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In this 3rd episode, Mr. R.C. Bhargava shares how Maruti's approach of treating vendors as partners helped the vendors grow with Maruti and also helped build the auto components industry in India.

Role of management in making India a manufacturing hub | Chapter 3: Treating Vendors as Partners

As global demand for industrial machinery soars, Indian equipment manufacturers are struggling. In this episode we discuss how they can overcome the constraints and be more competitive.

The Equipment Enigma: Rethinking the approach to new product development

The Equipment Enigma: Rethinking new product development in equipment manufacturing

Aditya Auto transformed operations by shifting from a forecast-based to pull-based system, cutting working capital, improving supplier relations, and boosting delivery performance.

How did Aditya Auto reduce its working capital requirements and improve on-time delivery

Discover how Aditya Auto transformed its R&D—from chaos to control. In this episode, leaders share how agile practices cut tooling lead times by 40% and boosted project closures by 150%.

How Aditya Auto transformed it's R&D systems

Discover how a leading agri-equipment company transformed supply chain chaos into competitive advantage by shifting from a push-based to a pull-based system during the COVID-19 crisis.

From chaos to control - Shifting to a pull-based system in agri-equipment

Hello and welcome to the Counterpoint Podcast. I'm Shubham Agarwal, and today, we're talking about a timeless lesson from a turbulent time: how a crisis can reveal the critical flaws in a business and how fixing them can lead to a sustainable competitive advantage. We'll be looking at a case in point from the agri-equipment business.Let's rewind to early 2020. The agri-equipment industry was looking at a great season, but then came the unprecedented COVID-19 lockdown.&nbsp;It resulted in a complete loss of a peak sales month. But as the country began to open up, a massive and rapid surge in demand followed.&nbsp;Dealers were selling off their inventory so fast that they were even offering cash to get new equipment. It was a golden opportunity.But the manufacturers couldn't deliver. The entire system choked. Why?&nbsp;The problem wasn't a lack of demand; it was a severe&nbsp;supply crunch. This situation exposed critical symptoms of a dysfunctional supply chain:1. Supplier struggles:&nbsp;Tier-1 suppliers were unable to ramp up production due to broken working capital cycles, constrained plant capacity, limited logistics, and the persistent threat of future lockdowns.2. Operational chaos:&nbsp;As a result, OEMs could not maintain production schedules and their plants were forced to operate at low capacity.3. Hoarding:&nbsp;In the face of uncertain supply, dealers and branches began hoarding inventory, driven by the fear of shortages.Under pressure to utilise limited capacity and meet sales targets, manufacturers and their channel partners engaged in a series of self-defeating behaviors, creating a self-reinforcing vicious loop.There are two basic concerns that aggravate during such times:1. The manufacturing mismatch.&nbsp;To keep production lines running, OEMs would assemble whatever they had parts for, even if the final product was not in demand.&nbsp;This practice consumed limited components, in a process we call&nbsp;‘material stealing’, and valuable production time, in a process we call&nbsp;‘capacity stealing’,&nbsp;on products that would not sell immediately.2. Pushing unwanted stock.&nbsp;To meet billing targets, companies pushed any available finished goods to dealers, regardless of what the dealers actually needed.&nbsp;This left dealers with non-moving stock, tying up their working capital and preventing them from buying and selling in-demand products.This dysfunction highlights a core conflict - companies want to respond quickly to market demand, but to do so, they need a smooth, stable production flow. However, the reality of the situation with erratic supply, frequent plan changes, and fragmented control, makes a stable flow impossible.The fundamental conflict, as people are currently solving it, is between two things:1. Responding to market demand by pushing available stock.