Dear All,
One of my friend is working in an organisation wherein they do business of household & kitchen appliances and entertainment products. They import most of their products from abroad and source some of them from India. They have their own brands and concentrate Kerala, Tamilnad and Karnataka markets. Now they appointed a consultant for business strategies, sales re-organisation to be adopted. He has suggested to maintain HR cost of Marketing Employees to a low percentage of its overall turnover which, my friend sometimes, feels not viable. He has also asked me my views. Before giving my views, I request the subject experts of this forum to give their views on the subject.
Regards
arlkrishna

From India, Madras
HI Arlkrishna,
Consultants are usually appointed to improve the bottom line and usually start with cutting costs, particularly those that are not a profit center. such as HR.
The costs of HR need not be high IF and only IF the company has ALL polices, rules and regulations in place, and where possible future proofed as much as practically possible.
Once these policies, rules and regulations are in place then HR costs can be reduced as the department should to some extent "run itself".
Having said that, an efficient HR department will save money for the company in the long run.
I hope the above helps.
Regards,
Harsh

From United Kingdom, Barrow
Dear ARL Krishna,

I have slightly different take. However, real solution will come provided we have hardcore business information. My questions are given in italics:

One of my friend is working in an organisation wherein they do business of household & kitchen appliances and entertainment products. They import most of their products from abroad and source some of them from India.

Out of total components used to manufacture finished product, how many bought from outside and how many produced in-house? has the "Make or Buy Analysis" is done? If done, on what parameters? This is the one area where lot of cost saving can be done.

In many companies that produce kitchen appliances, all that they do is to import 100% from China and stick label of "Made in India" on it. At best few companies use packing material produced in India. What is the position of this company?

Coming to "Make or Buy" analysis once again. When components manufacturing is done without scientific study, many companies end up in buying what they should have produced in-house or vice versa. You may check my blog titled Daimler’s India truck business financially ‘sick to know what happens when 100% products are outsourced.


They have their own brands and concentrate Kerala, Tamilnad and Karnataka markets. Now they appointed a consultant for business strategies, sales re-organisation to be adopted. He has suggested to maintain HR cost of Marketing Employees to a low percentage of its overall turnover which, my friend sometimes, feels not viable.

Consultants are hired to suggest new processes in marketing, operations, purchase etc. Has the consultant come up with new process or new marketing plan that makes some of the manpower redundant? Has the proper "Cost Benefit Analysis" of the plan has been done? If yes, then on what parameters?

Final Comments: - I recommend revisiting the supply chain of the company's product line. There is huge scope to cut down the cost. Every Rupee saved in supply chain goes to the profit. What are current supply chain practices? Has the Strategic Procurement Plan (SPP) been made? If yes, on what parameters?

Thanks,

Dinesh V Divekar


From India, Bangalore

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