magazine optima

8/13/2019 Magazine Optima

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OPtimaOPtimaINAUGURAL ISSUE , June 2013 TINK AHED. GROW

MUSIC PIACY IN OU TMS

Music artists of our times are earning good bygenerating revenues elsewhere.Yet , thereexists a scope to generate and protect salesrevenues , says Rahul Kashyap

Changing measurements holds the potentialof transforming behaviour in organizations,says Prasun Chowdhury, Director - Avenir

How

IndianRailwaysoperates

Insight

operatio

ns.iimc

/

CAT

CH

US

ATOGANIZTONAL PFOMANC

What is excellence for an organization ? Head, Operational Excellence (Asia Pacific) , Kenna

Metals explains ...

OPATONAL XCLNC

...12

...4

...7

Toll Plaza Problem ...................................02

Green Supply Chain Management ..............15Pharmaceutical Patents .............................19

Energy Optimization in Indian Railways .....22

KNOWLEDGE PARTNER


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DIOIAL HEDS

Rajat Gupta (former)Subhasis Maji (current)

DIOIAL MMBR

Arkadeep BiswasPawan Kumar Jhawar

Srivardhan M SKunal Joshi

PATONS CLUB PSIDN

Anoop Saurabh

O CONIBUOR

Alok AgarwalNavdeep Agarwal

Sarvesh Patil

OPtima TINK AHED. GROWINAUGURAL ISSUE

June 2013

The India story , sadly , looks to be losing sheen . The

economy is no longer growing at staggering rates, in-

flation and interest rates are soaring high , fiscal deficitis yawing wide , and currency exchange rates have

reached a historic low while foreign investors continue

to flock.

What happened to this promising story ? While the

other actor , China , is doing considerably and relative

well ,living up to the hype and hoopla ; what should

India do to be back on track ?

There are no certain answers , but some of them lie in

efficient operations. Be it electricity generation and

distribution, Public Distribution System managing our

cities or Indian Railways - India not only needs to up-

grade infrastructure , it also needs to change the way

things work now.

With this as the theme , it gives great pride to us in

launching the inaugural edition of OPtima , Operations

Magazine from IIM Calcutta.

We hope you enjoy the magazine !

Editors Letter


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Expert

Opinion


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OPtima Expert OpinionInsight:

How Indian Railways Operates

The author is Senior Divisional Superintendent

Officer with Palakkad Division , Indian Rail-

ways

Indian Railways is the worlds fourth largest withover 14 lakh employees, running over 10,000trains daily with a huge number of Freight Wag-ons, Passenger Coaches and Locomotives bothdiesel and electric. Indian Railways has a totalof 65,000 km of route length and is divided intoseveral zones, which are further sub-divided into

divisions. There are 16 zones with 68 Divisions.The entire Railway system is controlled by theRailway Board, The Chairman heads the boardwith 5 members.Each of the sixteen zones is headed by a Gen-eral Manager. The zones further divided into di-visions are under the control of Divisional Rail-way Managers (DRM). The divisional officers ofengineering, mechanical, electrical, signal andtelecommunication, accounts, personnel, operat-

ing, commercial and safety branches report to therespective Divisional Railway Manager and are incharge of operation and maintenance of assets.Train operations on the Indian Railways are con-trolled and monitored by the ControlRooms in each of the 68 divisional of-fices. The Control Room is the nervecenter of the division for train op-erations. The track length of a di-vision is divided into a numberof control sections for conveni-ence. Each control section hasa control board which includesthe telephony equipment for thecontrol staff to talk to any of thestations, crew control offices andloco sheds in the control section.A control section normally cov-ers about 150-250 km of railway line.

The entire control organization works round the

clock, all days of the year without any interrup-tion to monitor actual movement of trains on theentire rail network. The Chief Controller is thehead of Divisional Control Organization.

A control chart is drawn up by the section con-troller. The chart plots distance along one axisand time along with the other. The trains pathsare plotted on the chart to show the progress theyare making, the slopes of the path indicates thespeed. Colours are used to mark out different cat-egories of trains Example: Red for Mail & Expresstrains, Blue for ordinary passenger trains andBlack for Goods trains.

The station master at the railway stations are in-charge of implementing the directives of the sec-

tion controllers by operating the points and sig-nals and are generally concerned with the safeoperation and movement of trains in and out ofthe particular section he is incharge of.All departments involved in train movement havea representative in the Control office to providethe required support regarding their respectivedepartmental activities in movement of trains.The various departmental controllers are Motive

Power Control, C&W Control, Signaling andTele-Communication Control, Commercial, Secu-rity and Civil Engineering controls.

The basic function of train control organi-zation is supervising and regulating move-ment of trains from station to station onthe section to avoid delay to trains and

to maximize utilization of the capacityof the section by monitoring move-

ments of trains; arranging cross-ings and precedence to non-

stop trains; givinginstructions to sta-tions to detain andstart trains; arrangingof relief to the crewwho have completed

their duty hours etc. The event of an accident thecontrol organization plays a vital role in arrang-ing relief by way of ordering accident and medi-

cal relief trains informing the civilian authoritiesand hospitals etc.

The overall schedules and numbers of trains, as

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OPtima Expert Opinion

published in the passenger time tables are de-cided in advance based on consideration of theoperational aspects such as loco and coach avail-ability, crew changes, section capacity etc. Thetrains are classified as Mail/Exp, Passenger andGoods based on the type of service. The sched-

ule of all passenger carrying trains are controlledas per the time table issued by the Railway oncein a year. Every year a revised time table is is-sued effective from 1st of July. The trains move-ments are controlled as per the timings of thetime table. The time tabling of passenger carry-ing trains is fixed taking into consideration thetype of service, the speed, convenience of arrivaland departure at terminals, density of the line ca-pacity. Also facilities for fueling of locomotivesenroute, cleaning & watering of coaches, addi-tional time required for loading and unloading ofparcels at some stations, additional time requiredfor changing of running staff enroute etc.

Each train before taking on to the platform forstarting a service, the coaches of the train are ex-amined by the engineers and technicians of Me-chanical and Electrical departments in a pit linein the yard. The examination is to ensure the ef-

fective functioning of the brake system, lighting,air conditioning etc. A brake power certificateis issued for the train to the concerned Loco Pi-lot and Guard. The Loco Pilot has to verify theadequacy of brake power before starting of histrain. No Loco pilot can drive a train unless he isin possession of a valid certificate of competencyissued by an authorized officer.

2

Insight:

Toll Plaza problem

Dr. Kamaljit AnandHead of Client Delivery

Kie Square

This article was featured in The Economic Times

on September 27, 2012. Printed with special per-

mission from Kie Square.

My recent trip to Neemrana (120 km on NH-8) was aour-hour stifling daymare, whereas I ofen clockedthat to Jaipur with aplomb in the past. One need nottravel as ar or insightul discoveries on human dis-tress: a trip to Delhi-Gurgaon oll Plaza would suffice.

Despite building inrastructure, we are lackadaisical

in upgrading or even maintaining our set-ups in linewith growing demand. Our design needs a stress -de-tection engine to orecast, auto-recommend and de-use the system overloads in advance.

Increasing the number o toll lanes at the plaza mayhave been the most intuitive solution to planners, butdoes not address the problem. Widening o the tollplaza is not a scalable proposition. An effect o a simi-lar nature can be created with minimal interventionsin the current system.

Te theory: A tollgate systems efficiency is measuredthrough the queue length and the waiting time.Te queue buildup is a result o the gap in vehicle

clearance vis-a-vis total arrivals at the toll per unito time. Te waiting time is a maniestation o thequeue length and the time o arrival into the queue.It swells exponentially with the delay in joining thequeue in a peak hour.