&nbsp;People choose this because it offers the illusion of control and an immediate, measurable outcome, a completed sale.2. Maintaining stable, predictable production.&nbsp;This is chosen when the team wants to improve efficiency and reduce costs.&nbsp;However, in a push-based system, any attempt to maintain stability is quickly abandoned when faced with immediate market urgencies, leading to a cycle of firefighting and chaos.People choose the first option because it offers the illusion of control and immediate financial gain, while the second seems to fail in the face of unpredictable conditions.&nbsp;The result is a system with no protective inventory, leading to chronic instability and poor performance.So, what’s the way out?&nbsp;The solution requires a complete paradigm shift from a ‘push’ to a&nbsp;‘pull’ system, based on the principle of using strategic buffers to decouple the supply chain.The principles of this solution are simple yet powerful.1. Buffering against variability:&nbsp;Instead of pushing inventory to dealers, a company should hold finished goods stock at an aggregated central location, like a warehouse. This stock acts as a buffer to absorb demand spikes.&nbsp;Replenishment to dealers is based only on what they have sold, preventing hoarding and ensuring the entire system responds to real consumption.2. Ensuring ‘full kit’ availability: At the plant level, maintain buffers of all necessary components to protect production from supply uncertainty.&nbsp;The plant’s production should then be driven by the actual off take from its finished goods warehouse, not by unreliable forecasts.3. Suppliers as partners:&nbsp;You can't do this alone.&nbsp;Encourage suppliers to implement a similar ‘pull’ system.&nbsp;They can maintain their own finished goods buffers and produce to replenish what the OEM has consumed, rather than following rigid monthly schedules.&nbsp;This provides them with much-needed working capital relief and reduces overall supply chain inventory.The transition should be done systematically in phases to avoid overwhelming the system.1. Phase 1:&nbsp;Stabilise the supply chain for&nbsp;‘Runner’&nbsp;variants, the high-volume, regular-selling products. This is where the highest leverage lies.2. Subsequent phases:&nbsp;Once runners are stable, the company can move on to&nbsp;‘Repeater’&nbsp;and then&nbsp;‘New/Stranger’ variants.3. Use a priority system:&nbsp;A simple, color-coded system can be used to manage priorities and signal replenishment needs.<ul style="list-style-type:disc;"><li>Black will signify stockout, signalling urgent replenishment needed.</li><li>Red will stand for stock below one-third of the target level.</li><li>Yellow&nbsp;is stock is at a sufficient level and Green is stock is at a healthy level.</li></ul>The solution isn't just about changing processes; it's about building a foundation of trust and stability.<ul style="list-style-type:square;"><li>Support supplier finances:&nbsp;Implement a&nbsp;"bill discounting"&nbsp;mechanism with a financial institution.&nbsp;This allows OEMs to leverage their strong credit rating to get suppliers paid faster at a lower interest rate, ensuring business continuity for their partners and an uninterrupted supply for themselves.</li><li>Proactive safety:&nbsp;During a pandemic or other similar disruption, create a dedicated ‘COVID Care Team’ to ensure compliance with health norms, both at the OEM's plant and at the supplier's facilities.&nbsp;This reduces the risk of future shutdowns.</li></ul>The effectiveness of this approach is not just theoretical.&nbsp;International Tractors Limited (ITL), which already had a pull-based system in place before the pandemic, serves as a powerful example.&nbsp;While other companies struggled with supply-side chaos, ITL was able to respond to market realities with agility.&nbsp;In July 2020, ITL recorded an impressive domestic growth of &gt;71%, far surpassing the industry average of&nbsp;38.5%.&nbsp;Their cumulative domestic growth was the highest in the entire tractor industry. This demonstrates that a robust, flow-based system provides a sustainable competitive advantage, even in the most turbulent times.That's it for today's episode! Until next time, stay curious, stay informed. This is Shubham, signing off.

