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Adv Supply Chain - Group No-10

This case analysis discusses capability sourcing at Vedanta Resources and GMR Power in India. Initially, both companies made sourcing decisions on a piecemeal basis without a strategic focus. However, following a shift in the basis of competitive advantage, they transformed sourcing into a strategic function. Vedanta outsourced maintenance of critical assets to improve uptime and production capacity. GMR Power outsourced IT services to enhance data-driven decision making. The case highlights how outsourcing non-core capabilities can improve performance if proprietary rights and competitive scenarios permit. It presents a framework for capability sourcing based on a company's ability to perform, proprietary nature, and uniqueness of the business process.

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293 views4 pages

Adv Supply Chain - Group No-10

This case analysis discusses capability sourcing at Vedanta Resources and GMR Power in India. Initially, both companies made sourcing decisions on a piecemeal basis without a strategic focus. However, following a shift in the basis of competitive advantage, they transformed sourcing into a strategic function. Vedanta outsourced maintenance of critical assets to improve uptime and production capacity. GMR Power outsourced IT services to enhance data-driven decision making. The case highlights how outsourcing non-core capabilities can improve performance if proprietary rights and competitive scenarios permit. It presents a framework for capability sourcing based on a company's ability to perform, proprietary nature, and uniqueness of the business process.

Uploaded by

PRADHUMAN SHUKLA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PGPEX-VLMP -2019-2020

Case Analysis – Capability Sourcing

Submitted to: Submitted by: Group No 10

Prof. Arshinder Kaur Maheep Mathur (MS19V017)

Penta Ramkee Sriharsha (MS19V021)

Pradhuman Shukla (MS19V022)

Priyank Rawat (MS19V026)


Q1. What do you mean by Sourcing Decisions on a Piecemeal basis? Give 2 examples from
Indian Companies where the company have made the sourcing function as a strategic function
following the “Changing Basis of Competitive Advantage” in the given case.

Ans 1: Sourcing decision on a piecemeal basis means:

1) Sourcing decision made in silos and as per convenience and requirements of


departments.
2) Sourcing decisions were made at the periphery of the organization and are not part of
the core strategy.
3) Realization of benefits after sourcing is not as per the expectation laid down during
decision of sourcing.

Examples of Indian Companies which made sourcing function as a strategic function following
the” Changing Basis of Competitive Advantage” in the given case:

a) Outsourcing of technical services and maintenance of critical Assets by Vedanta


Resources:
Initially complete maintenance and major overhauling of critical production machines
were done by the in house maintenance department of Vedanta Resources which was
involving heavy costs of long downtime due to non-specialization. Long downtime was
severely impacting the production and plant was operating at very low % of capacity
and the company was loosing its competitive advantage of being in the resourceful
region. Later on as a part of strategic decision making it was decided to classify those
critical assets such as
- Diesel Generator.
- Rectifiers
- ABB Robots
- Honeywell DCS, Siemens SCADAs

And was recommended for outsourcing their maintenance and annual major overhauling to
their OEMs which were available on site 24 x 7 in case of any breakdown. This action
resulted in decrease of downtime, which eventually impacted the increase in production as
per the plant capacity and ultimately lead to increase in top line of the company.
b) Outsourcing of IT services and maintenance by GMR Power:

With the advent of digitalization and the increase in dependence of IT services such as
maintaining of network infrastructure , software requirements of different departments ,
licensing requirements , setting up configurations as per the needs and security of company
policy was becoming difficult for GMR power to maintain and regulate. Being in a power sector
which was heavy data driven and is among the fastest to adopt digitalization practices, GMR
decided to Outsource these critical IT services to well-known brand which takes care of
complete services from infrastructure to data driven analytics. This helps GMR in taking data
driven decision making which serves as the competitive advantage and eventually helped in
increasing the bottom line.

Q2.Describe your learning from Seven-Eleven Case. Describe the framework for capability
sourcing with the example of real life Indian Company.

Ans2: Learning’s from 7 eleven case:

1) Outsourcing of even critical operations can also be considered by checking of


proprietary rights, assessing competitive scenarios.
2) Vertical integration is not always successful
3) It's no longer ownership of capabilities that matters but rather a company's ability to
control and make the most of critical capabilities.
4) Capabilities of the procurement also needs to be enhanced considering the strategic
decisions of sourcing.

Framework for Capability Sourcing: Vedanta’s key business performance can be illustrated
as follows :
Company’s Ability

Good Production of Zinc


to perform well

Sales & Marketing

Sufficient Inbound Operations

Asset Maintenance

Not Good

Above Industry Median Equal to Industry Median Less than Industry Median

Transaction Cost

Not Proprietary

Asset Maintenance
Proprietary Nature

Data

Sales & Marketing

Business Process Inbound Operations

Profit Model Production of Zinc

Unique to Self Common across Industries

Uniqueness of Business / Process

References and Guidance:

a) Interview with team in Vedanta Resources Plc.


b) Interview with team in GMR Power.

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