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How the current system works: Tere are 16 toll lanesor traffic clearance on either sides o the highway witha our-lane traffic leading into the unnel. Te desig-nated tag card lanes are mostly used as regular lanes.Te average service time in each lane was empirically

ound to be about eight seconds. During peak hours,all 16 gates on a side are typically in use and that ena-bles clearance o about 120 vehicles per minute.As the weekday peak hour arrival rate was estimatedat 2.7 vehicles per second, or 162 vehicles per min-ute, there is a continuous queue buildup at the rate oaround 2.6 vehicles per minute per toll lane,and it continues till the arrival rate decelerates.

Arrival at various points in the peak hour means avarying queue length and, hence, a variable waitingtime ranging rom five minutes at the onset o thepeak hour to about 26 minutes afer one hour o peaktraffic, with almost 200 vehicles in queue per lane.One non-working tollbooth adds about seven vehiclesper minute across the queues o other toll lanes, andin one hour o peak traffic, it increases waiting time atother tollgate lanes by about five minutes each.

As the non-peak-hour arrival rate is about 1.8 vehiclesper second, there is only a 0.2 vehicle queue buildupevery minute on each toll lane even with two non-operational gates. It is not necessary to keep all gatesoperational in non-peak hours to optimise resourcecosts to manage the toll.

Potential structural improvements: Multi-row par-allel gates: Current tollgates have only one clearanceeasibility at a point in time, so a maximum o 16 vehi-

cles can be in the process at a time. I the same can beincreased to two, three or our booths per lane with-out widening the toll plaza, there can be significantimpact on the queue lengths as they have a potential

to emulate a 32-, 48- or 64-lane toll plaza. However,with multiple booths, there would be inefficient allo-cation o vehicles across the booths within a lane re-ducing the actual effectiveness to some extent.

Continuous widening o the toll plaza road - single-

booth parallel gates - has its physical limitations, sowe experimented with incorporation o additionalbooths at calculated distances in a single tollgate lane- multiple-booth parallel gates - in a simulated envi-ronment. Te introduction o multiple booths allowsor multiple clearances in a single cycle against singleclearances in the current scenario, leading to a asterclearance rate per minute and a lower queue buildup.

Simulation results: We hypothesised that it may take

up to our booths in a lane to reduce the queue lengthto a manageable number. But findings indicated thatno more than two booths are required per lane to re-duce the queue length to near zero within 30 minuteso peak hour. wo -booth parallel gates design nullifiesthe current wait time o 26 minutes seen at one houro peak rush and, hence, can play a significant leverin managing toll traffic. As the number o booths perlane is less, the inefficient vehicle allocation problemis also minimised. Te operator can flexibly decide onthe number o toll booths to be kept operational dur-ing peak or non-peak hours, given the arrival rate, butis advised to do it only with the help o an automateddecision support system.

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Prasun ChowdhuryDirector - Avenir([email protected])

Prasun leads the dynamic, resulted oriented con-

sulting and implementation firm, Avenir.

Avenir works with leading and mid-sized corpo-

rates in India and internationally to rapidly de-

sign and implement winning transformation ini-

tiatives using Theory of Constraints

Fact: Behavior is guided by how people are meas-

ured.

Tis is true in every walk o lie, especially so in the or-ganizational context, where behaviors are a maniesto the conflicts between departmental and overall or-ganizational measures.

Clearly, a multitude o management methodologieshave ocused on measurements o individual andgroup perormance in organizations. Key Result Areas(KRAs), Policy Deployment, and HoshinKanri, to name a ew, embed a myriad list o measure-ments that endeavor to drive organizational behav-iour. Organizational objectives are partitioned intodepartmental objectives and measured. Te wide-spread assumption is that these local measurements

are additive in nature and that their achievementwould necessarily acilitate the achievement o organi-zational goals.

Tere are many cases where Senior executives o a lossmaking organizations had earned an average o twopromotions over a five-year period due to so calledpositive results in their respective departments.Why would the organization continue to make lossesthen? Tis real case highlights the allacy in theabove-mentioned premise. Such examples abound in

the hallways o organizationalhistory.

Key thought leaders, such as Dr. Eli Goldratt observedthat department-linked perormance measurement

systems, however seemingly sophisticated, ail to im-prove organization bottom-line. Let us analyze thishypothesis in a simplistic but real case o manuactur-ing organizations.In most manuacturi-ng organizations, dep-artments have theirindependent contexto measurements.Te production unit

would be measuredon the basis o reduc-ing cost per unit.What is the largestfixed cost in most ma-nuacturing establish-ments? Depreciationo equipment and ma-chines is o course thelargest fixed cost allo-cated across each unit

o production!

o reduce cost per unit,conventional thinking advo-cates increasing production volume. How ofen havewe heard rom production people that an idle plantincreases costs?Increased production,thereore, adds to mushroom-ing inventory, which is the concern o the sales de-partment, not production.Measured on the basis omarket share and sales volume, coupled with escalat-

ing inventory sales department attempts to sell the in-ventory at progressively lower prices.While both production and salessuccessully achievedtheir local optima, through this seemingly heady com-bination o cost, volume and efficiency, company pro-its were eroded and corporate objectives contradicted.Tis is a proound example o why local measures cancontradict corporate measures. Te Abbreviated Cur-rent Reality ree (Figure 1) provides an overview othis vicious loop.

Contradicting this conventional thinking, Teory oConstraints (OC) contends that measuring localperormance is actually detrimental or organiza-

4

Measurements -

A Core Driver of Success


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OPtima Expert Opiniontional success.

We believe that shareholder satisaction, employeesatisaction, and customer satisaction must co-existor the organization to succeed over the long term.Customer satisaction and employee satisaction aremore intangible to measure. It is obvious that makingmore and more money, i.e. shareholder satisaction,now and in the uture can be a measurable parametero organization success.

I we agree to the above axiom, let us look closer at

this aspect o increasing bottom line. Profits are in-creased either by reducing costs or increasing rev-enues or both. Is there a limit to decreasing costs orincreasing revenue?

and sustainable competitive edge can be developedand enhanced. Tis would break the market con-straint continually, enabling the organization to gar-ner increased market share. Visibly, though, sustain-

ability o the competitive edge will be contingent ona significant paradigm shif that deters competitorsrom ollowing.

Teory o Constraints (OC) advocates Troughput() as the prime measure or an organization insteado contradictory local measurements. Troughput isdefined as the rate at which or-profit organizationsgenerate money.Troughput is simply calculated as the sales revenueless the truly variable costs (fixed costs do not changeover the short term).With a common and effective measure like Trough-

put distributed across the organization, productionwould not benefit rom burgeoning inventory, whilesales would reconsider reducing prices. All depart-ments would rather ocus on improving the flow orthe organization to achieve increasing throughput.

How does this model affect departments other thanproduction and sales? Well, support departments havean equally valuable role in this context as well. Pur-chase would consider the impact o delays vis--viscost effect on throughput. HR would consider the e-

ect o timely hiring on throughput. While finance

5

Profits areincreasedeither byreducingcosts or

increasingrevenues orboth.

Oganizon dono mak mo and

mo mony

ova goa of o-ganizon i ub-

vd

h i pu onpofi

Cos and os du-on a bivd o

b addiciv

Dp. fou on iown goa o x-

uion of or

Ofn meu ofon dp. onficwi o of o

dp.

Mo m akn odiu os du-

on iniav


uion of or


uion of or

Cun ei (Figu 1)

fixed costs, it would alsomeasure each investmentproposal based on projectedthroughput and return oninvestment thereo (-OE/I).

Changing measurementsholds the potential o trans-orming behaviour in organi-

zations. We can Site numerousexamples where senior ex-ecutives altered course due tonew set o measurements.

