Best Practices such as Smart Manufacturing help Industrial Companies to Achieve Sustainable Competitiveness

Swati Tiwari and Sharada Prahladrao

Global industrial companies which traditionally focused on markets in developed nations are foraying into emerging markets, such as India, which have strong fundamentals.  This trend is due to multiple factors, such as the resilient Indian economy, reduced demand coupled with low economic activity in the developed nations, and the ongoing Euro zone crisis.  Most industry verticals are eyeing India as a potential destination for their products/services.  The automobile market is one such sector which is currently witnessing a boom for both foreign and domestic manufacturers.  With global automobile manufacturers, such as Volkswagen, Toyota Kirloskar, BMW, Nissan Motors, Renault and such others, having set up their manufacturing hubs to exploit the “India opportunity,” the competition for the domestic players, such as Tata Motors and Maruti Suzuki has intensified.  Their customer base is narrowing as  customers are being lured by new brands, such as General Motors, Volkaswagen, Skoda, Mercedez and Land Rover, which have a solid global reputation.

The burgeoning middle class populace has given rise to a new segment with aspirations and discretionary spending power. This has given them the power to choose and their demand is mainly for compact and affordable cars.  Hence, manufacturers have to be innovative and provide customers the variety they demand at an affordable price.  With foreign players entering the market with new models customers are switching loyalties; for example, companies such as Nissan Motors are showing impressive growth and domestic players such as Maruti Suzuki are losing their market share.

India is a domestic demand driven economy and it is the sixth largest market in the automotive segment; according to analysts, India is poised to become the third largest market by the year 2015, in terms of investments and production capacity.  Investments to the tune of $30-$40 billion will lead to increment in production capacity from 3.7 million units to 12 million units, giving rise to 500,000 job opportunities along with the scaling up of about 30 factories. 

Currently, India’s automobile market is a hotbed of opportunities, and market players must expand their offerings.  Market competition is stiff and to remain sustainable companies must use technology as an enabler to be agile, efficient, and responsive to customer’s needs and specifications.   Hence it is imperative for manufacturers to adopt best practices, such as smart manufacturing.  Smart manufacturing can be defined as a “highly connected, knowledge enabled, industrial enterprise in which all businesses and operating actions are optimized to substantially enhance productivity, energy/sustainability, and economic performance.”  Smart manufacturing enables product customization with less carbon intensive processes and manufacturers can manufacture high value products at lower costs and reduced risk.

Smart manufacturing should be central to all production activities to meet the market challenges of fierce competition as new entrants wean away customers.  Complacency should be replaced by innovativeness to meet the demands of discerning consumers. By using smart manufacturing as the core approach to development, manufacturers will be equipped with practices and technologies to innovate and maximize productivity and profitability; this will give them the competitive edge and help them to achieve operational excellence.

It is clear that with global companies setting up automobile manufacturing hubs in India, the market is poised for exponential growth, but to sustain this growth momentum India’s automotive industry needs to adopt smart manufacturing and enabling technologies. 

We welcome your views on this topic.  Please write to stiwari@arcweb.com or sharadap@arcweb.com.​