Introduction to AI
Corporatization of Ordnance Factory Board (OFB) is an opportunity to transform the domestic defence manufacturing industry forever.
Introduction
I will try to present an outsider perspective and an industry perspective on the long term impact on the Indian defence manufacturing of this corporatisation decision.
Some brief background I would say is a look at these as observations, inferences, comments and suggestions, mostly intuitive. Because I mentioned to you that we have not had direct exposure to Ordnance Factory Board. Of course, we have done some work for Ordnance factories to set up the Pinaka assembly line, or we have done work for the mixers. But, those were more like supplying Capex equipment or production equipment; not on the weapons manufacturing side. You can also see this from the perspective of a concerned citizen.
Such a huge national resource not delivering towards its potential is certainly a cause for concern. At the same time, optimistically, we cannot drive looking at the rearview mirror. I’m sure things have not been good. Certainly not up to the mark and not as for what the end consumer or even the country needed. But going forward, we have to be internally optimistic because only with the positive frame of mind, only with the growth mindset, we can seize this opportunity.
The question is whether corporatization is a solution or an opportunity. One thing is for sure, the distinguished panellists certainly mentioned the sordid stories. This intervention was necessary. Something had to be done. It has been festering for far too long. Some of these industries have been nearly two centuries old and yet they were not delivering to their potential. But at the same time, We need to understand that corporatization is not a silver bullet. We have several examples from the public sector or even private sector companies that are not doing well./p>
Not all corporations are outstanding organizations. So it would be naive to believe that simply corporatization would change the way Ordnance Factory Board is performing today. Certainly, we need to make them customer-centric, productive, competitive, nimble, agile, cost-competitive and equipped with contemporary technology. The current Ordnance Factory Board performance is found wanting and there is a big gap. Therefore, I look at this not as a solution, but as an opportunity. Because we have had corporations, for example, Air India. This is only to evidence a point that simply to say that corporatisation will not change the situation. We have had HEC, HMT, but they didn’t do well. Eventually, that turned out to be a national loss.
Mere corporatization will not solve the issue. But then, the question is why corporatise? If it is not the solution, then why corporatisation?
When organizations get set in a certain way of doing business for decades, the introduction of new changes becomes very difficult. This is where corporatisation is a new playbook. A new set of rules and a new game. This injection of newness is going to help. Things have been going on in Ordnance Factory Board for decades without any downside risk, leading to a very sorry state of affairs in terms of utilization, quality, on-time delivery or reliability of the final products that have been supplied.
However, under the new set of rules, change can be initiated. I’m sure the people who are running Ordnance factories have to be held accountable. There is no doubt about it. But I also believe that maybe they have tried, maybe they’re also good people, good engineers, good executives. They really wanted to try. But, I heard somewhere that when outstanding managers work against a system, it’s always the system that wins. This is where I would like to give them the benefit of doubt. Probably under the new garb, all the things that they wanted to change, drive and implement would be possible.
Corporatization is a once in a lifetime opportunity for the leadership of the Ordnance Factory Board to bring about drastic changes and make Ordnance factories successful defence sector units. Likewise, I would like to say that labour unions have taken a very parochial, and very self-centred view. This is about saving the country and saving lives. They also have to realize that this is an opportunity. If you’re simply continuing the old way, change is difficult. But the very fact that now we have to play a new game and with new rules can actually help people to change their way. Therefore, if the leadership seizes this opportunity, this can be a golden period for Ordnance Factory Board.
Key success factors for Ordnance Factory Board
The organization must have a vision, skills, incentives, also disincentives, resources and action plan. If you have all of this, then the organization can be successful.
If you don’t have a vision; you will have skills, incentives, resources and an action plan, but it’ll only lead to confusion.
If you have a vision but don’t have skills; it will lead to anxiety. You know what you want to do. You have the incentives and the resources and the action plan, but you don’t have the required skill sets. It will only lead to anxiety because then, you’re frustrated as to why am I not able to do that.
If you do not have incentives or maybe a lack of downside risk; It will lead to a gradual change or no change at all. There was no downside risk and therefore, simply ambling along in the manner that they were doing.
If they don’t have resources, then it leads to frustration. However, in the case of the Ordnance Factory Board, enough and more resources have been provided in terms of human resources, landmass, opportunities for improvement, large factories, and several modernisation budgets. An excess of resources also leads to a bit of a cost.
If you don’t have an action plan, it will lead to a false start. If you were to have this construct for success, if you had one of these things missing, you will either have confusion and anxiety, gradual change, frustration and a false start.
A Construct for Success
If you were to look at Ordnance Factory Board performance, so far in the past, you will see a bit of all of it. Only if you have all of the above in place, there is a chance for success. This is the model if current leadership decides that we need to break away, clean from our past.
Going forward, Ordnance Factory Board needs to engage with all stakeholders, starting with customers, suppliers, employees, governing and statutory stakeholders.
Ordnance Factory Board has to engage with them and take their perception as reality. I was reading reports about factories as to how the military was complaining about the poor quality of ammunition and then the Ordnance factory shot back saying that this was in part because of mishandling. It takes us nowhere. If the end customer feels that we are not good then we have to take that perception as reality. Ordnance Factory Board can build metrics to it. Why do the stakeholders feel that quality is not good? If you define those metrics, then it becomes a fact-based issue. Later, if you can improve the metrics clearly, the perception can be changed.
