MODEL MATURITY ASSESSMENT ZED a 910¢ LHOdsY LOAPOUd LOMNd TWNOILVNAaraarsSeatsrarod Hare Re Me seo, fo aarit a wlastansor oF WY wep, of fStbere; GBR, oH stp) gar a Moetbrafor a Pew ofa dae A euks gleren & arse Beall aaron a a cara Aogibralora’s Brat oA sac a, weiter wearaadeasbacona) {urge the youth, especially the small and medium entrepreneurs. that they should not compromise on two things: First, Zero Defect; Second Zero Effect. Our manufacturing should be with zero defectso that our goods are not returmed from the international marketplace, and our manufacturing should be with zero effect, so that it has no negative impact on the environment ‘SHRI NARENDRA MODI Hon'ble Prime Minister ‘August 18, 2014National pilot project report 2016 XXZED Cautionary note his document is prepared to highlight the outcomes of the National Pilot Project sponsored by DIPP for the ZED programme of QCI. It thas been prepared in good faith on the basis of information made available by the participating MSMEs on the date of compilation, Readers are encouraged to provide feedback on the content of this publication Which can allow QCI to further improve and build on the learnings ofthe pilot for a sustained impact on quality and competitiveness of manufacturing and service units in India tis however clarified that QCI will not be liable for any loss, damage, cost or expense incurred or arising by reason of any person using or relying on the information contained inthis compilation, This report (including any enclosures and attachments) has been prepared for the exclusive use and benefit ofthe government and the MSMES solely forthe purpose for which it is provided. Unless we provide express prior written consent, no part of this report should be reproduced, distributed or communicated to any thitd party. We donot accept any Fiailty if this report is used foran altemative purpose for which itis intended, nor to any third partyin respect ofthisrepor. Feedback, ifany, may be sentat zed@gein org -TEAM ZEDNational pilot project report 2016 X2ZED Foreword ‘Acknowledgments Listof Abbreviations Executive Summary Chapter 1. ZED MATURITY ASSESSMENT MODEL 11 BackgroundandRatonale 1.2 Intoduconto2E0 Maturity Assessment Moa 13 Ecosystemot The ZED Mal 1.4 Detas of 20 Mode Chapter. PILOTPROJECT 13 21.SanctionofPitby PP 22 Plot enecaes 23 Roadmap Chapter’. PILOT OUTCOMES 7 511.Gapaiy Baling 82.Awareness Promotion 4.3 Dewdoprert (ES) 3.4.mlemertaon of Mode 45 Assessment Rating and Geriiaton Chapter 4. ANALYSIS AND FINDINGS FROM THE PILOT a 4.1. Assessment Pot MSMEPerfomance 42. imgronent partes fret atonal Roto Chapter. RECOMMENDATIONS FOR ROLL OUT 30 5:1.ACental Programme Maregement fee 52 Capacity Bung troup Exel Leating 5:3 Fineuned7E0 Mocs 54.7 Enablement 55.Avareness&Gonmunicaion 56 Robust Endtofnd Asessmen Process 57 Acton Panto BuldZED Vai Propaston CONCLUSION ANNEXURE!: Training & Awareness Programs ‘ANNEXURE I: ZED Cells ANNEXURE I: Details on eQuest seasNational pilot project report 2016 <2ZED foreword nda has embarked on @ revolution of sorts in building manufacturing competitiveness through the Make in India call, MSMEs, being integral to manufacturing, job creation and contribution to GDP have been identified for large scale interventions for improving quality, sustained growth and employability of youth, With this in mind, and the PM's call for Zero Defect Zero Effect, it was decided to launch a major program to help MSMEs attain ZED excellence, With the help from the Ministry of MSME and various industry bodies, we created the ZED standard and launched a pilot program to test the concept and standards. We are pleased that the pilot worked well and now there is a more robust sct of standards and processes which will be rolled out to over 10 ae MSMEs It is expected that very soon India will rise as a ‘manufacturing hub of the global supply chain. While the the mission of ‘Zero Defect and beginning has been ma Zero Effect’ has to be strongly followed by the government and the industry to ensure a continued emphasis on sustainable manufacturing practices. Further, with Make in India, we wal see foreign companies coming to India and establishing manufacturing base inthe country: companies who would have a certain benchmark for quality & sustainability and would expect the same from MSMEs from where they will source components & raw material, Statistical analyses from the outcomes of this pilot project have not only revealed current performances of the sample MSMEs but also the direct are trending. Now the challenge that emerges is not how far actual performance fell below expectations, but fundamentally why the gap exists. The ZED Maturity which theirmetrics Assessment Model is expected to bridge this gap and take enterprises through a process from the present status fo the next level in the ZED maturity matrix, which will not only build their capacities but also make them globally competitive over a period of time, thereby bolstering the ecosystem of Make in India Tam pleased to present tis pilot report which isa litmus