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Adoption of Advanced Technologies in Manufacturing: Implications for Human Capital Development

Presented byProfessor Shekhar Chaudhuri

Director and Chair Professor in Strategy, Calcutta Business School

Sanjib BiswasAssistant Professor, Operations Management, Calcutta Business School

At

The Annual Manufacturing Conclave

onTHE POWER OF INNOVATION IN MANUFACTURING - DRIVING INDIA’S GROWTH IN THE 21ST CENTURY

Williamson Magor Hall, The Bengal Chamber of Commerce and Industry (BCC&I)

February 17, 2017

Prof. Shekhar Chaudhuri & Prof. Sanjib Biswas, Calcutta Business School 2

Outline

• Introduction

• Case Studies on selected Indian Manufacturing Organizations

• Present Status of India vis-à-vis Manufacturing Competitiveness

• Highlights of GOI initiatives

• Case study on Visionary Leaders for Manufacturing Programme (VLFM)


Introduction

In recent years successive central governments in India have recognized that the manufacturing sector

in the country needs to be nurtured to improve its competitiveness. The National Manufacturing

Competitiveness Council was set up in 2004 as a think tank and a facilitating body to coordinate the

activities of concerned ministries and departments and various chambers of commerce and industries

with aim of improving India’s competitiveness in manufacturing. The present government at the centre

has also launched several new initiatives like Make-in India, Digital India, Start-up India, and Skill

India that have among others the objective of improving the competitiveness of India’s manufacturing

sector.

One study conducted by Deloitte in 2016 ranked India at 11th place in terms of its manufacturing

competitiveness index with China, USA, Germany, Japan, South Korea, UK, Taiwan, Mexico, Canada

and Singapore above her.


Introduction (cont..)

A large proportion of India’s US$ 174 Bn in manufacturing exports require high skill and

technological intensity. However, employability of her young population is a major concern as

only 5% of the workers have formal skills training. In this context, the present government’s

initiative in this area, “Skill India” is very laudable and the “Make-in India” campaign launched

in September, 2014 is indeed praiseworthy. The ultimate objective of the government is to make

India a manufacturing hub for key sectors.

Worldwide, technological change has become ubiquitous. Therefore, firms have to be alert to

technological trends and incorporate these new technologies that are likely to enhance their

competitiveness. New entrants into an industry that have the required resources can adopt

emerging technologies to offer competitive products and services faster than incumbent firms.



India, currently lags behind the US, China and Europe in the adoption of advanced technologies in

manufacturing. Therefore it has become imperative for Indian firms to adopt advanced technologies

to improve their competitiveness in manufacturing at a faster rate than global competitors.

The Sociotechnical Systems approach to Organizational development developed by Eric Trist and

his colleagues at the Tavistock Institute in London posited that there is a close interaction between

task, organizational structure, technology and people. Therefore, an organization Advanced

Manufacturing Technology (AMT) would have to consider their potential impact on the nature of

organizational tasks and people dimension.

One study of AMT adoption in the U.S. showed that, it led to “skill upgrading” and downsizing of

the workforce. Though this study focused on changes at the shop floor level, our contention is that



AMT adoption in the Indian context would have both strategic and organizational implications.

However, studies of this kind were not readily available. We therefore decided to make a

preliminary investigation regarding the adoption of advanced technologies by four leading

manufacturing firms in India and their human capital development initiatives.

In the following sections we present brief cases on the four firms based on information available

in their annual reports. Specifically we looked at their technology upgradation and human capital

development strategies. Based on our preliminary investigation we contend that to achieve

competitiveness in a global context firms would need to adopt advanced manufacturing

technologies and simultaneously invest in human capital development. Shifting our focus from

the firm to the general issues of competitiveness of Indian manufacturing industry we believe that



there is a need for developing visionary leaders who would be able to provide leadership to take

Indian firms to a higher level in order to compete in the global market place.