Satyashri Mohanty – Mr. Bhargava, we discussed, how to make workers as part of the team and so that they feel engaged with the company. And, as a result, we also discussed how to... how that can lead to cost reduction because you are getting workers who work on time and, the attendance levels are very high and then there is a huge value release can happen. But I remember you talking about, a point where you said that there are 70% of the workforce whose experience and all can also be encashed. So, can you talk about that part as to how do I get more…&nbsp;R. C. Bhargava - Yes&nbsp;Satyashri Mohanty - …out from these workers?&nbsp;R. C. Bhargava - Certainly, you get a lot of gain if workers don't have to be, if I may use the word ‘policed’, and they do things on their own, they don't have to wait, be enforced discipline, but it is voluntary discipline. But the other thing which we must not forget is that the workers are actually on the shop floor and they are the persons who are making the products, whether it is machining or welding or fitting or electrical works or whatever.&nbsp;R. C. Bhargava - They are the guys who do it. Now, over a period of time, a worker who's working at a particular station in the company gets to understand a lot of the problems associated with the processes which have been given down to him. And if he feels that it would be in his interest. In his interest in two ways - one, that if he makes a suggestion, his manager will actually take that seriously and examine it properly.&nbsp;And the second is that if he does it and the company benefits, then company benefit will ultimately also reflect in some benefit to him.&nbsp;If these two conditions are met, then the workers with their experience on the shop floor can have a potential of contributing a lot of suggestions on how to improve the process time, make it shorter, how to avoid wastage, how to avoid defects, where one can look at some low-cost automation to avoid a difficult situation which can't be solved otherwise, and a whole lot of improvements.&nbsp;Now, the reason why it's more important for the workers to do this, because their managers or their, even their supervisors who have not been working on the line, are actually not able to do this kind of thing. Because those guys who are the supervisors and higher they don't know how to make the product.&nbsp;Because there's a difference between actually welding and knowing the theory of welding. I mean, anybody who's, been to college will understand engineers, if they're asked today to weld something, they won't be able to do it.&nbsp;But the guy who's doing it will do, with his experience with his eyes shut.&nbsp;And the experience in Japan first was that if you actually first motivate these workers by making them understand that their future depends on the growth of the company.&nbsp;And if you motivate them by making them realise that they will benefit if they do this, and then you can train them as to how to use the knowledge which they have gathered to actually make suggestions for improvement. I'm saying train them because it will not come automatically.&nbsp;It's very difficult for a person to make suggestions for improvement. But it requires a certain amount of training and time over which he then understands how he should solve problems.&nbsp;And this is what we did in Maruti. We started the cross-functional teams and small quality circle groups. And they made initially not very much suggestions, but then our managers worked with them and taught them the methodology of trying to solve problems. How to identify a problem, how to determine its priorities, how to determine the possible causes of the problem, how to eliminate those causes, come to the root cause, then how to look at possible solutions, and then try those solutions and see then which one actually solved the problem.&nbsp;Satyashri Mohanty - So, how did you do this tactically? Because if I look at a typical shop floor, what managers should be bothered about is “how do I get eight hours from this guy then he goes home”. And, and what you're talking about is, you know, spending time in training, suggestion, ideating, brainstorming sessions.&nbsp;R. C. Bhargava - See, I'm assuming that…&nbsp;Satyashri Mohanty - Yeah&nbsp;R. C. Bhargava -... you have done one part of the job, which is&nbsp;Satyashri Mohanty - Yes&nbsp;R. C. Bhargava -... to make workers feel…&nbsp;Satyashri Mohanty - Feel as&nbsp;R. C. Bhargava - …that they are part of the team. Now, how to actually identify and solve problems and make suggestions. What Japan had, and we had, we put aside every month a time period of about one hour, during which we, we have a quality circle meeting. So, people in that area get together and then the process starts with the help of the manager initially. What I said, identify all the possible problems in that area which people encountered. Then to prioritise them and pick the most important problem to be solved first. Then to, get everybody's ideas that how can we solve this problem, what is the cause of it and that process then, over time, builds up. And people get more and more capable of doing this exercise of solving problems and making suggestions.&nbsp;It's been increasing in Maruti over the years. Last year, 2023-24, we had over a million suggestions which were actually implemented.&nbsp;Satyashri Mohanty - Wow.