VOLUME 1, ISSUE 1

SPJIMR

IND US T RY
15-11-2011

WAT CH

INSIDE THIS ISSUE:

OBJECTIVES OF THE IIC CORPORATE PAR EXCELLENCE: MCKINSEY & CO FLIPKART: TURNED FOUR TOYOTA PRODUCTION SYSTEM ATIFICIAL INTELLIGENCE IN BUSINESS QUIZ WINNERS

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INDUSTRY WATCH

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CORPORATE PAR EXCELLENCE: MCKINSEY & CO

By Akshayita Saxena

Introduction McKinsey and Company enjoys the reputation of being the most prestigious consulting firm in the world. The company is privately owned management consultancy firm, also known as The Firm, which serves around 85 of the worlds top 100 companies.

Client Confidentiality The most controversial aspect of McKinseys work approach is that it is non exclusive that is different teams work for direct competitors in the same industry. This means that the company has to keep its list of clients confidential and the consultants are forbidden to discuss the details of their work with the members of other teams. This clandestine way of working makes it difficult for observers to assess its client base, success rate and its profitability. The secrecy also helps the company in concealing its fee which often exceeds US$ 10K per day for a consulting team.

Hiring On the recruiting front, the company hires fresh graduates from top B Schools rather than experienced managers. The firm also selects undergraduates through a very careful selection process and takes them through a tough training schedule. The firm practices the up or out policy according to which the consultants must advance in their careers within a time frame, failing which they are asked to leave. Despite this, the company sponsors and maintains a very active alumni network which includes even those who are asked to leave via the up or out policy. A large number of people who leave McKinsey go on to head former clients, generating further business. The Firm publishes The McKinsey Quarterly which features articles on strategy, organisation, marketing, and other management areas. The firm is acknowledged as the the worlds leading management consultancy by the Financial Times and as by far the most influential consulting firm in the world by Newsweek. Simply put, McKinsey continues to be The Strategy Consulting Firm.

Founded Founder MD Headquarters Industry Type Revenue Website

1926 James O McKinsey Dominic Barton New York Management Consulting Incorporated Partnership US 6 Billion Dollars www.mckinsey.com

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FLIPKART: TURNED FOUR

By Ankit Gupta

India and Internet India has 50 million to 100 million internet users, and the number is growing by about 30 percent a year. 17 million people bought something online this year as compared to 10 million last year. The main reason for this low percentage of online buyers is because people in India are still not comfortable to use credit card over internet. But still this rapid growth in terms of absolute numbers has drawn the attention of venture capitalists who poured $183 million into 20 ecommerce firms in the last 12 months, up from $61 million for 13 firms in the previous 12 months.

Flipkart Founded in October 2007, Flipkart was a humble online book retailer which went on to become the largest online bookstore in India within two years, surpassing its rivals such as Infibeam, Landmark and Indiaplaza. In 2010, it diversified into becoming a generic ecommerce website, selling mobile phones, laptops, music CDs/DVDs, movies, games and software, and acquired a California-based company social book discovery service weRead. Flipkart had revenue of 500 million rupees ($11 million) in its last fiscal year, and is now clocking sales of about 10 million rupees a day. Hailed as Indias Amazon.com, Flipkart is close to raising $150 million in a PE round of funding from General Atlantic Partners in one of the biggest ever deals for an Indian Internet firm, making it the first Indian Internet company to sport a billion dollar valuation.

Business Model Having its own staff, Flipkart avoids paying courier services' commissions of more than 2 percent to accept cash on delivery, which make up about 60 percent of its orders. It can also track packages more accurately. And because labour costs are relatively low in India, its delivery cost is a modest $1 a package. It underwent a major brand makeover earlier this year with a new interface and logo, and kickstarted its offline advertising campaign in addition to its aggressive online campaigns by putting out ads in the leading newspapers and on television channels to become one of the hottest Internet companies in India, signifying the huge growth the company was experiencing. Recently, it further expanded its product portfolio to encompass home appliances and personal & health care products as well. As of June 2011, Flipkart had 1,500 employees on board and setup 5 warehouses in Bangalore, Mumbai, Delhi, Chennai and Kolkata, as noted by VCCircle. Flipkart is not alone in tweaking its model to suit Indian conditions. Myntra, an online retailer of clothes, has a delivery staff in Bangalore and plans to hire couriers in other cities. SnapDeal offers customers the option of making partial payments online and paying the balance to merchants whose products and services it sells.

We thought of doing something .. something simple, easy from the home and which could get us money Sachin Bansal

Founded Founder Headquarters Industry Area Served Revenue Website

2006 Sachin Bansal, Binny Bansal Bangalore Electric Commerce India US 15 million Dollars(2010-11) www.flipkart.com

INDUSTRY WATCH

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TOYOTA PRODUCTION SYSTEM

By Anshuman Gautam

Introduction The TOYOTA PRODUCTION SYSTEM (TPS) is the TOYOTAs unique approach of manufacturing. It is the basis of the LEAN ENTERPRISE that is dominating manufacturing trend of todays Global world. Before going ahead in our discussion for TPS lets try to understand LEAN MANUFACTURING. In the words of Taichii Ohno the founder of TPS: All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect cash. And we are reducing that time line by removing the nonvalue added services. Most of the activities related to truck chassis assembly line are non value adding activities and should be removed from the process to attain a lean manufacturing practise. Success or failure of lean manufacturing comes from understanding what all activities are there in the process that crates value to the customer. Many companies have tried this but were not able to convert it into success as much as TOYOTA.

