Wednesday, November 10, 2010
Renowned as low cost destinations, manufacturing industries thronged China and India in the early 2000′s, sprouting factories on the back of low wages and cheap raw materials. However, optimism in the domestic market, inflation and a flood of foreign investments has led to a sharp rise in manufacturing salaries in both India and China. Total labor costs in India’s formal manufacturing sector have risen 20 percent this year and are expected to average US$2.68 per hour in 2010 compared to China’s US$2.51, a rise of 10 percent. Basic wages have risen fast in India over the last year, but still lag China, India averages US$1.71 per hour, to China’s US$1.82, according to a recently released report by IHS Global.
While Indian manufacturing costs are higher now, following the spate of strikes in factories in South China in June, over low salaries, the study expects total Chinese manufacturing labor costs exceed Indian salaries by 2013 and to be 20 percent higher than in India by 2020. Over the next ten years, wages in China are expected to rise steadily, as compared to India where growth is more erratic. According to the study, China’s rising wages will not only reflect higher productivity, but also a step up in the value chain as a result of extensive investment in industrial infrastructure.
The difference in overall costs between both countries is however in benefits provided to employees. India’s benefit structure includes contributions to the Provident fund (social security), survivor insurance, pension contributions, state-mandated “13th month pay” and double pay for overtime. As basic wages rise, then benefits increase accordingly, which can add considerably to companies’ costs in India.
According to the IHS study, benefits make up roughly 36 percent of labour costs in India. The figures would be even higher if employers did not avoid many of these costs by employing contract workers.
In China, benefits make up just over 27 percent of labor costs. This figure is heavily diluted by rural workers, however, who earn only 8 percent benefits. Urban workers can earn up to 47 percent ad
ditional pay in benefits.
China’s manufacturing sector is more heavily dependent on exports to the West, which have suffered in the wake of the global recession. India’s economy, on the other hand, benefits from more diversity and domestic demand, allowing the rising wages to push total costs ahead of China.
Saturday, October 30, 2010
A better approach is to focus on building competency in cost management rather than cost reduction. Cost management programmes tend to be more longer term but also, crucially, offer more flexibility in dealing with changing business conditions, for instance, by allowing faster response times demand level shifts and better influencing their competitive drivers.
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Tuesday, October 5, 2010
That’s the finding of Capgemini Consulting’s 2010 Global Chief Procurement Officer (CPO) Survey released today.
Almost 80 percent of professionals say top management expects them to improve the overall value contribution of the Procurement function.
Based on responses from over 150 global companies across Europe, Asia and the Americas, the survey reveals there is a clear and emerging focus on strategic initiatives that can enhance the value delivered by procurement.
These strategies include proactive value creation through innovation; contribution to corporate sustainability objectives; developing reciprocity agreements with suppliers; increasing speed to market and a focus on Total Cost of Ownership.
Cost reduction continues to be a major focus area with over 40 percent of respondents reporting savings targets at nearly 10 percent for 2010.
Strategies that Procurement executives are employing to achieve these targets include contract re-negotiation, tighter contract compliance, global sourcing, hedging and moving to outsourced procurement services.
There is a continued trend towards centralised procurement operating models with over 40 percent of the surveyed companies favouring this model and another 50 percent favouring a centre-led/hybrid model.
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Monday, October 4, 2010
The burden of licensing and involvement of the bureaucracy has significantly reduced in India, since 2000. In terms of the companies’ perception of the burden, India is rated better than China and Brazil on business regulation. Licensing is no more a requirement in India, after liberalisation. Only in few areas of manufacturing or services is licensing applicable, as in the case of 3G services, etc ------
India’s commercial taxation system is unusually complex, especially where indirect taxes are concerned. While income tax, excise and customs duty are set by the Central Government, states and municipalities also levy their own taxes and provide discretionary exemptions to attract investment. Although the tax policy and many tax rates are set by the Centre, states and municipalities also levy their own taxes, which can overlap with state taxes. A manufacturer has no option but to take professional assistance to understand the tax structure.-------
Weak infrastructure remains a significant cost factor for companies, although most infrastructure indicators are showing an improvement. For the efficient running of any industry, good infrastructure is of prime importance. Infrastructure helps in improving efficiency, quality, cost, and service. The basic infrastructure for any industry comprises good roads, power, water, telecommunications, finance, raw materials, components, and logistics. In India, availability of these facilities is not the mark even in established industrial estates.------
Sunday, October 3, 2010
At the end of the first decade of the 21st century, Indian manufacturing companies are at par with the best in the world from a quality perspective. The next step will be to gain scale.