&nbsp;R. C. Bhargava - Itis the highest ever.&nbsp;Satyashri Mohanty - Okay.&nbsp;R. C. Bhargava - Now, you see that over 40 years people. Well, these suggestions didn't start 40 years ago. Started maybe 30 years ago, but over 30 years, people have been making suggestions, and the numbers have been growing. In Japan, they still have suggestions coming up after 70 years of work and getting to be so highly competitive.&nbsp;Satyashri Mohanty - Still there's so much more to extract from the system.&nbsp;R. C. Bhargava - So there's never an end to this. The word ‘Kaizen’ in Japan, as you know, means that everything is capable of being improved.&nbsp;Satyashri Mohanty - Yeah.&nbsp;R. C. Bhargava - And there's no end to this process of making improvements in your manufacturing processes. So, I think not only in India, but all over the world, except for places where they have implemented this worker's participation, companies are losing out on the experience and the learnings of the 70% or 60% of the workers who are on the shop floor.&nbsp;We are losing out that we don't get this value in. They could do so much more to help the company grow.&nbsp;Satyashri Mohanty - Very interesting because I also see these two topics are linked to each other. The first part of, you know, dealing with workers being part of the company, and the second is trying to, you know, engage them for ideation. What I've seen in many companies is you have this, uh, quality circles, but they fizzle out within no time. And from this discussion, I'm just thinking that if you don't do the first part right, and you just do the, "Let's do a quality circle program," and…&nbsp;R. C. Bhargava - Correct.&nbsp;Satyashri Mohanty - …you can't get that, value. So the, the two things fit together.&nbsp;R. C. Bhargava - One time, maybe 20, 30 years ago, there was a great movement towards learning from Japanese management.&nbsp;Satyashri Mohanty - Yes.&nbsp;R. C. Bhargava - And amongst the things was Just in Time and these quality circles. We have all India Kaizen competitions.&nbsp;Satyashri Mohanty - Correct&nbsp;R. C. Bhargava - But if you actually look at the results which are achieved in the company in terms of suggestions implemented and benefits, value coming out of that, it's miniscule.&nbsp;And that, the reason why I told many of these companies, I was in the boards of some of these companies also, I said, "The reason is unless the worker feels that he is a part of the company, that making these improvements and suggestions for improvements will actually also benefit him because as the company grows, he grows, why would he do it?"&nbsp;Satyashri Mohanty - Yeah.&nbsp;R. C. Bhargava - In Japan, workers actually do this on their own time.&nbsp;Satyashri Mohanty - Wow.&nbsp;R. C. Bhargava - Not within the working time.&nbsp;Satyashri Mohanty - So they just find out time for&nbsp;R. C. Bhargava - They spend an extra hour a month for the quality circle meetings.&nbsp;Satyashri Mohanty - Yeah.&nbsp;R. C. Bhargava - We found that India, we couldn't do that because most of the workers didn't have their own transport. They came by buses, or they had some other arrangement of pooling and things. And therefore, they could not stay back after a shift because then their transport system would go bad. So, we decided that it would be worth our while to cut short the working time in the shift by half an hour this way and half an hour that way and then get one hour together in two shifts. So, the shift change time became one hour a month for doing quality circle work.&nbsp;Satyashri Mohanty - And what is very important is you're tactically facilitating the entire process as well while taking care of the workers and...&nbsp;R. C. Bhargava - Well, they get involved.&nbsp;Satyashri Mohanty – …so a lot of things has to fit together.&nbsp;R. C. Bhargava - They have sense of involvement in the company.&nbsp;Satyashri Mohanty - Yeah, yeah. And you, you can't just start a quality circle and a Kaizen program by just putting posters and…&nbsp;R. C. Bhargava - No&nbsp;Satyashri Mohanty - …expect workers to contribute and…&nbsp;R. C. Bhargava - No, no. And, and you have to educate them on the process.&nbsp;Satyashri Mohanty - Yes.&nbsp;R. C. Bhargava - I do think while we understood the importance of quality circles from, from what the Japanese did, we never went deeper into it to understand how and why quality circles were successful in Japan.&nbsp;Satyashri Mohanty - I think, yeah, that's, missing piece in many of the companies where they have the so-called Kaizen Quality Circle. But if you really go deep into it, you see it's just an eyewash to the external world.&nbsp;R. C. Bhargava - Mostly on paper.&nbsp;Satyashri Mohanty - Nothing done about it. Very, very interesting. So, I think there's a lot of these, as you talked about, the time taken to produce a car. All those, I think, improvements should have translated into that, resulting in more cars getting produced.&nbsp;R. C. Bhargava - Yeah.&nbsp;Satyashri Mohanty - So, it's, it's something that even if you're doing locally, it is connecting to the benefits to the company as well. And from these benefits, you're saying there's a share also coming in to the workers who have been part of those circles, right?&nbsp;R. C. Bhargava - That's right.&nbsp;Satyashri Mohanty - That's, that's very interesting.

