“Manufacturing excellence”: A Growth Strategy for MSMEs.
Introduction:
The Micro, Small & Medium Enterprises (MSME) sector is one of the important contributors to the Indian economy, as this sector delivers more than 30% of the GDP (Ref: Ministry of Statistics & Programme Implementation 2021-22). SME’s are considered as the backbone of Indian economy and provides job opportunities to more than 40% of India workforce. Due to the recent COVID pandemic, MSMEs were badly affected and has left the sector extremely vulnerable. To make the matters worse, MSME sector has been slow to adopt to the advent of new technologies like AI (Artificial Intelligence), IoT (Internet of Things), Additive Printing, Industry 4.0 etc. Amidst all these happening right around us in India, many of our SME’s are not in a position to compete and scale up with their techno savvy counterparts. Most of the companies in this sector are way behind when it comes to technology, robust system for people management, digital presence & footprints and modern management tools to improve productivity and operational excellence.
Thus, rebuilding the Indian MSME sector is the need of the hour and the biggest challenge the SMEs are facing is “What strategy do they adopt in their quest of revival and propel their growth”
Defining Manufacturing Excellence
“Manufacturing excellence” is a concept in the industry that drives an organization to reach the pinnacle of operational performance. To enable an organization to reach a stage, where quality, cost, delivery, safety, and morale seamlessly converge, the implementation of Manufacturing Excellence as Strategy becomes imperative for creating an environment of optimal productivity and continuous growth.
This state of manufacturing excellence isn’t achieved merely through investing in the most advanced machinery or technologies. It’s a holistic strategy encompassing every facet of operations, from process optimization and waste reduction to workforce empowerment and safety. The importance of manufacturing excellence in today’s competitive landscape should never be undermined.
As manufacturers worldwide grapple with market volatility, achieving and maintaining highest level of manufacturing excellence offers a significant competitive edge. To drive productivity upwards, enhance customer satisfaction, and ultimately improve bottom-line results, the manufacturing excellence is highly effective strategy for MSMEs to bank upon.
Key Principles of Manufacturing Excellence
Before implementation of the strategy, it is important to understand the founding principles of manufacturing excellence. Unless we take the right path that will guide the journey towards excellence, it would be futile to deploy resources like money, men and machinery. Here, we explore some of the core principles that undermine manufacturing excellence.
- Identify the core competencies of your business and processes like doing Self-Assessment and SWOT Analysis, identifying Process Capability etc.
- Provide Clear, Consistent Performance Goals/Objectives: The second step in the setting up the manufacturing excellence strategy is to set up Goals for the organization.
There are three types of operational goals to focus on:
Operational-oriented goals, For example:
Delivery On time to exceed 95% (as per customer expectations)
Reduce Number of customer complaints to ….
Reduce the inventory by 15% ….
Financial-operational goals, For example:
Increase sales by 10% by the end of the year.
Reduce operational costs by Rs 10 million by the end of March.
Improve ROCE by 10% by end of March.
People-oriented goals, Examples:
Reduce employee turnover rate by 15%
Improve employee engagement score to 90%
Improve worker’s attendance to more than 90%
The manufacturing management facilitates a process to engage the manufacturing organization in developing project charters that align with the manufacturing strategy and the above mentioned critical objectives. Projects are selected for implementation based on aligned business objectives, manufacturing strategy, and manufacturing process improvements.
- Continuous Improvement: As they say that the biggest room in your home is the room for improvement. Continuous improvement, often use the methodologies like Kaizen, 5S, Quality tools, TPM, Poka-yoke, SMED etc. These techniques help incremental changes that cumulatively result in substantial enhancements over time. It fosters a culture where everyone is committed to finding better, more efficient ways to do their work.
- Lean Manufacturing: This technique was originally used in the Toyota Production System. Lean manufacturing focuses on waste reduction within manufacturing systems while simultaneously increasing productivity. It involves conducting a VSM (Value Strem Mapping) exercise for identifying and eliminating non-value-adding activities, enabling you to deliver quality products at the least cost and time to the customer.
