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The importance of manufacturing in India

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Indian Manufacturing, Make in India, Six Sigma, HenryFord, Total Productive Maintenance, THEORY OF CONSTRAINTS

Manufacturing has traditionally played a key role in the economic growth and development of countries. In developing countries, the importance of manufacturing has diminished over the last 20-25 years, resulting in de-industrialization. However industrialization — or increases in the share of manufacturing in Gross Domestic Product (GDP) — is a key feature of modern economic growth.

Historically, manufacturing has been the backbone of all developed and developing nations. It is where R&D starts, where new technologies are born, where scientists and engineers and others are challenged to develop new and better processes, products and technologies.

The manufacturing industry has pioneered historic breakthrough improvements via concepts, tools and methodologies over the last century.

1. Frederick Taylor’s “SCIENTIFIC MANAGEMENT” of the early 20th century.

2. Gilberth’s “Motion Study” together known as “TIME AND MOTION STUDY

3. MASS PRODUCTION SYSTEM of Henry Ford which revolutionized the automobile industry

4. STATISTICAL PROCESS CONTROL pioneered by Walter Shewhart and later by Deming and Juran: it  significantly improved process quality during World War (WW) I and II

5. Dr. EDWARD DEMING’S 14 POINTS: helped Japanese industry to rise from the ruins of WW II

6. TOYOTA PRODUCTION SYSTEM (TPS) or “JUST IN TIME PRODUCTION”  created by Eiji Toyoda with  help from people like Taiichi Ohno  and Shigeo Shingo that helped Japan (post WW II) to become the cheapest and most fuel efficient manufacturer of cars

7. TOTAL PRODUCTIVE MAINTENANCE to reduce losses in manufacturing by Tokutaro Suzuki that helped improve performance of chemical industry

8. SIX-SIGMA at Motorola by Bill Smith to improve defects and improve process capability later made famous by Jack Welch at GE

9. THEORY OF CONSTRAINTS (ToC) by Goldratt to improve throughput and reduce operating costs and inventory

10. LEAN by James Womack & Daniel Jones who brought TPS from Japan to the western world

As we know, all these concepts which originated in manufacturing are now used across various industrial sectors like IT, Financial Services, Hospitality, Logistics, Government and Armed Forces. This underlines the contribution and importance of manufacturing to industry as a whole.

India story so far

In last decade India has emerged as one of the fastest growing economies. While revising down the GDP growth outlook for 2020 to 6.1 IMF has pegged the medium term GDP up to 2024 at 7.4% making India one of the fastest growing economies ahead of China at 5.9%. (these estimats are prior to onslaught of Covid-19. The revised estimates are still emerging) Today our service sector contributes to 54.13% while manufacturing sector contributes to 18.32% followed by agriculture which is at 14.39%. Given our large domestic market which needs “products” to consume such a lower contribution of manufacturing is not a healthy sign.

Manufacturing provides many jobs, at all levels. It is important as an employment generator. Among all sectors (service, agriculture, social, manufacturing), manufacturing distributes wealth most equitably among the work-force; hence is a key factor to pull people above the poverty line. E.g. In most of the fast developing Asian countries such as Thailand, Indonesia, Malaysia, Taiwan, Philippines, Korea and China, manufacturing has contributed 30 to 50 per cent of GDP, and thus have helped in eradicating poverty. In contrast, Indian manufacturing sector’s contribution to GDP has moved from 16% to 18.32 % in last 10 years. 

“Make in India” initiative is designed to take manufacturing to 25% of GDP. For India to realise these projections our manufacturing industry has to play not just significant but a leading role. Under this initiative GoI has identified and taken many steps to improve competitiveness of Indian manufacturing organizations. This has resulted into India to jump to 58th rank out of 140 countries on the Global Competitiveness Index of the year 2018.

Even before GoI started serious efforts through reforms, organised manufacturing sector in India has put its act together and has spent significant efforts in putting the house in order. While battling with factors beyond their control leading Indian manufacturing companies have taken lot of efforts to reduce manufacturing costs, improve quality, sweating the assets and improve productivity. Most of the leading Indian manufacturing companies have adopted world class manufacturing or manufacturing excellence practices using methodologies like TPM, TQM, Six-Sigma and Lean.  Since 2003, India companies have won 401 JIPM TPM awards which are highest for any country outside Japan. Indian companies have won 38 Deming Prizes – the highest global recognition for TQM implementation. India has the most US FDA approved pharma plants outside US.


