Thursday, October 4, 2012

Small Scale Industries in India... Challenges and Opportunities

Over 94% of industries in India are MSMEs - micro, small and medium scale enterprises. To cater to the design needs and expectations of these three major Indian industry sectors is thus a major challenge for the Design Clinic Scheme. Each of these sectors, the micro, small and medium scale industry sectors, are fairly different in terms of their characteristics, the issues faced by them as well as their aspirations. The guidelines and formats for its three components should retain the much-needed flexibility to cater to the individual industry needs, expectations and contexts.

The ardent task of taking this unique design intervention scheme to the needy MSME units across the country, also provide us the opportunity to meet and interact with the owners and members of MSMEs and thus gain better understanding of some of the challenges and issues faced by them.  Also the Need Assessment Survey reports ( part of the Design Awareness programme, DAPs) developed by the designers based on their visits to the units and their detailed interactions with the members and owners of these units have helped generate fair amount of information on their present status as well as opportunities  for further improvements.

From the three MSME sectors, the small-scale industry, SSI, sector is the dominant industry sector of the country. This sector contributes significantly in terms of its manufacturing output as well as towards employment generation for the country. These industries are also the main suppliers of the components/parts to most of the products manufactured in the country. Majority of these industries would thus be either vendors, original equipment manufacturers for medium/ large industries, fabricators, and/or component manufacturers, thus relying heavily on labor and process costs as their earnings. The sector thus faces constant competition from within and outside the cluster as well as also from the international suppliers/industries.

Small-scale industries thus face constant struggle for their survival. And to survive in todays’ fiercely competitive and fast paced global markets, they either need to develop themselves as more effective and productive vendor/s and component manufacture/s for the larger industries or to move up their value chain to be product manufacturers. As their own product manufacturer the industries can command value for their core strengths and product features, rather than rely on labor and/ or process costs. The scheme is designed such to support SSIs to improve their existing processes, products and systems to be more productive and efficient as well as also to explore their own products and unique solutions for the contemporary markets. The scheme brings designers to the doorsteps of these industries to identify opportunities to improve their existing products/components and processes. It thereby helps develop the much needed platform for their constant and continuous interactions.

Small-scale industry usually works and operates around individual / owner's interests, passion and understanding. The ones that have succeeded over the years have normally grown together with its group of workers. It creates a healthy relation between the owner/s and its workers. Amar Industries, the small-scale industry at Samalkha, the industrial town 75 Kms north-west of Delhi, was established in 1965 and majority of its workers are with the industry for more than over 30 years. Similarly Moonlight Engineering Work, a small scale industry involved in manufacturing and repair of dispenser pumps and nozzles in Kolkata has most of their workers with them since the establishment of the unit in 70s. Most of them the school dropouts got themselves trained here. The workers on the shop floor enthusiastically shared and explained many of their improvements/ innovations for their existing processes, work area, products etc., when Mr. Niyogi one of its partners was taking me around to show their factory.  As I was late to reach the place, they had postponed their lunch break by an hour so that I can see the factory in its working condition and interact with all of them. The workers here are in charge of his/their work area and/or the specific processes handled.

With further understandings and experiences as the industry grows in confidence, it invests and expands at different levels. It expands internally or set up another industry/unit, thus offering fair degree of flexibility and opportunities to its workers, to the partners and to the relatives/ siblings to be part of the growth process.  While Moonlight Engineering Work has now set up departments within the unit, Amar Industry has now three units working in tandem with each other. Anjali Products, one of the Kitchen appliance-manufacturing industries in Mumbai developed themselves into cluster of units each owned by relatives/ friends that together produce variety and range of products.

The focus of these industries, as majority of them/their owner/s would have started as fabricators, machinists and/ or vendors, would thus be on technicalities of the product / components.  Value addition in their products/components in terms of improved quality, finishes and finesse through appropriate design intervention would be an important contribution here. The famous saying  "quality products are designed rather than inspected" will be most appropriate here.

While these industries utilise their limited resources - their available manpower, skills, machines, etc. most effectively, the inherent limitations of these resources form   barrier for them to compete with today's contemporary industries. Design here should act as catalyst to convert these constraints into unique opportunities. A user-centric approach would help them convert their technological solutions into products and user-required solutions thereby help create the much needed value addition to their strengths. While developing such unique solutions / products as per the market and user needs design will help align the solutions to the available resources and capabilities of the individual units. The creative engineering and design approach would help offer solutions to improve their existing products, processes, productivity, the ones that can be immediately implemented with minimum of investment and resource allocations, thereby demonstrate immediate benefits for these industries.