Costs can bereduced to alimit zero atwhich point theorganizationceases to unc-

tion. Revenues,though, canbe increasedad infinitumprovided that adistinctive


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6

Oganizon dono mak mo and

mo mony

obus pln o -a and usain om-

pv dg

h i knowdgof OC o hp -a ompv dg

Mo m i pn onhow o ine fo

oganizon

A dpamn fo-u on

houghpu() uda pim meu fo

oganizon & d-pamn

Fut ei (Figu 2)

OC provides the vehicle to break down silos andalign the senior leadership team towards the holisticgoal o making more and more money or the organi-zation.

OC can acilitate identiying a common and effectivemeasurement criterion and disseminate it across thedepartments, as a step towards creating differentiationin the market place and developing a sustainable com-petitive edge. Te Abbreviated Future Reality ree(Figure 2) demonstrates this in a simplified manner.


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Subrata Mitra MajumdarGeneral Manager , Head of Asia Pacific Opera-tional ExcellenceKenna Metals

What is excellence or an organization ?It means being successul in a chosen market against

competition regardless o size, country o origin or re-sources. It means matching and then exceeding yourcompetition on Quality, Speed, Customer Service, In-novation, Cost and flexibility.

Te most successul organizations dont just meetcustomer satisaction, they exceed them and beat the

competition by setting the standards at a level thatmakes it difficult i not impossible or others to sur-pass.

Tey do not become complacent even afer achievingthis but strive continuously to sustain and urther im-prove it.

Why we need excellence ?

o continuously achieve the ever changing expecta-tions and also improve the quality o lie o all stake-holders customers, shareholders, employees, suppli-ers, society.

Te key to business success is doing the right thingsbetter, aster and more efficiently than competition.Operational excellence is the key differentiator toachieve that.

Impact o small improvements are neutralized bynatural process variations, will not be noticeable andhence quantum jump is critical to realize our goals.

A visionary leader understands the cost o lost oppor-

tunities.

Why is it important or Indian organiza-tions ?

1 Indian customers are nowmore aware and expectingworld class products and ser-

vices2 Many world class MNCs

are increasing their ootprintin India. Tey are ready toprovide world class productsand services.3 Stakeholders now want or-ganizations to be global or-ganizations bigger, aster.4 Global perspective is the

need o the hour. World is shrinking, almost every or-ganization is engaged in some orm o international

trade - marketing and selling to customers in othercountries or simply using parts or materials that areproduced elsewhere.5 Nobody is going to protect us. Concept o level play-ing field is ast disappearing, to survive and grow onour own strengths.6 Past paradigm will not work. Past success is not theguarantee o uture success.

What is changing in this world continually ?

1.) Definition of Quality

Past concept

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Insight:

Operational excellence -

key to sustainable growth


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Focus on Conormance to standards. Tis definitionassumed that as long as the company produced qual-ity products and services, their perormance standardwas correct regardless o how those standards weremet. Moreover, setting o standards and measuremento perormance was mainly confined to the produc-

tion areas and the commercial and other service unc-tions were managed through command and control.

Present- the new concept o quality encompasses manuac-turing, commercial and other service unctions o anorganization because all these unctions directly orindirectly affect products/service quality & customersatisaction.

Quality is a state in which Value enrichment is real-ized or the customer and provider in every aspect obusiness relationship.Te term Value enrichment or the company meansthat they must strive to produce highest quality prod-ucts at the lowest possible costs to be competitive inthe global markets.For customers, the term Value enrichment meansthat they have the right to purchase high quality prod-ucts/services at the lowest cost.

2.) Customer expectation

Past Ready to wait or products and service as per sup-pliers choice o time-Ready to pay or both Value added and Non-valueadded activities o suppliers-Happy with basic quality compliance-Large batch size is acceptable as there was no choice-Accepts variation

Present Ready to pay or only Value added activities o sup-pliers. Customer decides the price.-Not ready to wait. Demands and gets lowest lead timerom suppliers.-Not happy with just basic quality. Expect Higherthe better, Delight rom the suppliers as Mr NoriakoKano describes.-Expects lowest lie cycle cost.

-Not ready to keep inventory. Expects Just in time, Justin sequence.-Expects consistency, certainty.

3.) Shareholder attitude

Past- Invest on large scale organization-Happy with past earning trend or slightly better

-Less risk appetite-Less awareness on possibilities / opportunities-Local perspective-Ready to wait or decent ROI

Present Invest on opportunities irrespective o scale-Ready to take risk or high probability on returns-Global perspective-Ready to invest or technology , environment, society

-Impatient or aster returns

4.) Employees , suppliers expectation of better qual-ity of life

Past Limited choice, ewer organizations-Limited learning opportunity-Protected economy-Unaware o global development

-Less awareness on excellence, accepts status quo.-Virtue in continuing in one organization-Loyalty toward organization-Mobility not preerred

Present Many choices, many world class organizations in-

vesting in India-Very high ocus on learning, competency building.People preer those organizations or career growth-Open economy

-Awareness on excellence, highly competent teachers,coaches.-People challenge status quo or breakthrough im-provements-Wealth creation is a priority-Loyalty more toward work, job content not just onorganization-Not araid o mobility or better career, better qualityo lie.

What is the destination ?

Tere is no final end destination o Operational ex-cellence. It is a journey to continuously achieve and

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exceed changing worlds expectations. In pursuit oachieving that, an organization will reach and crossmany important milestones that will bring immensebenefits to the organization. Tat is what we call sus-tainable growth.

Journey1.) A vision statement that is worth dreaming, aspir-ing or and shared. Nothing happens unless we dream

first.

2.) A value system that is customer centric, processocused, people ocused, socially relevant and ethical.3.) Mission critical strategies. Tey are like great river,that maintains its course but adjusts its flow.4.) Metrics driven. A little push in the right directioncan make a big difference.

5.) Adoption o a right excellence model. Organiza-tion can develop their own model that is aligned to its

vision.6.) PDCA

Te journey passes through five stages to take an or-ganization to World class. Leadership to ensure otalEmployee involvement ( EI ).

Awareness can make a difference, an important start-ing point

In both average and world class organizations, Sys-tems and clarity on Roles and responsibilities may besame but in world class organization, the awareness

on perormance improvements at all levels are muchhigher.

Mission critical strategies

1.) Shared Vision2.) Uncompromising values3.) Visible Leadership involvement

4.) Leadership development5.) Fast cross the valley o despair6.) Focus on Customer satisaction7.) End to End integration8.) Policy deployment9.)Root cause analysis approach10.) Do not ignore the non-technical aspect duringchange11.) Learning rom all sources12.) Continuous improvements through kaizen insti-

tutionalization13.) Reward & recognition. Do not promote medioc-

rity.

Some World class Metrics both businessand process related

1.) EBI : best in class among competitors and peerorganization. 30% + YOY growth

2.) ROI : best in class among competitors and peerorganization. 20% + YOY growth3.) Sales per person : best in class4.) Customer satisaction index : best in class5.) Productivity gain : 15% + YOY. Both in No. / valueper Man-hour and per Sq. meter.6.) Process quality : 5 Sigma +7.) Customer complaint 6 Sigma level8.) Saety : Zero accident and incident.9.) Lead time : best in class among competitors. ( )30% YOY

10.) Inventory turns : 50 + .11.) OEE : 85% or Discrete and 92% or Continuousprocesses.

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12.) Cost o quality < 5% o sales13.) Kaizen per person per month : 114.) Employee satisaction index : 90+15.) Employee turnover < 2%

Choice o Excellence models

Tere is no dearth o excellent models which an or-ganization can adopt and implement to become aWorld class organization.

