7 Dreams to Reality: Transforming Indian Manufacturing

Communiqué October 2013 | 7

to sustain double-digit growth in Gross Domestic Product (GDP), India needs to increase the share of its manufacturing sector in GDP to at least 25% from the current 17%. All the

stakeholders now agree that manufacturing must take an important role in India’s GDP growth, employment creation and export capability.

Manufacturing, like any other sector, has its own challenges as well as opportunities. Thus far, Indian companies depended mostly on bringing in technology from outside, and merely produced products. But, as a young nation, the challenge is to develop new products for our own huge domestic market. Opportunities are aplenty. We need companies, like in the developed world, who become our engines of manufacturing growth, and create products which are really Indian, and go on to become global products, building India’s brand identity.

To realize this, companies need to identify young talent and transform them into leaders of the future and ‘engines’ to drive change. These visionary leaders for

tomorrow need to unlearn past successes and acquire new methods continuously. They must develop new way of ‘breakthrough thinking,’ to create and add new value, to discover the needs of the customer, and to fulfill those needs.

Way back in 2004, CII sensed this latent need and approached Prof Shoji Shiba, an international expert in Breakthrough Management and then Adjunct Professor in MIT’s Leaders’ for Manufacturing Program (now known as Leaders for Global Operation) in USA, to guide Indian manufacturing. With Prof Shiba’s experience, CII, in collaboration with the National Manufacturing Competitiveness Council and the Japanese International Cooperation Agency (JICA), developed a set of programmes under the aegis of the Visionary Leaders for Manufacturing (VLFM) programme, in 2007, andthe Visionary Small and Medium Enterprises (VSME) programme, in 2010. Both these programmes opened the eyes of Indian companies and managers to the concept of Breakthrough to face a world undergoing drastic (10X) changes.

transforming Indian ManufacturingIndia needs companies to become engines of manufacturing growth,

create products which are really Indian, and go on to become global

icons, building the nation’s brand identity. seven success stories of

the ‘Indian’ way of implementing Japanese Manufacturing Management

methods are creating a buzz about Indian Manufacturing

7 Dreams to reality

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8 | October 2013 Communiqué

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Can Transformation really make a difference?

Theuniqueseven-year(2007–2013)VLFMjourneyhascreated more than 200 excellent success stories. Of these, CII proudly presents 7 chosen success stories of Real Change Leaders from Indian Industry: Anand Group, Godrej & Boyce, and Sona Group, and from Academia: IIM Kolkata in partnership with IIT-K and IIT-M, whose dream of taking Indian manufacturing to the next level became a true reality, with a new mindset and skills of ‘breakthrough thinking and implementation.’

These 7 success stories of the VLFM programme,demonstrating an ‘Indian’ way of implementation of Japanese Manufacturing Management methods, are creating a buzz across the globe about Indian Manufacturing. The successes were first showcased in Tokyo to Japanese industry in July 2013, and subsequently to the top Management of Indian Public Sector Undertakings (PSUs) in September 2013 in New Delhi.

The case studies demonstrate breakthrough in the way

• Newproductsaredevelopedandorganizationsaretransformed

• Customersand supplierswork together

• Society is impacted

• Higher Education is imparted through Industry-Academia collaboration

These success stories were presented in Prof Shoji Shiba’s book titled ‘Creating Visionary Leaders for Manufacturing,’ and are now being published by Penguin in November 2013, with the title ‘7 Dreams to Reality: Transforming Indian Manufacturing.’

Of the seven stories, two are about new product development and organization transformation, three are about creating win-win amongst customers and suppliers and sustaining them through community activities, and two about societal transformation. The basic principles in each of these studies can be applied to other fields as well.

new product Development and organization transformation

Breakthrough Product: Sona EPAM

The 12-year journey of this breakthrough product – an Electric Power Assisted Module (EPAM) began in 2000 when the Sona Group was drawing up its vision for the 21st century. Dr. Surinder

Kapur,Founder-Chairmanofthecompany,foresawtheincreasing application of electronics in industry, and realized that Sona – which manufactured mechanical steerings and parts – could find it difficult to survive in such an environment. Convinced that his company should plan for its own electronic power steering, he wanted a transition from `build to print’ to `print to build.’

