Colloquium: October 27, 2007
Mr. L.N. Krishnan
Strategic Outsourcing
A colloquial session with Mr. L. N. Krishnan, Vice President – Outsourcing, Thomas Cook was like a morale booster and a knowledge guide just before placements came. His profile spelt - graduation in science from Loyola, Chennai; PGDBA from IIM, Ahmedabad; DFM from Bombay University; PGDMM from IIMM, Bombay and a final loop of over 35 years of industry experience to add on in companies like HUL, PepsiCo, Mahindra & Mahindra, Mafatlal group, Arvind Mills etc.
Coinciding with the evening’s lecture was also the inauguration of the Marketing Forum - GenM for Pragati- official b-fest at Amrita. Speaking on the occasion, Mr. Krishnan hinted at the trend of “change” in marketing. Borrowing the words of an Italian Professor, he said, “Young people should be ready to accept and cope with changes. Rather than following one, we should be able to lead the change. Change need not be proactive it is a key to doing extraordinary things in a better way.” With an example from Mahindra, he showed how marketers set strategies and create change; whereby a suggestion was made to retain the handle and change the bristles of a toothbrush to sustain it longer. In terms of branding, newer strategies are coming up like book reviews and press releases etc.
According to him early 90’s was the time of moving towards strategic and organized way of procurement of things. With liberalization in ’91, shortages in the manufacturing industry began to be ruled out. Supply was leading the market. Then he was with Arvind Mills, known for their sarees - which suddenly became a global product, with competition in the export market. In such circumstances the challenge was not with the product but with capacity utilization which stood at 85%. And also strategically procuring goods, which were sold in three different markets namely Hong Kong (price sensitive, 20 to 24% growth rate), US and UK (quality sensitive). They had to learn the art of negotiation. Cotton which contributed for about 52-55% of sales faced many barriers and constraints. Cotton started being imported to reduce costs of production and devise more viable ways of operations. Multiple sourcing was adopted for example yarn was exported to Mexico. Chinese labor was partly incorporated.
Narrating another example from Mahindra, Mr. Krishnan focused on the factors responsible and important for being commodity and market leaders. There were major cost reduction attempts for example forming segregated commodity groups on scientific basis; diagnostic cross functional teams; involving marketing departments for changes; encouraging R&D; reducing lead time etc. there was an emphasis on creating a niche in the market place. “Technology changes were incremental. 80% of the expenses are incurred in the design stage. Whatever product we are going to work on in the future, we must look at the cost of ownership. Everything is cost driven right up to the final stage of the lifecycle of the commodity. We should also have an enduring relationship with the suppliers. Warranty, off-sales service etc should be addressed. Supplier assessment criteria should be devised. Performance management and monitoring for the vendor, bringing in newer technologies etc is important. Other than ideas, rest everything can be outsourced”, commented Mr. Krishnan. The session was a major peep through into Mr. Krishnan’s career experiences and learning.
Neha Sashi
I MBA
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