Five steps to performance excellence in manufacturing companies

To beat the slowdown blues Indian manufacturers should focus on five key areas to boost performance

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Amidst stalling economic growth Indian manufacturers face an increasing challenge to improve business performance. Drawing on insights from Kanvic's multi-year experience advising Indian manufacturers on performance excellence, we have identified five key areas where companies must focus to beat the slowdown blues.

1. Bring strategic alignment

In order to excel, manufacturing companies need to first set clear goals and ensure the organisation is aligned behind them. This process starts with setting goals based on thorough market analysis and transparent assumptions. Business goals then need to be broken down into Key Performance Indicators (KPIs) across various functions and levels. The organisation must create firm-wide visibility of these goals and create a robust management review system to constantly check whether its actions are aligned with the desired direction.

2. Achieve operational efficiencies

While progress has been made in recent years, Indian manufacturers still lag behind their global peers in key areas of operational efficiency. Companies can take action on this front by identifying gaps in their manufacturing processes and applying lean management principles. Further, they need to bring an intense focus on key operational parameters through precise measurement at every stage of the manufacturing process from raw materials to the finished product. Finally, manufacturing companies need to fully leverage this operational data through advanced analytics to gain real-time insights on operational performance and continually their optimise processes. 

3. Pursue strategic sourcing 

Sourcing remains a largely untapped source of performance improvement for Indian manufacturers. Companies can realise substantial cost savings by shifting sourcing from an operational to a strategic activity. They should start by bringing full visibility of their expenditure by category, department and suppliers. Then they should start the practise of purchasing equipment and consumables on value rather than price by applying tools like Total Cost of Ownership (TCO) to their sourcing practices. In addition, companies can use demand prediction models to anticipate periods of high demand and plan procurement more accurately, which will, in turn, reduce their inventory costs. At the same time, manufacturers can better time their purchases to take advantage of favourable price fluctuations by using price prediction modelling. 

4. Improve sales and channel management

Improving sales and channel management can help manufacturing companies increase sales and customer satisfaction as well as reduce their selling costs. They should begin by updating their customer segmentation according to actual needs and cost-to-serve rather than simple demographic variables like size and industry. The next step is to apply best practises in key account management to ensure the organisation's resources are focused on the most valuable customer segments. Finally, Indian manufacturers need to rapidly digitalise their customer-facing processes to eliminate time-taking manual activities and create a seamless customer experience which will also free up the sale force for new business development.

5. Create a high-performance culture

To achieve sustained performance improvement Indian manufacturing companies require a wholesale cultural shift. First, team capabilities must be built-in problem-solving, analytics, leadership and communication. Next, companies should leverage workshops, mentoring and coaching to bring about the necessary mindset change across the organisation. Finally, HR must play an active role in cultural transformation through reimagining hiring, development and retention processes.   

About the authors

Shiv Sharma is an Associate Prinicipal at Kanvic Consulting in Gurgaon. Ashwani Kumar is a senior consultant at Kanvic.

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