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Considering the role MSMEs plays in productivity, competitiveness and employment generation and also resource optimization of the country, Ministry of MSME, Government of India, has implemented the MSME Competitive (Lean) Scheme for manufacturing MSMEs which emphasises on reduction of wastages in processes, inventory management, space management, energy consumption etc.

Before getting into the details of the scheme, let us understand what Lean Manufacturing technology is all about and why the government is emphasizing on it.

 

What is Lean Manufacturing technology?

Lean manufacturing is a methodology emphasising on reducing the waste within manufacturing systems  as much as possible, while simultaneously maximising productivity. 

Waste here can be referred to as anything that does not add to value to the customers and only adds to cost.

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Wastes of Lean Manufacturing

In the context of lean manufacturing or Lean operations, waste refers to any activity or process that does not add value to the product or service being produced. The following are the seven types of waste commonly identified in lean manufacturing:

  1. Over production : Producing more than what is required by the customer or producing too early, resulting in excess inventory and higher costs.
  1. Transportation:Moving materials or products unnecessarily, resulting in higher costs and potential damage or defects.
  1. Processing: Performing unnecessary work or using too many steps to complete a task, leading to increased time and costs.
  1. Motion: Unnecessary movement of people or equipment, leading to wasted time and increased risk of injury.
  1. Inventory: Excess inventory or work-in-progress, resulting in higher storage costs, increased risk of damage, and potential obsolescence.

        6.Defects:Production of defective products or services, resulting in additional work and cost to correct the errors.

  1. Unused Talent: Failure to fully utilize the knowledge, skills, and abilities of employees, resulting in decreased engagement and motivation.

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Why Lean Manufacturing is important?

Lean manufacturing is an important methodology for reducing waste, improving efficiency, and increasing customer satisfaction.

Here are a few reasons, why it is important:

  1. Improved efficiency: By eliminating waste, lean manufacturing helps companies optimize their production processes, reducing the time, effort, and resources required to produce a product. 
  2. Increased quality: By focusing on continuous improvement and defect prevention, lean manufacturing helps companies improve the quality of their products, which in turn leads to increased customer satisfaction.
  3. Reduced costs: Lean manufacturing helps companies reduce costs by minimizing waste, optimizing production processes, and improving quality. This can lead to increased profitability and a competitive advantage.
  4. Better customer service: By reducing lead times and improving quality, lean manufacturing helps companies meet customer needs more effectively and efficiently, leading to improved customer satisfaction.
  5. Improved employee morale: By empowering employees to identify and solve problems, lean manufacturing creates a culture of continuous improvement and can lead to increased job satisfaction and engagement.

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Overall, lean manufacturing is important because it helps companies operate more efficiently, effectively, and competitively in a rapidly changing business environment.

Lean Manufacturing tools and concepts

Lean manufacturing requires a relentless pursuit of reducing anything that does not add value to a product, meaning waste. This makes continuous improvement, which lies at the heart of lean manufacturing, a must.

Other important concepts and processes lean relies on include:

