Welcome to Icon Matrix Quality Solutions

IconMatrix Quality Consultancy

Welcome to Icon Matrix.

iConMatrix stands for ideally Constructed Matrix Solutions.

Aimed at manufacturing, process and software organizations towards process improvement, business reengineering, process mapping, project management and TQM.

Solutions are ranging from study of existing system, gap analysis, migration to Quality Management System (ISO; QS; TS), training to meet the champion user requirements, defect analysis, process control for benchmarking, low cost process automation and continuous improvement to justify ROI.

«Time is ticking away and so does your opportunity to increase return on investments»

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Contact [email protected] for all ranges of quality solutions.

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MANAGEMENT / SSI units should shed its conventional management system and adopt newer practices for growth, writes N Syamasundaran in Deccan Herald of June 23rd 2003, Bangalore

Re-engineering for profitability

SMALL is beautiful is the general belief. But the beauty is lost for the very reason that it is small. The deep rooted problem with the small scale units in India is that the proprietor or the entrepreneur meddles in every aspect of the business, whether he is qualified to do that or not, whether he has time or not, thus making the entire organisation to stand on a single pillar. The entrepreneur thinks he is indispensable and takes pride in keeping all the powers unto himself.

The Managing Director of a Small Scale Industries (SSI) unit talks to the supplier over phone, orders materials and does not believe in the purchase order system. He does not believe in the system of documentation of material receipts as he thinks that he knows what is happening in his unit. Therefore he takes pleasure in seeing each and every bill of supplier and approving the same for payment. There are practical cases where such SSI units have lost money due to double payments, shortage of goods, and poor quality of goods.

He is little worried about inventory planning and over stocking of materials, which is a perennial issue with SSI units in India. There are umpteen practical examples where these SSI units have over stocked certain items of raw materials, whereas on the other hand, production was held up due to shortage of other items of raw materials. Indeed the Materials Management is a fire fighting exercise in SSIs in everyday life, the MD devoting substantial portion of time on this aspect.

All in One
The MD of a SSI unit wants to be all in one, by being a Production Manager, Finance Manager, Marketing Manager and Personnel Manager. By trying to be so, he neglects the functions of an MD and does every other thing in a half-baked fashion.

It is not uncommon that in the absence of proper system and procedure for salaries/wages payment, the Accounts personnel do not know who have joined, who have left the organization, salary of personnel, increments etc., and ultimately the MD ends up taking complete responsibility for the payroll by authorising the payroll sheet. All checks and balances are thus given a complete go by. There are practical cases where the names of persons who left the organization continue to appear in payroll month after month.
In a nutshell, the small-scale entrepreneur believes in Visual Control rather than Information Control. This attitude should change; as it will not help the SSI unit to survive in today’s environment, leave alone grow.

What should the SSI units do?
There should be a perceptible change in the thinking of the owners of the units that they being small, they can give a go by to normal business management principles. Small-scale units do need proper organisational structure, though at times, one or two functions can be combined. The entrepreneur may retain a portfolio like production OR finance in respect of which he has expertise.

It is neither desirable nor feasible for SSI units to engage hardcore managers. This does not mean they engage mediocre personnel. SSI units should hire people to head the functions, who have grasping of the function, can keep the wheels moving, can solve routine problems, disciplined and systematic in working.

Employee retention
Retention of people particularly performing employees is highly critical. SSI units should realise that employees do not provide subsidies to them accepting lower salaries. Why should an employee accept low salary just because the employer is an SSI unit? SSI entrepreneurs should change their thinking of hiring more people at less salary. They should indeed hire less people at market related salaries.

Work efficiency should be the criterion and not the working hours. By nature, the owners prefer people who sit 12 hours in the office and do little, rather than people who are efficient and adhere to working hours.
Though SSI units may not be able to depict that they are the ideal employers, welfare facilities should not be deprived the employees.

Outsourcing
SSIs should outsource functional managerial inputs, which are not available in-house. For example: SSI units can outsource services for improving quality systems for various functional areas and energy savings. Certain routine services like plant maintenance, outward dispatches can also be outsourced. Here again, the effectiveness of the service vis-a-vis the cost should be kept in mind. For example, the security services hired by many SSI units at throwaway prices is good for nothing. The units may feel that they are saving on costs but they may not realise that they are losing by way of bad security arrangements. Units tend to lose substantially on materials moving out with out invoice, inflated OT Bills, Lower productivity during night shifts, pilferage etc. That is why it is necessary to avoid cost suppression and concentrate on cost control.

Institutionalise systems
Each SSI unit should have well documented systems and procedures for efficient functioning. These can be simple but should be clear. Many SSI units have spent substantial amounts in acquiring ISO tags in order to satisfy buyers but they should ask themselves how far such tags are effective in the long run.

Thinking of today and finding short cut solutions should stop. Let the thoughts be on today and tomorrow and let the solutions be long lasting. Believe in delegation of both duties and powers though it can be limited in case of SSI units. For example, the final say in all recruitments can be with the MD. The power of granting of credit to a new customer can be with the MD.

The SSIs should manage its affairs based on information rather than physical inspection. Many entrepreneurs think they know everything that is happening in the organization as they are on the spot. This is totally a wrong thinking and must change.

No entrepreneur can keep a physical track on wastage of Materials/Rejections unless proper periodical information system is in place. Monitoring and control over productivity/waiting time can be effective only based on information systems but not occasional outbursts on the shop floor.
Further, even the things known to entrepreneurs goes to the back ground without sustained action. Only information systems can help in such cases. Some of the examples are: non-disposal of non-moving finished goods; non recovery of old dues from a customer, and outstanding advance to a supplier.
An entrepreneur was in the dark about how certain moulds that went for repairs to third party never returned for a long time, and the unit is facing shortage of moulds hampering production.

Don’t bend the rules
SSI units tend to create new entities considering the advantage from the excise point of view. But they forget that over a period of time, such new entities will mushroom making the cost of administration outweigh the excise duty benefit. Many entrepreneurs even lose track of such units leading to operational inefficiencies and frauds. Further, cross company transactions between different sister units worsen the managerial controls. 
SSI entrepreneurs should try to live with the tax regime rather than lose control over the very units that they have created.

By nature, SSI entrepreneurs try to stoop themselves when it comes to procuring orders from customers. They commit themselves on unmanageable delivery schedules, lower sales prices, and higher credit period. All these factors, though help them in getting orders, over a period of time, they will be unsustainable. Instead, let the customers count on their credibility to match the specifications of the product, delivery on committed dates without reminders, quality inputs, quality machines, good human resources, all resulting in quality output and justifiable prices and credit period.
You cannot be in the business if your customers’ portfolio are such that they are unworthy, unreliable and unstable. Choosing the customers is very important for your business to succeed.

No entrepreneur can neglect this aspect. With sound customers, a supplier can prove the business credentials without difficulty and establish a beneficial relationship. Only listening customers can appreciate the favourable differences that good suppliers can make to their products and business.

The author is a management consultant. 
e-mail: syam472001@yahoo.co.in

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