A multi-faceted panel of experts who have grown from MSME to large enterprises share their journey and learnings for the upcoming MSMEs at the Pro MG Smart MSME Forum presented by IDFC First Bank.
The strength of any economy is based on its MSME sector as it is the basis on which the entire manufacturing sector depends upon. The MSME sector acts as the training ground for professionals and the proving ground for entrepreneurship, both of which when successful, build to become the behemoths of the thor domains.
In India, the MSME sector is largely unorganized and lacks the courtesy of being looked up to. It has a large swathe of challenges that begin from availability of capital to availability of a skilled workforce, from the need to compete on cost and at the same time exceed in the quality of output. Expertise is hard to get and when they get it, it is often too expensive and add to it the latest trends of digital technology and pressure of innovation.
When asked about his views on streamlining operations, improving efficiency and productivity which is paired up productivity which is paramount to success, Indradev Babu, MD – UCAM, President - IMTMA explained that, “The real building blocks to make the organization accountable and productive are having a mentor, and having cultural change in the way we work. Leadership matters a lot. Employee first or customer first starts with the leader of the organization, the CEO is most responsible here”
“The most important thing you need is to have somebody with whom you can bounce off the ideas and they can tell you where you are going wrong. You need a mentor to allow you to have time to think beyond the everyday problems of running a MSME. Because MSMEs are always behind on deliveries. They're always behind on fund requirements. They're always having employee absenteeism, they're always having power cuts in their factory.” added Mr Babu.
Could you please highlight the roadmap to achieve world class quality?
Mohini Kelkar, Director, Grind Master Group, a global player in specialized Machines for providing total solutions for surface finishing requirements and one of the early lady production engineers in India said that “Somebody will ask why we should be world class? My answer to that is, if you want to survive in today's world, you have to be world class, you have to think of exporting because it is a global village. The only way is to become a world class quality player for survival. I'm not saying it is required just to fulfill your export ambitions, it is required for survival. And from that perspective, this 100 - 1 = 0 was phrased.
Quality perception is interlinked with customer expectation, you cannot separate it. You have to understand it is 100% what exactly the customer wants. At Grind Master, we have a number of checklists but only checklists don't help. From the senior level, we have to have a bird's eye view on every checklist.” Speaking about how China is winning the manufacturing game she added “We first see if BMW or Mercedes is going to order from me or not? If they are, then I need a level-2 finishing process and then I think of buying a Grind Master machine. But in China, a similar company in a similar position, they go ahead with the level-3 finish when level-2 is required.”
Speaking about quality and innovation, Mr. Kishore Khaitan, MD, Basant Fibertek who specializes in building and exporting hi-tech textile machinery began with, “You have to first define what is quality for you or rather for your customer. You know world class quality can be a very esoteric term. If we do not know exactly what is world class and the bigger question is, do our customers need world class.”
“For us, it was actually 100 - 2 = 0 and I'll tell you how. We had a defect rate of less than 2% in our product. And we had this big customer in one of the Southeast Asian countries. During the assembly, one small mistake, the fitter did, he did just put the shaft in the reverse order and bolted it. It became a huge, costly affair and we not only lost the customer but also lost our agent, who kind of got a loss of confidence in us. And as a result, cannot even estimate how much in terms of business we lost.” Continuing further, Mr Khaitan added, “You have to have your systems and processes and your culture so strong, that nothing second best is acceptable. You will have to use TQM, Lean management, Six Sigma, Poka Yoke or any other method that will give you the solution. But ultimately, it's the culture that ‘Yes, I should not even have one complaint from the customer and my product should perform 100% of the time to 100% of the performance standards’ is what is important”
Dr. Nagahanumaiah, Director at Central Manufacturing Technology Institute (CMTI), Bangalore and Former Chief Scientist of CSIR-Central Mechanical Engineering Research Institute, Durgapur, touched upon the government initiatives saying, “India started well on the cooperative movement but somehow it has not been successful. The reason is, though cluster industry associations are working, their benefits are not reaching the actual shop floor. Through the government, there are several schemes like common facility centers, but they do not solve the problems. MSMEs can find a solution by hiring consultant experts, but in general, it is not affordable in many cases. And then the challenge is retaining the expertise and training the workforce to deliver the solutions. One also has to address the challenge of all 4Ps - product, process, people and production”
“In case of process, people and production, no matter how much expertise we hire and spend on skilling and upskilling the workers, until there is dignity and respect, the skilled labour will move on to a better opportunity, maybe even to a competitor”, added Dr Nagahanumaiah.
Speaking about adoption of technology and its challenges, Mr. Babu stressed upon not only adopting technology in products but also in the processes. Speaking about the failures in technology adoption in his own organization, he said that it was important to first understand the key business processes, the scope and the ancillary processes to figure out the right technology. If you try to adapt a technology to your business model, the chances of it becoming a failure are much higher as every new process will have you circumventing the technology leading to even more problems.
Moving on to the success stories, Mr Babu added, “From order collection to pressing the green button for production, the side processes required were such that they would add immensely into the lead time of delivery. The production department didn't have enough clarity. Once we digitalized the system, we were able to bring it down, from a 40 day lead time of delivery, to four days. This is an actual story which is also documented.”
“The mindset to become unique is the key for innovation. I mean, if you have the mindset to become unique, innovation will happen. MSMEs are indeed extremely good at jugaad. The thing is jugaad is not bad, but it is a lab experiment. If you want to make it sustainable and robust to work in production, that innovation has to be further worked upon. Getting to the root cause analysis which helps you make your jugaad sustainable and make it work in production, one piece after the other, this is something which is missing in Indian MSME”, pointed Mrs. Kelkar.
“Thanks to China, the scale boat is already missed. So now, we have only the innovation boat to ride on. India has the advantage of being flexible, being able to customize the technology or the processes to satisfy the customer. So, customization and being a specialist in the being in the niche game is the key. And there are multiple niches available”, said Mrs Kelkar when asked about innovation and future of Indian MSMEs.
Speaking about on ground challenges and issues Dr Nagahanumaiah gave an example saying “There is a company placed in the industrial area in Bangalore. If we go and ask him if he would be interested in adopting Industry 4.0, use smart technology, he will not be interested. Because for him, it is irrelevant to his daily business needs. So, do I have any solution that will ensure that milling machine running time, which is currently 35% can be ensured to improve to 45%? Only then that business will be interested in adopting technology. And that is what smart manufacturing is in its essence”.