OPtima

INAUGURAL ISSUE , June 2013 THINK AHEAD. GROW

MUSIC PIRACY IN OUR TIMES

Music artists of our times are earning good by generating revenues elsewhere.Yet , there exists a scope to generate and protect sales revenues , says Rahul Kashyap

...12 ...4
CATCH US AT

ORGANIZATIONAL PERFORMANCE
Changing measurements holds the potential of transforming behaviour in organizations, says Prasun Chowdhury, Director - Avenir

OPERATIONAL EXCELLENCE
What is excellence for an organization ? Head , Operational Excellence (Asia Pacific) , Kenna Metals explains ...

...7

Toll Plaza Problem ...................................02 Green Supply Chain Management ..............15 Pharmaceutical Patents .............................19 Energy Optimization in Indian Railways .....22

KNOWLEDGE PARTNER

Insight

How Indian Railways operates

/ operations.iimc

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THINK AHEAD. GROW

Editors Letter

June 2013 INAUGURAL ISSUE

EDITORIAL HEADS
Rajat Gupta (former) Subhasis Maji (current)

EDITORIAL MEMBERS
Arkadeep Biswas Pawan Kumar Jhawar Srivardhan M S Kunal Joshi

The India story , sadly , looks to be losing sheen . The economy is no longer growing at staggering rates, inflation and interest rates are soaring high , fiscal deficit is 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 upgrade 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 !

OPERATIONS CLUB PRESIDENT

Anoop Saurabh

OTHER CONTRIBUTORS
Alok Agarwal Navdeep Agarwal Sarvesh Patil

Expert Opinion

OPtima

Insight: How Indian Railways Operates

The author is Senior Divisional Superintendent Officer with Palakkad Division , Indian Railways Indian Railways is the worlds fourth largest with over 14 lakh employees, running over 10,000 trains daily with a huge number of Freight Wagons, Passenger Coaches and Locomotives both diesel and electric. Indian Railways has a total of 65,000 km of route length and is divided into several zones, which are further sub-divided into divisions. There are 16 zones with 68 Divisions. The entire Railway system is controlled by the Railway Board, The Chairman heads the board with 5 members. Each of the sixteen zones is headed by a General Manager. The zones further divided into divisions are under the control of Divisional Railway Managers (DRM). The divisional officers of engineering, mechanical, electrical, signal and telecommunication, accounts, personnel, operating, commercial and safety branches report to the respective Divisional Railway Manager and are in charge of operation and maintenance of assets. Train operations on the Indian Railways are controlled and monitored by the Control Rooms in each of the 68 divisional offices. The Control Room is the nerve center of the division for train operations. The track length of a division is divided into a number of control sections for convenience. Each control section has a control board which includes the telephony equipment for the control staff to talk to any of the stations, crew control offices and loco sheds in the control section. A control section normally covers about 150-250 km of railway line. The entire control organization works round the clock, all days of the year without any interruption to monitor actual movement of trains on the entire rail network. The Chief Controller is the head of Divisional Control Organization.

Expert Opinion

A control chart is drawn up by the section controller. The chart plots distance along one axis and time along with the other. The trains paths are plotted on the chart to show the progress they are making, the slopes of the path indicates the speed. Colours are used to mark out different categories of trains Example: Red for Mail & Express trains, Blue for ordinary passenger trains and Black for Goods trains. The station master at the railway stations are incharge of implementing the directives of the section controllers by operating the points and signals and are generally concerned with the safe operation and movement of trains in and out of the particular section he is incharge of. All departments involved in train movement have a representative in the Control office to provide the required support regarding their respective departmental activities in movement of trains. The various departmental controllers are Motive Power Control, C&W Control, Signaling and Tele-Communication Control, Commercial, Security and Civil Engineering controls. The basic function of train control organization is supervising and regulating movement of trains from station to station on the section to avoid delay to trains and to maximize utilization of the capacity of the section by monitoring movements of trains; arranging crossings and precedence to nonstop trains; giving instructions to stations to detain and start trains; arranging of relief to the crew who have completed their duty hours etc. The event of an accident the control organization plays a vital role in arranging relief by way of ordering accident and medical relief trains informing the civilian authorities and hospitals etc. The overall schedules and numbers of trains, as

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Expert Opinion
Each train before taking on to the platform for starting a service, the coaches of the train are examined by the engineers and technicians of Mechanical and Electrical departments in a pit line in the yard. The examination is to ensure the effective functioning of the brake system, lighting, air conditioning etc. A brake power certificate is issued for the train to the concerned Loco Pilot and Guard. The Loco Pilot has to verify the adequacy of brake power before starting of his train. No Loco pilot can drive a train unless he is in possession of a valid certificate of competency issued by an authorized officer.

published in the passenger time tables are decided in advance based on consideration of the operational aspects such as loco and coach availability, crew changes, section capacity etc. The trains are classified as Mail/Exp, Passenger and Goods based on the type of service. The schedule of all passenger carrying trains are controlled as per the time table issued by the Railway once in a year. Every year a revised time table is issued effective from 1st of July. The trains movements are controlled as per the timings of the time table. The time tabling of passenger carrying trains is fixed taking into consideration the type of service, the speed, convenience of arrival and departure at terminals, density of the line capacity. Also facilities for fueling of locomotives enroute, cleaning & watering of coaches, additional time required for loading and unloading of parcels at some stations, additional time required for changing of running staff enroute etc.

Insight: Toll Plaza problem

Dr. Kamaljit Anand
Head of Client Delivery Kie Square in upgrading or even maintaining our set-ups in line with growing demand. Our design needs a stress -detection engine to forecast, auto-recommend and defuse the system overloads in advance.

Increasing the number of toll lanes at the plaza may have been the most intuitive solution to planners, but does not address the problem. Widening of the toll This article was featured in The Economic Times plaza is not a scalable proposition. An effect of a simion September 27, 2012. Printed with special per- lar nature can be created with minimal interventions mission from Kie Square. in the current system. The theory: A tollgate systems efficiency is measured through the queue length and the waiting time. The queue buildup is a result of the gap in vehicle clearance vis-a-vis total arrivals at the toll per unit of time. The waiting time is a manifestation of the queue length and the time of arrival into the queue. It swells exponentially with the delay in joining the Despite building infrastructure, we are lackadaisical queue in a peak hour. My recent trip to Neemrana (120 km on NH-8) was a four-hour stifling daymare, whereas I often clocked that to Jaipur with aplomb in the past. One need not travel as far for insightful discoveries on human distress: a trip to Delhi-Gurgaon Toll Plaza would suffice.