Finally we briefly present the experience of developing and implementing the unique Post

Graduate Programme for Executives for Visionary Leadership in Manufacturing being offered to

Indian industry by three premium Indian institutions, IIM Calcutta, IIT Kanpur and IIT Madras in

collaboration with CII and with the support of the National Manufacturing Competitiveness

Council, MHRD, GOI and the Government of Japan through its international cooperation arm,

JICA.


Case Study 1 - Tata Steel

• Presently has operations in 26 countries and commercial presence in over 50 countries. • Tata Steel is one of the largest private sector integrated steel producers with a turnover of INR

38,000 crore in India.• 11th largest steel producer in the globe• Global production: 25.9 MnT (Fy 2015-16)• Global revenues: INR 1172 bn (Fy 2015-16)• Awards: Dun and Bradstreet Award 2016; Prime Minister's Shram Award; the Golden Peacock

Innovative Product/ Service Award; ‘The Best Companies to Work for Award’ by Business Today; 2016 World’s Most Ethical Company by the Ethisphere Institute, Scottsdale, Arizona, USA

About the Company

Source: Company Annual Report


Strategic Intent Behind Technology Adoption & Innovation

Tata Steel has initiated technology upgradation activities in a variety of areas for a) Process technology improvementb) Capacity expansionc) Product improvementd) Better integration of manufacturing processese) Improvement in quality control and assurance systemsf) Mitigating negative impacts of technologies on the natural environmentg) Alternative material developmenth) Better utilization of inferior naturally available raw materials

Spend on R&D- (Capital+Revenue): INR 448 crore (Cumulative Fy 2012-16); In 2015-16, Tata Steel incurred INR 129.32 Crore in R&D (Total R&D expenditure as a % of Total Turnover is 0.34%)



Technology Adoption

Examples of the key technologies adopted:

• Underground and open cast mining, Coke Dry Quenching (CDQ), Bell less top charge high capacity furnaces, Online granulation of Blast Furnace Slag, Rolling Tandem Mill for pickling & rolling, Hot dip galvanizing etc.

• Large Blast furnace – 4330 cubic metre • Twin Wagon Tipplers for achieving faster turnaround time with unloading capacity of 20 MnTPA of raw

materials, • Big LD converter – 310 tonnes, CAS - OB for refining of steel, • Thin Slab Caster and Rolling - New technology, Energy Efficient, 100% by-product gas-based power

generation leading to reduction in carbon footprint (Achieved about 20%)


Human Capital Development Initiatives

Internal Activities

External Activities

To improve the way of life, work culture, employee engagement, productivity, e ectiveness and ffefficiency

To engage and improve the relationship with the community, and develop the skills of the youth in neighborhood areas which in the long run would help in getting trained employee and improving the business environment

Training need identification through workforce capability and capacity assessment process

Training on Quality, Attitude, Technical & Managerial Skills, Leadership development (conducted the Tata Outbound Leadership Convention, Nav Chetna programmes) & Higher Education

Reverse Mentoring

III Tier Structure for industrial harmony (JDC, JWC, JCCM)

Internal Training & Collaborations with 20 technical

institutes

Knowledge, Skill, Motivation & Attitude

Self Help Groups (SHGs), village committees , Tata Steel Skill Development Society, Thousand

Schools Project, Learning Enrichment Programme (LEP)

- Improved relationship with the community- Trained Youth- Feel good factor

Spend on training over last 5 years ( INR in crore): 578 Source: Company Annual Report

JCCM: Joint Consultative Council of Management; JWC: Joint Works Council; JDC: Joint Department Council


Some Aspects of Overall Performance

Crude Steel Capacity (MnTPA)

% Sales increase over FY15: 9% (9.54 MnT) Source: Company Annual Report

Fy 13 Fy 14 Fy 15 Fy 1635

36

37

38

39

40

41

37

40

41

39

# New products developed

Fy13 Fy 14 Fy 15 Fy 16

79

82

89.4

85.3

% Employee involved in improvement activities

Fy 14 Fy 15 Fy 160

102030405060708090

100

69.691.1 93.9

% Skilled Manpower


Case Study 2 – Bharat Forge

• Bharat Forge is the world’s largest forging company with global manufacturing footprint spread across India, Germany, Sweden and France.

