By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE | 0 | 0 | June 08, 2012
India’s economy isn’t growing at the speed many experts predicted only a few years ago. One major factor to blame: The country’s manufacturing sector. According to the Washington Post
, India’s economic growth rate slowed to 6.5 percent in the 2011__
2012 fiscal year.
“Many countries would still consider that an impressive performance, but for a country that dreams of emulating China and pulling hundreds of millions of people out of poverty, the slowdown has come as a shock,” writes Simon Denyer. This is India’s slowest growth rate in nine years. Plus, Indian manufacturing grew by just 2.5 percent, actually contracting in the last quarter.
Experts point to a variety of factors hindering Indian manufacturing, including poor infrastructure; unreliable power supply; and, most notably, antiquated land acquisition and labor laws. Farmers’ protests can stall or halt many projects, and strict labor laws make it difficult to fire people__
encouraging more capital-intensive rather than labor-intensive industries.
“In China, manufacturing has been an employment generator, pulling people away from agriculture and out of poverty, while manufacturing exports have earned the country a massive trade surplus,” Denyer writes. “By contrast, Indian employment growth has struggled to keep up with a rapidly expanding population.” In the last decade, unemployment levels appear to have risen and the Indian trade deficit has grown.
Not only do these challenges present barriers for international business leaders contemplating India for facility location, they also impair Indian-run businesses. The article quotes Kumar Mangalam Birla, who has built a $35 billion business that has grown to 33 countries. Two years ago, he was working to build a steel refinery in central India. The government invalidated its own environmental clearances and canceled necessary coal allocation for the project. Birla says: “I would rather make an investment in Brazil than in India today.”
Finding partners in India
Consider the following definition from the APICS Operations Management Body of Knowledge Framework
: “Global and extended supply chains create the need for international partners, especially in developing markets. A global partner may be a supplier of raw materials or components, an intermediary, a customs broker, or a retailing partner. Laws and regulations specific to a country may dictate how a global partner may enter the marketplace. Partnering usually is an indication of a long-term commitment based on mutual trust and a shared vision.”
India’s laws and regulations cripple manufacturing in the country, and illustrate why decision makers need to contemplate a variety of factors, including government, in this increasingly complex global economy. As supply chain and operations management professionals, it falls on you to facilitate strong supply chain partner choices and ongoing relationships. For that, you need to be informed.
APICS can help you by providing a variety of tools and opportunities to develop your supply chain expertise. One such opportunity is the 2012 APICS International Conference & Expo
, October 14-16, in Denver, Colorado. It features educational sessions on a wide range of topics, including risk management. For example, during “Globalization: A World of Opportunities,” Louis R. Ferretti will help attendees make the most of global sourcing and learn about the tools and processes that can enable the greatest benefits, while uncovering and managing risk.
If your company leaders are considering doing business in India__
or anywhere else__
you need to be knowledgeable, and APICS 2012 will give you expertise you can put to work immediately. Idea exchange
In other news
Now, you can take the APICS Operations Management Now discussion to your social networks on LinkedIn, Facebook, Twitter, and the APICS Supply Chain Channel. Be sure to use the hashtag #OMNow and include @Tweet_APICS in any tweets to have your words featured on the APICS homepage.
- What are some of the factors that can create challenges for India’s manufacturing sector? What are some of India’s greatest strengths in this area?
- Are there any instances where government policies and regulations interfere with your ability to manage your supply chain? What strategies do you employ to deal with this?
- Do you have global partners as well as local? If so, what does it take to manage supply relationships across long distances?
Related APICS education
Supply Chain Risk Management Seminar
Here or There?
By John P. Collins, CFPIM, CSCP, and Eric P. Jack, PhD, CFPIM, CSCP
May/June 2012, APICS magazine
APICS is pleased to offer the Supply Chain Risk Management Seminar, which provides participants with a glimpse of the global supply chain risk landscape. Definitions of risk management and new techniques and tactics to mitigate risk will be discussed along with profiles of early adopters of risk management. This seminar is lead by Greg Schlegel, CPIM, Adjunct Professor, Supply Chain Risk Management, Lehigh University.
Thursday, June 21, 2012 from 8:00 a.m. to 4:00 p.m. CT
In partnership with the APICS Ontario Grand Valley chapter
Holiday Inn Cambridge - Hespeler Galt
200 Holiday Inn Drive
Cambridge, ON N3C 1Z4