India has seen gradual transformation in last 70 years from agro-based to industry-based economy. Though the agriculture GDP has grown with time, its contribution in nation’s GDP has gradually reduced from 52% to 17% and that of industry and services together grown from 45% to 83%. Dependence of people has gradually shifted from agriculture to industry.
Today, we have all kinds of industries in India, manufacturing pins to aeroplanes, pharmaceuticals to fertilizers, and garments to diamonds. The technology used in many industries is similar to the one used anywhere else in the world and products from India are exported all over the world. Industrialised nations cannot ignore Indian industry anymore.
In last decade, growth of manufacturing industry has slowed down which is a result of globalisation of Indian economy and removal of tariff barriers. For some industries, globalisation brought an opportunity of accessing global market and expanding their capacities, whereas, some got a threat from products being imported in India and started shrinking. The factor differentiating the two segments is the adoption of ‘Manufacturing Excellence Systems’ (MES).
Some industries in India are set up by global companies. They brought their technologies and MES, which made their products competitive and acceptable in global market. Some industries in India started exporting and they had to improve their product quality to access the global market. Their overseas customers demanded inspection, and audits of their manufacturing operations and that led to the adoption of MES.
However, some industries who depended on domestic market and failed to adopt MES lost their competitiveness and are now finding it difficult to sustain.
The sustained growth in India’s GDP is supported, more by the services sector than by the manufacturing sector. According to a recent report released by World Bank, the growth in India’s GDP is attributed mainly to its domestic consumption.
Though exports of merchandise from India has increased with time, it is not keeping pace with the increase in imports. With the result, the trade deficit of India continues to increase, causing continuous depreciation of Indian currency and leading to inflation.
Several reports are published which clearly indicate that in the competitiveness index, India’s rank is very low. It is therefore very important for Indian Industry to adopt MES to make their industry globally competitive. Even if industry is not exporting their products, they still have to be globally competitive, to protect their market position which is under constant threat from products being imported from different parts of the world.
Various industries have developed their own MES; there are several consultants supporting industries to develop MES and lot of that information is available in public domain. Industry traditionally focussed on marketing and financial management. The time has come now to focus on manufacturing competitiveness.
To move in the direction of manufacturing excellence, industry has to focus on several parameters which contribute to it like productivity of machines, productivity of labour, plant maintenance, training of employees, innovation, quality systems, environment protection, safety systems, planning, material handling systems, regulatory compliance, customer focus etc. Every person employed with the company must share the same vision and must be committed to achieving excellence. Industries have adopted various methodologies like TPM, KAIZEN, SIX SIGMA etc to move in the direction of excellence.
If anything is to be improved, it has to be measured first. So, the improvement process starts with measurement. Industry achieved this by adopting internal audit process. Every person believes that he is doing a good job; every company believes that they have good systems. Only when they carry out audit, the gaps are identified and corrective steps are taken. Best of the companies in the world have reached that state of excellence only by this process of continuous improvement, which is achieved by identifying gaps and taking corrective measures. There is nothing like perfection. It is a continuous improvement process.
Government of India has started a ZED scheme for audit and improvement of small and medium size industry. Industry must adopt this audit process to improve their competitiveness.
Large corporates can provide a leadership role by hand holding small industries. Large companies have hundreds or thousands of suppliers. They can insist and ask their suppliers to adopt ZED audit and rating system. Of course, they can adopt alternatives also. This small initiative from large companies can take thousands of small industries on the path of improvement. Automobile industry is a good example. They have worked closely with their suppliers and improved their supply chain. If industry gets good and consistent quality raw materials/ components from their suppliers, their own performance also improves. Therefore, it is important for large and small industries to work together to create a robust and competitive supply chain.
FICCI Task force for Manufacturing Excellence is striving to facilitate this process.
(The author is Chairman, FICCI Task Force for Manufacturing Excellence)