8/7/2019 ECILdoc

1/3

Case Study 1 - Customer Centric Materials Management -A Case Study of ECIL

EClL-An OverviewElectronics Corporation of India Ltd.(ECIL) is a Public Enterprise under theDepartment of Atomic Energy established with the purpose of supporting Indias

Nuclear Power Programme and help the country achieve self-reliance in professionalelectronics. Over the years the company evolved itself into a multi-product andmulti-disciplinary organisation with focus on Computers, Control Systems andCommunications. In the post-liberalisation scenario, the compulsions of globalcompetition on local soil guided its Vision, Mission and Objectives as follows:

VisionTo help the country achieve self-reliance in Strategic Electronics.

MissionTo strengthen the status as a valued national asset in the area of StrategicElectronics meeting the requirements of Atomic Energy, Defence, Space, CivilAviation, Security and such other sectors of strategic importance.

Objectives

1. To strengthen the technology base and thereby the capability to combattechnology denials

2. To promote creativity and innovation and realise higher levels of operationalefficiency through actionable learning.

3.To attain and maintain world-class competitiveness by pursuing global

benchmarks

4. To lay down plans and programmes for effective succession at seniormanagement level

5. To consistently ensure a customer-centric organisational culture

6. To achieve steady growth in business performance and generate reasonableinternal resources

The operations are therefore focussed towards meeting the requirements of

Strategic Electronics in the Nuclear, Defence, Security and such other sectors ofNational Importance.

The Crisis

The post-liberalisation period of 90s was characterised by intense competition fromboth the MNCs and private sector. The impact of the globalisation process and thesanctions in the wake of Pokhran-11 experiments have brought the company to the

8/7/2019 ECILdoc

2/3

brink of sickness in 1998-99. ECIL suffered a loss of Rs.10 crore in 1997-98 and asubstantial loss of Rs.60 crore in 1998-99. The networth of the company was badlyeroded 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 thecrisis. Material costs constituting around 55-60 % of the total cost, it becameimperative for the company to introduce a host of innovative practices in the areaof materials management. These initiatives need to be in consonance with thenature of global electronics business characterised by high rate of obsolescence,falling prices, high quality inputs and global sourcing. More over the businessenvironment of ECIL is different even from other PSUs as there is no assuredmarket, customer-driven requirements and threat of denials. It is against thisbackground that the entire supply chain is addressed and briefed below are thesalient aspects of this process.

Supplier Communication

It was ensured that the requirements of the customers of ECIL are clearlycommunicated to the suppliers, thus making the latter jointly responsible for

ensuring customer satisfaction. This is done through constant touch with thesuppliers to indicate the priorities through written and verbal means and by hostingvendor meets Vendor Development and Quality AssuranceThe suppliers were continuously provided all the support during productdevelopment and engineering, prototype testing, evaluation, qualification andguidance in the implementation of ISO 9000 Quality Management system and otherindustry standards and practices. Emphasis was on prevention rather than

detection and correction. Suppliers are encouraged to imbibe the culture ofOwnership of Quality as?

Inventory Control

The scheduling of placement of orders and receipt of materials was streamlined toensure efficient inventory management covering such requirements as timelyavailability of material, minimisation of waste and surplus due to obsolescence etc.

Negotiations and Payments

Suppliers are involved right from the tender stage to offer the most competitive

terms to the customers in terms of quality, cost and delivery. Mutually beneficialpayment terms are negotiated and strictly adhered to.

Implementation of IT

All the processes involved in Integrated Materials Management are fullycomputerised for speedy disposal of material requisitions, resulting in substantialreductions in lead times across various operations.

8/7/2019 ECILdoc

3/3

The Results

These simple intiatives were implemented effectively resulting in incredible resultsthat culminated in the historic turnaround of the company that brought widerecognition and national awards like SCOPE award for Outstanding Performance andContribution to Public Sector Management. Specifically the following achievementswere realised.

Between 1998-99 and 2002-031.Turnover shot up from Rs. 250 crore to Rs. 1000 crore2. Profitability reversed from a loss of Rs. 60 crore to a profit of 130 crore3.Networth increased from Rs. 7 crore to Rs. 309 crore4. Loans Outstanding and Statutory Outstandings became nil5. Inventory levels and Sundry Debtors demonstrated efficient Working Capital Management6. Substantial cost Reductions were realised through negotiations and improved quality levelsacross various processes

7. Procurement lead-times reduced substantially from about 60 days to 30 days8. Customer Satisfaction Index improved phenominally from 66% to 95%9. MoU rating of Excellent has been achieved and is maintained and10. Image of the company enhanced remarkably.

Future Plans

The multi-disciplinary competencies and capabilities of ECIL coupled with theStrategic Sectors it has chosen, is bound to give the company a competitiveadvantage to succeed in the national market but explore avenues in theinternational market. Many of its products have been identified for exportpromotion and the brilliant performance of the Electronic Voting Machines in the

recent general elections established its export worthiness with many countriesevincing interest in the product. While all the processes under materialsmanagement are fully computerised, plans are underway to install a fully ITenabled Supply Chain Management including e-procurement. The company is fullyaware of the competitive global environment surrounding it in the high technologyelectronics and is focusing continuously on enhancing its technology base andenrichning its skill base to strengthen its status as a valued national asset.