test of the sustainability of the ZED Model in the scheme of Make in India, This report captures the outcomes of the 10-month long process, summarizes the lessons leamt and recommends future course, On behalf ofall the partners contributing for this report, 1 ‘would like to profusely thank Shri Amitabli Kant, Secretary- DIPP; Dr. A. K. Pujari, past Secretary-MSME; Shri ‘Amarendra Sinha, Past DC-MSME; Shri S. N. Tripathi, Additional Secretary & DC-MSME; Shri Rajiv Aggarwal, Joint Seeretary-DIPP; Shri G. R. Raghavender, Joint Secretary-DIPP, Shri Ramesh K. Pandey, JDC-MSME and many more for their commitment, unwavering support and ‘encouragement in conducting this pilot project. UAL Farcructtlna it ZainulbhaiNational pilot project report 2016 S3ZED acknowledgements A= ay ares ee Senor 0 say ote Naor Plt Prt 68 ‘implant nd testing of ZED Matty Ancien Molclantyonering ie Plc pe ‘ue sire has 1 he Minty of Mr, Soi and Maun Enric whine een spre vegan selene ars tio asn ‘We cagres sco gate ocr nde aseitons, Fen of tan Camber fC a Indy (FICC, Condon saun ny CI, Ast ‘Chambers of Commerce and fodestry of India {ASSOCHAMD 4 Nl Pravin Con (NPC) ar ore rope Genin kong sh!t ZED Moll among Mx Sell Meta Eee and (rss geo MeKiney ater doin pte vaabecottn instr lta nove poo dig moet pepaton in poise ‘efi orci pat ep onal ing ‘cer sgeofiplenntont ese, (ue Chima, Mt Ail Zainal aml Seoy Gener, De Rei Singh have povided contin ines, alate ess end sgpor pan and eee this bis pot. Ther demote awe ened valde en cnr the fen Tht profound evens cores! and mated our epee of & ‘owed andmapriierinihton ‘Vipin Sun (CEO, ABET) and Me AK in Advi faving yk sd seston for ‘is work, Newest ei om enone dance Ot OCI satTmbeshvel pith nwt ‘irom epi an provi al ps ap owas comp Las bt the st si tks alo ly entercpes and panne ithe operant onl ave herp cco amp th powitinaeinete = ZED TeamNational pilot project report 2016 list of abbreviations ASSOCHAM BIEL, cro. a cum CPCBIPCB DFS pipp EFQM QUEST, FDL ricer GaP cpp cup cGMP. uA Jak KYC MACE Mn/mn /MoMSME_ Mooc MSMEs NAB NABET NIQR NTPC acl us grr TPM ‘19M ZED “aD The Associated! Chambers of Commerc: ind Industry of India 43ZED Bharat Heavy Electricals Limited Chief Executive Officer Central Pollution Control Board Pollution Control Board Department of Financ Department of Industrial Policy and Promotion European Foundation for Quality Management E-Quality Platform for Employability through Skill and Training Foreign Direct Investment Federation of Indian Chambers of Commerce and Industry Good Agricultural Practices Gross Domestic Product Good Hygiene Practices Good Manufacturing Practices Indian Industries Association Jammu and Kashmir Know Your Customer Maruti Centre for Excellence Million Ministry of Micro Small and Medium Enterprises Massive Open Online Course Micro Small and Medium Enterprises National Accreditation Body National Accreditation Board for Education & Training National Institution for Quality and Reliability National Productivity Couneil National Thermal Power Corporation Quality Council of India Quality Management System Quality Technology Tools Total Productive Maintenance Total Quality Maintenance ‘Zeto Defect Zero Effect ‘Zeto Liguid Discharge &National pilot project report 2016 43ZED executive summary ddressing the nation on India's 68th Independence Day, Hon'ble Prime Minister Shri Narendra Modi urged industry, especially the MSMEs of India- “We should manufacture goods in such a ‘way that they carry zero defects; that ourexported goods are never retumed to us. We should manufacture goods with zero effect so that they should not have a negative impact on ". With more than 26 million MSMEs ‘manufacturing over 6000 products, the MSME sector is critical for the overall growth of manufacturing sector and the national economy, MSMEs which are globally competitive, producing quality produets and maintaining strong environmental standards are integral o the success of “Make in India”, Consequently, QCI along with MoMSME_ and DIPP started exploring the idea of creating a holistic model for the MSME sector. the environmen ZED (Zero Defect, Zero Effect) aims to build a sustainable ‘competitive advantage for MSMEs across India by Focusing ‘on zero defects (quality) and zero effect (environment). The ZED model is an integrated certification and capability building model, encompassing quality led process and product design, productivity, production and postproduction maintenance, enhanced ‘product and process! compliance with environmental standard, financial prudence including finan discipline, human resource development and dissemination of MSME innovations. Inspired from global best practices, this model is developed by experts from QCI with extensive contributions from MoMSME, experts drawn from industry chambers like CH, FICCI, ASSOCHAM and leading companies such as NTPC, Maruti Suzuiki, and BHEL apart from other industry experts. The model, through its graded benchmarking, provides a roadmap to help organizations build world class quality and environment systems and