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Clustering Approach to manufacturing competitiveness is today a popular concept and achieved national significance in India since 2004. This approach focuses on helping manufacturing enterprises particularly the Small and Medium Enterprise sector to become lean and at the same time absorb and implement skills which will lead them to becoming globally competitive manufacturing enterprise.
 The goal of cluster development is to increase competitiveness of small and medium scale enterprises through organised agglomeration human-centred initiatives. This implies that inputs and support services become increasingly space-bound and more closely targeted in such a way that enterprises in an agglomeration are able to tap both internal and external economies. They provide not only an incubator for competitiveness, but also a platform for business alliances. They help enterprises to specialise, attract suppliers and buyers, spread ideas and the capacity to innovate, and most importantly, engender co-operative action through mutual sharing and learning.
In this approach 8-12 companies, mostly small and medium enterprises (SME’s) but at times large enterprises too, come together to learn, share experiences and solve problems. Traditionally the approach has been applied to manufacturing enterprises hailing from the same sector. Examples include auto component sector, light engineering and leather industry. But cross sectoral clusters are known to be as successful.
A cluster is a group of not more than 8-10 companies who agree to follow the discipline of the cluster approach for mutual learning and sharing. The participating companies have a common set of goals spelt out in the key indicators and they undergo an agreed roadmap over a period of 12 months, 18 months or two years.
These companies may come together at the request of a customer or a OEM or could be a group of companies that group together and then approach CII for support.
The CII Clusters access and network with institutions that provide adaptable technology; adequate financing, access or create infrastructure; advance communication; acceptable regulatory and business climate.
CII has been implementing cluster programmes since 1991-92. Counselors and subject experts provide inputs and handholding on quality and productivity management. These include concepts such as Poka Yoke, 5S, 3M, inventory reduction etc.
Cluster members are given common inputs through common training inputs and hand-holding support/counseling. Inputs are based on TQM, TPM and Lean. Energy conservation has been a part of some clusters. Companies meet every month to share & learn from the implementation practices. All members in the cluster progress together. Some key parameters by which progress of cluster members is assessed include getting it right first time, productivity, cost, delivery, sales, safety and total employee involvement. Through mutual sharing and learning, the speed of learning and taking action is increased manifold.
Clusters provide an efficient partnership mechanism for support agencies such as Department of Industry, financial institutions, technology providers and tertiary institutions to link with SMEs and other businesses.
The Industry associations playing an active role in this movement include ACMA, IMTMA and SIAM. Maruti Centre of Excellence has also joined the initiative. Over a period of time, we expect to increase partnership with other associations in the engineering/manufacturing sector.
CII is perhaps the first industry body in the world that has taken on such a leading role in driving a cluster movement to lift the SME base at a national level. CII, through this cluster approach plans to create more and more clusters to create a significant impact at the grass root level.
Why Competitiveness for SMEs is Important :
- Dependence of larger companies on SME varys from 10% to 75% & SMEs are backbone of manufacturing sector.
- SMEs contribute 40 % of manufacturing & also contributes to the exports.
- In case SMEs loose out on the opportunity to improve quality and reduce cost than larger companies cannot remain competitive.
- SME will become customer’s choice once performance is upgraded to world class levels.
Competitiveness
it is the ability of industries & companies to generate high income & employment levels on a sustainable basis while exposed to international competition.
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