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Expert Opinion

to emulate a 32-, 48- or 64-lane toll plaza. However, How the current system works: There are 16 toll lanes with multiple booths, there would be inefficient allofor traffic clearance on either sides of the highway with cation of vehicles across the booths within a lane rea four-lane traffic leading into the funnel. The desig- ducing the actual effectiveness to some extent. nated tag card lanes are mostly used as regular lanes. The average service time in each lane was empirically Continuous widening of the toll plaza road - singlefound to be about eight seconds. During peak hours, booth parallel gates - has its physical limitations, so all 16 gates on a side are typically in use and that ena- we experimented with incorporation of additional bles clearance of about 120 vehicles per minute. booths at calculated distances in a single tollgate lane As the weekday peak hour arrival rate was estimated - multiple-booth parallel gates - in a simulated enviat 2.7 vehicles per second, or 162 vehicles per min- ronment. The introduction of multiple booths allows ute, there is a continuous queue buildup at the rate of for multiple clearances in a single cycle against single around 2.6 vehicles per minute per toll lane, clearances in the current scenario, leading to a faster and it continues till the arrival rate decelerates. clearance rate per minute and a lower queue buildup. Simulation results: We hypothesised that it may take up to four booths in a lane to reduce the queue length to a manageable number. But findings indicated that no more than two booths are required per lane to reduce the queue length to near zero within 30 minutes of peak hour. Two -booth parallel gates design nullifies the current wait time of 26 minutes seen at one hour of peak rush and, hence, can play a significant lever in managing toll traffic. As the number of booths per lane is less, the inefficient vehicle allocation problem is also minimised. The operator can flexibly decide on the number of toll booths to be kept operational durArrival at various points in the peak hour means a ing peak or non-peak hours, given the arrival rate, but varying queue length and, hence, a variable waiting is advised to do it only with the help of an automated time ranging from five minutes at the onset of the decision support system. peak hour to about 26 minutes after one hour of peak traffic, with almost 200 vehicles in queue per lane. One non-working tollbooth adds about seven vehicles per minute across the queues of other toll lanes, and in one hour of peak traffic, it increases waiting time at other tollgate lanes by about five minutes each. As the non-peak-hour arrival rate is about 1.8 vehicles per second, there is only a 0.2 vehicle queue buildup every minute on each toll lane even with two nonoperational gates. It is not necessary to keep all gates operational in non-peak hours to optimise resource costs to manage the toll. Potential structural improvements: Multi-row parallel gates: Current tollgates have only one clearance feasibility at a point in time, so a maximum of 16 vehicles can be in the process at a time. If the same can be increased to two, three or four booths per lane without widening the toll plaza, there can be significant impact on the queue lengths as they have a potential

OPtima

Measurements A Core Driver of Success

Prasun Chowdhury Director - Avenir

Expert Opinion

(pchowdhury@avenirco.com) Prasun leads the dynamic, resulted oriented consulting and implementation firm, Avenir. Avenir works with leading and mid-sized corporates in India and internationally to rapidly design and implement winning transformation initiatives using Theory of Constraints Fact: Behavior is guided by how people are measured. This is true in every walk of life, especially so in the organizational context, where behaviors are a manifest of the conflicts between departmental and overall organizational measures. Clearly, a multitude of management methodologies have focused on measurements of individual and group performance in organizations. Key Result Areas (KRAs), Policy Deployment, and Hoshin Kanri, to name a few, embed a myriad list of measurements that endeavor to drive organizational behaviour. Organizational objectives are partitioned into departmental objectives and measured. The widespread assumption is that these local measurements are additive in nature and that their achievement would necessarily facilitate the achievement of organizational goals. There are many cases where Senior executives of a loss making organizations had earned an average of two promotions over a five-year period due to so called positive results in their respective departments. Why would the organization continue to make losses then? This real case highlights the fallacy in the above-mentioned premise. Such examples abound in the hallways of organizational history.

Key thought leaders, such as Dr. Eli Goldratt observed that department-linked performance measurement systems, however seemingly sophisticated, fail to improve organization bottom-line. Let us analyze this hypothesis in a simplistic but real case of manufacturing organizations. In most manufacturing organizations, departments have their independent context of measurements. The production unit would be measured on the basis of reducing cost per unit. What is the largest fixed cost in most manufacturing establishments? Depreciation of equipment and machines is of course the largest fixed cost allocated across each unit of production! To reduce cost per unit,conventional thinking advocates increasing production volume. How often have we heard from production people that an idle plant increases costs? Increased production,therefore, adds to mushrooming inventory, which is the concern of the sales department, not production.Measured on the basis of market share and sales volume, coupled with escalating inventory sales department attempts to sell the inventory at progressively lower prices. While both production and salessuccessfully achieved their local optima, through this seemingly heady combination of cost, volume and efficiency, company profits were eroded and corporate objectives contradicted. This is a profound example of why local measures can contradict corporate measures. The Abbreviated Current Reality Tree (Figure 1) provides an overview of this vicious loop. Contradicting this conventional thinking, Theory of Constraints (TOC) contends that measuring local performance is actually detrimental for organiza-

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tional success.

Expert Opinion
Organization does not make more and more money Cost and cost reduction are believed to be addictive overall goal of organization is subverted There is pressure on profits More time taken to discuss cost reduction initiatives

Dept. focus on their own goals to the exclusion of others Dept. focus on their own goals to the exclusion of others

Often measures of one dept. conflict with those of other depts. Dept. focus on their own goals to the exclusion of others

Current Reality Tree (Figure 1) We believe that shareholder satisfaction, employee satisfaction, and customer satisfaction must co-exist for the organization to succeed over the long term. Customer satisfaction and employee satisfaction are more intangible to measure. It is obvious that making more and more money, i.e. shareholder satisfaction, now and in the future can be a measurable parameter of organization success. Theory of Constraints (TOC) advocates Throughput (T) as the prime measure for an organization instead of contradictory local measurements. Throughput is defined as the rate at which for-profit organizations generate money. Throughput is simply calculated as the sales revenue less the truly variable costs (fixed costs do not change over the short term). If we agree to the above axiom, let us look closer at With a common and effective measure like Throughthis aspect of increasing bottom line. Profits are in- put distributed across the organization, production creased either by reducing costs or increasing rev- would not benefit from burgeoning inventory, while enues or both. Is there a limit to decreasing costs or sales would reconsider reducing prices. All departincreasing revenue? ments would rather focus on improving the flow for the organization to achieve increasing throughput. Costs can be reduced to a How does this model affect departments other than limit zero at production and sales? Well, support departments have which point the an equally valuable role in this context as well. Purorganization chase would consider the impact of delays vis--vis ceases to func- cost effect on throughput. HR would consider the eftion. Revenues, fect of timely hiring on throughput. While finance though, can fixed costs, it would also be increased measure each investment ad infinitum proposal based on projected provided that a throughput and return on distinctive investment thereof (T-OE/I). and sustainable competitive edge can be developed and enhanced. This would break the market con- Changing measurements straint continually, enabling the organization to gar- holds the potential of transner increased market share. Visibly, though, sustain- forming behaviour in organiability of the competitive edge will be contingent on zations. We can Site numerous a significant paradigm shift that deters competitors examples where senior executives altered course due to from following. new set of measurements.

Profits are increased either by reducing costs or increasing revenues or both.

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Expert Opinion
Organization does not make more and more money Robust plan to create and sustain competetive edge There is knowledge of TOC to help create competetive edge More time is spent on how to increase T for the organization All departments focus on T Throughput(T) used as prime measure for organization & departments

Future Reality Tree (Figure 2)

TOC provides the vehicle to break down silos and align the senior leadership team towards the holistic goal of making more and more money for the organization. TOC can facilitate identifying a common and effective measurement criterion and disseminate it across the departments, as a step towards creating differentiation in the market place and developing a sustainable competitive edge. The Abbreviated Future Reality Tree (Figure 2) demonstrates this in a simplified manner.

