TCM Maturity Model


CONCEPT

Considering the importance of cost management process as the heart of cost competitive strategies across sectors in the industry, CII has been positioning it as a framework entitled Total Cost Management (TCM).

CII has established TCM division under the aegis of Mr. Mahalingam CFO, TCS and through a panel of internal and external experts was established to bring in an integrated approach to improve the cost competitiveness of the Indian Industry.

CII has taken up the mission of cost management in the country through its TCM initiatives. The TCM initiative of the Maturity Model calibrates the maturity levels in cost management from a pace to the highest through 5 layers with differentiating characteristics at each layer.

It will be worthwhile to consider the description of TCM philosophy in the context of modeling its maturity levels in enterprises.

There are 5 levels of maturity in cost management practices which has been identified after considerable study and works with experts in domain field. The names of the levels are Minimal, Functional, Operational, TCM Enabled & Exemplary.

The numerical count of the levels is based on the CMM-I architecture in IT industry.

The top layer should be the destination for all the corporates regardless of the sectors.

It is expected that this Maturity Model assumes a very high level of importance in the evolving days of cost competitive pressures.

CII also set in motion a roadmap of assessing the levels of the enterprises on a voluntary basis and several of them have already been rated.

Several benefits are expected to accrue from the rating of the model - beginning from strategic perspective of cost to benchmarking the best practices.

The Credit Rating Agencies, Financial Institutions and Insurance companies can play a significant role in taking this model to the industry. Awareness of this model to the above sectors will enable a better perspective of their rating of the industry.

A brief presentation to the prominent players in the Insurance, Credit Rating Agencies and Financial Institutions sector, will enable to bring in the right comment, visibility and efficacy of the model.

The overview of the maturity model to the above sectors brings in;

  • An organization's sojourn across the maturity levels of the model and its related advancement in cost perspective at unit level and corporate level
  • Facilitates better focus / understanding of systems / processes related to TCM


LEVELS OF TCM MATURITY MODEL




BACKGROUND

Business models are constantly reviewed for sustained competitiveness which has also injected a new dynamism into cost management. The basis and assumptions used in the traditional costing are constantly being challenged resulting in pressure for evolving the organizations into higher maturity levels.

The contemporary challenges, faced by the business organizations are emerging to be more intense than ever.

The focus point of the senior management at this moment is emphasizing on strategic issues and effectiveness of the resource utilization in the process of value creation of the business.

CII has taken up the mission of building cost competitiveness of the Indian Industry through TCM initiative. As part of this initiative CII TCM division has launched TCM Maturity model which is a major milestone in its objective of creating and sustaining TCM movement in Indian industry.

Genesis

The journey of TCM Maturity Model began in November 2007 with the draft version been launched by Mr S Mahalingam, Chairman-CII TCM Working Group & CFO and Executive Director, TCS.

Pilot Study The year 2009 saw the participation from organizations from plethora of sectors. The response from the industry was overwhelming. The approach and content were standardized through the experiences of pilot studies.

Introduction
Visit and Submission of Questionnaire
Receipt of Questionnaire
2/3 Days Visit and Assessment by CII Team
Report Submission


