The Hindu Business Line : Global benchmarks in manufacturing

MULTINATIONAL companies (MNCs) now seem to be taking lessons from their Indian operations, with the latter setting global benchmarks in manufacturing.

Indian arms of MNCs in sectors as varied as durables, automobiles, and processed glass are increasing the efficiency standard across manufacturing businesses worldwide.

Samsung India Electronics (SIEL), for instance, clocks the highest productivity amongst Samsung subsidiaries worldwide, with productivity at the Indian operations about 40 per cent higher than the closest Samsung subsidiary in Vietnam.

Samsung's India operations are being benchmarked by other Samsung subsidiaries, and engineers from the India team this year have gone to Brazil and Slovakia and, closer home, to Malaysia and Iran to help these subsidiaries improve their production systems.

Earlier, Samsung subsidiaries in China, Iran, Vietnam, Hungary and Indonesia visited SIEL, and spent 600 benchmarking hours here.

"With the help of our R&D centre, the company is focusing on enhancing productivity at its Noida facility through machine software upgradation as well as developing competitive spirit in its people," said Mr Girish Shah, DGM, Manufacturing, SIEL.

So, now, while Samsung India has set its eyes on becoming the first Samsung factory, and the first factory in the world to have a tact time of 4.9 seconds, AIS (Asahi India) is charting out its own history.

AIS has become the lowest cost producer among Asahi Japan's global network across over 35 countries. "We have achieved operational efficiencies across various parameters and have been able to reduce costs significantly. For instance, equipment that would have cost us $1 million per line to import, has been developed in-house for $200,000,'' said Mr Arvind Singh, COO of AIS.

Asahi Japan, in fact, plans to leverage these cost efficiencies, and AIS has recently bagged an export order of $5 million that was routed through the company's global network. This is the company's largest export order in several years and it expects the trend to continue.

Even analysts are watching with interest the progress that local arms of MNCs are making. Mr Jayesh Desai, Partner, E&Y India said: "Adoption of better quality control and quality management is leading to reduced costs for a number of firms. While purely on a cost perspective, India may not be the most competitive, in terms of manufacturing efficiency there have been major improvements with companies embracing quality."

Analysts also point out that the advantage that India has is its skills in process, product and capital engineering.

Korean majors Hyundai and LG seem to be walking the same path. Hyundai is in the process of developing India as a hub for small cars, and has outlined an investment of about $500 million to set up its second plant in the country.

According to Mr B.V.R. Subbu, President, Hyundai Motor India, the Indian subsidiary is the most cost-efficient producer for small cars in Hyundai's global network.

LG, meanwhile, has set up its second unit in Pune recently, which is slated to cater to both the domestic and export markets.

Industry officials point out that even auto component giant Delphi, which had recently filed for bankruptcy in the US, could eventually shift a chunk of its production to cost-efficient locales such as India. And the trend is only going to strengthen in the coming years, as India emerges as a benchmark destination for manufacturing, they say.

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