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Insight: Operational excellence key to sustainable growth

Subrata Mitra Majumdar
General Manager , Head of Asia Pacific Operational Excellence Kenna Metals

Expert Opinion

The key to business success is doing the right things better, faster and more efficiently than competition. Operational excellence is the key differentiator to achieve that. Impact of small improvements are neutralized by natural process variations, will not be noticeable and hence quantum jump is critical to realize our goals.

What is excellence for an organization ?

It means being successful in a chosen market against A visionary leader understands the cost of lost opporcompetition regardless of size, country of origin or re- tunities. sources. It means matching and then exceeding your competition on Quality, Speed, Customer Service, InWhy is it important for Indian organizanovation, Cost and flexibility.

tions ?

1 Indian customers are now more aware and expecting world class products and services 2 Many world class MNCs are increasing their footprint in India. They are ready to provide world class products and services. 3 Stakeholders now want organizations to be global organizations bigger, faster. 4 Global perspective is the The most successful organizations dont just meet need of the hour. World is shrinking, almost every orcustomer satisfaction, they exceed them and beat the ganization is engaged in some form of international competition by setting the standards at a level that trade - marketing and selling to customers in other makes it difficult if not impossible for others to sur- countries or simply using parts or materials that are produced elsewhere. pass. 5 Nobody is going to protect us. Concept of level playThey do not become complacent even after achieving ing field is fast disappearing, to survive and grow on this but strive continuously to sustain and further im- our own strengths. 6 Past paradigm will not work. Past success is not the prove it. guarantee of future success.

Why we need excellence ?

What is changing in this world continually ?

1.) Definition of Quality Past concept

To continuously achieve the ever changing expectations and also improve the quality of life of all stakeholders customers, shareholders, employees, suppliers, society.

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Expert Opinion
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 for decent ROI

Focus on Conformance to standards. This definition assumed that as long as the company produced quality products and services, their performance standard was correct regardless of how those standards were met. Moreover, setting of standards and measurement of performance was mainly confined to the production areas and the commercial and other service functions were managed through command and control.

Present - the new concept of quality encompasses manufacturing, commercial and other service functions of an Present organization because all these functions directly or Invest on opportunities irrespective of scale indirectly affect products/service quality & customer -Ready to take risk for high probability on returns satisfaction. -Global perspective -Ready to invest for technology , environment, society Quality is a state in which Value enrichment is real- -Impatient for faster returns ized for the customer and provider in every aspect of business relationship. 4.) Employees , suppliers expectation of better qualThe term Value enrichment for the company means ity of life that they must strive to produce highest quality products at the lowest possible costs to be competitive in Past the global markets. Limited choice, fewer organizations For customers, the term Value enrichment means -Limited learning opportunity that they have the right to purchase high quality prod- -Protected economy ucts/services at the lowest cost. -Unaware of global development -Less awareness on excellence, accepts status quo. 2.) Customer expectation -Virtue in continuing in one organization -Loyalty toward organization Past -Mobility not preferred Ready to wait for products and service as per suppliers choice of time Present -Ready to pay for both Value added and Non-value Many choices, many world class organizations inadded activities of suppliers vesting in India -Happy with basic quality compliance -Very high focus on learning, competency building. -Large batch size is acceptable as there was no choice People prefer those organizations for career growth -Accepts variation -Open economy -Awareness on excellence, highly competent teachers, Present coaches. Ready to pay for only Value added activities of sup- -People challenge status quo for breakthrough impliers. Customer decides the price. provements -Not ready to wait. Demands and gets lowest lead time -Wealth creation is a priority from suppliers. -Loyalty more toward work, job content not just on -Not happy with just basic quality. Expect Higher organization the better, Delight from the suppliers as Mr Noriako -Not afraid of mobility for better career, better quality Kano describes. of life. -Expects lowest life cycle cost. -Not ready to keep inventory. Expects Just in time, Just What is the destination ? in sequence. -Expects consistency, certainty. There is no final end destination of Operational excellence. It is a journey to continuously achieve and

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Expert Opinion

exceed changing worlds expectations. In pursuit of on performance improvements at all levels are much achieving that, an organization will reach and cross higher. many important milestones that will bring immense benefits to the organization. That is what we call sus- Mission critical strategies tainable growth. Journey 1.) A vision statement that is worth dreaming, aspiring for and shared. Nothing happens unless we dream first. 2.) A value system that is customer centric, process focused, people focused, socially relevant and ethical. 3.) Mission critical strategies. They are like great river, that maintains its course but adjusts its flow. 4.) Metrics driven. A little push in the right direction can make a big difference. 5.) Adoption of a right excellence model. Organization can develop their own model that is aligned to its vision. 6.) PDCA

1.) Shared Vision 2.) Uncompromising values 3.) Visible Leadership involvement 4.) Leadership development 5.) Fast cross the valley of despair 6.) Focus on Customer satisfaction 7.) End to End integration 8.) Policy deployment 9.)Root cause analysis approach 10.) Do not ignore the non-technical aspect during change 11.) Learning from all sources 12.) Continuous improvements through kaizen institutionalization 13.) Reward & recognition. Do not promote mediocrity.

Some World class Metrics both business The journey passes through five stages to take an or- and process related
ganization to World class. Leadership to ensure Total Employee involvement ( TEI ). organization. 30% + YOY growth Awareness can make a difference, an important start- 2.) ROI : best in class among competitors and peer organization. 20% + YOY growth ing point 3.) Sales per person : best in class 4.) Customer satisfaction index : best in class 5.) Productivity gain : 15% + YOY. Both in No. / value per Man-hour and per Sq. meter. 6.) Process quality : 5 Sigma + 7.) Customer complaint 6 Sigma level 8.) Safety : Zero accident and incident. 9.) Lead time : best in class among competitors. ( ) 30% YOY In both average and world class organizations, Sys- 10.) Inventory turns : 50 + . tems and clarity on Roles and responsibilities may be 11.) OEE : 85% for Discrete and 92% for Continuous same but in world class organization, the awareness processes.

1.) EBIT : best in class among competitors and peer

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12.) Cost of quality < 5% of sales 13.) Kaizen per person per month : 1 14.) Employee satisfaction index : 90+ 15.) Employee turnover < 2% Choice of Excellence models

Expert Opinion
among Indian organizations since last 15 years. As many Japanese and US companies started their businesses in India in last 15-20 years, we learnt these highly effective methodologies and started practicing. Today many management and technical institutions have made Lean and Six sigma as part of their curriculum. I have conducted classes as visiting faculty in IIM Kolkata on some Lean tools.

