MSE CDP

Slide 1: 

The Micro & Small Enterprises - Cluster Development Programme ( Mse-cdp ) Removing barriers to human potential

Activities Cluster Development Programme (MSE-CDP): 

Activities Cluster Development Programme (MSE-CDP) The Ministry of Micro, Small and Medium Enterprises (MSME), Government of India (GoI) has adopted the cluster development approach as a key strategy To enhance the productivity and competitiveness as well as capacity building of Micro and Small Enterprises (MSEs) and their collectives in the country. A cluster is a group of enterprises located within an identifiable and as far as practicable, contiguous area and producing same/similar products/services. The essential characteristics of enterprises in a cluster are (a) Similarity or complementarity in the methods of production, quality control and testing, energy consumption, pollution control, etc (b) Similar level of technology and marketing strategies/practices (c) Channels for communication among the members of the cluster (d) Common challenges and opportunities.

Activities Cluster Development Programme (MSE-CDP) : 

Activities Cluster Development Programme (MSE-CDP) (i) Diagnostic Study Reports: To Map The Business Processes In The Cluster and Propose Remedial Measures, with a Validated Action Plan. (ii) Soft Interventions : Technical Assistance, Capacity Building, Exposure Visits, Market Development, Trust Building, Etc For The Cluster Units.

Activities Cluster Development Programme (MSE-CDP): 

Activities Cluster Development Programme (MSE-CDP) (iii) Detailed Project Report: To prepare a technical feasible and financially viable project report for setting up of a common facility center for cluster of MSE units and/or infrastructure development project for new industrial estate/ area or for upgradation of infrastructure in existing industrial estate/ area/ cluster .

Activities Cluster Development Programme (MSE-CDP): 

Activities Cluster Development Programme (MSE-CDP) (iv) Hard Intervention/Common Facility Centers (CFCs): Creation of tangible “assets” like Testing Facility, Design Centre, Production Centre, Effluent Treatment Plant, Training Centre, R&D Centre, Raw Material Bank/Sales Depot, Product Display Centre, Information Centre, any other need based facility. .

Activities Cluster Development Programme (MSE-CDP): 

Activities Cluster Development Programme (MSE-CDP) (v) Infrastructure Development: Development of land, provision of water supply, drainage, Power distribution, non- conventional sources of Energy for common captive use, construction of roads, common facilities such as First Aid Centre, Canteen, other need based infrastructural facilities in new industrial (multi- product) areas/estates or existing industrial areas/estates/clusters

OBJECTIVES OF THE SCHEME : 

OBJECTIVES OF THE SCHEME To support the sustainability and growth of MSEs by addressing common issues such as Improvement Of Technology, Skills And Quality, Market Access, Access To Capital, Etc. ii. To build capacity of MSEs for common supportive action through formation of self help groups, consortia, upgradation of associations, etc. iii. To create/upgrade infrastructural facilities in the new/existing industrial areas/ clusters of MSEs. iv. To set up common facility centres for testing, training centre, raw material depot, effluent treatment, complementing production processes, etc

Diagnostic Study Reports: 

Diagnostic Study Reports To Find Out Its Strengths, Weaknesses, Threats And Opportunities (SWOT), Problems And Impediments, Suggestions And A Welldrawn Action Plan For Enhancing Competitiveness Of The Units Of The Cluster And To Position The Cluster On A Self Sustaining Trajectory Of Growth

Diagnostic Study Reports: 

Diagnostic Study Reports The DSR should preferably be prepared by the end users and Other agencies should only facilitate in preparation of reports. In case the DSR is prepared by other expert agencies other than end users, these reports must be thoroughly discussed with and vetted by the end users and concerned State Government. Such agencies should have relevant expertise in cluster development .

Diagnostic Study Reports: 

Diagnostic Study Reports Specific needs of the cluster regarding IPRs, Technology Upgradation, Information and Communication Technologies (ICT), Enterprise Resource Planning (ERP), energy efficiency, lean manufacturing, technology benchmarking (international/ national), market potential assessment, skill up-gradation/ certification system, design development, comparative study with other clusters, twining of clusters, need to improve safety, health, business literacy, welfare of workforce by the enterprises and their common bodies, social upliftment, etc. should be examined and included in the DSR.