strengthen their potential in global value chain, Itaims to rate more than one million MSMEs ane handhold them to improve their quality and environmental performance. MSMEs rated under ZED. ‘model have the potential to ereate about 1 million job ‘opportunities in thenext decade. DIPP decided to fund the pilot to test the ZED model of QC1 ‘on 31st March 2015 with a goal to cover a sample set of $0 MSMESs in India across sectors and across states. The pilot also envisaged building a ZED ecosystem to help the Industry improve their competitiveness, understand the pain points for their growth, ereate avenues to improve their productivity, quality of products etc, through a sustained improvement methodology. The pilot aimed to ereate and analyse the end to end processes so as to incorporate the learnings in national rollout. twas decided to cover a broad range of sectors during pilot. ‘The pilot therefore concentrated on the 25 Make in India sectors including chemicals, automobiles clectronies and defence. Pilot MSMEs were taken through self-assessment, hhandholding as well as on-site assessment, As part ofthis pilot, 36 consultants and 30 assessors were trained and developed. To drive awareness about the ZED effort, multiple workshops were conducted with more than 1800 MSME participants across India, A fully functional online learning system with training modules was also deployed and tested as apart ofthe pilot Although the task at hand was to cover only 50 MSMES, the ddcluge of applications in the initial 10 days of opening the portal for inviting applications forced us to restrict the ‘number of applications to 374, Out of these only 74 were selected through a detailed process to gauge the maximum, impact across sectors in manufacturing alone, A separate pilot is however being conceived for the MSMEs working under the service sector, including healthcare, retail, tourismand hospitalityNational pilot project report 2016 <2ZED The pilot reinforces key hypothesis that the ZED model has a potential to provide effective and comprehensive assessment at seale for MSMEs across India, It is evident that the online infrastructure set up for MSME supports rapid understanding of the model, Clear improvement plans have arisen out of the assessment. The pilot highlights specific success stories from sample MSMEs and supports the approach of MSME handholding by the consultants to improve on the assessed parameters. The analysis of pilot data has identified few key issues, such as limited understanding of IPR and patents as well as weak environmental systems across MSMEs. ZED will provide a ‘mechanism to increase awareness, understanding and implementation of these systems. On the ZED model and the assessment process the pilot data indicates the need to clarify few select parameters, improve understanding of quantitative parameters. ‘Some of the key leamings from the pilot which are being planned as a strategy and also for incorporation in the national rollout of ZED ate: ‘= Integration of service sector: Given that almost 47% of MSMEs are inthe service sector that contributes 38% to the GDP, their integration in ZED scheme is a must. Large industries have done well in service sector primarily due to well recognized voluntary standards like CMM. However, MSMEs need to support the quality paradigm. A separate pilot is required given the parameters impacting service sector are different. = Ecosystem that can drive robust end-to-end assessment and handholding process: As the assessment and hand-holding processes are scaled up, i is critical to expand the available resources for assessment and handholding in terms of numbers, geographical spread and sectoral spread. As part of this effort, 11 "ZED Cells’ have already been set-up for awareness, training and project management of ZED. Over 5 years, the estimated requirement will be 10 establish more than 300+ ZED cells at universities, OEMs, Industry Associations and companies. ‘= Ensuring effective capacity building of assessors and consultants through e-learning and experiential learning: A web based 'eQuest'(E-Quality platform for Employability, through Skill and Training) system has been set upto support the MSMEs in their improvement journey. eQuest will contain more than 100 high end audio visual interactive courses and in-built assessment ‘engine based on the latest face recognition technology. ‘= Creating an ecosystem to promote IPR, trademarks and design innovations: The parameters related to these areas were the least chosen by participating MSMEs, amongst all he parameters in the model. Given their importance in the global value chain and export ‘competitiveness there is an urgent need to create greater awareness and adoption ofthese topics. = Environment parameters: Average scores on ‘environment parameters have been significantly lower than on other parameters. This indicates limited ‘emphasis on environment topies. More environment parameters could be made mandatory. However, itis also critical to create infrastructure to support impzovement in these