  • 5S Manufacturing: The 5S systems is a workplace organization which helps in getting the “junk” out of the work area and set of procedures to keep it that way. 5S stands for Sort, Set in order, Shine, Standardize & Sustain. 
  • Visual Control: Visual controls such as cartoons, charts, light signals, Lane marking on floor, Safety instructions, Warning signs, Poka-Yoke instructions etc., can be displayed all over the work place.
  •  Standard Operating Procedures (SOPs): All verbal instructions should be converted to SOPs to remove dependency on skilled personnel in achieving required product quality level, consistency, effectiveness and efficiency. 
  • Just in Time (JIT): It’s a Japanese manufacturing philosophy to make the right product in right quantity at the right time. This almost results in zero inventory and shortest possible cycle time.
  • KANBAN System: In this, components are pulled by assembly or subsequent work centers and the containers are replenished with the right quantities by the previous work center, which reduces the inventory of unwanted components.
  • Cellular Layout: In this improved manufacturing system, familywise component completion is aimed at within the smaller self contained cell, which is a part of a big factory, as compared to operationwise completion in traditional functional layout. 
  • Value Stream Mapping: It covers all activities, both value added and non-value added, and helps in arriving at best layout of all resources required for making the product. 
  • Poka Yoke or Mistake Proofing: It is again a Japanese technique used to prevent errors occurring at their source of origin, and it finally leads to a ‘Zero Defect Situation.
  • Single Minutes Exchange of Dies or Quick Changeover (SMED): Applying ingenious methods, set up time is minimized and brought to less than ten minutes; thereby smaller batches as required by the customer can be taken up for manufacturing.
  • TPM (Total Productive Maintenance): TPM involves operators, maintenance staff and management working together to improve overall operation of any equipment. Operators, who first identify noisy or vibrating motors, oil or air leaks, can be trained to make simple repairs to prevent major and costly break downs. 
  • Kaizen Blitz or Rapid Improvement Process: It is an intense management programme, which results in immediate change and bottom line improvement. Both management staff and workers are involved in this.

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Now, let us understand What Lean Manufacturing Competitiveness Scheme (LMCS) holds for MSMEs.

Ministry of Micro, Small & Medium Enterprises, Government of India, aims to implement the MSME Competitive (Lean) Scheme for MSMEs with an objective to enhance their productivity, efficiency, and competitiveness by reduction of wastages in processes, inventory management, space management, energy consumption, etc.

LMCS brings improvement in the quality of products and lowers costs, which are essential for competing in national and international markets. 

The larger enterprises in India have been adopting LMCS to remain competitive, but MSMEs have generally stayed away from such Programmes as they are not fully aware of the benefits. 

Besides, experienced and effective Lean Manufacturing Counsellors or Consultants are not easily available and are expensive to engage and hence most MSMEs are unable to afford LMCS. So, government has brought this scheme to make MSMEs aware of the benefits of it and provided some incentives.

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Objective of the LMCS scheme

The main objective of the Lean Manufacturing Competitiveness Scheme (LMCS) is basically a business initiative to reduce “waste” in manufacturing and enhance the Domestic and Global Competitiveness of MSMEs through the application of various Lean Techniques.Waste reduction is the motive of this scheme

MSME Lean Manufacturing scheme involves applying Lean Techniques as discussed earlier (e.g., 5S,, Kanban System, Poka Yoke etc.) to identify and eliminate waste and streamline a system. The focus is on making the entire process flow, not improving only a few operations. Worker empowerment is also emphasized throughout the effort.

Approach of the scheme

The approach involves engagement of Lean Manufacturing Consultants (LMCs) to assess the existing manufacturing system of member units of the Mini Cluster(s) and stipulate detailed step by step procedures and schedules for implementing and achieving of lean techniques. 

Mini Cluster is a group of basically 10 MSMEs located within an as far as  identifiable, practicable,ontigous area, manufacturing same or similar products.

All the units of Mini Cluster will assigned withLean Manufacturing Consultants (LMCs) to implement specific LEAN Techniques.

A Special Purpose Vehicle (SPV) will be formed in each cluster. It is expected that once MSMEs are introduced to the benefits and savings that accrue from LM techniques, they would themselves continue the Scheme from the second year onwards at their own expens 

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What does all this scheme include?

Industry Awareness Programmes/Workshop

MSMEs will be made aware of the Scheme through Nation-wide awareness programmes (online and/or face-to-face, as appropriate) with the assistance of stakeholders like Industry Associations, Implementing Agencies, MSME-DFOs, District Industries Centres (DICs), Large Enterprises/OEMs.

Training Programmes

Stakeholders like the MSME Officers, Assessors and Consultants will be trained on the MSME Competitiveness (Lean) Scheme to enable an effective implementation by Implementing Agencies like QCI, NPC.