- Six Sigma: This technique was originally developed in Motorola. Rooted in statistical analysis, Six Sigma is a data-driven approach to eliminate defects and reduce variability in processes. Using the famous DMAIC (Define, Measure, Analyze, Improve and Control) to improve quality output resulting in removing the causes of errors and minimizing variability in manufacturing and business processes.
- Total Quality Management (TQM): Total Quality Management (TQM) is a management framework that enlists all members of an organization in a continual effort to improve quality and customer satisfaction. Total quality management (TQM) is the continual process of detecting and reducing or eliminating errors in manufacturing. It streamlines supply chain management, improves the customer experience, and ensures that employees are up to trained to stay updated with the latest trends in quality management. Total quality management aims to hold all the stake holders involved in the production process accountable for the overall quality of the final product or service.
- Balanced Scorecard: The term balanced scorecard (BSC) refers to a strategic management performance metric used to identify and improve various internal business functions and their resulting external outcomes. Used to measure and provide feedback to organizations, balanced scorecards are common among companies in the United States, the United Kingdom, Japan, and Europe. Data collection is crucial to providing quantitative results as managers and executives gather and interpret the information. Company personnel can use this information to make better decisions for the future of their organizations.
By integrating the above principles into your manufacturing operations, you lay the groundwork for a culture of excellence that permeates every level of your organization. This approach not only leads to improvements in production efficiency and product quality but also helps foster a more engaged and motivated workforce. Applied scientifically, the above techniques drive the achievement of manufacturing excellence.
The roadmap to Manufacturing Excellence:
For manufacturing excellence to be achieved, management must be willing to accept change and challenge their own past decisions. They must also believe in the power and potential of their employees.
With a clear understanding of what manufacturing excellence is, the key principles that guide it, and the crucial role of the human factor and technology, you are now well versed to embark on this transformation journey towards world of excellence. Below, we provide a broad roadmap to help you navigate your way towards manufacturing excellence.
1. Top management Commitment to Continuous Improvement: It is extremely important that the top management is committed to achieve the Manufacturing Excellence. This is a top-down approach and not vice versa. Begin by fostering a culture of continuous improvement within your organization. Management needs to encourage every employee to search for opportunities for improvement, even though they may appear very small. Implement methodologies like Kaizen or Six Sigma and other continual improve programmes to systematically identify inefficiencies and reduce waste.
2. Employee Engagement and Empowerment: As it is said that the company is built by the employees. A business is only as successful as its employees and that goes for any industry. Management needs to provide comprehensive training programs to enhance their skills and reduce the risk of errors. Foster an environment that encourages engagement, innovation, and teamwork. Ensure your employees feel valued and involved in the decision-making process thus improving their engagement levels.
3. Customer satisfaction survey: Customer satisfaction surveys can help your business increase productivity and profitability by evaluating your products and services’ expectations of customers and their level of trust and loyalty to your business. For example, you can customize your customer survey to ask questions that would open up areas of vital importance for your organization. Ensure your operations are well-coordinated and workflows are consistent.
4. Leverage Technology: With advent of state-of-the-art technologies like AI (Artificial Intelligence), IoT (Internet of Things), Additive Printing, Industry 4.0 etc.it is imperative that the management makes a paln for implementation of advanced technologies that complement your human workforce and enhance their productivity. Investment in flexible, user-friendly solutions that provide real-time data and interactive work instructions to your shop floor workers is the key.
5. Prioritize Quality: If faced a situation of limited resources and time, always prioritize “Total Quality Management”, This approach will ensure high standards are maintained across all stages of your manufacturing process. Make it clear to all the employees that every individual is responsible for maintaining quality standards.
6. Measure and Monitor: It is very important that management establishes “key performance indicators” (KPIs) that align with your manufacturing excellence goals. Regularly monitor these metrics to assess your progress and identify areas for further improvement.
Remember, achieving manufacturing excellence is not a one-time task or an event but it is a continuous journey over time. It requires persistent efforts and flexibility to adapt to changing market conditions, and a commitment to nurturing your workforce and harnessing the power of advanced technologies while keeping customer at the focus.
With this roadmap as your guide, you can confidently embark on your journey towards manufacturing excellence.
As Aristotle said “We are what we repeatedly do. Excellence, then, is not an act but a habit”
Rajendra Argade
Partner Businary Consultancy Services.
