Auto parts makers gain from Unido scheme

Small and medium enterprises (SMEs) in the auto component sector, which participated in the United Nations Industrial Development Organisation's (Unido's) partnership programme, have shown substantial improvement in business, quality, labour management, delivery as well as productivity performance, found a study done by PricewaterhouseCoopers.

The study focused on nearly 40 SMEs in the auto component sector, which had enrolled for phase two of Unido's programme.

In the business performance area, the study found that the turnover of 15 out of the 30 firms surveyed had a better growth rate than the industry growth rate of 62.8 per cent over a period of 30 months.

While eight of these firms registered an increase of 75-100 per cent in their revenues, the rest seven firms had a revenue increase of over 100 per cent.

"Though growth in revenue may not entirely be attributed to Unido intervention, some component of it is linked to the programme," the report said.

It was also found that Unido's programme helped the participating firms in enhancing labour productivity. The interventions included organising the workplace better by putting shadow boards, which helped reduce search time for tools.

The participating firms showed a 15.72 per cent improvement in overall equipment effectiveness. The machine breakdown hours in half of these firms were reduced by as much as 60 per cent. Besides, absenteeism was also reduced.

According to the study, one of the most striking results of the programme was improvement in productivity, which helped SMEs win new customers and get appreciation from the existing buyers.

Regarding the quality of output, the study revealed that customer complaints and the rate of return of manufactured products decreased substantially.

The partnership programme helped SMEs to win internationally recognised certifications like TS-16949, ISO-9001, QS-9000, ISO-14000 as well as OHSAS.

Another significant result of Unido's intervention was that the participating firms were able to manage their delivery schedules and costs in a much more efficient way, with some firms reporting a reduction of around 14 per cent in direct and indirect raw material costs.

Unido's programme also helped bring about a change in the work culture of the workers, who became quality conscious.

In some firms, in spite of union activities, workers were willing to increase output. Production targets in some firms were now settled across the table with workers, without the involvement of the union.

The PricewaterhouseCoopers' study has recommended that Unido's programme needs to enhance the skill sets of trainers in select areas such as flow manufacturing and statistical process.

It has also suggested that Unido should include inputs like training to achieve standards like ISO/TS 16949, which is essential for securing orders from overseas clients.