Case Study 1 - Customer Centric Materials Management -A Case Study of ECIL
EClL-An Overview
Electronics Corporation of India Ltd.(ECIL) is a Public Enterprise under the
Department of Atomic Energy established with the purpose of supporting India’s
Nuclear Power Programme and help the country achieve self-reliance in professional
electronics. Over the years the company evolved itself into a multi-product and
multi-disciplinary organisation with focus on Computers, Control Systems and
Communications. In the post-liberalisation scenario, the compulsions of global
competition on local soil guided its Vision, Mission and Objectives as follows:
Vision
To help the country achieve self-reliance in Strategic Electronics.
Mission
To strengthen the status as a valued national asset in the area of Strategic
Electronics meeting the requirements of Atomic Energy, Defence, Space, Civil
Aviation, Security and such other sectors of strategic importance.
Objectives
1. To strengthen the technology base and thereby the capability to combat
technology denials
2. To promote creativity and innovation and realise higher levels of operational
efficiency through actionable learning.
[Link] attain and maintain world-class competitiveness by pursuing global
benchmarks
4. To lay down plans and programmes for effective succession at senior
management level
5. To consistently ensure a customer-centric organisational culture
6. To achieve steady growth in business performance and generate reasonable
internal resources
The operations are therefore focussed towards meeting the requirements of
Strategic Electronics in the Nuclear, Defence, Security and such other sectors of
National Importance.
The Crisis
The post-liberalisation period of 90s was characterised by intense competition from
both the MNCs and private sector. The impact of the globalisation process and the
sanctions in the wake of Pokhran-11 experiments have brought the company to the
brink of sickness in 1998-99. ECIL suffered a loss of Rs.10 crore in 1997-98 and a
substantial loss of Rs.60 crore in 1998-99. The networth of the company was badly
eroded and ECIL had to be reported to BIFR.
The Initiatives in Materials Management
The company had to initiate a number of innovative measurers to tide over the
crisis. Material costs constituting around 55-60 % of the total cost, it became
imperative for the company to introduce a host of innovative practices in the area
of materials management. These initiatives need to be in consonance with the
nature of global electronics business characterised by high rate of obsolescence,
falling prices, high quality inputs and global sourcing. More over the business
environment of ECIL is different even from other PSUs as there is no assured
market, customer-driven requirements and threat of denials. It is against this
background that the entire supply chain is addressed and briefed below are the
salient aspects of this process.
Supplier Communication
It was ensured that the requirements of the customers of ECIL are clearly
communicated to the suppliers, thus making the latter jointly responsible for
ensuring customer satisfaction. This is done through constant touch with the
suppliers to indicate the priorities through written and verbal means and by hosting
vendor meets Vendor Development and Quality Assurance
The suppliers were continuously provided all the support during product
development and engineering, prototype testing, evaluation, qualification and
guidance in the implementation of ISO 9000 Quality Management system and other
industry standards and practices. Emphasis was on prevention rather than
detection and correction. Suppliers are encouraged to imbibe the culture of
‘Ownership of Quality’ as?
Inventory Control
The scheduling of placement of orders and receipt of materials was streamlined to
ensure efficient inventory management covering such requirements as timely
availability of material, minimisation of waste and surplus due to obsolescence etc.
Negotiations and Payments
Suppliers are involved right from the tender stage to offer the most competitive
terms to the customers in terms of quality, cost and delivery. Mutually beneficial
payment terms are negotiated and strictly adhered to.
Implementation of IT
All the processes involved in Integrated Materials Management are fully
computerised for speedy disposal of material requisitions, resulting in substantial
reductions in lead times across various operations.
The Results
These simple intiatives were implemented effectively resulting in incredible results
that culminated in the historic turnaround of the company that brought wide
recognition and national awards like SCOPE award for Outstanding Performance and
Contribution to Public Sector Management. Specifically the following achievements
were realised.
Between 1998-99 and 2002-03
[Link] shot up from Rs. 250 crore to Rs. 1000 crore
2. Profitability reversed from a loss of Rs. 60 crore to a profit of 130 crore
[Link] increased from Rs. 7 crore to Rs. 309 crore
4. Loans Outstanding and Statutory Outstandings became nil
5. Inventory levels and Sundry Debtors demonstrated efficient Working Capital Management
6. Substantial cost Reductions were realised through negotiations and improved quality levels
across various processes
7. Procurement lead-times reduced substantially from about 60 days to 30 days
8. Customer Satisfaction Index improved phenominally from 66% to 95%
9. MoU rating of ’Excellent’ has been achieved and is maintained and
10. Image of the company enhanced remarkably.
Future Plans
The multi-disciplinary competencies and capabilities of ECIL coupled with the
Strategic Sectors it has chosen, is bound to give the company a competitive
advantage to succeed in the national market but explore avenues in the
international market. Many of its products have been identified for export
promotion and the brilliant performance of the Electronic Voting Machines in the
recent general elections established its export worthiness with many countries
evincing interest in the product. While all the processes under materials
management are fully computerised, plans are underway to install a fully IT
enabled Supply Chain Management including e-procurement. The company is fully
aware of the competitive global environment surrounding it in the high technology
electronics and is focusing continuously on enhancing its technology base and
enrichning its skill base to strengthen its status as a valued national asset.