WCM – The Indian Scenario
FACTORS FAVOURING
MANUFACTURING IN INDIA
• India's vast domestic market and availability of low-cost
workers with advanced technical skills
• The rapid growth of the Indian economy is likely to make
India the fifth largest consumer market in the world by 2025
• India offers abundant engineering and technical manpower;
producing annually about 4, 00,000 graduate engineers
• high skill-sectors account for almost 40 per cent of the
manufacturing output in India. Taking advantage of this
fact, several multinationals operating in skill-intensive
industries requiring advanced technical expertise have set
up their shop in India.
• For example, ABB, Honeywell, and Siemens in
electrical and electronic products; Cummins,
DaimlerChrysler, and Toyota Motor in auto
components and engineering; and Degussa as well as
Rohm and Hass in specialty chemicals have all set up
their manufacturing base in the country
• Global Manufacturing exports hub
– 'Made in - India, with its proven track record in the
skill-intensive industries and the global trend to
manufacture and source products in low cost countries, is
well placed to emerge as one of the leading hub for
manufactured exports - list includes companies like Nissan
Motor Co, Suzuki Motor Corp, Fiat, Anest Iwata, Hyundai
and Nokia
• Going Global
– Bharat Forge after multiple acquisitions has emerged
as the world's second-largest manufacturer of axle
beams, crankshafts, and other forged auto
components. Similarly, Tata Steel after the acquisition
of Corus has become the fifth largest steel producer in
the world. Suzlon is the world's largest wind turbine
generator (WTG) manufacturer. Ranbaxy Laboratories,
India's largest pharmaceutical company, manufactures
generic drugs in 11 countries
• Manufacturing Excellence
• India is amongst the countries with the highest tally for 2007
with total TPM Excellence Awards -- conferred by the Japan
Institute of Plant Maintenance
• 15 Deming award-winning companies (amongst the highest
tallies worldwide outside Japan), and one Japan Quality Medal
winner
• Government Initiatives
– Implementation of technology upgradation schemes for various
sectors such as small scale industries, textiles, food processing
among others
– Implementation of industrial infrastructure upgradation
programmes on cluster basis, Easier access to inputs at
competitive prices and rationalisation and reduction in duty
rates
– Encouragement to foreign technology, collaborations, and
liberalisation of FDI in manufacturing activities
– Launch of "Visionary Leadership in Manufacturing" programme
to generate 300 visionary leaders in manufacturing in the next
three years.
– Implementation of Special Economic Zones Act.
– Starting the construction of Delhi-Mumbai Industrial Corridor in
cooperation with Japan External Trade Organisation (JETRO)
– Government plans to set up Manufacturing Investment Regions
(MIRs) on the lines of Petroleum and Petrochemicals Investment
Regions (PCPIR)
•
FACTS AND FIGURES
India is one of the top performers in the manufacturing sector in the world. India’s manufacturing
sector is large and diverse, composed of several independent sub-sectors. The 10 key sectors that
comprise the bulk of Indian manufacturing are:
• Engineering
• Electronics
• Automotive
• Textiles
• Chemicals
• Leather
• Metals
• Machine tools
• Food processing
• Gems and Jewellery
• India is the largest three wheeler market and second largest two wheeler market in the world.
• India is the second largest jewellery market and largest diamond cutting and polishing centre in
the world.
• India stands nineteenth in production and sixteenth in consumption of machine tools in the
world.
• India’s Textile Industry is the second largest in the world in cotton trade.
• The Indian Chemical industry ranks twelfth by volume in the world for production of chemicals.
• India is the third biggest leather producer in the world after China and Italy.
• India is world’s largest producer of milk, tea and pulses with world’s largest livestock population
to support food processing sector.
• India ranks fifth in the world bauxite reserves next to Australia, Guinea, Brazil and Jamaica.
Issues in strategic planning of WCM
• Involvement of line managers in strategic planning: In many organisations, where planning is
identified as a separate function, it is still carried out by the planning group that in many
cases does not include line operating managers. However, planning performed by a planning
staff in a vacuum generally results in sufficient implementation.
• It must, therefore, be realized by companies that planning is a management tool for line
managers. Therefore, operating managers must become deeply involved in planning to
reduce the risk of plan implementation failure.
• Lack of planning orientation in manufacturing culture: In many organisations, involving
operating managers is a major problem since the traditional manufacturing culture does not
encourage planning. However, one of the keys to IBM’s success is that its managers never
stopped planning, and this became a major part of any manager’s job in IBM. This view must
also be propagated throughout the culture of manufacturing in order to enable businesses to
operate more effectively.
• Lack of IT usage as a strategic resource: Some companies manage IT merely as a technology
and some others perceive IT as enabler of information management. The technological view
of IT sees costs as an operating expense and, therefore, in these companies the attention of
the management is primarily focused on reduced cost for efficiency sake. On the contrary, an
organisation using IT for information management views information as a corporate resource
sees IT as a capital investment for which maximum management attention should be on
maximization of its breadth. When the IT strategy provides the framework for what is spent,
then that spending can be defined as an investment. However, when there is no sense of
direction, then IT spending may simply represent an ongoing expense. This shift in perception
changes IT budgeting as a ‘separate’ issue to business goal with business profitable projects.
• IT investment levels are frequently quoted in revenue ratios and, according to many
experts; they should be in the range of 1 to 5 per cent in the case of organisations
investing in IT successfully. According to a recent survey of top 50 IT spending
companies in India, there was only one company spending more than 4 per cent
of its revenue on IT, five companies were spending more than 3 percent, three
companies were spending more than 2 per cent, eight companies were spending
than. 1 percent and rest were spending less than 1 per cent (Data Quest 1996). Most
of these companies perceive that IT could improve their business efficiency and
productivity, and may give better access to information. Only about 15 per cent of
these believed that IT could provide customer satisfaction or could give marketing
and sales advantage, i.e. may have strategic impact. Thus, it is clear that most Indian
companies do not perceive IT as a long term investment for gaining strategic
advantage and, therefore, treat it merely as an expense item. This perhaps might
explain why there are not many companies having a high extent of integration as
well as high breadth of IT infrastructure. It also explains why a company’s use of
IT is limited to value-oriented accounting systems and not exploiting it for long-term
planning and decision support (as per Scheer’s framework, Perhaps, this might be
because until recently Indian manufacturing was not exposed to global competition.
But in the changed scenario, such an attitude is dangerous because it tends to make
companies less competitive, thereby treating them to major business disadvantages.
We believe that this is a serious issue that needs to be addressed through proper
education and further research.
• Need for a formal planning methodology: Another problem facing planning is the
absence of formal planning process (or methodology) to translate the strategic
vision of the company into an implement able, long-term action programme in any
internal function to obtain competitive advantage and move it towards World-Class
performance?
