Supply Chain Management

at
Titan Industries Limited

CONTENTS

INTRODUCTION

SALES

MANUFACTURING

MATERIAL FLOW

PERCEIVED PROBLEM AREA

TAKEAWAYS

CASE SUMMARY

INTRODUCTION

Titan Industries Ltd is a joint sector company promoted by Tata Industries Ltd and TIDCO to manufacture
quartz analog watches and jewellery.

Titan is acronym derived from TATA Industries and Tamil Nadu

Titan was set up in mid-1985 by Tata group

It set up its manufacturing units in Hosur, Tamil Nadu, close to Bangalore and on the Bangalore-Madras
national highway.

Titan entered the Indian watch market during 1986-87 by just assembling watches and increased its
manufacturing content through a phased manufacturing programme.

Cont

SALES (FROM THE ANNUAL REPORT 1995-96)

As against the sale of 3 million watches in the previous year, it has the total sale of 3.40 million watches
in the domestic market and in addition, 430000 watches were exported.

At the end of March 1996, Titan had market share of close 50% of the quartz analog watches sold and
manufactured in India.

Retail showrooms increased from 80 to 86 and the number of titan shops was 90.

During 1996-97 there was a further strengthen of its retail network.

It was also in the process of setting up a joint venture with Hour Glass of Singapore, one of the worlds
largest wholesalers and retailers of luxury watches.

Cont

MANUFACTURING (FROM THE ANNUAL REPORT 1995-96)

There were two plants, the eurowatch plant and the jewellery plant.

Both had their first full year of commercial production.

Eurowatch plant produces about 80000 watches and the jewellery plant produces almost 40000 jewellery
pieces and around 2000 watches.

Titan totally produced 3.77 million watches, 3.70 million movements and 1.98 million cases.

PQCD (Productivity, Quality, Cost Control and Delivery on time) had in fact become the new buzzword
throughout the company.

Cont

SUPPLY CHAIN MANAGEMENT: MATERIAL FLOW

SCM at Titan was very complex.

800 varieties of watches were made available to the retail outlets- 7 regular ranges and 4 special ranges.

Watches were sold through variety of channels- Redistribution Stockists, Institutional Sales, Franchisee
Operated Shops, Traditional Outlets And Titan Shops.

The watches were distributed to these outlets through CFAs who were spread regionally.

Watches moved to CFAs from three assembly plants located in Hosur, Dehradun and Ooty.

Cont

Transportation from CFAs to retail outlets was essentially through road or through representatives.

A watch assembly consisted of six components- 5 appearance part, 1 movement (not visible).

Appearance part: cases, dials, hands, straps and the crown.

Titan manufactured and assembled the movement at Hosur and manufactured 50 % of the cases at Hosur.

For movement, three items were brought in from outside. The batteries and the quartz were imported
from Japan while the electronic circuit board was manufactured by Titan in Goa and sent to Hosur.

Cont

SUPPLY CHAIN MANAGEMENT - PERCEIVED PROBLEM AREA

One of the important concern area was high levels of inventory, including obsolete inventory.

Reasons: repeat forecast modifications, long lead time, excess buffer planning and lack of coordinating.

Loss of sales owing to stock out.

Cutting back on in-house manufacture and focusing purely on design, sourcing, assembly, distribution,
retailing and marketing.

Production batch sizes were also a concern, this is because of the high rates of production which is
caused problems of large inventories and matching components.

TAKEAWAYS

Dependency on third party logistics, slow information flow and decision making increases
lead time.

Large production batch sizes will lead to large inventory level.

Large variety leads to difficulty in forecasting and capacity planning.

Inefficient transportation reduces customer reach.

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