If you ever take a road trip through the American West, you’ll notice a lot of things. Beautiful mountains, endless prairie, and arid deserts all provide a stunning backdrop. Enough time on the road, and you’ll eventually start to notice something else—cheaper gas if you pay with cash.
Automobiles companies are faced with the challenge of retaining market share by introducing new models and same time optimize cost to remain profitable. Companies have to think different, and contract manufacturing can possibly be the way to go.
Continue reading "Can Contract Manufacturing help automobile companies?" »
Automobile is a fiercely competitive industry, most companies are struggling to be in the BLACK, Ford and GM are registering losses year after year, but same time Toyota and Honda continue to register profits. What is it that they do differently? Are there things that we can learn? Yes, Toyota and Honda have managed costs better and use it to fuel growth.
Increased regulations and alternate fuel technology is going to take a lot of investment, therefore companies have to re look at their cost structures and generate enough profits for future investment.
Continue reading "Are Automobile companies doing enough to optimize Cost?" »
On 10th of Jan 2008 the world saw the launch of the cheapest car, not from Japan or Detroit (who are know as the technology leaders in automotive), but from India. This car is not only going to revolutionize the automobile industry, but also the entire manufacturing industry. This car is going to be an inspiration for many and is the best example of Innovation and optimizing cost to fuel growth.
The company undertook the transformation journey few years back when it saw huge losses of $110 million in 2001 and today is set to change the rules of the game with the introduction of Nano. The learning from this is that Impossible is Nothing and companies need to constantly innovate.
I am not sure I need to contribute yet another piece on the 'greening' efforts of the Global Auto industry, but let me try!
We have read numerous news-articles on the efforts by the major manufacturers to launch hybrid cars over the past couple of years. I am aware of a few models from Toyota that have hit the roads and seem to have found a strong 'green' franchise. General Motors, the largest car manufacturer worldwide (yet, with Toyota nipping at its heels!), has announced grand plans to launch an 'unplug-and-drive' electric hybrid, aptly called the Volt.
Continue reading "The Next Big Innovation in the Automobile Industry..." »
I was quite overwhelmed by the comments to my earlier post, here as well as offline! Most readers agreed that digital alternatives to cash are becoming prevalent. Many also alluded to the so called ‘unbanked’ segment of society and what service providers are doing (or need to do) to enlist them into the mainstream. That thought is an interesting lead into what I wanted to post as a sequel!
According to a 2004 Federal Reserve Board study, nearly 10 percent of American households are unbanked! One would assume that a developed economy like the US, with Banks at every street corner, would not suffer from such a glaring deficiency! It is this underserved segment that is now becoming the focus for some of the large financial institutions.
by Ajai Vasudevan, Automotive Solutions Practice Leader
When we sat down for lunch that day, it wasn't exactly the initial topic of discussion. But given the pressures on the North America auto industry, it was only a matter of time before the topic came up.
"How do we enhance our product development capabilities while speeding time to market and reducing cost," asked the engineering director of a venerable Detroit based Automotive Tier-1 supplier. While this happened several days ago, the words are still ringing in my head.
This is obviously the holy grail of automotive product development.
Maybe a day will come when customers will design their own cars - like they today happily "assemble" IKEA furniture at home.
That will effectively take care of at least part of the problem. However till that day of product development nirvana comes, more mundane solutions need to be found. Mundane? Very well!
The Product Development process remains one of the most complex automotive business processes. It is everything that automotive manufacturing is not. It is iterative, it branches out and congregates, it runs over an extended period of time. In short, it is quite different and hence requires a different approach.
The rapidly flattening world is opening up new vistas to innovate the product development process. Take Toyota as an example. While common wisdom conveys that there is an outflow of engineering jobs from the US, Toyota is turning the logic upside down. Its Design center in Detroit is hiring locally and growing fast. Toyota and Honda are opening new plants in the US and recently Kia announced opening a new plant in the US as well. It is remarkable that organizations based in developed economies are opening an engineering center in another developed country. What’s attracting Toyota? Talent. Experienced engineers who have spent a lifetime in automotive product development.
Another route is to leverage the global talent pool. Thanks to availability of connectivity, workflow tools and product data management systems it is now possible for an extended global team to pretty much act as one. This opens up the route to tapping a lower cost talent pool, running an extra shift and allowing the core team to focus on innovation. And, in the process, if the team comes up with new product ideas for the global markets. Now that’s a way to the holy grail!
by Sandeep Dadlani, AVP, Retail and CPG Business Unit
I looked in disbelief at the CIO of a small fast food chain when he asked “Can you help set the menus of all my fast-food outlets and manage the menus from Bangalore?”
No, he wasn’t talking about the menus that run some weekly batch jobs on his HP servers in his datacenter…He was talking about the actual menus with combo deals with fries or fruit salad as an option. And, to manage that from Bangalore would mean at least a few menu management experts who would take sales data from all over the world, analyze them, take inputs from the company’s menu experts and then set/reset the menus.
