NUTCRACKER CASE

STUDY 2021

COMPANY BACKGROUND

ABC Limited is a multinational, multi-category firm, and is one of the largest FMCG
companies in the country, with 2 out of every 3 Indians using their products. ABC operates
a home care category business with multiple global brands and is well-loved in this space.
Their strength lies in consumer intimacy, consistent product quality and innovation, and
brilliant marketing.

The Home Care Category (HC) is primarily a volume-based business with low gross
margins and high scope for growth. HC is a flourishing business, producing many famous
brands of detergents, disinfectants, and cleaning products. A low-margin business
category like HC is strict in monitoring costs and cost optimization is a way of life,
engineered into the manufacturing processes designed by ABC.

One manufacturing site of ABC, Site X, is currently producing on average 600 tons per
day cumulatively, of multiple SKUs, of 3 major brands in the category.

VISION

According to projections, HC category is expected to grow throughout the next decade,

and site X is expected to contribute significantly to this growth.

Key factors at play for Site X’s growth:

• Investments for plant expansions

• Integrating operations of various plants on the site
• Increasing skilled manpower
• Cost optimization via technological transformations
ABC primarily wants to stay ahead in the current times, specially in terms of digitally
enabling its manufacturing sites.

THE FUTURE OF SITE X

A. Facts:
• Highly regionalized site; location advantage due to increased proximity to
depots and retailers
• Fastest growing site for ABC, with land availability for future expansion.
• 100% collectivized site; unionized
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STUDY 2021

• Current Skill Profile of shop floor workers:

o Mostly experienced semi-skilled workforce, been employed in the site for
most of their careers.
o Avg. age 40+,
o A small but growing cohort of young apprentices in the site, all of whom
are 12th pass from science stream and pursuing technical certifications or
diplomas from local institutes

• Desirable future-skill profile:

o Workforce adept to handle a minimal touchpoints process
o Fundamental digital awareness
o Continuous upskilling and reskilling basis plant upgradations
o Learning mindset open to adapt to automation

• Current vs future talent profile of Blue-Collar workforce at Site X:

B. Key Transformations and outcomes implemented by Site X:

• Transformation: Various manpower saving initiatives like conveyors for WIP goods
transport, process line organization for minimal manpower deployment, and
automation of several shop floor processes.
Outcome: This has led to unlocking of capacity, and an almost constant CPT
(Cost per ton) for a 9000 ton increase in production volume over the last 3 years.
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STUDY 2021
• Upcoming Transformation: Building 4 new plants within site X to increase variety
of production and leverage the labour-light future ready phenomenon
Outcome:
a. Increase in total no. of SKUs from 17 to 34
b. Increase annual volumes by 2.5x
c. Increase in site turnover by 5x

C. Challenges and Key Jobs to be done

1. Building workforce capabilities for the future to meet the needs of newer
tools, machines, sensors, and integrated processes on the shop floor.

2. ABC needs to hire heavily (~500 people) for the new plant and distribution
centre that they are building.

3. Individual development and progression to be guided by skill and

performance as opposed to seniority in the past

4. Building a progressive employee relations environment and policies which

enable new and old workforce of varying skill levels to coexist within site X
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STUDY 2021

PROBLEM STATEMENT 1:

• What are the key challenges you anticipate in achieving this skill transformation?
(Sub-question: Would you build or buy the talent to be further hired (~500 people),
and why?)

PROBLEM STATEMENT 2:

• Define and elucidate the structure of your skill transformation plan & how would
you estimate the cost for your proposal?

PROBLEM STATEMENT 3:

• What would be your KPIs for measuring progress & when would you deem the skill
transformation complete?

PROBLEM STATEMENT 4:

• In an environment where blue collar workforce is collectively governed, how do

we introduce individualized skill-based development and career progression?
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STUDY 2021

GLOSSARY

• CPT- cost per ton: Conversion cost per ton, where conversion cost is the cost of
direct labour and manufacturing overheads incurred in transforming raw materials
into finished goods

• SKU- Stock Keeping Unit

• WIP – Work in progress: intermediates in the production process

• Collectivized Site – A site whose workers are members of union(s), and collective
bargaining occurs between the management and union(s) to make decisions.

• Multi-category firm- A firm that operates in more than one product category. A
category is a segment of goods that are used for a specific purpose e.g., personal
care, home care etc.

• Regionalized site – A site that has a locational advantage due to proximity to

depots or retailers.

• Process Line Organization – The manufacturing process in the plant is organized

into production lines, (like assembly lines), which are a set of sequential operations
involving machines and workers, and each line is independently capable of
producing finished goods.