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September - 2007 - issue > Cover Feature
Drive-for-excellence-will-help-Indian-firms-leapfrog-into-the-global-arena
Sanjiv Sidhu
Chairman & Co-founder-o9 Solutions
Tuesday, September 4, 2007
Over the last 20 years i2 has had the privilege of providing supply chain expertise to some of the world’s leading corporations across many industries. This includes 20 of the 25 corporations that were selected as leaders in supply chain management by AMR Research. Learning best practices from companies such as Texas Instruments, Pepsi, Woolworths Australia, Toyota, Samsung Electronics, Posco Steel and more, has been a great experience.

For this article I was asked to compare i2’s global experience versus the experience of working with Indian corporations. In my interactions with our Indian customers, I often face this question: “How can we reach the highest global standards of supply chain management?” The vigor with which our customers such as Asian Paints, Tata Steel etc. put forth this question indicates that they do not want to lag behind anyone in the global marketplace.

The process of being exposed to their aspirations gives me an eerie sense of déjà vu; the hunger to excel that I see in Indian companies today is similar to the hunger of Korean companies like Samsung, Posco Steel and Hyundai, that I witnessed around ten years ago. I attribute the meteoric rise of these firms to the hunger that these management teams demonstrated, to be the best. Within our management team we often discuss a ‘hunger to excel’ index of our customers. We joke that an investment strategy based on the i2 ‘hunger to excel’ index would create a basket of stocks that will outperform the best investment strategies available. Our Indian customer rank high on this hunger index. The Indian customers we work with have big aspirations and my intuition strongly supports the notion that these aspirations will be exceeded.

Hunger alone is not sufficient to ensure success on a global playing field. Leading Indian corporations possess several additional characteristics that I believe will make them serious contenders. One characteristic that stands out is the quality of management talent. Today’s Indial leadership teams grew up and advanced in an environment where there was a scarcity of jobs. Those who did rise to the top prospered in an intensely competitive environment. This is unlike the developed nations where there was a relative shortage of talent compared to positions that needed to be filled to support a thriving economy. Having succeeded in a highly selective advancement process, the quality of talent at the top of Indian companies is impressive.

Combined with management talent, Indian companies have well developed management disciplines. Our Indian customers demonstrate tremendous thirst to learn and implement global best practices. This sophistication is reflected in the accolades some of the Indian companies have earned internationally. Asian Paints, for example, has been the recipient of the Ken Sharma Award for Supply Chain Excellence. Most of the Indian companies i2 interacts with are extremely keen on improving their systems and adopting process sophistication by investing in real-time supply chain solutions.

Operating in harsh local conditions makes typical Indian managers very agile. There is also a natural inclination towards cost efficiencies. As long as this frugal nature does not come in the way of making critical investments, management practices honed in local markets will help Indian companies spread their wings globally. Tata Steel’s acquisition of Chorus and Hindalco’s acquisition of Novelis are great examples of this trend.

So what are the constraints the Indian companies face as global competitors? The Korean companies that I mentioned earlier had three significant advantages that Indian companies will have to find ways to address and overcome. These are: a) efficient local infrastructure, b) scale and c) global experience. Global experience will come with time but lack of scale and local infrastructure are bigger challenges. Companies can address their local infrastructure challenges by working with partners or acquiring new companies to better accommodate manufacturing. For example, Tata Steel produces steel in Chorus steel mills located in Europe. There are several strategies available to deal with this constraint.

Scale can be measured in several dimensions. State Bank of India, is not amongst the top banks when measured by revenue or assets managed, but is a scale leader when measured by number of customers or branches. Indian companies will have to find markets and strategies that utilize their strengths. These differentiated strategies will lead to eventually building scale in revenue and scope of international operations

Being exposed to the global aspirations of our Indian customers has been an eye opening experience and I look forward to many great things from these companies.
Over the last 20 years i2 has had the privilege of providing supply chain expertise to some of the world’s leading corporations across many industries. This includes 20 of the 25 corporations that were selected as leaders in supply chain management by AMR Research. Learning best practices from companies such as Texas Instruments, Pepsi, Woolworths Australia, Toyota, Samsung Electronics, Posco Steel and more, has been a great experience.

For this article I was asked to compare i2’s global experience versus the experience of working with Indian corporations. In my interactions with our Indian customers, I often face this question: “How can we reach the highest global standards of supply chain management?” The vigor with which our customers such as Asian Paints, Tata Steel etc. put forth this question indicates that they do not want to lag behind anyone in the global marketplace.

The process of being exposed to their aspirations gives me an eerie sense of déjà vu; the hunger to excel that I see in Indian companies today is similar to the hunger of Korean companies like Samsung, Posco Steel and Hyundai, that I witnessed around ten years ago. I attribute the meteoric rise of these firms to the hunger that these management teams demonstrated, to be the best. Within our management team we often discuss a ‘hunger to excel’ index of our customers. We joke that an investment strategy based on the i2 ‘hunger to excel’ index would create a basket of stocks that will outperform the best investment strategies available. Our Indian customer rank high on this hunger index. The Indian customers we work with have big aspirations and my intuition strongly supports the notion that these aspirations will be exceeded.

Hunger alone is not sufficient to ensure success on a global playing field. Leading Indian corporations possess several additional characteristics that I believe will make them serious contenders. One characteristic that stands out is the quality of management talent. Today’s Indial leadership teams grew up and advanced in an environment where there was a scarcity of jobs. Those who did rise to the top prospered in an intensely competitive environment. This is unlike the developed nations where there was a relative shortage of talent compared to positions that needed to be filled to support a thriving economy. Having succeeded in a highly selective advancement process, the quality of talent at the top of Indian companies is impressive.

Combined with management talent, Indian companies have well developed management disciplines. Our Indian customers demonstrate tremendous thirst to learn and implement global best practices. This sophistication is reflected in the accolades some of the Indian companies have earned internationally. Asian Paints, for example, has been the recipient of the Ken Sharma Award for Supply Chain Excellence. Most of the Indian companies i2 interacts with are extremely keen on improving their systems and adopting process sophistication by investing in real-time supply chain solutions.

Operating in harsh local conditions makes typical Indian managers very agile. There is also a natural inclination towards cost efficiencies. As long as this frugal nature does not come in the way of making critical investments, management practices honed in local markets will help Indian companies spread their wings globally. Tata Steel’s acquisition of Chorus and Hindalco’s acquisition of Novelis are great examples of this trend.
So what are the constraints the Indian companies face as global competitors? The Korean companies that I mentioned earlier had three significant advantages that Indian companies will have to find ways to address and overcome. These are: a) efficient local infrastructure, b) scale and c) global experience. Global experience will come with time but lack of scale and local infrastructure are bigger challenges. Companies can address their local infrastructure challenges by working with partners or acquiring new companies to better accommodate manufacturing. For example, Tata Steel produces steel in Chorus steel mills located in Europe. There are several strategies available to deal with this constraint.

Scale can be measured in several dimensions. State Bank of India, is not amongst the top banks when measured by revenue or assets managed, but is a scale leader when measured by number of customers or branches. Indian companies will have to find markets and strategies that utilize their strengths. These differentiated strategies will lead to eventually building scale in revenue and scope of international operations

Being exposed to the global aspirations of our Indian customers has been an eye opening experience and I look forward to many great things from these companies.

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