TCM Journey So Far EID Parry (India) Limited

Transcription

1 TCM Journey So Far EID Parry (India) Limited Cost Congress - Dec 17, Bangalore A Company with more than 225 Years of Legacy Thomas Parry arrived in Madras to establish the House of Parry The firm became Parry & Co in : East India Distilleries & Sugar factories ltd. bought 100% stake in Parry & Co. 1975: EID Parry incorporated 1981: EID becomes part of Murugappa group th Century 20 th Century 1990s 2003: Hived off farm inputs in to Coromandel Fertilizers 2004: Divests confectionary business to Lotte; Pioneering launch of branded retail sugar 2006: Divests Parryware to Roca 2008:Sugar refinery at Kakinada 2010: Acquired 4 Sugar factories in KN & AP. 2000s Present (2014) 1842: Set-up the country s first sugar plant at Nellikuppam 1848: Start of distillery operations EID was in varied biz. such as sugar, fertilizers, chemicals, sanitary ware etc. 1995: Start of bio pesticides 1997: Start of algal based Nutraceuticals One of the leading sugar producers in India with presence in the promising fields of Biopesticides and Nutraceuticals 2

2 Sugar Mill Distillery Ash Rectified Spirit Absolute Alcohol ENA Waste Water / Spent Wash Organic Manure Plant R & D bringing in new varieties to improve yield and Bio-compost disease free cane. Best agronomy practices are provided as a package to farmers which is core strength of EIDP. Manure 3 Input Sugarcane Fair Remunerative Price by Central Government State Advised price by State Government Command area control by State Government for Cane Procurement Rangarajan Committee recommendation for Pricing Output Sugar Essential Commodity (High weightage to WPI) Pricing indirectly controlled thru Govt. policy on import/export Recently Levy de-control ordered Compulsion on Jute Packing material - Obligatory Output Distillery Inter state sales not possible (State Govt. restriction) Ethanol Blending % Controlled by Central Government Output Power Third party sales controlled in TN Intra state Open Access Still not active in TN 4

3 Our Survival Equation : Cost = Price - Margin 5 Input & Output are controlled (directly & indirectly). Need to find a way to make money in a sustainable manner in a turbulent environment. One Off or Knee Jerk reactions to cost management do not provide Competitive advantage Need for a tool to have a Comprehensive & Sustained Cost Management Approach. Cost Management has to become a culture Needs to be prevalent at grass root levels rather than prevalent in few hands at the Top Risk has a huge cost. Need a tool to have Structured Focus & continuously evaluate Risk as a Cost & have a Risk mitigated Business Strategy. Operational excellence Challenge & Surpass the Industry & Internal best norms in a sustained manner. Sustainability - Key to decision making across value chain & its impact on cost Sustainable Sugarcane Initiatives (SSI) conserving water, soil, seeds etc Sustainable Sugar Supplier thru Bon-Sucro Certification. Energy Conservation (Water + Steam + Power) Environment Protection (Water/Air Emission) 6

4 Attended Last Cost Congress in Nov 2013 Got introduced to TCM as a tool for sustained cost management Discussion with CII-TCM and Introduction meet CII-TCM wing agreed to assess EID Parry NDA Signed off and assessment kicked off in Jan 2014 Assessment An important milestone in EID Two factories selected for Assessment Other functions assessment held in Mar 2014 Final report with Rating received in Mar Operations: Cost drivers (key efficiency parameters) managed thru strong monitoring system (SAP n SMS alerts) Considerable number of cost saving projects at plant level Total Loss parameter - closely monitored and reported. Key parameters monitoring on hourly basis thru SMS alerts Cane Development Clean cane monitoring to reduce Non-cane content Farmer level and plot level - cane yield data captured in CMS Procurement Volume based discounts and spares standardization by central purchase team Vendor managed inventory and jute bag price blocking strategy Procurement discounts captured in SAP and reported Strategy / Sustainability Strategic focus on growth drivers, efficiency drivers and capability drivers Sustainability : SSI, Bonsucro certification, water conservation, effluent and emission check 8

5 Strategy Strategic plans should translate into target costs/measures and deployed thru BSC Operations Cost impact monitoring and communication of cost drivers will improve the adherence Cane Development Possibility of recovery pre-assessment at field level can be looked at Costing Value chain costing Reflecting the premium Vs Cost at customer point Intra company benchmarking of process cost Reporting Enhancing reporting capabilities of SAP and minimizing excel usage. Structured reporting of cost savings thru standard MIS format Identify aspirational cost structure for Farmer and monitor at field level 9 Level 3 (Close to Level 4) 10

6 Modules We are good at Operational Improvements and its integration with TCM Modules - We can improve Formulation of business strategy and integration of TCM Sustainability and TCM Integrated data warehousing and data analytics, Cost centres Mapping of Strategic product/customer segment in TCM New Product Development Assessment Summary: Good and Not So Good 11 Opportunity to experience Level 5 Company CII-TCM wing organized for experiencing Level 5 Company Visited Subros Noida Plant in June 2014 Key Learnings from Subros Engagement of and support from Top Level Management Comprehensive & Integrated Approach to TCM Customised MIS integrated with SAP Improvement practices across value chain (QPCDMSE)12

7 To reach Level 4 by Close to Level 4 Focusing on Opportunities For Improvement Short term OFIs first priority Going for Level 4 TCM Enabled Level (15/16) 13 Business Strategy Vision/Scenario Planning Exercise BSC broken-up into targets Mapping Customer Segment in TCM Linking Cost to each Customer separately New Product Development Value Added Products Target Costing 14

8 Bonsucro Certification and WWF Sustainable Sugarcane Cultivation and Sugar Production MIS automation in SAP Signing off Monthly MIS by 5 Working days Dashboard on Operating parameters Bringing more focus on cost impact to ground level Recovery Pre-assessment Cane samples Big Mill Test Recovery Database Intra-company Benchmarking of Process cost Conversion cost (Distillery/Cogen/Sugar) 15 Thank You 16