There is no dearth of excellent models which an organization can adopt and implement to become a World class organization. When I attended TQM training in Osaka Japan, I asked Prof. Ryoji Futami ( Author of 7 New Manage1. Deming TQM contact JUSE, Japan. Some ment tools for QC ) about his opinion about the excelIndian companies that adopted, implemented and lence models and methodologies. He opined that all awarded are Lucas TVS, Sunderam clayton, TVS Mo- are very good. He advised me to read all the models. tors, Sundaram Brake lining, Brakes India, Sona Koyo We can adopt any one that we think right for us or Steering, Mahindra & Mahindra farming division, prepare our own model after reading these models. Tata Steel, Rane Engine Valves, Rane TRW Steering, SRF Ltd, Asahi India Glass, Krishna Maruti Seat divi- Mr. David Meier ( Author of Toyota Way Field book ), sion, National Engg Ind. etc. in our company seminar in USA , advised us to follow 2. TPM contact CII, JIPM. Some Indian com- any model that focuses on waste reductions, all forms panies that adopted, implemented and awarded are of wastes that reduces effectiveness and efficiencies. Bajaj Auto Chakhan, TVS Rubber, Hindustan Lever multiple plants, Sundaram Fastners, Brakes India, All excellence models focus on keys aspects of busisome IOCL plants, some Ispat Ind plants, MRF, Sona ness Enablers such as Leadership, Strategy, Process, Koyo Steering, TVS Motors, National engg Ind, some Partners, Employees and Results of these enablers as divisions of Tata steel, Grasim Ind and many others. Customers, People, Society and Key performances. 3. Frost & Sullivan Manufacturing excellence. Offices across major metro cities. Some Indian com- Start the journey now panies that adopted, implemented and awarded are Wabco-TVS, JSW, Titan Ind, Tata Cummins, LucasTVS, Honeywell Automation, Apollo Tyres, Bajaj Auto Chakhan, Piramal Glass, Godrej Consumer products, Tata Motors etc. 4. CII EXIM contact CII. Some Indian companies that adopted, implemented and awarded are HP, Start the journey. Dont seek perfection now. Infosys, Maruti Udyog, Tata Steel, Tata Motors Commercial vehicle division, TCS, BHEL. Expected results after 3 years 5. European Foundation of Quality ( EQQM ), Malcolm Baldridge ( USA ) excellence models. 1.)EBIT / ROI 40% + 6. Many organizations have prepared their own 2.)Velocity ratio - Double excellence model and practice across their organiza- 3.)Defect reduction by 50% tions. Like Tata Business Excellence Model, Aditya 4.)Lead time reduction by 40% Birla WCM, Toyota Production system, Bosch Pro- 5.)Inventory turns WIP / FG / RM : 30% improveduction system, Mahindra & Mahindra TQM, Delphi ment Production system, Kennametal Value Based System, 6.)On time delivery in Full 90% + WIPRO Mission Quality and many other organiza- 7.) Predictable lead time variability 3 sigma level tions. 8.) Productivity gain 50% 7. Lean manufacturing ( adoption of Toyota Pro- 9.) Set up time reduction 50% duction system ) and Six sigma ( invented at Motorola 10.) Skill matrix 80% ) These two initiatives have become very popular 11.) Batch size 40% less

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Expert Opinion
Never stop questioning, never stop challenging and develop an attitude from looking to seeing and from seeing to doing for betterment forever. - Taichi Ohno, Invented Toyota Production System I have been always learning great lessons from that one principle, and it appears to me that all the secret of success is there : to pay as much attention to the means as to the end. - Swami Vivekananda

12.) OEE 25% plus than base level 13.) Kaizen per person per month 0.2 14.) Employee turnover 40% less 15.) Organization moving toward a learning organization

Early warning be cautious

Conclusion

Let us get started. That is the attitude of a good leader. Remember the following power thoughts to remain motivated during the journey. Developing a Excellent system is similar to saving money for retirement. Effort and sacrifice must be made in the near term in order to reap the benefit in the future. The implementation process will require sacrifice of time and resources now for the potential gains in the future. Like investing, the key to success is to start early and make contributions regularly. We will not be remembered by our words, but by our kind deeds. Life is not measured by the breaths we take, but by the moments that take our breath. Conviction is worthless unless it is converted to conduct -Scottish historian Tomas Carlyle When the Rate of Change Outside Exceeds the Rate of Change Inside, the End is in Sight - Jack Welch, Chairman and CEO GE

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Student Speak

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Opinions: Piracy In Music Industry

Rahul Kashyap
2011-13 IIM Calcutta

Student Speak

packaging of the original recording. The aim is to mislead the consumer into thinking that they are buying the genuine product. Pirate Recordings: - These are unauthorized duplications of music from legitimate recordings for commercial gain. Pirated CDs or music cassettes may be compilations such as Top Ten, Bollywood Hits or a combination of hit titles of different music companies. The packing and presentation of a pirate copy does not usually resemble a legitimate commercial release.

Piracy is not a recent phenomenon and so does pirates. Pirates have existed since medieval times. Their business plan included looting the cargo ships. In the recent three decades we have seen major technology changes like PC , software , the music industry etc. This technology change has changed of appearance of the pirates and their business Piracy as well. Bootlegging: - This is recording, duplication and sale Lets start from the Music industry. As per The Indian of a performance such as a live concert or broadcast Music Industry , without the permission of the artist or the Record Company which may be Piracy is the unauthorentitled to control the ized duplication of an recording rights of the original recording for artists performances. commercial gain without the consent of the rights Music Industry claims owner. The packaging of that have been losing pirate copies is different millions of dollars due from the original. Pirate to piracy. The latest figcopies are often compilaure as per The Institute tions, such as the greatest for Policy Innovation, hits of a specific artist, said music piracy is or a collection of a specosting the U.S. econocific genre, such as dance my $12.5 billion every tracks. year. Well this figure The problem of piracy should be taken with a has arisen with the rapid pinch of salt as this is advance of technology. not the exact loss. This New techniques of printfigure gives the size ing, recording and fixaof pirated music and tion of broadcast or recontains all the illegal corded programmes have downloads. On internet emerged, making it easy when someone is downfor the pirates to carry loading something free, on their illegal activities. it doesnt means that Piracy is an illegal and one is actually intercriminal activity SOURCE : Go-gulf.com ested in the content. Hence, it doesnt give the figure of real music lovers It also mentions about three kinds of piracy, namely, and therefore the original losses would be much less. counterfeiting, pirate recordings and bootlegging. Counterfeiting: - This is the unauthorized copying Transformation of Music Industry of the sound as well as artwork, trademark, label and Music is increasingly being downloaded to laptops,

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Student Speak
a new service called Flyte through one can download songs at as low as Rs 6. Internet has become the new radio or we can say that Streaming music the new radio. It has helped to bring down the figures of pirated music. A research, conducted by music research companies Music Ally and The Leading Question last summer, found that illegal music sharing is declining and that teens are now increasingly streaming music online instead. The younger generation just wants to click - not on the download button, but on the play button. Of the 1,000, 14 to 18 year olds polled, only 26% admitted to illegally sharing music files, down from 42% in December 2007. Instead, 65% of respondents said they stream music online at least once a month. Gerd Leonhard, media futurist and writer, pointed out: Kids now only listen to music, they dont download it. Technology infrastructure has helped a lot to achieve this benchmark. The advancement in broadband technology and high speed internet has ensured that consumer doesnt notices the difference 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 4G have supported music streaming a lot. It has ensured that a consumer can now stream while moving. Leonhard explained that this new trend requires new business models, as even fewer people now will want to pay for music. The new business model is selling stuff around music; tickets, merchandising, posters, books, things like that. Consumers skip television ads, but they will listen to a sponsor message when they get free music in return.

