Conclusion

Issues
• The company, since its inception twelve years ago, was making loses

• Current market trends like shrinking product life cycles, increased product
life cycles, increased competitiveness in prices, product mix , and varieties,
are affecting an organization’s ability to compete.

• The company’s 70% of the cost came from SCM

• Another focus is reducing waste in the supply chain and inputs through
value engineering.
 Solution
• The company made dedicated efforts to reduce cost and
increase speed and efficiency, to achieve turnaround

• To accomplish this, MICO focused on supply chain elements

such as
1. Indigenization and ancillarization
2. Reduction in material cost
3. Localisation
4. e-sourcing
5. Reducing time to market
6. Supplier base and logistics optimization for cost reduction
 Tangible and Intangible benefits
• Indigenization and ancillarization
- production cost reduced from 12-13% and production doubled

• Material cost reduction

- cost cutting measures led to 8% reduction in material costs

• Export promotion
- export turnover increased
 Contd…
• Reduction in time-to-market
- reduced lead time for development for products from 90 days to 38
days. Hence their market share increased from 8% to 23%

• Optimization in supplier base and strategic sourcing

- this meant reduction in terms of space and complexity in
supply chain

• Optimization in logistics for cost reduction

- reduced logistics cost by 15%
 Effects of this project
• Reduction in material cost by 2-3%

• Reduction in inventory levels and space by 10% and 20%

respectively

• Reduction in cost of manpower by 30%

• Increase in overall logistics operating efficiency

 Business turnaround
10

0
2001 2002 2003 2004
-5
Column2
-10

-15

-20

-25