The Reluctant Entrepreneur: Greatness, Save or Sell

Rajesh, like every employee of Zarhak multitasks. While driving me to the airport he brought to my notice that while we had semi finished material on our shop a truck bound for FORD had left with a lot of space, why could we not have filled in more?

His question reflected my faith in goan employees, they come with a thinking cap, and that makes a huge difference between then and employees from other states. The crux of the question he was asking is it it good enough to manufacture and be happy? Or is there more to it?

We have always pushed productivity and savings as a way of life at Zarhak. This was achieved by using the principles behind Kaizen, Just InTime (JIT) and Total Productive Maintenance (TPM). Kaizen ensured that every employee thought of saving in small ways, putting off a light here or putting masking tape on a tear to prevent raw material wastage. Just In Time ensure we produce only to order so that there was no dead inventory sitting on the shop floor. With TPM we pushed machine utilisation from a Company perspective, it was not just about machine maintenance, it involved purchase and sales too. Together these concepts drove our quality initiative which was reflected by our quality concerns on one hand and kept our costs down on the other.

In order to decentralise and avoid confusion, we have fixed prices and standard policies. So if a customer approached us with a big order for tanks from Bangalore, we gave him a price which worked our more expensive because of the additional freight. Invariably we lost such business.

Two, years ago we were exposed to another management concept, Theory Of Constraints (TOC)” expounded by the late management guru, Eliyahu Goldratt. A trained practitioner, had returned to Goa and hence the expertise was available locally. It made a difference as even if a company was interested the costs of hiring non Goa based consultants was exorbitant. To my mind TOC simply put stated that cutting cost would increase your profits, but if you increased your top line, your profits would increase dramatically. A combination of cost cutting measures on one hand and techniques to increase sales on the other would effect the bottom line in dramatic proportion.

We did make take steps to increase sales, and we did not lose orders from Bangalore because we adjusted our selling price to compensate the customer for the additional transport. It made sense, the positive contribution added to the bottom line and we has used existing resources. On the other hand, allowing the vehicle to leave with space when we had semi finished products on the shop floor was violation of the concept. Had the supervisors been fully tuned to the situation they would have reallocated resources to finish the parts and get them on the truck, thereby increasing the sales.

Now they would be left as inventory till the next consignment was dispatched and always open to a schedule change. The thinking should be sales in the key, just producing or manufacturing is not enough. A sale is not closed till the correct part is delivered in time at the minimum and earlier if possible.

One cannot expect to SAVE a company to greatness, one must sell your way to greatness. Whoever said these words knew exactly what he was talking about.

Suggested reading: The Goal by Eliyahu Goldratt