1. Deming QM contact JUSE, Japan. SomeIndian companies that adopted, implemented andawarded are Lucas VS, Sunderam clayton, VS Mo-tors, Sundaram Brake lining, Brakes India, Sona KoyoSteering, Mahindra & Mahindra arming division,

ata Steel, Rane Engine Valves, Rane RW Steering,SRF Ltd, Asahi India Glass, Krishna Maruti Seat divi-sion, National Engg Ind. etc.2. PM contact CII, JIPM. Some Indian com-panies that adopted, implemented and awarded areBajaj Auto Chakhan, VS Rubber, Hindustan Levermultiple plants, Sundaram Fastners, Brakes India,some IOCL plants, some Ispat Ind plants, MRF, SonaKoyo Steering, VS Motors, National engg Ind, somedivisions o ata steel, Grasim Ind and many others.

3. Frost & Sullivan Manuacturing excellence.Offices across major metro cities. Some Indian com-panies that adopted, implemented and awarded areWabco-VS, JSW, itan Ind, ata Cummins, Lucas-VS, Honeywell Automation, Apollo yres, Bajaj AutoChakhan, Piramal Glass, Godrej Consumer products,ata Motors etc.4. CII EXIM contact CII. Some Indian compa-nies that adopted, implemented and awarded are HP,Inosys, Maruti Udyog, ata Steel, ata Motors Com-mercial vehicle division, CS, BHEL.

5. European Foundation o Quality ( EQQM ),Malcolm Baldridge ( USA ) excellence models.6. Many organizations have prepared their ownexcellence model and practice across their organiza-tions. Like ata Business Excellence Model, AdityaBirla WCM, oyota Production system, Bosch Pro-duction system, Mahindra & Mahindra QM, DelphiProduction system, Kennametal Value Based System,WIPRO Mission Quality and many other organiza-tions.

7. Lean manuacturing ( adoption o oyota Pro-duction system ) and Six sigma ( invented at Motorola) Tese two initiatives have become very popular

among Indian organizations since last 15 years. Asmany Japanese and US companies started their busi-nesses in India in last 15-20 years, we learnt thesehighly effective methodologies and started practicing.oday many management and technical institutionshave made Lean and Six sigma as part o their cur-

riculum. I have conducted classes as visiting aculty inIIM Kolkata on some Lean tools.

When I attended QM training in Osaka Japan, Iasked Pro. Ryoji Futami ( Author o 7 New Manage-ment tools or QC ) about his opinion about the excel-lence models and methodologies. He opined that allare very good. He advised me to read all the models.We can adopt any one that we think right or us orprepare our own model afer reading these models.

Mr. David Meier ( Author o oyota Way Field book ),in our company seminar in USA , advised us to ollowany model that ocuses on waste reductions, all ormso wastes that reduces effectiveness and efficiencies.

All excellence models ocus on keys aspects o busi-ness Enablers such as Leadership, Strategy, Process,Partners, Employees and Results o these enablers asCustomers, People, Society and Key perormances.

Start the journey now

Start the journey. Dont seek perection now.

Expected results afer 3 years

1.)EBI / ROI 40% +2.)Velocity ratio - Double3.)Deect reduction by 50%4.)Lead time reduction by 40%5.)Inventory turns WIP / FG / RM : 30% improve-ment6.)On time delivery in Full 90% +7.) Predictable lead time variability 3 sigma level8.) Productivity gain 50%

9.) Set up time reduction 50%10.) Skill matrix 80%

11.) Batch size 40% less

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12.) OEE 25% plus than base level13.) Kaizen per person per month 0.214.) Employee turnover 40% less15.) Organization moving toward a learning organiza-tion

Early warning be cautious

ConclusionLet us get started. Tat is the attitude o a goodleader.

Remember the ollowing power thoughts to re-main motivated during the journey.

Developing a Excellent system is similar to savingmoney or retirement. Effort and sacrifice must bemade in the near term in order to reap the benefitin the uture. Te implementation process will re-quire sacrifice o time and resources now or thepotential gains in the uture. Like investing, thekey to success is to start early and make contribu-tions regularly.

We will not be remembered by our words, butby our kind deeds. Lie is not measured by thebreaths we take, but by the moments that take ourbreath.

Conviction is worthless unless it is converted toconduct-Scottish historian omas Carlyle

When the Rate o Change Outside Exceeds theRate o Change Inside, the End is in Sight- Jack Welch, Chairman and CEO GE

Never stop questioning, never stop challengingand develop an attitude rom looking to seeingand rom seeing to doing or betterment orever.- aichi Ohno, Invented oyota Production Sys-tem

I have been always learning great lessons romthat one principle, and it appears to me that all thesecret o success is there : to pay as much attentionto the means as to the end. - Swami Vivekananda

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Student

Speak


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OPtima Student Speak

Rahul Kashyap2011-13IIM Calcutta

Piracy is not a recent phenomenon and so does pi-rates. Pirates have existed since medieval times. Teirbusiness plan included looting the cargo ships.In the recent three decades we have seen major tech-nology changes like PC , sofware , the music industryetc. Tis technology change has changed o appear-ance o the pirates and their business Piracy as well.

Lets start rom the Music industry. As per Te IndianMusic Industry ,

Piracy is the unauthor-ized duplication o anoriginal recording orcommercial gain withoutthe consent o the rightsowner. Te packaging o

pirate copies is different

rom the original. Piratecopies are ofen compila-tions, such as the greatesthits o a specific artist,or a collection o a spe-cific genre, such as dancetracks.Te problem o piracyhas arisen with the rapidadvance o technology.New techniques o print-ing, recording and fixa-tion o broadcast or re-corded programmes haveemerged, making it easy

or the pirates to carryon their illegal activities.Piracy is an illegal andcriminal activity

It also mentions about three kinds o piracy, namely,

countereiting, pirate recordings and bootlegging.

Countereiting: - Tis is the unauthorized copyingo the sound as well as artwork, trademark, label and

packaging o the original recording. Te aim is to mis-lead the consumer into thinking that they are buying

the genuine product.Pirate Recordings: -Tese are unauthorized dupli-cations o music rom legitimate recordings or com-mercial gain. Pirated CDs or music cassettes may becompilations such as op en, Bollywood Hits or acombination o hit titles o different music companies.Te packing and presentation o a pirate copy doesnot usually resemble a legitimate commercial release.

Bootlegging: - Tis is recording, duplication and saleo a perormance such as a live concert or broadcastwithout the permission o the artist or the Record

Company which may beentitled to control therecording rights o theartists perormances.

Music Industry claimsthat have been losingmillions o dollars due

to piracy. Te latest fig-ure as per Te Instituteor Policy Innovation,said music piracy iscosting the U.S. econo-my $12.5 billion everyyear. Well this figureshould be taken with apinch o salt as this isnot the exact loss. Tis

figure gives the sizeo pirated music andcontains all the illegaldownloads. On internetwhen someone is down-loading something ree,it doesnt means thatone is actually inter-ested in the content.

Hence, it doesnt give the figure o real music lovers

and thereore the original losses would be much less.

ransormation o Music IndustryMusic is increasingly being downloaded to laptops,

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PCs, mobile phones etc, rather than purchased inphysical ormat like tapes, CDs, DVDs etc. With theadvent o semiconductor technology, we are witness-ing the death o music which used to be distributed onthe physical discs. Internet can be surely blamed orthis as it has made sharing very easy. So, i I buy any

music record then I can share that with all my riends.Te orums or doing so were everywhere, whether itwas Napster in the old days, Limewire, Kazaa, or sim-ply sharing a riends CD or iunes collection. Tisresulted in rampant increase o piracy in the musicindustry.

