Before going for Manufacturing as service, lets see where manufacturing sector is in India?
In India, the manufacturing sector contributes about 17% of India’s GDP. This is increasing YOY with positive steps has been taken to improve the manufacturing sector’s contribution. The share of the formal MSME sector contributes around 40% of India’s GDP. Out of which 31% is contributed by the Manufacturing Sector itself.
There are government initiatives like startup India, Make in India, Made in India, etc which are boosting India’s manufacturing sector.
Although manufacturers are becoming organized, there are a large number of enterprises which are still very informal and unorganized. They don’t have plans for growth and marketing of the enterprises. They are working in similar fashion from last generation, there is very little improvement in their standard of living and working culture.
Most of the enterprise owners are self employed. There is a gap between the customer needs and manufacturers quality and delivery time. In this digital era customers still find it difficult to get the perfect vendor for their manufacturing needs. There is a long process of quotation to delivery of the parts or product.
The problems associated with the Indian manufacturing sector, mainly micro and small enterprises are explained below. And also the solutions to it are mentioned below.
Current Scenario in the Manufacturing Industry:
How does the Indian manufacturing sector work?
India has a potential to export goods worth $1 Trillion by 2030. It is moving towards becoming the manufacturing hub of the world. It has tremendous potential to grow because of government support and the largest working population in the world. From 15% of GDP contribution by the manufacturing sector to 25% GDP contribution in GDP by 2025. Government is planning to improve the manufacturing sector.
There is still a lot to change in the manufacturing sector. Most MSMEs are working in unorganized fashion and not improving their working style, not thinking about the growth of the enterprises. This may be because of the lack of business education, lack of customers, may be lack of required technical skills or may be lack of financial support form banks or government.There can be many reasons that they are not growing their business.
Problem for customers in traditional manufacturing process.
Typically in any micro or small enterprise there is an owner who is working day and night with very few employees. They don’t have enough funds and customers to hire more employees.
If customers reach their shop with some requirements in manufacturing then they will take a long time to give estimates. There are no standards in calculating the estimated amount. If customers go to similar enterprises for the quotation then there is so much difference in the quotation amount. If there is a small difference in the amount then that can be understood but sometimes it has a huge difference. So the customer gets confused when giving orders to the right vendor and because of the confusion. He chooses the wrong vendor for the wrong work.
After taking so much effort in the vendor development process, the customer still suffers to get the required job done, because vendors take so much time to manufacture the parts, don’t give proper response, and do not receive calls. There is so much delay in the manufacturing process. But after taking a lot of time they end up getting less quality work and customers get unsatisfied.
This is a huge problem in the manufacturing sector that most of the innovators, researchers, small companies and startups are facing in the manufacturing and product development process.
What are the problems in the manufacturing sector?
Problem in finding the right vendor for the manufacturing work:
There are some businesses on the digital platforms, despite being in the digital platform, most of the people are inactive on the digital platform. Some enterprises don’t understand the use of the platform or some don’t have the time to use it for the growth of the enterprises. Some enterprises hire or get some external agencies to market on their behalf but due to some poor services given by those agencies. These enterprises think that this will not work for me or this is some kind of fraud scheme to earn money. So, they discontinue their service. And end up from where they started. And miss up an opportunity for work from unknown customers.
So because of these issues the customer finds it difficult to find the vendor.
Delayed quotation generation process:
When customers ask for the quotation to companies then they take so much time to give the quotation due to they are too busy in their day to day operations, they don’t have special employees to prepare quotations, they don’t have a system to generate fast quotations, etc. These are some main reasons for the delay in the quotation.
Huge differences in the quotation of the same types of vendors:
Due to the lack of the systems in the quotation generation process, vendors end up making quotations based on the experience and some predictions. Because there is no standard presence in the industry, customers end up getting quotations which are having too many differences. Customers get confused due to the differences in the amount.
Most of the quotations are delivered orally or by text message because of the lack of system and lack of digital skill of the vendors.
Because of these issues customers have shown less interest in the work or sometimes they don’t give orders even when vendors are capable of delivering goods and services.
Delay in manufacturing process:
This is a huge problem in the manufacturing sector. Most of the work is being delayed because of a number of reasons. Firstly, delay in the material purchase process. Maybe there is no availability of required materials. Or because of the long negotiations there is delay in the procurement process. Secondly, lack of workload management, there is no management of workload or no priority matrix while manufacturing goods. Thirdly, employee problems, if there is employee absent of the vendor then there is
Sometimes fails to deliver the required quality work:
If a customer fails to choose the right vendor then there is a higher possibility of poor quality work. There are other factors that also impact the quality of goods produced. Quality of machines used, Skill and knowledge of the operator, Frequent quality checks, quality of raw materials, defects occurring during improper ways of transportation, etc.
Poor customer support during and after the manufacturing process:
Not giving the right information about the goods produced to the customer is the major reason for spoiling customer relationships. Vendors often do that, they do not pick up calls, do not respond to an email, and give excuses to the delays. After sales service is also a major issue in the small scale business. They do not give any guarantee or warranty of the goods produced. And even they try not to give any maintenance service after sales.
Lack of business education, marketing, finance and digital skills to grow the business:
The business of vendors is doing business from generations so that they have lots of personal contacts and they have their name in the local market. So that they don’t do marketing and they think they do not need any education in business because they think they know all of their business.
Because of the lack of financial management 99% of businesses fail, and go bankrupt. This is the global average of failure. Main reason for business failure is lack of financial management.
Lack of awareness of the digital tools to grow the business is also one factor of the small business not growing or they become limited to the local area.
