It’s challenging to set up a manufacturing plant. Apart from all sorts of legal compliances, you have the plant and equipment at the core that represents a sizeable investment. In certain sectors you can source various equipments like lathes, milling machines, CNC machines and others from a variety of known or not so well known vendors. However, when you are setting up a manufacturing unit that has an end to end process you cannot pick and choose. You have to source the entire plant from one single supplier.
Factors that influence choices: It is often seen that those who apply for loans and float projects are wary of suppliers. Plants are expensive and must be optimized for quality, output and consistent products otherwise you will be faced with delays, extra cost of repairs and even a stalled project. Even if foreign suppliers charge high prices they are trusted because they assure faultless plants, best equipment installation and commissioning by their experts. Then there is another factor: Time. The suppliers of entire plants on turnkey basis can delay delivery far beyond the scheduled date and this could lead to losses for buyers. It is difficult to trust local suppliers who make big promises but do not live up to their expectations. Then there is the matter of after sales services. Once the plant is working and you need service or support, there is another delay and you suffer production loss.
Due diligence: In the case of entire plants. such as roll mills for steel bars being supplied by one manufacturer, you need not look overseas if there is a suitable manufacturer. You simply need to conduct due diligence. The simplest way is to ask supplier for customer list and, better still, get them to take you to users of their plants and get the user’s opinion. Going local has advantages if you are satisfied with the references. You are assured of timely supply. Quality is perfect. Better still, you get timely services for repairs and parts cost less (this is one area where foreign suppliers charge exorbitant prices). You will save lakhs of rupees on plant cost and repairs, and gain a competitive market advantage from the word go.