Handholding

MSMEs will be provided handholding towards the implementation of Lean Tools and Techniques at three different levels – Basic, Intermediate, and Advanced. Completion of each stage is verifiable end term assessment or assessment by Implementation Agency along MSME -DFOs as the case may be.

Benefits/Incentives

Graded incentives will be announced by the Ministry of MSME for MSMEs for encouraging MSME units’ participation under the scheme. Implementation of Lean (Generation of Lean ID) Lean Pledge & Undertaking (Generation of Lean Pledge Level) Implementation of Lean (Basic, Intermediate, Advanced)

PR campaign, Advertising & Brand Promotion

For popularising the Lean Scheme, a Nation-wide publicity will be done.

Digital Platform

Lean Scheme process will be e-enabled through a single window digital platform which will be utilized for the implementation of the scheme.

MSME Competitive (Lean) Scheme can be attained in THREE Levels after registering and taking the Lean Pledge:

a) Every MSME that embarks on the journey of Lean (Basic, Intermediate, Advanced) will have to take a “Lean Pledge” before undertaking the journey of implementation of lean tools and techniques.

b) The intent of taking a Lean Pledge is to take a “pre-commitment” or a solemn promise by MSMEs to uphold the values of Lean Practices and Philosophy in their functioning and to urge them to move ahead on the journey of Lean.

c) After taking the Lean Pledge, the MSME can apply for handholding of its units depending on the need and level of preparedness and interest of MSME unit. Lean Scheme can be implemented by MSME units in the above three levels.

Coverage & Eligibility

  1. All MSMEs registered with the UDYAM registration portal (of the MoMSME) will be eligible to participate in MSME Competitive (Lean) Scheme and avail related benefits/incentives.
  2. Scheme is also open to Common Facilities Centres (CFCs) under SFURTI (Scheme of Fund for Regeneration of Traditional Industries) and Micro & Small Enterprises – Cluster Development Program (MSE-CDP) Schemes.

Who can apply?

The scheme is open to all manufacturing MSEs. The units should be registered with the DIC (EM-II) or with any other agency (professional body, association, Government agency, department, etc.). The units are required to form a MC, ideally of 10 units (minimum 6), by signing among themselves a Memorandum of Understanding (MoU) to participate in the scheme.

How to apply?

  • A group of SMEs can apply for the scheme, hence either a recognised SPV can apply or a mini cluster can be formed by a group of 10 or more units.
  • The SPV can apply to the National Monitoring and Implementing Unit (National Productivity Council for the Scheme) in the given format.
  • The approval is given in two steps; first, the provisional approval, and final approval is given once the criteria of the provisional approval are fulfilled.

Nature of assistance

Financial Assistance for MSME Units

 

Basic Level 

Intermediate level 

Advanced Level Implementation Cost 

Implementation Cost (Max. per unit)

Free

₹ 1,20,000 + Taxes 

₹ 2,40,000 + Taxes

Beneficiary Contribution 

10% of Total Cost of implementation i.e., up to ₹12,000 + Taxes per unit (Max.) 

10% of Total Cost of Implementation i.e., up to

₹ 24,000 + Taxes per unit (Max.) 

GOI Contribution 

90% of Total Cost of Implementation-MSME unit will be entitled for up to ₹1,08,000 (max.) (Taxes Extra) 

90% of Total Cost of Implementation- MSME unit will be entitled for up to ₹2,16,000 (max.) towards the Implementation cost (Taxes Extra)

Additional Benefit

a) Additional 5% GOI contribution for MSMEs which are part of SFURTI Clusters, Woman/SC/ ST owned, NER located MSMEs. 

 

b) OEM/ Industry Association route:

 

 

(i) Additional 5% GoI contribution shall be given to the MSMEs registering through Industry Association/ OEM after completion of all levels. 

 

 

(ii) ₹ 5000/ per MSME shall be given to OEM/ Association after completing all stages of lean intervention. 

 

 

(iii) For availing this benefit MSME unit need to mention on while applying – Applying under Original Equipment Manufacturer (OEM) or Applying under Industry Association (IA).

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