Enhancing Competitive Strength of MSME’s
To Win Global Markets
Experience of Small Enterprise
Presentation at
Third Tri Nation Summit for Small Business Development
November 18th – 21st 2008
By Mr. J.P. Malhotra
President, Faridabad Chamber of Commerce & Industry
CEO, Bhartiya Valves Pvt. Ltd.
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Introduction - MSME
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Major plank of India’s Economic Development
Strategic Importance due to contributions in
terms of Output, Export & Employment
To sustain & accelerate growth, MSME sector
needs to be thoroughly competitive
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Introduction - MSME
MSME’s are supported by Govt. of India & its
agencies as
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For
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Ministry of MSME
National Small Industries Corporation
Small Industries Development Bank
District Industries Centre
Modernization
Productivity
Technological Needs
Skill Development & Up gradation
Adequate & Affordable assistance in Finance
3
Classification of MSME’s
Manufacturing
Service
Micro Enterprises
Rs. 1 Lakh to 25
Lakhs
Rs. 10 Lakhs
Small Enterprises
Rs. 25 Lakhs to 5
Crores
Rs. 10 Lakhs to Rs. 2
Crores
Medium Enterprises
Rs. 5 Crores to 10
Crores
Rs. 2 Crores to Rs. 5
Crores
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Importance of SME’s
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Labor Intensive
Short gestation period
Lowest Administrative cost
Maximum potential for employment generation
Assist decentralization of power
Induce growth of industrially backward regions
ensuring balanced regional development
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Competitiveness of SME’s
To understand competitiveness of SME’s, one has to
look at the issue in two different areas
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Competitive advantage compared to large
enterprises – because of inherent nature of SME’s
International competitiveness – This reflects more
on the influence of policy framework
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Why Being Small is Efficient?
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No Economies of scale for certain trades
Lower transaction cost in small entity
More flexibility
Innovation – often possible in small
flexible units
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SME’s Competitive Advantage
SME’s should do business
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That cannot be done more efficiently by a
larger unit
That requires
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Flexibility
Innovativeness
Closeness to customers
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Roadblocks in SME’s Development
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Problem of Information Poverty
Handling of Information – ability to gather, process,
store & distribute information
Information base is small
Entrepreneur has to get informed
Entrepreneur has limited capacities
This leads to more intuitive than
analytical decision making
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Policy Environment
For competitiveness on a global scale, the policy environment
can have a supportive or an inhibiting effect on SME
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While competing against foreign companies that enter the
home market
While competing as a SME in foreign markets
While becoming part of international value chains and
business relations
Economic policy direction has changed and there is a
commitment to change it further to promote and enable
competitiveness among SME’s
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Information & Communication
Technologies
ICT’s are
 Considered the motor of globalization
 Enable an unprecedented exchange of
information
 Lead to a new era of communication
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Information & Communication
Technologies
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Decrease transaction cost
Open new communication channels
Alter the way business is done
Alter market balances
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Information & Communication
Technologies
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Cuts cost – Email / Fax / Letter
Quality & Quantity of Information increases
– www. phenomenon
Relevant information flows faster – quick
reaction to changing environment
Enable SME’s to participate in global value
chains & international joint development
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National Manufacturing
Competitiveness Programme
(NMCP) Govt. of India
Global competition brings many opportunities of
 Wider Market Access
 Technological innovations
 Skill up gradation
NMCP
 Aims to take up the challenge before the sector and to
harness their undoubted competitive edge to avail the
unfolding opportunities
 To introduce the best elements of industrial competitiveness
to the MSME sector
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NMCP - Components
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Support for entrepreneurial and
managerial development of MSME’s
through ‘Business Incubators’
Quality Management Standards (QMS) &
Quality Technology Tools (QTT) for
MSME’s
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NMCP - Components
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National campaign for investment in
Intellectual Property Rights (IPR)
Marketing support / assistance for MSME’s
for adoption of Bar Code
Lean manufacturing
Setting up of new mini tool rooms (MTR)
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NMCP - Components
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Energy efficiency & quality up gradation support
for MSME’s
Design Clinics
Promotion of Information & Communication
Technology (ICT) in MSME’s
Marketing assistance for MSME’s and technology
up gradation activities – Marketing Scheme
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An SME Experience
Company – Bhartiya Valves Pvt. Ltd.
Faridabad
Product
– Gas cylinder Valves for High
Pressure Gases Oxygen, DA,
Hydrogen, Fire Fighting &
Medical Application
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An SME Experience
Quality Standards
 IS 3224 – Indian Standard Specification
for Valve fittings for compressed gases
 IS 3745 – Indian Standard specification
for Yoke type Medical gas cylinders
System Certification
ISO 9001 : 2000
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An SME Experience
Sales Turnover
Plant & Machinery
Work Force
Credit Rating
-
Rs. 10 Crores
Rs. 30 Lakhs
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SE2A
High Performance
High Credibility
By Onicra
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Total Employee Involvement
TEI
Listen to Voice of Customers
Leadership
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1.
