COST CUTTING BY RANBAXY - case study

“ Together we can” was the new maxim being heard across Ranbaxy laboratories Limited, Indias largest pharmaceutical company. The promise was made more than a year back when project Cruose was born. Project Crouse, which stands for creatively releasing, unlashing substantial operating efficiencies, began as a small cross-functional team in ranbaxy, but soon took the shape of people’s revolution.

Through initially conceived as a cost efficiency exercise. Project Crusoe has now positioned itself as a change enabling HR exercise in the company. The pharma major had initiated the exercise for real business benefits and hence took the task in the most methodical and scientific for real business benefits and hence took the task in the most methodical and scientific manner, identifying broad areas of the business that needed a re lok and getting the right talent within it to overhaul it.

The team was given a clear brief – challenge everything that has come to be accepted as a norm. The team members, working as internal consultants, were to benchmark, question, ponder, suggest and implement better systems within established time frames. The result was ideas that veered clear of current practices, but ingrained in practicality and the current business context. Idea banks, constant brainstorming, weekly reviews and debates made the entire idea generation process in to one that gave birth to concepts that could be applied to business, not just discussed and shelved.

Today, the project is delivering in scale and proportion that has surprised the teams as well. Over 15 different areas of spend were addressed in four waves and around 425 projects were identified which are likely to generate savings up to 10 %.

A Director in the company was appointed as the team leader for the project on a full time basis. Each wave comprised 20 – 25 executives drawn from various functions across geographies, across layers and functions with the youngest member aged 21 and the oldest 50, which gave a perfect blend of fresh ideas and experience. The cumulative experience of the teams in each wave was close to 300 years.

The project experimented with new technologies and leveraged them to acquire substantial benefits for the company. Two such tools used were online reverse auction and forward auction by the freight team and stores, spares and repairs team. The results re – affirmed that e – business delivers cost reduction and efficiency and improves velocity of transaction, thereby delivering an improved performance.

What was initially understood to be a euphemistic term for cost cutting has today grown to the size and stature of a regular business function. The company realized very early that cost cutting was no way to define what may ultimately change the way it does business. It was decided to approach the task with the objective of making a cultural change at the organization.

The core focus of each wave was to challenge the costs of business operations, but the third wave also worked aggressively on bringing in a cultural change in the ways of doing business. The fourth wave went a step ahead and brought about a change in the ways of doing business. The fourth wave went a step ahead and brought about a change in the business modules. A greater visibility and involvement at the employee level was generated to bring in a change of mindset and attitudes. The first initiative was taken by the power and fuel team who created innovative posters to communicative to every Ranbaxian the benefits of saving power and fuel, even in their personal lives.

The company has already implemented around 150 projects so far and the rest are under various stages of implementation. Each Crudoe crusader is responsible for taking ownership of the implementation of the project through the operational cross-functional team, required in the identified projects.

Various communication tools such as thought provoking colorful posters, screen savers across locations have brought in high visibility and participation from all Ranbaxians. The Cruose team’s journey so far was aided by the success of the Crusoe contest, which shows that Ranbaxy has been able to use the power of its people to charter the competitive waters that today’s business strive in.

Questions to Ponder

    Identify the mainstay of project Crusoe. How did the Crusoe team members implement the project? Discuss the success of the project in the short run and in the long run?