‘Trust plays a critical role in the manufacturing segment in India’
Published on : Saturday 05-02-2022
Sonam Motwani, Founder & CEO, Karkhana.io, and Maninder Singh, General Manager - Sourcing & Supply Chain, Karkhana.io.
How has Karkhana.io performed since inception, in terms of scaling up operations?
Karkhana.io started as a team of three people in 2018 in Mumbai.
The idea was simple: build a platform that enables companies to procure their custom parts from small manufacturers across the country.
Initially, Karkhana.io’s team started working with startups and SMBs in the space to figure out their key problems in sourcing custom parts and finding solutions.
Initially, we weren’t focused on any one industry or product. But after working with a few companies, we figured out the common materials and manufacturing processes that everybody needs.
So we started building our platform around these capabilities and raw materials.
Today, Karkhana.io has capabilities in CNC machining, sheet metal fabrication, stamping, injection moulding, casting, and rapid prototyping.
Karkhana.io has built a supplier base – SMEs – around these processes and materials.
Our customers are OEMs and engineering companies who want to focus their core resources on the tech behind their product and are looking to outsource manufacturing. We work with 70+ customers from domains like electric vehicles, robots, industrial automation, special purpose machines, and medical devices.
Currently, we are a team of 40 and have close to 500 suppliers spread across technologies and geographies.
Digitalising and streamlining operations in an unorganised industry like manufacturing can be daunting. What are the challenges?
Covid-19 has led to a broad acceptance of digital ways of doing business. However, the major challenge is the adoption of digital tools: companies take time to transform digitally, and there is enormous effort required to manage the change.
There are three aspects to digitalising and streamlining operations: a. Formalising MSMEs; b. making the supply chain digital; and c. enabling users to leverage the power of digital technology
There are approximately 6 crore MSMEs in India and only 60 lakh are registered in the official MSME data bank. Since only a small percentage of MSMEs are registered, there is no clear visibility in the supply chain. While the number of MSMEs grew by 25 lakh in 2020 due to the launch of the Udyog Aadhar Memorandum policy, there is a long way to go in bringing unregistered units into the fold.
In the manufacturing sector, lack of visibility in the supply chain is the biggest challenge and can be improved only with digital solutions. There are a host of other areas that can lead to a tremendous improvement in the functioning of MSMEs: access to credit, skills training, and managerial competency enhancement. Karkhana.io is playing a critical role by helping the MSMEs in all these areas, thereby enabling their transformation.
Karkhana.io’s digital platform provides a whole new experience into the entire manufacturing process through DfM, parts library, project management, online payment, and visibility into the manufacturing journey.
How has the industry, especially the large companies, responded to this concept which has flourished elsewhere in the developed world?
On the whole, we have received a very positive response from the industry on the on-demand manufacturing concept. We are collaborating with customers, including large companies such as P&G, for their manufacturing requirements.
India is emerging as the destination of choice for companies looking to expand manufacturing, and Karkhana.io can enable the process of localisation of manufacturing.
What about the challenges in bringing the MSMEs on board? How enthusiastic is their response?
Trust plays a critical role in the manufacturing segment in India. The majority of MSMEs are inclined towards the traditional way of working, i.e., directly with the customers. Trust is built through knowing each other personally, timely payments, regular business, supporting each other during difficult times, etc.
The majority of the Tier 01 suppliers (medium enterprises) take time to appreciate Karkhana.io’s model and in associating with us. It is relatively easier to onboard Tier 02 and Tier 03 (micro & small) suppliers as they value technical support, advance payments and regular business.
Equally important, since the suppliers work in the traditional way, we enable their digital transformation, helping them scale their business and providing training as well. Owing to these reasons, the response from micro & small suppliers has been very encouraging.
While CNC machining, sheet metal fabrication, injection moulding and vacuum casting are traditional methods, how is additive manufacturing faring in terms of demand?
