Shop Floor Cost Management

Presentation By
R. P. Gupta
Vice President –Operations
Subros Limited-Noida
20.01.2007

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 Subros - an Introduction

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 Suri Group of Companies

India’s Largest and Integrated car AC manufacturing Company.

Annual Turnover Rs.725Crores.

Automobile Precision component manufacturer. Annual Turnover

Rs.37Crores.

Mega Automobile retailing Company. Annual Turnover

Rs.313Crores.

India’s Leading 5 star hotel chain with 7 properties in India. Annual

Turnover Rs.185Crores

Telecom Convergences solutions Company. Annual Turnover

Rs.19Crores.

Strategic acquisition in 2005. FIBCOM is the leading telecom

solutions company manufacturing optical networking equipments.

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 About Subros

Established in 1985, Subros is the Largest AC company in India. A Joint

Venture company between Suri group, Suzuki and Denso.

Our Plants

Noida Plant

Noida R&D Center

Manesar Plant Pune Plant

Noida Tool Room

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 Subros’s Customer & Market Share

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 Product Range

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 Product Development Infrastructure: R&D / Tool Room

Calorimeter Environment Test Chamber Wire EDM

Vibration Testing CAE CNC Machines

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 Need for Cost Competitive Management

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 Changes in the Global Economy

Falling Trade barriers under WTO

Free Trade agreements between Nations

Unified Markets in Europe, ASEAN

Shrinking Time and Distances

Global market place

Customer preferences

E commerce

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 Global Cost Pressures

Cost pressure on global OEM will drive them to outsource from LCCs

Source : McKinsey Study done for ACMA

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 Country-wise Quality & Cost Competitiveness in Auto
Component Sector

S.No. Country Supply Cost

Quality Advantage
Level (FOB Basis)

1 India 500 ppm 0

2 Japan 5 ppm -5%

(reference)

3 Thailand 30 ppm -20%

4 Indonesia 15 ppm -15%

5 Europe 10 ppm -5%

6 USA 7 ppm -10%

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 Market Potential
The Indian Passenger car market is far from being saturated-leaving Ample room for volume growth

Vehicle (Cars+CV’s) Production and A.C demand

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 Subros - Cost Leadership Road Map

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 Cost Leadership Structure at Subros

Corporate Objective
----------------------------
Cost Leadership

Deployment of PQCDSME Goal

Strategic Cost Areas Operational Cost Areas

• Localisation
• Alternate Sourcing ABC
Material Cost
• ZBC
• Vendor Cost down

• Standardization
• Target Cost Setting
NPD & Break thru
• VAVE
• Localisation at SOP
• Lead Time Reduction

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 Cost Management at Shop Floor

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 Our Approach

Plant Managers do not necessarily manage cost directly

They Manage activities and resources that consume cost

People Involvement and use of Cost Management Tools In

Decision Making

Permissible
Cost

Cost Cost Control

Cost Cost Driver
Understanding Activities
Awareness Identification (Kaizen/ QC/
TPM)

Non Permissible
Cost

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 Our Approach

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 Cost Driver based Potential Areas

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 Examples of action taken for waste elimination

SINGLE FEEDING – SPEED IS SLOW DOUBLE FEEDING – SPEED IS HIGHER

Layout Changes
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 Examples of action taken for waste elimination
5000

4633
4413 Time Reduction in Set Up
4500 280

280
Reduction in Yield Losses
4000
520

520
and Adjustment
160 3645
193 160 130
3500
193
520
600
2976 2976
3000 600 160 130 130 2731
128 100
171 400 400 130
Time (Sec)

128
2500 180
171 600 400
160 160
100
100 100
530 160
128
2000 530 475 475 100
171
100 350
303
128 128
303
1500 171 171 128
230 530
100 100 171
118 230
100
191 118 95 300 300
90 300
1000 191 118 95 95
243 90 90
191 95
189
243 118 118 90 540
1 120 120 118
189 243 60
500 130 120 120 60
130 189 189 189 189
290
150 130 130 130 130 540
177 177 150 150 150 150
0 0 0 0 0
Internal BM Elimination of MUDA Internal to External Improvement in Internal Adjustment Other activity Target

Flux Consumption Energy Saving in NBF

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 Conclusion

Cost Management is not by Choice it is a question of survival

Build a Cost Culture in the Organization

People involvement is very important

Line Managers transformation to Cost Managers

Cost Transparency is important for real action

Use Integrated Cost management Tool for tracking all actions.

(TPM/TQM/Kaizen/QC etc…).

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 Thank You

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