Origin of TOYOTA PRODUCTION SYSTEM (TPS): TPS was developed in the period after World War II where Japanese auto maker were facing several challenges that were different from the other US auto manufacturers: 1. Market was small so getting economy of scale was difficult. 2. TOYOTA also had to manufacture several vehicles on the same assembly line to satisfy its customers. So we can say that 2 most important factors that were governing vehicle manufacturing in Japan at that time were Cost and flexibility.

Underlying Principles of TPS TPS is based upon 14 principals that TOYOTA has divided into 4 subheads that form the pyramid structure of TPS called 4-Ps of TPS. Philosophy( Long term thinking) Principle 1-Base your management decisions on a long-term philosophy even at the expense of short-term financial goals. Process (The right process will bring right results) Principle 2- Create a continuous process flow to bring problems to the surface. Principle 3- Use PULL systems to avoid overproduction. Principle 4- Level out the workload. Principle 5-Build a culture of stopping to fix problems, to get quality right the first time. Principle 6- Standardized tasks and processes are the foundation for continuous improvement and employee empowerment. Principle 7-Use visual control so no problems are hidden. Principle 8- Use only reliable, thoroughly tested technology that serves your people and processes. Add Value to the Organization by Developing Principle 9- Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others. Principle 10- Develop exceptional people and teams who follow your companys philosophy Principle 11- Respect your extended network of partners and suppliers by challenging them and helping them improve. Continuously Solving Root Problems Drives Organizational Learning Principle 12- Go and see yourself, to thoroughly understand the situation. Principle 13- Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly. Principle 14- Become a learning organization through relentless reflection and continuous improvement.

All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect cash. And we are reducing that time line by removing the non-value added services - Taichii Ohno

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ARTIFICIAL INTELLIGENCE (AI)

By Rajaaswin K

Introduction Artificial Intelligence (AI) is used for solving complex problems and decision-support techniques in realtime business applications in various corporates. Applications on AI find great relevance in all domains of management ranging from finance to marketing forecast and production. Today decision-making is fairly complex and process latency is inherent primarily due to the substantial increase in data with several constraints. AI play a great role in making business decisions efficiently and effectively. Here is a small write up on the relevance of by AI in businesses. Simulation of numerous human skills such as automatic programming, case-based reasoning, neural networks, decision-making, expert systems, natural language processing, pattern recognition and speech recognition etc. AI technologies bring more complex data-analysis features to existing applications. AI is an investigation into the creation of intelligence and that there is no reason for the intelligence that is created to be exactly the same as human intelligence. This involves borrowing characteristics from human intelligence, and applying them as algorithms in a computer friendly way. A more or less flexible or efficient approach can be taken depending on the requirements established, which influences how artificial the intelligent behaviour appears.

AI in Finance AI has found a home in financial services and is recognized as a valuable addition to numerous business applications. Sophisticated technologies encompassing neural networks and business rules along with AI-based techniques are yielding positive results in transaction-oriented scenarios for financial services. AI has been widely adopted in such areas of risk management, compliance, and securities trading and monitoring. Tangible benefits of AI adoption include reduced risk of fraud, increased revenues from existing customers due to newer opportunities, avoidance of fines stemming from noncompliance and averted securities trade exceptions that could result in delayed settlement, if not detected. AI in Marketing Artificial intelligence functions are made possible by computerized neural networks that simulate the same types of connections that are made in the human brain to generate thought. Currently, the technology is used mostly to analyse data for genetics, pharmaceutical and other scientific research. For example, customer patterns are analysed to learn ways to extend the life of light bulbs or to help decide the correct dosage for medications. High-tech data mining can give

companies a precise view of how particular segments of the customer base react to a product or service and propose changes consistent with those findings. In addition to further exploring customers" buying patterns, analytics could help companies react much more quickly to the marketplace. AI in Production Artificial Intelligence in manufacturing can be applied to a variety of systems. It can recognize patterns, plus perform time consuming and mentally challenging tasks. Artificial Intelligence can optimize your production schedule and production runs. In order for organizations to meet ever increasing customer demands, and to be able to survive in an environment where change is inevitable, it is crucial that they offer more reliable delivery dates and control their costs by analysing them on a continual basis. Performing planning using the "Deterministic Simulation Method" will provide schedules that will indicate job loads per equipment. "Genetic Algorithms", "Artificial Intelligence", and "Neural Networks" are some of the technologies being used for scheduling. It helps increase efficiency and quality by using optimal settings from past production. AI can optimize schedule beyond normal human capabilities and increase productivity by eliminating downtime due to unpredictable changes in the schedule.

Write to us on indintegration@spjimr.org

FAC U LT Y, I I C , S PJ IM R
Prof. Jiban Mukhopadhyay Prof. Indu Niranjan

STUDENT S, IIC, SPJIMR

Akshayita Saxena Ankit Gupta Kunal Shah Aditya Narang Anshuman Gautam Rajaaswin K