Top Managers
1.
Middle Managers
1.
Line Supervisors
Express Vision
Cheer & Motivate People to work together & eliminate waste
Coach
Teach
Obtain Resources
Support Employees
Empower Employees to Excel
Act as facilitators
Emphasis on Continuous Improvement
Product based on demand not capacity
Reduce Inventory
Reduce Lead Time
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MONOZUKURI
MONO
ZUKURI
means
means
PRODUCT
Process of Making
Monozukuri means
 Having the spirit to produce excellent
products
 Ability to constantly improve the
production system & process
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Monozukuri
7 M principle for Perfect Quality
for Profit i.e. PQ
1.
2.
3.
4.
5.
6.
7.
Men
Machine
Material
Method
Market
Money
Management
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Men
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Agile & Flexible Workforce
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Multi skilling of Employees
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Team Work
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Share Targets
Fulfill Duties
Help Others
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Machine
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Use Local Machines
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Maintenance is easy
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Volume
Model
Flexible
Operator Training
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Production
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Material
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Competitive – QCD
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Quality
Cost
Delivery
Improvement Activities Implementable
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Method
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Continuous Improvement
Separation of 3 powers for Quality Control in
Manufacturing
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Legislation
Administration
R&D, Production Engineering, Work Standards
Production to assure product quality in every
process
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Judicature
Quality Control, Inspection
Activities – not to make defectives
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Waste Elimination
1.
2.
3.
4.
5.
6.
7.
Waste
Waste
Waste
Waste
Waste
Waste
Waste
from Over Production
of Waiting Time
of Transportation
of Processing
of Inventory
of Motion
from Product Defectives
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Use of 5S Principle for
Elimination of Waste
1.
2.
3.
4.
5.
SEIRI
SEITION
SEISO
SEIKETSU
SHITSUKE
ORGANIZATION
NEATNESS
CLEANING
STANDARDIZATION
SELF DISCIPLINE
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4 Steps to Waste Elimination
1.
Making Waste Visible
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2.
Identify Waste
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3.
Red Tag System
Cannot Generate Waste
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4.
Remove doors from Almirahs
Do not procure Red Tag Items
Work to Standards
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Make this Standard for procurement
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Red Tag System
1.
2.
3.
4.
5.
Take out every item from store
Put red tag on every item
Keep on taking items that you require in
the work place & remove Red Tag
After 3/6 months, you are left with Red
Tag items which are not necessary for you
Remove / Dispose
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Two Minute Inspection
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1.
2.
Each operator at Start, Middle & End of shift will pick up
one piece from production.
See visually & check important functional dimensions
with gauges
Keep ok on Green table & defective on Red Table.
Inspector visits the station & checks for suitable action.
Total Employee Involvement
10x2 Operator eyes are better than 1x2 inspector eyes
RESULT – CANNOT PRODUCE DEFECTIVES
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KAIZEN
KAI
CHANGE
ZEN
BETTER
KAIZEN means Make It Better
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Eliminate
Abolition, Discontinuance, Exclusion, Removal
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Reduce
Simplification, Centralization, Synchronization, Standardization
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Change
Alteration, Exchange, Conversion, Diversification, Separation
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KAIZEN
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Kaizen – Small change to make something better
Kaizen means improvement
Before use of MONEY, use an IDEA
Don’t look at Cost Saving
Suggestion in Morning, Money in Evening
To escape from the Lion, don’t run faster than the
Lion – RUN FASTER FROM OTHERS
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4 Steps for QC
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Do not pass defect
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Do not make defects
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Cannot make defect
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Work to Standards
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4 Steps for Enhancing Production
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Make waste visible
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Do not generate waste
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Cannot generate waste
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Work to Standards
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4 Steps for QCD
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Keep manufacturing good products
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Keep manufacturing without waste
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Keep manufacturing with on time delivery
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Work to Standards
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CONCLUSION
What determines the competitiveness of
SME’s ?
 Economies of scale & scope
 Required flexibility & innovativeness
Additionally
 Policy environment SME’s are performing in
– Can be supportive or constraining
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CONCLUSION
ICT – Information & Communication Technology
Improve their competitiveness in global
market, global value chains & domestic
competition
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NMCP – National Manufacturing Competitiveness Program
Each scheme in itself is a KRA
When Fully Implemented – MSME are bound
to have enhanced competitive edge
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CONCLUSION
Winning formula for enhancing
competitiveness combines
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Elimination of Waste
Enhancement of Productivity
Use of Quality & Productivity Tools
Total Employee Involvement
Flow of information to all Enterprise Stakeholders
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CONCLUSION
IT
International
Technology
+
IT
Indian
Talent
=
IT
India of
Twenty First
Century
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CONCLUSION
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Coming Together is a Beginning
Keeping Together is a Progress
Working Together is a Success
We hope India, Brazil & South Africa work
together for the Success of MSME’s
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Thank You !
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