Clustering as an infrastructure solution

Abstract

With the influx of several world-class auto assemblers into India and the fact that planned production capacity exceeds the estimated demand, competition is getting increasingly intense. All assemblers are attempting to implement lean production techniques to cut costs, improve quality, and enhance their responsiveness to demand. As argued in the previous chapter, however, poor transportation infrastructure is proving to be a serious obstacle in implementing lean/ just-in-time production. This is because inadequate transportation infrastructure raises both the length and unpredictability of transit time for freight, which translates directly into higher in-transit and buffer inventories. In other words, poor transportation infrastructure does not allow for the elimination of the inventory safety net, which is one of the key drivers of the entire lean system and associated gains in quality and competitiveness.