Does the 2d most populous nation lack managerial maturity?

"No culture can live, if it attempts to be exclusive." – Mahatma Gandhi

About a year ago, a customer asked me to identify a reliable manufacturing source for stainless steel castings in India, and to manage it as well as my company manages circuit board products built in Taiwan. I appreciated the compliment and considered it an opportunity to create a new profit center. My experience in India, however, made me realize that while the country has the potential to become a great manufacturing resource, the path will be longer and more complicated than I first expected.

I traveled to India in July 2006 to survey a manufacturing facility located in the western part of the nation, just a short distance from the center of the historic and lively city of Ahmedabad, the capital of the state of Gujarat. The city is the second-most prosperous in western India, with a population of more than five million people. Ahmedabad has both old world charm and modern ambience. The mixture of reverence for the past with the drive of a leading industrial city is fascinating. Summers in Gujarat are hot, with temperatures rising above 100°F even at night. Even for this Florida boy, that was a bit much!

Thanks to the influence of the British, English is spoken throughout India and is considered the “linking language” connecting the many cultures found in this large and diverse country. The food was great, hotel accommodations modern, and the service excellent everywhere I went. As an American, I found it easier to function in India than in China because of both the language and the cuisine.

When I arrived, I was promptly greeted by the new vendor I’d recruited via telephone and email. The vendor’s English was excellent, and an interpreter, usually a requirement in Taiwan or China, proved unnecessary. The factory I’d come to see was a sleek, sophisticated manufacturing facility. I was ceremoniously greeted by the entire staff, and a tree was planted in the company garden to symbolize the growth of our business relationship. It was a nice touch.

The factory was impressive: its layout, equipment, alternate power source and, most important, its employees. Even my customer, a Tier 1 OEM, was more than satisfied when a more in-depth survey was conducted at a later date. And initially, quality product was received in good order at a competitive price.

But my firm’s relationship with the Indian manufacturer was filled with far more frustration than I ever anticipated, and it had nothing to do with quality or lack of infrastructure. India has it all: good schools, modern facilities, a reliable power source, very capable engineers and knowledgeable staff. The problems I experienced were caused by management failures.

While there were problems inherent in what is still in some respects a Third World country – bad roads, power shutdowns, and so on – the chief errors of my esteemed Indian vendor were a lack of communication with me, the customer, and an inability to effectively manage time. There will always be delays in even the best-laid plans. But the vendor repeatedly neglected to notify me of the delays.

Even when I made follow-up calls to confirm earlier emails that stressed the importance of timely notification about any delay in shipment, when a shipment was indeed delayed, no notification was received.

The vendor seemed unwilling to inform me of any bad news, even when I made it clear that occasional delays were to be expected. I wondered if this was a cultural difference or if I had not effectively communicated my requirements. But I regularly deal with vendors in Taiwan – a complicated culture with many unspoken communication rules (see Global Sourcing, October 2005, circuitsassembly.com/cms/content/view/2164/) – and I’d never before run up against this kind of resistance.

My admittedly limited experience with Indian manufacturing leads me to believe that, unlike in Taiwan, there is at present a lack of managerial maturity in India that is preventing it from becoming a truly effective player in the global sourcing community. The ability to accurately assess the manufacturing cycle to create a realistic product timeline – along with the ability to adhere to, as much as possible, the agreed-upon schedule, and to notify the customer when it cannot be met – are crucial factors in the success of any offshore vendor. Regardless of quality or price, if product is not shipped on schedule, customers go elsewhere. 

It would be foolish to project the potential of an entire nation’s supply base on experiences with a single supplier. I haven’t given up on using vendors in India. The future is bright there for manufacturing. But based on my first go-around, I’ve come to realize that it may take a while to reach the same level of professionalism I am accustomed to in Taiwan.

Greg Papandrew is founder and president of Bare Board Group (bareboard.com), a distributor of offshore-manufactured circuit boards; greg@bareboard.com. His column appears quarterly.