November 26, 2011

P&G To Produce Locally

Though Procter and Gamble (P&G) is a world leader in FMCG, its market share in developing countries like India, China, Vietnam, Brazil etc. is meager in comparison to that of its archrival, Unilever. It is always anticipated that P&G will come out with a strategy which will make its products more affordable and competitive in the developing countries than its competitors. The recent decision of the company to stop the imports of major chunk of its products in India and to manufacture these products in India itself is one such step towards the goal mentioned above.
Till now, P&G imports most of its premium products manufactured in other countries to India for sale. The imports add an additional overhead to its products which put them on an unaffordable premium product shelves. The decision of P&G is to invest Rs. 700 crores to enhance the production capacity of P&G firms in India so that they can cater to the demands of its products and distribute them through its 1.3 million outlets across the country.

The localized production will help P&G in many ways. Firstly, it will save huge amounts of duties that it has to pay to the Government of India for importing its products. Secondly, the availability of large workforce at low price will further reduce the cost of production and will maximize the profits. Thirdly, it will also protect P&G from the fluctuation in the foreign exchange markets. It is obvious that when the currency of a country depreciates, it is the importers who have to bear the maximum loss as they could import only few items with the given amount in comparison to when currency appreciates. Fourthly, India has signed free trade agreements with many countries in Asia and Africa. P&G can take advantage of this to pump its products manufactured in India to these countries without any difficulties. In addition, it will also make P&G's Supply Chain more responsive by reducing the lead time for replenishment. As a result of which, the different elements of the Supply Chain i.e. retailers, dealers, manufacturer, suppliers etc. will have to maintain lower inventory levels, thus reducing inventory holding cost. All these factors will help in increasing the market share of P&G which in turn will improve its revenues.

But the biggest challenge for P&G would be to maintain the quality standards. Even the slightest degradation in the quality of its products might severely hurt its entire market shares in India. Moreover, it is a general perception among the Indian consumers that the imported products are better in quality. It would be a challenge for P&G to change this perception of the general Indian consumers.

No doubt that P&G has made a well calculated move by deciding to enhance the production of its premium and mass premium products in India. Whether it is going to be successful or not remains to be seen.

Article “P&G Plans Big Move, to Make More Locally” by Mr. Sagar Malviya in The Economic Times dated 14th November 2011

The writer of this article, Abhay Shankar is a PGP student of Indian Institute of Management, Raipur and has done his B. Tech (Chemical Engineering) from BIT Sindri. Prior to joining IIM Raipur, Abhay was working at Vedanta Aluminium Ltd. Abhay can be reached at

November 13, 2011

Operations and Supply Chain Club of IIM Raipur Launches its Magazine – Strive

The Operations and Supply Chain Club of IIM Raipur, OPEP, today launched its Magazine Strive. The Magazine was launched by the Director Prof. B.S Sahay who expressed his happiness over the initiatives being taken by the club for the benefit of Supply Chain Professionals. The highlight of the event was the launch of Tablet Friendly version of the Magazine which helps it to be viewed easily on smart phones and tablets. The magazine was launched in presence of internationally acclaimed expert Dr E. Peacock and Business India’s b-school ranking expert A T Raman who lauded the students of IIM Raipur for their efforts and hoped that the students shall continue to strive for excellence in the field of management. Mr Raman was specially delighted by the launch of tablet friendly version of magazine and went on to say that initiatives like this are necessary for the improvement of quality of b-schools in India.

Speaking on this occasion the Editor of Magazine and also Second year student, Rohit Bhagat, highlighted the salient features of the magazine. The magazine contains article from both academia and the industry with Companies like Safexpress and Maruti contributing to articles in the magazine. Noted contributors include Mr Pawan Jain CMD, Safexpress, Dr Krishan Kumar, Director, Maruti Center for Excellence,  Prof. Ravi Shankar, the foremost academician on Supply Chain wrote the cover article for the magazine expounding the Guru Mantras for a Successful Supply Chain. The students talked about the Supply Chain Dynamics of PDS system in Chhattisgarh, which was studied by students in internship last year and how it is becoming a role model for other states to emulate. He thanked his team for the successful release of the inaugural edition of the Magazine. The theme of the magazine was Green Supply Chain and its implications were also discussed. The magazine will now be available for students of all B-schools across India and also to Supply Chain Professionals in the industry. The Institute now plans to use Kindle for its future releases to make the publications widely available, Prof. Sahay hoped that this marks the beginning of wide spread use of Digital Platforms for dissemination of content, and promised that all future releases will leverage the power of technology.
To download the magazne, click on the following link

The writer of this article, Tarang Singhal is a PGP student of Indian Institute of Management, Raipur. Tarang is a member of the Public Relations Committee of IIM Raipur.