From the Ordnance Factory Board point of view, I would say that maybe not everything is wrong with them. However, if they start to assume that all 100 things that have been spoken about them, let’s say all 100 are correct. And if they analyse that at least, let’s assume that 40 things are actually under their control. It’s not a bad thing. Let them assume that all 100 things have gone wrong and go back to post corporatization within 6 months or within a year and say that we have made tremendous improvement on these 40 and here are the metrics to prove that. Such initiative can also create good opportunities and a good solid foundation going forward.
There is a need for benchmarking to the best. I don’t think they should benchmark with other DPSUs. Their performance too is nothing to write home about. They have to become a role model organization even for the existing DPSUs to follow.
I always tell my teams that if you have begun late on anything, you have the benefit of knowledge of everything others have done and which worked, or which didn’t work. Therefore, with all that knowledge, you should actually be able to do better than what everybody has done so far.
Therefore, the new leadership has to visualize to create a shared vision. Today we find the vision to be fractured because there is no uniformity of performance standard, or in fact, I would say it is uniformly unsatisfying to the end consumer.
Likewise, what is the vision that the employees and employee unions would also be sharing with Ordnance Factory Board? Wouldn’t they want to have job satisfaction like the armed forces? Why can’t the same spirit like that of armed forces be ignited within Ordnance Factory Board? Therefore creating a shared vision is very very important.
They also need to assess the skill gaps from the point of view of appropriateness and inadequacy. We heard about how, some of the ammunition, which is being made on manual machines and some on CNC machines. It is tragic. We are doing the nation a disservice by continuing to pander to such a mindset that I will not learn new skills.
Within our company also, we have adopted new technologies. We have found that as long as there is a willingness to learn in the employees and there is a willingness on the other part of the management to coach; the new learning as possible.
This would be very important and together with shared vision along with adequate skill development will create a great skill-will balance. Every time we hear stories about the great performance of our armed forces. It’s because they have a great skill-will balance. That is something that I would request the members of the board, who will come from the armed forces to ignite the sense of a skill-will balance within Ordnance Factory Board employees.
There has to be incentives and disincentives. For far too long, we have gone about tolerating poor, substandard performance. We certainly do not do away with that.
From the industry perspective, I would say that in terms of resources, they appear to be adequate, in fact, underutilized and therefore programs like TPM, TQM, Kaizen, low-cost automation, single-piece flow have to be initiated. These programs will not only help in the efficient utilisation of resources but also will mentally and emotionally engage the workforce and the engineers for improvement. We have seen tremendous benefits from these programs. After all, Ordnance Factory Board is also industrial Corporations, and I don’t see why this will not work for them. Once we have done all this, all of these action plans must be granular with Goals.
If you have a good shared vision, you are working on improving the skills, you have incentives and disincentives and you have adequate resources, then you can make them productive using all these techniques and you have an action plan, you have a great chance for success.
Finally, If we look at corporatization as an opportunity, this one decision has the potential to transform the domestic defence manufacturing industry forever.
As I mentioned earlier, we don’t want Ordnance factories to be as good as the private sector companies today or the DPSUs; we want them to be role models because they are starting late. They have the benefit of everything that has been done well, or not done. So in terms of delivering on time, with reliable quality and cost-competitive supplies to the customer that should be the one goal.
They should become a source of business and revenue to the vendor ecosystem. Once they start delivering, automatically there is a demand created for the ecosystem. We have seen this in the case of the auto industry, just one company to start with, which was Maruti. It has changed the entire ecosystem. With Ordnance Factory Board, there is a similar opportunity. If we really corporatize Ordnance factories in the manner that I thought would be a good idea; there is an opportunity to bring efficiency, competitiveness, reliability in the entire ecosystem, all the vendors that I spoke about and other Indian domestic manufacturers.
Ordnance Factory Board needs to become outstanding, world-class, most reliable in the things that are tasked to them. R&D can follow later. Because, if we spread our efforts thin then we will have a problem. The entire focus should be on how to produce it as per the design specifications. If Ordnance Factory Board does that, in another 4-5 years they will be able to stabilize the existing lines. Later, if Ordnance Factory Board develops a surplus capability, confidence in processes and end consumer gets confidence and then we should talk about R&D.
I feel that this is more, it’s more of an opportunity than a solution to the existing challenges, both real and perceived, I said perceived because we have to also assume that maybe not everything is wrong with Ordnance Factory.
It’s a great opportunity, and it is a once in a lifetime opportunity. You will not get a second chance because if you do a poor job of it now, Ordnance Factory Board will be once again, part of, other DPSUs who also don’t have a stellar record. We have the opportunity to learn what works and what does not.
Amongst all the DPSUs not everything is okay, but not everything is bad too. So probably, we can pick and choose and figure out everything that works in all the organizations there and then try to do that and hence become better than anybody else.
It’s the interest of a nation that they should be done and it should also be a national endeavour. It shouldn’t be left to the corporate entities also. Otherwise, it will be missing out on a grand opportunity forever. It should be at the ministry level with the involvement of political leadership in coaching, mentoring, helping, building this vision and taking this forward. We have to also inspire new boards that their mandate is to build world-class, role-model organizations as a result of this decision. If the mandate is to just improve on-time delivery performance or improve the quality levels. We would waste this great opportunity. I don’t think of it as a solution, but this is a great opportunity and if handled well.
