Titan - The Outsourcing Journey
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BACKGROUND NOTE contd...
In 1998, the company decided to move out of the lower segment of the clocks
business. The same year, Titan instituted the ‘PQCD world
class-manufacturing program'that placed renewed emphasis on Productivity,
Quality, Cost control and Delivery on time.
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This program emphasized greater focus on customer
satisfaction and profitability. In order to cut costs, the company
indigenized its components. It was able to increase the proportion of
indigenous components from 44% in 1994 to about 75% in 1998.
The company also implemented SAP Enterprise Resource Planning on the
advice of Coopers & Lybrand consultants, to improve the utilization and
planning of resources, lower lead time and inventories. Over the years,
Titan became one of the most successful and respected Indian brands. |
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The company was ranked sixth among the world's largest
watch manufacturers. It was given the credit for revolutionizing the Indian
watch industry in India through constant innovation, better product design,
heavy branding and good distribution. The advertisement campaign for Titan
watches with the signature tune adapted from the 25th Symphony of Mozart
became a landmark Indian advertising's history (Refer Table I for key
statistics of the Indian watch industry).
TABLE I
INDIAN WATCH INDUSTRY - KEY STATISTICS
| Year |
Production (in 000 nos) |
Market Size (in Rs crore) |
Market Shares (in %)
|
| Titan |
HMT |
Timex |
Others |
1993
|
29401.6
|
516.3
|
37
|
47
|
3
|
13
|
|
1994
|
30648.4
|
465.5
|
49
|
22
|
10
|
19
|
|
1995
|
20918.6
|
587.4
|
45
|
22
|
12
|
21
|
|
1996
|
24726
|
766
|
41
|
23
|
13
|
23
|
|
1997
|
36480.7
|
797.3
|
45
|
21
|
10
|
24
|
|
1998
|
36717.5
|
746.3
|
48
|
22
|
10
|
20
|
Source: www.indiainfoline.com
The company's tryst with outsourcing began in 1999, with
the changes in India's foreign trade policies. Earlier only watches worth Rs
35,000 and above could be imported. The new EXIM policy[7] freed the imports
of watches of any value under a special import license. The import duty was
also set to be reduced gradually in the future.
According to analysts, this removal of restrictions could cause
international players to make a beeline for marketing their products in
India. Titan, which hitherto had only the low-profile, failing HMT as the
main competitor, realized the financial muscle and technological superiority
of the MNCs. In order to be able to meet the challenges of the changing
market dynamics, outsourcing became an imperative for the company.
ABOUT OUTSOURCING
THE ESSENTIALS OF OUTSOURCING
OUTSOURCING AT TITAN
TABLE V - TITAN - KEY STATISTICS
THE FUTURE
EXHIBIT I - TITAN - PRODUCT PROFILE
[7]
The export-import (EXIM) policy is announced by the Union Minister of
Commerce and Industry in co-ordination with the Ministry of Finance, the
Directorate General of Foreign Trade and a network of regional offices to
regulate India's foreign trade.
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