Breaktrough management - 'manufacturers must think global'

MUMBAI: Even as the debate on core competency and diversification continues to dog Indian companies, a well known Japanese management expert was in the country recently to try and make Indian manufacturing companies look beyond mere production and to include aspects like research and logistics, to increase their share of the global pie. Professor Shoji Shiba, a former professor at the Massachusetts Institute of Technology, and author of the celebrated ‘breakthrough management’ concept, was in Mumbai, to make middle and senior executives unlearn the “need to produce and produce more.” Core competency for corporations has been a key part of management restructuring in most companies ever since gurus CK Prahlad and Gary Hamel published their celebrated theory in the Harvard Business Review in the nineties. But then there has also been too much of a focus on production, fears the professor. “For years Indian manufacturing companies have been laying too much emphasis on production. It’s time they made that leap to the big mindset,” he said. “You need to include R&D (research and development), product design, supply chain, if you want to go global,” he said. The Japanese professor who is also one of the world’s leading experts in Total Quality Management, recently spent two weeks at the Godrej’s Center for Excellence in Mumbai, in a joint effort with the Confederation of Indian Industry. “If Indian manufacturing companies don’t get their act together and work toward a global presence, they could be wiped out,” he said. Indian manufacturing is already reeling under the impact of old labour laws and a weak infrastructure, he added. Outlining his views through a presentation titled ‘Small m vs Big M’, with the ‘m’ representing mindset, Prof Shiba said R&D based on customer feedback is vital before focusing on production. The feedback and research would feed product design which could then be used in producing custom-made goods, he said. Putting the supply chain - including logistics for raw materials and finished goods - was equally important and so were developing after-sales-service and warranty to spur global growth, he added. Industry insiders, including those who have attended Prof Shiba’s previous sessions say that the re-orientation from production-only to a global mindset, shows how dynamic his concepts could be. In fact the former MIT professor wasn’t slow to attack TQM and Total Productivity Maintenance (TPM). “All that was okay till three years back...now it isn’t enough. The Big M is essential to survive under global competition,” he added. Rightfully, his new concept now includes manufacturing, societal and environmental changes as well. “You also need to develop manufacturing and create role models,” he said while talking about the erosion of the sector’s share of the Indian economy. Manufacturing currently accounts for 27% of the GDP, way behind the 55% contributed by the service sector. But that could be changing, say latest reports. Manufacturing firms reported healthy expansion of output in September, with the rate of growth the fastest since November 2006 and led by higher volumes of new orders and increased marketing. The ABN AMRO India Purchasing Managers’ Index (PMI) rose from 57.9 in August to 59.1 in September. The index is an indicator of the economic health of the manufacturing sector and is based on factors like new orders, inventory levels, production, supplier deliveries and employment. A index reading of more than 50 means that the sector has expanded. Apart from a more-than-necessary focus on production, weak R&D is another inhibiting factor, said Prof Shiba. “Research in India is mostly product design...that needs to be ramped up so that Indian centres create a series of innovations,” he added.