EPAM is critical for steering systems for off-highway vehicles, such as golf carts, garden utility vehicles, and tractors. Traditionally, these vehicles had never been fitted with power steering, and were difficult to manoeuvre. EPAM makes steering these vehicles easy.

Mr Kiran M. Deshmukh, then Sona’s Chief Operating Officer, joined the first VLFM Learning Community asa Module Director. His learning, that an innovativeorganization and a facilitative work environment are critical to achieving a breakthrough, led him to form a dream team for this project, led by Dr. Ravindra Nath Sharma (now General Manager, R&D). There were three critical reasons for the success of this team: the team leader and the COO developed an emotional bond;

the team leader and his deputy were experts in the relevant technology; and the entire team was passionate about the project.

EPAM is a breakthrough product born in the innovative environment created by Sona

within their organization. This was supported by the commitment of the top management and the unique engagement with the customer, who partnered in its development.

Sona created an open innovative office space, 300m away from the main building, with no cabins, for the entire team. It offered a flat

Demonstration of EPAM during the visit of a Japanese Parliamentary Delegation to the Sona Plant in Gurgaon


change, he followed the seven infrastructure tools model learnt during the course. He alsolearnt that transformation is a slow and gradual process, which generally starts from an individual. But one individual cannot transform an entire organization successfully; the whole organization has to be involved in the process of change.

Interestingly,MrHussainchosethescrapyard as a starting point for the transformation of the periphery, believing that the best place to start is at the weakest point. The scrap yard is the most unattractive part of any factory and also the most undisciplined. This sent out the message that nothing is a waste, everything has value. This was combined with greening of the campus, setting up a national flag pole, founders’ gallery, and more.

The Shirwal team rolled out activities such as Departmental Safety Score (DSS), Asset Identification and Control, a common canteen and uniforms to build trust between the workers and the management, accountability among employees, and unity irrespective of hierarchies. These initiatives increased employee participation, and diluted the earlier mistrust that marked management - worker relations. When a wage settlement that had been pending for three years was being negotiated, the trade union leaders were more receptive and the issue was resolved amicably. The number of trade unions in the plant has also come down from three to one.

Taking the transformation from the company to the suppliers and society at large, the Shirwal factory’s interactions with the local community helped save

organization with flexible timings. The team created an environment of fun and togetherness, celebrating every occasion.

To further promote the feeling of unity in the team, Mr Deshmukhgavetheteamalogo-InnovaTEam.Hemadesure to spend at least 20% of his time with the team to give an outsider’s perspective of their work, and provide solutions to technical problems.

The decision to co-develop the product with a leading American company helped it get immediate acceptance from others in the industry. The enthusiastic response to EPAM surprised even the partner customer. In 2013, the customer’s order of EPAM jumped more than 150%!

Sona’s EPAM journey is important not just for the technological development for a particular company, but for manufacturing in general. It shows how companies can undertake breakthrough projects and deliver them successfully.

Havingconqueredaforeignmarket,Sonahasnowsetits sights on the Indian market, and is excited about making a difference to the lives of Indian farmers.

Transforming an Organization: Godrej Shirwal

This story is about the complete transformation journey of the Godrej Shirwal plant, located 40 km from Pune, both in its internal processes and its interactions with the outside world. The transformation at Shirwal was not an easy journey. It took two-and-a-half years from the change at the periphery to involving the society.

MrHussainShariyarr,theyoungheadoftheShirwalplant,which manufactures washing machines, refrigerators, ChotuKool and air conditioners, led this transformation asaRealChangeLeader.Attending theVLFMseniormanagers’ course brought about a paradigm shift in his thinking. The most important learning was how to transform himself from an effective manager to a Real Change Leader. For the organizational

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The Shirwal Plant Scrapyard was renamed ‘Waste Management and Control Department’

The Shirwal Story


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the imminent closure of its operations due to water shortage when the area was affected by near-drought conditions in 2012.