The design clinic approach of design intervention therefore is more appropriate for this industries, and by now interesting results and outcomes have been demonstrated through the design awareness programmes and design projects undertaken with the support of the scheme. Design approach helps look at the industry and the business in holistic form and develop range of opportunities and their implementation strategy for the specific unit/s. Developing indigenous semi-automised machines and equipment of appropriate scale, capacity and size, the ones that are affordable and practical for these industries, is one such critical area of intervention emerged from these studies.

These industries as they would be operating with limited resources, appropriate common facility centers for their research and development activities, quality improvement processes, data and information sharing, knowledge of market and user expectations and trends etc. will form an important support towards handholding and capability development  process. The Product Design and Development Centre, PDDC, Manila, Philippines, and Tapei Design Centre, Tapei, Taiwan are some of the examples of such common facility centers.

Small scale industries, by the very nature of their business, are more agile and closer to the markets and their users. These industries are best placed to understand individual user needs and expectations and offer customised solutions and services. The small scale industry that will be able to combine its local understanding and experiences with global knowledge and contemporary approaches will gain the much needed edge in the mass-customised markets of the future economies.

We have organized 200 design sensitization seminars for various different sectors of MSMEs. Also over 80 design awareness programmes for different micro, small and medium industry clusters are at various stages of their completion. The need assessment survey reports of few of the small scale industry clusters indicates following broad macro level challenges faced by these SSIs

Traditional manufacturing processes, mostly with low level of technologies, make units less competitive in regional /national and international market.
Old, inherited plants make it difficult to compete against today's energy efficient and higher productive technologies.
Though better and larger markets available, majorly manual processes make it difficult for the units to cater to them.
Low level of mechanisation leading to dependence on unskilled and scarce labours.
Poor operational practices and processes.
Unbalanced investment of resources, ie. machines, workspace etc.
Unhealthy competition exists due to close proximity of large numbers of similar units.
Lack of cooperation and sharing of facilities among units
Competition within the cluster / group of units - no one stick to the price

Limited knowledge of newer and advanced technology and processes among the unit owners.
Lack of interest among younger generation to get involved in their traditional business
Lower motivation level and professional approach to manage their business among the unit owners
As mechanisation involves huge investments, the unit owners are forced /prefer to work with the existing technology only
Very few young and qualified entrepreneurs in the profession.
Younger generation more open to change
Systematic plan for future intervention /development from government agencies missing
Collaborative efforts with Academic/ R&D institutions are missing.

Haven't moved/ up-graded to modern technologies and designs
Investment for modernization/ mechanization/ technology up-gradation, nearly impossible
Lack of knowledge of standard accessories, newer manufacturing techniques etc. and their availability in the market.
Limited or no input drawing / data management, revision / change request procedures
Limited capability/capacity of tool design, development
No / limited resources for investment as whatever available is used for regular turn over
Need for R&D facilities, shared design services, designer on demand, CAD tools/ training centers, skill-set improvement, up-gradation, further skill-development training centers
Lack / shortage of skilled and unskilled manpower
Workers education and lack of use of standard procedures
No trainer/knowledge provider in the cluster for skill development.
Skilled workers / graduates from the technical institutes located nearby not connected / do not join the units
Shortage of molders/ machinist (skilled manpower)
Need for information data base of locally skilled workers on demand
Moulder/ pattern makers / machinists (skilled workers) share the design/s with other units
Unskilled local workers also involved in farming ( seasonal work and thus their non availability during certain period of the year)
Labor/ workers shifts from one unit to another
Unavailability of continuous power
Poorly constructed roads, internal roads leading to increase in breakage, rejection

Raw Materials
Scarcity and/or unavailability of raw material/s.
High cost of raw material/s and their price fluctuations
Use of poor quality and untested raw material/s. The units not able to get the right material individually due to low off take. No efforts made to pool requirements and buy the same collectively to get volume, price and supplier preference
Units/business developed over the years, around the availability of raw materials ( furniture units etc.).  With the unavailability of raw materials in the present situation, it becomes unviable for them to compete. New material (wood alternatives) not manufactured locally and thus has to be brought from outside
Productions, manufacturing processes developed around earlier available raw materials and the change of raw materials make it difficult for the units to reorganize their manufacturing set up.
Unstable and irregular market demands forces the units with steady /good production to store raw materials, products in and around/outside the units.
Need proper and effective raw material, scrap material, finished and unfinished components and products etc. segregation, storage, inventory methods and management processes, proper storage,stacking space and packaging to reduce damages and wastage