India has the largest number of companies, outside of Japan, that have beenrecognised for excellence in quality. Twenty-one companies have received the Deming Excellence award and 153 companies have bagged the TPM Excellence award for their total productivity management practices from Japan Institute of Plant Maintenance (JIPM). As many as 165 companies have been recognised for the Confederation of Indian Industry (CII)-Exim Bank award for business excellence (equivalent to European Foundation for Quality Management awards); about 80 per cent of these are manufacturing companies. Sundaram-Clayton, Sundaram Brakes Linings, TVS Motors, Brakes India, Sona Koyo and Indo-Gulf Fertilisers are among the few Indian companies that have won both the Deming and TPM awards.
This has happened because in the last decade Indian manufacturing companies have imbibed world-class practices in manufacturing management by educating their employees, both managers and shop-floor staff with the help of global teachers who have brought in the best manufacturing management techniques. These practices have shown positive results in bringing down customer returns to below 50 parts per million (ppm), and have reduced manufacturing costs by 15-20 per cent over the decade.
Sundaram Clayton of the TVS group became the first company to get the Deming prize in 1998, after having put in 10 years of significant efforts to imbibe the total quality management (TQM) culture. The TVS group found a lot of commonalties between its culture and the one prescribed by TQM — and its companies became fully aligned to bring about “continuous improvement” into their fold. Many Deming Award winners are from the automotive and automobile component sectors, with Tata Steel being the most recent claimant in 2008. Tata Motors, among many others, is pursuing the Deming awards
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Thursday, August 19, 2010
Wednesday, May 12, 2010
With fast paced changes in a business environment companies had to take fast decisions with little time for finer details to look for any deviation or error in selecting wrong strategies could lead to disaster for the business
Here are 5 basic steps for cost cutting
- Identify quick wins
Companies should identify the opportunities available with possibblities of savings with minimum of investment and are sure of quick results.
- Quantify and communicate cost reductions
Any cost cutting needs to be quantified No assumptions or vague figures .facts and figures needs to be figured out before planning for cost reduction strategies and achievements to be highlihted to all
- Aligning cost reduction with business strategy
- Simplify operations
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Monday, April 26, 2010
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Source : http://www.spendmatters.com/index.cfm/2010/4/6/Ford-goes-Local-in-India
Author: Jason Busch
Thursday, April 15, 2010
The prevalent technologies vary across functions in the organisations. At the shop floor level, CNC (computer numerically controlled), PLC (programmable logic controls), and HMI (human machine interface) provide the industrial automation technologies that serve in the automated control of the physical manufacturing.
More advanced users have matured into centralised plant operations control with SCADA technologies. In terms of product design and manufacturing process design, 3D design, PLM (product lifecycle management), and digital manufacturing are evolving in adoption cycle from the nascent stage of 2D design platform.
Very advanced users, though a few, have evolved to use complete plant modelling and simulation, with virtual commissioning and advanced tools such as process simulate, factory flow, factory CAD and so on. Here, practically before a single rupee is invested in physical plant infrastructure, the entire model and operations can be visualised on different what-if business scenarios.
In the horizontal functions, ERP (enterprise resource planning) has a mature adoption curve, while SCM (supply chain management) systems are in mid stage of maturity in adoption. Very progressive companies have looked at vertical application integrations, between the shop floor and business systems, to provide competitive advantage and have adopted manufacturing execution systems (MES) and manufacturing intelligence solutions.
Read more on http://beta.thehindu.com/business/article397976.ece
Cutting costs by radically changing manufacturing processes over half a decade—initially at its factory in Chakan, near Pune, and later at other facilities—was the reason the country’s second largest maker of motorcycles remained in the black despite the sales plunge.
The feat involved the way the auto maker, known primarily for its ubiquitous scooters, designed and produced motorcycles. It decided to massively outsource the manufacture of parts to a core group of suppliers, thus cutting down heavily on variable costs.
