25th Feb, 2020

How India’s Manufacturing Industry Can Become Competitive Globally

The untapped potential of India

At $2.3 trillion in GDP, India is the ninth-largest economy in the world. But manufacturing accounts for just 16 percent of the country's GDP, relative to almost 52 percent in the services sector.Manufacturing is key to India's economic development. India needs to create approximately one million jobs per month over the next decade to draw on the demographic dividend. Manufacturing has the ability to provide the young Indian community with large-scale jobs and thus allow a substantial section of the population to migrate out of the poverty.

Nonetheless, manufacturing executives are still asking whether India's manufacturing industry is competitive globally. If not, what are the main problems that hinder the capacity of the nation to contend with the world's best and how can such concerns be addressed? Answers to these questions would decide if companies will set up shops in India or extend their manufacturingfootprint. First let us know four components which contribute to India's limited competitiveness in manufacturing:

1. Poor workforce productivity:

Manufacturers are held back by low efficiency of the workers, largely due to a lack of technology, obsolete production processes, restricted use of design-for-manufacturing and various non-value-added activities.

2. Hiring casual workers:

Rigid labor laws compel businesses to employ seasonal workers. Business schools aren't well suited to train workers. Companies fail to concentrate on intermediate-level manager or foreman (Master) grades that can provide direct labor on - the-job training, and Indian academics prioritize simulation and engineer Excel modeling over kanban and kaizen processes.

3. Inefficient chains of manufacturing:

Bottlenecks in logistics and systemic impediments due to taxation policies at the state level have led to longer lead times and surplus inventories across the value chain.

4. Lower manufacturer competency

Most Indian tier 2 suppliers were part-to-print suppliers who didn't invest in developing their product development or quality control capability. This has made daily rework and returns, further reducing efficiency.Apart from the above four components, here are some challenges for achieve global manufacturing qualityand solutions for the same;

• Challenge 1: Aboriginal manufacturing methods are labor intensive

Manufacturers use low labor costs to cover the large outlay of capital required for automation. We have seen Manufacturers use semi automation or low-tech automation systems or custom build their own production equipment to reduce capital costs.

Solution: Invest wise in quality A variety of foundational steps, such as effective line spacing, lean plant architecture, and cycle de-bottlenecking, may increase manufacturing efficiency. Therefore, manufacturers should accelerate gradual progress and incorporate know-how from suppliers and industry groups to bring their development processes up-to-date.Such measures will boost productivity by around 15-20 percent. Through structural changes, another 15 to 20 per cent increase is likely. Smart automation, for example, — investing in capital equipment to increase productivity— places automation devices at select locations, preferably stations with significant quality problems or stations with long cycle times.

• Challenge 2: Skilled workforce is in scarcity
While India has a strong working-age population, it is difficult to find skilled labor. One explanation for this is the standard of training provided by Indian vocational schools, which lack the necessary facilities and resources to provide relevant training, ensuring that once trained, businesses must retrain their labor force.The effect of inadequately trained workers on efficiency and lean methods is enormous and a massive drag.

 Solution: Build workplace competencies across all layersThe manufacturing sector should take collective and individual steps to build a professional pool of labor. On a collective level, business should set up and support institutes of vocational training to build skilled labor pools across main clusters of manufacturing.Individually, by designing specific curricula and structured training programs aimed at employees at various stages of their careers, manufacturing industries may boost their capacities. They should provide the entry-level workforce with a regular apprenticeship or induction curriculum and more advanced technical or supervisory instruction for senior employees.

•Challenge 3: Supply chains are unreliable in large part

Supply chains are a major contributor to non-value-added activities in India. A number of external factors influence supply chain networks, including market volatility and distorted consumer trends, bottlenecks in logistics and distribution, and weak supply chain network structuring to maximize revenue and excise taxes.

Solution: Improve mobility over the supply chain to reduce wasteAgility in the supply chain is important for a lean organization. Flexible companies have less inventory, improved flow control, and less stock-outs. A manufacturer needs to be more flexible should work on three areas such as organizational setup, supply and demand, technology or tools. With the exception of a few clusters of success, India's manufacturing industry is yet to become competitive globally. India's manufacturers have been improving slowly and steadily over the past few years, but more is needed to extend the few pockets of excellence. Adopting lean manufacturing concepts will be crucial to meeting the pioneers of operational excellence to succeed on the global ring. Know more by attending the Make in India Conclave. Buy Tickets at MeraEvents today!