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. 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. 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

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 policy⁷ 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.

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7] CAD systems enable engineers and architects to carry out design activities on the computer. They allow engineers to view a design from any angle on the computer and make it possible to zoom in or out for close-ups and long-distance views. It also keeps track of design dependencies so that when the engineer changes one value, all other values that depend on it are automatically changed accordingly.