India poised for a new age

I just returned from Kronos’ first customer conference in Mumbai. It’s an exciting time for the Kronos India team as they now have over 100 customers locally.

During the week Narendra Modi took office as the new Prime Minister. The media and citizens have an optimistic vibe. Modi’s messages include increased transparency, eliminating nepotism and other forms of corruption and improved economic conditions. He has a history of welcoming foreign investment and a take charge attitude. Already there are examples of families of government officials who are now rejecting long time government perks saying to the media that they want to be treated the same as everyone else people. Indians are ready and hopeful for some good news.

Indian RetailA traditional and common view of retail in India

I’ve been visiting India for the last seven years. Over that time, economically, there have been significant ups and downs. For many of the companies I’ve been visiting there has been tremendous progress in terms of how they operate including managing their workforce. For retailers, there is an increasing appreciation for larger chain stores as compared to the small stalls that line the streets each specializing in just a handful of products. While retail chains and larger grocers are still in the minority they are leaping forward in their thinking. Last week I spoke with the Head of Operations, Hemant, for a retailer of electronic and electrical consumer products that has over 100 locations across India. It has just completed the transformation from a push to a pull strategy with respect to moving their inventory from DC’s to the store. As a result of this strategy they are experiencing increases in revenue as stock-outs are reduced. Margins are improving due to the reduction of discounts of excess inventory. The return trips of unsold inventory to the DC has more than paid for the incremental expense of smaller, more frequent shipments. Hemant is now moving his sights onto the workforce. He recognizes that pursuing a low-cost labor strategy won’t work. “How do we differentiate our stores when our competitors have the same products with the same types of employees? We need to pay more for highly skilled employees to guide our customers to the product that is right for them.” To pay for this increase in skill, Hemant is looking to make sure the staff is scheduled when the customers are there. This is more difficult than for most retailers in the U.S. as its employees are all full-time. Increased utilization isn’t even the main priority. Hemant continues…”During slow periods when employees have completed some training and refreshed inventory and still have time on their hands they become bored and sluggish. It’s tough for them to get their energy back when customers begin entering the store again. It’s important to make sure they stay busy and energized throughout the day.”

retail storeModern retail chain in India

I visited with a number of manufacturers and there is a widening gap in their approach to labor. The head of HR at one large exporter of textiles felt very strongly that there is no place for technology in managing people. Their supervisors manage the 17,000 people at one plant just fine according to this executive. If there is a problem, adding a couple of extra people is no issue because their wages are low. He did however acknowledge a machine utilization problem. This is being addressed by adding sensors to the machine to let management know when it the machine goes down. I’m looking forward to visiting him in the future to see if his perspective changes.

Diametrically opposed to that perspective is a manufacturer of cellular phones who uses technology to analyze the behaviors of supervisors to understand if they are favoring one gender over the other in scheduling overtime or if they are showing favoritism in granting leave requests. This company has also identified 250 out of 20,000 employees who are critical to keeping the lines moving and know instantly if they are late for work so management can begin reacting right away.

There is no shortage of talent in India, let’s hope Prime Minister Modi is successful in his efforts so that India’s talent can be converted to economic success.

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