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Fortunately, such a systematic approach is available in the form of the 'lean production' approach. Presently, the penetration of this approach in the Indian manufacturing sector is limited, although the awareness of its benefits and applicability in the local context is increasing. The manufacturing sector is showing strong growth, and contributing in a healthy way to India's GDP (for the first quarter of fiscal year 2005-06, the industrial sector has grown by as much as 10.3%). With a major boost in operational
effectiveness by adopting the lean production philosophy, this growth can be stimulated further, at least in a few sub-sectors. Thus, the contribution of manufacturing in achieving India's aim of a sustained GDP growth of 8% can increase appreciably.

Shifting Sources of Competitive Advantage

The outsourcing of manufacturing operations by Western companies (mainly in the US and Western Europe) to Asian locations has been a well-observed phenomenon for at least 3 decades now. East Asian countries like Taiwan, and also China, led the way in this outsourcing wave. India was not recognized as an outsourcing destination for manufacturing for a combination of factors including both operational and external factors. In this outsourcing wave, the main sources of competitive advantage (order-winning criteria) for the successful nations were cost and quality. Low-cost labour contributed substantially to the attractiveness of these destinations for companies in Western countries.

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* Contributed by -
Vaishnav Tadatmya Ashok,
IIM, Lucknow.