At the recently held National Productivity Summit organized by Indian Machine Tool Manufacturers’ Association (IMTMA), AK Taneja, Managing Director & CEO, Shriram Pistons & Rings, offered his 360 degree take on manufacturing competitiveness. An excerpt of his keynote presentation on the concepts and practices that can lead to improvement in manufacturing productivity…
Immense opportunities ahead
India is growing, in fact brimming with opportunities. This is the best time to be in India and to be an Indian, because we have every reason to be optimistic. However, all opportunities available can be availed only by those who are prepared for them. While the demand for consumer durables, consumer goods and capital equipment is expected to grow for several years, the key differentiator of success of manufacturing enterprises will be how good is your management bandwidth and talent pipeline.
If we continue to show People as an expense in the P&L Statement and show Machine Tools, Plant & Equipment as Assets, we will never be able to benefit from the opportunities and realise the full potential of our business. Because the only appreciating asset in a company is actually People.
Customers expect more for less, and will expect even more, going forward. Therefore, continuous improvement is the only way forward to create a culture of competitiveness. Auto and Auto Component industry are great examples of continuous improvement. They are ceaselessly working to offer new features, new variants and new technology in cars, motorcycles, etc. and all this at a lower price. The Machine Tool industry in India is yet to show similar pace of improvement.
Without a vibrant and large Machine Tool industry, which is modern, sophisticated and competitive, one cannot expect India to become a manufacturing hub. It’s a fact there is no country which has progressed from emerging market to a developed market without a solid Machine Tool industry.
Mounting protectionism and deglobalisation
We witnessed globalisation in the last three decades and supply chains have got built up accordingly. However, we are now entering an era of deglobalisation and protectionism. “Make in America”, “Make in India”, “Make in China” are the new headlines. All these countries feel the pendulum of open markets has swung too far and there have been significant job losses due to globalisation. The wave of protectionism we are witnessing is in response to this and will lead to the established supply chains getting disrupted; this will impact our business model and eventually affect our competitiveness.
In the changed scenario, if we want to remain competitive, we will have to think of deep localisation of raw materials, components, finished products. And for all this, the Machine Tool industry will have to play a much bigger role.
Among the many serious changes taking place in the world around us, one of most significant is the crazy race for customer acquisition and customer retention. Companies are willing to pay huge price for acquiring new customers and retaining loyalty of the old ones. Simultaneously, we have entered the era of Sensors, Big Data and AI, and there is a mad rush to collect, store, analyse and use the data, to predict what the customer wants, sometimes even ahead of he himself knowing it! Data has become the new oil of the future.
The tolerance level of customers towards any shortcomings in Quality is going down and as they get more exposure to what is happening in the world, they are not willing to accept anything short of world class. This is great opportunity for us. However, it is not technology or capital that will decide how well we meet the changing expectations of the customers, but how passionate and aligned people in our companies are towards the company goals.
Creating Alignment and Passion
Have a relook at what is the Mission Statement of any enterprise. Does it give you goose pimples? Does it create Passion and give people the sense that they are working for a bigger cause than Profit?
Typically, Management wants higher profit, faster growth, high market capitalisation and increase in productivity. On the other hand, Employees are seeking fair treatment, recognition of good work, opportunity to grow, learn new skills and adequate wages that will allow their families to live a better life. Employees want to be able to lean on Management in times of crisis and, most importantly, they want to experience a sense of pride when they tell their neighbours and family that they work for a particular enterprise. Unless we create greater alignment between the goals of the Management and Employees, we can never realise their full potential. It is like sunshine: unless there is a lens that focusses the light, we cannot experience the full power of the sun.
Walking the talk
Another important aspect of creating Passion and Engagement in teams is consistency between what we say and what we do. We want a safe working environment in our companies, but how many of us are willing to stop production if we see something unsafe? We claim we are like a family and want all Associates to contribute with good ideas; but we have different standards for our Permanent, Temporary and Contract Associates. We talk about teamwork, but when it comes to annual appraisal, we tend to reward individuals for their intelligence or hard work. We talk integrity, but there are so many examples of companies that do not hesitate to cosmetically treat their Balance Sheet to avoid or reduce taxes. We claim customer is the most important person for our business, but inside closed rooms, the tone of the conversation is completely different. It is not easy maybe not even possible to find a perfect balance. But we have to create a work culture where we walk the talk, where we are consistent. Because only this builds Trust. And when you have trust, employees are willing to not only to work for eight ours, but put their heart, mind and soul into it. And this stretch effort is what creates true competitiveness.
An excellent example is the Indian Army that recruits ordinary persons from our villages and small towns, and builds soldiers who are ready to die for the country. This is done by creating passion and building trust through fanatic discipline and consistent behaviour.
Building a talent pipeline : Think of this like CSR
Talk to anyone in the manufacturing industry and they will tell you that Engineers graduating from our colleges are not plug-and-play. They are simply not ready for a job, because what is taught in the colleges is not aligned with what the industry needs. This is a valid `Circle of Concern’, because there is little that we can do about changing the quality of education.
However, what is within our `Circle of Influence’ is that we can transform our companies to behave like a University, where people are imparted training and also paid for it! Industry has to invest in class room and practical training in a bigger and more systematic way, to create Engineers who are trained for our specific requirements.
Indeed, many of the Engineers you train can leave for other jobs or pursue higher education after receiving good training. Even if 20% of the Engineers stay with the company, it will build a solid talent pipeline. The expenditure incurred on the balance 80%, who choose to leave the company after receiving training, is like CSR. These Engineers will go and work in other companies as ambassadors of your Company. And all the investment you make in their skill development will get repaid in one form or the other.
Simplification and ease of doing business
No company is small because it wants to be small. Companies are small because they haven’t yet learned how to become big. All companies aspire to become larger, more profitable, with higher turnover. However, as companies grow bigger they also become more complex. And complexity is cost. More complexity is also more bureaucracy and slower decision making.
Effort has to be focussed on simplifying procedures to speed up decision making and for faster response to continuously changing needs of customers. An essential mantra for competitiveness is speed and for that manufacturing enterprises must simplify, simplify, simplify.
Managing Director & CEO
Shriram Pistons & Rings Ltd presenting his keynote presentation on manufacturing competitiveness at National Productivity Summit 2018.
It is nearly impossible for a company to be good at everything. Therefore, building partnerships and creating synergy is becoming the modern way of doing business. For optimum utilisation of Assets and People, the `Do-it-yourself’ business model is giving way to partnering with others, to share even key technology and resources. Building partnerships requires a new mind set, but the essential ingredients remain the same: Trust, Transparency, consistent behaviour, mutual concern, and at all times, following a win-win approach