Consultation on HR Cost Management for Marketing Employees
One of my friends is working in an organization that deals in household and kitchen appliances, as well as entertainment products. They import most of their products from abroad and source some from India. They have their own brands and focus on the Kerala, Tamil Nadu, and Karnataka markets.
Now, they have appointed a consultant for business strategies and sales re-organization. The consultant has suggested maintaining the HR cost of marketing employees at a low percentage of the overall turnover, which my friend sometimes feels is not viable. He has also asked for my views. Before giving my opinion, I request the subject experts of this forum to share their views on the subject.
Regards,
arlkrishna
From India, Madras
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1One of my friends is working in an organization that deals in household and kitchen appliances, as well as entertainment products. They import most of their products from abroad and source some from India. They have their own brands and focus on the Kerala, Tamil Nadu, and Karnataka markets.
Now, they have appointed a consultant for business strategies and sales re-organization. The consultant has suggested maintaining the HR cost of marketing employees at a low percentage of the overall turnover, which my friend sometimes feels is not viable. He has also asked for my views. Before giving my opinion, I request the subject experts of this forum to share their views on the subject.
Regards,
arlkrishna
From India, Madras
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Consultants are usually appointed to improve the bottom line and typically begin by 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 policies, 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
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I hope the above helps.
Regards,
Harsh
From United Kingdom, Barrow
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Dear ARL Krishna,
I have a slightly different take. However, the real solution will come provided we have hardcore business information. My questions are given in italics:
One of my friends is working in an organization where they do business in household & kitchen appliances and entertainment products. They import most of their products from abroad and source some from India.
Out of the total components used to manufacture the finished product, how many are bought from outside and how many are produced in-house? Has the "Make or Buy Analysis" been done? If done, on what parameters? This is one area where a lot of cost saving can be done.
In many companies that produce kitchen appliances, all they do is import 100% from China and stick a label of "Made in India" on it. At best, a 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 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% of products are outsourced.
They have their own brands and concentrate on the Kerala, Tamil Nadu, and Karnataka markets. Now they have appointed a consultant for business strategies and sales re-organization to be adopted. He has suggested maintaining the HR cost of Marketing Employees to a low percentage of its overall turnover, which my friend sometimes feels is not viable.
Consultants are hired to suggest new processes in marketing, operations, purchase, etc. Has the consultant come up with a new process or new marketing plan that makes some of the manpower redundant? Has a proper "Cost Benefit Analysis" of the plan been done? If yes, then on what parameters?
Final Comments: I recommend revisiting the supply chain of the company's product line. There is a huge scope to cut down the cost. Every Rupee saved in the supply chain goes to the profit. What are the 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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I have a slightly different take. However, the real solution will come provided we have hardcore business information. My questions are given in italics:
One of my friends is working in an organization where they do business in household & kitchen appliances and entertainment products. They import most of their products from abroad and source some from India.
Out of the total components used to manufacture the finished product, how many are bought from outside and how many are produced in-house? Has the "Make or Buy Analysis" been done? If done, on what parameters? This is one area where a lot of cost saving can be done.
In many companies that produce kitchen appliances, all they do is import 100% from China and stick a label of "Made in India" on it. At best, a 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 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% of products are outsourced.
They have their own brands and concentrate on the Kerala, Tamil Nadu, and Karnataka markets. Now they have appointed a consultant for business strategies and sales re-organization to be adopted. He has suggested maintaining the HR cost of Marketing Employees to a low percentage of its overall turnover, which my friend sometimes feels is not viable.
Consultants are hired to suggest new processes in marketing, operations, purchase, etc. Has the consultant come up with a new process or new marketing plan that makes some of the manpower redundant? Has a proper "Cost Benefit Analysis" of the plan been done? If yes, then on what parameters?
Final Comments: I recommend revisiting the supply chain of the company's product line. There is a huge scope to cut down the cost. Every Rupee saved in the supply chain goes to the profit. What are the 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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