Discover how empowering shop floor workers through trust, training, and structured ideation unlocks innovation, drives continuous improvement, and builds a deeply engaged workforce—transforming manufacturing from the ground up.

Role of management in making India a manufacturing hub | Chapter 2: Harnessing workers as employee assets

Satyashri Mohanty – Mr. Bhargava, we discussed, how to make workers as part of the team and so that they feel engaged with the company. And, as a result, we also discussed how to... how that can lead to cost reduction because you are getting workers who work on time and, the attendance levels are very high and then there is a huge value release can happen. But I remember you talking about, a point where you said that there are 70% of the workforce whose experience and all can also be encashed. So, can you talk about that part as to how do I get more…R. C. Bhargava - YesSatyashri Mohanty - …out from these workers?R. C. Bhargava - Certainly, you get a lot of gain if workers don't have to be, if I may use the word ‘policed’, and they do things on their own, they don't have to wait, be enforced discipline, but it is voluntary discipline. But the other thing which we must not forget is that the workers are actually on the shop floor and they are the persons who are making the products, whether it is machining or welding or fitting or electrical works or whatever.R. C. Bhargava - They are the guys who do it. Now, over a period of time, a worker who's working at a particular station in the company gets to understand a lot of the problems associated with the processes which have been given down to him. And if he feels that it would be in his interest. In his interest in two ways - one, that if he makes a suggestion, his manager will actually take that seriously and examine it properly.And the second is that if he does it and the company benefits, then company benefit will ultimately also reflect in some benefit to him.If these two conditions are met, then the workers with their experience on the shop floor can have a potential of contributing a lot of suggestions on how to improve the process time, make it shorter, how to avoid wastage, how to avoid defects, where one can look at some low-cost automation to avoid a difficult situation which can't be solved otherwise, and a whole lot of improvements.Now, the reason why it's more important for the workers to do this, because their managers or their, even their supervisors who have not been working on the line, are actually not able to do this kind of thing. Because those guys who are the supervisors and higher they don't know how to make the product.Because there's a difference between actually welding and knowing the theory of welding. I mean, anybody who's, been to college will understand engineers, if they're asked today to weld something, they won't be able to do it.But the guy who's doing it will do, with his experience with his eyes shut.And the experience in Japan first was that if you actually first motivate these workers by making them understand that their future depends on the growth of the company.And if you motivate them by making them realise that they will benefit if they do this, and then you can train them as to how to use the knowledge which they have gathered to actually make suggestions for improvement. I'm saying train them because it will not come automatically.It's very difficult for a person to make suggestions for improvement. But it requires a certain amount of training and time over which he then understands how he should solve problems.And this is what we did in Maruti. We started the cross-functional teams and small quality circle groups. And they made initially not very much suggestions, but then our managers worked with them and taught them the methodology of trying to solve problems. How to identify a problem, how to determine its priorities, how to determine the possible causes of the problem, how to eliminate those causes, come to the root cause, then how to look at possible solutions, and then try those solutions and see then which one actually solved the problem.Satyashri Mohanty - So, how did you do this tactically? Because if I look at a typical shop floor, what managers should be bothered about is “how do I get eight hours from this guy then he goes home”. And, and what you're talking about is, you know, spending time in training, suggestion, ideating, brainstorming sessions.R. C. Bhargava - See, I'm assuming that…Satyashri Mohanty - YeahR. C. Bhargava -... you have done one part of the job, which isSatyashri Mohanty - YesR. C. Bhargava -... to make workers feel…Satyashri Mohanty - Feel asR. C. Bhargava - …that they are part of the team. Now, how to actually identify and solve problems and make suggestions. What Japan had, and we had, we put aside every month a time period of about one hour, during which we, we have a quality circle meeting. So, people in that area get together and then the process starts with the help of the manager initially. What I said, identify all the possible problems in that area which people encountered. Then to prioritise them and pick the most important problem to be solved first. Then to, get everybody's ideas that how can we solve this problem, what is the cause of it and that process then, over time, builds up. And people get more and