Diagnostic Study Reports: 

Diagnostic Study Reports GoI grant of maximum Rs 2.50 lakh will be provided for preparation of DSR for one cluster. For the field organizations of the Ministry of MSME, this financial support will be Rs 1.00 lakh. The cost includes the expenses towards visits to cluster, compilation of data, validation of action plan, hiring of consultant, special studies (if reqd), printing & stationery, etc. 50% of the amount sanctioned will be released after the approval. Balance 50% will be released only after acceptance of report. DSR for one cluster should be prepared within a period of 3 months, unless extended with the approval of DC(MSME).

Soft Interventions: 

Soft Interventions Soft activity would consist of creation of general awareness, counseling, motivation and trust building, exposure visits, market development including exports, participation in seminars, workshops And training programmes on technology upgradation, etc.

Soft Interventions: 

Soft Interventions a. for effectively realising the demonstrative impact of soft interventions should be maximum but not less than 25 units participating in the cluster development activities. for difficult and backward regions and for special entrepreneurs groups having a sizeable presence of Women/SC/ ST/Minorities, the critical mass could be 20. b. Maximum limit for project cost would be Rs 25.00 lakh per cluster. GoI grant for the soft interventions will be 75% of the sanctioned amount of the project cost. The cost of project will be moderated as per size/ turnover of the cluster. c. The share of the cluster beneficiaries should be as high as possible but not less than 10 per cent of the total cost of Soft Interventions. State Government/ other stakeholders contribution will be considered as gap funding.

Soft Interventions: 

Soft Interventions d. Funds will be released after getting commitment from the State Government/ Implementing Agencies that required share of the cost of interventions in the cluster is contributed by the cluster actors and other institutions/stakeholders. Funds will be released in two/three installments depending upon the implementation plan, requirements of funds. e. The duration of soft interventions will be maximum 18 months, Unless extended with the approval of Steering Committee.

Detailed Project Report (DPR): 

Detailed Project Report (DPR) The GoI grant of maximum Rs 5.00 lakh Will be provided for preparation of a technical feasible and financially viable project report for setting up of a common facility center for cluster of MSE units and/or infrastructure development project for new industrial estate/ area or for upgradation of existing infrastructure in existing industrial estate/ area/cluster. 50% of the amount sanctioned will be released after the approval. Balance 50% will be released only after acceptance of report. a. The DPR should include financial analysis like internal rate of return, break-even point, debt-service coverage ratio, sensitivity analysis, etc., using basic templates such as projected profit & loss account, projected balance sheet etc. DPR should be appraised by a bank (if bank financing is involved)/ independent Technical Consultancy Organization/ SIDBI.

Slide 16: 

Proposed Budget (Indicative)* and Means of Finance for Soft Interventions (per cluster spread over a period of 18 months) (Rs in lakh) Trust building (organizing meetings, seminars for cluster actors) 4 meetings 0.80 up to 90% 2 Building awareness of various schemes of Ministry of MSME, other Ministries and Departments of State & Central Govt, other developmental agencies, Financial institutions etc (2programmes)

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) consist of creation of tangible “assets” as Common Facility Centers (CFCs) like Common Production/Processing Centre for balancing/correcting/improving production line that cannot be undertaken by individual units, Design Centres, Testing Facilities, Training Centre, R&D Centres, Effluent Treatment Plant, Marketing Display/Selling Centre, Common Logistics Centre, Common Raw Material Bank/Sales Depot, etc.

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) a. The GoI grant will be restricted to 70% of the cost of project of maximum Rs 15.00 crore. . The cost of project includes cost of Land (subject to max. of 25% of Project Cost), building, pre-operative expenses, preliminary expenses, machinery & equipment, miscellaneous fixed assets, support infrastructure such as water supply, electricity and margin money for working capital.

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) b. The entire cost of land and building for CFC shall be met by SPV/State Government concerned. In case existing land and building is provided by stakeholders, he cost of land and building will be decided on the basis of valuation report prepared by an approved agency of Central/State Govt. Departments/FIs/Public Sector Banks. Cost of land and building may be taken towards contribution for the project. CFC can be set up in leased premises. However, the lease should be legally tenable and for a fairly long duration (say 15 years).