The industry is well-aware of additive manufacturing (AM) and the adoption of this method is very encouraging. The majority of product prototyping happens through additive manufacturing and customers are able to get the parts in a single day as well.
With AM, decentralisation is also adding substantial benefits to the customers compared to the centralised model, in terms of the ease with which complex products can be prototyped with less lead time.
In the case of additive manufacturing using metal, we still feel that the use cases are limited as the traditional model is still affordable and better in terms of performance. However, some customers are preferring to use metal AM, irrespective of the cost, if the timelines are very short.
How did the Covid pandemic and resultant disruption of supply chains impact the operations of Karkhana.io – the positives and the negatives?
With unpredictable guidelines and localised lockdowns, MSMEs were impacted immediately.
However, as we manufacture across India (supplier partners in different locations), the visibility of the supply chain helped to control the manufacturing timelines. Also, due to forward-looking payment terms, our suppliers were able to build the raw material inventories on time leading to uninterrupted manufacturing, and hence timely deliveries.
As essential industries are operational during the lockdowns, Karkhana.io was able to get huge orders from FMCG, medical and related industries. During the pandemic, the majority of the customers having a few suppliers approached Karkhana.io and leveraged the benefits of our huge supplier base, which helped these industries to keep the show running.
Even though we are able to control the supply chain easily, global impact on raw material prices, restrictions on the logistics industry and labour shortages have impacted the operations up to a certain extent. For a few months, our supplier partners were not able to find the skilled labour to complete the manufacturing and our customers didn't get the products on time.
What about the digital tools and multiplicity of vendors in the software and design area, how does the platform work?
For Suppliers:
Digitalisation is a scarcity in most manufacturing shop floors owing to the lack of technical infrastructure and skilled resources. Making the suppliers go digital with the karkhana.io platform unlocks massive business potential.
1. Suppliers get access to demand from multiple industries and geographies that are compatible with their competency, helping with better capacity utilisation and de-risking of business.
2. Our proprietary tools help them manage all order activity in one place: manufacturing specs, quality, and commercial documents, project updates, billing, and logistics.
For Customers:
To make procurement simpler and faster for OEMs, we are taking a full-stack approach:
1. On-demand capacity: Our digital platform indexes specific manufacturing competencies and the associated capacity for every supplier in our ecosystem. By plugging into the platform, the customer (OEM) gets access to practically infinite capacity for any manufacturing process. This gives them the advantage to scale their production to any volume instantly
2. Convenience: The platform facilitates organising design files, manufacturing specs, quotations, inspection reports, and live order tracking till delivery with photos of every stage. No more need for a daily phone call or email to the suppliers to check on the status.
3. Trust: Performance on the platform is backed by the reliability of an expert team on the ground that takes end-to-end responsibility for the success of the customer’s project from raw material to delivery.
What is the impact of progressive policies in the wake of Make-in-India in terms of scaling up business?
Certain sectors have seen positive impact due to the PLI schemes rolled out under the Make-in-India initiative. Also, with the ongoing shift in global supply chains and geopolitical factors, a significant number of companies have begun to reconfigure their sourcing and manufacturing footprints. India’s advantages in raw materials, manufacturing skills, and entrepreneurship is making it a favourable manufacturing destination.
Sonam Motwani founded Karkhana.io in 2018 with a mission to simplify manufacturing, through a digital platform, for businesses of all sizes. Before starting Karkhana.io, she worked with Procter & Gamble (P&G) in engineering and manufacturing roles across different business units. Sonam is an Aerospace Engineer from IIT Bombay. She enjoys conversations around technology, building teams, leadership, and decision making.
Maninder Singh is a Supply Chain Expert with 7+ years of experience in driving projects to reduce cost, ensuring business excellence, developing key relationships with strategic business partners, and taking data-enabled decisions to add value to the organisation. His past experience is in Supply Chain Excellence, Facility Planning, Project Management, Manufacturing Processes & Procurement.