Creating Win-win amongst Customers and suppliers, and sustaining them through Community activitiesThis section highlights the success of the Visionary SME programme which attempts to fashion a paradigm change in the relationship between a company and its suppliers, to make it more sustainable.

Transforming a Tier 1 Enterprise through VSME Initiative: Gabriel

The Visionary Small and Medium Enterprise (VSME) course is one of the four VLFM courses, started in2010. The 3rd batch of the VSME course was conducted in 2013 in Hosur, TamilNadu, for companies based in southern India. Gabriel, an Anand Group Company, also participated in this course. Ms Sandeep Kaur, Deputy General Manager, Programme Management, at Gabriel, was given the task of implementing the VSME programme in her plant in Hosur.WithaVLFMSeniorManager background, she not only played a key role in the transformation in her company, but also introduced several innovations of her own.

In VSME, the first step is the supplier’s voluntary agreementandthenfinalselection.Forthis,MsSandeepshared the success stories of suppliers from previous VSME batches to motivate the Hosur suppliers. Foursuppliers joined this programme along with Gabriel– Hosur Steel Industries, Vinsar Elastomers, StandardElastomers and Yeko Enterprises. A team of focused group of people was formed, starting from the top, includingtheCEO,PlantHead,supportengineers,andinter-company group representatives. Involvement of the CEO was necessary, as it sent out a message about their commitment and the importance of the programme.

After the CEO programme, training was started at the unique classroom created for operating the VLFM Programme at the CII Naoroji Godrej Center ofExcellence in Mumbai.The first module on breakthrough

management laid emphasis on the behavior of the leader, while another module was about understanding the customer’s requirements and identifying latent needs.

The classroom inputs were supported by visits to factories of the companies and their suppliers. Prof Shoji ShibaandProfFuruhashihand-heldthetransformationteams during the implementation of various measures as well as internal training. It is this hand-holding that makes VSME unique.

Early successes, which can be showcased and implemented in other areas, are important for team motivation. So, the selection of the model line, a small

part of the plant or a section of operations where change has to be effected before being diffused to other parts of the organization, is critical. Gabriel selected its SA3 assembly line, which produces two varieties of shock absorbers.

All the four suppliers chosen for the VSME programme were supplying components to the SA3 assembly line. These suppliers too went through all the steps that Gabriel had undergone. They also defined their goals, formed a team which went for training, and selected

model lines.

The first step was to transform the SA3 model line. In transforming a workplace, the VSME initiative focuses not on stand-alone improvements in individual processes (which is the traditional approach), but on the seamless flow of production across processes and different levels of suppliers. Gabriel got quick results in terms of saving floor space, reducing the time and distance involved in moving components and making the workplace safe.

The company then invited the four suppliers and showed them what it had done. This motivated them to take up similaractivityintheirplants.Followingthis,thesupportengineers and functional heads went to the suppliers’ premises and carried out the same activities there. This yielded quick visible results.

More business results followed as they focused on flow. However, a more far-reaching benefit is that therelationship between Gabriel and its suppliers has changed.

Gabriel: VSME Benefits

Line efficiency Improvement

(%)

Productivity Improvement(Units/manhour)

Delivery Performance Improvement

(%)

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Transformation of Tier 2 or small company: Sona - Paragon

The second aspect of Transformation presents the Supplier or Tier 2 perspective. This story is about Paragon Autotech Products, which supplies rubber and plastic components to the auto component industry. From 2008, the company’sperformance started deteriorating. It was making cash losses for two years, till it reached a point where it had no cash balance.

Mr Rahul Jain, Managing Director, who took over the company from his father, Mr R. L. Jain in 2005, got an ultimatum from his father to close down the company by March 2012.

The turnaround in Paragon’s fortunes came from Sona Koyo Steering Systems, the auto-component manufacturer of which Paragon was a supplier. Mr R. B. Singh, the VSME chief of Sona Koyo, persuaded Paragon to join the second batch of the Visionary Small and Medium Enterprises (VSME) programme. And the MD decided to try it out before accepting defeat and proving his father right.