PCs, mobile phones etc, rather than purchased in physical format like tapes, CDs, DVDs etc. With the advent of semiconductor technology, we are witnessing the death of music which used to be distributed on the physical discs. Internet can be surely blamed for this as it has made sharing very easy. So, if I buy any music record then I can share that with all my friends. The forums for doing so were everywhere, whether it was Napster in the old days, Limewire, Kazaa, or simply sharing a friends CD or iTunes collection. This resulted in rampant increase of piracy in the music industry. Music industry tried to curb piracy by uniting together. They got Napster closed, along with the some major sharing forums. But still piracy seemed to be too big menace to be killed. So, finally music industry decided to start selling online. This opened up a new opportunity for music industry. In the initial days, music companies tried to sell the music online, they were not very successful. Then came the concept of live streaming, legal music streaming sites, such as Spotify and We7. A plethora of websites now allow consumers to stream music without actually downloading and keeping it. Streaming sites provide a way for consumers to sample music whenever they want to before being given the option to purchase legal downloads or physical albums. This is especially important in times of economic hardship, given the high cost of CDs. This type of site allows users to stream and listen to music for free on any device, without actually downloading and keeping it. If they like the music enough they may be motivated to buy the physical album or download legally. So, now anyone can listen online to his favourite song many times but if one wants to download the song then they have to pay a nominal price for that. Websites like itunes are giving song for download for as low as 99 cents per songs. Indian website Flipkart has launched

Becoming Famous

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Student Speak
Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. The survey found that music was particularly close to the hearts and minds of the young in India (83%) and the Philippines (80%); followed by Vietnam (77%), China (69%), Thailand (67%) and Indonesia (65%). The love affair between music and young urban Asian consumers remains, the study proclaimed. Overall finding also showed that 25% of the respondents were listening to more music obtained digitally in the last year. Listening to music will continue to be a major form of escapism for many consumers, but music will increasingly be downloaded or streamed to PCs, MP3 players or mobile phones, rather than purchased in a physical format. Music industry needs to catch up with this new trend of streaming and free downloading. Fighting head on with the daemon of piracy is not going to solve the problem because a big population of hackers is always trying to breakdown the new technologies. So, if we bring some technology for anti-piracy, it may run good for sometime but sooner or later some hacker group will crack it. A better way is to make music freely available for music lovers. So, music lovers can listen to music whenever and wherever they want through internet. They can be charged with pay per usage mechanism or against a small download fee like 99 cents. The solution is free, legal music streaming sites. The process of downloading and paying for downloads should be made amazingly simple. Also, infrastructure like broadband internet and fast speed mobile networks would be needed. Once the cost of downloading music easily through internet comes below the cost of hassles in downloading the pirated version of the music, music lovers will definitely follow the legal method over the illegal pirated methods. Hence, we can have a music industry which is not bothered by the piracy anymore.

Music bands of newer times dont rely on the sales of the records anymore. They are using internet mediums to launch their albums. Many of the albums are getting released on youtube.com for free. Millions of music lover can listen to these albums for free and hence the album becomes famous. The introduction of YouTube has allowed established and aspiring artists to post their videos for the world to see. Consumers can look at what they want when they want, offering musicians new promotional opportunities. Artists are producing expensive music videos for their fans and uploading them to YouTube. . Right from Lady Gaga to Justin Bieber, from Radio head to PSY, everybody is now launching their new albums on youtube.com. The major source of revenue for these bands are the concerts and live performances, for which a music loving customer is ready to spend anywhere between Rs 500 5000 for a show. This way music bands and artist have also realized that distributing music for free is actually helping them to gain popularity and then they can easily earn money through live performances. A survey conducted in Norway in mid-2009 found that music consumers who regularly download illegally pirated music tracks are also the largest purchasers of legitimate digital music files, by a factor of 10 over non-pirates. In conducting the survey, the independent BI Norwegian School of Management looked at the music purchasing habits of 1900 respondents, each over 15 years of age. Consumer Ethan Smith, in response to the results of the survey, wrote: I fall into the category of pirate/consumer. However, I spend more money on music now than ever before, despite having pirated a sizable portion of my library. Music fans today dont learn about new music through old media. Radio, television, corporate sponsorship, and for-sale singles just dont sell music like they used to. Instead, we use blogs, live performances, digitally enhanced word of mouth, and, yes, pirating.

Way Forward
Piracy or no piracy, music is going to stay for sure. We love music and we will love it for the next many generations. Over two-thirds (68%) of Asian youth say that music plays a very important part in their lives, according to a Branded and Synovate survey from June 2009. This survey included 8,841 respondents aged 15-24 in China, Hong Kong, India, Indonesia, Japan,

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Opinions: Green Supply Chain Management

GSCM the way ahead

Student Speak

Parthiban V & Rahul Ranganathan

NITIE MUMBAI

Introduction

A supply chain is a conglomeration of multiple parties involved in fulfilling a customer order, decision making and management of information, resources and funds. The objective of a supply chain is to maximize the surplus the difference between the revenue generated from a customer order and all the costs incurred by the supply chain while satisfying that customer order. A facilitys supply chain has a profound impact on the environment as a result of waste generated during products storage, transportation, processing, use or disposal. The global ecosystem is witnessing a rigorous challenge in terms of its energy generation and waste disposal capabilities. Therefore, environmentally responsible manufacturing is the need of the hour not just to achieve a competitive edge but also to increase the market share by curtailing the adverse Another critical aspect of a green supply chain is sustainable and environmentally friendly product and process design. Such an approach contributes significantly to the bottom line of the firm owing to increase in the number of environmentally conscious customers, who, in turn, serve as the primary driver in order to justify the implementation of green initiatives. In environmental impact of products. As a more system- green product design, an analysis is carried out to asatic and integrated strategy to achieve the dual objec- sess the environmental impact of a product during its tives described, Green Supply Chain Management active lifecycle and beyond and attempts are made to (GSCM) has emerged as an important new innovation minimize adverse effects. This includes elimination of that helps organizations develop win-win strategies. waste and by-products during manufacturing, reuse GSCM is a holistic concept of green purchasing, green of wasted energy, adherence to strict quality standards manufacturing and material management, green dis- to reduce defects and adoption of lean principles to tribution and marketing, and finally reverse logistics. avoid excess usage. Thus, green supply chain encompasses components of environmental management as well as closed-loop Finally, return collection and recovery are an integral supply chain, which integrates design, operations, and part of the green supply chain which adds significant control of a system for maximizing value over life cy- value to it. While efficient return collection system cle of a product including value recovery from return saves logistics costs, easy and environmentally conat the end of its use. For instance, by employing ef- scious return policy improves customer relationships, ficient closed-loop supply chain, Xerox Corporation thereby benefiting not just the product manufacturer not only makes and sells new printer cartridges but but all parties involved in the supply chain. The conalso generates substantial revenue by remanufactur- cept of Reverse Logistics is popular in this regard, the ing used cartridges collected from the users. process of moving products from their typical final

Businesses that incorporate GSCM implement two important practices, one being the assessment of environmental performance of their suppliers and the other to collaborate with suppliers encouraging them to undertake measures that ensure the environmental quality of their products and processes. Organizations generally adopt green practices in their supply chain in order to comply with rules and regulations. However, there are several advantages for proactive firms that inculcate GSCM initiatives even before environmental regulations are in place. GSCM initiatives can help organizations develop a competitive advantage, enhance the brand value of the firm and create a positive impression about the firm in the minds of the stakeholders. For instance, Volvo planned proactively in anticipation of a Swedish law that made automakers responsible for disposal of used vehicles and eventually set up sophisticated operations for salvaging and dismantling vehicles that generated significant revenue.

