Charlie Fine’s Blog on Indian Manufacturing Scenario

On December 28, I flew home, following a five-week stint as a visiting professor at the

Indian School of Business in Hyderabad, where I taught three sections of supply chain management to 170 “post graduate” students; helped plan the launch of a program similar to MIT’s Leaders for Global Operations program; met with a number of industry leaders and statesmen and women interested in upgrading India’s manufacturing infrastructure and capabilities; and visited seven factories from north to south, where the working conditions ranged from modern to appalling. That same day The New York Times ran a front page article about Indian manufacturing in the Dharavi slum in Mumbai, entitled “In One Slum, Misery, Work, Politics, and Hope.” In Dharavi, a million people produce output valued at about a billion dollars per year, not far from the national average GDP per capita of $1371.

During a tour of one of India’s many slum-based clothing factories that “we don’t show our European customers,” one of my (Western) colleagues remarked to the MBA-educated factory owner about the difficult working conditions for employees who labored eighteen hours a day at a workbench, after which they would sleep and bathe under that same workbench. The owner’s response: “At least we don’t chain them to the workbench.”

At the other end of the spectrum are the modern and efficient campus-factories of companies such as the heavy vehicle manufacturer Ashok Leyland in Chennai or the Hero Group in Delhi. Hero is India’s largest motorbike producer, run by the Munjal family, benefactors of the new Munjal Global Manufacturing Institute, soon to open at the Mohali campus of the Indian School of Business, which has partnered with the MIT Sloan School for curriculum design and research collaboration.

Closing the gap between the slums and the campuses presents a huge challenge and a huge opportunity for India and the world. Ultimately, we are all part of the same inter-connected industrial value chains — chains that can only be as strong as their weakest links. Further, within India alone, there are thousands of  factories in between these extremes – small and medium sized enterprises (SME’s) that form the base of the manufacturing and supply chain pyramid of Indian industry. In fact, FISME, the Federation of Indian Micro and Small & Medium Enterprises, which supported some of our factory visits, claims to reach out to approximately 500,000 SME establishments in the world’s largest democracy.

The greatest tragedy is at the low end, where the hands, but not the minds, of the factory workers are employed. Modern manufacturing recognizes that the best companies use both the hands and the minds of their workers and that the most valuable workers contribute far more with the latter. A single innovative idea can be worth hundreds or thousands of labor hours. In the primitive factories we saw, the minds of the workers were not only being ignored, in many cases they were chained to a model not far from the physical chaining of laborers to their workbenches. My reaction: liberate the vision of the leaders to liberate the minds of their employees.

After visiting a range of these factories, my colleagues and I organized a one-day workshop where representatives of the entire spectrum of factory managers and owners could sit in a room together, comprehend the extent of the variation in their circumstances, and brainstorm how to make progress – individually and collectively. The Hero factory in Gurgaon, outside of New Delhi, hosted the workshop and provided an opportunity for the owners of much less sophisticated operations to see one face of modern manufacturing. Toyota teaches us that a core principle of learning and problem solving is genchi genbutsu, “go and see.” By taking these entrepreneurs to Gurgaon they were able to go and see first hand what is possible in manufacturing.

The results were astounding and rewarding. In one short day, the SME owners saw things they had never seen before. They were excited – and we were  encouraged. Now the challenge: How do we continue and scale this learning? How do we do for 500,000 SME leaders what we did for merely a score of them? Further, how do we follow up? One’s eyes can be opened in a day, but changing habits and organizational behaviors takes months and years.

Furthermore, the constraints are not only in the enterprises we visited. The education value chains in India are lacking and the governmental bodies that have responsibility for everything from transportation systems to electrification to business permitting are not always focused on the national interest of building stronger national or regional manufacturing capabilities. These are also candidate constituencies for education and “go and see” opportunities.

I don’t know the solution to all of India’s educational needs for the manufacturing sector, but I know that we don’t have the capacity to reach everyone in person, even if we enlist every university in India. So, the amplification capabilities of modern communications tools and technologies must be a part of the answer. We are still at the dawn of the age of mobile and Internet-based communication in education. Myriad ideas and experiments will be required. At least in India, we won’t have a sample size problem.

This entry was posted on Sunday, January 1st, 2012 at 12:00 pm and is filed under Value Chain Dynamics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

posted at http://cfp.mit.edu/cfp-pi/?p=48