Category Archives: India

Bringing Lean Principles to Service Industries

Bringing ‘Lean’ Principles to Service Industries by Julia Hanna

“One of the important lessons we’ve seen on the ground is how Wipro approached the launch of this lean initiative,” Staats says. “They didn’t come out with big banners and say, ‘OK, today your work is lean work, and yesterday it wasn’t.’ They started with a small group and recruited other people from there. It was a very controlled experimentation.”

In their research, Staats and Upton document how the use of lean principles affected the workflow at Wipro. The concept of “kaizen,” or continuous improvement, for example, resulted in a more iterative approach to software development projects versus a sequential, “waterfall” method in which each step of the process is completed in turn by a separate worker.

By sharing mistakes across the process, the customer and project team members benefit individually and collectively from increased opportunities to learn from their errors; the project also moves along more quickly because bugs are discovered in the system earlier in the development process.

Iteration is very important. It is important in proper use of the PDSA cycle – many quick iterations are much better than one long slow one. And for software application development it is an excellent strategy.

I think iteration is even more important in software application development than most other areas (for now anyway) because many stakeholders cannot visualize what they need from software. Therefore attempts to force rigid requirements up front fail. No matter how much effort you put in the stakeholder just doesn’t know until they see it and use it – then they can tell you what they want changed. so design a system that works given this – iteration and agile development work very well.

Related: lean thinking articlesExperiment Quickly and OftenManagement Consulting (what does the consultants web site show?)Indian Firms Learning From Toyota (on Wipro posted here in 2005)posts on improving software developmentNot Lean Retailing

Manufacturing Takes off in India

Manufacturing takes off in India by John Elliott:

The sleek, clean factory in the Delhi suburb of Noida seems more Taiwan than India. Engineers in white overalls and goggles watch over an automated production line that spits out four billion state-of-the-art DVDs and CDs a year. To get to the factory floor, you have to pass through three air-cleaning passages – a process that makes it clear you’re no longer in crowded, dirty Delhi.

This is not some futuristic vision of India. It’s the main factory of Moser Baer, a 24-year-old Indian company that was one of the first in the world to make high-definition DVDs and is now starting on flash memories and solar panels. And while not typical of most Indian factories, Moser Baer is one of a number of companies utilizing the same brainy ability that fueled the country’s IT boom to remake its manufacturing landscape.

The second problem is India’s infrastructure, especially power shortages and the grossly inadequate highways and ports that make it difficult to transport goods. New highways are helping, but growing urban congestion is making the problem worse, and there are seemingly endless bureaucratic and physical delays at ports.

India has a great deal of potential for manufacturing. The roadblocks are largely economic I think. Poor infrastructure is a huge problem that requires huge investments be made. China has made huge investments in infrastructure and they have paid off. Another incredible drain on India’s progress in manufacturing is the government bureaucracy.

Related: Manufacturing in AsiaHopeful About India’s Manufacturing SectorTop 10 Manufacturing Countriesarticles on manufacturing management

Deming Prize 2007

India continues to shine with Deming Prizes (and of course there economy and stock market have been doing pretty well too). Companies based in India took home both Deming Prizes this year and the Japan Quality Medal. Countries of organizations receiving the Deming Prize since 2000 (prior to that almost all winners were from Japan):

Country Prizes
India 14
Thailand 8
Japan 4
USA 1
Singapore 1

The 2007 Deming Prizes went to Asahi India Glass Limited, Auto Glass Division and Rane (Madras) Limited. Three different divisions of Rane received awards in the previous the last 4 years, making this Rane’s fourth prize in 5 years.
The 2007 Japan Quality Medal went to Mahindra & Mahindra Limited, Farm Equipment Sector.

The 2007 Deming Prize for Individuals went to Mr. Masayoshi Ushikubo, Chairman, Sanden Corporation. The Sanden International portion of Sanden was the third USA based organization to win a prize in 2006 (prior winners were: Florida Power & Light Company in 1989 and AT&T Power Systems in 1993). I mentioned India’s economy and stock market above, China’s economy and stock market are doing amazingly well also and then have yet to have a Deming Prize winner. I hope China, USA and many another countries can follow India’s current performance in this area. Deming Prizes are not awarded on a quota or forced ranking basis – any deserving applicants in any year can receive a prize.

Learn more about the Deming Prize.

Related: Deming Prize 2006Deming Prize 2005Deming Prize 2004Top 10 Manufacturing CountriesToyota Chairman Comments on India and Thailand2006 Deming Medal presented to Peter R. Scholtes

TVS Group Director on India – Manufacturing, Economy…

Gopal Srinivasan is Director of TVS Electronics Limited, Joint Managing Director of Sundaram-Clayton Limited and Director of various other TVS Group companies. TVS group companies, based in India, have been awarded 5 Deming Prizes. He discusses Deming and quality a bit. He also discusses their experiences in manufacturing in China and the strengths they have found in each country. And he discusses the Indian economy and manufacturing.

In the second part of the podcast he talks about the growth of the economy of Tamil Nadu and the inclusive approach required to help India grow. via Gopal Srinivasan of TVS Group of Companies on Entrepreneurship

Related: Hopeful About India’s Manufacturing SectorToyota Chairman Comments on India and ThailandIndian Deming Prize Winner Expanding2005 Deming Prize Awardees2004 Deming Prize

Moving Jobs to Silicon Valley from India

India grows up:

The costs of having two offices, which are twelve time zones apart, is significant. People in both offices frequently had conference calls at 10pm and midnight every night (as a result the office in the US didn’t get started until noon sometimes or people rolled in tired). We were all traveling constantly. Development and communication moved slower due to the distance and teams. However, all of this was worth it so long as the ROI was there.

