- Nokia's factory in Chennai produces 1 million handsets per month with 1200 operators. AMUL has 12 plants working with 11,962 village societies and 2.5 million farmers, collecting 6.3 million litres of milk daily. ORPAT's factory in Morbi produces 5000 wall clocks per day with more than 4000 operators. - Daiso has 2400 retail stores adding 30 per month with sales of $3 billion across 15 countries and variety of 70,000 items per outlet priced at 100 yen or less. - The textile supply chain in Gujarat has manufacturing cycle times ranging from 12 to 49 days for different processes while delivery lead times range from 25 to 49 days.

1. Returning Competition to the
Factory Floor
Pankaj Chandra
Indian Institute of Management
Ahmedabad
ICRIER’s Silver Jubilee Conference, November 6-7, 2006

2. Large Volume Operations
• Nokia’s factory Chennai
• AMUL’s operations in Gujarat
• ORPAT’s factory in Morbi
• Daiso’s 100 Yen retail outlets in Japan

3. • NOKIA’s Factory in Chennai
– 1 million handsets per month
– 1200 operators
• AMUL (GCMMF)
– 12 plants
– 11, 962 Village Societies, 2.5 million farmers
– Daily Milk collection: 6.3 million litres per day
•Mehsana: 1.342 million litres per day
– Sales Turnover: Rs 3773.6 crores

4. • ORPAT’s factory at Morbi
– 5000 wall clocks per day
– More than 4000 operators
– Sales turnover: Rs 300 crores
• DAISO’s 100 Yen Retail Stores
– 2400 retails stores; 30 stores per month
– Sales turnover: US$ 3bn.
– 380 stores outside Japan in 15 countries
– 10th
fastest growing company in global retail industry
– Variety: 70,000 items per outlet
– All products sell outside Daiso at a price greater than
100Yen !

5. Changing the Frame
• Lead Time
• Skills
• Scale
• Strategy
• Tools of Production

6. The Textile Supply Chain in Gujarat
MCT DLT
Ginning & Pressing 12 25
Spinning 8 38
Weaving 23 40
Processing 11 21
Garmenting 15 49
Customs - 10
Transport (overseas) - 35
** MCT= Manufacturing Cycle Time (days)
DLT = Delivery Lead Time (days)

7. Skills Dilemma
•Indian Textile & Apparel Sector
– Export target US$ 50 bn. by year 2010
– Expected Investment in the Indian Textile
& Apparel sector – Rs. 1400 bn.

8. • Manpower required to run the additional
plant & equipment –
Textile sector: about 70,000 supervisors
and 1.05mn operators
Apparel sector: about 112,000
supervisors and 2.8mn operators in the
apparel sector
(Not to mention auxiliary services &
NATURE OF SKILLS)

9. Scale
• Chinese Capacity Strategy – capacity
leading the demand (credit issue in India?)
• New organizational forms
– TAMA, Tokyo region, Japan
– Wenzhou, Zhejiang Province, China
– Rajkot, Gujarat, India
• Evolution of “coordinating specialist firms”

10. • Formation of “Cluster:” TAMA
Technology Advanced Metropolitan Area
• TAMA Association formed by MITI in
1996
• Includes adjoining areas of Saitama, Tokyo
and Kanagawa prefectures
– Along Route 16 & Ken-O-Do Expressway
– Inland industrial area covering 74
municipalities

11. – Number of workers: 4 million
– Value of shipped goods: $214 billion (1998)
– Total Value add (in Million $): 1,083,883
(Japan), 81,862 (TAMA), 63, 890 (Holland)
– Total Value add($)/worker: 116,447 (TAMA),
110,184 (Japan), 94,970 (USA), 58,260
(Germany)
– TAMA has twice the shipment value of
Silicon Valley

12. Some Performance Indicators
• No. of New Products in the Market in the last 3
years: 22 (against 4 by non-member SMEs)
• % of firms cooperating with research universities: 65
(an increase of 55% over last five years)
• Patents: 62.9% of TAMA firms held patents as opposed
to 29.6% of all SMEs in Japan
• R&D Expenditure/Sales: 5%(PDS),2%(PPS)
• Profit/Sales ratio: 2% for PDS (1% All Japan SME
median)

13. DNA of TAMA
• Linkages between firms: “creation of new technologies, new
products and new businesses by combination of different
technologies and knowledge”
• R&D units of large enterprises (about 15)
• University & Colleges with science, engineering &
management departments (34)
• Product Developing SMEs (about 300)
• Product Processing SMEs (about 16262)
• All are R&D oriented

14. Strategy
• Managerial strategy for large number of
operators on the shop floor or configuring
quick throughput lines
• Role of Small and Large enterprises

15. PRODUCT-PROCESS MATRIX
Project
Job Shop
Batch
Process
Assembly
Line
Continuous
Process
Bidding
Delivery
Product Design
Flexibility
Product-
Differentiation
Flexibility in
Volumes
Price
Availability
Very
Jumbled
Flow
Rigid
Flow
One of
a kind
Low Volume
Many Products
Hig Volume
Few Products

16. Debate on Manufacturing
must Refocus on
• Operational Productivity
• Capabilities - built by individual firms
– manufacturing ability will define success – new
tools of production
– inter-firm linkages (GPNs) will help learn &
reduce risks
– quick throughput lines
• Quality and Quantity of Manpower

17. • New Organizational Forms
• Attract world-class producers of goods
& machinery to setup manufacturing &
R&D facilities in India

18. Thank You!