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points of use for the purpose of proper disposal and/ or value recovery through recycling or remanufacturing. Recycling is processing of a product after the end of its life cycle to prevent potential waste of useful materials. After recycling, the materials used in a product may be converted into some other materials or may be brought back to their original forms to be used again. On the other hand, remanufacturing is the process of replacing or repairing worn out or obsolete components or modules in a product and bringing back the product to like-new condition.

Reactive: This is adopted for low levels of environmental responsiveness wherein a firm would take up environmental management only if prompted or enforced to comply by means of regulations. Focused: Such a strategy is employed for high levels of environmental management wherein a firm is fully committed to the implementation of GSCM practices irrespective of its financial implications. Environment management holds the utmost priority for such a firm and not profits. Opportunistic: A firm adopts such a strategy if it is financially beneficial in the long term Implementation of GSCM cannot be initiated without Proactive: Applied to the latest environmena firm commitment from all the key partners. Since tal practices, a firm adopting such a strategy has high most GSCM initiatives involve the adoption of rela- standards of environmental performance set internaltively newer technologies, a clear and defined frame- ly which may be quite advanced as compared to the work of measures to assess project performance needs current government or global standards. to be established. Moreover, GSCM initiatives may not be attractive in the short run but yield significant The implementation of green supply chain is, in turn, benefits in the long run. This requires intense and ob- driven by internal as well as external drivers. Internal jective scrutiny of the GSCM implementation in the drivers include the willingness to improve risk manshort run so that the right path is tread for significant agement due to potential interruptions in the supply long term initiatives. Hence, the framework of meas- chain and the collaboration with suppliers to find alures employed needs to be tailored to the individual ternative materials and equipment that minimize envifirm or project level needs. Also, the set of metrics em- ronmental impacts. External drivers include customployed need to be constantly monitored and reworked ers, investors and non-governmental organizations. A so as to reflect maturity of the practices involved. brief description of the key drivers is as follows: As far as the implementation of GSCM is concerned, four critical stakeholder groups can be identified which are listed below: Regulatory stakeholders who either set regulations or have the ability to convince governments to set standards Organizational stakeholders who are directly related to an organization or can have a direct financial impact on the company Community groups, environmental organizations and other potential lobbies who can mobilize public opinion in favor of or against a firms environmental policies Media, which has the ability to influence societys perception of a firm

GSCM put into practice

1. Environmental collaboration with suppliers This involves joint collaboration between organizations in the supply chain in order to capture the added value which can arise from collaborative interactions to reduce the environmental impact. This collaboration mechanism requires the buying organization to dedicate specific resources to developing cooperative activities and results in increase in customer satisfaction and contributes to the reduction of business waste, environmental and supply chain costs.

2. Environmentally friendly purchasing practice A suppliers ability to develop environmentally friendly goods is becoming a major factor in supplier selection as the environmental effects of raw materials are transferred across the supply chain. Adopting green The relative influence of each of the above four stake- purchasing practices avoids buying in waste and reholder groups determines the environmental strategy duces environmental costs and can create economic adopted by a firm for its environmental management value with reduced disposal and liability costs. initiative. Accordingly, four such strategies are identi3. Product environmental impact reduction by fied: collaboration with designers and suppliers

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9. Environmentally friendly packaging Application of environmentally friendly packaging reduces environmental costs and business waste while improving customer satisfaction. 10. Working with customers to change product specifications This practice helps to establish product specifications that are compatible with process modifications and input substitution while conforming to specifications and durability.

Design collaboration with key suppliers enhances GSCM practices and reduces product introduction time. However, the success of this practice requires a high degree of external cooperation with other partners throughout the supply chain. 4. Minimizing waste This can be achieved by incorporation of lean practices for the elimination of waste or non-value added activities throughout the supply chain. 5. Decreasing the consumption of hazardous and toxic materials This practice minimizes the cost of eliminating and treating hazardous and toxic materials and can be implemented only if all partners in the supply chain share the same environmental concerns.

It is important to assess the effects of green practices listed above on the supply chain performance of a firm and integrate them in a manner that makes it possible to control and supervise supply chain performance in operational, 6. ISO14001 economic and certification environmenISO14001 can act tal terms. Opindirectly to inerations are the fluence all supply foundation of chain partners to efficient disadopt more entribution and vironmentally manufacturing friendly practices. which in turn Also, suppliers leads to finanwishing to access cial returns. environmentally Economic perconscious markets formance is the can obtain impormost important competitive tant driver for advantages with organizations ISO14001 certifiwhich implecation. ment GSCM and is related to 7. R e v e r s e the effective use Logistics of various inReverse logistics puts in the prorepresent a cost for the organization through product duction processes. Finally, as mentioned earlier, envirecovery as well as the collection and transportation ronmental performance is a concern for organizations of recovered products. Minimizing this cost is imper- for regulatory and contractual compliance, public perative to maximize the environmental gain resulting ception and a competitive advantage. The below table from the GSCM initiative. outlines measures and metrics to evaluate the influence of green practices on supply chain performance. 8. Environmental collaboration with customers This green practice increases the environmental Challenges to develop good metrics awareness of the customers and makes them environ- With the increasing complex nature of green supply mental partners in the green supply chain. chains, especially those employing closed loop strate-

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Conclusion
The impact of supply chain on the environment is under increased scrutiny in current times with increased pressure from community and environmentally conscious customers. This has forced manufacturers to integrate environmental concerns in their management practices out of which GSCM has emerged as an important outcome. The drivers for the implementation of a green supply chain were highlighted along with the fact that a buy-in from all the key partners in a supply chain is imperative for the success of GSCM initiatives. In this regard, a comprehensive framework of measures to evaluate the performance of a green supply chain needs to be established in order to monitor the effectiveness and efficiency of such an initiative and maximize the environmental gain.

gies, the need for performance assessment with reliable performance measures is imperative. Accordingly, some of the important challenges to the development of reliable metrics are highlighted below which need to be tackled effectively. 1. With no shortage of environmental indicators, the choice of indicators to employ and methodology to incorporate them in the PMS is an increasingly difficult decision to make. 2. Incompatibility between classical production measures designed for intra-organizational management and supply chain measures applicable for interorganizational scope needs to be resolved by proper delineation of metrics employed for each. 3. Enforcement of compliance across the supply chain is tough considering the lack of an oversight agency which controls the entire supply chain, particularly for economic and social measures. 4. Lack of trust in the supplier-manufacturer relationship and fears that data confidentiality may be compromised need to be addressed. 5. Nonalignment of the potentially conflicting environmental strategies of all supply chain players is a potential roadblock for the development of an integrated PMS. 6. Implementation of GSCM practices is a recent trend, characterized by its time consuming nature and uncertainties owing to the dynamic nature of the supply chain. Hence, a particular set of metrics employed for performance assessment need to be continuously reviewed and reworked to suit current needs.

