Posted on: May 2018
India on the digital phase of its reforms programme is poised to become the third-largest economy of the world by 2030. The Prime Minister points out that the country offers the 3 'Ds' for driving business - democracy, demography and demand. On the human resource front, the country has a tech-savvy and educated population, skilled labour whilst the administrative front is supported by a robust legal and IPR regime.
Clearly India is a destination that investors have had to look at seriously ever since the 1990s reforms were launched. More than a quarter of a century later, Indian manufacturing companies are targeting global markets and are becoming formidable global competitors in several sectors. Many are already amongst the most competitive in their sectors as the world enters the fourth phase of the industrial revolution Industry 4.0.
Essentially, Industry 4.0 is about is transforming economies, jobs and even society itself with the coming together of many physical and digital technologies as they combine “through analytics, artificial intelligence, cognitive technologies, and the Internet of Things (IoT) to create digital enterprises that are both interconnected and capable of more informed decision-making”, says Deloitte1.
Industry 4.0: Building a digital enterprise
Digital enterprises can communicate, analyze, and use data to drive intelligent action in the physical world. In short, this revolution is embedding smart, connected technology not only within organisations but also our daily lives. Thus forward looking companies the world over are talking end-to-end digitisation of their physical assets, essential functions and processes and integrating them into digital ecosystems with their value chain partners. All this is being underpinned by data analytics that is expected to spearhead their innovative spirit and drive efficiency.
The eventual mission is stakeholder delight with a special focus on the customer that companies seek to delight with quality at affordable prices and on time deliveries on the one hand while creating value to its shareholders with bottom line improvements through efficient use of its physical, financial and human resources courtesy use of real-time information.
Use automation systems to control production processes (often referred to as OT or Operational Technology) along with enterprise solutions, such as Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Supplier Relationship Management (SRM), Customer Relationship Management (CRM) and such others bolster the movement towards 4.0. However, this literally deconstructs vertically integrated manufacturing into horizontally integrated chain of collaborative value-added partners and this is expected to be the trend of the future, driven by the Industrial Internet of Things (IIoT) and Services into the manufacturing environment.
The next avatar
The convergence of the information and operational technologies serve emerging business imperatives in terms of stakeholder delight. This is courtesy processes being embedded computing processors, memory storage units, sensors and transmitters that generate data.
According to a report, Varroc, a leading auto component manufacturer, has, under its Industry 4.0 / IIOT initiative connected all its disparate machines seamlessly to create a single data tunnel that collected various parameters in real time, The initiative has helped the company maximise operational efficiencies, productivity, reduce the energy footprints and maximise capacity utilisation.
The International Council for Small Business (ICSB) has come up with some compelling insights into the socio-business environment that ECAs may expect to encounter and the commitments that they may well fulfil in 2018. Some even unknown to themselves.
1) Contributing to sustainability
ECAs are set to meet sustainable development goals (SDGs) as the basic fabric of communities. In India they are contributing to the achievement of SDGs, even without realizing it through their impact on employment creation and poverty alleviation. They deserve to be empowered to achieve more.
The ICSB recommends that ECAs make SDGs a prominent selling point to demonstrate why consumers should buy from them. With greater consumer /industrial buyer consciousness about SDGs, ECAs can earn greater credibility by publicly engaging in the SDG movement.
2) Social entrepreneurship
Realizing that doing good and doing well can co-exist, social entrepreneurship is catching on. The ICSB recommends that ECAs have social entrepreneurship as a standard operating procedure and not a diversion from their core business strategy. Educators, policy-makers, and consultants should educate, encourage and assist ECAs to develop the framework for this new operating model.
3) Increasing formalization
A growing economy needs formalisation and the movement towards growing formalisation of the informal sector is evident in India and this must be incentivised. Threats of penalty do not work but direct financial benefit (loans, government contracts and access to the global marketplace) serves the purpose better. The ICSB recommends that governments propose a set of clear and enticing incentives to encourage informal companies to switch. Until then, it is a missed opportunity for both parties.
4) Growth is easier than ever for ECAs
ECAs can expand their sphere of influence through many more media than before. A website makes one a global firm. Accepting online payments makes one a potential exporter in an era of shrinking impediments to grow even amidst growing competition. The idea is to capitalize on new technologies to build a successful strategy.
The ICSB recommends that firms plan to grow business through smart strategies that leverage today's technology and ease of doing business. "If you do not have a plan, someone else will steal your customers".
5) ECAs will need to adjust to disruptions
The pace of technology change means unforeseen eventsand the ECAs ability to adjust to them will determine their long-term survival and effectiveness. They must plan to handle unexpected disruptions more quickly and creatively. A contingency plan is no longer optional.
6) Humaneness is the key
ECAs are about doing business the human way and "hold a special place in people's hearts because they are as human as we are". Industrialisation, robots and artificial intelligence will continue to stay and grow. Yet, the heart will always yearn for a human touch.
The ICSB recommends that technology be the tool to improve one's operations but the human element be intact because that is what makes ECAs unique and long-lasting. "Treat your employees with dignity and respect and engage your customers with the warmth of a human smile. Humane entrepreneurship is all encompassing"
7) Personalization is the new buzz word
ECAs cannot compete on price or convenience of location as big businesses have discovered how to deliver their products to their clients on the same day and at a lower price but they offer the one-size fits all for many products for mass consumption. ECAs cannot compete at this level.
The ICSB recommends that ECAs brainstorm and develop products and services that are personalised for their customer needs and preferences. The benefits of new technologies like 3D printing and being close to the consumer will allow ECAs to offer new and more attractive options.
8) Attracting new workforce for SMEs
ECAs should seize the opportunity to hire millennials by offering them the stability of a quality job but with the benefits of innovation, encouraging creativity and opportunity to grow. "As millennials are the workforce of the future, they will be able to offer the best skillset, mindset, and productivity to SMEs. Its HIP to work for an SME!"
The ICSB recommends that SMEs identify ways to engage millennials and think about how to offer compelling jobs to attract them.
9) Accessing finance and the new options
ECAs and entrepreneurs have more routes to finance with banks launching new financial products targeted at them. Also, new mediums such as peer-to-peer lending, crowd funding, invoice-factoring and corporate finance are expected to increase rapidly. "Economists also anticipate that new and much unregulated financing options will appear via crypto-currencies.
The ICSB recommends that ECAs begin exploring these new options and understand their risks.
10) Need to protect assets
The value of ECAs lies in their assets ranging from the customer base and know-how, to location, business service, and reputation. These unique assets need to be protected now more than ever before because more threats are coming that no one has ever experienced.
The ICSB recommends that ECAs protect their core assets. "Do not think that because you are an ECA you are not a prime candidate for an attack. Also, own and protect your brand".