Cost reduction is dependent on the attitude of mind

A lot is discussed about the cost reduction strategies. During the days at the organisation where I worked, a lot of talk would revolve around cost reduction and how that can be achieved.

Today's economics class laid a stepping stone for me to think the cost reduction altogether from a different angle. Though this examples might look simpler, but they have been effective in reducing or saving the cost significantly.

Ambuja cements in Gujarat had to transport large consignment of cements to other parts of the country. With the increase of oil price, the cost incurred in the road and rail was on the increasing trend. In order to mitigate the effect, they bought ships and barges in order to transport consignment of cements to other places like Mumbai, Managalore, Cochin, Chennai and Visakapatnam. Their thought process of purchasing ship and transferring huge consignment provided a cost-effective solution for them.

Another example is realted to John D. Rockefeller, who was an oil magnet in US during late 19th century. While going around the refinery, he moved into the production division. In those days, men were involved in filling the oil in the barrel and riveting the barrel with nails. Rockfeller noticed that ten nails were used for riveting the barrel. He enquired the use of 10 nails to the employee but of no use. The research team and the production manager also were of no help in providing answer to him.

Rockefeller ordered his employees to rivet using only 7 nails and saw that the oil spilled over. Then he asked them to use 8 nails. The oil did not spill but there was seepage if it is rolled across or handled roughly. Later, the use of 9 nails solved the issue of spilling. Rockefeller patented the use of 9 nails as soon as he returned to New York, his hometown. We would all be surprised that by eliminating the use of 1 nail per barrel saved them thousands of dollars for the firm. One would not have expected such a saving !!!!

How come printers in Sivakasi are more effective and able to offer service at lower cost? Quite a huge number of printing works are being done at Sivakasi. Lets see why? The printing operation consists of using 4 colors. The basic three colors: Red, Blue, Yellow. The fourth color Black is used to increase the depth in colors. The printing rods are used for this operation and depending on the color required, the rods would be setup. If another job requires different coloring, the color composition must be setup different and the rods has to be cleaned thoroughly. The cleaning of rods between the two jobs require close to 2 hours and effective cleaning is required. This process is known as Make Ready Time. Eventually there is a loss of time.

This hurdle is overcome in Sivakasi by using 4 machines simulataeously. The 4 machines would have only one color (red, blue, yellow, black) setup respectively. Lets say a job printing that required only combination blue,red and black. They would use the machine with Blue color for printing the blue, followed by red and then black. Hence, there would not be any stoppage in between. The machine would be running continuously for 24 hours and produces more output at any given time.

Again, its all the way we look at things. Lets all think to reduce cost effectively and efficiently, rather than cutting on the coffees or other freebies offered to the employees, as it being done today. :-)

Understanding Individuals

Oh!!!! What is there to understand about individuals??? Why should we understand about individuals?? The understanding of an individual helps to be a better manager and leader.

Another question crops up with respect to an individual? What is a personality?
It can be defined as the combined answer of the following two questions:
1) Who you are? and 2) How you need to be perceived by others?

Also, the interpersonal communication and relationships of the personality can be understood with the help of following tool: Johari window.

During 60's and 70's, the person is determined to be smart and intelligent if he had IQ and analytical skills. At a later stage, the researchers came up with a finding that a person should also possess the Emotional Quotient (EQ). Not stopping with IQ and EQ, they determine two other quotient: Social and Spiritual, required for a personality.

This can be put up as follows:
Personality = IQ + EQ + SQ + SQ.

The following attributes are vital for a personality: Attitude, Traits, Values, Habits and Behaviour.

Tit Bits

Some tit-bits

Seven habits of highly effective people. These were taken from the book written by Stephen R. Covey:
1. Be Proactive
2. Begin with the end in the mind.
3. Put first things first.
4. Think Win/Win.
5. Seek first to understand, then to be understood.
6. Synergize.
7. Sharpening the saw.
All the above habits were described in a single book.

Covey came up with a book on eight habit. The habit takes a person from Effectiveness to Greatness - the habit is "Trust".

General Electric is the name of the organisation earlier knows as "Edison Electric".

Interpersonal Skills Important??

Today happened to be beginning of a new subject in my term 1. And the new subject is Interpersonal Skills and Organisational Dynamics. Though we had come across several such things, I felt the class was completely on a different platform today. Probably, is it because of the professor? Is it because of the way he handles the 3 hour session. Anyways, whatever it might be let me churn out few stuffs that I gathered from the class.

