‘Scale in India’ a must for Make in India

In their article, http://www.thehindubusinessline.com/todays-paper/tp-opinion/scale-in-india-a-must-for-make-in-india/article7431350.ece , Piyush and Seshadri argue that Make In India will happen when small manufacturers are able to connect to the larger global supply networks. The current equilibrium of low productivity, outdated technologies and disconnected supply chains can not be sustained if modern manufacturing enters India. Rather than uproot them enmass their suggestion is to transform the supply base. Their warning is timely because already cheap imports are pushing Indian firms to non-existence.

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The sharing economy

I have been reading with interest the efforts made by several new players to use idle and spare resources to create new business models. I have borrowed the title from today’s NY Times. The idea is as old as B&B. One can rent rooms, cars, computers, labor, etc. Definitely, those in need of employment or additional money can use the business networks to contract safely. It also improves resource utilization. However, safety, reliability, service level guarantees remain a concern. What also characterizes these arrangements is that the contract between the business network operator and the service provider can vary greatly.

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Who would have thought pencil making has secrets?

The short story in New York Times about Faber Castell makes one think. There are secrets to pencil making! And it takes a week to make one. This company in its 252nd year of existence across eight generations seems to trumpet the victory of manufacturing excellence over competition and changing tastes.

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The Toyota Way

A legend passes away. I was saddened to read “Eiji Toyoda, Promoter of the Toyota Way and Engineer of Its Growth, Dies at 100.” I have learnt so much third and fourth hand about the Toyota Way. It is humbling how the philosophy of the The Toyota Way resonates in every setting. The philosophy reflects human endeavor and gives meaning to innovation and productivity improvement in any setting. It is a unique blend of the East and the West. It is also a very personal philosophy. So many firms, individuals and societies have benefitted from reading about The Toyota Way. I invite readers to contribute their personal learning here as a tribute to the legend.

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Big Data and Farming

I read with great interest today’s article in the New York Times on one farmer’s crusade to demonstrate that one must know one’s land to get better yield. I was really attracted with the following words:

‘Thompson said, “Get along, but don’t go along.” He refused to believe that chemicals (and government subsidies, which he eschewed) could solve every problem that confronted them.’

Lone farmers have been experimenting on their farms for hundreds of years. However, the practical wisdom is passed only by word of mouth. As families grow and ownership changes the wisdom is soon lost and new cycles of trials begin.

One challenge to the big data community is to capture this experience and make it usable to individuals and policy makers. Given the latest fad related to me by Bharat Ramaswami of ISI of switching to bio-fuel, the world may face a shortage of food  within a few decades. The temptation to switch is driven by the desire to profit from the land. But the base case for land use has to be made using micro-level data which we could be gathering right now.

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Worker Safety

New York Times carried an article on worker safety in Bangladesh and beyond. Every time there is a failure in safety or quality control the world looks surprised. Unfortunately, these violations reflect the safety and quality standards regulations within each host country. No amount of pressure from outside the country can replace the laws of the land. For example, along Kondapur road near the high rise buildings of the Hi-Tech city in Hyderabad, there are two glass workshops. The workers do not wear masks or shoes while cutting and buffing glass. Most workers are young and perhaps unaware of the dangers of inhaling glass particles. Many deliveries in India are made on the backs of labor when investing in a dolly for moving heavy cargo costs only a fraction of the profits of retailers. Like these ínnocent’ violations of safety how many more are hidden behind the walls and doors of sheds and homes in India? Even large scale catastrophes can not prevent such gross violations on a small scale. It is the failure of law that allows businesses to continue such practices.

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Boeing 787 Dreamliner: Jinxed?

The main events on the Dreamliner’s saga are listed below. We have used public sources for this sequence – there could be major omissions. Please let know if you find any.

What can we learn from this sequence of events? Some may say that the project was too ambitious. Others that Boeing used too many new and untested technologies, new suppliers and partners. Still others might point to the inflexibility introduced due to initial decisions. Of course, one could also say that Boeing weighed three outcomes, stop, proceed and fail, and proceed and succeed. What other main factors could have contributed to this sequence of events?