parameters as well as provide incentives to MSMEs to comply beyond what isin the legislation. = Simplifying quantitative parameters: Quantitative Parameters like quality performance can be further clarified. Specifically, the definition and method of calculation can be further detailed to ensure accurate understanding. ‘= Creating an action plan to ensure strong pull for ZED certification: «holistic and syndicated action plan, needs to be developed to move from “conformance to excellence” through ZED among MSMEs. These should include greater financial access at lower cost, _sreater market access and in the long run simplification of business rules. The plan should also ensure strong, recognition for top performers.ZED MATURITY ASSESSMENT MODELMaturity Assessment Model <2ZED 1.1, BACKGROUND AND RATIONALE Addressing the nation on India's 68th Independence Day, Hon'ble Prime Minister Shri Narendra Modi has urged Industry, especially the MSMEs of India -"We should ‘manufacture goods in such a way that they carry zero defect and that our exported goods are never retumed to us. We should manufacture goods with zero effect that they should not have a negative impact on the environment”. With an aim to make India a manufacturing hub, he had appealed to the manufacturers and investors world over fo come and establish their manufacturing units in India, “I want to appeal to the entire people word over, “Come, Make in India”, “Come, manufacture in India, Sell inany country of| the world but manufacture here. We have got skill, talent, discipline, and determination to do something” he had said, Make in India isa disruptive idea to boost the Indian manufacturing at seale and ereate job opportunities for the rapidly growing working population ~ popularly called demographic dividend. Over the next 20 years India's working age population will ‘grow faster than the overall population growth, expanding the ratio of working ageto dependent population just as other countries Food such as China are experiencing a contraction in theirs’ Importance of manufueturing has stagnated for 40 years and now contributes 15-16% to GDP, employing only 10.2% of the labour force’, If these scenarios play out in tandem, and: they will if current trends continue, demographies would create a disaster = not a dividend. This highlights the importance and the scale of Make in India initiative as a discuptive ide. Tele & saverettowmil saat Produce: gemente & Worldwide, MSMEs have been accepted as the engine of economic growth especially the manufacturing. growth? ‘with MSMEs constituting over 90% of total enterprises in most of the economies and being credited with generating. the highest rates of employment growth and exports, In India too, with more than 26 million MSMEs manufacturing. over a range of 6000 products’, the MSME sector is critical for the overall growth of manufacturing sector and the national economy. The top 10 MSME subsectors by their contribution to the Indian manufacturing output are summarised in the exhibit below |SME SUBSECTORS BY THEIR CONTRIBUTION ‘TOMANUFACTURING OUTPUT. Top 1OMSME subsectors by contibuton othe lnan manufacturing output ‘4age of tata manutactrng output of na 76k 75% rach. Tanspar Rubber Tasos res “What makes Indian manufacturing competitive today is technology, not cheap labour; we tried it the other way around and it didn't work" isthe common refrain amongst Industries. While the idea may be good, the implementation needs to be ramped up exponentially. This would require that the Indian manufacturing and particularly MSMES rust provide quality produets and services with minimum ‘environmental impact, Thus globally competitive MSMEs producing quality products while adhering to strong ‘environmental standards are integral to the suecess of “Makein India”,Maturity Assessment Model <2ZED Recent policy instruments and market interventions-both in public and private spaces- around developing the MSMES. of India are encouraging. To start with, the implementation of Public Procurement Policy that mandates public sector units to procure 20%’ of their annual procurement from MSMEs and foreign direct investment in single & ‘multibrand retails and in various manufacturing sectors such as Railways and Defence, are a quantum leap in boosting the capabilites of Indian MSMEs. Additionally, emerging manufacturing sectors like aerospace and challenges faced by Indian Offset Partners fo offload offset in defence imports are enough multipliers and drivers to encourage MSMEs towards the zero defect and zero effect ‘manufacturing in Indi. In this context, itis important that to invite FDI under the Make in India regime, the fulcrum of local support must revolve around MSMEs and policy interventions, which includes: L._Theeaseof doing business through policy changes; Creating a feeder model in Indian MSMEs and nernational OEMs through quality of source material, components and services with minimum environmental impact; 3. Making available skilled human resource and skilling existing ones ‘While the Department