Same / similar products manufactured since years / decades, without keeping abreast of ever changing market trends.
Mostly vendors, the units are dependent on other industries and their product/ market demands
Products mostly of jobbing ( job work , made to order ) nature and changes from time to time
Owners need to be on constant look out for new product /parts that can have good volume
Products/ jobs uncompetitive due to poor design
Units work at marginal profits / only on labor cost, mainly due to poor finish of their products / jobs.
Poor quality standards and poor packaging techniques make the units unable to cater to export markets.
With weak / poor brand image of the cluster, the units are forced to sell their products in unorganised markets.

The level of technical knowledge and practices normally poor across all the units of the cluster.
Limited or no exposure to better and efficient technology and operational practices.
Majorly manual operation of production used, with limited or no control on quality, finishes, productivity.
Rejection and rework at every stage due to process inaccuracies and human error
The methods and practices of manufacturing do not offer much room for achieving cost efficiency in production.
Wastage at every stage, too much of wastage
Process does not allow usage of alternate materials
Higher overheads and maintains
Improper / unbalanced utilisation of production capacity
Difficult to scale up operation/s.
Limited or no in-process material handling system and methods for subcontracting, product delivery, raw material procurement etc.
Scope to upgrade skills and overall working method at every stage of manufacturing
Scope for redesign / improvements to reduce numbers of processes/ operations, easier assembly, inventory management etc.

Final product quality poor/weak, no / limited attempt towards improving the same.
Lack of Inspection procedures
Quality inspection not regular as is done with in-house facilities
Unit wise test lab/ department is not available
Absence of quality inspection leads to wastage and low export market.

Work area
Undefined work areas; unorganized workplaces, storage, tools
Poor working conditions leading to labor absenteeism and low turnover.
Inadequate ventilation, inadequate and improper lighting conditions, space congestion, etc. common issues
Need of proper uniform /work-suits as workers wear loose clothes, improper foot wears
Vey few material handling devices - leading to most material handling tasks performed manually
Lack of / few basic facilities for workers
Environmental compliance not strictly followed
Absence of proper waste / solid-waste disposal system, leading to polluted and unhygienic surroundings
Pollution control devices normally not installed / not in proper working conditions

No brands and/or  visual identity of the unit/s and/or cluster
Unable to compete with branded products
Lack of orders from organised buyers; restricted to unorganized markets
Traditional marketing system through middlepersons, weekly markets/ bazaars etc.
Traditional markets fetches them very low margin. Owners are not aware of modern marketing channels
For years, the units confined to same products, many of them seasonal products thus limited business during offseason.
No export and no participation in displays/ exhibitions in India and/or abroad
Limited or no knowledge of national and global market expectations and trends.

Product development process lacks some of the key elements of a design process, ie. market context, research, user study, product context, technology integration, material innovation etc.
Originality, exclusivity & contextual thinking are not always found as core drivers of business.
Newer segments are not adequately addressed
Not enough awareness or consciousness about new trends and markets.

Smaller units work mostly on credits and thus with weak financial position.
Low volume and declining markets threaten these units towards financial bankruptcy.
Lack of awareness of business costing
Lack of awareness of different government schemes
Lengthy process involved in accessing government subsidies and schemes resulting in unit owners loosing interest.

[Reference :
Interactive Design Study, Cluster level report, Thangarh Cluster, Submitted by Dirtyhands, Ahmedabad ;
Need Assessment Study Report for Samalkha Foundry Cluster, Foundation for MSME Cluster & Sudihr Kumar, Amit Sharma, Anupam Banerjee
Report of the Need Assessment Survey conducted at Malabar Funriture Consortium, Taliparamba, Designscope, Bangalore
Presentation of Need Assessment Survey & Design Clinic Workshop for  Kerala Furniture Consortium Pvt. Ltd., Tycka Design Pvt. Ltd.
Need Assesment Study report for Kaithal Foundry Cluster, Sudhir Kumar
NCR Toy Cluster Study for Design Integration, Prof. Jatin Bhat, New Delhi
Need Assessment Survey Report, Refractory Cluster, Asansol, Purulia, Barakar, Dr. Amiya K. Samanta  ]

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