more capable of doing this exercise of solving problems and making suggestions.It's been increasing in Maruti over the years. Last year, 2023-24, we had over a million suggestions which were actually implemented.Satyashri Mohanty - Wow.R. C. Bhargava - Itis the highest ever.Satyashri Mohanty - Okay.R. C. Bhargava - Now, you see that over 40 years people. Well, these suggestions didn't start 40 years ago. Started maybe 30 years ago, but over 30 years, people have been making suggestions, and the numbers have been growing. In Japan, they still have suggestions coming up after 70 years of work and getting to be so highly competitive.Satyashri Mohanty - Still there's so much more to extract from the system.R. C. Bhargava - So there's never an end to this. The word ‘Kaizen’ in Japan, as you know, means that everything is capable of being improved.Satyashri Mohanty - Yeah.R. C. Bhargava - And there's no end to this process of making improvements in your manufacturing processes. So, I think not only in India, but all over the world, except for places where they have implemented this worker's participation, companies are losing out on the experience and the learnings of the 70% or 60% of the workers who are on the shop floor.We are losing out that we don't get this value in. They could do so much more to help the company grow.Satyashri Mohanty - Very interesting because I also see these two topics are linked to each other. The first part of, you know, dealing with workers being part of the company, and the second is trying to, you know, engage them for ideation. What I've seen in many companies is you have this, uh, quality circles, but they fizzle out within no time. And from this discussion, I'm just thinking that if you don't do the first part right, and you just do the, "Let's do a quality circle program," and…R. C. Bhargava - Correct.Satyashri Mohanty - …you can't get that, value. So the, the two things fit together.R. C. Bhargava - One time, maybe 20, 30 years ago, there was a great movement towards learning from Japanese management.Satyashri Mohanty - Yes.R. C. Bhargava - And amongst the things was Just in Time and these quality circles. We have all India Kaizen competitions.Satyashri Mohanty - CorrectR. C. Bhargava - But if you actually look at the results which are achieved in the company in terms of suggestions implemented and benefits, value coming out of that, it's miniscule.And that, the reason why I told many of these companies, I was in the boards of some of these companies also, I said, "The reason is unless the worker feels that he is a part of the company, that making these improvements and suggestions for improvements will actually also benefit him because as the company grows, he grows, why would he do it?"Satyashri Mohanty - Yeah.R. C. Bhargava - In Japan, workers actually do this on their own time.Satyashri Mohanty - Wow.R. C. Bhargava - Not within the working time.Satyashri Mohanty - So they just find out time forR. C. Bhargava - They spend an extra hour a month for the quality circle meetings.Satyashri Mohanty - Yeah.R. C. Bhargava - We found that India, we couldn't do that because most of the workers didn't have their own transport. They came by buses, or they had some other arrangement of pooling and things. And therefore, they could not stay back after a shift because then their transport system would go bad. So, we decided that it would be worth our while to cut short the working time in the shift by half an hour this way and half an hour that way and then get one hour together in two shifts. So, the shift change time became one hour a month for doing quality circle work.Satyashri Mohanty - And what is very important is you're tactically facilitating the entire process as well while taking care of the workers and...R. C. Bhargava - Well, they get involved.Satyashri Mohanty – …so a lot of things has to fit together.R. C. Bhargava - They have sense of involvement in the company.Satyashri Mohanty - Yeah, yeah. And you, you can't just start a quality circle and a Kaizen program by just putting posters and…R. C. Bhargava - NoSatyashri Mohanty - …expect workers to contribute and…R. C. Bhargava - No, no. And, and you have to educate them on the process.Satyashri Mohanty - Yes.R. C. Bhargava - I do think while we understood the importance of quality circles from, from what the Japanese did, we never went deeper into it to understand how and why quality circles were successful in Japan.Satyashri Mohanty - I think, yeah, that's, missing piece in many of the companies where they have the so-called Kaizen Quality Circle. But if you really go deep into it, you see it's just an eyewash to the external world.R. C. Bhargava - Mostly on paper.Satyashri Mohanty - Nothing done about it. Very, very interesting. So, I think there's a lot of these, as you talked about, the time taken to produce a car. All those, I think, improvements should have translated into that, resulting in more cars getting produced.R. C. Bhargava - Yeah.Satyashri Mohanty - So, it's, it's something that even if you're doing locally, it is connecting to the benefits to the company as well. And from these benefits, you're saying there's a share also coming in to the workers who have been part of those circles, right?R. C. Bhargava - That's right.Satyashri Mohanty - That's, that's very interesting.&nbsp;

