Returning Competition to the Factory Floor

1
Returning Competition to the Factory Floor

• Pankaj Chandra
• Indian Institute of Management Ahmedabad
• ICRIERs Silver Jubilee Conference, November 6-7,
  2006

2
Large Volume Operations

• Nokias factory Chennai
• AMULs operations in Gujarat
• ORPATs factory in Morbi
• Daisos 100 Yen retail outlets in Japan

3

• NOKIAs Factory in Chennai
• 1 million handsets per month
• 1200 operators
• AMUL (GCMMF)
• 12 plants
• 11, 962 Village Societies, 2.5 million farmers
• Daily Milk collection 6.3 million litres per day
• Mehsana 1.342 million litres per day
• Sales Turnover Rs 3773.6 crores

4

• ORPATs factory at Morbi
• 5000 wall clocks per day
• More than 4000 operators
• Sales turnover Rs 300 crores
• DAISOs 100 Yen Retail Stores
• 2400 retails stores 30 stores per month
• Sales turnover US 3bn.
• 380 stores outside Japan in 15 countries
• 10th fastest growing company in global retail
  industry
• Variety 70,000 items per outlet
• All products sell outside Daiso at a price
  greater than 100Yen !

5
Changing the Frame

• Lead Time
• Skills
• Scale
• Strategy
• Tools of Production

6

• The Textile Supply Chain in Gujarat
• MCT DLT
• Ginning Pressing 12 25
• Spinning 8 38
• Weaving 23 40
• Processing 11 21
• Garmenting 15 49
• Customs - 10
• Transport (overseas) - 35
• MCT Manufacturing Cycle Time (days)
• DLT Delivery Lead Time (days)

7
Skills Dilemma

• Indian Textile Apparel Sector
• Export target US 50 bn. by year 2010
• Expected Investment in the Indian Textile
  Apparel sector Rs. 1400 bn.

8

• Manpower required to run the additional plant
  equipment
• Textile sector about 70,000 supervisors
  and 1.05mn operators
• Apparel sector about 112,000 supervisors
  and 2.8mn operators in the apparel sector
• (Not to mention auxiliary services NATURE OF
  SKILLS)

9
Scale

• Chinese Capacity Strategy capacity leading the
  demand (credit issue in India?)
• New organizational forms
• TAMA, Tokyo region, Japan
• Wenzhou, Zhejiang Province, China
• Rajkot, Gujarat, India
• Evolution of coordinating specialist firms

10

• Formation of Cluster TAMA
• Technology Advanced Metropolitan Area
• TAMA Association formed by MITI in 1996
• Includes adjoining areas of Saitama, Tokyo and
  Kanagawa prefectures
• Along Route 16 Ken-O-Do Expressway
• Inland industrial area covering 74 municipalities

11

• Number of workers 4 million
• Value of shipped goods 214 billion (1998)
• Total Value add (in Million ) 1,083,883
  (Japan), 81,862 (TAMA), 63, 890 (Holland)
• Total Value add()/worker 116,447 (TAMA),
  110,184 (Japan), 94,970 (USA), 58,260 (Germany)
• TAMA has twice the shipment value of Silicon
  Valley

12
Some Performance Indicators

• No. of New Products in the Market in the last 3
  years 22 (against 4 by non-member SMEs)
• of firms cooperating with research
  universities 65 (an increase of 55 over last
  five years)
• Patents 62.9 of TAMA firms held patents as
  opposed to 29.6 of all SMEs in Japan
• RD Expenditure/Sales 5(PDS),2(PPS)
• Profit/Sales ratio 2 for PDS (1 All Japan SME
  median)

13
DNA of TAMA

• Linkages between firms creation of new
  technologies, new products and new businesses by
  combination of different technologies and
  knowledge
• RD units of large enterprises (about 15)
• University Colleges with science, engineering
  management departments (34)
• Product Developing SMEs (about 300)
• Product Processing SMEs (about 16262)
• All are RD oriented
• TAMA Association the coordinating
  organization

14
Strategy

• Managerial strategy for large number of operators
  on the shop floor or configuring quick throughput
  lines
• Role of Small and Large enterprises

15
PRODUCT-PROCESS MATRIX
One of a kind
Low Volume Many Products
Hig Volume Few Products
Project
Job Shop
Very Jumbled Flow
Batch Process
Assembly Line
Continuous Process
Rigid Flow
Product- Differentiation Flexibility in Volumes
Bidding Delivery Product Design Flexibility
Price Availability
16
Debate on Manufacturing must Refocus on

• Operational Productivity
• Capabilities - built by individual firms
• manufacturing ability will define success new
  tools of production
• inter-firm linkages (GPNs) will help learn
  reduce risks
• quick throughput lines
• Quality and Quantity of Manpower

17

• New Organizational Forms
• Attract world-class producers of goods
  machinery to setup manufacturing RD facilities
  in India

18

• Thank You!