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'Manufacturing is where wealth is created'

December 10, 2007 16:15 IST

Anand Sharma, co-founder of TBM Consulting Group, is the company's president and CEO. Recently he has co-authored the book The Antidote -- How to Transform Your Business for the Extreme Challenges of the 21st Century along with Gary Hourselt, who is the TBM execeutive vice president.

Sharma had earlier authored The Perfect Engine: How to Win in the New Demand Economy by Building to Order With Fewer Resources

He was named 'A Hero of US Manufacturing' in 2001 by Fortune magazine and was awarded the 2002 Donald Burnham Manufacturing Management Award by the Society of Manufacturing.

He has a master's degree in Business Administration from Boston University and Advanced Management studies at The Wharton School of Management. TBM Consulting Group, Inc. has brought lean business principles to the US, Europe and South America over the past decade.

In an interview with Contributing Editor Shobha Warrior, Sharma speaks about his book and his take on manufacturing. Excerpts:

Why did you decide to title the book, The Antidote?

This book provides a recipe to not only survive but to thrive in the face of challenges that businesses face today. It provides the perfect antidote that helps businesses become healthy and robust.

What are the 'extreme challenges' businesses face in the 21st century? How are they different from earlier ones?

In the 21st century, consumers are in the driver's seat. They have unprecedented access and options with the invention of the Internet and have increasingly discriminating expectations in terms of responsiveness, reliability and service as their discretionary incomes are increasing.

According to you, 'sustainable competitive advantage in today's global marketplace can be difficult to acquire, especially if your company is burdened by the old scientific management model'. What is the old scientific model, and what is the new one?

The old business model is based on Fredrick Taylor's Principles of Scientific Management published in 1911. It was based on dividing the work content in small and simple steps that the uneducated immigrants can carry out in large batch and queue method. It was the right solution for the time when people were happy to have a job and put bread on the table.

The Ford Motor company adopted that system in 1914 and were able to reduce the price of the car from $800 to $300, raise the wages to $5 per day for eight hours a day and created a highly profitable industrial revolution.

Today people want to engage their hearts and minds at work and the competition is fierce and global. The Transformational Management System for the 21st century is customer centric in every aspect and uses the experience and creativity of all associates in delivering fast, flexible and reliable value to the customers. It is also based on the culture of continuous improvement and treats people as the only appreciating asset a business has.

Is it possible for businesses to have sustainable advantage in the highly competitive marketplace?

Yes, it is not only possible but hundreds of our clients worldwide practise 'The Transformational Management' and are benefiting from it for many years since the early 1990's.

Toyota's lean culture is portrayed as a successful model. How lean can a business model be?

Lean is not a static destination. It is a continuous journey without destination. Toyota has been at it for over five decades and many of our clients have been practicing and benefiting from it for over a decade with no end in sight.

If all companies go for lean culture, what about employment opportunities?

The undisputed fact is that all true practitioners of lean do more with less. But they always experience increased customer loyalty and market share gain so that their employment opportunity increases. Those who do not practise this face extinction, which is also healthier for the economy and the society in the long term.

I am sure you are aware that those societies that did not believe in the power of competition eventually fell apart like the Soviet Union countries and China (which eventually adopted it)

Is the object of businesses that of maximising profits only?

No, the primary purpose of businesses is to deliver superior value to the customers, provide secure employment, education and growth opportunities for the employees and contribute to the community and societal well being. Profits enable them to do all this.

How did Toyota overtake the industry leader of the 20th century, Ford in 1980? Is lean culture the only reason?

Absolutely, Lean and TPS along with the other virtues I just mentioned are directly responsible for Toyota's success.

You have been recognised as the Hero of US manufacturing by the Fortune magazine. What changes did you suggest to the US manufacturing sector?

Since 1990, as founder of TBM and even before, since early 80's, I have been involved in transforming hundreds of US corporations to achieve unprecedented growth in sales and earnings by applying Lean and achieving sustained competitive advantages.

How important is the manufacturing sector for a country's economy?

Manufacturing is where the value and wealth is created by continuously raising the bar and doing more with less to achieve true productivity. But I do not like the traditional definition of manufacturing that is limited to producing things. My definition of manufacturing is a business that is providing comprehensive solutions to the articulated and the unarticulated needs of select set of customers with products and services.

In India, manufacturing has taken a backseat after liberalisation. Where will it lead to?

In my interactions with the business leaders in the west, India is increasingly discussed as a countermeasure to the chinks in China's manufacturing armour. The demand is here and now in the West and also in India. But it all depends on business leaders in India to think big and treat the world as their playground, and on political leaders to provide robust infrastructures like power, water and logistics.

Photograph: Sreeram Selvaraj