• Recognized by Computer Association of India as ‘Top 50 CIOs as part of India’s Best CIOs’

• Recognized by Centre of Recognition & Excellence (CORE), as ‘Manufacturing Icon’ at the second CIO Power List

• Winner of Greentech Award 2015

About the Company




• Process technology improvement• Capacity enhancement and productivity improvement• Product improvement• Expansion of product portfolio• Creation of digital ecosystem for better integration,

monitoring & control• Conservation of energy

Fy 14 Fy 15 Fy 16

272.44

421.35396.05

R & D Expenditure (Rs in Million)



Technology adoption

• Manufacturing - Additive manufacturing for metals, Development of precision forging (Near net shape forging), Technology development for Aerospace forging, cold and precision forging, Development of aluminum forgings for passenger car application, Development of near net shape components for di erential gear box, Technology development on precision gears.ff

• Energy conservation- Automatic burner on-o system, Automation in capacitor bank switch-ffover system to improve power factor while quenching

• The Company has decided to work on 5 building blocks for implementing industry 4.0: Digitization of information flow from top floor to shop floor, Digitization of information flow from shop floor to top floor, Automating the Real Time KPIs Monitoring Visualization, Layer Digitization of Material Flow, and Digitization of Services.



Internal Activities

External Activities



Training need identification

Training on• Engineering Knowledge• Managerial Effectiveness & Leadership• Higher Education


Industrial Training Institute (ITI) in Khed near Pune, Kalyani School, supported by BFL , ‘Life Lab’ in the

adopted School Rajrshi Shahu Maharaj, mentoring of students from Vidhyarthi Sahayak Samittee and CII

Foundation, Pune



• Fulltime Engineering Development Program at Chakan• Managerial Training, SHRM training, Soft skill• ‘Industry Mechanic’ training course for ITI qualified

employees• tie-ups with leading academic institutions such as BITS-

Pilani, IIT Mumbai and Warwick University

Industrial harmony through regular employee meeting on business related activities and challenges;

maintaining safety and dignity of the women employee

17


Performance, % increase over FY15:• 87% growth in Passenger Vehicle export Business in FY 2016 in

comparison to FY 2015.• Earnings before interest, tax, depreciation and amortization

(EBITDA) margins maintained at 30%• New customer addition in domestic PV market. The Passenger

Vehicle segment witnessed a 5.5% increase in demand, driven by new product launches.

• CV revenues in the export market grew by 8%Fy 13 Fy 14 Fy 15 Fy 16

31,51233,993

45,48143,054

Total Revenue ( Rs in Million)


Prof. Shekhar Chaudhuri & Prof. Sanjib Biswas, Calcutta Business School

• A total of 12 patent applications were filed in FY 2015-16, bringing the number of patents filed till date to 22. • KCTI’s learning curve on Additive Manufacturing (3D printing) of metals is one of the fastest in India.• Total 31 research articles were published and presented at various international conferences during 2015-16• Skill upgradation training imparted to 42% of the permanent employee


Case Study 3 – Mahindra & Mahindra

About the Company

• Mahindra & Mahindra is a part of the US$ 17.8 billion global Mahindra Group headquartered in Mumbai, India, with a presence in over 100 countries and employing over 2,00,000 people. The Group’s operations span 20 key industries across 10 sectors.

• Revenue: INR 1,16,245 Cr • India’s largest tractor Company• India’s #1 Utility Vehicles maker (Market share: 37.9%), # 1 Small Vehicle Maker (Market share:

51%)• ‘Technology Innovation of the Year’ award at IATIA 2015 • ‘Top 3 Institutions for R&D in Renewable Energy’ by the Ministry of Non-conventional and

Renewable Energy (MNRE), Govt. of India.• ‘Manufacturer of the Year’ by CNBC Overdrive Awards 2016 and ET India Manufacturing

Excellence Award 2015 by Frost and Sullivan. Source: Company Annual Report



Mahindra & Mahindra believes “…Innovation will be one of the main drivers of our e orts at emerging ffamong the Top 50 Most Admired brands in the world by 2021.”

