23MBA0045 Om (Case)

Operations Management
(PMBA511L)
UNIVERSAL PRINT SYSTEMS LIMITED:
EXPLORING OPERATIONS STRATEGY OPTIONS
Submitted to
Dr. Dibyajyoti Ghosh
Submitted by
Swathika VP (23MBA007)
Kousikan E (23MBA008)
Adithiyaa BR (23MBA0018)
Avinash M (23MBA0045)
VELLORE INSTITUTE OF TECHNOLOGY(VITBS)

March,2024
Company Background:
Universal Print Systems Limited (UPSL) was founded in 1995 and is based in Chennai,
Southern India. It started operations as a reprography unit in 1977, became a public listed company
in 1995. Initially focused on prepress operations, it launched its self-adhesive label printing
(SALP) business in 1997.
In 2008, Manipal Press Limited (MPL), a commercial printing company founded in 1941, acquired
a majority stake in UPSL to leverage UPSL's SALP capacity. UPSL has manufacturing facilities
in Chennai (one dedicated to SALP) and Bangalore. It has ISO 9001:2008 certification and
presence across sectors like alcoholic beverages, consumer packaged goods, automotive,
pharma/healthcare. Self-adhesive labels account for 95% of UPSL's total label business revenues.
Synopsis:
UPSL was founded in 1995 in Chennai, India and was primarily engaged in prepress
operations until 1997 when it started self-adhesive label printing (SALP). In 2008, Manipal Press
Limited (MPL), a commercial printing company, acquired a majority stake in UPSL mainly to
exploit UPL's SALP capacity.
In 2013, UPSL's SALP unit had an annual capacity of 5.3 million sq.m. of labels but was
operating at only around 60% utilization, producing 2.1 million sq.m. Roughly 80% of its
customers were small, generating less than ₹1 million in revenue per year. Its major end-user
industries were automotive, alcoholic beverages, pharmaceuticals and FMCG, with around 80%
of customers based in South India.
MPL was concerned about the low-capacity utilization and was evaluating four options:
1) Increase share of existing South Indian customers
2) Target the export market
3) Offer online ordering and digital printing and
4) Set up new facilities closer to customers in other regions like West and North India.
Performance Analysis:
Low-Capacity Utilization
Operating at only 60% capacity utilization was extremely inefficient and undermining
profitability. High fixed costs were being spread over low production volumes, increasing per unit
costs Solution: Increase capacity utilization to at least 80-85% through a combination of strategies
like targeting new markets, adding product lines, improving marketing/sales efforts.
Narrow Market Focus
Being overly dependent on South India and smaller customers limited UPSL's growth
opportunities. It was missing out on larger accounts and faster-growing markets in West and North
India.
Solution: Actively target and develop relationships with larger national/multi-regional customers
in key industries like pharmaceuticals, FMCG across the country.
Long Lead Times

Average 35–55-day lead times for new orders were uncompetitive. Long distances from
Chennai made it difficult to service customers needing faster turnarounds.
Solution: Establish strategically located production facilities closer to major customer clusters in
West/North to reduce transportation times and lead times.
Technology Lagging
Still using older flexo/letterpress technologies while competitors adopted newer digital
printing. Digital enables shorter print runs, faster turnarounds, less waste and better customization.
Solution: Invest in upgrading to digital printing capabilities to enhance flexibility, responsiveness
and customization abilities.
Poor Capacity Planning

With 15%+ annual industry growth expected, UPSL lacked a capacity expansion strategy.
May get capacity-constrained again even if utilization improved at the current Chennai facility
Solution: Develop a multi-year capacity enhancement roadmap combined with facility expansions
in other regions based on projected demand.
Missed Opportunities
Not fully leveraging government incentive schemes like technology upgrade subsidies.
These schemes can defray expansion costs and increase competitiveness.
Solution: Take maximum advantage of all relevant government incentives for capital
investments, technology adoption and training
Intense Competition
Many competitors offering similar services leading to fierce pricing and margin pressures.
Need to differentiate service levels, capabilities and pricing models
Solution: Differentiate through superior service levels, responsiveness, digital capabilities and
develop a competitive pricing/margin management strategy
By addressing capacity utilization, market diversification, technological upgrades, strategic
capacity planning, government incentives and differentiation - UPSL can regain competitiveness
and drive sustainable profitable growth in India's high potential label market.
Solutions:
Based on the performance analysis, here are the preferred solutions for UPSL:
Expand to New Regions (Option 4) This emerges as the most comprehensive solution to address
multiple issues like low utilization, narrow market focus, long lead times and lack of capacity
planning.
Setting up new production facilities in the high-potential West and North India markets, closer to
major customer clusters, would:
 Increase capacity utilization by serving a broader national market.
 Reduce transportation times and lead times for customers in those regions.
 Allow UPSL to target and build relationships with larger national/multi-regional
customers.
 Build capacity in line with projected 15%+ annual industry growth.
 This strategic geographic expansion, combined with modular capacity additions based
on demand, appears to be the best long-term solution.
Invest in Digital Printing Capabilities (Option 3) Adopting digital printing capabilities would
allow UPSL to:
 Provide faster turnarounds and flexibility for shorter print runs.
 Enhance customization abilities.
 Improve competitiveness by matching technological capabilities of rivals.
 Digital integration could also optimize workflow efficiencies.
Leverage Government Incentives UPSL should proactively take full advantage of schemes like
the Credit Linked Capital Subsidy Scheme to partially defray costs of investments in digital
printing, capacity expansions and technology upgrades.
Differentiate through Superior Service In the intensely competitive market, UPSL needs to
differentiate through superior service levels by:
 Ensuring consistent high quality and reliability
 Providing highly responsive service through localized production
 Developing customized solutions for customers
 Competitive and innovative pricing/margin management models
These solutions, based on geographic expansion, technological upgrades, government support
and service differentiation, can comprehensively address UPSL's key challenges around
utilization, markets, technology, and competitiveness.
Current Status:
As of 2013, UPSL's SALP unit had an installed annual capacity of 5.3 million sq. m. but
was operating at only around 60% utilization (2.1 million sq.m produced). 80% of its customers
were very small, generating less than ₹1 million in revenue per year. Top customer provided
only around 6% of its total label requirement to UPSL.
Around 80% of customers were based in the South Indian regional market. Average lead time
of 35-55 days for new orders was very long. Still using older flexo and letterpress printing
technologies.
Facing intense competition and pricing pressures in the commoditized label market. SALP
business contributed over 50% of UPSL's total revenues.
In summary, although part of the larger MPL group, UPSL itself was facing major operational
challenges like low-capacity utilization, outdated technologies, concentrated regional focus,
and intense competition - despite operating in a high-growth label market in India. MPL's
management was evaluating strategic options to improve UPSL's capacity utilization and
profitability.

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Operations Management

Dr. Dibyajyoti Ghosh

VELLORE INSTITUTE OF TECHNOLOGY(VITBS)

Long Lead Times

Poor Capacity Planning

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