India Competitiveness Vs China

1. India Competitiveness Vs China Dr. Guy Rabbat

2. India needs manufacturing to compete for the local and in the global economies • India must not cede the ground to China when it comes to manufacturing • India must use its Information Technology strengths as a competitive advantage in manufacturing • India must remove industry impediment to be competitive versus China

3. Summary • India will do better by • Selecting the right product mix • Enabling information technology (IT) for data capturing and information flowing • Improving the quote hit rate • Improving the supply chain efficiency • Improving productivity with the use of IT tools and systems such as ERP

4. Requires • Product Selection Criteria • Data & Information Technology • Efficient Supply Quotation • Efficient Supply Chain Management • Productivity

5. Product Selection Criteria – Manufacturing Market Segmentation

6. Select a Product with low Cash Cycle - Convergence

7. Products Selection Criteria • Stay away from “me too” products with low margin and too much competition. • Target customers looking for high quality products at reasonable prices. • Avoid products which have long lead time components as far as possible to reduce inventory. • Tie up third party vendors with JIT capability to avoid large inventory stocking. • Look for additional revenue from customers who need post sales support at site. If it requires a large work force in the field, tie up a third party contractor for such services.

8. Data & Information Technology • India has a very high level IT talents compared to China. • But not effectively used for increasing / improving National Productivity. • In many situations lack of data and information hamper the decision making process • Indian Manufacturers lack the shop floor & management data / information and further analysis

9. Quotation Execution and Support • The quote to order hit rate is very low • Analysis process is missing • Need for Rapid/ Fast/ Intelligent quote models

10. 80% increase in RFQ volume every quarter in 2007

11. Efficient SCM - Key Findings • Excel in SCM – Supply Chain Management – not just Procure, Stock, Manufacture and Sell but should be Efficient, Competitive and Productive • Vendors should lead by service in moderate-volume product segments, becoming true partners to their OEM customers. • Vendors that have significant exposure to high-volume/low-mix product segments should lead by design. • Vendors—and the industry as a whole—must dispose of excess capacity. • Implement operational improvements.

12. China manufacturing environment • China is practically now the factory of the world in high volume electronics and mechanical products with over 20,000 companies and 30 millions workers involved. It is a massive undertaking. • All these workers work “truly almost non-stop” and live on factory premises with 5-8 individuals per room in massive dormitories. • Total equality exists between women and men, workers and managers. • All are dressed the same and live together in these massive dormitories, where food and full accommodation are provided. • These workers are between 17 and 27 years old and are expected to work for an average of 7 years in 12-hours days.

13. China Manufacturing Environment • The discipline is exceptional. For example, start time is punctually at 6:58am and precise repetitive conditions in thousands of stools, well designed by management breaks are 10 minutes in their individual locations. • Work is done is very for maximum efficiency and 3 shifts on 24/7 working environment. • China is covered by massive and extensive highways and construction is simply gigantic. • We must tap in that incredible energy and utilize it to our advantage. We should not limit ourselves by “buying our vendors”.

14. Summary • India can do better by • Selecting the right product mix • Enabling IT for data capturing and information flowing • Improving the quote hit rate (SQM) • Improving the supply chain efficiency (SIVA) • Improving productivity with the use of IT (ERP)