• Expansion of product portfolio• Process technology improvement• Product improvement, cost reduction, & product

development • Import substitution – Alternative material

development



Technology Adoption

• Technology adopted: CNG Injection Technology, Hydrogen Fuel Technology, Dual Clutch Transmission Technology, Advanced Engine Exhaust After Treatment Technology, Advanced Engine Exhaust After Treatment Technology, New Gasoline Engine Technology, Automated Manual Transmission Design & Development, Automated Manual Transmission Design & Development for vehicles

• Recently launched TRRINGO digital platform using new age technology and digitization to make tractors and implements more accessible to the small and marginal farmers.



Internal Activities

External Activities



Talent Management framework driven by the Talent Councils at the Group and Sector Levels

Training on Attitude, Quality, Safety, Managerial Effectiveness, Technical efficiency


Project Nanhi Kali, which supports the education of underprivileged girls, Mahindra Pride Schools, which provide livelihood training to youth from socially and economically disadvantaged communities, ‘Mahindra École Centrale’ (MEC) in Hyderabad, in partnership with Ecole Centrale, Paris and the Jawaharlal Nehru Technological University, Hyderabad. Wardha Family Farming Project, Krishi Mitra and Integrated Watershed Development Project



• Mahindra Leadership University (MLU)• Tie ups with leading international, and

national institutes like HBS, IIM etc.

3E approach: Experience, Exposure, and Education

Industrial harmony is maintained through ‘open door policy’, shared understandings, in-house feedback

mechanism and trust



• Volume growth in fy16: 6.3%• New products launched in 2015-16: 14• Shop floor associates generated about 17.5

ideas per person towards resolving quality concerns, reducing cost, ensuring safety and improving productivity, resulting into whopping cost saving of Rs. 26 crores cumulative for 2 years.

• Three prestigious National Awards on World Intellectual Property Day under the categories of ‘Best Commercialization of Patents’, ‘WIPO (World Intellectual Property Organization) Users Trophy’ and ‘Top Organization for Trademarks’.

• 7th rank at World Skill Competition held at Brazil in 2015-16.

Fy 15 Fy 16

39,293

41,739

Net Income ( INR in crore)


Fy 06 Fy 160

20406080

100120140160180

10

173

Patent Applications


Case Study 4 – Asian Paints

• Asian Paints Limited is an Indian multinational paint company headquartered in Mumbai, Maharashtra. Presently it is operating in 19 countries and has 26 paint manufacturing facilities in the world, servicing consumers in over 65 countries.

• The Company is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services.

• Asian Paints is India's largest and Asia's third largest paints corporation.• "Royale Aspira" certified to be compliant as per Green Seal standard for Paints and Coatings(GS-

11),USA.,2015.• "Asia Coating Innovation Achievement Award" at the Green Industrial Coating, Asia, Shanghai, China in

October 2011

About the company




• Product improvement and new product development• Process technology improvement for capacity

enhancement, efficiency & productivity improvement• Alternative sourcing• Waste reduction & environmental protection• System integration for better monitoring & control• Risk mitigation

Fy 15 Fy 16

71.64

75.16

R& D ( INR in crore)



Technology Adoption

• Asian Paints has completed the upgrade of its core ERP to a highly scalable in-memory platform and the new S/4 HANA platform to analyze vast amounts of data across multiple dimensions and derive insights.

• Adopted the cloud technology in some of its enterprise wide requirements considering the overall business value offered by these solutions.

• Asian Paints has set up an IT architecture that supports personalized consumer journeys across physical (Colour Ideas, Signature Stores), digital (Website, Mobile, Kiosks) and human (Colour consultancy, AID) touch points through seamless integration of multiple systems.