Kevin D’sa, vice-president of finance at Bajaj, credits the company’s ability to defend profit margins to this move. At present, 72% of the firm’s costs to sales are variable, while fixed costs are at 6%, he said. The remaining 22% is reflected as revenue minus cost of sales and operating expenses.
“This protects the company in the event of a slowdown or downturn and resultant volume contraction,” D’sa said.
The move also improved manpower productivity by five times since 2002, and reduced Bajaj’s suppliers from 800 to 185. Today, just 15 vendors supply 75% of the components used at its Pantnagar facility in Uttarakhand. At Chakan, 50 suppliers cater to 100% of its requirements.
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Thursday, April 8, 2010
Overhead cranes are used around the world for moving cargo containers, crates and other materials to different locations in warehouses, train yards, and shipping ports. Controlling the speed and direction of the cranes is of utmost importance to prevent collisions and damage to either the cranes or the materials being moved.
The operator is stationed either in a booth mounted on the crane or on the ground with a remote control pendant. In either location, accurate feedback from the crane is essential to determine its position and speed.
This feedback is typically provided by sensors mounted on the crane to detect the distance and position relative to a reference point. Alternatively, an encoder may be used to count pulses. The outputs of the sensors or encoders are transmitted to displays or programmable logic controllers (PLC) through cables or wires.
Cable Stress Increases Maintenance Cost and Failure Risk
As the crane moves throughout the work area, these cables are continuously flexed and bent, creating a critical maintenance issue. Many overhead cranes use flexible conduit or tracks to reduce the stress of the flexing on the cables. Some use loops in the cables and wires to minimize movement during the flexing. But even with these solutions, the cables and wires are at risk of failure and eventually need to be replaced.
Wireless Communication Eliminates Long Cable Runs
Wireless I/O devices, like the SureCross DX70 and DX80 from Banner Engineering Corp., are being used increasingly in both new crane designs and retrofit installations. Eliminating the cables and wires decreases both the cost of installation of the sensors and encoders and the cost of maintenance on the overhead cranes.
In one of the many applications of wireless control, a manufacturer of sheet metal rolls and metal plates uses an overhead crane controlled from the floor of the warehouse. The location of the crane is monitored by using 2 retro-reflective laser sensors. One sensor measures the (X) location along the length of the warehouse, and the second measures the (Y) location of the crane along the width.
The two sensors provide analog outputs connected to numeric LED displays that indicate the crane position in both the X and Y axes of movement. The operator of the crane reads the information from the displays to correctly position the overhead crane to pick up and place the metal rolls or plates in the proper locations.
The retro-reflective laser sensors each give a 4-20 mA analog output, which is connected to an analog input on the wireless I/O device. The wireless device checks the analog output of the sensors as many as 8 times per second to monitor the position of the overhead crane. Since the wireless device and both sensors are mounted on the moving crane, very short runs of cable are needed to connect them and they do not bend or flex.
The wireless device transmits the analog output information to a second wireless I/O device that is installed next to the digital displays. This device has 2 analogue outputs that are connected to the digital display inputs, one showing the X location of the overhead crane, and the second showing the Y location. Based on the digital readouts, the operator uses the remote control pendant to move the crane to the correct location.
Compatible with Many I/O and Control Devices
In addition to discrete and analog I/O, industrial wireless networks also allow communication via RS485 and RS232 serial communication, and Ethernet TCP/IP communication. This allows the wireless networks to interface with many different types of I/O devices, as well as PLCs and computers.
Signal integrity is important in all wireless networks. Some concerns when using wireless signals are that objects might block the signal or that other radio sources in the area could interfere. These are valid concerns and are accounted for with the design of modern wireless I/O networks.
The use of frequency hopping spread spectrum and time division multiple access protocols prevent much of the interference from other radio sources and objects. Some wireless I/O networks also include a communication or link loss indication and an output default condition that prevents crane operation if the signal is lost. These features result in robust, reliable wireless communications.
The use of the wireless I/O devices saves money in three ways:
◦During control system installation there is no need for long runs of cable.
◦Maintenance costs and system downtime are reduced because there is virtually no risk of broken cables.
◦Reliable location information transmitted by the wireless devices reduces the risk of collisions. This reduces costs for replacing damaged materials or parts of the overhead crane.