The prof started the class with the discussion about future of MBA. And he indicated the corporates are willing to hire people from other disciplines like sociaologists, psychologists, historians. The corporates are slowly moving away from MBA. There were couple of researches done by professors at Harvard and London Business Schools. The findings are as follows: Following are key parameters for a good MBA grad - knowledge, skill and attributes. From the corporate survey, it was identified that MBAs get the knowledge (so obsessed with Analytical and Technical) and hone their skills. But these MBAs are not imparted with the Attributes which is referred to "Managing changes, complexity and challenges". Hence, the B-Schools are required to reform their pedagogy to impart the attributes.

Then the discussion on "What is Management?" came to the fore. Well, several of us came up with different definitions, the prof gave his own definition:
Management is all about 5 Ms - Men, Money, Machine, Materials, Minutes.

One should remember the "SPICE" when we talk about the stakeholders of the company.
SPICE - Society, Partners (Suppliers,distributors), Investors, Customers, Employees.

The culture of two companies were discussed to highlight the importance of Employee satisfaction - GOOGLE and NORDSTROM. We all knew a lot about Google, let me describe about what I learnt abt NORDSTROM.

NORDSTROM - The organisation is so obsessed with customer satisfaction. Refund to the products are given to customers without any no-nonsense, no question to the customer. They are top 1 company is customer satisfaction. In their initial years, the sales personnel were trained to make duplicate car keys. The reason being the buyers leave their keys in the car in late 70's and early 80's and come for shopping. They realise their mistake only after the purchase is made. The customers are made to sit and were offerred with coffee. Meanwhile, the sales people retain the keys and hand it over to the customer. Such is the extent to which customer satisfaction is pursued in the organisation. The sales people had to smile always and be customer focussed. They were always monitored through the means of "Mystery Shoppers".

By the way, Wal Mart used to refund customers without any questions. Oflate, they have changed the practice, wherein they would question the refund if it comes from a set of ethnic group. This is happening due to abuse of the system by a particular group of people.

Can the attitude of any person be changed? May be its tough to change. But the good news is it can be changed. Through AWARENESS, the individual can be aware of the "CHOICES". Based on the choices, the individual can taken the "DECISION" and come up with the "ACTION PLAN".

Why managing people is different?
1. Every inidividual is different, distinct and from diverse background.
2. Human beings are predictably irrational.
3. Humans behave differently in different situations.

Innovation are of two types:
1. Conventional Innovation - happens from within the market.
2. Unconventional Innovation - happens from within the organisation.

The Modern definition of leadership is "Influence without Authority". The other phenomena is "Watercooler" or in modern times "CAFETERIA" phenomena. It is the place from which the general feeling about the organisation can be sensed.

To end with some new words that I learnt :-)
COOPETITION = COLLABORATION + COMPETITION
FRIENIMIES = FRIENDS + ENEMIES ( There are no enemies and friends as such. This coexist in the current world scenario).

Hoping that I could continue posting few more....

Goal came true??

I never thought in my life that I would pursue MBA in abroad and in particular SP Jain. I knew about the course and the college earlier, but still my mind put it aside.

In Mar2010, when I had an onsite oppourtunity at my hand, I came across the advertisement that SP JCM is admitting students using the CAT 2008 score. Whoa!!! With no prep for GMAT or any other competitive exams, I felt why shouldnt I try with the old score. With 6 years in my kitty, I thought pursuing from SPJCM should not be a discouraging sign.

Hence, I applied during the 11th hour. I literally mean it!!! I submitted the online form at 11.55 PM with the deadline being 12:00.

The process went through smoothly and secured an admit. Though the onsite oppourtunity might be an enticing option, I thought I would run behind my desire of doing a MBA.

I do not know if my goal came true.. Lets wait and watch...

Wait for the next post to see the Week 1 in Dubai.

Students and Politics

Students, enthused by the patriotic politicians, played a critical role inpolitics during Independence and led our country onto the growth path.Currently, students get easily misled into politics by the rhetoric engagedby the “ill-famed” politicians.
Students are enticed into politics with self development as the primarymotive. They resort to violence, sensationalize issues for politicaladvantage and stand in the way of the governing bodies from dischargingtheir duties. “Students emerging as good leaders” has become an exceptionand students entering into politics without the knowledge and awareness ofthe same should not be encouraged.

Ephemeral

There are certain things/games/events/toys that instaneously catches up with Kids. They engage themselves until a point of ennui. Beyond, which they search for another interesting stuff that could keep them busy.
I can attribute my characteristics to a child to a greater extent. Currently, I am obsessed with the following:
1. CAT (though this is a long time obsession).
2. Financial Jargons.
3. Crossies and Quizzes.
4. Product Management
Let me keep you all updated with what I am doing on the above.