tsmg

Tata Strategic studied all elements of the cost structure except the cost of raw milk. The focus was on key elements of operational costs such as manpower, logistics and conversion. Manpower cost was studied using levers such as benchmarking, outsourcing and zero basing. Almost 30 per cent surplus manpower was identified using these levers. In logistics, the contracted rates for transport of milk from DCs to the chilling stations were re-evaluated. Inter-union milk movement was redesigned using optimisation software. A potential to reduce logistics costs by 15 per cent was identified. Savings on conversion costs were identified through levers such as process redesign and fuel change. A potential to save 5 per cent of conversion costs was identified. Savings were also identified through the rationalisation of inventories, a change in the distribution structure and improved cash management.

The study enabled the client identify and exploit ideas to reduce overall operational costs by over 20 per cent