ProV Conf -Talk 7- Mr.girish Kelkar

8/14/2019 ProV Conf -Talk 7- Mr.girish Kelkar

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www.pmipunechapter.org 2008 PMI Pune-Deccan India Chapter

Challenges & Risksfaced by SME unitsGirish Kelkar

President PMI Pune Deccan India

Chapter25th Sept 2008

Hyderabad

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PMI Pune Deccan India ChapterVision

Nurture for excellence!


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Some important achievements

Chapter recognized as FASTEST growing chapter in Asia Region

The Winner of 2007 PMI Component Award for Component of the Year in th

world

Our Vice President Shantanu Bhamare, PMP is recipient of Volunteer Of

The Year 2007 Award given by PMI USA for his Leadership & Outstanding

Commitment to PMI Pune chapter and PMI activities


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Objectives of the presentation

Objectives: To give brief about problems faced by SME Units in India (Pune as an

example)

To discuss the following issues from Project Management:

Challenges faced by Small & Medium Enterprises in Pune about implementation

of new ideas and projects

Challenges for Risk Management for these units

To seek discuss possible solutions


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Running a SME unit is same as running a project!

Anything that can go wronggoes wrong!


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Running SME units


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Few details about Pune city

Pune is one of the oldest cities in India and has place ofprominence in terms of Historical / Political / Social / Cultural /Educational / Religious and Industrial activities in the India today.

The city is more than 800 years old with rich cultural background andheritage

Area of the city 450sq Kms

Current population of (Pune_Pimpri_Chinchwad metro) over 50 Million

Pune has provided many freedom fighters (pre-independence forIndian Politics) and eminent thinkers in India

Pune is cultural capital of the western India and will continue tohold this position for decades to come

Pune has earned a name for new idea generation and providedleadership to the country for many new initiatives in terms of culturalreforms and advances



Few details about Pune City

Pune has a place of pride for Education & Engineering activities &is one of the most sought-after cities for Quality Education and

Scientific / Engineering Research

5 Major Universities, 100 affiliated colleges (28 Engineering Colleges,

5 Medical colleges) and over 300,000 Students in Pune

National Research Organizations

NCL & Biotech / MIRADO / IUCCA & Overseas Communication Centre etc

Super Computing Centre - CDAC

Indian Meteorological Department (IMD)

Software Technology park - one of the largest in India

A new upcoming Biotech Park

Research centre for Sanskrit and Oriental Languages



Few details about Pune City

Important centre for Defence Activities for India HQ for Southern Command Indian Army

National Defence Academy of India

Army School of Intelligence / Army School of Physical Training /

Armed Forces Medical College / Artificial Limb Centre

Indian Air Force Centre for Western Command

Many Defence Research Organizations

High Explosives Manufacturing Unit / Ordinance Depot

Explosive Research & Development Laboratories

Indian Armament Technology Centre (IAT)

Armament Research & Development Establishment (ARDE) andmany others



SMEs in Pune Small and Medium sized Enterprises (SME) in Pune:

More than 10,000 small units (Average size 1 to 5 Mn USD)

More than 500 medium sized units(Average size 5 to 10 Mn USD)

SME supply components mainly to Large Mfg units or MNCs as Tier 1 or

Tier 2 suppliers to large units

SME in IT / ITES sectors also work as vendors / sub-vendors to larger IT

companies

The operations mainly dependent on the main promoters who have strong

technical background

Entrepreneurs are first generation entrepreneurs & do not have business

background in the families



Manufacturing in Pune

Pune plays a pioneering role as the Manufacturing Hub in India with over250,000 people involved in manufacturing activities.

The city is full of Manufacturing units-Large as well as Small & MediumEnterprises / Auto-components industry for the world market.

Over the last 5 decades Pune has become a hub for the Automobile

Industry for India / Asia

Many ancillary units supplying components for such Auto units

Pune has the largest two wheeler manufacturing facility in India (2nd

largest unit in the world)

Pune has more than 100 large Engineering units

Diesel Engine Manufacturing / Power Generators Complex Engineering Machinery for a variety of applications

Project Engineering activities

Electronic/Electrical Equipment Manufacturing units

Many small and medium size pharmaceutical units



IT in Pune

Recently Pune has also become an important Hub for the ever

growing IT / Software Industry in India.

Pune has over 100 large IT units / 500 Medium sized units & 2500 smallunits involved in the IT Industry

There is population of over 100,000 qualified IT personnel (IT & ITES) in

Pune and Pune will continue to be an important location for the country

Punes IT Industry has been catching up with Mumbai in terms ofSoftware Exports in the last few years



Business Environment of SME Units

Units generally set up by technocrats using personal funds:

These units are mainly dependent on larger customers for business

SMEs do not have very good reach for marketing that restricts their

volumes and makes them too dependent on large units (in spite of SME

expertise in niches)

SMEs are generally starved for funds and have to spend too much time for

collections of Accounts Receivable & external funding arrangements

Banks are not very keen on supporting these units for working capital dueto uncertain business cycles and growth

Too much time required to be spent with Govt. / Semi Govt. agencies



Challenges faced by the SME units

Lack of adequate Management training and bandwidth amongst promotersof such units resulting in lack of:

Non-availability of Business plan leading to ad hoc decision making

Lack of Business & Financial discipline

Lack of Forward planning resulting in unforeseen situations

Lack of cognizance to even appreciate that there is a better way tomanage the projects