While that is the story of top of the pyramid manufacturing companies an average manufacturing company in India is yet to adopt world class manufacturing practices and claim to get competitive advantage. Many Indian companies use various manufacturing improvement initiatives. These initiatives are used on stand-alone basis without integration. E.g. initiatives like kaizen, 5 S, Quality Circles and Six-Sigma etc. excel in themselves and remain restricted to lower and middle level. Such programs remain largely cosmetic in nature without creating any competitive advantage. In some multi plant organization each plant is left to decide their individual program with limited or no horizontal deployment of best manufacturing practices. Often there is no integrated approach to initiatives across plants. E.g. while one of the plant might be winning accolades in Quality Circle initiative, other plants of the organization do not have a culture of Quality Circle but may be working on other initiatives. Another typical behavior we often see is that the plant manager would claim to be knowledgeable about manufacturing excellence initiative but there would not be practicing the same.   

Today’s Manufacturing plants are not isolated from the end to end supply chain which consists of Plan, Source, Make and Deliver. Hence Manufacturing practices within four walls of manufacturing can’t be built in isolation. There have been many examples of companies spending lot of money on ERP with limited impact on manufacturing performanceas modules like PP and MM are not supported by a strong manufacturing improvement initiative that improves down time, cycle time, change over time, MTBF and MTTR. Objectives of a manufacturing excellence program have to be defined in the context of specific supply chain challenge faced by the company’s supply chain. E.g. a B2B supplier has to build abilities to provide small batch sizes of variety of parts within short lead time as demanded by the customer factory which itself might not be very good at supply chain planning.  In such a case the  plant has to focus on efficient layout, quick change overs with minimum wastages and delayed differentiation.  A pharma plant has to be fully compliant with GMP as defied by regulators. Thus practices like 5S, process capability improvement, SOP management; ability to do exhaustive CAPA and data integrity should be the key objectives of its manufacturing excellence program. In many such cases we don’t see the supply chain objectives being well integrated in manufacturing.

Manufacturing Excellence program to integrate “Panchmahabhoot” of manufacturing

As per Auruveda and Indian philosophy we have five basic elements in nature,  which are associated with health of human beings namely Prithvi (Earth), Jal(Water), Vayu(air), Agni (fire) and Akash(Ether). Any disorder in human body indicates imbalance of one or more of these elements.  Similarly a manufacturing plant has five basic elements which govern its performance. These elements are Assets, Processes, Place, Utilities and People.

Any lack of performance of a plant can be traced back to sub optimal management of these elements.

A comprehensive manufacturing excellence (ME) program has to ensure that performance of all the five elements is improved to deliver a right quality product at least conversion cost with highest productivity & safety, with optimum inventory at right time. A manufacturing excellence program has to address following basic aspects:

Improving Asset Adequacy and Availability :
Adequacy of asset mean the bottleneck stage of manufacturing has enough capacity to meet the demand hence must be fed with orders which improve throughput. The concept of Theory of Constraints (TOC) has to be used to make this happen. The bottleneck has to be fully exploited by focusing on Overall Equipment Effectiveness (OEE) improvement using TPM, Lean and Six-Sigma tools. Remaining stages of manufacturing have to be adequately available by rigorous implementation of TPM.  

When we think of assets in a traditional manner we only focus on production assets. In some process and chemical plants utilities play a major role in deciding capacity which is often is a function of product mix. Thus implementing TPM in utilities to improve quality, availability and adequacy of utilities has to be part of ME initiative. In industries like pharma where large number of SOP based analytical testing happens for RM, PM, FG and WIP QC labs are important assets using various equipment for testing which can become bottlenecks. Hence QC has to be part of the ME program.

Another area to build excellence is building smart assets and IoT based asset management.  Ability to build a connected plant where machines can communicate with one another, predict failures and measure their own performance is important for asset management.

