Hindustan Electronic Limited-

Case Study
 Group Members
• Yash Sawant – 0947
• Rahul Shankar – 0950
• Rohan Trivedi – 0953
• Niharika Verma – 0954
• Dhiren Pipaliya – 0958
• Mayank Kothari – 0959
 CASE
• ATL & BTL
• Product Quality first
• SCM
• From made-to-stock to made-to-order
• Distribution Network
• Logistics
• Forecasting
• Internet
• IT
• Warehousing & Transportation
• JIT
• Layout
 Consumer Durables
• Entry of large scale players

• Various measures has been taken:

 Cost reduction

 Redesigning the supply network

 CRM Programs etc.

• Increased competition
 Hindustan Electronic Ltd
• An Indian subsidiary
• HEL comparatively new player in industry
• In 2006 company achieved the growth rate of 25%
• Launched new models
• HEL competed:
 First on product quality
 Second on price front
Supply Chain Management
Supply Chain Management in HEL
 SCM - HEL
• First company to introduce supply chain
management

• HEL made a paradigm shift

• Distribution network - HEL

• HEL has lowest logistics cost

• Market penetration
7 RIGHTS OF LOGISTICS & SUPPLY CHAIN MANAGEMENT

Right
Quantity Right Quality
& Performance
Right
Materials
And Products

Efficient
Logistics &
Right Time
Supply Chain

Least Cost

Right
Customers / Right Place
Suppliers /
Associates
 Products Selling
22
26 CFA
Branch
Offices

HEL
Products

5000
4 RDC Dealers

550
Service
Centers
 Cont…
• HEL – engineered their supply chain to the market
conditions

• The main stumbling block:

 Accuracy in forecast

 Frequency of forecast review

• Dealers requirement
 System & Software
• HEL uses EDI integrated with ERP system

• Online connectivity

• Two tier distribution/warehouse system

• System provides dealers:

 Weekly production plan

 Delivery schedule
 ERP
MATERIALS PRODUCTION DISTRIBUTION

SUPPLIER 3 FINANCE CUSTOMER 1

SUPPLIER 2 H.R.D.
CUSTOMER 2

R. & D.
SUPPLIER 1 FINAL
CONSUMER
 MATERIALS PRODUCTION DISTRIBUTION

IMMEDIATE IMMEDIATE
SUPPLIER CUSTOMER

FLOW OF INPUTS FLOW OF OUTPUTS

IN - BOUND IN - PLANT OUT - BOUD

LOGISTICS LOGISTICS LOGISTICS
 Issues & Solutions
 Issue – Increasing freight cost

• Solution - Introduced a system(logistics

innovation)

 Helped in reducing delivery time

 Transportation cost came down

 Inventory level came down

 Cont….
 Issue – Related to distribution

• Solution – Introduced a new system

 Reduced the order cycle time

 The system automation – expected to reduce future

order cycle time
 TOTAL LOGISTICS COSTS

PROCUREMENT INVENTORY PACKAGING

COST COST COST

TRANSPORT CUSTOMER INSURANCE

COST COST
SERVICE COST

ORDER
WAREHOUSING INFORMATION
PROCESSING
COST COST
COST
 HEL - Imports
• HEL meets its requirements through import from
its parent company

• Ordering base of raw material

• Ordering of imported items

• Production schedule
 Vendor

38 are
11 are within
beyond 100
100 kms kms
55
Suppliers

6 are
located
overseas
 Cont….
• HEL classified its vendors in to A & B

• Currently 18 A class vendor supplying

• A class items are procured on JIT basis

• A class items imported

 For High Storage Density &
Speedy Pick Up

• Company uses horizontal carousels:

 Increased the picking speed

 Loading capacity increased

• All this helped HEL to achieve high level

 Increased Operations
• Due to rapid increase in operation company
experienced:

 Problem of data storage

 Problem of order cycle time

• To shorten order cycle time- company invested in

custom built automated order processing software
 Cont….

Manufactur
ing Plant HO

Internet

Branch
RDC Office
 Cont…

• Dealers were connected through extranet

• This new system helped:

 Online order processing

 Market improvement
 Concluding with the Learnings.

• Demand triggers must be identified as quickly as possible

• Make sure the person who is supposed to take action

acknowledges and confirms this requirement.

• Everything needs to remain in context.

• Mechanisms for clarification are critical.

• Group similar tasks, not just similar priorities.

• Evaluate risk :
1. The forecast
2. The demand data
3. The understanding that forecasts are skewed by
previous bad events.

• Don’t reward bad suppliers with increased orders.

• Motivation should be a foundation, not an afterthought