Ram Kishore Chabba, an operator in the manufacturing division at Samsung India's CTV plant in Noida, recently noticed that it took, on average, 5.2 seconds to solder components onto printed circuit boards. He suggested a change in the shape of the nozzle from which the soldering liquid flowed onto the plate. Result: the time taken for soldering came down to 4.5 seconds. He was rewarded with Rs 5,000. Rekha Bisht, another line operator, suggested changes that reduced component insertion time from 1.1 seconds to 0.9 seconds; this is now part of Samsung's best practices worldwide.
These suggestions have helped make this CTV plant one of the most efficient production hubs for Samsung worldwide-it has the lowest tack time (the time taken for TV sets to roll off the production line) of 4.9 seconds. The company receives nearly 60,000 such suggestions every year from its 300 employees. "Yet, we do not think we are the best as Samsung uses Toyota benchmarks in lean manufacturing where 700,000 suggestions come from 300 employees," says Girish S. Shah, gm (Manufacturing), Digital Media Division, Samsung India Electronics (SIEL). Every suggestion here gets Rs 10; ones that make a difference to cost efficiency, either by way of saving time or by way of cutting unnecessary expenditure, can earn anywhere between Rs 500 and Rs 20,000. Thus far, six employees have earned Rs 10,000 each while many others have earned smaller amounts.
These are some examples of production best practices emanating out of India. But Samsung's Indian operations are taking the lead in more serious innovations as well. Vikram Vij, Vice-President (Software Centre), SIEL, leads a team that is working on creating cutting-edge technologies that go into Samsung's LCD CTVs, camcorders, desktops, mp3 players and recorders. This centre is one of Samsung's 16 global R&D centres and is poised to become the biggest for digital media products. "Over the past four years, our role has evolved from project support for our headquarters to base intellectual property (IP) development; we have applied for 25 patents so far," says Vij.
India and Indians are setting new standards within the Samsung fold worldwide.
» The CTV plant in Noida enjoys the highest productivity among all Samsung facilities worldwide, including Korea. For three consecutive years (2004, 2005 and 2006), it has received the Manufacturing Value Innovation Award from its headquarters in Korea.
» In 2006, 56 engineers from Samsung subsidiaries in Vietnam, Mexico, Thailand, Malaysia and Hungary visited the Samsung India CTV plant in order to be able to benchmark their practices against it.
» Samsung India has sent around 10-11 engineers to group companies in various countries to help improve their productivity.
» About 120 Indian engineers are working at the Samsung head-quarters in Korea as regular employees. Plus, it has at least 250 more Indian engineers working there on short-term projects.
Under his supervision, 300-odd engineers have developed the HDMI interface for Samsung's flagship Bordeaux and Bordeaux Art LCD television series, end-to-end solutions for thin clients and the multimedia slot in the full HD Mosel series of LCD TVs. The team has also worked on a patented 'Magic Rotation' feature in colour monitors (that allows the monitor to be rotated in several ways while keeping the image upright) among many others. "Given this record, headquarters is entrusting us with more innovations for the global market. Consequently, we will recruit up to 1,000 people for this centre by 2010," he says with obvious pride.
There are some interesting innovations happening out of India that will be part of a new range of flat TVs that will be launched globally. These include the introduction of pc-like features in televisions, such as a channel minimiser, which will allow users to "minimise" channels to allow for easy surfing; introducing a "music mode", which will enable users to switch off the display without turning off the sound, thereby consuming less power; and a "half-mute" function, which will allow users to change the volume in mute condition.
India's key position in Samsung's global scheme is evident from the fact that it appointed Hyun Bong Lee as President & CEO (South West Asia), three months ago. Lee, who was heading Samsung's Global Home Appliances Division prior to this, will be based in India, which will become Samsung's hub for South and West Asia. This is the first time that the Korean chaebol has deputed such a senior executive from its head office to India. Now, S.H. Oh, President & CEO, SIEL; H.C. Ryu, MD, Samsung Telecommunications; and G.C. Kim, MD, Samsung India Software Operations, will all report to Lee.
In his first media interview to Business Today, Lee acknowledges that Samsung had envisioned India as a global hub since 1995. "However, there were some joint venture obstacles (100 per cent ownership was not allowed in 1994; so, it had to form a JV with Reasonable Computer Solutions, which it later bought out). But we have moved steadily towards materialising that vision and my appointment will accelerate this process. India is an open market. Just as we will export products from here, we will tap the excellent talent available here and 'export' people to other places," he says, adding that over time, Indian talent will rise up the hierarchy within Samsung's global system.