Improving Capability, Flexibility and Value of Manufacturing Processes:
A plant uses many processes like capacity management, production planning & scheduling, Asset Maintenance and Quality Management which support the core production process. Improving process capability of these processes to reduce variations, defects, rework and delays has to be the objectives of cross functional and function projects lead by senior and middle level managers. Methodologies like DMAIC, SPC (Six-Sigma tools) need to be used for process improvement.  Flexibility of support processes in terms of quick response time and shorter lead time are critical for plant flexibility. A process becomes valuable when it has less non value adding activities and meets customer expectations in terms of time and quality. Manufacturing processes often have lot of wastes which increase the lead time. Use of tools like VSM and 7 Wastes (Lean tools) are very effective in identifying wastes and designing new processes.

Workplace Organization
The workplace is like ether which fills all the space in a plant. Workplace effectiveness fundamentally starts while designing the plant layout. Indian manufacturing has grown through brown field.  Most of the old plants have poor layouts leading to problems like unwanted material handling, inadequate machine working area, poor illumination & ventilation and safety problems. Ensuring high quality workplace upkeep, hygiene and safety are quite a challenge. While we have focused on cleanliness with some success we have not understood importance of beautification of manufacturing shop floor. Why should a shop floor look drab and mundane ?  How can we use the machines, walls, MH equipment, floor etc to display messages about quality, safety, team work, inventory etc  in a manner which will make shop floor lively and vibrant ? why cant there be some plants in the shop floor ? Of course all this has to be done keeping applicable safety and environmental norms.  

Thus a robust 5 S and beautification program coupled with strong intolerance towards “abnormalities” should be the foundation of any ME initiative. It has to go hand in hand with initiatives like autonomous maintenance (AM). Making AM and 5 S as part of job description of a shop floor worker, however highly skilled  a job may be is critical much needed mind-set change.

People Capability & Total Employee Involvement
Involvement of grass root level is the foundation of any improvement initiative. A robust mass awareness and communication program which makes the masses aware of the business challenges and new improvement initiatives has to run on an ongoing basis. It gives opportunity to the leaders to connect with the masses and gives employees to see how their role needs to change with changing time. Programs like 5S, Kaizen, suggestion scheme, Quality Circle etc have to be effectively used to achieve shop floor improvement objectives which get cascaded from the organizational thrust areas. Today customer wants full visibility and access to shop floor. The experienced customer or auditor of international regulatory body assesses the work culture during such visits by interacting directly with shop supervisors and workmen and nothing remains hidden. Thus we have to move from employee involvement to employee engagement. Creation of empowered cross functional Area Effectiveness Teams in each section right from entry gate to scrap yard & ETP is needed to improve workplace organization and employee engagement.

Upgrading skills is a continuous process as the manufacturing technology is changing fast. Knowledge of basic 7 QC tools, Why-Why analysis etc are no more new skills. These are basic skills to remain gainfully employed in today’s manufacturing world. In India most of front line staff lack adequate supervisory skills which hamper their ability to do effective daily management.

Plant managers have to build capabilities to understand latest applicable manufacturing technology, have to be literate in IoT and digital technologies. Sadly today’s average Indian manufacturing manager is quite inadequate even in excel skills. They need to practice high level problem solving skills using statistical analysis to solve complex problems, process reengineering skills and appreciation of supply chain view. Managing industrial relations in situation when the workforce is going to shrink with use of automation and robotics is important.

Each company has to design its own unique program aimed at building competitive advantage through manufacturing. A large multi plant manufacturing organization has to develop following core abilities under the umbrella of Manufacturing Excellence. These abilities have to be part of company’s manufacturing DNA:

1. Common maturity model to measure maturity of MfgEx across all the plants
2. Comprehensive improvement structure across all plants
3. Common Operational KPIs across the plants
4. Strong internal capabilities to continuously improve product quality, throughput and costs.
5. A robust linkage of improvement targets , performance & maturity of ME with and rewards of leaders
6. Ability to rapidly implement best manufacturing practices and key corrective actions for critical issues from one plant to all the plants.
7. Integrated planning to manage delivery due dates & inventory
8. Availability of a competent pool of manufacturing leaders who understand Manufacturing Excellence
9. Strong structure for manufacturing capability building lead by internal trainers
10. Robust mechanism to ensure implementation of MfgEx at key vendors and 3P plants.

Manufacturing Excellence is a long term commitment and core competency for manufacturing leaders. Make in India will be truly successful only if we are able to build culture of Manufacturing Excellence across majority of the plants. This task is quite daunting and would call for much more collaboration among manufacturing companies facilitated by industry and trade associations. Some kind of mandating and incentivizing from the government would help in gathering speed as we are already late.

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