No. Date Event
1 April 26, 2004 Boeing Launches 7E7 Dreamliner
2 September 11, 2005 Boeing 787: Parts from around world will be swiftly integrated
3 November 20, 2006 The Dream of Composites
4 December 06, 2006 Boeing chief: 787 still on schedule
5 July 08, 2007 Boeing unveils 787 Dreamliner; Airbus sends congrats
6 July 08, 2007 Boeing Celebrates the Premiere of the 787 Dreamliner
7 September 10, 2007 Boeing 787 first flight suffers two-month delay
8 January 16, 2008 Boeing Shifts Schedule for 787 First Flight
9 February 15, 2008 Final Assembly Begins on Another Boeing 787 Dreamliner
10 April 09, 2008 Boeing Revises 787 First Flight and Delivery Plans
11 November 05, 2008 Boeing finds problems with fasteners on 787 test planes
12 December 4, 2008 Boeing reviews Dreamliner schedule for more delays
13 December 11, 2008 Boeing confirms 787 first flight pushed back to 2Q 2009
14 February 08, 2009 FAA to loosen fuel-tank safety rules, benefiting Boeing’s 787
15 March 09, 2009 Concerns raised over expected 787 range shortfall
16 May 03, 2009 Boeing 787 Dreamliner Moves to Flight Line for Testing
17 May 07, 2009 Boeing confirms 787 weight issues
18 June 23, 2009 Boeing Postpones 787 First flight
19 June 26, 2009 More Boeing 787 Woes as Qantas Drops Order
20 July 30, 2009 Boeing 787 wing flaw extends inside plane
21 August 28, 2009 Boeing still sure delayed 787 will be profitable
22 December 08, 2009 787 approaches final gauntlet testing
23 December 12, 2009 Boeing completes 787 Dreamliner high-speed taxi test
24 December 15, 2009 Boeing 787 Dreamliner lifts off on maiden flight
25 December 22, 2009 Second Boeing 787 Dreamliner Completes First Flight
26 March 24, 2010 Boeing completes 787 flutter and ground effects testing
27 March 28, 2010 Boeing completes ultimate-load wing test in 787
28 March 30, 2010 Boeing’s Dreamliner Lags Testing Schedule
29 April 07, 2010 Boeing confirms success on 787 wing, Fuselage Ultimate Load Test
30 April 23, 2010 Boeing 787 in hot/cold testing in Florida
31 June 25, 2010 Horizontal stabiliser gaps force 787 inspections and reduced flight envelope
32 August 11, 2010 Boeing faces claim on 787 delays; sixth flight test aircraft won’t fly until September
33 August 27, 2010 Boeing delays delivery of 787 aircraft until next year
34 August 28, 2010 Lack of production engine for Airplane Nine drives 787 delay
35 September 3, 2010 787 flight test fleet to expand
36 October 04, 2010 Sixth Boeing 787 first flight, Testing Program Making good progress
37 October 25, 2010 Boeing considers moving 787-9 tail build in-house
38 November 05, 2010 Boeing faces prospect of further 787 delay
39 November 9, 2010 Electrical fire forces emergency landing of 787 test plane
40 November 15, 2010 787 electrical fire raises prospect of further delay
41 November 23, 2010 Boeing 787 Fire Sparked by Stray Tool in Equipment Bay, La Tribune Reports
42 December 23, 2010 Boeing Resumes 787 Flight Testing
43 August 15, 2011 Certification flight testing complete, the 787 fleet is still busy
44 September 25, 2011 Boeing formally delivers first 787 to All Nippon Airways (ANA)
45 October 26, 2011 Dreamliner carries its first passengers and Boeing’s hopes
46 October 26, 2011 Boeing’s Dreamliner completes first commercial flight
47 July 29, 2012 Safety officials looking into Boeing Dreamliner after fire
48 September 15, 2012 NTSB urges grounding for certain GEnx-powered 787 and 747-8s
49 November 25, 2012 Dreamliner glitch: Air India (AI) summons Boeing team
50 December 25, 2012 Problems with new 787 Dreamliner continue to plague Boeing
51 January 08, 2013 Fire discovered on Boeing Dreamliner minutes after flight lands
52 January 09, 2013 Another Japan Airlines Boeing 787 Dreamliner encounters a problem
53 January 11, 2013 Boeing Dreamliner to undergo federal safety review
54 January 13, 2013 Japan Airlines reports fuel leak in beleaguered Boeing Dreamliner
55 January 16, 2013 Japanese airlines ground Dreamliners after emergency landing
56 January 16, 2013 787 emergency landing: Japan grounds entire Boeing Dreamliner fleet
57 January 17, 2013 Dreamliner: Boeing 787 planes grounded on safety fears
58 January 17, 2013 Boeing Dreamliners grounded worldwide on battery checks
59 January 17, 2013 Boeing 787 Dreamliner: The impact of safety concerns
60 January 17, 2013 Is the Dreamliner Becoming a Financial Nightmare for Boeing?
61 January 18, 2013 Dreamliner crisis: Boeing halts 787 jet deliveries
62 January 22, 2013 Boeing 787: Dreamliner Groundings Continue As Battery Problem Persists
63 January 22, 2013 FAA steps up investigation of Boeing 787 Dreamliner

Note: Each of the event titles have been taken verbatim from the original articles.



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Manufacturing in emerging markets

In the article “How important is manufacturing to emerging markets?” Rob Minto, editor of the FT’s emerging markets desk in London identifies several interesting themes. One surprising theme is that even India has made large strides towards improving its ranking (from 14 to 10) and aims to continue on this path and increase the share of manufacturing in the GDP. A second theme is the demand for services from the growth in manufacturing has contributed significantly to growth of output in China. He suggests that the connection between manufacturing and services  growth is stronger in emerging markets than in mature economies. There are many implications of this finding, starting with whether the nature of these services is different in EMs, how are these services being staffed and managed, to whether the services play an important role in raising productivity or capturing value in the manufacturing sector.

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Standardized product, differentiated service

A news item in the Business Standard talks about insurance companies not being in favor of the Insurance and Regulatory and Development Authority’s (Irda) proposal to standardize the life insurance product. The rationale is that life insurance requires some degree of customization and standardization might lead to undiffertiated products. Another way to differentiate might be through better – faster, reliable and more responsive service; Progressive and USAA are some examples that come to mind.

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Fast, flexible and still profitable

A recent New York Times article describes Zara’s strategy in retailing fashion goods in the global marketplace. Zara has invented a new form of forecasting fashion. Prior to the Internet word of mouth was perhaps the best way to identify trends. Zara added a quick response system to this and made that a profitable combination. What is fascinating is Zara’s rate of expansion into China. It suggests Zara is trying to reach customers of a certain demographic segment. Other retailers should be watching these moves closely and trying to understand beyond the strategy how China has become a huge and profitable market. It is also some what intimidating to think about the head start Zara has in collecting information about customers.

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