'Over 400 suppliers in India have benefited from ACMA's ACT initiative.'

Srivats Ram, chairman of ACMA Centre for Technology, speaks to Shobha Mathur on providing expert guidance to ACMA members by improving their manufacturing competitiveness, enhancing quality, productivity and profitability.

ACMA’s Centre for Technology (ACT) has been around for over 12 years now. What have been its key highlights and successes?
The ACMA Centre for Technology was set up 13 years ago during the tenure of the past president K Mahesh along with C Narsimhan, the chief mentor of ACT. They put together a programme that incorporates some of the best practices of Japanese and global manufacturing. Their approach was to form clusters and take them through the best practices so that over a one- or two-year period there would be a significant transformation in the companies, both in terms of the shopfloor, costs and performance.
Over the past 13 years, we have covered 419 plants with various ACT programmes. We have the ACT base level Foundation Cluster, then the Advanced Manufacturing Cluster and finally an Engineering Cluster, which is a tierised system for manufacturing.
While this works well for larger companies, for smaller companies – small and medium enterprises (SMEs) – we have over the past two years been trying to target clusters of automotive manufacturing, at small companies and look at improving them. It is something that is required and the benefits that companies have got by participating in this are significant.

How has ACT helped Tier 1 and Tier 2 suppliers collaborate and also improve their work efficiencies and cost competitiveness?
On an average, the returns that companies get from participating with ACT are usually within months and typically within six months they get their money back. ACT also works along with organisations like The Association for Overseas Technical Scholarship (AOTS) of Japan and The Overseas Human Resources and Industry Development Association (HIDA) and organises training programmes on various issues that the auto industry demands namely lean machine and production management. A two-day introductory program is held in India while the course completion happens with a 15-day residential program in Japan. We now have AOTS-ACT with a lot of Japanese-related interventions and manufacturing interventions. Six sigma tools have also been used a lot in the past 13 years and lastly besides the cluster and manufacturing improvement we have also worked along with our members at harmonising automotive standards – Automotive Industry Standards, Central Motor Vehicle Rules, Bureau of Indian Standards, World Forum for Harmonisation of Vehicle Regulations (WP29) – which we then proposed to the ministry and the government to implement. There is a standards-related part and a clusters-related part. While the clusters part is more improvement, consultancy, guiding our members, taking them along and bringing about savings, the second one involves arriving at standards which are then incorporated by industry in the country.

How do you keep a tab on how successfully the training is being implemented in real-world situations?
We have monthly review meetings over the course of a two-year programme by each cluster member, wherein they show what they have done and other members will also have to make presentations. So there is a frequent monthly review mechanism where performance is evaluated.
Where there are shortcomings, we try to give them additional assistance. Tier 2s have been a relatively recent focus; over the past three years, we have had numerous occasions where OEMs (cars, trucks and two-wheelers) have told us that Tier 2s are a cause for concern and we need to work along with them. We have done that, worked with our members to identify their Tier 2 suppliers and have run a number of programmes for them. Since 2012, maybe about 40-50 percent would have been Tier 2s and smaller companies.

What about SMEs? How is ACT helping them grow and also innovate?
For the SMEs, it is more a case of sustenance which means bringing in systems, practices and standards. Once they see the benefit of doing business, they continue with it. We are now providing members an opportunity – after the consulting period, they share the metrics with us about six months down the road. It is just not possible for us to continuously monitor all 419 companies but we are looking at giving them some kind of guidance after the engagement period.

How many clusters does ACT have in India and which, in your opinion, are the most dynamic?
We have completed about 25 clusters, typically of 10 or more companies. Currently we are running 10 clusters and the engagement has increased in recent times because we have also brought in a new engineering cluster which looks at very advanced manufacturing.
C Narsimhan, our chief mentor, has introduced a manufacturing system called the Indian production system. With his guidance and his curriculum we have come up with the engineering cluster which is even more advanced and a very innovative way of manufacturing engineering. We have completed one cluster and the second one is running.
We constantly innovate and bring about new programmes and update existing ones. As we are looking at new product development clusters, there is a lot of scope for broadening the bandwidth of clusters and improvement-related projects with our members. At the same time, there is increased opportunity for us to get into smaller companies that need our help. In the past two years, we have been focusing on improving the competitiveness of smaller companies so that they can reduce costs in which they have had moderate success. The challenge for small companies is that they also need some management. Very often it is a one-man show – a challenge but we have had reasonable success. We have also had cluster programmes run along with United Nations Industrial Development Organisation (UNIDO), some of them are also working with the Heavy Industries Ministry and are also trying to work with MSMEs so that we can make it affordable for our members.

Are OEMs in India actively working with suppliers to improve component quality and also productivity? Can you cite some recent examples? And across which vehicle segments has such collaboration been the maximum?
There have been occasions where we have worked along with OEMs in specific projects like quality but we like to work directly with the company because when it puts in money, it is serious about the program. We have worked with the larger Tier 1 companies like Bosch which have their own Tier 2s and have done a number of programmes with them.
Similarly, with larger groups like TVS and Rane, the Tier 1 is instrumental in bringing them. We work with ACMA members or Tier 2s directly, second with Tier 1s and through them Tier 2s, and finally with OEMs who have very small suppliers. The fees for the programmes depend on the type of cluster and the scale of the company. The foundation course is less expensive. The curriculum is drawn by the ACT chairman, the chief mentor and the head of clusters who brainstorm on the type of programme we should have. We conduct seminars and conferences for counsellors and tell them about the changes we want in the curriculum and based on a member’s feedback, we strengthen our programmes according to advances in industry. New product development (NPD) has been initiated with feedback from customers who spoke of teething issues and defects cropping up when new products are launched, so we decided to strengthen NPD. Once a year we review and work out a plan.

With the auto industry aggressively looking to reduce overall vehicle weight, component light \weighting has become critical. How is ACT driving awareness on this issue?
Our expertise in ACT is two-fold – one involves work on arriving at harmonising of standards which are then proposed to the Indian Standards Institute to come up with standards for the auto components group and systems in the automotive vehicle area. The second is manufacturing consultancy; lightweighting is more of design consulting. We had conducted programmes with Fraunhofer Institute as well as collective workshops. Subsequently, OEMs have taken it up. So it is more of organising workshops while actual design work is taken up externally. More facilitation is what we have taken up.

What is your 5-point agenda to make the Indian auto component industry world-class?
At ACT, we would like to widen our net and increase the membership. We would like more component companies in the auto sector to recover and we are undertaking studies to understand how many of our members have not used ACT and how do we address them. Can we use the cluster approach to also bring non-ACMA members into the ACMA fold?
We want to ensure that manufacturing programmes are updated and want to add new programmes based on customer needs. The NPD programme is based on customer and industry needs which keep evolving, so we need to ensure that our programmes match them.
If we cover enough companies, it improves the capability of the industry which in turn improves the competitiveness and profitability of our members and will bring in more business for the industry as a whole. Standards ensure that safety is a focus; for instance, on ABS, we are working with the authorities and strengthening smaller companies like Tier 3s and Tier 2s. The proof of the pudding is that in 13 years we have reached 419 companies and will complete 50 clusters in the next three years.

What are the challenges perceived by ACT?
Bringing in smaller companies into the fold as they are owner-operated. There is a challenge working along with UNIDO and bringing down the cost of the company, marketing ourselves better and the need to go to regions and market our capability.