Music industry tried to curb piracy by uniting to-gether. Tey got Napster closed, along with the somemajor sharing orums. But still piracy seemed to be

too big menace to be killed. So, finally music industrydecided to startselling online.Tis opened upa new opportu-nity or musicindustry. In theinitial days, mu-sic companiestried to sell the

music online,they were notvery successul.Ten came theconcept o livestreaming, legalmusic stream-ing sites, suchas Spotiy and We7. A plethorao websites now allow consumers to stream musicwithout actually downloading and keeping it. Stream-

ing sites provide a way or consumers to sample musicwhenever they want to beore being given the optionto purchase legal downloads or physical albums. Tisis especially important in times o economic hardship,given the high cost o CDs. Tis type o site allows us-ers to stream and listen to music or ree on any de-

vice, without actually downloading and keeping it. Ithey like the music enough they may be motivated tobuy the physical album or download legally. So, nowanyone can listen online to his avourite song many

times but i one wants to download the song then theyhave to pay a nominal price or that. Websites likeitunes are giving song or download or as low as 99cents per songs. Indian website Flipkart has launched

a new service called Flyte through one can downloadsongs at as low as Rs 6.

Internet has become the new radio or we can saythat Streaming music the new radio. It has helped tobring down the figures o pirated music. A research,

conducted by music research companies Music Allyand Te Leading Question last summer, ound thatillegal music sharing is declining and that teens arenow increasingly streaming music online instead.Te younger generation just wants to click - not onthe download button, but on the play button. O the1,000, 14 to 18 year oldspolled, only 26% admitted to illegally sharing musicfiles, down rom 42% in December 2007. Instead, 65%o respondents said they stream music online at least

once a month. Gerd Leonhard, media uturist andwriter, pointedout: Kids nowonly listen tomusic, theydont down-load it.

echnologyinrastructure

has helped a lotto achieve thisb e n c h m a r k .Te advance-ment in broad-band technol-ogy and highspeed internet

has ensured that consumer doesnt notices the differ-ence between listening to a song by streaming vis--

vis listening to a song that is locally stored. Also, the

new and advanced mobile networks like 3G and 4Ghave supported music streaming a lot. It has ensuredthat a consumer can now stream while moving.

Leonhard explained that this new trend requires newbusiness models, as even ewer people now will wantto pay or music. Te new business model is sellingstuff around music; tickets, merchandising, posters,books, things like that. Consumers skip television ads,but they will listen to a sponsor message when they

get ree music in return.

Becoming Famous

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Music bands o newer times dont rely on the sales othe records anymore. Tey are using internet medi-ums to launch their albums. Many o the albums aregetting released on youtube.com or ree. Millions omusic lover can listen to these albums or ree andhence the album becomes amous. Te introduction o

Youube has allowed established and aspiring artiststo post their videos or the world to see. Consumerscan look at what they want when they want, offeringmusicians new promotional opportunities. Artists areproducing expensive music videos or their ans anduploading them to Youube. . Right rom Lady Gagato Justin Bieber, rom Radio head to PSY, everybodyis now launching their new albums on youtube.com.

Te major source o revenue or these bands are the

concerts and live perormances, or which a music lov-ing customer is ready to spend anywhere between Rs500 5000 or a show. Tis way music bands and artisthave also realized that distributing music or ree isactually helping them to gain popularity and then theycan easily earn money through live perormances.

A survey conducted in Norway in mid-2009 oundthat music consumers who regularly download ille-

gally pirated music tracks are also the largest purchas-ers o legitimate digital music files, by a actor o 10over non-pirates. In conducting the survey, the inde-pendent BI Norwegian School o Management lookedat the music purchasing habits o 1900 respondents,each over 15 years o age. Consumer Ethan Smith, inresponse to the results o the survey, wrote: I all intothe category o pirate/consumer. However, I spendmore money on music now than ever beore,despite having pirated a sizable portion o my library.Music ans today dont learn about new music through

old media. Radio, television, corporate sponsorship,and or-sale singles just dont sell music like theyused to. Instead, we use blogs, live perormances, digi-tally enhanced word o mouth, and, yes, pirating.

Way Forward

Piracy or no piracy, music is going to stay or sure. Welove music and we will love it or the next many gener-ations. Over two-thirds (68%) o Asian youth say that

music plays a very important part in their lives, ac-cording to a Branded and Synovate survey rom June2009. Tis survey included 8,841 respondents aged15-24 in China, Hong Kong, India, Indonesia, Japan,

Malaysia, the Philippines, Singapore, South Korea,aiwan, Tailand and Vietnam. Te survey ound thatmusic was particularly close to the hearts and mindso the young in India (83%) and the Philippines (80%);ollowed by Vietnam (77%), China (69%), Tailand(67%) and Indonesia (65%). Te love affair between

music and young urban Asian consumers remains,the study proclaimed. Overall finding also showed that25% o the respondents were listening to more musicobtained digitally in the last year. Listening to musicwill continue to be a major orm o escapism or manyconsumers, but music will increasingly be download-ed or streamed to PCs, MP3 players or mobile phones,rather than purchased in a physical ormat.

Music industry needs to catch up with this new trend

o streaming and ree downloading. Fighting head onwith the daemon o piracy is not going to solve theproblem because a big population o hackers is alwaystrying to breakdown the new technologies. So, i webring some technology or anti-piracy, it may rungood or sometime but sooner or later some hackergroup will crack it.

A better way is to make music reely available or mu-sic lovers. So, music lovers can listen to music when-

ever and wherever they want through internet. Teycan be charged with pay per usage mechanism oragainst a small download ee like 99 cents.Te solution is ree, legal music streaming sites. Teprocess o downloading and paying or downloadsshould be made amazingly simple. Also, inrastruc-ture like broadband internet and ast speed mobilenetworks would be needed. Once the cost o down-loading music easily through internet comes belowthe cost o hassles in downloading the pirated versiono the music, music lovers will definitely ollow the le-

gal method over the illegal pirated methods. Hence,we can have a music industry which is not botheredby the piracy anymore.

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Parthiban V & Rahul RanganathanNITIE MUMBAI

IntroductionA supply chain is a conglomeration o multiple par-ties involved in ulfilling a customer order, decisionmaking and management o inormation, resourcesand unds. Te objective o a supply chain is to maxi-mize the surplus the difference between the revenuegenerated rom a customer order and all the costs in-

curred by the supply chain while satisying that cus-tomer order. A acilitys supply chain has a prooundimpact on the environment as a result o waste gener-ated during products storage, transportation, process-ing, use or disposal. Te global ecosystem is witnessinga rigorous challenge in terms o its energy generationand waste disposal capabilities. Tereore, environ-mentally responsible manuacturing is the need o thehour not just to achieve a competitive edge but alsoto increase the market share by curtailing the adverse

environmental impact o products. As a more system-atic and integrated strategy to achieve the dual objec-tives described, Green Supply Chain Management(GSCM) has emerged as an important new innovation

that helps organizations develop win-win strategies.GSCM is a holistic concept o green purchasing, greenmanuacturing and material management, green dis-tribution and marketing, and finally reverse logistics.Tus, green supply chain encompasses componentso environmental management as well as closed-loopsupply chain, which integrates design, operations, andcontrol o a system or maximizing value over lie cy-cle o a product including value recovery rom returnat the end o its use. For instance, by employing e-ficient closed-loop supply chain, Xerox Corporation

not only makes and sells new printer cartridges butalso generates substantial revenue by remanuactur-ing used cartridges collected rom the users.

GSCM the way aheadBusinesses that incorporate GSCM implement two

important practices, one being the assessment o en-vironmental perormance o their suppliers and theother to collaborate with suppliers encouraging themto undertake measures that ensure the environmentalquality o their products and processes. Organizationsgenerally adopt green practices in their supply chainin order to comply with rules and regulations. How-ever, there are several advantages or proactive firmsthat inculcate GSCM initiatives even beore environ-mental regulations are in place. GSCM initiatives can

help organizations develop a competitive advantage,enhance the brand value o the firm and create a posi-tive impression about the firm in the minds o thestakeholders. For instance, Volvo planned proactivelyin anticipation o a Swedish law that made automakersresponsible or disposal o used vehicles and eventu-ally set up sophisticated operations or salvaging anddismantling vehicles that generated significant rev-enue.