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) c. It is necessary to form an SPV prior to setting up of and running the proposed CFC. An SPV is a clear legal entity (Cooperative Society, Registered Society, Trust or a Company) with evidence of prior experience of positive collaboration among its members. The SPV should have a character of inclusiveness wherein provision for enrolling new members to enable prospective entrepreneurs in the cluster to utilise the facility should be provided. In addition to the contributing members of the SPV, the organizers should obtain written commitments from ‘users’ of the proposed facilities so that its benefits can be further enlarged. Bylaws of SPV should have provisions for CDE/ CDA and one State Govt official as members of the SPV.

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) There should be a minimum of 20 MSE cluster units serving as members of the Special Purpose Vehicle (SPV). There is no ceiling on the maximum number of members. In special cases, where considerations of investments, technology or small size of the cluster warrant lesser number of units, a minimum of 10 MSE units may be considered for the SPV.

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) The share of the cluster beneficiaries should be as high as possible but not less than 10 per cent of the total cost of CFC. State Government contribution will be considered as gap funding. All the participating units should be independent in terms of their financial stakes and management. No single unit will hold more than 10 per cent in the equity capital (or equivalent capital contribution) of the SPV.

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) Large mother manufacturing firms (whether in the public or private sector), other major buyers of the cluster MSE products, Commercial machinery suppliers, raw material suppliers and business development service (BDS) providers will be eligible to contribute up to 49 per cent for SPV, provided management of SPV remains clearly with the intended beneficiary SPV. The SPV may also raise loans from banks to take care of any shortfall, expansion, etc. on the condition that the plant and machinery in the CFC purchased with Government assistance will not be hypothecated and the first right thereto will rest with the Government.

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) The CFC may be utilized by the SPV members and as also others in the cluster. The CFC should be operationslised within two years from the date of final approval, unless extended with the approval of Steering Committee. Funds will be released in two/three installments (after final approval) depending upon the implementation plan, requirements of funds. n. A Tripartite Agreement among the GoI, the State Government concerned and the SPV shall be signed for CFC projects. The format of the agreement is given at Annex 3.

Hard Interventions (setting up of CFCs): 

Hard Interventions (setting up of CFCs) Exhibition Centres by Associations of Women Entrepreneurs: The GoI assistance shall also be available to Associations of Women Entrepreneurs for establishing exhibition centres at central places for display and sale of products of women owned micro and small enterprises @ 40% of the project cost. The GoI contribution will be towards furnishings, furniture, fittings, items of permanent display, miscellaneous assets like generators, etc .

Infrastructure Development: 

Infrastructure Development Infrastructure Development projects under the scheme will consist of projects for infrastructural facilities like power distribution network, water, telecommunication, drainage and pollution control facilities, roads, banks, raw materials, storage and marketing outlets, common service facilities and technological backup services for MSEs in the new/ existing industrial estates/areas.

Infrastructure Development: 

Infrastructure Development The location of the Projects should be close to district / block / taluka Headquarters or any other development projects with access to the following basic facilities :- i. Proximity to railway stations / state highways to facilitate transport of raw material to, and finished material from the Project; ii. Availability of water supply and adequate source of power supply. The power position should be reflected in the detailed project report; iii. Telecommunication facilities; iv. The location selected should not create any ecological imbalance by disturbing environment; v. The workers in the project should not be made to travel for more than 8-10 kilometers from their dwelling places;

Infrastructure Development: 

Infrastructure Development The GoI grant will be restricted to 60% of the cost of project of Rs 10.00 crore., proposals will be based on actual requirements. The State/UT Governments will provide suitable land for the Projects. In estimated cost to set up a project under Infrastructure Development projects of Rs.10.00 crore (excluding cost of land), Central Government will provide grant-in-aid. The remaining amount may be loan from SIDBI/Banks/Financial Institutions or equity from State/UT Government. The State/UT Governments will meet the cost in excess of Rs.10.00 crore or any escalation in cost. The project should be completed within two years from the date of final approval, unless extended with the approval of Steering Committee.

