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Ti-Tech

Ti-Tech

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Published by Ankur Salunke

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Published by: Ankur Salunke on Nov 25, 2012
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01/11/2016

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Group 6

TI-TECH (A)

QUESTION 1 ORDER SELECTION .

CRITERIA FOR SELECTION BY DEPARTMENTS • Job is challenging and fits Ti-Tech’s capabilities • Job is long run and competitive and job scope is clear and company has prior experience with same Operations • Overall contribution before sales. general and administrative expenses is 20% of product price Marketing • • • • Job must be similar to what Ti-Tech had done before The design is simple and the cost estimate reliable The job has good payment terms The market has future scope and adequate delivery time • Price is not the primary factor in customer’s decision .

PROCESS OF JOB SELECTION (Marketing Dept) Get Ti-Tech on the bid-list of potential customersGet The Request for proposal (RFQ) (Operations Dept) Used estimators to estimate the duration for completion and delivery date (Marketing Dept) Modification of the quote to reflect market conditions .

IMPLICATIONS BY THE METHOD FOLLOWED   No job diversification Lead time increases by intra departmental verification and estimation process  Quality over price doesn’t satisfy all customers  Progress payments wanted to focus more on labor costs to meet labor requirements .

QUESTION 2 ORDER SELECTION – RECOMMENDATIONS .

New orders to be taken with the consideration that delivery schedules are not hampered Profit expected per projected shop floor hours required should be maintained optimally They should be on the lookout for new opportunities that are available . They should enter Market area which has potential for further development Avoid excessive dependence on a single customer The contracts with customers should not be fixed. The company should concentrate on profitable growth .They should keep adapting and building new capabilities.the payment terms should be negotiable so that any change in labor or material costs can be accommodated. During contracts with long duration .

QUESTION 3 ACCOUNT MANAGEMENT .

Account Management Features at TiTech  Sales managers handled both fabrication sales and metal sales  Staff with close relationships with customers handled accounts personally  Most of the management people handled 2-3 functions including sale  Sales along with marketing made sure that TiTech is on the bid lists .

By accepting the order how the customer can be retained and increase subsequent business for the company . Tie both the department’s goal to lifetime value of customer. not in sync   Operations wanted technically challenging work and marketing wanted job similar to what ti-tech had built before. was handling these accounts.CORRECTIVE ACTIONS   Customer Hendricks represented for 15-20% sales each year Two other companies accounted for 10-15% sales   As per organizational chart no Key Account Manager was allocated for these accounts. the uncertainty in the labor costs have direct impact on the bottom-line  Order processing in Marketing and Operation dept. Marketing Dept. Hence the organization structure should change to incorporate key account managers  Project budget estimation for key accounts should be done with higher markup on labor  As these are time consuming projects.

QUESTION 4 PRICING DECISIONS .

G&A – 20%  .PRICING TILL NOW  Cost + basis  Two estimators – calculate the cost of manufacturing  COG – 80-85% Contribution before S.

SUGGESTIONS FOR IMPROVEMENT  Shift to Value Based Pricing More aggressive for first-time customers / new market opportunities Robust system for Competitor Analysis Target Pricing for Standard (Proprietary) Line of Products    .

QUESTION 5 OVERALL STRATEGY .

OVERALL STRATEGY Explore newer industries and diversify portfolio(Max 20% and 30% from a player and a market respectively) • Alleviate pressure due to erratic pricing and market conditions • Ti-tech will be future proof and can’t be held to ransom Focus on maintaining close relationships with clients • Most key accounts were based on relationships with certain employees • Required specifically for custom made jobs Attain COGS average of 80% with upper limit of 85% without jeopardizing quality • Reduce expenditure in certain heads viz. manufacturing overheads et al Improve the Bid Success Rate from 15% • Pick and choose bids which are likely to be fruitful More Involved in proprietary contracts rather than custom made contracts • Synergies in manufacturing processes and cost allocations • Ease of training and maintaining workforce • Creating a sales force that can augment current business .

STRATEGY BEHIND JOB SELECTION Operations Marketing • • • • • • • Technically Challenging job In sync with Ti-tech’s high image quality Repetitive job and long run job Experience with similar products Progressive payment Overall contribution before sales. Market area has potential for further development Leeway on delivery time Marketing and Operations are not kept in sync as a result inefficient order processing ensues . general & admin expenditure near 20% Specifications and job scope clear • • • • • Job similar to what Ti-tech had been doing Design Simple and cost estimate reliable Progressive payments etc.

RECOMMENDATIONS Pick up jobs which leverage Ti-tech’s technical expertise  Have more synergies between the operating and the marketing teams for efficient working  Don’t put too much pressure on the operations team to trim down the costs  Don’t put too much emphasis on the bid success rate  Continue with quality orientation rather than volume orientation  .

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