Why SEMCO isn't afraid of China
(May 30, 2005)For Rajinder Raina's people, understanding has been the beginning of freedom
Corporate India almost means big business. In the mind of the average person, largeness equals strategy and success. It also means larger socio-economic impact. Nothing is farther from the truth. It is a sobering thought that the No.1 contributor to the US GDP is not the Fortune 500 club. It is the mom-and-pop stores that dot the US landscape. In Germany, the economy runs on the strength of small and medium businesses. So, while it is in order to celebrate size, it is even more important to celebrate the small and the medium. Often, these are the ones that are leading the way in delivering access, attention and agility - the three elements that every customer craves for. It is in that context that I found this email interesting... "My name is Rajinder Raina. Age 45 with Engg from BITS Pilani plus an MBA from McGill Canada. I head the Indian operations of a 100 per cent EOU, manufacturing and exporting electrical fittings to companies like Home Depot. We do about 70 million in sales and employ about 1,400 people spread in three geographic locations. You can say, a BPO in manufacturing..."
BPO in manufacturing? Interesting. Hasn't Rajinder heard about China? Whenever I meet CEOs from the manufacturing sector, there is this inevitable discussion about how the dragon is hissing steam through its puffed nostrils as forked tongues are whipping their cost, margins and market share. I am intrigued, and visit Rajinder's website www.sigmaelectric.com. His company started in 1996, manufacturing electrical wiring accessories out of zinc, aluminum and copper alloys. The customer list is baffling: GE, ABB, Lowes, Hubbel and Thomas & Betts. Operating from 300,000 sq.ft facilities in Pune and Jaipur, it believes in giving its customers quality and value-addition in all areas of operations at the lowest total cost. Towards this end, SEMCO uses the latest design software, CNC machines and has a JD Edwards ERP system. But if technology could deliver competitive advantage, anyone could succeed. SEMCO realised this and front-loaded the organisation with its five cardinal principles, five important habits and five key goals.
The five cardinal principles are: respect all individuals, be fair, respect company discipline and culture, be truthful, and be fearless. The five habits are: keep promises, encourage teamwork, encourage continuous learning, be a good listener and keep the end in mind. Finally, the five key goals are: customer satisfaction, employee satisfaction, zero defect, high productivity and high cash flow.
No, I was not going to be conned into believing all this from an MBA from McGill. I called up Rajinder and asked for a chance to speak to his workers. A meeting was set up. I spoke with Sajid Mulani, the trade union secretary; Sanjay Jadav, former union president; and others. The youngest was 26 years of age and the oldest was 35. Average education? SSLC. These workmen told me that the purpose of enterprise is: "quality, cost aur delivery. Customer khush hona chahiye." Sanjay, 35, says that in earlier firms, all he knew was his own sphere of work. Today, he does "vendor management". Sajid, 26, talked about the criticality of teamwork, and Ganesh, who finished his diploma while working, said he hoped to study more. They all dream of making SEMCO a No.1 company.
A few years back, sensing the China threat, SEMCO sent its workmen to China. They visited eight factories. They returned and spoke to their comrades about the nature of the threat. An average Chinese worker made Rs 4,000 a month - an amount static for 10 years. Compare that to Rs 6,000-10,000 in India and the expectation for more. The team got the message - the only way to keep their jobs was to build collective competitive capability and to convert each worker into a highly value-added individual. Today, SEMCO is not worried about China. Because, for Rajinder's people, understanding has been the beginning of freedom.
Are we impressed, corporate India?