Infrastructure Development: 

Infrastructure Development Funds will be released on reimbursement basis or on matching share basis (Implementing Agency will deposit its share in the dedicated bank account in the name of project and submit a bank certificate). 1stinstallment limited to Rs. 2 crore only. State/UT Governments may constitute State Level Committees to coordinate and monitor the progress of implementation of the Projects, with representatives from O/o DC (MSME), SIDBI, Lead Bank, etc.

Infrastructure Development: 

Infrastructure Development . Other Conditions: i. Construction of sheds/structures shall not be taken up under the scheme. Sheds/structures will be built by the entrepreneurs according to their needs. ii. Suitable land endowed with infrastructural facilities like water, electricity, communication and nearness to “mandis” should be selected. iii. There should be forward and backward linkages between agriculture and industry. Efforts should be made to use local resources both men and material. iv. Any change in the layout plan should be got approved by DC (MSME)

New United Motors in 1986…: 

New United Motors in 1986… Super clean Super orderly High quality products High morale workforce

New United Motors in 1986…: 

New United Motors in 1986… How do they keep this plant so clean? How do they keep it so orderly? Why does the workforce look energized and happy? What’s happening that makes this plant so different from others?

It’s all about human potential…: 

It’s all about human potential… In 1923, Henry Ford wrote a little book called, “My Life and Work.” This book is quite possibly one of the most important books written about manufacturing in the 20 th Century. Why? Because it describes the basics of a system that 38 years later some folks at MIT would call lean manufacturing.

Lessons learned from Henry Ford…: 

Lessons learned from Henry Ford… “If there is any fixed theory—any fixed rule—it is that no job is being done well enough. The whole factory management is always open to suggestions, and we have an informal suggestion system by which any workman can communicate any idea that comes to him and get action on it.”

Lessons learned from Henry Ford…: 

“No manufacturer can say: ‘I built this business’—if he required the help of thousands in building it. It is a joint production. Everyone employed in it has contributed something to it.” Lessons learned from Henry Ford…

Ford and lean work processes…: 

Henry Ford’s ideas later were used by Toyota, as they developed the Toyota Production System. Lean work processes are transforming manufacturers, and a wide variety of businesses and service organizations throughout the world. Chrysler, GM, and Ford are heavily committed to the implementation of lean processes. So are their first and second-tier suppliers. Lean processes are being used world-wide to transform work processes in hospitals and other healthcare facilities. “Lean” beliefs and practices are transforming organizations in all sectors of our economy. Ford and lean work processes…

Lean transformations are driven by…: 

Lean transformations are driven by… Some basic assumptions about the nature of work and the nature of workers … and Some assumptions about the degree to which workers can be trusted. The basic assumptions undergirding mass production are quite different…

Mass production on work and workers…: 

Mass production on work and workers… Workers only work for a paycheck and benefits. The amount of information to which workers have access needs to be strictly controlled. The average worker has very limited interest in improving work processes. The typical worker doesn’t have the ability to make significant individual contributions to improved product quality or productivity.

Workers are biological robots…: 

Workers are biological robots… Trained Controlled Directed

: 

“Lean” on work and workers… Creative Concerned

Slide 41: 

“Lean” on work and workers… Knowledgeable A Partner

Basic Beliefs of Lean Organizations : 

Basic Beliefs of Lean Organizations Any company’s most valuable assets are the knowledge and creativity of its workers. Unleashing this knowledge and creativity is the primary responsibility of management; no other responsibility trumps this one. Before any company builds a product or delivers a service, it has to build the knowledge of its workers . This is what it takes to develop a lean workforce.

Developing a lean workforce…: 

Developing a lean workforce … It’s possible It’s difficult Managers and Supervisors are the key to success… They can also be a barrier

Slide 44: 

Degrees of lean enthusiasm…

Developing a lean workforce…: 

Developing a lean workforce … A basic barrier to lean…

Slide 46: 

What do you think employees value? Good Pay Job Security Promotion & Growth Good Working Conditions Interesting Work Tactful Discipline Loyalty to Employees Full Appreciation of Work Done Help with Personal Problems Feeling of Being in on Things

Slide 47: 

What do managers believe employees value? Good Pay Job Security Promotion & Growth Good Working Conditions Interesting Work Tactful Discipline Loyalty to Employees Full Appreciation of Work Done Help with Personal Problems Feeling of Being in on Things