CREDENTIALS

S. No. Company Name Location Industry
Companies Rated
1 Hitech-Arai Madurai Auto Ancillary
2 Kirloskar Brothers Limited Dewas Pumps
3 Escorts Agri Machinery Group Faridabad Farming equipment
4 Subros Limited Noida Auto Ancillary
5 Godrej & Boyce Mfg. Co. Limited Mumbai Material Handling
6 Godrej & Boyce Mfg. Co. Limited Mumbai Security Solutions
7 Godrej & Boyce Mfg. Co. Limited Mumbai Process Equipments
8 Godrej & Boyce Mfg. Co. Limited Mumbai Precision Engineering
9 JCB India Pvt. Limited Ballabgarh Excavators
10 Kirloskar Brothers Limited Dewas Pumps
11 Amara Raja Batteries Limited Tirupati Batteries
12 CavinKare Private Limited Chennai FMCG
13 Hyderabad Industries Limited Hyderabad Building Products
14 ITC Limited - Agri Business Division, ILTD Anaparti Tobacco Processing
15 ITC Limited - Agri Business Division, ILTD Chirala Tobacco Processing
16 Kirloskar Brothers Limited Kirloskarvadi Pumps
17 Menon & Menon Limited Wadi Auto Ancillary
18 Wipro Engineering Bangalore Engineering
19 Godrej & Boyce Mfg. Co. Limited Mumbai Appliances
20 Godrej & Boyce Mfg. Co. Limited Chennai Storage sol
21 ITW Signode India Limited Hyderabad Metals
22 Shree Cement Beawar Cement
23 Godrej & Boyce Mfg. Co. Limited Mumbai Tooling
24 Tata Motors - CVBU Mumbai Automobiles
25 Wheels India Chennai Automobile Anc
26 Grundfos Chennai Pumps
27 Weir Minerals Bangalore Engineering
28 ITC Paper Hyderabad Paper boards
29 EID Parrys Chennai Sugar
30 Coromandel fertilizers Hyderabad Fertilizers
31 JSW * Vijayanagar Steel
32 Ultratech Cement * Malkhed Cement
33 Greenply * Kolkatta Plywood
34 Nippon Paints * Chennai Paint
35 Comstar Automotives * Chennai Auto components
Re-assessment
36 Subros Noida Auto components
37 Kirloskar Brothers * Dewas Pumps
38 JCB * Ballabgarh&Pune Construction equipment
* in Process

The CII TCM Maturity model is being protected by the IPR (both copyright and trademark).

VOICE OF EXPERTS

TCM Maturity Model received accolades from luminaries from

  • CAM - I (USA)
  • CMA (Canada)
  • ICMA (Sri Lanka)
  • IFAC - PAIB


Dr Robert Kaplan, Baker Foundation Professor at Harvard Business School, has also elicited his views on the model. Dr Robert Kaplan is Co-creator of Balance Scorecard.


VOICE OF COMPANIES

In the words of Godrej & Boyce Mfg. Co. Ltd.
We were having a feeling of inadequate costing systems in our business and were looking for ways to improve them. The interactions from introducing the concept, filling the questionnaire, assessment and the feedback helped us to appreciate where we are good, to understand the current state in the maturity process and to develop a read map to take it further. Concepts like moving from cost accounting to cost management, linking cost structures to strategy, risk management were completely new ideas and their interpretation in our context would not have been occurred to us with going through the process of assessment. We could experience the passion of the CII-TCM for evolving Cost Management further.
- Godrej & Boyce

In the words of JCB India Ltd.
"Methodology followed by CII and Evaluators for assessing TCM practices helped to identify the gaps in process followed at JCBI. It further helped to understand the best practices & Structures followed by other Companies that are helping to improve on the process followed by JCBI. "
- JCBI

In the words of Kirloskar Brothers Limited, Dewas
The CII-TCM Model acts as a catalyst to integrate an all-pervading cost culture throughout the organization. It creates a thrust for cost control and cost reduction and enables the organization to focus on its cost structure continuously so as to achieve systems, procedural and financial benefits."
- Kirloskar Brothers Limited, Dewas


BENEFITS

  • Strategic
    • Products and customer profitability: Through understanding individual product and customer profitability and its drivers, enable plethora of actions which transform unprofitable to profitable product/customer
    • Knowledge Management Process: It encompasses making vast amount of cost information accessible, sharing of the best practices and technology that enables generating new knowledge for achieving competitive advantage for the organization
  • Operational
    • Assessment of cost management maturity across the internal value chain
    • Emphasize and facilitate TCM culture across the Functional levels of the organization.

TCM Maturity Model in Service Sector
Triggered by the success of the model in manufacturing industry, a draft version of the model for service sector has already been conceptualized. It is been proposed to take the model under pilot mode in the year 2010.