Another critical aspect o a green supply chain is sus-tainable and environmentally riendly product andprocess design. Such an approach contributes signifi-cantly to the bottom line o the firm owing to increasein the number o environmentally conscious custom-ers, who, in turn, serve as the primary driver in orderto justiy the implementation o green initiatives. Ingreen product design, an analysis is carried out to as-sess the environmental impact o a product during itsactive liecycle and beyond and attempts are made tominimize adverse effects. Tis includes elimination o

waste and by-products during manuacturing, reuseo wasted energy, adherence to strict quality standardsto reduce deects and adoption o lean principles toavoid excess usage.

Finally, return collection and recovery are an integralpart o the green supply chain which adds significant

value to it. While efficient return collection systemsaves logistics costs, easy and environmentally con-scious return policy improves customer relationships,

thereby benefiting not just the product manuacturerbut all parties involved in the supply chain. Te con-cept o Reverse Logistics is popular in this regard, theprocess o moving products rom their typical final

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points o use or the purpose o proper disposal and/or value recovery through recycling or remanuactur-ing. Recycling is processing o a product afer the endo its lie cycle to prevent potential waste o useul ma-terials. Afer recycling, the materials used in a productmay be converted into some other materials or may be

brought back to their original orms to be used again.On the other hand, remanuacturing is the process oreplacing or repairing worn out or obsolete compo-nents or modules in a product and bringing back theproduct to like-new condition.

Implementation o GSCM cannot be initiated withouta firm commitment rom all the key partners. Sincemost GSCM initiatives involve the adoption o rela-tively newer technologies, a clear and defined rame-

work o measures to assess project perormance needsto be established. Moreover, GSCM initiatives maynot be attractive in the short run but yield significantbenefits in the long run. Tis requires intense and ob-

jective scrutiny o the GSCM implementation in theshort run so that the right path is tread or significantlong term initiatives. Hence, the ramework o meas-ures employed needs to be tailored to the individualfirm or project level needs. Also, the set o metrics em-ployed need to be constantly monitored and reworked

so as to reflect maturity o the practices involved.

GSCM put into practiceAs ar as the implementation o GSCM is concerned,our critical stakeholder groups can be identifiedwhich are listed below: Regulatory stakeholders who either set regula-tions or have the ability to convince governments toset standards Organizational stakeholders who are directlyrelated to an organization or can have a direct finan-cial impact on the company Community groups, environmental organiza-tions and other potential lobbies who can mobilizepublic opinion in avor o or against a firms environ-mental policies Media, which has the ability to inuence soci-etys perception o a firm

Te relative influence o each o the above our stake-holder groups determines the environmental strategy

adopted by a firm or its environmental managementinitiative. Accordingly, our such strategies are identi-fied:

Reactive: is is adopted for low levels of envi-ronmental responsiveness wherein a firm would takeup environmental management only i prompted orenorced to comply by means o regulations. Focused: Such a strategy is employed for highlevels o environmental management wherein a firm

is ully committed to the implementation o GSCMpractices irrespective o its financial implications. En-

vironment management holds the utmost priority orsuch a firm and not profits. Opportunistic: A rm adopts such a strategy ifit is financially beneficial in the long term Proactive: Applied to the latest environmen-tal practices, a firm adopting such a strategy has highstandards o environmental perormance set internal-ly which may be quite advanced as compared to the

current government or global standards.

Te implementation o green supply chain is, in turn,driven by internal as well as external drivers. Internaldrivers include the willingness to improve risk man-agement due to potential interruptions in the supplychain and the collaboration with suppliers to find al-ternative materials and equipment that minimize envi-ronmental impacts. External drivers include custom-ers, investors and non-governmental organizations. A

brie description o the key drivers is as ollows:

1. Environmental collaboration with suppliersTis involves joint collaboration between organiza-tions in the supply chain in order to capture the added

value which can arise rom collaborative interactionsto reduce the environmental impact. Tis collabora-tion mechanism requires the buying organization todedicate specific resources to developing cooperativeactivities and results in increase in customer satis-

action and contributes to the reduction o businesswaste, environmental and supply chain costs.

2. Environmentally riendly purchasing practiceA suppliers ability to develop environmentally riend-ly goods is becoming a major actor in supplier selec-tion as the environmental effects o raw materials aretranserred across the supply chain. Adopting greenpurchasing practices avoids buying in waste and re-duces environmental costs and can create economic

value with reduced disposal and liability costs.

3. Product environmental impact reduction bycollaboration with designers and suppliers

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Design collaboration with key suppliers enhancesGSCM practices and reduces product introductiontime. However, the success o this practice requires ahigh degree o external cooperation with other part-ners throughout the supply chain.

4. Minimizing waste

Tis can be achieved by incorporation o lean prac-tices or the elimination o waste or non-value addedactivities throughout the supply chain.

5. Decreasing the consumption o hazardous

and toxic materials

Tis practice minimizes the cost o eliminating andtreating hazardous and toxic materials and can be

implemented only i all partners in the supply chainshare the same environmental concerns.

6. ISO14001

certificationISO14001 can actindirectly to in-fluence all supplychain partners toadopt more en-

v i r o n m e n t a l l yriendly practices.Also, supplierswishing to accessenvironmentallyconscious marketscan obtain impor-tant competitiveadvantages withISO14001 certifi-cation.

7 . R e v e r s e

LogisticsReverse logisticsrepresent a cost or the organization through productrecovery as well as the collection and transportationo recovered products. Minimizing this cost is imper-ative to maximize the environmental gain resultingrom the GSCM initiative.

8. Environmental collaboration with customersTis green practice increases the environmentalawareness o the customers and makes them environ-mental partners in the green supply chain.

9. Environmentally riendly packagingApplication o environmentally riendly packaging re-duces environmental costs and business waste whileimproving customer satisaction.

10. Working with customers to change productspecifications

Tis practice helps to establish product specificationsthat are compatible with process modifications andinput substitution while conorming to specificationsand durability.

It is important to assess the effects o green practiceslisted above on the supply chain perormance o a firm

and integrate them in a manner that makes it possibleto control and supervise supply chain perormance

in operational,economic ande n v i r o n m e n -tal terms. Op-erations are theoundation oefficient dis-tribution and

manuacturingwhich in turnleads to finan-cial returns.Economic per-ormance is themost impor-tant driver ororganizationswhich imple-ment GSCM

and is related tothe effective useo various in-puts in the pro-

duction processes. Finally, as mentioned earlier, envi-ronmental perormance is a concern or organizationsor regulatory and contractual compliance, public per-ception and a competitive advantage. Te below tableoutlines measures and metrics to evaluate the influ-ence o green practices on supply chain perormance.

Challenges to develop good metricsWith the increasing complex nature o green supplychains, especially those employing closed loop strate-

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gies, the need or perormance assessment with relia-ble perormance measures is imperative. Accordingly,some o the important challenges to the developmento reliable metrics are highlighted below which needto be tackled effectively.1. With no shortage o environmental indicators,the choice o indicators to employ and methodologyto incorporate them in the PMS is an increasingly di-ficult decision to make.

2. Incompatibility between classical productionmeasures designed or intra-organizational manage-ment and supply chain measures applicable or inter-organizational scope needs to be resolved by properdelineation o metrics employed or each.3. Enorcement o compliance across the supplychain is tough considering the lack o an oversightagency which controls the entire supply chain, par-ticularly or economic and social measures.4. Lack o trust in the supplier-manuacturer re-

lationship and ears that data confidentiality may becompromised need to be addressed.5. Nonalignment o the potentially conflictingenvironmental strategies o all supply chain players isa potential roadblock or the development o an inte-grated PMS.6. Implementation o GSCM practices is a recenttrend, characterized by its time consuming nature anduncertainties owing to the dynamic nature o the sup-ply chain. Hence, a particular set o metrics employedor perormance assessment need to be continuouslyreviewed and reworked to suit current needs.

