Unravelling Make in India - Reaching for the stars
As India celebrates Make in India week from 13th to 18th Feb 2016, at Mumbai, an event for highlighting the potential of design, innovation and sustainability of the various Indian manufacturing sectors in the coming decade, it is an opportune time to ponder and analyse the supply chain networks in the country since supply chain management is one of the critically determining factors for the success of this manufacturing splurge.
Today, when we take a walk down the Indian markets, it is perplexing to see the plethora of Chinese items flooding the markets be it - toys, electronic gadgets, hot water bottles, car components, electric lights, garments or even Diwali crackers! Low price, bulk availability, and variety have led to the rampage of Chinese goods in India. Chinese goods are not only affecting the Indian domestic business and Indian market but also the exports of our country. Indian goods are being replaced by ‘Made in China’ label both in India as well as abroad.
To address the age-old manufacturing crisis in India, the Make in India program was launched in 2014 to transform India into a global design and manufacturing hub. The program envisages the creation of a manufacturing eco system with new transparent processes, policies, use of technology, technical knowledge framework, dedicated help desk to drive investment, develop skills, create jobs, foster innovation, protect IP and build best-in-class manufacturing infrastructure. India seeks to emulate the success of Japan, China, and other “Asian Tiger” economies by encouraging manufacturing in the country and raising contribution of manufacturing to India’s GDP. The unprecedented opening up of key sectors including Railways, Defence, Insurance and Medical Devices to higher levels of Foreign Direct Investment and extending investments in 25 sectors are encouraging signs. Also, regulatory policies have been relaxed to facilitate investments and ease of doing business. A slew of ordinances and laws to simplify corporate tax structure, land acquisition, foreign direct investment, business operations etc. are also on the anvil. Another reason in favour of India is the slowdown in the Chinese economy. ‘Make in India’ is all set to get a boost through these initiatives.
Supply Chain Management is King
Undoubtedly, supply chain management(SCM) takes centre stage as Make in India targets to transform India into a global manufacturing destination. It is indeed going to be a challenge to handle the complex and dynamic supply and demand networks involved in the Indian environment. Efficient management of the entire supply chain including the movement and storage of raw materials, work-in-process inventory, production, and finished goods from point of origin to the end consumer will play a pivotal role. Developing the infrastructure to facilitate an integrated framework for operations management,sourcing, procurement, logistics and information technology will be of paramount importance.
Optimising the supply chain include various tactics like liaising with suppliers to eliminate bottlenecks, sourcing strategically to strike a balance between lowest material cost and transportation, implementing just-in-time techniques to optimise manufacturing flow,maintaining the right mix and location of factories and warehouses to serve customer markets, and using location allocation, vehicle routing analysis, dynamic programming, and traditional logistics optimisation to maximise the efficiency of distribution which are all important for efficient manufacturing. As supply chain partners include suppliers, intermediaries, third-party service providers, and customers, the need to improve trust and collaboration among supply chain partners, is also vital.
How SCM-ready is India?
The core challenge for India lies in building a reliable infrastructure to handle the supply chain challenges that will accompany a massive influx in manufactured goods. The supply chain makeover in India is a much needed one. India presents a unique logistical challenge for domestic and international manufacturers. Perishable and cold supply chains face a higher spoilage rate on average due to inefficiencies in Indian domestic logistics.The infrastructure initiatives and investments will lead to rapid expansion of the nation’s freight transportation network to accommodate the projected increase in traffic. Needless to say, planned infrastructure improvements will be costly. Frequent power outages may cause delays in manufacturing schedules and an increased likelihood of defective parts. India lacks a developed supply base as raw materials and parts are still often imported for production. The import process needs to simplified and standardised, to offset unpredictable delays.There needs to be a push for policies on core strategy of supply chain design for the creation of more effective supply networks, clusters, hubs, and cooperative enterprises.
Will the infrastructure investments in India deliver results?
Can Indian manufacturing design and develop products which are world-class?
Can Indian supply chains cope up with volatility and dynamic change? Can India build resilient supply networks ?
Global Supply Chain Leaders as Knowledge Partners
Close partnerships of government with global Supply chain leaders is fundamental to understanding the SCM-related issues and incorporating agile solutions. It also becomes imperative for Indian companies to adapt to SCM technologies to facilitate the entire gamut of SCM. Leveraging the expertise of supply chain leaders for effective supply chain management solutions and models is the need of the hour. On a positive note , there are a number of SCM players of Indian origin who are global leaders in this space. It would be highly effective if government can bring such SCM leaders in advisory positions and take advantage of their domain knowledge.
Positive indicators
Though in its early stages, the Make in India campaign has already attracted notable participants. Electronics giants Samsung and Sony have announced plans to set up manufacturing bases in India. Chinese firms are expressing interest in setting up manufacturing facilities in India. Japan reiterated its resolve to finance projects worth billions in India.Kia motors, the second largest automobile manufacturer of South Korea wants to set up a manufacturing base in India. Moscow has plans for a manufacturing facility in India and to export light utility helicopters. United Kingdom has launched ‘GREAT Collaboration’ with the partnership between UK’s BP plc and India’s Reliance Industries Limited (RIL).
India is a resurgent, vibrant nation with a buoyant economy. While countries like China, Japan and Russia are staring at an economic slowdown, Indian business sentiment is on the rise. Today, India’s credibility is stronger than ever. There is visible momentum, energy, enthusiasm and optimism. Make in India is opening investment doors to the world. India is well on its way to becoming the world’s most powerful economy and a global export powerhouse. One can say with aplomb that there is enormous scope for investment, growth and also very exciting business prospects.
India finally dreams of a manufacturing bonanza.The start is there.
With the right focus and agenda in place, execution will depend on how fast a massive overhaul of the existing manufacturing woes occurs. Of course, the proof will lie in execution.