MrJPMalhotraEnhancing Competitive Strength of MSME's

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Enhancing Competitive Strength of MSMEsTo 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 Major plank of Indias Economic Development

Strategic Importance due to contributions interms of Output, Export & Employment

To sustain & accelerate growth, MSME sectorneeds to be thoroughly competitive



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Introduction - MSMEMSMEs 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 MSMEsManufacturing Service

Micro Enterprises Rs. 1 Lakh to 25Lakhs

Rs. 10 Lakhs

Small Enterprises Rs. 25 Lakhs to 5Crores

Rs. 10 Lakhs to Rs. 2Crores

Medium Enterprises Rs. 5 Crores to 10Crores

Rs. 2 Crores to Rs. 5Crores



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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 regionsensuring balanced regional development



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Competitiveness of SMEsTo understand competitiveness of SMEs, one has to

look at the issue in two different areas

Competitive advantage compared to largeenterprises because of inherent nature of SMEs

International competitiveness This reflects moreon the influence of policy framework





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SMEs Competitive AdvantageSMEs should do business

That cannot be done more efficiently by alarger 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 thananalytical 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 thehome 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 acommitment to change it further to promote and enablecompetitiveness among SMEs



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Information & Communication

TechnologiesICTs are

Considered the motor of globalization Enable an unprecedented exchange of

information

Lead to a new era of communication



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Technologies

Decrease transaction cost

Open new communication channels

Alter the way business is done

Alter market balances



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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 theunfolding opportunities

To introduce the best elements of industrial competitivenessto the MSME sector



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NMCP - Components

Support for entrepreneurial and

managerial development of MSMEsthrough 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 & CommunicationTechnology (ICT) in MSMEs

Marketing assistance for MSMEs and technologyup 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 ExperienceQuality Standards

IS 3224 Indian Standard Specificationfor Valve fittings for compressed gases

IS 3745 Indian Standard specificationfor Yoke type Medical gas cylinders

System Certification

ISO 9001 : 2000



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An SME ExperienceSales Turnover - Rs. 10 Crores

Plant & Machinery - Rs.30 LakhsWork Force - 28

Credit Rating - SE2A

High PerformanceHigh Credibility

By Onicra



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Total Employee Involvement

TEI Listen to Voice of Customers Leadership

1. Top Managers Express VisionCheer & Motivate People to work together & eliminate waste

1. Middle Managers CoachTeachObtain Resources

1. Line Supervisors Support EmployeesEmpower 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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MONOZUKURIMONO 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.

Machine3. 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 inManufacturing

Legislation R&D, Production Engineering, Work Standards

Administration Production to assure product quality in everyprocess

Judicature Quality Control, Inspection

Activities not to make defectives



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Waste Elimination1. Waste from Over Production

2. Waste of Waiting Time

3. Waste of Transportation

4. Waste of Processing

5. Waste of Inventory6. Waste of Motion

7. Waste from Product Defectives



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Use of 5S Principle for

Elimination 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

1. Making Waste Visible Remove doors from Almirahs

2. Identify Waste Red Tag System

3. Cannot Generate Waste Do not procure Red Tag Items

4. Work to Standards Make this Standard for procurement



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Red Tag System1. Take out every item from store

2. Put red tag on every item

3. Keep on taking items that you require inthe work place & remove Red Tag

4. After 3 /6 months, you are left with RedTag 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.

1. Total Employee Involvement 2. 10x2 Operator eyes are better than 1x2 inspector eyes

RESULT CANNOT PRODUCE DEFECTIVES



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KAIZENKAI CHANGEZEN BETTER

KAIZEN means Make It Better

Eliminate Abolition, Discontinuance, Exclusion, Removal

ReduceSimplification, 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 theLion 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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CONCLUSIONWhat 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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CONCLUSIONICT Information & Communication Technology

Improve their competitiveness in global

market, global value chains & domesticcompetition

NMCP National Manufacturing Competitiveness Program Each scheme in itself is a KRA

When Fully Implemented MSME are boundto have enhanced competitive edge



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CONCLUSIONWinning 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 worktogether for the Success of MSMEs



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Thank You !

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MrJPMalhotraEnhancing Competitive Strength of MSME's