08Dec2016

25% Share from Manufacturing

I believe you are doing fine and got quite a few insights from the various recent annual networking events, conferences and summits. I participated in almost 4 over the last few days as a speaker in some and delegate in others. In almost all these events both the acute need and the opportunity to increase the manufacturing share to 25% of Indian GDP, from current 16% almost stagnant over the last couple of decades, was a discussion topic.

I am writing my thoughts on how simple yet very difficult this challenge is for our society.

Let me start with the Global Manufacturing Competitiveness Index from Deloitte.

  • 2010 India was in Position 2 and forecasted to continue in Position 2 after 5Y

  • 2013 India dropped to Position 4 and forecasted to gain Position 2 after 5Y

  • 2016 India further dropped to Position 11 and forecasted improve to Position 5 by 2020

Many of you may connect this development to our politics, governance and infrastructure. I would differ with that understanding, since manufacturing companies around the world have always gone to under developed regions for cost advantage and succeeded well.

Some of you may connect this development to the very much talked about skill availability. I surely believe that skill is a topic and has always been a topic in the growth phases of an economy. There are many time tested solutions such as TWI: Training With-in Industry, Apprentice programs, Cooperation with ITIs, etc. available to overcome this barrier as has been the case with the few world class manufacturing companies in India.

The key success factors in manufacturing is initial robust engineering, significantly high CAPEX, consistent disciplined performance, continuous improvement, review for both compliance and learning followed by systematic problem solving. The source or the core to world class manufacturing in my experience from India, Brazil, Japan and Germany is the regular structured review of Productivity, Quality, Cost, Delivery, Safety and Morale popularly known as PQCDSM starting at the shop floor with a daily rhythm cascading through the junior/middle management with a weekly rhythm up to the top management with a quarterly rhythm. I have experienced great innovations, both product and process, emerge out intially as a problem from this fundamental habit, part of the DNA of any world class manufacturing company that I have known.

Unfortunately, but for some companies, mostly foreign MNCs, the Indian Manufacturing Industry is weak in this organizational competence. Of course, automation, blue ocean strategy, lean manufacturing, theory of constraints, total productive maintenance, total quality management, six sigma, and now Industry 4.0 surely are more appealing than this basic core competence, which normally is taken for granted. Maybe, therefore focusing and building on this organizational competence of structured consistent review is so simple yet an extremely difficult challenge.

I remember the way the shop floor looked like in 1980s, when I started my professional life, when I visit may companies, some even large ones, even today after almost 30Y feels like the 1980s! However, the change was significantly faster even in the SMEs I visited in the other countries. I am sure many of you will resonate with my feelings.

Therefore, I believe that there is a lot more than politics, governance and infrastructure that can be done by every company on their own to enhance our manufacturing competitiveness and thus the share in our GDP to 25%.

I am sure with the individual brain power in our country, just following such a Learning to Learn System (L2L System illustrated below. Clicking on this will take you to a YouTube video) can create a global benchmark in less than 5Y.

An opportunity to get everyone to speak about his/her doing and learning of the focus topics during the regular reviews further hastens the maturity increase of the L2L System.

You may want to get an outsider, preferably one with hands on experience in a world class manufacturing foreign MNC, to assess your organizational competence for the regular structured reviews and coach/guide the build-up of this DNA.

You may also want to encourage your vendors to do the same.

Happy reading and becoming world class!