How to restart the manufacturing industry in India after COVID 19 using the ‘100 days COVID 19 restart’ program

Slowly, life as we used to know before COVID 19, is being talked about in state and central ministries. The PM is in constant touch with CM’s over video. Apart from the active cases, total cases, the mortality rate and the recoveries, economy is the next topic for discussion. Not because of the money, but livelihood and the need to restart normal life. One cannot live in fear of the virus constantly, one must find ways of coping with it, and carry on with day to day life, and retain sanity.

About 30% of the Indian GDP is on account of industry. The services industry, although contributing to over 55% of the Indian GDP, is totally dependent on the manufacturing industry for sustenance. Without manufactured goods, housing, roads, infrastructure are of not much use. Roads cannot be consumed, rail tracks cannot be consumed, but cell phones and TVs can be changed every two or three years, as more value-added models make for better connectivity and viewing pleasure. Manufacturing forms the very base of the consumption pyramid, around which modern life revolves.

The corona virus has interrupted all manufacturing because people cannot either go out of their houses, or, even if allowed to, they cannot work together in small groups, which is what current manufacturing demands. Of course, in the services industry, the problems are much worse, but manufacturing is no better.

In order to move out of the temporary rut, industry has to plan initiatives to restart in a sustainable way, and here, I would like to emphasize the word ‘sustainable’. This is an opportune moment for the Indian Manufacturing Industry – IMI, for short – to regroup and get on to a more equitable, technically savvy, forward looking operations platform. What are the key issues which need to be addressed?

The first one is of course the exploitation of migrant labour. In India, most IMI companies deploy migrant labour, aka contract or temporary or outsourced labour, to get around labour laws, which guarantee a minimum wage. This practice is abhorrent and needs to be stopped forthwith. The average employees cost varies between 5 to 12% of the total sales, in IMI, and is far, far lower than the same figures abroad. And this, in spite of the fact that rupee investment in capital is far less per capita labour as compared with the same in industrially advanced countries. In other words, we spend less on creating assets, and, to operate these, we often resort to migrant labour, which is paid about 50 to 60% of the regular. This needs to be corrected. We should pay our employees more, and still be globally competitive, in view of our demonstrated superior abilities to convert raw materials to finished products.

Second, India is savvy in IT, Artificial Intelligence, Internet of Things, using SCADA (Supervisory Control and Data Acquisition Systems) in factories, all of which are future oriented and can give a huge advantage, if used on a larger scale inside each factory, and in companies, to create ‘economies of integration’. So far, the IMI has used economies of scale and economies of scope, it is time to now switch to economies of integration. Economies of integration is possible with Big Data and Cloud Computing, and accrues benefits to the users through a systems approach to manufacturing. With interconnected machine networks, productivity can be taken to high levels, defect levels can be driven close to the ground and human engagement can be optimized, in scale and scope. Thus, the way forward for IMI is through Industry 4.0.

Third, any IMI company consists of three value adding zones. Modern supply chains are comprised of: Inbound, In-process and Outbound value centres. In the first centre, the company handles all matters concerned with incoming raw materials, components, SKDs. In the second, the raw materials and other SKDs are assembled and converted to a finished product, in a collaborative way by manufacturing, maintenance, R&D, engineering, process control, production planning and other related departments. In the third centre, the finished goods are sent to the end users through a system of distribution centres like, distributors, sole selling agents, wholesalers and retailers. In restarting operations after COVID 19, IMI companies must look at each of these three value adding centres, and ensure that all of them work in unison without interruption.

The basic principles which will govern sustainable operations after COVID 19 will include: Inbound rebuild, Inprocess renewal, Outbound reorientation and Overall coordination. We will briefly describe each of these four phases of the COVID 19 restart.

Inbound rebuild: In view of the large involvement of MSMEs, geographical dispersion over wide areas, loss of migrant labour, and sudden drop in demand, all such suppliers are in deep trouble. IMI companies must create ‘Inbound Rebuild’ task forces, to regroup all suppliers, assess their capabilities gaps, find out mutually acceptable, time bound rebuild programs. Very often, this will lead to greater communication through online media, payment gateways, more regularly held ‘morning meetings’ between groups of suppliers and the IMI company. Plans to ramp up, at the rate of 10% or so every two weeks need to be drawn up, with contingent plans in case of a COVID 19 relapse.

Inprocess Renewal: This is a longer term program, which will have to be done by the ‘Inprocess Renewal’ task force, which will make the necessary changes in the operations across the company, with the singular objective of installing Industry 4.0 practices in the 1 to 3 years perspective, shorter, the better. Industry 4.0 is no more a wishful thinking; it is an imperative. This program is not rebuild, but redesign, recreate and remodel the entire manufacturing system.

Outbound Reorientation: This program, to be done under the aegis of the ‘Outbound Reorientation’ task force, should work to make the changes in the outbound supply chain which will make the company more responsive, nimble in the long term, but ensure a continuous flow through of goods and services, in the short term.

Overall Coordination: In the short term this is the most critical of all the above four activities. Companies, individually or collectively, get together to plan for a COVID 19 free operations. This will involve: COVID 19 testing of all incoming transport, infection free loading and unloading of goods at suppliers and the companies, facilities for dealing with detected cases by medical staff at the companies’ premises, for which companies must liaise with the local government departments, for reporting and action purposes. In every company premise, a specially appointed COVID 19 medical team has to be set up. This can be done collaboratively also. In warehouses, three zones must be created. One, for entry, another for unloading and loading, and a third for medical assistance. Companies or warehouses may have to join hands to create these facilities cost effectively. The HR and the administration department of companies will be the most go-to people for making these happen, and, like COVID 19 warriors, companies must declare these as ‘inhouse COVID 19 warriors’ and give them the proper empowerment, support and recognition, and expect outstanding work in a short time. Second, inculcating social distancing practices, including short term changes in layout, relocation of some equipment, introduction of automation using AI, IOT, etc., as a part of the Industry 4.0 program. Graduated deployment of manpower, in a well-designed and controlled way, to produce products in a prioritized manner, will be a desirable activity. Before beginning any activity, a complete sanitization, maintenance of all equipment, restocking of consumables, must be done. Raw materials and other SKD’s needed for production must be procured in advance before restarting. Not only that, a certain minimal level of customer orders, to keep the show going for about 4 to 6 weeks, must be in hand. In the outbound side, what has been done with suppliers must be repeated.

Thus, what is critical is a well-planned restart program, quite similar to the ‘100 days’ program practiced by companies while acquiring other companies. The ‘100 days COVID 19 restart’ program is an effort to ensure short term and long-term measures to be taken up in a way which will end years of exploitation and put the IMI on a new pedestal, a world class force to reckon with.

R. Jayaraman