Saloni Meghani

The unseen star of Titan's achievements in securing and retaining customer trust is its supply-chain methodology

Whatever be your station in life, at Titan you can expect to be treated like a celebrity. Lavishing that kind of attention on its customers is one reason why the brand stands head and shoulders above the competition in the market for watches. The precision and sharpness that enables such unwavering customer focus are products of Titan's standout supply-chain systems.

Your favourite Titan design comes at the right time and the right place through a complex supply chain. The rapidity with which the company rolls out new products — it currently has some 2,000 variants in the market — keeps the clock at Titan ticking at all times. Says Bijou Kurien, chief operating officer (watches): "Customers are demanding, and time and money are tight. While supply-chain management was earlier seen as production and stock planning, it is today about the optimal utilisation of capacity."

Two years ago, Titan had about Rs 180 crore stuck between its finished goods, raw material and working capital, and the company turned its inventory twice a year. Titan has since then put its assets on the treadmill to sweat them slim. Last year, while it cut the flab down to Rs 110 crore, it also increased its inventory turns to four. Coming soon is a new inventory plan of six times in a year at a mere Rs 80 crore.

A decade back Titan would predict market requirements for each month of the year a good six months before the year began. Gradually, by breaking down its array of products into discrete buckets, Titan reduced its response time significantly. The cycle of forecasting sales, creating a production plan, mobilising components and assembling them into watches was pared down to four months. But with the market getting competitive, Titan was faced with the danger of a style's star appeal getting crusty even quicker. So now this watch wizard can bring you a watch in one or two months and, in case of urgent requirements, even in 15 days.

This makeover has not been merely skin-deep. To ensure a better shot in fewer takes, the company has scoured each link of its long and many-stringed supply chain and hammered it into maximum efficiency mode. Here is a glimpse of Titan's architectonics.

Link 1: Reorganising the structure
About two years ago, Titan's management stepped back and looked at the big picture. The company supply chain then consisted of two discrete departments: manufacturing, and sales and marketing. The idea for one supply chain banner became self-evident following the implementation of an enterprise resource planning solution in 1999.

"Information suddenly became transparent and we were able to 'see' the stocks across the entire system at a single glance, in terms of quantum as well as the financial investment, and for both finished goods and raw materials," says Mr Kurien. That led to activities under the heads of sales forecasting and production planning becoming one continuous whole.

Then the company sorted out its watch categories and made distinct processes for each. This happened when the management noticed that the time required to make Sonata products, which catered more to semi-urban and rural markets, was less than that needed for other watches under the overall Titan brand. The batch sizes for Sonata were also larger. The company realised that the components for these could be outsourced from vendors, while the Titan watches could be taken care of in-house.

A third category emerged from the styles for which international vendors supplied components; the time required for these was the highest. At the end of this brainstorming, Titan created three different segments according to the lead-time required from the start to the end: Sonata watches that needed 30 days, Titan watches that needed 60 days and Titan watches that needed 90 days.

Having set its house in order, it was time now for Titan to woo customers with what their hearts desired.

Link 2: Forecasting demand
Securing the future of a Titan product is a scientific and rigorous exercise. To accurately predict which watch the market needs and in what quantity, Titan uses a time-tested method. First, it studies the historic sales of different styles. The primary information comes from an account of its own sales. Retail or secondary information is gathered from showrooms and distributors. The company also keeps in mind elements such as marketing schemes and advertisement campaigns to foresee demand. Seasonality is factored in because sales shoot up during festivals like Diwali, Onam and Pongal.

Considering that there are about 1,300 variants in the domestic market and 700 internationally, there is a lot of estimating to do. Instead of forecasting for all its varieties, Titan focuses on about 400 variants that contribute to 75 per cent of the company's overall sales.

To hit on the optimal mix of products, the company has also come up with an iterative demand-planning method. It is currently setting up an 'advanced planning and optimising' (APO) tool. This monster of an engine takes into account the historic sales pattern for three years and applies a forecasting model to that data and develops a heuristic. The forecast thrown up by this formula is then vetted by the sales and marketing group, which may want to modify it based on specific sales or market inputs they have received.

Once the cast and the screenplay are ready, production begins.

Link 3: Utilising manufacturing capacity
Mapping the demand projection of all the styles to the available production capacity can make science fiction seem as simple as running around trees.

The forecasts may add up to a requirement of say 800,000 watches in a month. But the production capacity may be pegged at 650,000 or 700,000. "We have to prioritise the watches we want to make," says Mr Kurien. Titan cannot simply be partial to styles that make larger contributions to the sales; it may end up under-utilising some of its manufacturing capacities while others get overused.

When the new APO tool is put in place by April 2005, the demand for each watch variant will be matched with the capacity within each of the company's manufacturing shops, as well as those of its vendors. In case the two do not fit advantageously, the forecast will get modified till a concrete production plan emerges.

As some of the components are bought from vendors, the company will maintain what it calls its 'supplier network planning' (SNP). Through a portal for its vendors, orders can be placed keeping lead-times in mind. Vendors will upload information daily on this portal, helping the company keep track of the production in real time. "It will give us a good feel of whether the vendor will meet our production plan," says Mr Kurien.

It is through this complex web of considerations that the number of watches is reached, while ensuring that resources are used effectively.

Link 4: Sales and after
Titan reaches the nooks and crannies of its market through 170 exclusive 'World of Titan' showrooms and 8,000-odd dealers. The availability of spares and accessories is critical to ensure that every watch sold can be quickly and reliably repaired so that Titan's customers remain loyal and satisfied.

Titan has a network of spares distributors across the country, and stays connected using a web application. In fact, they are able to place approximate orders before the production begins, thus helping Titan produce closer to market requirements. If there is excess inventory after all the orders are met, it gets released into this system for all prospective buyers. As the consignments are dispatched, the company's logistics service provider ensures that distributors can track their consignment online without manual intervention.

The journey of your favourite Titan watch, thus, passes along a long and intricate string, for which precision and finesse at each stage is vital.

But the best never rest. "The watch industry has created issues for itself because of the way it has developed historically," explains Mr Kurien. "We cannot take comfort from the success of our current supply chain; we have to keep looking for better benchmarks in other consumer industries." The company has stepped up pressure by comparing itself to retail chains and apparel. These have dynamics similar to those of watches but have achieved lower lead times.

Titan has upped the ante for itself and will keep fine-tuning its supply chain even further. It is this thoroughness that makes a perfectionist such as Aamir Khan the ideal brand ambassador for the Titan of our times.

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