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Growth is not an option, it is an imperative

EM NEWS BUREAU ,  Wednesday, August 24, 2011, 11:54 Hrs  [IST]

Soeb Fatehi.jpg— Soeb Fatehi, President, Control Panel & Switchgear Manufacturers' Association (COSMA)

The control panel and switchgear industry, though an important constituent of the power chain, is often a victim of marginalization. Small and medium enterprises engaged in this business have to work in challenging conditions, many arising out of systemic flaws, says Soeb Fatehi in conversation with Electrical Monitor. Despite all odds, Fatehi notes with confidence that the industry is beginning to turn around with most of the first-generation entrepreneurs realizing that growth is not an option, it is an imperative.

What are the most common challenges faced by small and medium industry members of your trade? Why does the industry tend to get marginalized?
The challenges are many but I will not name the most important. The biggest reasons why SMBs are stressed in working are systemic in nature. There is a pattern that transcends business sectors and regions. If one studies and analyzes the insides of one's business, one will see the pattern clearly. Seeing the pattern is only the first step toward a solution though.

Can you name some systemic deficiencies?
Absence of a business plan and a market development plan, inadequate market intelligence, unclear definition of processes, insufficient management acumen, unplanned human resources management, failure to source and use professional expert advice, shifting focus, lack of understanding of inventory and materials management, poor attention to debt and credit management and insufficiency of financial management to hedge against technology and scale changes. Then there are the location-based challenges stemming from a variety of typical reasons.

You mention human resource-related challenges. Tell us more.
The business (even when relatively mechanized and automated) is essentially manpower intensive. Sourcing the right skills and qualifications required becomes a nightmare when the choice of location for the business has not sufficient considered this.

Remote or less accessible locations do not allow control panel and switchgear manufacturing businesses to succeed because the businesses require a very large number of discrete inputs from multiple sources. The input materials, components and sub-assemblies have large variance in sizes, quantities, costs, frequency of need and sources. The logistics of managing the supply chain becomes extremely cumbersome and expensive for remote locations.

Further, location accessibility becomes important because the business has a large element of customization with no two products being identical. Even after the best of standardization is made for the products, every project of every customer has a different configuration of needs! This requires frequent interaction between sales, design, materials, production and quality functions thus rendering remote working very difficult.

Untitled - 42.jpgThere must be some seasonal or market condition connected challenges too, we feel. What is your view on competition arising from within the industry?
Yes. Some watchers of the industry do list "competition" as one of the challenges; however I believe that any business is bound to be fraught with competition issues. It is natural for an increasing number of players to be attracted to any business with potential for growth. Supply and demand will always rock the market and the most effective learn to survive.

One market specific challenge of importance is the speculative volatility of metal and plastics prices making raw material prediction and planning go haywire on a recurring basis. Sadly this is a factor that we can neither control nor influence; hence we cannot address it as a constraint. However what we can do is build our processes to plan materials better and partially hedge against market volatility by allowing sufficient lead time and controlling quantities of ordering effectively. This requires mature operations skills deployment and precise control on design and consumption. A hint is due here-businesses will do well to remember that they are consumers and not speculators—therefore they may forget their core business at their own peril!

What is the scene on availability of switchgear for panel manufacturers?
Erratic availability of switchgear from large makers is indeed another serious constraint faced by our manufacturers. This results in disruptions in manufacturing lines and supply time failures to end customers. One reason for this is poor forecasting and market planning at the end of the large makers. Another is that large sector switchgear makers depend on imports from different sourcing points for their products and component parts. Instability on global markets, currency fluctuations, shifting demands in other global regions and operational logistics are major contributors to the erratic supplies.

This constraint in the supply chain gets accentuated by paucity of operational planning at the control panel manufacturer's end. There also exists a tendency to be adventurous enough in filling up the order book by making unrealistic delivery commitments.

To end with, do you think this cloud of challenges has a silver lining?
Of course! Every cloud has a silver lining!

Most of the first generation entrepreneurs, constituting a majority of business leaders in our trade, are brave and bold. They take the bull by the horns and rise to every challenge. The common thread running in all of them is that they are people with exceptional multitasking capabilities. They are all business persons willing to learn what it takes in every commercial, technical and operational aspect of their businesses. They are also exceptional risk takers with a strong gut. In many companies a highly qualified second line has emerged from amongst the heirs of the original starters.

Now many of the businesses are realizing that growth is no longer an option and that it is an imperative. Family owned and family-managed businesses are slowly getting transformed into professionally-managed businesses. Business owners are seriously setting their succession plans.

Soon we shall see a churned market scenario where those who embrace change shall emerge through the filters as survivors. There's light at the end of the tunnel for those who are willing to fight at the end of the tunnel!
 
                 
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