Author :Lee Kielblock
Source : http://www.ipfonline.com/
Manufacturers : Banner Engineering India Pvt Ltd, Pune 411 016. Tel: 020-66405624. Fax: 91-20-66405623. Email: sales india@ bannerengineering.com)
Tuesday, March 16, 2010
cost competitive manner. This only proves India’s competitive strength lies in ‘frugal engineering’, a phrase coined by Franco-Japanese automaker chief, Carlos Ghosn.
Since Indian manufacturing lacks the scale that China has, it needs to evolve its own model, Satish Sekhri, managing director, Bosch Chassis Systems, said.
He was emphatic that Indian industry should evolve a unique method, which takes into account our social fabric, sensibilities and competencies. Indian manufacture is able to make small batches with a large variety.
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Wednesday, March 10, 2010
Hi-Tech International offers removable/reusable insulation jackets that allow a cost-effective approach to insulating systems, where insulation is desired but occasional maintenance or inspection is required. Items such as valves, pumps, tanks, turbines, instrumentation, heat exchangers, blowers and fans all utilise this product for either thermal or acoustical reasons. Multi-layer energy saving insulation covers provide protection from fire, oil spillage and results in energy saving. These are 100% incombustible and undergo strict tests as per BS476 Part 20. The inner insulation layers are made from alumina silica fibres to reduce the heat loss from the valves and joints to keep the system heat constant and prevent heat loss. Products and applications: removable valve covers; thermal insulation over pipes and joints; covers for steam pressure valves; and turbo charger insulation. All materials are tested as per British Standards BS 476- Part 20.
Friday, February 12, 2010
Tuesday, February 2, 2010
Providing protection from mechanical damage
Increasing shelf life of product
Easy handling of items during transportation
Advertisement and messages from manufacturers
Legal declarations on packs for consumers
Manufacturers are employing various strategies and ideas to reduce packaging cost of the product .Packaging are strong medium of marketing various design and concepts are used to differentiate ones product from competitors
Following steps can results in savings
Change dimensions of the primary /secondary packaging as per the product
Change the product dimensions as per the secondary packaging which would result in better handling and optimum use during stacking and loading an container
Thickness of the material used in packaging can be reduced with trials such as material are safe during transit
Preformed boxes /cartons can be used rather than employing labor to do in-house
Universal boxes and packaging material can be used for the product basically for multilocational companies
Alternate materials can be used
Excessive packaging to be avoided
Use pre printed boxes/ wrappers can save cost on printing
Automation on packing machines can also help reducing packaging cost
for more on packaging reduction log on to http://shumaonline.com/costreduction_packaging.html
Saturday, January 30, 2010
Watch this Video
Saturday, January 23, 2010
Monday, January 18, 2010
And this was not all. Be it the mass market players like Maruti Suzuki, Hyundai and Tata Motors or those keen on tapping the fast-growing luxury segment like Skoda, BMW, Mercedes-Benz, Audi or Volkswagen - all were there at the mega show announcing India launch of their latest models and unveiling their concepts.
One automaker that presented itself as a 'complete brand' was General Motors, which is not only making efforts to tap the maximum selling compact segment but is also looking at the luxury segment.
Through the highly competitive pricing of its new compact car 'Beat', it could have triggered a price war in the mass selling segment.
The growing clout of Indian automakers was clearly underlined by a recent survey by leading consultancy firm KPMG, which said that global automotive market share winners over the next five years would include various new Chinese and Indian vehicle manufacturers, along with leaders like Hyundai/Kia, Toyota, Honda and Volkswagen.
From the current ranking of 11th largest passenger car market, India will jump to the seventh spot in the next five years. And it is not just about cars; India is also world's second largest two-wheeler market and fourth largest commercial vehicle market, besides emerging as a quality component manufacturing base with low-cost advantage. So, auto experts were not at all surprised with Honda's decision to export crucial components from its new plant in Rajasthan to its headquarters in Japan, while Hyundai and Suzuki Motors have already made India as their export hubs.
