the business, the companys IT system were not really kicked off. Besides,
some subsidiaries are still following many legacy applications. As different flavors of ERP, Supply
chain systems, CRM and PLM are running in the firm, it is getting difficult to manage disparate
systems and operations. Inter-business unit information exchange is becoming a nightmare.
The company is not able to take advantage of economies of scale for the divisions to
complement one another in a better way. For instance, Mexico firm has a process for cost
reporting that is different from the one in India. Because of this decentralized system, it takes a
lot of time to collect the information.
Another problem is the collation of the data for reporting to the management as concerned
person should be present to share the information. If the concerned person is not present at
the site, the data cannot be collected and reporting of the same to the management becomes a
nightmare. The work has to be done at various locations, thereby increasing overall workload.

Without instant access to the information across the value chain, business capabilities are
getting diminished. For instance, in a time when companies are approaching customers
proactively, the company is reactive to customers (i.e.) they rectify the problems in the product
only when the customer informs them.
4. Key Conclusions from internal assessment
Jim and his team completed the internal assessment and derived the following key conclusions:
1. Multiple ERPs are leading to the integration challenges like multiple business processes,
lack of business intelligence and decision support system.
2. Take measures to improve productivity and reduce cost to improve operating margins
3. Develop strong and collaborative relationship with suppliers to reduce cost, streamline
operations and minimize defective products.
4. Enhance customer experience- understand end-users, provide products and services as
per their requirements at right pricing.
5. Transform the service model, from break-fix support services to the one where services
are seen as strategic differentiator. It has to venture to the service areas of improving
intelligence around the use of product/service, and providing best-in class preventive
and predictive maintenance.
6. Adopt digital technologies to:
Enhance customer experience
Increase efficiency and effectiveness of the field service force (firms it has
recently acquired)
Develop smart applications and services for its customers

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Rockers has given an opportunity to TCS to respond to their request for consulting engagement
and partner during implementation. You are leading exercise to respond to the request. Put
your thoughts together to address the problem in hand articulating the following:
1. Create product- market segmentation for Rockers as a whole and the key business
units? Identify the common & different aspects of the business units in terms of
segments, channels, product & service characteristics, buying behavior / criteria in each
segment etc.
2. Prepare a market scan- key success factors, key business drivers, competition analysis-
key strategies, adoption of new age technologies, new business models etc.
3. What would be your strategy to approach the key conclusions from Jim and his team at
the end of the case- Is there a need for a different IT strategy? Are there any elements
of new age technology that can help Rockers establish competitive advantage, and take
them well ahead of competition?
4. Develop a road map to implement the same.
5. What criteria would you use to develop a business case to justify the above? Develop a
business case making assumptions as necessary
6. Bring out a brief executive summary response covering all the above elements
Note:
1. Make necessary assumptions especially around technology portfolio, competitive
environment or financial estimations. The Focus is more on thought process than the
accuracy of numbers.
2. Statistical data is given in the appendix.
3. Weightage will be given to :
a. Relevance to the questions asked
b. Relevance to the Manufacturing Industry and Practical application
c. Coverage of pointers in the case study
d. Power Messaging techniques
e. Overall approach to solve the case study

Deliverables for Round 1
1. Blueprint of the solution to the case study in not more than 12 slides (excluding the title
slide and thank you slide) covering all the points: 1-6. Include notes to the slide
wherever applicable.
2. Two page executive summary response for point 6. Insert this summary response in the
slide for Executive summary.

3. Format- PPT/ PDF
4. Font Type-Times New Roman/ Arial/Myriad Pro/Calibri; Font Size-12/14.
5. Submit the response in the submission template available at the link below:
Nextstep > Campus Commune -> Click on Casewiz Banner -> Related Communities (at
right side) -> TCS Casewiz Manufacturing Unit
Deliverables for Round 2
1. Solution to the case study in not more than 10 pages (excluding the title/cover page)
2. Format-Word/PDF
3. Font Type-Times New Roman/ Arial/Myriad Pro/Calibri; Font Size-12/14
4. Submission template will be shared with those qualifying for the Round2.
Deliverables for the Grand Finale
1. Solution to the case study in not more than 10 slides (excluding the cover/title slide and thank
you slide)
2. Format- PPT/PDF
3. Font Type-Times New Roman/ Arial/Myriad Pro/Calibri; Font Size-12/14
4. Submission template will be shared with those qualifying for the Grand Finale.



5. Appendix
5.1 Company Performance over Last 3 Years (in USD mil)
Table 1: Company Performance over Last 3 Years

31-Dec-13 31-Dec-12 31-Dec-11
Revenue
21634 23275 21997
Net Income after taxes
-68 767 1934

5.2 Important ratios over last 3 years
Table 2: Important Ratios over Last 3 Years
31-Dec-13 31-Dec-12 31-Dec-11
Gross Margin
29.38 30.2 35.76
EBDITA margin
2.29 6.55 13.05
Net Profit Margin
-0.3 3.32 8.88
COGS/ Revenue
70.62 69.8 64.24
SGA Expenses/ Revenue
22.3 19.9 18.92
Days in Inventory
61.11 56.08 62.71
Days Receivables
outstanding
113.42 110.29 97.79




5.3 Business Segment performance as on 31-Dec-13
Table 3: Business Segment performance as on 31-Dec-13

Revenue in
USD mil
Revenue
share
Operating
Margin
USP Channel Industry
position
Power
Systems
15983 74% -1.5% Own
product,
R&D
capability
Direct &
Agents
3
Industrial
Systems
5651 26% 10.70% Own
Product,
R&D
Capability
Direct
and
Agents
4
21634 100%

5.4 Operating Margin (in %) for Business Segments over last 3 years
Table 4: Operating Margin (in %) for Business Segments over Last 3 Years

31-Dec-13 31-Dec-12 31-Dec-11 Benchmark
Power Systems
-1.5 3.5 12.4 14
Industrial Systems
10.7 11.6 17.6 18

5.5 Return on Assets over last 3 years
Table 5: Return on Assets over Last 3 Years

31-Dec-13 31-Dec-12 31-Dec-11 Benchmark
Power Systems
-1.7 4.5 17.2 20
Industrial System
16.7 17.4 37.8 40



5.6 Performance by Geographic Segment over Last 3 Years
Table 6: Performance by Geographic Segment over Last 3 Years
Geographic Segment 31-Dec-13 31-Dec-12 31-Dec-11
United States 29.00% 27.20% 23.80%
Europe 34.40% 35.80% 38.60%
Asia 26.80% 27.30% 26.70%
Middle East and Africa 10% 9.70% 10.90%

5.7 Industry Position in various Geographic Segments
Table 7: Industry Position in various Geographic Segments
Geographic Segment Power System
Industrial
System
United States 3 4
Europe 3 4
Asia 4 5
Middle East and Africa 4 3