This story is also available at

November 08, 2011

National Manufacturing Policy

Last week the cabinet came out with the National Manufacturing Policy. This was a much awaited move that required clearance from the government and finally it has come to reality. India is a country that was recognized for its services throughout the 1990s but then the manufacturing industry could also not be ignored. Considering the perception of growth of the manufacturing industry, a general public view could have been that the share of the manufacturing industry in India’s GDP was also increasing year on year but the fact is that year after year the manufacturing industry was recording an almost constant share of about 15-16%.
Some of the major objectives and highlights of the policy are
1) To generate 100 million jobs within the next 10 years- Though this idea is very ambitious. If it comes as planned, it should increase the GDP share of manufacturing industry manifold.
2) To increase the contribution of manufacturing industry in the GDP to up to 25 % by 2022- This is quite an achievable target considering the seriousness with which the government has now come out in support of the manufacturing industry.
3) Increase competitiveness in the global markets by appropriate policy support
National Investment and Manufacturing Zones
 This idea seems to be taken from that of Special Economic Zones. Under NIMZ’s a land of about 5000 hectares shall be allocated to each zone. There will be one CEO of the zone who will be a high rank government official to take care of all the major decision in the zone. Various benefits will be given to the operators in these zones such as relief from capital gain tax. If the amount used for the purchase of new equipment is derived from the consideration received from the sale of old plant and equipment there shall be a relief in capital gain tax. This shall increase and motivate the units to bring back the money from the sale consideration back to business. The work of land acquisition shall lie with the government and it will be a challenge to bring in land excess of 5000 hectares for the use of NIMZ’s
Innovative IT methods and clearance system
In the past the manufacturing industry has experienced many roadblocks despite the government bringing in many IT enabled tools for faster processing. The government officials have many times been found reluctant to follow new methods. Efforts will now be on to bring in a single window for all clearances to enable faster processing of matters related to the clearances from the government. This shall be done by integrating as much IT systems within the system as possible. One of the major and innovative measures in the policy is that all government clearances will now have a timeline and if the clearances are not given within the stipulated timeline the clearance will be deemed to have been given.
In most of the case where matters will be held up due to clearances, due importance shall be given to the case and the government shall support the manufacturer to get the clearance done.

Go Green

Those industries willing to go green or those that are willing to reduce their carbon footprints shall be incentivized in manners more than one. In fact the policy also says about the idea of buying out Intellectual Property rights from the innovators. By this method, if some industry wants to go green and is withheld due to some technology getting patented then it can also enjoy the freedom of using that idea. The idea/invention/innovation or any other IP shall be shared by the government after the buyer duly gives a royalty for the idea. But in this manner after paying a certain amount at least the IP right will not be a hindrance for anyone to go ahead.

Development of new ITI’s and polytechnics.
The policy has also focused on the grass root level from where the talent for working in a manufacturing industry comes. The policy aims at increasing the number of ITI’s and polytechnics in the country. This shall focus even on bringing in specialized courses besides new colleges. The new courses shall be highly industry specific.

Sector Specific policy

Though a policy as generic as this doesn’t have many sector based inclination but in this policy it is proposed to focus on such sectors that can bring in more money. This shall be a method that will fulfill the motive on 25% share in GDP by 2022.  Such measures are always good wherein the industry hits and exploits such sectors which are new and have lots of potential. The basic indicators of success such as share, GDP, profit, sales margin can all be increased for the whole industry by focusing on these few sectors.

As we all understand that more important than making a policy is its implementation and for the very reason the policy makers have provided the tool of manufacturing policy review mechanism. Secretary, Department of Industrial Policy and Promotion will be reviewing the policy on regular basis.

We hope that all these measures help India achieve its targets and come out victorious through the execution of this policy.

The writer of this article, Abhijeet Srivastava is a PGP student of Indian Institute of Management, Raipur. Abhijeet has worked in Punj Lloyd for 36 months before joining IIM Raipur.

November 03, 2011

Kaizen: What Is It All About?