• Predictive and data mining based upgradation of demand forecasting platform• Technology imported: Technology of Intumescent Coating for cellulosic fire from M/s Neutron

Fire Technology Inc.• State-of-the-art Research & Technology Centre at Mumbai.



Internal Activities

External Activities



Training need identification

Training on• Engineering Knowledge• Managerial Effectiveness• Leadership


11 (eleven) permanent academies and 10 (ten) mobile academies. Asian Paints has partnered with National Skills Development Programme (NSDP) to strengthen the delivery of this programme to both unskilled and semi-skilled individuals. partnered with National Skill Development Corporation (NSDC) for undertaking a painter skill development project. projects focused in areas of Water, Health and Hygiene and Education



• Internal Training• Partnering with NSDC• collaborative development projects with

vendors, academia and institutes

Industrial harmony through employee branding and engagement, transparent & well laid out policies, cultural integration and diversity



• 78% men and 60% women employee got skill upgradation• New Products Launched (2015-16): 22• Patents filed (2015-16) – 5• The high end premium interior product “Royale Aspira” has received “FICCI sustainability award” from The

Federation of Indian Chamber of Commerce and Industry for being selected as the best green product in the chemical and petrochemical sector in the year 2015. This is the only product approved by US Green Seal body in paint category in India for being compliant to GS-11 standard in all aspects.



Conclusions from the Four Cases

From the brief case studies of the four leading manufacturing firms in India it is evident that all of

them have given significant importance to adoption of advanced technologies in order to achieve

competitiveness. They have innovated new products to cater to the emerging needs of the

customers not only within the company but also in the international markets. These firms have

over the years established a significant presence internationally that has made it imperative for

them to think about their corporate strategy with a global perspective. The four case studies also

bring out the fact that all of them have also invested significantly in developing their human

capital. Given their overall success in the competitive market, we can surmise, therefore, that their

emphasis on human capital development has helped them not only in improving productivity, but

also in smooth adoption and implementation of advanced technologies.


Conclusions from the Four Cases (Cont..)

The case studies also provide evidence of the senior and top management’s involvement in the

area of technology and human capital development. All the four firms have given emphasis to

human capital development activities both within as well as outside the organization. The internal

activities are geared towards development of their existing human resources while the external

activities have two fold objectives: (i) development of the future human resources, and (ii)

develop a relationship with external constituencies to create harmonious relationships with the

larger community which is essential for development.


India – Present Status

• Manufacturing sector contributes around 16% to the GDP• Global Competitiveness (2016) Rank #39 with an index score of 4.52 (scale 1-7)* where Switzerland being #1• Manufacturing Competitiveness** (2016) Rank # 11 with an index score of 67.2 (Low: 10, High:100) where

China being #1• Human Capital Index (2016) Rank # 105 (out of 130 countries)*** where Finland being #1

*Source: The Global Competitiveness Report 2016–2017, World Economic Forum** Source: Deloitte Survey (2016)*** Source: Human Capital Index 2016, World Economic Forum

Although India gained global competitive index # 39, the survey of World Economic Forum has pointed out the following areas of concern which need to be addressed

• Stagnating performance on technological readiness• Slow growth of higher education & training• Infrastructure


Govt. of India Initiatives

Make-in India

• To foster innovation. • To enhance skill development. • To protect intellectual property. • To build best-in-class manufacturing infrastructure.

Digital India

Skill India

To make the country digitally empowered in the field of technology by• The creation of digital infrastructure• Delivery of services digitally• Digital literacy

Start-up India

• To train over 40 crores (400 million) people in India in different skills by 2022.

• To create employability

• To promote start-up ventures • To boost entrepreneurship and encourage start ups• To develop youth specially from backward classes and women • To create employment opportunities


Case Study: Visionary Leaders for Manufacturing Programme (VLFM)

Portfolio of Programmes:

• The Visionary Leaders for Manufacturing Programme was conceived under the guidance of Professor Shoji Shiba, an international expert in Total Quality Management (TQM) and Breakthrough Management and Professor Emeritus of University of Tsukuba in Japan, and Chief Advisor to the Visionary Leaders for Manufacturing Programme (VLFM) in India.