Mr R B Singh participated in the Real Change Leaders’ workshop during the first Learning Community in 2004 and attended the 11 days first module of the one-year

PGPEX- VLM programme for middle-level executives at IIM Calcutta (IIM-C) in 2011. There, he learned breakthrough management principles, expected behavior and body language of CEOs, opening up to new ideas, and unlearning past ones.

On his return, Mr Singh got immersed in the VSME programme, attending all the modules,

identifying the model lines in Sona Koyo to be taken up for improvement, and working along with the company’s VSME team to practice the learnings. Sona Koyo chose Column 2, which

manufactures various models of steering columns, as its model line. Paragon was selected as one of the four suppliers.

This transformation process had four stages. In the first, the mindset change cycle, the change began with the CEO of the company leading the transformation, and cascaded to the CEO of the supplier. Next came the immediate results cycle, where visible problems were addressed and quick results obtained. This was followed by the pregnant results cycle, where hidden problems were identified and analyzed and counter-measures taken. Finally, in the business results cycle, the tangible andintangible results of transformation activities were seen.

Paragon, which was deep in the red when the VSME initiative began, not only achieved huge cost saving under various heads, but also significant intangible benefits.

The Sona-Paragon story is not just an example of a successful VSME initiative where a company and its supplier move to a mutually beneficial win-win relationship; it is one which shows how this can completely transform an organization through mindset change.

An Indian Way of Community Activity for Accelerating SME Growth: Anand VSME Community

This story takes the VSME initiative, which helped companies and their suppliers move away from the traditional hierarchical relationships to one of win-win partnerships, one step further. Communities are meant to ensure the sustainability of the VSME after the one year programme, further develop the capability of the suppliers, and continue the win-win relationship with the supplier companies.

Paragon’s environment before and after the VSME programme

Before after


The Visionary Laghu-Udyog Mitra Mandal or VLMi (small industry friend group), the brainchild of Mr C. S. Patel, Member, Supervisory Board of Anand Automotive, is about moving from a traditional individual-based self-development model to a community learning-based model.

Mr Patel realized that transformation is a slow process and what had begun with VSME could take at least three more years to consolidate and sustain. Also, each company and each of its suppliers had only one model line. It was necessary to diffuse the transformation to all the lines in the plant and all the suppliers of a company,tomakeitsustainable.Hethoughtofforminga community to take the transformation process forward to more people. Each company had a model supplier, and Mr Patel suggested that this supplier become a kind of a demonstrator of change for other suppliers of that company.

He tookonboard the topmanagementof theAnandgroup, the CEOs of the group companies, and the suppliers, telling them that VSME was the first phase, and this community would be the second. They also realized that learnings of the VSME programme was limited to the top two or three persons in the organization, and needed to be diffused to others as well.

Each company formed communities with their suppliers, and appointed a support engineer for the community. In the case of Spicer, an Anand Group company, Mr Sangramsingh D. Pardeshi, a young and enthusiastic senior manager, and a graduate of the VSME programme, drew up a manual for organizing activities under VLMi. This set out a standard operating procedure for VLMi, helping to sustain it.

Every month, there is a community meeting, usually at the plant of a member, or a Spicer facility. Spicer’s top management regularly visits suppliers’ plants, not as a mere formality, but for close interaction with the team there, sharing valuable suggestions and feedback. This has given the suppliers significant operational results, and motivation to sustain the activity.

society transformation

Godrej ChotuKool-2012 Edison Award Winner

Today’s unsolved problems of society are tomorrow’s market opportunities. The story of Godrej ChotuKool is the story of the visionary leaders of a company seeing the invisible – a market that did not exist. It is also about a challenge that faces those eyeing the Bottom of the

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Pyramid (BOP) as a market. It demonstrates the role companies can play in building inclusive growth, and exemplifies a new relationship between business and society through applying breakthrough principles to understand human nature, especially at the Bottom of the Pyramid.