References

1. Arimura T.H., Darnall N., Katayama H., Is ISO14001 a gateway to more advanced voluntary action? The case of green supply chain management, Journal of Environmental Economics and Management, 61(2011), p170-182 2. Azevedo S.G., Carvalho H., Machado V.C., The influence of green practices on supply chain performance: A case study approach, Transportation Research Part E, 47(2011), p850-871 3. Bose I., Pal R., Do green supply chain management initiatives impact stock prices of firms?, Decision Support Systems, 52(2012), p624-634 4. Diabat A., Govindan K., An analysis of drivers affecting the implementation of green supply chain management, Resources, Conservation and Recycling, 55(2011), p659-667 5. Hassini E., Surti C., Searcy C., A literature review and a case study of sustainable supply chain with a focus on metrics, Int. J. Production Economics, 140(2012), p69-82 6. Lin R.J, Chen R.H., Nguyen T.H., Green supply chain management performance in automobile manufacturing industry under uncertainty, Procedia Social and Behavioral Sciences, 25(2011), p233-245 7. Olugu E.U., Wong K.Y., Shaharoun A.M., Development of key performance measures for the automobile green supply chain, Resources, Conservation and Recycling, 55(2011), p 567-579 8. Zhu Q., Sarkis J., An inter-sectoral comparison of green supply chain management in China: Drivers and practices, Journal of Cleaner Production, 14(2006), p472-486

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Opinions: Pharmaceutical Patents

Rahul Shresth and Rohit Jaiswal
2011-13 IIM Calcutta

Student Speak

Proposed Changes in the Patent Law

As per the annual reports of a few big names in the pharmaceutical industry, the pharmaceutical companies spend 15% of their revenues on research, according to their own numbers. The remaining 85 are spent on other things (mostly marketing and profits). The suggestions on amendments to the patent law for drugs include. Removing the monopolistic nature of the patent rules would help to reduce the price of the actual substances by at least 70% when they are manufactured on a free market with competition. The government should take 20% of what it currently spends on drugs, and allocate that money directly to pharmaceutical research thus eliminating the need for patent protection.

Though it is true that pharmaceuticals have made major improvements and extensions in the lives of millions of people, but one cannot negate the fact that these advancements over the past decades have involved some major controversies, most of which is centered around the massive profits that these companies make under the protection of patent laws. Most of these companies register a unique blockbuster formula which is protected by massive patents providing them the exclusivity of production. The monopoly over the drugs drives the mass producers to harvest the profits at the maximum rate until a better solution is formulated in some other laboratory. The end result is highly inflated cost of medicines, which has made Amendment as a solution to the Societal and it practically impossible for the poor to afford their Government concerns treatment even when the solution is available, espeThe major problems that are faced by the society and cially in the third world countries. the government due to the current patent laws include High Costs Due to the high import export This mad race of money-making has raised a lot of controversies over the ethics and values of the indus- duties in addition to the highly priced drug, hundreds try with questions being asked on loosing the essence of thousands of people in poor countries can not reof medicinal developments which now appears to ceive the drugs they need, even though the drugs exist have become a game of making big money rather than and could save their lives. These drugs can again not making the world free of illness. Under the threats of be prepared indigenously as the patent law prevents massive protest from different philanthropic activists, the local pharmaceutical companies to copy the drugs. the patent laws might see a major drive for change. Solution With abolishment of the patent law, the techThe industry now has to increase its focus on aligning nology would be available to all and the drugs can be their business processes to the demands of the society, manufactured indigenously by the local companies as in order to make their business sustainable. This ar- well, thus reducing the cost of the medicines by almost ticle talks about some of these pertinent issues along 50%. For examples, the drugs manufactured in India are far less costly as compared to the similar imports with some suggestions on improvement. from other countries. Profit priority rather than philanthropy The pertinent issues in the pharmaceutical sector as of Pharmaceutical patents distort the pharmaceutical today include Due to the monopolistic nature of the supply research priorities, since it becomes more profitable as per the patent protection, the costs of the medicines to treat the symptoms of diseases that come from a are generally inflated. This prevents the people from high standard of living, than to cure poor people from poor background to access the latest discoveries as a malaria. Solution With 20% of funding by the government, the suitable solution to their illness. High price of the substance (ingredients of the government can control the research and discovery of the new drugs as per the situation and demand in the medicine) primarily due to the patent protection. country. This will help in checking the profit generat-

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Opinions: Pharmaceutical Patents

Student Speak

ing motives of the pharmaceutical industry in develop- ly. ing lifestyle drugs and help the poor people by providing Resource dependency If the country which them with a solution to more widespread disease in the needs the drug being researched does not have the reregion rather than solving the purpose of a few rich peo- sources (raw material) for the in-house development ple. of these drugs, they have to depend on some other Low political control over the pharmaceutical country for industry Due to the current nature of the pharmasuch a provision. This ceutical patent law, the drug manufacturers are protected from any interference from the government again does not solve over production and scientific research. Also the the pricgovernment is spending heavily in protecting the industry by aiding them fiing issues completely nancially. Solution As per the amendas the import costs maybe high. ments in the patent law, the Pollution In order to develop governments cost would be cheaper drugs, some companies may not 20% (for research) plus 30% adhere to the global standards of produc(for the substances). A total of 50% of todays costs, and still more money than today tion and might end up pollution the environment befor research. Thus, by spending more on research funds yond repair. and providing subsidy on the ingredients, the government can control the nature and size of production of New problems drugs within the country. This is a highly subjective matter and these issues can be considered as a possibility and not as a surety. Some other critical issues Pharmaceutical lobbying The countries posThough the proposed amendments to the patent law sessing the technology for a specific drug developsolve a majority of issues, there are still a few issues ment may not share it with a country which has no that remain untouched. strategic importance to them. This might defeat the initial cause of philanthropy behind the pharmaceuti Timeliness of the solution The development cal development and change its nature to more diploof the drug, if completely based on the requirement matic. of the local government, cannot be seen as a global Quality of Product Making the technology solution as the priority in a certain region may again available to all may push the pharmaceutical companot be same for the other. The late discovery of a drug nies to reduce the cost of their production on the cost may prove detrimental for a region as it was not in the of the quality. If the quality of the product is compropriority list of the research organization. mised with in such a critical industry, the unknown The development of drugs for poor countries side effects might prove to be fatal. lacking the proper research capabilities The popu- Additional burden on poor countries Poor lation in these countries even when they have the countries might feel additional burden in allocating a technology cannot prepare indigenous drugs due to substantial portion of their annual budget to research inability of infrastructure. of new drugs. Currently, they highly depend on the Regionalism of drug production The drug global pharmaceutical companies to bring out a new research, when guided by the interest of the govern- solution for their ailment even though at some prement, can become a localized solution to the problems mium. specific in the region of development. This cannot be Disparity in development budget All the presented as a solution to the demands of the poor countries cannot have the same amount of funding by countries, as their ailment needs may differ complete- the government on research. The quality of develop-

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ment may suffer heavily due to this reason.