Slide 48: 

What do employees value? Interesting Work Full Appreciation of Work Done Feeling of Being in on Things Job Security Good Pay Promotion & Growth Good Working Conditions Loyalty to Employees Help with Personal Problems Tactful Discipline

Slide 49: 

A significant disparity… Good Pay Job Security Promotion & Growth Good Working Conditions Interesting Work Tactful Discipline Loyalty to Employees Full Appreciation of Work Done Help with Personal Problems Feeling of Being in on Things Managers Employees Interesting Work Full Appreciation of Work Done Feeling of Being in on Things Job Security Good Pay Promotion & Growth Good Working Conditions Loyalty to Employees Help with Personal Problems Tactful Discipline

Driving Lean that Sticks….: 

Driving Lean that Sticks…. Means doing first things first

At an Ernst & Young Seminar in 1984….: 

At an Ernst & Young Seminar in 1984…. Why have you only asked about tools? Why hasn’t anyone asked about beliefs? Why hasn’t anyone asked about values?

The Lean Enterprise Drives Lean that Sticks….: 

The Lean Enterprise Drives Lean that Sticks….

The 5S System is...: 

The 5S System is...

Value Stream Mapping is...: 

Value Stream Mapping is...

Slide 60: 

The impact of 5S and VSM…

Slide 61: 

Lean teams transformed this…

Slide 62: 

To this…

Slide 63: 

Lean teams transformed this…

Slide 64: 

To this…

Lean teams transformed this…: 

Lean teams transformed this…

To this…: 

To this…

Making Order and Cleanliness Unbreakable : 

Making Order and Cleanliness Unbreakable

Making Order and Cleanliness Unbreakable : 

Making Order and Cleanliness Unbreakable

Lean is more than orderly and clean : 

Lean is more than orderly and clean Lean is about developing a work environment in which everybody is continually looking for ways to improve work processes Lean is about developing a work environment in which everybody is continually generating ideas about how to eliminate waste from work processes Lean is about fully engaging the creativity, imagination, and energy of everybody

Slide 70: 

“We build people before we build cars.” A fully engaged workforce…

Slide 71: 

Toyota Camry Plant in Georgetown, KY 10 years after 5S implementation 6,500 process improvement suggestions per year Number of process improvement suggestions per employee/year A fully engaged workforce…

Slide 72: 

Western Pennsylvania Hospital Time spent between signing in and registration: 2 hours to zero. Time spent registering patients: Between 12 to sixty minutes to three minutes Number of unnecessary blood bank reports issued: Between 10 and 11 to zero Shadyside Hospital Nurse time spent on patient-controlled anesthesia pumps: Reduced by 2,900 nurse-hours per year. Patient fall rate: Dramatic decline. At one point, the unit went 95 days without one. A fully engaged workforce…

Slide 73: 

Allegheny General Hospital Number of patients suffering from intravenous infections: 37 in one year to 6 the next. Deaths from intravenous infections: 19 in one year to 1 the following year. Flinders Medical Center (Australia) Emergency Department waiting time down 25 percent. 70 percent of patients in ER discharged within 4 hours. Number of patients leaving ER without seeing a physician fell by 41 percent. A fully engaged workforce…

Slide 74: 

Bolton Hospital (UK) 70 percent reduction in the number of steps needed to complete most tasks. 40 percent reduction in floor space needed. Up to 90 percent reduction in the time taken for a department to do its job, achieved with less staff and limited technological investment. Non value added tasks reduced by 49%. Flow time for blood samples reduced from 300 to 35 minutes. Reduced staff “journey” distances by 80%. Identified ₤300,000 improved income in laundry through lean redesign. A fully engaged workforce…

It can happen…: 

It can happen… Transformed Work Spaces

It can happen…: 

It can happen… Transformed Work Processes

It can happen…: 

It can happen… Transformed Workers

Slide 78: 

Lean could transform your facilities… We’d like to partner with you in making this happen

Slide 79: 

Questions? Comments?

Slide 80: 

George H. Friesen, MA Business Practice Leader – The Lean Enterprise Center for Business, Industry & Labor St. Louis Community College 314.539.5376 gfriesen@stlcc.edu