Bangalore wages have just been growing like crazy. To give you an example, there is an employee of ours who took the first 5 years of his career to get from 1% to 10% of his equivalent US counterpart. He then jumped from 10% to 20% of his US counterpart in the next 1 year. During his time with us (less than 2 years) he jumped to 55% of the US wage. In the next few months we would have had to move him to 75% just to “keep him at market.”

A good post on some of the difficulties of outsourcing. Also a good illustration of how economics is suppose to work. If labor is underpriced in India and the market is opened labor rates should rise to a level where they are equivalent (given productivity… differences). Don’t be lead to believe all labor prices in India have experienced anything like this. Those areas where the value to cost difference was largest is where rates increased a great deal in a short period of time.

Related: IT Outsourcing SlowingGoogle India not Finding Enough EngineersThe Power of Silicon Valley

Top 10 Manufacturing Countries

The newest data from the UN confirms most of the recent trends in manufacturing output – most notably that China continues to grow dramatically. The data also shows a stagnation in USA manufacturing output over the last several years, though the USA remains by far the largest manufacturer. The most significant news from this latest data, I believe, is that that manufacturing output growth in the USA has been slower than global manufacturing output growth from 2002-2005. This was not the case prior to 2002. I will be writing more on this data in the Curious Cat Investing and Economics Blog. UN Data, in billions of current US dollars:

Country 1990 1995 2000 2001 2002 2003 2004 2005
USA 1,040 1,289 1,543 1,460 1,471 1,488 1,545 1,493
Japan 809 1,217 1,033 857 807 886 962 964
China 143 299 484 527 573 664 788 895
Germany 437 517 392 389 407 490 566 594
United Kingdom 207 221 230 218 222 239 283 no data
Italy 240 226 206 205 218 259 295 291
France 200 233 190 185 192 228 256 253
Korea 200 233 190 185 192 228 256 253
Canada 92 100 129 119 120 149 170 196
Brazil 117 149 120 102 95 109 130 171
Spain 108 107 98 100 108 134 153 160
Mexico 50 55 107 110 111 104 111 122
Russia 201 104 73 77 54 64 92 117
India 50 60 67 68 72 84 100 116

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Manufacturing in Asia

The Economist explores the trend to manufacture in Vietnam, Indonesia, Malaysia… instead of China in: The problem with Made in China:

helping China’s share of the world’s exported goods to triple to 7.3% between 1993 and 2005. In comparison, every member of the G8 group of rich nations, with the exception of Russia, saw its share fall. It is a similar story with manufacturing output. Whereas China doubled its share of global production to almost 7% in the decade to 2003, most of the G8 saw their shares fall. Interestingly, only the United States and Canada saw their shares rise

It is nice to see this reported properly. The USA manufacturing share of global output has risen, not fallen, as we have stated numerous times: Manufacturing Value Added Economic DataManufacturing Jobs Data: USA and ChinaGlobal Manufacturing Data by Country. The most fundamental facts of global manufacturing – Global output is increasing. Jobs are decreasing (everywhere, not moving from one place to another – decreasing everywhere). China’s output is growing rapidly. The USA is still by far the largest manufacturer, USA output is growing faster than global output and much slower than China’s output. Japan is the second largest manufacturer with China third, by a fairly large margin though China is growing very rapidly.

Related: Manufacturing JobsChina’s Manufacturing EconomyAmerica’s Manufacturing Future
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IT Outsourcing Slowing

Outsourcing bubble getting Busted: What should India do? – commenting on the 2006 Global IT Outsourcing Study

Essentially the study says the outsourcing IT will continue to grow though more slowly than it has. It also states the benefits of outsourcing have not reached the level that was predicted for a number of reasons. The study predicts vastly increased competition from China for IT outsourcing work (which reinforces the general consensus).

Perhaps most interesting, however, is the phenomenal growth in the expectations of China as an outsourcing destination. In 2004 only 8 percent of study participants expected to be outsourcing anything to China over a 3–5 year period. In 2005 this number had grown to 40 percent and in 2006 it sits at an impressive 56 percent. We believe that the hype of the Chinese outsourcing phenomenon has potentially outpaced reality.

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Six Sigma Spells Success in India

Six Sigma spells success for BPOs by Pradeep Kapur:

However, while Six Sigma’s pedigree can indeed be traced to TQM, it is differentiated from these earlier approaches by the bottom-line focus and intensity of its application. Experience has shown that Six Sigma works and if applied appropriately, it can be the key to enhance customer experience by adding to the bottom line. This can provide you a winning edge.

Related:

Indian Deming Prize Winner Expanding

Lucas TVS on Global and Local Expansion Mode

A delegation of top officials from leading Japanese industries — mostly comprising Toyota group and its suppliers — had also visited the Lucas TVS’ Chennai plant. The delegation is part of the central Japan Quality Control Association, an organisation promoting quality control in cooperation of the Union of Japanese Scientists and Engineers (JUSE).

The purpose of the visit was to introduce the delegation to the best practices amongst the member companies and also outside Japan. In 2004, Lucas TVS had won the prestigious Deming medal…

According to Balaji the Japanese delegation led by Tadashi Onishi, JTEKT Corporation, said that quality is not a magic solution but a systematic practice, and quality should not be measured by the absence of defect. A company should reach a condition where it innovates in quality. Further, all the stakeholders-employees, suppliers and others- should be involved in quality control. “The delegation also told us that quality systems should be at all levels of management and not only at the shop floor level,” Balaji said.

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