ConclusionTe impact o supply chain on the environment is un-der increased scrutiny in current times with increasedpressure rom community and environmentally con-scious customers. Tis has orced manuacturers tointegrate environmental concerns in their manage-

ment practices out o which GSCM has emerged as animportant outcome. Te drivers or the implementa-tion o a green supply chain were highlighted alongwith the act that a buy-in rom all the key partners ina supply chain is imperative or the success o GSCMinitiatives. In this regard, a comprehensive rameworko measures to evaluate the perormance o a greensupply chain needs to be established in order to moni-tor the effectiveness and efficiency o such an initiativeand maximize the environmental gain.

Reerences1. Arimura .H., Darnall N., Katayama H., IsISO14001 a gateway to more advanced voluntary ac-tion? Te case o green supply chain management,Journal o Environmental Economics and Manage-ment, 61(2011), p170-1822. Azevedo S.G., Carvalho H., Machado V.C.,Te influence o green practices on supply chain per-ormance: A case study approach, ransportation Re-

search Part E, 47(2011), p850-8713. Bose I., Pal R., Do green supply chain man-agement initiatives impact stock prices o firms?, De-cision Support Systems, 52(2012), p624-6344. Diabat A., Govindan K., An analysis o driv-ers affecting the implementation o green supply chainmanagement, Resources, Conservation and Recy-cling, 55(2011), p659-6675. Hassini E., Surti C., Searcy C., A literature re-

view and a case study o sustainable supply chain witha ocus on metrics, Int. J. Production Economics,140(2012), p69-826. Lin R.J, Chen R.H., Nguyen .H., Green sup-ply chain management perormance in automobilemanuacturing industry under uncertainty, Procedia Social and Behavioral Sciences, 25(2011), p233-2457. Olugu E.U., Wong K.Y., Shaharoun A.M., De-

velopment o key perormance measures or the auto-mobile green supply chain, Resources, Conservationand Recycling, 55(2011), p 567-5798. Zhu Q., Sarkis J., An inter-sectoral compari-

son o green supply chain management in China:Drivers and practices, Journal o Cleaner Production,14(2006), p472-486

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Rahul Shresth and Rohit Jaiswal2011-13IIM Calcutta

Tough it is true that pharmaceuticals have mademajor improvements and extensions in the lives omillions o people, but one cannot negate the actthat these advancements over the past decades haveinvolved some major controversies, most o which iscentered around the massive profits that these compa-nies make under the protection o patent laws. Most

o these companies register a unique blockbuster or-mula which is protected by massive patents provid-ing them the exclusivity o production. Te monopolyover the drugs drives the mass producers to harvestthe profits at the maximum rate until a better solutionis ormulated in some other laboratory. Te end resultis highly inflated cost o medicines, which has madeit practically impossible or the poor to afford theirtreatment even when the solution is available, espe-cially in the third world countries.

Tis mad race o money-making has raised a lot ocontroversies over the ethics and values o the indus-try with questions being asked on loosing the essenceo medicinal developments which now appears tohave become a game o making big money rather thanmaking the world ree o illness. Under the threats omassive protest rom different philanthropic activists,the patent laws might see a major drive or change.Te industry now has to increase its ocus on aligningtheir business processes to the demands o the society,in order to make their business sustainable. Tis ar-ticle talks about some o these pertinent issues alongwith some suggestions on improvement.

Te pertinent issues in the pharmaceutical sector as otoday include Due to the monopolistic nature of the supplyas per the patent protection, the costs o the medicinesare generally inflated. Tis prevents the people rompoor background to access the latest discoveries as a

suitable solution to their illness. High price of the substance (ingredients of themedicine) primarily due to the patent protection.

Proposed Changes in the Patent Law

As per the annual reports o a ew big names in thepharmaceutical industry, the pharmaceutical com-panies spend 15% o their revenues on research, ac-cording to their own numbers. Te remaining 85 arespent on other things (mostly marketing and profits).Te suggestions on amendments to the patent law ordrugs include. Removing the monopolistic nature of the pat-ent rules would help to reduce the price o the actualsubstances by at least 70% when they are manuac-

tured on a ree market with competition. e government should take 20% of what itcurrently spends on drugs, and allocate that moneydirectly to pharmaceutical research thus eliminatingthe need or patent protection.

Amendment as a solution to the Societal and

Government concerns

Te major problems that are aced by the society and

the government due to the current patent laws include High Costs Due to the high import exportduties in addition to the highly priced drug, hundredso thousands o people in poor countries can not re-ceive the drugs they need, even though the drugs existand could save their lives. Tese drugs can again notbe prepared indigenously as the patent law preventsthe local pharmaceutical companies to copy the drugs.Solution With abolishment o the patent law, the tech-nology would be available to all and the drugs can bemanuactured indigenously by the local companies aswell, thus reducing the cost o the medicines by almost50%. For examples, the drugs manuactured in Indiaare ar less costly as compared to the similar imports

rom other countries. Prot priority rather than philanthropy Pharmaceutical patents distort the pharmaceuticalresearch priorities, since it becomes more profitableto treat the symptoms o diseases that come rom ahigh standard o living, than to cure poor people rommalaria.

Solution With 20% o unding by the government, thegovernment can control the research and discovery othe new drugs as per the situation and demand in thecountry. Tis will help in checking the profit generat-

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ing motives o the pharmaceutical industry in develop-ing liestyle drugs and help the poor people by providing

them with a solution to more widespread disease in theregion rather than solving the purpose o a ew rich peo-

ple. Low political control over the pharmaceuticalindustry Due to the current nature o the pharma-ceutical patent law, the drug manuacturers are pro-tected rom any intererence rom the governmentover production and scientific research. Also thegovernment is spending heavily in protect-ing the industry by aiding them fi-

nancially.Solution As per the amend-ments in the patent law, the

governments cost would be20% (or research) plus 30%(or the substances). A total o50% o todays costs, and still more money than today

or research. Tus, by spending more on research undsand providing subsidy on the ingredients, the govern-ment can control the nature and size o production odrugs within the country.

Some other critical issuesTough the proposed amendments to the patent lawsolve a majority o issues, there are still a ew issuesthat remain untouched.

Timeliness of the solution e developmento the drug, i completely based on the requiremento the local government, cannot be seen as a globalsolution as the priority in a certain region may again

not be same or the other. Te late discovery o a drugmay prove detrimental or a region as it was not in thepriority list o the research organization. e development of drugs for poor countrieslacking the proper research capabilities Te popu-lation in these countries even when they have thetechnology cannot prepare indigenous drugs due toinability o inrastructure. Regionalism of drug production e drugresearch, when guided by the interest o the govern-

ment, can become a localized solution to the problemsspecific in the region o development. Tis cannot bepresented as a solution to the demands o the poorcountries, as their ailment needs may differ complete-

ly. Resource dependency If the country which

needs the drug being researched does not have the re-sources (raw material) or the in-house developmento these drugs, they have to depend on some other

country orsuch a pro-

vision. Tisagain doesnot solvethe pric-ing issues

completelyas the importcosts maybe high.

Pollution In order to developcheaper drugs, some companies may not

adhere to the global standards o produc-tion and might end up pollution the environment be-yond repair.

New problemsTis is a highly subjective matter and these issues canbe considered as a possibility and not as a surety. Pharmaceutical lobbying e countries pos-sessing the technology or a specific drug develop-ment may not share it with a country which has nostrategic importance to them. Tis might deeat theinitial cause o philanthropy behind the pharmaceuti-cal development and change its nature to more diplo-matic. Quality of Product Making the technologyavailable to all may push the pharmaceutical compa-

nies to reduce the cost o their production on the costo the quality. I the quality o the product is compro-mised with in such a critical industry, the unknownside effects might prove to be atal. Additional burden on poor countries Poorcountries might eel additional burden in allocating asubstantial portion o their annual budget to researcho new drugs. Currently, they highly depend on theglobal pharmaceutical companies to bring out a newsolution or their ailment even though at some pre-

mium. Disparity in development budget All thecountries cannot have the same amount o unding bythe government on research. Te quality o develop-


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ment may suffer heavily due to this reason.

