THE UNWRITTEN RULE

The Goal, Good to Great, Build to Last, The Machine That Changed The World, the list of some of the best management books goes on. These best sellers often create impact however these books are read and shortly forgotten but what permanently holds (consciously or sub consciously)are simple laws of physics:

Rule #1 – Every object continues to be in state of rest or of uniform motion or in state of equilibrium unless acted upon by an external unbalance force. (This is also known as Newton’s first law of motion).

Rule #2 – Every object / entity takes path of least resistance.

Rule #3 – Every Action has an equal and opposite reaction (also known as Newton’s third law of motion).

We studied the above laws (Rule #1, #2, #3) in engineering and to my surprise these rules hold true in everyday life! According to Rule #1, our life as students used to be in perfect equilibrium to which the exams always played the role of external unbalanced force. With every semester the subjects changed however Rule #2 remained the same. Why get into physics, electricity, fluid mechanics or thermodynamics? It was perfectly applicable to we, the students who would leave the most difficult questions and attempt least difficult ones just to secure the passing grades in examinations (Path of least resistance)!! Ultimately Rule #3 used to manifest itself in the form of results!

Likewise:

Biding with Rule #1 the snack market (that includes Lays, Kurkure, Hippo, Haldirams, etc) in India was in the state of equilibrium, growing at a uniform rate and no worries what so ever about the product cost, quality, sales etc. However with growing health concerns and mounting criticism over widespread obesity, food and beverage majors began adopting nutritional labeling in the country, in line with global trends, to reduce portion sizes, reformulate existing products to reduce saturated fat, cholesterol, added sugars and sodium etc etc…

Several companies including Coca Cola and Pepsico, Unilever, Nestle, Kellogg’s, Kraft Foods and Mars came together in March last year to sign an India Pledge, a set of guidelines to restrict and regulate propagating unhealthy foods on the lines of the European Union Pledge (external unbalanced force)

The pledge involves the companies making individual commitments to social responsibility in marketing food and beverage products to children, and providing a framework to promote healthier dietary choices.

Rule #3 of equal and opposite reaction manifested in the snack market growing to Rs. 1530 crore last April, saw increase in competition to gain market share, cut cost and at the same time increase profits. In less than a year from signing the India pledge, Pepsico has silently taken off the ‘Snack Smart’ logos from the packs of its snack foods like Lay’s chips, Kurkure and Cheetos. Starting March 2012 as part of cost saving major, the company has replaced the healthy rice bran oil with cheaper palm oil to cook its snacks. This move expects to save Rs. 8 to 10 per Kg. Further to this the company supports the move adding, their analysis of consumer feedback showed that the consumer did not show any added preference to the use of rice bran oil!!!

Pepsico is one of the case but I wonder why cost saving measures mean product of inferior quality? Why always product quality suffers to reduce cost? May be the companies seem to follow an unwritten rule

The Unwritten Rule – Every object takes path of least resistance as per convenience in action considering selective reaction to continue in the existing state of rest or of uniform motion or equilibrium.

The laws of physics so very dominant, here is a quick recap of some of the best management books and the areas that can save much more cost than what is achieved by using cheaper inputs.

  1. Increasing efficiency and productivity in manufacturing (The Goal, The Machine That Changed The World).
  2. Making supply chain a value adding process than a mere routine or essential process. (Supply Chain Management: The Wow Factor).
  3. Product packaging. This is one area that has potential to save money. Just to mention an example Britannia Hi Fiber Digestive biscuits and Raagi biscuits has layers of packing. The layers of packing do not prevent the biscuits from breaking but adds to cost and litter. I think companies can give away these extra polyethylenes to save cost at the same time make the packing more eco friendly and address one more social responsibility.

With this it is time to leave the rule book and start out of the rule…err…box thinking for a promising cost effective product and efficient and highly productive organization delivering its commitment towards society.

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