Harnessing workers as employee assets

In this insightful episode of the Counterpoint Podcast by Vector Consulting Group, Dr. Rajiv Desai, Senior Technical Advisor at the Indian Pharmaceutical Alliance, joins host Chandrachur Datta to explore the evolving landscape of pharmaceutical quality management in India. 

A must-listen for pharma professionals committed to quality, patient safety, and long-term business sustainability.

Challenges and opportunities in pharma quality

Hello and welcome to the Counterpoint Podcast. I’m Shubham Agarwal, and in this episode, we will be discussing a report released by the research team at Vector Consulting Group.We are going to talk about something that’s not just big business, but deeply personal for anyone who’s ever relied on affordable medicine — especially in the US.We’re diving into the strange saga of the Indian generic pharmaceutical industry. It’s a story that’s part success, and part crisis. So, let’s unpack what’s really going on. Buckle up, &nbsp;it’s going to be interesting.Okay, so here’s the thing. India is quickly becoming the generic drug supplier for the world, and especially for the US. And I mean huge. In 2022, the US. market for generics was about $87 billion, and it’s expected to hit $111 billion by 2028. Currently, the Indian pharma companies have built fortunes supplying to this market. And with a ton of blockbuster drug patents set to expire over the next few years, &nbsp;there’s this massive opportunity to launch generic versions.Sounds amazing right?But here’s the plot twist: even as the opportunity gets bigger, the profits are shrinking. Generic pharma companies focused on US market are facing significant margin pressure.Over the past decade or so, prices for generic drugs have just kept falling.Let’s breakdown the parts of the puzzle further. Whenever a generic hits the market, competitors swarm in. More competition means lower prices. Simple supply and demand.Adding to the pressure is another aspect: buyer power. There has been a major buyer consolidation, increasing the bargaining power of distributors and reinforcing the downward trend of drug prices.But wait — here comes the curveball.While prices for most generics have been tanking… some drugs are suddenly in short supply. And because of that, prices for those specific drugs are shooting up.We’re talking critical medicines — cancer drugs, emergency room meds, and basic stuff like cold and flu medicine for kids. As of mid-2024, the US was facing 250 active drug shortages. That’s huge.<h5>Two big reasons for the shortage:</h5>1. Some companies just gave up on making drugs because of depleting margins, and2. The US FDA cracked down hard on quality — shutting down plants that didn’t meet standards.So now, companies that can supply these drugs, and do it reliably, suddenly find themselves in high demand.Opportunity knocks, right? But here’s the dilemma.Indian pharma companies are stuck between two very different realities.On one hand, they’re trying to cut costs, while on the other hand, they’re staring at this opportunity to step in and solve a global drug shortage. But if they’ve cut too deep, they don’t have the capacity, the people, or the quality systems ready to respond.<h5>So now they’re playing a guessing game:</h5>‘Should we invest and be ready — just in case we get a big order?’OR‘Should we hunker down and wait it out?’The result? Chaos. Uncertainty. And missed chances.If you're still with me, here’s where it gets really interesting.There is a way out. But it’s not a silver bullet. It’s more like a new way of thinking. Three big shifts are needed.<h5>First: Get operationally Agile</h5>And no, I don’t mean just in meetings. I’m talking real, on-the-ground agility in operations. Ditch the monthly planning systems. Start working with real-time demand signals. Create buffers where needed. And stop clinging to those rigid production schedules.Plants that made this switch? They saw output jump by up to 30%. That’s game-changing because additional output helps reduce the overheads. Agility helps players cut down on other wastages like excess inventory, air freights and penalties. These savings add up and positively impact the bottom line.<h5>Second: Quality has to be everyday, Not just FDA Day</h5>A lot of companies still treat FDA inspections like exams — cram before the visit, clean up just enough to pass. But guess what? The FDA is now doing surprise visits. So, if your plant isn’t inspection-ready all the time, you're in trouble. It’s time to shift from ‘inspection readiness’ to ‘perpetual readiness’. It’s about building habits, not checklists.<h5>Third; Rethink R&amp;D</h5>Most firms are overloading their R&amp;D teams — way too many projects, not enough resources. Everyone’s in a rush, and nothing flows smoothly. But the companies that took a breath and actually reduced their work in progress in R&amp;D, — that staggered their project launches, managed capacity better, and focused — they saw 30%-50% faster timelines. And didn’t even need more people.Quick side note — we’ve got to talk about raw materials.India may be becoming the pharmacy of the world… but when it comes to ingredients? We’re still heavily dependent on China. Like, over 80%. That’s a big vulnerability.Even Indian companies with their own API plants treat them like third-party suppliers, no visibility, no coordination. The result? More delays. More waste. Less control.The fix? Integration. Share data. Commit to volumes. Treat your API supplier even if it's your own company or not — like a strategic partner, not a vendor. Sounds obvious, but you’d be surprised how many don’t do it.So where does all this leave us?Indian pharma is at a critical juncture. The opportunity is real. But so is the risk. You can’t survive by just cutting costs. And you can’t grow by just waiting for luck. It’s about making smart, structured changes. One area at a time. First, fix the constraint, the one that gives the highest leverage. Then move to the next. Create a system that’s ready to adapt, ready to scale, and ready to respond, not just react.It won’t be easy. But the companies that get it right? They won’t just compete. They’ll lead.That’s the pharmaceutical odyssey we’re in. Let’s see who makes it to the other sideThanks for listening.If this resonated with you — share it with a colleague or friend in the industry. You never know who might need to hear it.Until next time, stay sharp and stay ready.

