Ti-Tech

Group 6

TI-TECH (A)

QUESTION 1

ORDER SELECTION

• Job is challenging and fits Ti-Tech’s capabilities • Job is long run and competitive and job scope is clear  and company has prior experience with same Operations • Overall contribution before sales, general and administrative expenses is 20% of product price

Marketing

• • • •

Job must be similar to what Ti-Tech had done before The design is simple and the cost estimate reliable The job has good payment terms The market has future scope and adequate delivery time • Price is not the primary factor in customer’s decision

(Marketing Dept) Get Ti-Tech on the bid-list of potential customersGet The Request for proposal (RFQ)

(Operations Dept) Used estimators to estimate the duration for  completion and delivery date

(Marketing Dept) Modification of the quote to reflect market conditions

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No job diversification

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Lead time increases by intra departmental verification and estimation process

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Quality

over

price

doesn’t

satisfy

all

customers 

Progress payments wanted to focus more on labor costs to meet labor requirements

QUESTION 2

ORDER SELECTION – RECOMMENDATIONS

New orders to be taken with the consideration that delivery schedules are not hampered

Profit expected per projected shop floor hours required should be maintained optimally

They should be on the lookout for new opportunities that are available .They should keep adapting and building new capabilities.

They should enter Market area which has potential for further development

 Avoid excessive dependence on a single customer 

The contracts with customers should not be fixed. During contracts with long duration ,the payment terms should be negotiable so that any change in labor or material costs c an be accommodated.

The company should concentrate on profitable growth

QUESTION 3

ACCOUNT MANAGEMENT

 Account Management Features at TiTech 

Sales managers handled both fabrication sales and metal sales

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Staff with close relationships with customers handled accounts personally

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Most of the management people handled 2-3 functions including sale

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Sales along with marketing made sure that TiTech is on the bid lists

CORRECTIVE ACTIONS  

Customer Hendricks represented for 15-20% sales each year  Two other companies accounted for 10-15% sales  As per organizational chart no Key Account Manager was allocated for these accounts. Marketing Dept. was handling these accounts.  Hence the organization structure should change to incorporate key account managers 

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Project budget estimation for key accounts should be done with higher markup on labor  

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 As these are time consuming projects, the uncertainty in the labor  costs have direct impact on the bottom-line

Order processing in Marketing and Operation dept. not in sync 

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Operations wanted technically challenging work and marketing wanted job similar to what ti-tech had built before. Tie both the department’s goal to lifetime value of customer. By accepting the order how the customer can be retained and increase subsequent business for the company

QUESTION 4

PRICING DECISIONS

PRICING TILL NOW 

Cost + basis 

Two estimators – calculate the cost of  manufacturing

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COG – 80-85%

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Contribution before S,G&A – 20%

SUGGESTIONS FOR IMPROVEMENT 

Shift to Value Based Pricing

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More aggressive for first-time customers / new market opportunities

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Robust system for Competitor Analysis

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Target Pricing for Standard (Proprietary) Line of Products

QUESTION 5

OVERALL STRATEGY 

OVERALL STRATEGY  Explore newer industries and diversify portfolio(Max 20% and 30% from a player and a market respectively) • Alleviate pressure due to erratic pricing and market conditions • Ti-tech will be future proof and can’t be held to ransom Focus on maintaining close relationships with clients • Most key accounts were based on relationships with certain employees • Required specifically for custom made jobs  Attain COGS average of 80% with upper limit of 85% without jeopardizing quality • Reduce expenditure in certain heads viz. manufacturing overheads et al Improve the Bid Success Rate from 15% • Pick and choose bids which are likely to be fruitful More Involved in proprietary contracts rather than custom made contracts • Synergies in manufacturing processes and cost allocations • Ease of training and maintaining workforce • Creating a sales force that can augment current business

STRATEGY BEHIND JOB SELECTION Operations • • • • • •

•

Technically Challenging  job In sync with Ti-tech’s high image quality Repetitive job and long run job Experience with similar  products Progressive payment Overall contribution before sales, general & admin expenditure near 20% Specifications and job scope clear 

Marketing

• • • • •

Job similar to what Ti-tech had been doing Design Simple and cost estimate reliable Progressive payments etc. Market area has potential for further development Leeway on delivery time

Marketing and Operations are not kept in sync as a result inefficient order processing ensues

RECOMMENDATIONS Pick up jobs which leverage Ti-tech’s technical expertise  Have more synergies between the operating and the marketing teams for efficient working  Don’t put too much pressure on the operations team to trim down the costs  Don’t put too much emphasis on the bid success rate  Continue with quality orientation rather than volume orientation 