Morbi, Emerging CERAMIC OUTSOURCE DESTINATION…..

Morbi is the ceramic capital of India. This undoubtedly and openly accepted by one and all. With so many factories of Sanitary ware, Wall tiles, Floor tiles and other ceramic goods already growing and many more taking shape, the future only seems better.

It is also a matter of pride that most of these establishments recognize the importance of creating brands. This is a sign of real entrepreneurship coming into play where industrialists do not run only after profit, but rather building a string recognizable entity that reaps benefits for generations to come. It also improves the goodwill of the firms.

However, amongst these, lie a few who would focus just on their core competencies, mainly producing high quality ceramic products. The late management thinker, Shri C K Prahlad rightly said that it is best to focus on core competencies. This yields long term risk free results and subsequent profits.

While market development and brand building do not come naturally to traditional businessmen, administration of manufacturing is not as challenging. They handle people and inbound processes with delicate ease and have a knack of string control over all the business processes linked to manufacturing. Moreover, Marketing as an activity sometimes goes into the TRIAL AND ERROR zone which is not in liking to many manufacturers.

Such manufacturers have carved a niche for themselves as manufacturers of bigger brands. Today, big brands like Johnson, Parry etc are getting their products mass manufactured at some production plants in Morbi. The Bigger Brands are, as we call in Modern Business terminology, outsourcing their work to these production units.

The concept is not new in the Indian economy. Brands like Levis, Nike and reebok all do it, and very successfully so.

There is a two way benefit in this kind of a deal. It is beneficial to both the parties. Benefits for the Bigger brand that outsource production include,

·      No Need to set-up a new plant.

·      No need to put in place and administrative team.

·      Focus on only market development.

·      Brand Building becomes their major are aof activity and performance.

·      They already own string Distribution channels and an equally popular brand to generate the pull.

·      Their team sets up system and quality parameters, which are also checked by their QC team apart from manufacturers.

·      Every unit of sales added in the existing sales channels fetches the Big Brand their value and hence also increases shareholder value.

The manufacturer also gains benefits from this deal:

·      They focus only on manufacturing.

·      Process and product control all are provided by the Brand Owner.

·      The brand owner knows the market well and hence gives perfect specifications to work with, so R & D cost of the manufacturer is virtually nil.

·      Quality parameters and methods as well as manufacturing guidelines are ready made and can be easily adopted. Moreover, the Brand owner trains key personnel and also provides fool proof working systems, which also takes away a lot of management burden.

·      The manufacturer is also assured of his total capacity utilization, keeping him free of tensions of sales and marketing.

·      He also feels less risk prone as such deals are for long term and all his installed capacity is well paid for and his profits are protected.

While there are many more benefits which can be highlighted, you may be wondering why is Morbi chosen over some other ceramic clusters. Some of the points that come on the fore are…

·      Entrepreneurs in Morbi are good at administration and quite reliable. Big Brands would feel safe working with them.

·      They have financial muscle and hold on to challenging deals.

·      They have experience in Manufacturing and also can gather technical expertise form in and around the region.

·      Morbi has relatively lower production costs.

·      Being on the national highway, it is well connected to the country as well as Kandla Port. This gives an immediate logistical advantage.

·      Entrepreneurs in Morbi are technology savvy and upgrade and learn very fast. This enables the buyers to implement their levels of working as well as quality systems very fast.

·      There are many upcoming factories and all are technologically advanced. Many of them also plan to start production as a manufacturing partner only, with quantity commitments for a period of time.

·      Availability of manpower as well as raw material is relatively easy. It is also easy to find qualified people from ceramic background.