Volatility has impacted organisations of all sizes, across all major industries but most significantly the MSMEs. The industry is under constant pressure from what is termed as VUCA forces, i.e. Volatility, Uncertainty, Complexity and Ambiguity, which continue to characterise the business environment.
VUCA has affected the market such that there is a slowdown coupled with other adversities in macro-economic factors that have created negative sentiments in the industry. However, every cloud has a silver lining and this holds true for the Auto industry as well.
In light of above, ACMA with the Ministry of Micro, Small & Medium Enterprises jointly organised 3rd MSME summit in New Delhi on March 21st 2013. mr Ajay Shankar, Member Secretary of National Manufacturing Competitiveness Council inaugurated the summit, with Mr N K Maini, Deputy MD of SIDBI as the Guest of Honour and Mr Sudam Maitra, COO (Supply Chain) of Maruti Suzuki India Limited as the Keynote Speaker.
The summit was organised to assess the current business scenario and how component manufacturers, especially the small and medium enterprises can harness this challenging environment to their benefit. Mr N K Maini, redefined VUCA as Vision, Understanding, Communication and Agility and urged the industry to strategize such that the adversity turns into an advantage.
During his inaugural address Mr Shankar, referring to volatility as intrinsic to human civilisation said that “While we have seen growth come to a standstill due to uncertainty and lack of confidence, the challenges for the future are equally daunting. Lack of availability of power, poor managerial bandwidth and low return on investments add to the challenge of unutilised capacity, especially for small Tier 2 and Tier 3 manufacturers. The industry has a lot more ground to cover and become cost competitive, while the Government needs to ensure a dependable and competitive ecosystem and infrastructure, the industry needs to focus on internal efficiencies and opportunities other than the conventional to keep their heads above water.”
At the event Mr Sudam Maitra, referred to VUCA as the ‘New Normal’. To mitigate volatility, MSMEs must strategically design a long term road map, have effective financial planning, prudently manage manpower, work smarter & leaner and focus on limited dedicated yet diversified customers without any compromise on quality. It is imperative that for the auto component industry to be globally competitive, the Tier-1s must hand hold Tier -2/3s to build their capabilities including technology and skilling of personnel.
Further, it is critical that the industry explores tools and best practices such as diversification to newer segments, globalisation, technology absorption, hedging forex, effective cash-flow management and continually innovate, along with working on concepts such as Practical Improvement in Sales and Marketing, improvising quality through innovation, better inventory management, re-examining suppliers credit processes and exploring external markets for increasing business returns to mitigate volatility.
On the occasion Mr Ramesh Suri, Vice President of ACMA said that “The purpose of this summit was to understand the dynamics of the Indian automotive market with focus on MSMEs, the factors affecting their de-growth and what could be the possible strategies to manage the volatility in the industry. The industry and the government will need to collaborate in helping companies manage the challenges especially handholding the Tier 2/3s, the weakest link in the entire automotive value chain”.
At the plenary sessions, the discussions revolved around the need for the auto component manufacturers to be innovative and being able to create higher value addition.
Source – Strategic Research Institute, Steel Guru
<source : http://www.steelguru.com/indian_news/Volatility_a_new_lesson_for_Indian_auto_sector_ACMA/335643.html>
