In a declining market, with many capacity addition projects at halt and receding existing capacity utilization how is it that, the Indian industry should ride over the tide. If experts must be believed the pandemic scenario will persist till the last quarter of 2020-21, taking further toll on the economy.
However, there are two silver-linings, when it comes to sustenance of the industry in India. On one hand, the infrastructure projects will boost the demand in a quarter or so. And on the other hand, the rural markets, which contributes significantly to the economy is relatively faring well. This, thanks to a good crop and so-far a relatively lesser impact of the pandemic situation. Added to this, there is a substantial focus on MSME capability building that we would see in the next 2-5 years in the Pharmaceutical, Electronics and Automotive industries.
So, as it appears, most of the industry would remain just above water, in the next six to nine months. In such times what should be the strategies that help organizations to make the best of the troubled times. While conserving cash and investing smartly on the new product development is continuing to be central pillars of any strategy at the moment, there is another opportunity waiting for manufacturers that can transform the industry from inside-out if attended to systematically. Organizations will need to apply foresight intelligently in turning this adversity into a long-term opportunity. Here is the RE-THINK, that possibly leaders may apply in creating a higher competitive advantage over global peers even during these troubled times.
RE-THINK Supply Chain
Re-thinking supply chain is the call of the times. Indian industry has been a little behind in creating capabilities of their overall value chain and downstream suppliers. Having worked 10 years, with the suppliers of an automotive major, I can safely say, that in India, our capabilities we are still far behind in our dealing with this mostly MSME space. There is a large re-think needed to upgrade the MSME capabilities and bring them in the range of competition with global peers. Manufacturing industry majors need to bring in a new think may be from a digital solutions perspective, to make these MSME’s more competitive. Leveraging digital integration with suppliers right up to the lowest rung MSME, with an intention to reduce cash and capital pressure on these organizations, can free their resources for learning, experimentation, and capability – capacity building.
A more capable supplier marketplace can totally transform the industry fortunes. China has transformed their economy by building MSME and component manufacturer resilience. Creating strategies for bottom-up resource capability building can massively free resources at the OEM-end to do more value-added work. There is a lot of non-value-added work, due to complicatedness and lower supplier capabilities, that the industry can live without. Right now, is a great time to re-cast some of these processes, to nudge both the supply chain and sourcing professionals as well as MSME owners to disrupt and create a resilient and strong supply chain.
Going digital is the only strategy, there is no alternative. This is the strategy, that must completely be re-thought, the way companies implement them often. Often, I have come across application of digital and automation tools as a fashion in organizations. With large capacities and distributed business systems, digitization investments often fail due to their erroneous conceptualization.
There is a simple question, that those engaged in digital strategies, need to ask before they embark the digitization path. Who will become autonomous by the digital solution that is being implemented? More failures in organizations, happen due to breakdown in communication and decision-making, rather than machineries and processes. Digital solutions need to be re-thought from this perspective, as to who will become more autonomous and be able to take decisions in line with the business need – real-time and accurately. Making all stakeholders in the value-stream more autonomous – be it suppliers, employees, dealers, and customers has a potential to release a lot of hidden value from the whole system. Digital interventions to drive autonomy, can totally transform the way business is done today.
The capabilities have a half-life of 24 to 30 months today, as compared to past, where there was a substantial slack on development of capabilities. Learning engines of the company must fire, and fire on all cylinders not just for the employees, but the whole value chain from Suppliers to Dealers and their employees. These times are the best times to conduct an audit of your current capabilities and how to build those in next few years. The idle capacities of people today, must be looked at as future opportunities. Re-sensing the market, process, product, and customer requires people to bring more attention to the work they do. Providing people with skills, tools, techniques, and methods, that can help them do that, will not only make them more productive but also more engaged in their work.
In lean times, what the pandemic is presenting to us today, organizations must focus their attention on sharpening the saw and build internal capabilities. The second world war presented an unprecedented situation to the Allied armed forces to induct and train people faster. The US armed forces and later Toyota developed the technique of training-within-the-industry to ensure a faster assimilation of people. Today’s times, present different challenges and capabilities require a re-look to serve customers faster with the right experience and right quality. Conceptualizing programs and internal distribution to build digital, empathy, experience, and design thinking skills may go a long way in serving customers well.
So, as the industry operates below normal level in the foreseeable future, most experts will rightfully nudge companies to cash preservation. The humankind will certainly tide over the Covid times, but in the world after, a lot of new norms will establish. Future belong to more agile organizations. Agile is created by capabilities across the value stream and a leverage on digital. Organizations may feel, there can be business-as-usual post-pandemic, however, that is wishful thinking. Strategic and rightful investments on capabilities though, never fails an organization. Stay invested in your supplier, digital and employee capabilities in these times of capacity reduction – that will be our advice to the Indian manufacturing leaders.
#Organizationtransformation #Capabilitybuilding #Supplychainoptimization