Of course it can all be done in Bangalore…that wasn’t the fascinating fact. The most fascinating thing was that the question was coming from the CIO and not the CEO. Such an activity should have been the CEO or CFO’s priority but here was the CIO taking it up in full earnest.
CIOs have always been challenged with being part of the business strategy and using IT to enable business. Their objective has been to listen to their business partners and partner with them on their business ideas to implement them. But the Flat World CIO has a bigger mandate…My last few meetings with leading CIOs of Fortune 1000 companies have revealed that the CIO is well suited to take on another role – that of a flat-world evangelist and champion, that of an originator of business ideas and this is not just about offshoring.
Take for example, the CIO of a large consumer products company who started throwing out ideas in our first meeting on how we could become the analytics engine for his category managers. By using our brand managers in different geographies to analyze sales data and spew insightful reports we could allow his category managers to “Make Money from Information” instead of getting stuck in myriad reporting capabilities (or the lack of it) within the organization and the geography. This CIO was again not limiting himself to offshoring but he was using his experience at offshoring IT applications and basic business processes like F&A and HR. This experience was helping him in thinking globally without limitations. I can say for sure that this CIO would be a true friend of the VP of Marketing because both have the same vision.
Or for example the CIO of a large retailer who eagerly looks forward to the next downturn in the economy where most of the competitors slow down in spending on new initiatives. This CIO actually picks up the pace during a downturn in terms of taking business ideas proactively to his business partners and investing in those ideas “while the competitors are sleeping” as he says. No wonder, this retailer is one of the most successful in its league. It knows how to “Win in the turns.”
All in all, the more forward-looking CIOs, lets call them Flat World CIOs, are taking on their roles seriously as flat-world evangelists. They are best suited to this role for the following reasons:
- They have been exposed to a more global environment more than other CXOs
- In most companies, the IT department today is the most multi-cultural and multi-geographic environment
- They have first access to most of the core information that runs the company
These flat World CIOs tend to be the first to take up new business ideas that address each of the four flat world shifts. In a sense, they are assuming the defacto role of CEO without any limitations or boundaries to their thinking. It is no wonder that these CIOs are known in the industry to be the most successful.
Sandeep Dadlani, from the Infosys retail and consumer products business unit, says that increasingly he has been seeing CIOs taking a leadership role in driving operational changes. I've asked him to share his thoughts based on recent discussions and meetings with client executives.
Sandeep Dadlani is an AVP responsible for strategic relationships for Retail & CPG business unit at Infosys. He has over a decade of operations, product management and IT consulting experience. He has been with Infosys for over 6 years. Prior to Infosys he worked with Citibank in India, transitioning parts of their cash management operations to their captive and managing some of their global cash management product portfolio. Sandeep holds an MBA in Finance from Bombay University in India and a Bachelors in Electronics Engineering from MS University, Baroda, India.
Cisco's Chief Globalization Officer Wim Elfrink says that Cisco plans to have at least 20% of its top executives working in India in the next three to five years.
Why? According to Business Week:
"One reason lies in the size of India's market. While Internet penetration in India stands at a mere 4.5%, the online market there is one of the fastest growing in the world and the Indian cellular market is white hot.
"The other issue is cost. Huawei can compete against Cisco on price because of its cheap talent pool. Facing those pressures, Cisco will find it hard to maintain its high margins unless it develops its own vast force of low-cost engineering talent.
"Cisco also wants to acquire the best Indian operations in its field to accelerate growth. As part of its ambitious investment plan, Cisco has set aside $100 million in a venture capital fund to buy out Indian companies. It has invested in a couple of outfits such as gaming destination Indiagames.com. (Cisco acquired Linksys, a home networking company, in 2003.)"
Yesterday after a dinner at a Bangalore restaurant, my colleagues and I were offered mints: miniature packs of 3 Tic Tac mints each!
The price on these packets for retail sale was 50paise (approximately a US penny).
I decided to do a comparison with US prices (I admit curiosity got the better of me). A Tic Tac box is available for 58 cents on Amazon if bought two dozen at a time, excluding shipping cost of course!. If I assume that each box contains 35 mints, I come up with approximate price of 1.6 cents per mint.
Interesting isn't it? The supplier is able to make a profit on these penny packets despite all the extra (though miniature) packaging and distribution costs.
To make the product affordable to millions of cash-flow sensitive customers, manufacturers package consumer products in single use packets -- everything from Tic Tac mints to shampoos and laundry detergent, or even a single text message sent across the country. The trick is in how to maintain profitability even as product sizes (and therefore transaction sizes) shrink to zero.
Motorola has recently launched its Motofone in India for Rs. 1700 (approx. US$40). What's amazing about this phone is not only its price, but that it is not a "stripped down" version. The phone comes fully loaded with features that people anywhere in the world would want: durability, extra long battery life, screens desgined to be sharp in daylight combined with stylish design.
This is innovation.
Watch out, Nokia!