India’s pharma industry powers global generics—but behind the success are shrinking margins, rising scrutiny, and urgent choices. Discover the hidden challenges behind India’s pharma success and what it will take to lead in a changing world.

The pharmaceutical paradox: A growing market with shrinking margins — ​ What’s the way out?​

Hello and welcome to the Counterpoint Podcast. I’m Shubham Agarwal, and in this episode, we will be discussing a report released by the research team at Vector Consulting Group.We are going to talk about something that’s not just big business, but deeply personal for anyone who’s ever relied on affordable medicine — especially in the US.We’re diving into the strange saga of the Indian generic pharmaceutical industry. It’s a story that’s part success, and part crisis. So, let’s unpack what’s really going on. Buckle up, &nbsp;it’s going to be interesting.Okay, so here’s the thing. India is quickly becoming the generic drug supplier for the world, and especially for the US. And I mean huge. In 2022, the US. market for generics was about $87 billion, and it’s expected to hit $111 billion by 2028. Currently, the Indian pharma companies have built fortunes supplying to this market. And with a ton of blockbuster drug patents set to expire over the next few years, &nbsp;there’s this massive opportunity to launch generic versions.Sounds amazing right?But here’s the plot twist: even as the opportunity gets bigger, the profits are shrinking. Generic pharma companies focused on US market are facing significant margin pressure.Over the past decade or so, prices for generic drugs have just kept falling.Let’s breakdown the parts of the puzzle further. Whenever a generic hits the market, competitors swarm in. More competition means lower prices. Simple supply and demand.Adding to the pressure is another aspect: buyer power. There has been a major buyer consolidation, increasing the bargaining power of distributors and reinforcing the downward trend of drug prices.But wait — here comes the curveball.While prices for most generics have been tanking… some drugs are suddenly in short supply. And because of that, prices for those specific drugs are shooting up.We’re talking critical medicines — cancer drugs, emergency room meds, and basic stuff like cold and flu medicine for kids. As of mid-2024, the US was facing 250 active drug shortages. That’s huge.<h5>Two big reasons for the shortage:</h5>1. Some companies just gave up on making drugs because of depleting margins, and2. The US FDA cracked down hard on quality — shutting down plants that didn’t meet standards.So now, companies that can supply these drugs, and do it reliably, suddenly find themselves in high demand.Opportunity knocks, right? But here’s the dilemma.Indian pharma companies are stuck between two very different realities.On one hand, they’re trying to cut costs, while on the other hand, they’re staring at this opportunity to step in and solve a global drug shortage. But if they’ve cut too deep, they don’t have the capacity, the people, or the quality systems ready to respond.<h5>So now they’re playing a guessing game:</h5>‘Should we invest and be ready — just in case we get a big order?’OR‘Should we hunker down and wait it out?’The result? Chaos. Uncertainty. And missed chances.If you're still with me, here’s where it gets really interesting.There is a way out. But it’s not a silver bullet. It’s more like a new way of thinking. Three big shifts are needed.<h5>First: Get operationally Agile</h5>And no, I don’t mean just in meetings. I’m talking real, on-the-ground agility in operations. Ditch the monthly planning systems. Start working with real-time demand signals. Create buffers where needed. And stop clinging to those rigid production schedules.Plants that made this switch? They saw output jump by up to 30%. That’s game-changing because additional output helps reduce the overheads. Agility helps players cut down on other wastages like excess inventory, air freights and penalties. These savings add up and positively impact the bottom line.<h5>Second: Quality has to be everyday, Not just FDA Day</h5>A lot of companies still treat FDA inspections like exams — cram before the visit, clean up just enough to pass. But guess what? The FDA is now doing surprise visits. So, if your plant isn’t inspection-ready all the time, you're in trouble. It’s time to shift from ‘inspection readiness’ to ‘perpetual readiness’. It’s about building habits, not checklists.<h5>Third; Rethink R&amp;D</h5>Most firms are overloading their R&amp;D teams — way too many projects, not enough resources. Everyone’s in a rush, and nothing flows smoothly. But the companies that took a breath and actually reduced their work in progress in R&amp;D, — that staggered their project launches, managed capacity better, and focused — they saw 30%-50% faster timelines. And didn’t even need more people.Quick side note — we’ve got to talk about raw materials.India may be becoming the pharmacy of the world… but when it comes to ingredients? We’re still heavily dependent on China. Like, over 80%. That’s a big vulnerability.Even Indian companies with their own API plants treat them like third-party suppliers, no visibility, no coordination. The result? More delays. More waste. Less control.The fix? Integration. Share data. Commit to volumes. Treat your API supplier even if it's your own company or not — like a strategic partner, not a vendor. Sounds obvious, but you’d be surprised how many don’t do it.So where does all this leave us?Indian pharma is at a critical juncture. The opportunity is real. But so is the risk. You can’t survive by just cutting costs. And you can’t grow by just waiting for luck. It’s about making smart, structured changes. One area at a time. First, fix the constraint, the one that gives the highest leverage. Then move to the next. Create a system that’s ready to adapt, ready to scale, and ready to respond, not just react.It won’t be easy. But the companies that get it right? They won’t just compete. They’ll lead.That’s the pharmaceutical odyssey we’re in. Let’s see who makes it to the other sideThanks for listening.If this resonated with you — share it with a colleague or friend in the industry. You never know who might need to hear it.Until next time, stay sharp and stay ready.&nbsp;

Discover how Maruti Suzuki’s people-centric management style fuelled India’s auto boom. Mr. R.C. Bhargava - Chairman, Maruti Suzuki shares insights on transforming work culture to drive manufacturing growth.

Role of management in making India a manufacturing hub | Chapter 1: Driving worker engagement

Listen to Mr. R.C. Bhargava, Chairman, Maruti Suzuki discusses the role of management in making India a manufacturing hub in the future.

Role of management in making India a manufacturing hub in the future | Podcast by Vector Consulting Group

Why do players in steel fabrication industry stay small?
Discover the root causes and the strategies they can adopt to drive long-term growth and efficiency.

Breaking the tonnage trap: Rethinking growth in the steel fabrication industry

Why do players in steel fabrication industry stay small? Discover the root causes and the strategies they can adopt to drive long-term growth and efficiency.

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Counterpoint, by Vector Consulting Group, is a podcast and video series that challenges conventional management thinking.&nbsp;In today’s business world, traditional approaches often fall short of solving complex challenges. Counterpoint dares to question these norms.&nbsp;Created by Vector Consulting Group, the series blends systems thinking with deep causal analysis to uncover the real levers of change. Each episode offers fresh perspectives and practical, actionable insights rooted in real-world business experience.&nbsp;Whether you’re navigating operations, strategy, or leadership dilemmas — Counterpoint helps you look beyond the obvious and rethink what truly drives performance.&nbsp;

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Counterpoint podcast by Vector Consulting Group - a podcast series that challenges conventional management thinking. Listen to our podcasts which cover a wide range of topics - from manufacturing to mystery analysis to conversations with business leaders.

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