Indian customers are aware and awareness for safety is growing
Published on : Tuesday 08-11-2022
Michael Ambros, Managing Director, K A Schmersal GmbH & Co KG.
Schmersal manufactures and exports several products from India. Are there any significant differences in quality in order to make these more customer friendly?
We often hear this question. For me it is simple – we are in the safety business and there is no under cutting or downsizing in safety standards. We have plants around the globe – Europe, Americas, India, China – we are asked if this product is made in India it must be cheaper. We do not accept this kind of discussion. For us these products are made by Schmersal to global standards and there is no compromise on quality. Our products have certain standards to fulfil regarding local and global requirements. The Indian government is working on safety standards that are more or less aligned to European standards. Therefore, our products have to be good enough not 100% but 150%, because our customers often use it at the end of the range and if it exceeds by even 1 or 2%, we have a problem. So we do not accept any compromise in quality.
Post Covid have you noticed any change of trends in the major markets?
The last 2-3 years have been tricky for all of us, first with Covid, then the wave of cyber attacks – Schmersal was hit by one – and then the issues related to supply chain causing disruptions. In such a crazy situation, you have to talk to customers, you have to take them into confidence and handle their expectations. To that end, we at Schmersal have an Open Book Policy where we reach out to the customers – and some of them have been with us for 50 years, as also the new ones. So we have to have a trustful relationship with the customer.
Can you tell us more about the cyber attack that happened on Schmersal and how was that dealt with?
Yes, we had a cyber attack and since our operations globally are coordinated from a central location at a single place, we were affected by it. We could plug everything in about 10 minutes and isolate the system. The good thing is we were not frozen, nothing was destroyed or stolen – our data or the customer data – but it was close. With the help of our other company, the Schmersal Global Competence Centre (SGCC) that supports the IT operations with most of the staff based in India, we could manage the situation and get back to work quickly. However, it really opened our eyes and we had to ensure this does not happen again. So our top management got us to migrate to a much safer and secure system. One has to be always more advanced than the people who try to attack. With all the actions we have taken and investments made, we are now in a much better position to handle such threats. Learning from our experience, we are also helping our vendors, suppliers and channel partners to secure their systems. Here again, we follow the Open Book Policy of not hiding anything. But it was a nightmare and something I do not wish on any of my enemies!
Regarding the supply chain disruption, as a company with a large presence in China where the disruption started, how has Schmersal addressed this issue?
We are all now wiser, and know that the globalisation approach from the old days will not work anymore, full stop! There were challenges and bottlenecks in different countries during Covid, which was normal – problems in cargo shipments, especially in the automotive industry where the Just-in-Time approach would not work anymore. You know what happened with this crisis with microchips. So it is time to rethink the globalisation approach. We should now think of the world as three hubs – the Americas – North and South; Europe; and Asia and this is how we approach it at Schmersal. There are challenges because for some materials you have just one source and you have to keep chasing it. The last one and a half years I have done a lot of purchasing and my official title felt like Purchasing Officer because there are a lot of brokers making money out of these bottlenecks. For a microchip costing USD 1.2, the price went up to USD 26! It was insane. So with the customer again we followed the Open Book Policy and explained to them that the cost of the microchip being what it is, there is a surcharge, but we are not making any profit out of it. At the same time our global team worked on redesign of the microchip used in our products so we can have options and not face such bottlenecks ever again. This is the message for all manufacturers – global and local. Globalisation with a single source of supply is not going to work and everyone has to rethink the supply chain. This is the most important lesson from this period.
So how does this Open Book Policy work in India, which is considered a price sensitive market?
To be honest, even Indian customers who bargain hard were very understanding of the situation. I showed them what we pay the suppliers; we have no secrets and they appreciate our position. There are always exceptions and some guys do keep bargaining forever. When our own sales guys tell me this will not work, I tell them it is our responsibility to educate the customer about the cost of an effective safety solution, the awareness of safety. If they are not willing to buy, they will not get a proper safety solution. There is a price, there are margins and we can talk about everything, but there is also a threshold that we will not cross. Because there is a standard of safety and that comes at a price. The Indian customers are aware and the awareness for safety is growing. It is a win-win situation. Unlike in the past when the engineers designed the machine and then looked for safety, or the customers asked for retrofit solutions, it was difficult for us, and also expensive. Today, engineers work on safety at the design stage. With our slogan, ‘the DNA of Safety’, it is interesting for us, also easier to incorporate the solution at the blueprint stage of new generation machines for Greenfield projects, fulfil the exact needs of the client, and it also works cheaper.
Digitalisation is simplifying things, even as there are a lot of complexities too. As safety devices are integrated into the overall plant ecosystem, can these also be used for asset security in case of a cyber attack?
This is an interesting question, and we are already thinking and working on it. All or most products now are digitised and like they send out data, they can also collect data. At Schmersal we are talking about the four S in our products – Safety, Smartness, Service and Security. The need for industrial security is growing; we see it all around us, and the focus on security is huge but we cannot do this on our own, because as we are experts in safety, not in security. However, we are talking about cooperation, having discussions on partnerships with experts in security, because they need us, and it could be a win-win situation. Though for us safety and security are two different things, the customers or the industry often see these two as related, and it is the greater need of the industry as digitalisation is connecting things, and possibly in the next 3-4 years there could be such products and solutions available.