Managing
profits
The
Machinist spotlights CII’s Cost Conclave 2003 that presented a paradigm
shift from cost management to profit enhancement
The
Cost Conclave 2003, a function organised by CII on October 16-17, 2003,
in Mumbai, addressed the need to shift focus from mere cost management
to managing profits and discussed the emerging issues of enhancing profitability.
Dr Vijay Govindrajan, Professor of International Business and Director
William F Achtmeyer, Centre for Global Leadership, Tuck School, addressed
the Cost Conclave on the topic ‘New paradigms in strategy: Implications
for cost management’.
One
of the key messages that emerged out of the Conclave was that the strategy
for future lies in being inherently non-linear, being expert in managing
operational challenges, allocating resources to streamline the future
and outperforming the desired aspirations. The event gave a clear verdict:
While focusing on the present, the companies should simultaneously create
their future. However, the present should not become the hurdle, for
future strategy and growth.
COST
QUOTIENT
Four questions determine if a firm is using
interorganisational cost management:
• Does your firm set specific cost-reduction
objectives for its suppliers?
• Does your firm help its customers and /
or suppliers find ways to achieve their costreduction
objectives?
• Does your firm take into account the profitability
of its suppliers when negotiating component pricing
with them?
• Is your firm continuously making its buyersupplier
interfaces more efficient?
If the answer to any of the above is no, your firm is
not taking full advantage of interorganisational
cost management. It risks introducing products that
cost too much and are not competitive. |
Every
strategy starts decaying the moment it is implemented. Hence, it is
essential to be innovative in one’s approach and envision the future.
Some of the issues brought to the fore were the slew of management orthodoxies
that Indian companies need to forget and instead reinvent their strategy.
They need to start rethinking their core strategy by inventing next
best practices, establishing bottom-up strategy making, setting unrealistic
goals, focusing on leading customers and by decentralising resources.
With
the Indian market gaining ground, its potential needs to be tapped.
Low labour cost, high productivity, formidable infrastructure and political
stability are the key drivers to promote the brand – ‘India’.
Globalisation
is the need of the hour as it not only offers economic progress by increasing
trade in goods, services and capital but also assures global peace.
The conclave focused on the need to look at the industry’s cost, revenue
and profit structures in order to provide a strategic direction to the
organisations. The need to align resources to offer value-added products
and services and capacity creation was also underscored by some key
speakers.
The
other industry veterans who addressed the Conclave were Prakash Bhalerao,
Executive Director, Bharat Forge; Sai Prakash, Head (Logistics), Asian
Paints; R C Nandrajog, Vice President (Finance), The Tata Iron and Steel;
G Slinderraman, Head (Sourcing and Quality Functions) Godrej & Boyce
Manufacturing; N Ravichandran President (Operations), Lucas-TVS and
V Jagannathan, Head (Programme Management), Mahindra & Mahindra.
Also
present at the event were Bal Palekar, Head (Marketing), Eureka Forbes;
Siddharth Shankar, Head (Marketing) and Vice President, Associated Cement
Company; Rajiv Bakshi, Chief Executive Officer, Tata Auto Plastic Systems;
Bhavna Doshi, Head (Taxation), KMPG; Raja Ramana, Global Head (Business
Solutions), Tata Consultancy Services and Tushar Jani, Chairman, Express
Industry Council of India.
.........CONTD
