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Indian Auto Component Units set For High Growth Print E-mail
Written by Arjun   
Wednesday, 26 September 2007


The Indian auto component industry has enhanced its productivity and achieved substantial improvement in quality as a result of the UNIDO Partnership Programme for the Indian Auto Component Industry, which is now in the third phase of implementation since its launch eight years ago, according to an Impact Assessment of the Programme by Price Waterhouse Coopers. 

 “ The partnership programme enhanced the business performance as well as the operational performance of targeted domestic small and medium enterprises (SMEs). 15 of the 30 firms (for which data was available for the phase II of the programme which began in 2002), showed growth rates that beat the industry growth rate of 62 %”, the study says.

The programme, which is a partnership between the United Nations Industrial Development Organization (UNIDO), the Government of India and the Automotive Component Manufacturers Association of India (ACMA), was in recognition of the need for the Indian auto components industry to not only become globally competitive by adopting global best practices in their own operations as the sector gradually opened up to foreign competition, but also to vertically extend such practices to their sub-suppliers. Around 20 companies participated in the first phase in the western region; 40 companies in phase 11 and 58 companies in the current phase III of the programme at the national level. It aimed at strengthening the SME auto component suppliers to meet the requirements of automobile manufacturers and their first tier suppliers, and enhancing productivity and overall performance to enable their inclusion in the domestic as well as global supply chains.

Referring to business performance in terms of productivity, quality, delivery, safety and cost, the study states that existing customers have placed additional orders, and firms have also acquired new customers in the course of the programme. “As per representatives of many participant firms, the interventions transformed the look and feel of their shop floors to such an extent that customers who would otherwise not be inspired to place an order with them felt confident that the firm could deliver to expectation. The programme has helped firms to enhance labour productivity and these enhancements have come about as a result of a combination of training interventions. Firms have also been awarded quality certifications over the course of the programme (ISO 9001, QS 9000, ISO 14000), many of which were (due to) training interventions.

The programme has helped firms to plan better to meet delivery schedules. About 50 % of the firms have shown a percentage increase in inventory turnover ratio (ITR) of 95 %, while Kaizen activities have helped firms achieve cost savings”, the study reveals.

The study has also underlined the importance of expanding the outreach of the programme so as to upgrade the competitiveness of an increasing number of target companies in India as well as the need to ensure sustainability of the programme by building a pool of well-trained national engineers.

“Going forward, the UNIDO partnership programme would do well to provide firms with inputs specific to enable firms to further enhance performance to hasten their inclusion in the global supply chain. This could include supporting firms to achieve the ISO/TS 16949 standard since it is essential to securing global automotive business. There is also a need to take these interventions beyond the realm of operations, to enabling firms to establish appropriate management frameworks. The programme could also work towards sensitizing manufacturers to disciplines relevant to international business activities such as the impact on industry of the WTO, international trade operations, export documentation, financial risk management etc”.

Under its new /Integrated Programme of Cooperation 2007-2012/ currently under review by Government of India, UNIDO plans to develop turnkey training packages for manufacturing enterprises building on the core expertise in quality and productivity management honed through the partnership with ACMA, but also integrating other dimensions such as cleaner production, energy efficiency and occupational health and safety in a holistic approach of sustainable industrial development.

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