Kaizen is perhaps one of the most commonly used jargons when it comes to process improvement methodologies. It is also very well known that it one of the many philosophies or practices associated with lean thinking or lean manufacturing. The name “Kaizen” originates from two Japanese words- “kai” which means “change” or “to correct” and “zen” which means “good”. Thus kaizen stands for “change for good” or “continuous improvement”, and it literally does the same. Hence the popularity and widespread application it enjoys.
Origin and History
Kaizen is believed to have originated in Japan after World War II, when the industries and the economy were trying to get back on their feet with some help from American experts. The Japanese were taught statistical control methods and various management skills. One of the training materials used in the process was a film to introduce the three "J" programs (Job Instruction, Job Methods and Job Relations). The film was titled "Improvement in 4 Steps" (Kaizen eno Yon Dankai). This marked the first introduction of kaizen to Japan. Dr. W. Edwards Deming, one of the American experts, was awarded the “2nd Order Medal of the Sacred Treasure” by the Emperor of Japan in 1960 for his contributions in teaching and popularizing kaizen in Japan. He was considered a hero in Japan and later, the Union of Japanese Science and Engineering (JUSE) instituted the annual Deming Prizes for achievement in quality and dependability of products.
What is Kaizen?
Simply stated, kaizen is a philosophy or practice that aims to bring improvements in all processes of a system. The system here may refer to industry, business, workplace, services and even household or social activities- this marks the wide outlook and huge potential of kaizen. In Japan, kaizen is a way of life. Some other very important aspects of kaizen are:
1.      It is continuous and ongoing, not a monthly or annual event.
2.      If we are to consider only the business and industry applications, kaizen involves all the employees of the organization- from the top management as well as the bottom level laborers.
3.      Usually, kaizen is used to bring about small, incremental improvements, which, if pursued for some time and in proper manner, compound to very significant results.

Primary Elements of Kaizen
The foundation of kaizen rests on the following five elements, which also represent the major aspects of this ground-breaking way of thinking:
1.      Quality Circles: Groups which meet to discuss quality levels concerning all aspects of a company's running. Such groups are usually made at different levels in an organization to ensure good and widespread participation.
2.      Improved Morale: Strong morale amongst the workforce, in kaizen, is considered as a crucial step to achieving long-term efficiency and productivity.
3.      Teamwork: Kaizen needs the inputs of all the personnel- higher management as well as workforce, while they work in a team. This culture is also fostered by this philosophy.
4.      Personal Discipline: Each team member must have the basic understanding of the process and the belief that it is for the good of the organization as well as him/her. This commitment to personal discipline ensures the sustained strength of the team over the long period in which kaizen is implemented.
5.      Suggestions for Improvement: It is important that every member contributes through suggestions for improvement. In fact, it is advisable to evaluate the performance of the employees based on the value of the suggestions they provide as well as the extent to which they implement the suggestions of their juniors.

The main techniques used in Kaizen are PDCA, also known as Shewhart cycle or Deming cycle and 5 Whys.
PDCA stands for Plan-Do-Check-Act.
Plan: Once the expected output is known, the necessary objectives and processes are accordingly established. It is advisable to start on a small scale as a trial to verify the results.
Do: The plan is executed and data is collected for analysis according to the further steps.
Check: The expected results are compared with those obtained from “Do”. If required, these steps are repeated several times to observe the trend.
Act: The differences in the data are analyzed to get to the root causes (5 Whys could be used here) and corrective measures are taken to resolve them. This step also suggests whether or not more PDCA cycles will be required.
5 Whys is a simple method to determine the root cause of a specific problem through repeated questioning. It can be visualized through fishbone diagram or Ishikawa diagram.
Kaizen is not limited to just such techniques. In most cases, it signifies a huge change in the corporate culture. To make it a success, the higher management doesn’t only need to work with the workforce as a team but also lead them by example. It should also be ensured that the suggestions received from the workforce are either implemented as soon as possible, or rejected with complete transparency. Further, each problem has to be looked at as an opportunity to improve. Kaizen can simply be expressed as a systematic way of finding, reporting and fixing problems.

Benefits of Kaizen
Though applicable in a huge variety of contexts, some of the common benefits of kaizen are:
1.      Kaizen produces immediate and visible results. Though not very substantial, these improvements play an important role in the overall process by compounding into a large change and also by repeatedly strengthening the morale of the team members.
2.      Being a way to lean thinking, kaizen has been very instrumental in reducing wastes in various forms like inventory, overproduction, waiting times, unnecessary transportation and motion and excess quality.
3.      It also improves employee retention, production capacity, space utilization, use of capital, product quality etc.
The writer of this article, Akshay Agarwal is a PGP student of Indian Institute of Management, Raipur and has done his B.Tech from Indian Institute of Technology, Guwahati. Akshay holds a Green Belt Certification in Six Sigma.