Lack of inadequate internal systems

Inability to attract & retain highly trained manpower in this segment sincethere is lot of poaching from larger units / MNCs in Pune

Lack of succession plans and new generation not available for such cause

Lack of awareness of modern Management practices and specificallyProject Management practices and methodologies amongst them


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Risks Faced by SME Units

Management Risks General Management skills / methods / training / attitudes Perpetuation of the units as an ongoing concern

Financial Risks

Lack of Financial Plans (Too many surprises & ad hoc decisions)

Funds & Cash Flow planning Marketing Risks

Reach & Net working

Dependence on few customers

Technology Risks (Scope / Costs / Quality)

Need for perpetual R&D

Technology obsolescence

Human Resource Risks

Need for formally trained manpower

Ability to pay competitive wages

Support Structure & Associates


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Who would want to look like this when one grows old??Running SME Unit??


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What would you want to look like when you grow old??

Managing SME Units is a challenge indeed!!

Learn to anticipate risks and deal with them


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Look at the plight of Promoter of SME

Is this a normal way??

How do you run the business? Single-handed??


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Risks faced by the SME Units in running normal operations

Promoter of SME units


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Project Process Groups

Time

Effort

Project CompleteProject Start

Control

Planning

Initiation

Closing

Execution Risks all over


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Period of greatest Risk Impact: Typical Project Environment

Planning Definition Implementation Termination

Min

Max

Risk Ability toChange easily

Ability to IdentifyRisk / Opportunity

Amount of Stake

Cost of Change

Time


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Period of greatest Risk Impact: Typical SME Environment

Planning Definition Implementation Ongoing-operation

Min

Max

Risk

Ability toChange easily

Amount of Stake

Time

SME Organization has risk thr all over the phases & it is continues for ever! Think !

Risks for SME units tend tobe perpetual

Critical Period forRisk IdentificationPlanning & Control

Cost of Change


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Risks faced by the SME units & Suggestions

Management Team: Senior Management Team

Vulnerable for slowing down or going under if the original owners are not active or have nottrained capable next generations

This can be managed if right from the beginning you have planned for successions

Lack of formalized Planning process: Emphasis of Planning right from early stages

Lack / inadequacy of good planning practices right from the beginning

This can be managed if right from the beginning you have planned for systems with requisitdiscipline & rigor . This has to be taken seriously but at times not given adequate attention

Costs / Finances / Funds Inadequate attention to financial disciplines and cash flowcontrol.

Inadequate financial plans & control over Cash Flows (perpetually caught up in this viciouscycle). This can be dangerous

Inability to pay competitive wages / salaries to trained professional in working classes

Meticulous attention to funds flow & cash flows & follow up on regular basis

Lack of adequate marketing contacts & reach:

Vulnerable due to complete dependence on single or very few customers



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Lack of formal training of the Team: Senior Management Team

Vulnerable due to non-availability of trained staff is an important challenge / risk for the SMEsegment and the risk is real

This can be managed if right from the beginning you have planned for such exercises andtraining programs for technology plus leadership skills as part of the on-going activity

Lack of formalized focus on SMART & Efficient operational procedures / methods:

Need for formal systems / Need for learning from others experience & planning for veryefficient ways and methods right from the beginning. This means this will have to continuecontinuous reviews & improvements

This can be managed if right from the beginning one has planned for right choice technologymethods even if the initial project costs are higher

Lack of awareness of IPRs and legal issues (IPRs / Patents / Copyrights / Registration

in these units: In the era of globalization it is important issue to attend to. One tends to give secondary

treatment for this. But one can not neglect these issues for even in SME units


Need for training of the leadership and Promoters of such units with right managemen

thinking / attitudes & practices


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One can easily appreciate that such situations are very common for many SME

units in and around Pune.

However this may ably represent issues faced by many such units in India

operating in such sector of the Industry.

SMEs are becoming an important segment of our economy and one can no mor

neglect such needs any more.

How ever the challenge is to decide where do we start and what is the way to

promote such thinking for this vital sector.

We all need to change our ways of thinking and think for the long term to prote

our own interest for all such units & start soon. SMEs definitely needs special

attention from everyone


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How do you insure SMEbusiness Performance?


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Marketing is the name of the game!


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To be fair inselectionprocedures all ofyou must climbthe tree!

HR dilemma??


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Some bloke wants to know if we have carried out a thorough risk assessmentproperly!!

Over enthusiastic attitude of some young players


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How do we improve the situation? Journey is not simple

Capacity to Excellence Capacity is basic potential as a given

Capacity is converted to Capability once you arewilling to put in action your potential capacity anddevelop ability

Capability is honed into Competence when you do

well over & over again in flawless way. Youdevelop a particular skill at reflex level and canrepeat the same in an effortless way

Excellence emerges when you develop passionfor your activities and master the art of doing itand living your life with zest and vigor

At times journey and the process are far moreimportant than the destination

Organization Development path would mean thatwe move from Capacity to Excellence

Capacity

Capability

Competence

Excellence

Journey from Capacity to Excellence isthe Path one needs to travel all life foractualizing Goals in Life of an individualas well for an organization

Focus &Attention

Speed &Productivity

Action Control &Repeatability

Values &Passion


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Can we manage / balance the world for ourselves

We need to work continuously to

ensure that we reach our goals andhappiness in our own way

The task is not so simple and youmust make it a serious business foryourself


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Thank you!

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ProV Conf -Talk 7- Mr.girish Kelkar

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