Enhancing Competitive Strength of MSME

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Enhancing Competitive Strength of MSMEsTo Win
Global MarketsExperience 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

• Major plank of Indias 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

• MSMEs are supported by Govt. of India its
  agencies as
• Ministry of MSME
• National Small Industries Corporation
• Small Industries Development Bank
• District Industries Centre
• For
• Modernization
• Productivity
• Technological Needs
• Skill Development Up gradation
• Adequate Affordable assistance in Finance

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Classification of MSMEs
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 SMEs

• 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 SMEs

• To understand competitiveness of SMEs, one has
  to look at the issue in two different areas
• Competitive advantage compared to large
  enterprises because of inherent nature of SMEs
• International competitiveness This reflects
  more on the influence of policy framework

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Why Being Small is Efficient?

• 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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SMEs Competitive Advantage

• SMEs should do business
• That cannot be done more efficiently by a larger
  unit
• That requires
• Flexibility
• Innovativeness
• Closeness to customers

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Roadblocks in SMEs Development

• 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
• 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 SMEs

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Information Communication Technologies

• ICTs 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

• Decrease transaction cost
• Open new communication channels
• Alter the way business is done
• Alter market balances

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Information Communication Technologies

• Cuts cost Email / Fax / Letter
• Quality Quantity of Information increases
  www. phenomenon
• Relevant information flows faster quick
  reaction to changing environment
• Enable SMEs 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

• Support for entrepreneurial and managerial
  development of MSMEs through Business
  Incubators
• Quality Management Standards (QMS) Quality
  Technology Tools (QTT) for MSMEs

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NMCP - Components

• National campaign for investment in Intellectual
  Property Rights (IPR)
• Marketing support / assistance for MSMEs for
  adoption of Bar Code
• Lean manufacturing
• Setting up of new mini tool rooms (MTR)

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NMCP - Components

• Energy efficiency quality up gradation support
  for MSMEs
• Design Clinics
• Promotion of Information Communication
  Technology (ICT) in MSMEs
• Marketing assistance for MSMEs 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 - Rs. 10 Crores
• Plant Machinery - Rs. 30 Lakhs
• Work Force - 28
• Credit Rating - SE2A
• High Performance
• High Credibility
• By Onicra

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Total Employee InvolvementTEI

• Listen to Voice of Customers
• Leadership
• Top Managers Express Vision
• Cheer Motivate People to work together
  eliminate waste
• Middle Managers Coach
• Teach
• Obtain Resources
• Line Supervisors 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 means PRODUCT
• ZUKURI means Process of Making
• Monozukuri means
• Having the spirit to produce excellent products
• Ability to constantly improve the production
  system process

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Monozukuri7 M principle for Perfect Quality for
Profit i.e. PQ

1. Men
2. Machine
3. Material
4. Method
5. Market
6. Money
7. Management

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Men

• Agile Flexible Workforce
• Multi skilling of Employees
• Team Work
• Share Targets
• Fulfill Duties
• Help Others

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Machine

• Use Local Machines
• Volume
• Model
• Maintenance is easy
• Flexible
• Operator Training
• Production

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Material

• Competitive QCD
• Quality
• Cost
• Delivery
• Improvement Activities Implementable

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Method

• Continuous Improvement
• Separation of 3 powers for Quality Control in
  Manufacturing
• Legislation RD, Production Engineering, Work
  Standards
• Administration Production to assure product
  quality in every
• process
• Judicature Quality Control, Inspection
• Activities not to make defectives

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Waste Elimination

1. Waste from Over Production
2. Waste of Waiting Time
3. Waste of Transportation
4. Waste of Processing
5. Waste of Inventory
6. Waste of Motion
7. Waste from Product Defectives

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Use of 5S Principle forElimination of Waste

1. SEIRI ORGANIZATION
2. SEITION NEATNESS
3. SEISO CLEANING
4. SEIKETSU STANDARDIZATION
5. SHITSUKE SELF DISCIPLINE

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4 Steps to Waste Elimination

• Making Waste Visible
• Remove doors from Almirahs
• Identify Waste
• Red Tag System
• Cannot Generate Waste
• Do not procure Red Tag Items
• Work to Standards
• Make this Standard for procurement

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Red Tag System

1. Take out every item from store
2. Put red tag on every item
3. Keep on taking items that you require in the work
   place remove Red Tag
4. After 3/6 months, you are left with Red Tag items
   which are not necessary for you
5. Remove / Dispose

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Two Minute Inspection

• 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
• Eliminate
• Abolition, Discontinuance, Exclusion, Removal
• Reduce
• Simplification, Centralization, Synchronization,
  Standardization
• Change
• Alteration, Exchange, Conversion,
  Diversification, Separation

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KAIZEN

• Kaizen Small change to make something better
• Kaizen means improvement
• Before use of MONEY, use an IDEA
• Dont look at Cost Saving
• Suggestion in Morning, Money in Evening
• To escape from the Lion, dont run faster than
  the Lion RUN FASTER FROM OTHERS

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4 Steps for QC

• Do not pass defect
• Do not make defects
• Cannot make defect
• Work to Standards

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4 Steps for Enhancing Production

• Make waste visible
• Do not generate waste
• Cannot generate waste
• Work to Standards

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4 Steps for QCD

• Keep manufacturing good products
• Keep manufacturing without waste
• Keep manufacturing with on time delivery
• Work to Standards

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CONCLUSION

• What determines the competitiveness of SMEs ?
• Economies of scale scope
• Required flexibility innovativeness
• Additionally
• Policy environment SMEs 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
• 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
• 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

• I T I T I T
• International Indian India of
• Technology Talent Twenty First
• Century

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CONCLUSION

• 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 MSMEs

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Thank You !