Implications or Pharmaceutical CompanyA pharmaceutical company on a average spends about25% o its capital on research o new drugs. Followingwill be the implications o amendments o the patent

law to them Loss of Competency e companies highlydepend on the competitive advantage that a compa-ny has over the other. Such competencies are gainedthrough the exclusivity clause o the patent law. War for developing cheaper drugs e majorocus o the companies would shif rom providing ahigh quality product to providing a cheaper solution. Lower burden on research activities the -nancial backing by the government gives the company

a cushion or carrying out the research and mobilizingits resources more on production activities. Lack of incentive e loss of prot genera-tion motive might slow down the research process alittle as the company might not have any direct incen-tive in developing the drug and might wait or someother company to develop the ormula.

Implications on Social ResponsibilityTe major differentiator between 2 pharmaceutical

companies is the individual technology that they holdor development o drugs. When these amendmentsare enorced, the differentiation parameters wouldchange more to the reputation o the company. Tecompanies would react in the ollowing ways to main-tain a good reputation in the market. More involvement in philanthropic activities. More focus on compliance for environmentalsaety. Increased eorts on maintaining a good imagewhile marketing the product.

Reinvention o Social ResponsibilityWith such social motives the pharmaceutical com-panies would ocus more on collective growth ratherthan selfish motives. Te probable agenda would in-clude Information parity rather than asymmetry. Collaboration between the companies for in-clusive growth. More focus on sustainable growth.

Global focus rather than regional in search ofnew markets. Society building to maintain brand image.

Backward integration to maintain cost compe-tency.

ConclusionTe sustainable solution to the problem o politicallobbying would be creation o independent agencies

unded by the United Nations or such other philan-thropic organization which would ocus on global is-sues rather than local motives. Tis would reduce thedependency and control on the research activities bythe government. Tese independent agencies wouldcollaborate with the pharmaceutical companies andshare their finding with all the participant countries.Tis would be a step in uniting the world or the causeo eliminating atal diseases and making our society aglobal enterprise.

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Tanmay Chakraborty & Sachit Jain2011-13XLRI Jamshedpur

Situation odayIn India, there are about 12,000 passenger trains run-ning every day. Te project proposal discussed belowis related to the mail/express trains only, i.e. trainswith reservation coaches e.g. sleeper, AC 2/3 tier andchair car. Te number o such trains running daily isabout 3000.

Many o these trains start rom small cities rom whereall reservation berths are not ully occupied. Most othe berths get occupied at major junctions on the routeo such trains. Similarly, towards the end o the route,many reservation coaches get vacant in a ew stationsbeore the last station. Te trains nevertheless end uppulling many empty coaches or quite a distance andthereby consume lot o energy needlessly.

As exemplified, the train pulls about 5 coaches be-tween A & B and 2 coaches between B & C needlessly.Similarly towards the end o the journey or stations

I & J.

Tis proposal is to address the issue o load optimi-zation on the train route and thereby reduce energyconsumption by the Indian Railways.

Proposed SolutionTe project proposal has two aspects Change of existing algorithm of berth allocation Set-up of the infrastructure at junctions

Change of berth allocationIndian Railways passenger berth allocation is done bya system called Passenger Reservation System (PRS).

Its sofware already has a very robust and complexalgorithm. It takes care o passenger age, sub-urban

quotas, preerences and many other actors. Te reser-vation coaches investigated here (i.e. AC 2 tier, 3 tier,sleeper & second class) all under the Non-Serial Al-location algorithm o the PRS. A brie o the currentalgorithm is as below: e details of the transaction i.e. quota, source,destination o the passengers are captured. e Coaches meeting these broad require-ments are sorted in the order o increasing availabilityo accommodation.

All the cabins of the rst applicable coach arescanned to see i the choice can be met in one cabin. e Order of Cabin Search for each class isrom the middle o the Coach. If such a cabin can be found then this is thecoach selected. Otherwise, the next coach is scannedand so on till all the applicable coaches have beenscanned. If such a coach cannot be found then the coachsatisying the cabin compaction is selected and seat

berths are allotted keeping in view old passengers andladies. at is compaction is given priority over

choice. In case no single cabin can satisfy the require-ment, then the transaction is split over minimumnumber o cabins. In case no single coach can satisy the require-ment then the transaction is split over the least num-ber o coaches which together, satisy the requirement. In case the requirement is not met, either fullyor partially, then all or some o the passengers will goto RAC or Wait-list.

A significant drawback in this algorithm is that it al-locates berth numbers at the time o reservation itsel.Tus, i a passenger books rom A to H and another

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passenger books rom C to J, the current algorithmmost probably allocates them berths in separatecoaches. In the meantime, i their respective coachesare only hal filled, then the train ends up pulling twoless-than-hal filled coaches.

Our proposal is to modiy this algorithm such that e berth allocation is done just before thechart preparation. An additional module is to be added to thesofware, which will see i there are sufficient reserva-tion requests. is module, then in conjunction with the ex-isting module will allocate berths, such that firstcompaction is taken care o and then the sourceand destination wise distribution o berths.

All existing rules of quota, age wiseberth preerence etc. which are considered bythe current PRS algorithm, will continue to beollowed.

Set-up o inrastructure at junctionsAssuming the new algorithm has allocated theberths with compaction, next, necessary in-rastructure needs to be developed at selected

junctions on the route to enable joining and re-

moving o coaches.

On a high level, the ollowing inrastructure changesneed to be done Joining coaches at junctions on the route. Say,C is a junction, where an express (not the super-ast)train usually has long halt or cleaning, driver breaketc. Tis halt could be used to add new coaches to thetrain. Conversely, this same infrastructure can be

used to remove the coaches rom the train in its re-turn journey. With reerence to the example statedin the executive summary, say one wagon is added at

junction B and one removed at junction I during theorward journey. On the return journey o the train, awagon can be added rom I and removed at B. Many stations have some necessary processesor engine change. E.g. some trains change their en-gines rom Diesel to electric at Rourkela station. Tisinrastructure could be enhanced to allow wagon ad-dition/removal.

Since trains would usually add or drop coach-es at the same stations, maintaining o coaches inven-tory at the junctions should be possible without greatoverhaul o inrastructure.

Since berth allocation will be done before chartpreparation, the acility to inorm passengers throughsms has to be established. Also electronic displays tobe arranged at several points on the junction station toenable passengers to see their allocated berth.

Risks

Sustainability Report

Te ollowing is a highly pessimistic model o energysaving per day possible. I the sofware and the inra-structure are adapted to perection, savings can be

higher than 5 times o this estimate.Te ollowing are the advantages oreseen with theproject Less energy consumed and less pollution. Electricity scarcity can be managed well, asrailways is one o the major consumers o electricity

produced in the country. Earnings in terms of carbon credits, which In-dia can trade abroad. And many more..

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Financial Plan

Te ollowing is an estimate o the costs involved in the different parts o the project. As stated earlier, we haveassumed this Opex to be quite low as all junctions already have the required inrastructure in place or chang-

ing engines.Sofware changes project is estimated as

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Inrastructure change at every station in India to display passenger wise berth allocation (sms should also besent to passengers, when berth allocation is done), is estimated at a high level as

Daily operational expenses at junctions are estimated as

Tereby effective savings and payback period is estimated as

Tus on a high level, afer 2.3 years, Railways is expected to make profit.


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A e fom Opaon Cub , IIM Caua

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