Government policies to grow the manufacturing sector:
- The main policies of the government of India to grow manufacturing in India are “Make in India” and “Atmanirbhar Bharat(Self Reliant India Campaign)” initiatives. These two are the major policies to bring change in the manufacturing sector.
- The Indian Government is also running numerous schemes to grow our MSME sector. The Emergency Credit Line Guarantee Scheme (ECLGS) has delivered additional credit to more than 130 lakh MSMEs. INR 2 lakh crore additional credit for Micro and Small Enterprises to be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE). Raising and Accelerating MSME performance (RAMP) programme with an outlay of Rs 6,000 crore to be rolled out.
- Udyam, e-Shram, National Career Service (NCS) and AtmaNirbhar Skilled Employee Employer Mapping (ASEEM) portals will be interlinked.
- Prime Minister Employment Generation Programme(PMEGP): The scheme aims at providing financial assistance to self-employment ventures, in order to generate sustainable employment opportunities for unemployed youth and traditional artisans in rural and urban areas.
- 2nd load for up-gradation of the existing PMEGP/MUDRA unit.
- Micro and small enterprises cluster development programme (MSE-CDP)
- There will be a separate blog on government schemes because this is a very vast topic to be covered.
Manufacturing Service (MaaS): Business Model
Manufacturing as a Service (MaaS) is not exactly like SaaS. It is used to manufacture parts and machines using contract manufacturers or vendors. This business model is introduced because of some current problems in the manufacturing industry faced by the customer and also small manufacturers as discussed earlier.
Now we are going to discuss the solutions which are offered by this business model to current problems.
How Manufacturing Service (MaaS) giving solutions to current problems in the manufacturing sector?
One stop solution for all types of manufacturing:
Customers don’t have to search for a number of vendors for their job/work. They only have to ask for quotations for their work. And they don’t have to go to another supplier. Manufacturing Service (MaaS) providers have a large vendor base to manufacture almost everything. They have proper systems to generate fast quotations. They have optimized all the manufacturing processes to give faster services.
No need of vendor development and vendor management:
As MaaS providers have a huge number of verified vendors so customers don’t need to go anywhere else. They have optimized all the vendor management processes according to the types of manufacturing process and quality of their work. Also customers do not need to follow up to numbers of vendors, they only have to ask a MaaS provider about the progress of work.
Parallel Manufacturing:
If there is part which is going to be manufactured but one vendor does not have that much capacity to produce it single handedly. In that case Manufacturing Service (MaaS) providers spread out the work between the same types of vendors. So that there is no wastage of time and resources. So that there is faster manufacturing and can deliver the parts in real quick time.
AI generated quotations:
The Manufacturing Service (MaaS) provider uses AI and ML based tools to provide faster quotation. So that customers can make manufacturing decisions faster. Customers have to provide a drawing of the part to be manufactured, then the tool will decide the types of process to be used, costing of the manufacturing and the best vendor to manufacture the part. Some information they keep for themselves and some information like cost, time and other terms and conditions are told to customers.
Saves Investment in machinery and Manpower:
Sometimes customers want to manufacture the parts by themselves, in that case they need to have machinery. The machinery comes with costs like purchasing, workshop rents, manpower, and other miscellaneous costs. If they outsource their manufacturing to MaaS providers then they can save their huge investment in Machinery as well as manpower. Customers sometimes outsource the work from various vendors but they need a team of designers, vendor development and management person, production engineers, etc. But if they work with Manufacturing Service (MaaS) then they do not need any of them or they will need very few people to handle this work.
Benefits to vendors:
Vendors can have continuous work as Manufacturing Service (MaaS) providers have a large number of customers. Vendors can also benefit from the expert team of MaaS providers in their marketing, digitization of business and to set up the quality standards in vendors’ workshops.
Conclusion (Manufacturing service):
There are still lots of problems in the manufacturing industry. Mainly to customers who are home innovators, startups, and small businesses. There is poor customer support for this type of vendor as they don’t have a very large quantity of goods to be manufactured. As there are many government schemes to help the MSME sectors to grow but they are not addressing the real business problems to solve. But Manufacturing as a Service provider can address this issue and solve problems of the customers. This will benefit both customers and vendors. There is a huge requirement for manufacturing in the market. As the government is supporting the manufacturers by the Make In India and AtmaNirbhar Bharat Initiatives.
FAQ :
Q: What is the current contribution of the manufacturing sector to India’s GDP?
A: The manufacturing sector currently contributes about 17% to India’s GDP.
Q: What are some government initiatives to boost the manufacturing sector in India?
A: Initiatives like Startup India, Make in India, and Made in India are aimed at boosting India’s manufacturing sector.
Q: What are some common problems in the Indian manufacturing sector?
A: Problems include finding the right vendor, delays in the quotation process, significant differences in quotation amounts, delays in the manufacturing process, issues with quality work, and poor customer support.
Q: How does Manufacturing as a Service (MaaS) address the problems in the manufacturing sector?
A: MaaS provides a one-stop solution for manufacturing, eliminates the need for vendor development and management, allows for parallel manufacturing, uses AI-generated quotations, saves investment in machinery and manpower, and benefits vendors by providing continuous work and support.
Q: How can MaaS benefit customers and vendors?
A: MaaS can benefit customers by providing faster manufacturing solutions, saving costs on machinery and manpower, and offering expert support. Vendors can benefit from continuous work and support in marketing, digitization, and setting quality standards.
Q: What government policies support the growth of the manufacturing sector in India?
A: The government of India has policies like Make in India and Atmanirbhar Bharat (Self Reliant India Campaign) to promote the manufacturing sector. They also run schemes like the Emergency Credit Line Guarantee Scheme (ECLGS) and the Prime Minister Employment Generation Programme (PMEGP) to support MSMEs.
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