of Industrial Policy and Promotion have started work around ereating an atmosphere of ease of doing business and the results have started to show through improved rankings, the QCLalong with MoMSME ventured to develop a holistic model aimed at improving quality and ‘competitiveness of MSMEs. ZED.was thus born! 4. The Gace ofa, New Deh 26 March 2012 1.2, INTRODUCTION TO ZED MATURITY ASSESSMENT MODEL The joumey of ZED started from the announcement of Make in India, where the government made it clear that Make in India was not about protectionism, but about making Indiaa part ofthe global supply chain, Itwas in this pretext that it was felt necessary that MSMEs have to be supported to expand, evolve and grow to produce to intemational standards. Therefore, ZED was sought to be a solution for managing the two important aspirations of Indian enterprises ~ quality and environment QUALITY ‘Quality is crucial in today’s environment. Supplying quality products is a key to customer satisfaction, Increasingly, “organizations in India, whether selling a product or service, have realised that relentless focus on quality gives a sustainable competitive advantage to theirbusinesses. ENVIRONMENT CONSCIOUSNESS Many MSMEs see environmental issues as a challenge, primarily because in order to act in an environmentally responsible way, there is a significant eapital investment required. The MSMEs with environmental focus sometimes lack the knowledge of environmental risks or inadequate common facilities to inculeate environmental ‘consciousness in their processes. Thus, these MSMEs facea significant challenge to deliver products or services with zero effecton environment, Integrating the above two aspects, ZED has presented a model where concept of quality takes a view from a mere tool for compliance to a source of competitiveness. Operationally itis meant to evolve from a total dependency ‘on inspection ofthe final product to correct defect, toaMaturity Assessment Model <3ZED proactive process of enablers of quality like quality planning, product and process designing, optimum processes, efficient resource management etc. All along with quality of products and services, the model puts equal ‘emphasis on the elimination of impacts on the environment through adequate planning at product and process design, pre-production, production and maintenance activities, pos, production. Thus, the mode! aims to boost competitiveness ‘of MSMEs in the global supply chain and in the process of driving these transformational changes creates career ‘opportunities for the youth in India, The ecosystem around ZED model is calibrated to make aware, assess, rate, counsel, handhold, re-assess & certify more than one million MSMEsand ensure that they riseup the ZED ladder. Thus ZED has emerged a an integrated and holistic certification system, which can account for quality, productivity, energy efficiency pollution mitigation, human resource and technological depth including design and IPR both in product and process of manufacturing. The assessment parameters ofthe mode! covers many aspects of the existing schemes of MoMSME: Quality Management System (QMS)(Quality Technology ‘Tools (QT), Lean Manufacturing Competitiveness Scheme (LMCS), Design Clinic, and Technology & Quality Up-gradation (TEQUP), and Building Awareness on Intellectual Property Rights (PR), 1.2.1. GLOBAL BEST PRACTICES EXPLORED FOR ‘THE MODEL ‘The government over the years has flirted with many schemes catering to improving the quality of processes and systems in MSME sector. These include the Lean Manufacturing Competitiveness Scheme, ISO ete. To censure that these schemes reach the Indian MSMEs at scale, itis important thatthe idea and intent ofall these schemes must be leveraged to create aholistic model of growth, & Itis in this context that uring the design ofthe ZED model the team assessed several global best practices which eventually became a foundation fora comprehensive model for Indian MSMEs. Few examples of global best practices are mentioned below- Capability Maturity Model (CMM) : The model's im is to improve existing software-development processes, butt can also be applied to other processes. Baldrige Model : More than 25 countries base their frameworks upon the Baldrige criteria EFQM Model : The EFQM Excellence Model allows people to understand the cause and effect relationships between what their organization does and the results it achieves. It can be applied to any organization, regardless of size, sector or maturity. ‘Testing Maturity Model (TMM) :Itsaimisto be used {na similar way to CMM that isto provide a framework for assessing the maturity of the test processes in an ‘organization, and to providing targets on improving. maturity 1S 9001 : Thiscertifcation is suitable forall sizes and types of organizations and is well established around. the world as an invaluable Quality Management ‘System standard. The process encompasses the entire ‘organization and requires senior management buy-in, it isnot{justa function of the Quality Department. In