Student Speak
Backward integration to maintain cost competency.

Implications for Pharmaceutical Company

A pharmaceutical company on a average spends about 25% of its capital on research of new drugs. Following will be the implications of amendments of the patent law to them Loss of Competency The companies highly depend on the competitive advantage that a company has over the other. Such competencies are gained through the exclusivity clause of the patent law. War for developing cheaper drugs The major focus of the companies would shift from providing a high quality product to providing a cheaper solution. Lower burden on research activities the financial backing by the government gives the company a cushion for carrying out the research and mobilizing its resources more on production activities. Lack of incentive The loss of profit generation motive might slow down the research process a little as the company might not have any direct incentive in developing the drug and might wait for some other company to develop the formula. The major differentiator between 2 pharmaceutical companies is the individual technology that they hold for development of drugs. When these amendments are enforced, the differentiation parameters would change more to the reputation of the company. The companies would react in the following ways to maintain a good reputation in the market. More involvement in philanthropic activities. More focus on compliance for environmental safety. Increased efforts on maintaining a good image while marketing the product.

Conclusion

The sustainable solution to the problem of political lobbying would be creation of independent agencies funded by the United Nations or such other philanthropic organization which would focus on global issues rather than local motives. This would reduce the dependency and control on the research activities by the government. These independent agencies would collaborate with the pharmaceutical companies and share their finding with all the participant countries. This would be a step in uniting the world for the cause of eliminating fatal diseases and making our society a global enterprise.

Implications on Social Responsibility

Reinvention of Social Responsibility

With such social motives the pharmaceutical companies would focus more on collective growth rather than selfish motives. The probable agenda would include Information parity rather than asymmetry. Collaboration between the companies for inclusive growth. More focus on sustainable growth. Global focus rather than regional in search of new markets. Society building to maintain brand image.

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Opinions: Energy Optimization In Indian Railways

Tanmay Chakraborty & Sachit Jain
2011-13 XLRI Jamshedpur Its software already has a very robust and complex algorithm. It takes care of passenger age, sub-urban quotas, preferences and many other factors. The reservation coaches investigated here (i.e. AC 2 tier, 3 tier, sleeper & second class) fall under the Non-Serial Allocation algorithm of the PRS. A brief of the current algorithm is as below: The details of the transaction i.e. quota, source, destination of the passengers are captured. The Coaches meeting these broad requirements are sorted in the order of increasing availability of accommodation. All the cabins of the first applicable coach are scanned to see if the choice can be met in one cabin. The Order of Cabin Search for each class is from the middle of the Coach. If such a cabin can be found then this is the coach selected. Otherwise, the next coach is scanned and so on till all the applicable coaches have been scanned. If such a coach cannot be found then the coach satisfying the cabin compaction is selected and seat

Student Speak

Situation Today

In India, there are about 12,000 passenger trains running every day. The project proposal discussed below is related to the mail/express trains only, i.e. trains with reservation coaches e.g. sleeper, AC 2/3 tier and chair car. The number of such trains running daily is about 3000. Many of these trains start from small cities from where all reservation berths are not fully occupied. Most of the berths get occupied at major junctions on the route of such trains. Similarly, towards the end of the route, many reservation coaches get vacant in a few stations before the last station. The trains nevertheless end up pulling many empty coaches for quite a distance and thereby consume lot of energy needlessly.

As exemplified, the train pulls about 5 coaches between A & B and 2 coaches between B & C needlessly. Similarly towards the end of the journey for stations I & J. This proposal is to address the issue of load optimization on the train route and thereby reduce energy consumption by the Indian Railways.

Proposed Solution

The project proposal has two aspects Change of existing algorithm of berth allocation Set-up of the infrastructure at junctions Change of berth allocation Indian Railways passenger berth allocation is done by a system called Passenger Reservation System (PRS).

berths are allotted keeping in view old passengers and ladies. That is compaction is given priority over choice. In case no single cabin can satisfy the requirement, then the transaction is split over minimum number of cabins. In case no single coach can satisfy the requirement then the transaction is split over the least number of coaches which together, satisfy the requirement. In case the requirement is not met, either fully or partially, then all or some of the passengers will go to RAC or Wait-list. A significant drawback in this algorithm is that it allocates berth numbers at the time of reservation itself. Thus, if a passenger books from A to H and another

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Student Speak
Since berth allocation will be done before chart preparation, the facility to inform passengers through sms has to be established. Also electronic displays to be arranged at several points on the junction station to enable passengers to see their allocated berth.

passenger books from C to J, the current algorithm most probably allocates them berths in separate coaches. In the meantime, if their respective coaches are only half filled, then the train ends up pulling two less-than-half filled coaches.

Our proposal is to modify this algorithm such that Risks The berth allocation is done just before the chart preparation. An additional module is to be added to the software, which will see if there are sufficient reservation requests. This module, then in conjunction with the existing module will allocate berths, such that first compaction is taken care of and then the source and destination wise distribution of berths. All existing rules of quota, age wise berth preference etc. which are considered by the current PRS algorithm, will continue to be followed.

Set-up of infrastructure at junctions

Assuming the new algorithm has allocated the berths with compaction, next, necessary infrastructure needs to be developed at selected junctions on the route to enable joining and removing of coaches. On a high level, the following infrastructure changes need to be done Joining coaches at junctions on the route. Say, C is a junction, where an express (not the super-fast) train usually has long halt for cleaning, driver break etc. This halt could be used to add new coaches to the train. Conversely, this same infrastructure can be used to remove the coaches from the train in its return journey. With reference to the example stated in the executive summary, say one wagon is added at junction B and one removed at junction I during the forward journey. On the return journey of the train, a wagon can be added from I and removed at B. Many stations have some necessary processes for engine change. E.g. some trains change their engines from Diesel to electric at Rourkela station. This infrastructure could be enhanced to allow wagon addition/removal. Since trains would usually add or drop coaches at the same stations, maintaining of coaches inventory at the junctions should be possible without great overhaul of infrastructure.

Sustainability Report The following is a highly pessimistic model of energy saving per day possible. If the software and the infrastructure are adapted to perfection, savings can be

higher than 5 times of this estimate. The following are the advantages foreseen with the project Less energy consumed and less pollution. Electricity scarcity can be managed well, as railways is one of the major consumers of electricity produced in the country. Earnings in terms of carbon credits, which India can trade abroad. And many more..

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Financial Plan

Student Speak

The following is an estimate of the costs involved in the different parts of the project. As stated earlier, we have assumed this Opex to be quite low as all junctions already have the required infrastructure in place for changing engines. Software changes project is estimated as

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

Daily operational expenses at junctions are estimated as

Thereby effective savings and payback period is estimated as

Thus on a high level, after 2.3 years, Railways is expected to make profit.

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A Release from Operations Club , IIM Calcutta