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4.2.2. Power Supply

By far the most significant infrastructure constraint for manufacturing is the unreliability of power supply. On average a company can expect nearly 17 significant power outages per month, against one per month in Malaysia and fewer than five in China. At the same time costs are higher.³

The implications are obvious; an irregular power supply implies disruptions in manufacturing. This necessitates higher inventory levels than required in the entire chain. Several manufacturers have set up captive power generation plants to protect themselves from irregularity in power quality and in certain cases have even leased power to their suppliers, if located in vicinity and allowed by the state regulation. Clearly, this imposes an extra cost on the manufacturers.

(See Exhibit 5 for an international comparative on Industrial Power Costs.)

4.2.3 Improved Quality at Source

One of the prerequisites for implementing lean manufacturing is quality at source. Toyota was able to implement "lean manufacturing" by ensuring quality at source from its supplier and then implementing poka-yoke and jidoka. An increase in number of defects would result in frequent disruption of the line, which often implies higher inventory levels at different stages in the manufacturing line.

Inconsistent quality of raw materials / components from suppliers is a key challenge which prevents Indian manufacturers from implementing lean.

³ Data from "Manufacturing in India: Opportunities, Myths and Challenges".

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* Contributed by -
Amandeep S. Bedi & Namit Puri,
Indian School of Business (ISB),
Hyderabad.