Material Management Cases

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Case : 1

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.

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 strategicimportance.

Objectives
1〉 To strengthen the technology base and thereby the capability to combattechnology denials. 1〉 To promote creativity and innovation and realise higher levels of operational efficiency through actionable learning 2〉 To attain and maintain world-class competitiveness by pursuing global benchmarks 3〉 To lay down plans and programmes for effective succession at senior management level 4〉 To consistently ensure a customer-centric organisational culture 5〉 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...
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