Management Cover

Opening the doors for discrete manufacturing

Manufacturers who are part of the larger supply chain of an OEM or Tier-1 supplier are leveraging the power of enterprise application software to bolster their component export business, says Abhinav Singh

Many discrete manufacturing companies are eyeing exports to boost their topline revenues. These export-oriented companies supply automotive components and machinery to global OEMs. Faster time-to-market and reduced product lifecycles are putting pressure on discrete manufacturers to connect with the product development and manufacturing processes of global OEMs.

Booming exports

Savour this. Bharat Forge (BF) is a leading exporter of auto components and earns Rs 333 crore from exports. BF is targeting the global passenger car and heavy-duty diesel engine crankshaft markets. About 25 percent of Sundram Fasteners’ production is exported; this is expected to double to 50 percent in the near future. Both Triveni Turbine (a turbine manufacturer for the power sector) and Sansera Engineering (an auto ancillary manufacturer) get around 10 percent of their revenues from exports. Yuken India, a manufacturer of hydraulic pumps and valves, earns three percent of its revenues from exports, but there are plans to take this figure to 30 percent within the next five years.

A seismic shift

According to ACMA (Automotive Component Manufacturers Association), auto component exports have already crossed the $ 1 billion mark in 2003, showing a growth of 30 percent. ACMA points out that there has been a remarkable shift in the nature of exports: from what was predominantly oriented towards aftermarkets aggregating almost 70 percent five years ago, 70 percent of today’s exports are to OEMs/Tier-1s. This change has demonstrated the maturity level attained by Indian discrete manufacturers, especially in the automotive segment, in recent years.

Enterprise apps a must

The recent upsurge of global outsourcing to the Indian auto component industry shows that overseas buyers are now looking at India for its high-quality design and production at a lower cost. At the same time, smaller Indian auto component manufacturers need to scale up their manufacturing capabilities before they can procure new business and meet the demands of global OEMs. Both enterprise applications as well as CAD, CAM and PLM solutions can play a significant role in this process.

Bangalore-based Sansera Engineering is leveraging the power of IT and is using AutoCAD, Autodesk Inventor and Wrench (PLM software) for designing products. The company has been supplying gear shifter forks to Yamaha Indonesia for over three years now, and it hasn’t witnessed a single day of delay in supplying these forks. Says F R Singhvi, the company’s director, commercial, “Through the usage of enterprise applications and CAD-CAM solutions, we have been successful in maintaining consistency in the quality of the shifter forks supplied to Yamaha Indonesia. Seeing our success in meeting their OEM requirements, we have received orders from Yamaha in Brazil and Italy recently.”

A better system

Enterprise applications have helped discrete manufacturers plan, monitor and rapidly develop components for the export market. Explains Narayan Rao, vice-president, operations, Yuken India, “Enterprise applications have helped in the seamless flow of data on production and quality to respond to market requirements. This in turn has led to an improvement in the quality of products and has reduced costs. It has helped us remain competitive in our export efforts.”

Enterprise applications are also helping discrete manufacturing companies such as Triveni Turbine (which is part of Triveni Engineering & Industries) to better monitor its production projects and calculate the cost incurred for new product development (NPD). The company, which manufactures turbines for the power sector, many of them for the export market, has been able to analyse the complete execution cost of a project before it commences. Says Rajiv Jain, the company’s deputy general manager in charge of operations, “Every turbine we manufacture differs in shape, size and capacity, takes an average of 8-9 months to manufacture, and has to adhere to the specifications of the customer. With the help of enterprise applications we are able to fix the likely cost of a project. This has also helped us keep our inventory low. We have better control over the cost of the raw materials, and plan production better.”

Faster design cycles

Discrete manufacturing firms are using CAD-CAM tools to simulate their product designs and speed up manufacturing. Sansera is using AutoCAD and Wrench to build sample products and present the same to its customers. With the efficient use of CAD-CAM tools, the company makes further samples on the basis of customer feedback. As a result, hardly any of the final products are rejected. Singhvi says, “Before we started using CAD-CAM tools, we used to physically prepare product samples without simulating them. Due to the manual processes involved, a lot of our samples, which were prone to error, used to be rejected by our customers. This resulted in the loss of time, effort which used to take at least three months, plus costs associated with it. With CAD-CAM tools we are able to bring out a product sample within 21 days, and have been able to churn out accurate samples which are usually accepted by our customers in one go.”

Yuken India has also leveraged the power of CAD-CAM and trimmed design cycles. With these tools it is able to analyse customer feedback and field complaint data to build improvements into its new designs. The company has digitised all its existing designs, and is now planning to move to 3D design software, namely, Pro/Engineer from PTC. Rao notes the change, “The design cycles have reduced through better collaboration and workflow. We have been able to reduce the cycle time by almost 30 percent.” Faster cycles have resulted in improvement in teamwork due to better collaboration.

Better customer service

Enterprise applications are also helping discrete manufacturers serve their customers better as they streamline post-sales service. Jain says, “Enterprise applications maintain a record of every turbine sold to a customer; this helps us track the history of a product, so our engineers can service a customer better as they know the complete background of the product.”

The adoption of enterprise applications at Yuken has speeded up the order cycle process from enquiry to dispatch, and has helped improve customer satisfaction by reducing errors. Before Yuken started using an ERP solution, its average billing as a result of product despatch used to work out to an average of Rs 5 lakh per day for two shifts with four persons working in product shipment. The process typically resulted in 15-20 invoices being generated. Today by using enterprise applications, Yuken has succeeded in increasing its average billing to Rs 20 lakh per day in one shift without changing the manpower, and it is now generating over 100 invoices per day.

Adds Rao, “Prior to adopting enterprise applications, orders had to be sent on paper or via fax from our zonal offices to our head office for making an order acceptance, and the typical cycle was about 10 days. Today, an order is entered by our sales engineer in our zonal office, transmitted electronically to our head office, and the order acceptance is generated the same day or the next at the very latest. Information about the order is also available to the manufacturing department on an immediate basis.”

More investments

Many discrete manufacturers have plans to invest further in enterprise applications in the near future, or they will go in for add-ons. Yuken plans to go in for a Tier-1 ERP solution. Rao explains the rationale, “We realise that our company is growing beyond the native ERP that we have been using so far, which we have developed and implemented over the last few years. We are seriously considering a Tier-1 ERP solution such as SAP or Baan, and want to evaluate these and finalise on one of them in the next few months.” Similarly, Triveni also has plans to go in for a CRM solution, and is thinking of implementing an SCM solution during the next one year. It also plans to implement a PLM solution shortly.

The auto component industry could grow to about $ 20-25 billion in exports by 2015, according to a Vision 2015 industry study prepared by McKinsey. The recent spate of global outsourcing to the industry shows that overseas buyers now look to the sector for its high quality and low cost. To tap this potential fully, Indian manufacturers will need enterprise applications.

abhinav@expresscomputeronline.com