For the record, the week-long show, jointly organised by the Automotive Component Manufacturers Association (ACMA), the Society of Indian Automobile Manufacturers (SIAM) and the Confederation of Indian Industry (CII) since 1986, saw participation of over 2,100 exhibitors and launch of 25 new models (the biggest ever so far), besides unveiling of over two-dozen concept vehicles. It was a huge hit as far as footfalls were concerned as almost 20-lakh auto-enthusiasts, apart from those eyeing serious business opportunities, witnessed the extravaganza.
The auto show also helped companies gauge the mood of their Indian customers and accordingly plan their future launches in the booming market that recorded growth despite economic slowdown even as the markets in the U.S. and Europe fared badly.
One segment that has caught everybody's attention is the scope of battery-operated cars. It was precisely for this reason that some major carmakers like General Motors, Renault, Hyundai, Tata Motors and Maruti Suzuki announced their plans to bring "green cars" in the near future. India is also being seen as a major source of e-cars for global markets.
On the other hand, the commercial vehicle segment saw global players like Volvo, Navistar, Tata Motors, Ashok Leyland and Mercedes-Benz renewing their focus on the Indian market, thanks to the boom in the infrastructure sector and consistent economic growth.
India is also poised to emerge as a major destination for hi-end biking, besides consolidating its position as mass bike market and its major exporter.
The entry of iconic Harley Davidson brand and Ducati bikes in India are examples of it, while other players like Ducati, Yamaha, Suzuki and Honda are bullish on the idea.
Similarly, the presence of component manufacturers in huge numbers, which included dedicated stalls from countries like China, Germany and Italy did not surprise Indian industry.
Besides seeing huge domestic potential, emergence of India as a manufacturing hub for exports has prompted them to make a beeline for the sub-continent. Interestingly, the domestic auto component industry is targeting a six-fold growth in exports by 2016.
Pointing out that component sourcing by both domestic and global auto majors turned out to be a major activity at this year's show, ACMA President Jayant Davar said, "India's advantage as an ideal cost-competitive hub is the key, and this is going to prop up component exports in a big way in the years to come." From around $20 billion in 2009, 20 per cent of which would be exports, Indian auto component industry is likely to touch $45 billion, of which 50 per cent would be from exports.
Author : Sandeep Joshi
Source : The Hindu
Tuesday, January 5, 2010
By Charles Dominick, SPSM
How Are Purchasing & Sourcing Different Today?
The new year's arrival made me ponder how purchasing in 2008 differs from purchasing in 1998. Here are the top 10 purchasing changes in those 10 years.
10. Technology Proliferated. Today, eProcurement and eSourcing are two of the most useful practices in purchasing. Ten years ago, those terms were unheard of.
9. Center-Led Procurement Arrived. In 1998, even top purchasing departments processed purchase orders. Today, purchasing departments aim to centralize the supplier selection process, not transactions, which are delegated to end users or outsourced.
8. Purchasing Grabbed More Spend. When purchasing departments deliver results, management seeks more spend that Purchasing can positively impact. Once sourced by other departments, categories like fleet management, benefits, and travel services are now sourced by Purchasing.
7. Social Responsibility Became A Top Priority. Whether for philanthropy or to avoid media scandals, management counts on Purchasing more than ever to buy from diverse suppliers, make environmentally-conscious decisions, and do business ethically.
6. Measurement Was Mandated. With the potential of smart purchasing widely known, senior management more strictly holds their purchasing departments accountable for results. The use of purchasing metrics and dashboards is now commonplace.
5. Strategic Sourcing Went DIY. In the '90's, strategic sourcing was done mostly by consulting firms hired to help companies reduce spend. Today, many companies have their own refined and documented in-house strategic sourcing processes.
4. Supplier Roles Expanded. In 1998, there was talk about "partnering" with suppliers. Today, there's action. Top purchasing departments actively develop their suppliers and look to the supply base for ideas, better performance, and innovation.
3. Global Sourcing Went Mainstream. Ten years ago, only the progressive companies were searching abroad for suppliers. Now, in some countries, it is difficult to find products manufactured domestically.
2. The CPO Position Got Adopted. This past year alone, I've encountered an unprecedented number of folks with the title "Chief Procurement Officer."
1. The Supply Chain Was Recognized. In the last decade, companies more closely analyzed the way material flows into, through, and out of the organization. This "supply chain" focus has those who once just placed orders now responsible for inventory, warehousing, outbound logistics, and distribution.
Source : Nextlevelpurchasing.com
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