• This programme was designed to develop the human capital required to provide visionary leadership to manufacturing industry in India in order to make it globally competitive.

• VLFM is the flagship national program to develop Leaders in Manufacturing as per the recommendations contained in the National Strategy for Manufacturing (NSM).

• This program is based on a partnership arrangement between IIMC, IITs and CII with NMCC playing a catalytic role.


Case Study: VLFM (Cont..)

Visionary Leaders for Manufacturing : The Key Stakeholders



The Four Opportunities:

On the basis of the Detailed Project Report (DPR) prepared by IIT/IIM, NMCC, CII and JICA, four programs were identified : Opportunity ‘A’: to develop skills of Senior Managers from large and medium companies to

implement contemporary manufacturing management practices – Conducted by CII Opportunity ‘B’: to develop next generation of manufacturing leaders through an one year full time

residential program leading to award of PG Diploma in Management for Executives in Manufacturing (PGPEX-VLM) for middle/junior managers – Conducted jointly by IIMC, IITK & IITM

Opportunity ‘C’: Short duration program (less than a week) designed for CEOs and top level managers to brainstorm and appreciate the need for visionary leadership in manufacturing and how best to utilize the emerging talent created by VLFM programs – Conducted by CII

Opportunity ‘D’: designed for SMEs to enable them to meet growth & globalization requirements and developing into visionary leaders – Conducted by CII.



Logo of the programme

Visionary Leadership for Manufacturing (VLFM) program has been introduced in India under the direct initiative of Government of India, through Ministry of Human Resource and Development (MHRD) and NMCC. A separate LOGO has been assigned, as given here illustrates growth and improvement with the support of 3 major stakeholders; Industry, Government and academia.



Indo-Japan Cooperation Agreement – 2006

• Indo-Japan Cooperation Agreement 2006, signed by Hon’ble Dr. Manmohan Singh, Prime Minister of India and His Excellency Mr. Shinzo Abe, Prime Minister of Japan, in December 2006.

• Government of Japan is actively supporting various initiatives of the Indian academia and industry in the area of manufacturing and design.

• From Japanese side, JICA is playing a key role in implementing the project. • Professor Shoji Shiba, an Individual Deming Prize Winner, is a Member of the NMCC Apex

Committee for VLMP, who is also JICA Advisor for the program. He has also been honoured by the Government of India with the title of Padmasree.

• The existing agreement was extended up to March 2013. A new agreement has been signed by the Government of India and the Government of Japan for a period of three years for a programme named Champions of Societal Manufacturing.



Objectives of PGPEX-VLM (Opportunity ‘B’) jointly conducted by IIMC, IITK & IITM:

• To provide skill based training to transform potential middle-level managers in Indian manufacturing industry into visionary leaders who can provide strategic leadership to their organizations

• To implement principles of manufacturing excellence in organizations• To promote innovation to make Indian manufacturing globally competitive

Launch of PGPEX-VLM

In order to realize these objectives as laid down in the National Strategy for Manufacturing, a 1 year joint IIMC, IITK & IITM Post Graduate Program for Executives for Visionary Leadership in Manufacturing (PGPEX-VLM) started in August 2007 at IIMC. The program was formally launched in New Delhi on 7th May, 2007 by Dr. V. Krishnamurthy, Chairman, NMCC.



Selection Criteria:

• First class graduate engineer with first division in class X & XII School Board Examinations

• Candidates with minimum 5 to maximum 10 years work experience in manufacturing may be considered for admission as self sponsored, sponsored or on study leave

• Candidates with more than 10-years work experience can only be considered as sponsored or on study leave

Main Aspects of the Programme:

• Structured pedagogical approach based on lectures and discussion, cases, role plays and presentations

• Domestic industry visit• Study visit to Japan to study

manufacturing best practices and get acquainted with Japanese culture

• Industry internship

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