Mr G. Sunderraman, Executive Vice President-Corporate Development, Godrej & Boyce, was the Real Change Leader in this story. As part of Prof Shiba’s first Learning Community in 2004, and then an active supporter of the VLFMSeniorManagersProgrammeasModuleDirectorof the product development module, he understood how to see the invisible – the latent need of the customer thatisnotexpressed.Hisideaforaproductthatmeetsthe daily needs of a family of five in rural households met ready acceptance from Mr Jamshyd N. Godrej, Past President, CII, and Chairman and Managing Director, Godrej & Boyce. Mr Godrej dedicated Mr Sunderrajan totally to this project.

ChotuKool, a small-sized, light weight portable cooling revolution for low-income homes in India, keeps the basic needs of water, milk, vegetables and fruits, fresh and cool between 5°C to 15° C. It uses advanced semi-conductor technology, not a conventional compressor, to keep the price affordable. Apart from regular AC power, it can work on a battery, inverter and even solar power. It also consumes 30% less power than conventional refrigerators. Every aspect of ChotuKool was based on the just right philosophy: size, weight, cooling capacity,

Godrej ChotuKool


power consumption, even colour!

ChotuKool is not just a new product, it is a new idea. It has evolved from being just a cooling device for daily household items to become an asset to generate income for kiosk-based businesses run by small entrepreneurs. For example, a youngmanwhoruns a kiosk selling paan (betel leaf) and cigarettes in Nashik bought a ChotuKool because many customers wanted their paan served cold, and often asked for coldwater.Hewasnotabletoprovideeitherbecausehis small stall could not accomodate a refrigerator. Now,hecould,thankstoChotuKool.Hisdailyearningshave also gone up.

In an innovative product, reaching out is a big breakthrough. The more innovative the product, the more innovative is the need to reach out. The breakthrough team decided not to go through the regular distribution system but opted for channels that had the patience to create value for customers, such as NGOs and India Post.

It is no surprise that ChotuKool won the Edison Gold Award 2012 in the social impact category.

Preparing Leaders: PGPEX VLM

This story describes a unique Industry-Academia-Government collaboration to launch a joint programme to secure the future of Indian Manufacturing by creating an entirely new generation of engineer-managers.

For the manufacturing sector to grow and prosper,a fusion of engineering and management skills is necessary. A technologist without managerial skills will continue with his engineering mentality and will not be able to lead a manufacturing organization. Combining these skills becomes even more important

in a world where technology is getting increasingly advanced and technological changes are happening rapidly.

The Post Graduate Programme for Executives-Visionary Leadership in Manufacturing (PGPEX-VLM) is a one-year full-time diploma programme, offered jointly by the Indian Institute of Management Calcutta (IIM-C) and the Indian Institutes of Technology at Kanpur and at Madras (IIT-K, IIT-M). It is open only to engineers with at least five years’ experience in the manufacturing sector. The curriculum offers courses in both management and engineering.This programme spans various subjects such as strategy, finance, human resources, marketing, and especially, leadership skills. The course structure is path-breaking in many ways, with much emphasis on the practical application of knowledge.

The programme is taught by the three institutes, starting with IIM-C, followed by IIT-K and then IIT-M. IIM-C focuses on management principles, and the global economic and business scenario. The two IITs deal with engineering subjects with a management focus, like supply chain management and technology management.

The students have to form groups and take up projects like developing product concepts and prototypes. Cash awards are given to the best product concepts and prototypes. Besides visits to factories during various modules, there is a two-month industry internship towards the end of the course, with the finale being a 10-15 day visit to Japan.

Spreading the course across different institutions is a breakthrough element in the programme. Getting participants to spend five months in IIM-C and two months each in the two IITs, acquaints them with different learning environments as well as different cultures.

The course, now in its 7th year, is gaining in popularity among both students and recruiting companies. Every year the programme turns out around 35 young men and women engineer-managers, equipped with leadership skills which help them move up the corporate ladder faster, and bring value to the organization.

Sensing that these numbers are not sufficient to meet the needs of the Indian manufacturing sector, the Government of India is now actively working on scaling up the programme to other institutions, to develop more engineer-managers for the nation’s manufacturing sector.

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Business

7 Dreams to Reality: Transforming Indian Manufacturing