India's contribution to Samsung's global operations is also rising. Its factory in Chennai, which will cater both to the export market as well as the one in south India, will begin production this year and will receive an investment of $100 million (Rs 410 crore) over the next four years. Last year, the contribution of Samsung India's contribution to global turnover was 2 per cent. This is expected to grow to 5 per cent by 2010 (by when the new factory will be fully operational).
Samsung also sees India as a global components hub. "We need quality components at cost-effective rates and see India as one of our key hubs in this regard," says Lee. It has already taken some steps in this direction. Some of its components vendors are being groomed as global vendors for CTVs. SIEL has already started training them on Samsung's quality systems. And in May 2006, it took eight Indian vendors to Indonesia to learn about the processes followed by Samsung vendors there. Prior to that, it had also sent a few Indian vendors to Korea and China to give them a better understanding of Samsung's quality management systems and manufacturing processes.
At the cutting edge
The Indian R&D centre is among 16 Samsung facilities worldwide that are developing the latest products for the global market.
» The Samsung India Software Operations (SISO) unit in Bangalore is one of Samsung's global R&D centres and has been operational since 1996. Samsung's other global R&D hubs are located in London, Moscow, Beijing, Israel, Korea (4), Japan (2) and the US (2). The parent company spends $5 billion (Rs 20,500 crore) or 8-9 per cent of its global turnover of $63.4 billion (Rs 2,59,940 crore) on R&D every year.
» SISO is doing cutting-edge work in the areas of wireless terminals, network infrastructure, networking, SoC (system on chip), digital printing and imaging solutions, multimedia, digital media technologies, memory devices and related applications software.
» SISO has a dedicated in-house intellectual property team that facilitates IP creation across the organisation. Thus far, SISO's engineers have applied for more than 450 patents related to breakthrough technologies, of which 20 patents have been granted.
» 50 per cent of SISO's employees come from the top 10 engineering institutes in the country.
» IMS (IP Multimedia Services), Next Generation Mobile Handsets, Pervasive Computing, Hybrid Memory Devices, SoC design, WiMax & Heterogeneous Networks are some of the cutting-edge technologies that SISO is currently working on.
» SIEL has developed an online practical machine manual to guide Samsung's subsidiaries worldwide on auto insertion machines and to offer online help.
Incidentally, rival LG Electronics India (LGEIL) is not sitting idle. Says Rajeev Karwal, former head of LGEIL's Sales & Marketing Division: "LG is equally competitive in terms of productivity, technology and production flexibility. However, Samsung has taken a global lead in some high-end products and that is paying off well. But the interesting thing about these Korean players is that they have recognised the importance of developing markets and even have specific products and strategies for countries such as Nepal and Bangladesh, which is unheard of. It has just not been possible for European and Japanese brands to match that sort of focus." Karwal is now the founder of Milagrow Business Knowledge Solutions.
Anoop Kumar, President, CEAMA (Consumer Electronics & Appliances Manufacturers Association), is far more incisive. "Samsung received the Consumer Electronics Company of the Year Award from CEAMA last year. This is given to companies that introduce and work on innovative products and develop new categories of products. It has certainly pushed the envelope in LCD Plasma TVs," he says, adding that SIEL is primarily responsible for the LCD and Plasma TV category growing 400 per cent to sales of 1.5 lakh sets last year. According to ORG-MARG data, SIEL is the leader in both categories with market shares of 42.5 per cent in LCDs and 34.5 per cent in Plasmas.
Says Ravinder Zutshi, Deputy MD, SIEL: "We know our leadership roadmap in the domestic market as we already lead the market here in flat panel TVs and side-by-side refrigerators (double door, large capacity units that have a freezer on one side and the refrigerator on the other). We are now keen on establishing our dominance outside this domain. Even our product customisations for the Indian market-such as the 'mobile tracker' anti-theft device for mobile phones and 'cool pack' feature for refrigerators-are unique, and we have applied for patents from India."
But that's really a small change. Samsung has set itself a target of becoming the global numero uno innovator in consumer electronics and related technologies-and is already well on its way to achieving its target-with a little help from its Indian operations.
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