addition, a set of popular tools and techniques atabally accepted in quality assessment are summarized below: ‘Lean manufacturing : itis a systematic method for the climination of waste (Mu system, Lean also tak through overburden (“Muri”) and waste created 1) within a manufacturing into account waste createdMaturity Assessment Model 43ZED through unevenness in workloads (*Mura” = 58:5Sisthename ofa workplace organization method that uses a list of five Japanese words: seiri, seiton, sciso, seiketsu, and shitsuke. They can be translated from the Japanese as ” "standardise", and "sustain", = Kaizen : Kaizen is Japanese word for "improvement, when used in the business sense and applied to the workplace, refers to activities that continuously improve all functions and involve all employees from the CEO to the assembly line workers. Italso applies to processes, such as purchasing and logistics that cross ‘organizational boundaries into the supply chain, Is envisaged that inviting FDI under Make in India will include sourcing of parts and components from the Indian ‘manufacturing base. The rating mechanism provided by the ZED model is understood to enable the foreign investors, assess information & build confidence of the eapability and capacity of Indian MSMEs. This would also ensure that the larger companies investing in India have a ready-made ‘vendor base to support their activities and an expansive base of trained human capital who can contribute to their ‘manufacturing process without much retraining. ZED is thus a win-win proposition for all in a new emerging ‘manufacturing competitiveness under the Make in India regime, ZED asa maturity assessment model focuses on improving the processes of MSMES through its 5 level rating (Bronze- Silver-Gold-Diamond-Platinum). The model has been conceived and structured to offer these graded benchmark levels of an organization's performance through a set of standard enablers and outcomes focused on quality and environmental performances in easily understandable terms, It aims to rate and handhold more than one million MSMEs to deliver top-quality products using clean technology. This process will help MSMEs evolve and grow ‘through adequate training and funding to move up the value chain and produce quality products. The Model will sensitize MSMEs to emphasize on packaging and branding, sly train them to deliver quality products sading to zero rejection, ‘Thus the vision and mission of ZED is devised as: Vision To enable the advancement of Indian industry to position ‘of eminence inthe global marketplace and leverage India's ‘emergence as the world’s supplier through the ‘Made in India! mark Mission ‘Todevelop and implement a'ZED' culture in India based on the principles of & ZeroDefeet (focus on quality) + Eliminating waste + Ensuring conformance to requirement = Zero Effect focus onenvironment) + Zeto air pollution/liquid discharge (ZLDYsolid waste + Zoro wastage of natural resources 1.2.3 Scope of the ZED Maturity Assessment Model The ZED Maturity Assessment Model shall be applicable forall sectors of manufacturing and service industry. It will initially focus on MSMEs/Small businesses. It will address the quality and ecological needs of domestic and overseas customers, society, employees, partners, regulators and investors. Clean energy is a very important aspect of the model. Enterprises will be encouraged and handheld to %Maturity Assessment Model <3ZED adopt clean technology to attain sustainable growth trajectory, During the course of national implementation, the model will fine tune specific assessment parameters for cach sector, 1,3ECOSYSTEM OF THE ZED MODEL ‘The ecosystem of ZED has dynamic systems & processes working in synergy with specific roles to play in the foreseeable future. The sector specifie models are aligned with all 25 sectors under the Make in India initiative, to begin with. The Rating & Certification on the maturity assessment mode is valid fora specified time period within which system of surveillance is inbuilt in the model, The cexhibitbelow visually highlights this ecosystem, ‘THE ZED ECOSYSTEM Advoeary opacity Building Collaborations Assessment ‘eating Award Reward Handholding Global Best Practices Gof See ‘Benchmarking ‘The ZED ecosystem has dynamic systems & processes working in synergy, with specific roles to play in the foreseeable future, The MSMEs, during their journey in this environment, undergo training, handholding and assessment where the ecosystem will facilitate learning fiom intemational best practices through online & offline modes. ZED will ereate a forum for MSMEs to go & see benchmarked systems & processes at top quartile ZED MSMEs and other organizations. An annual award & reward system for high performing ZED units will provide an opportunity to showcase themselves globally, Various collaborations under this ecosystem will enable knowledge sharing amongst stakeholders of ZED which will assist in advocacy of the ZED philosophy at various government & ‘non-government platforms, DETAILSOFZED MODEL, ‘The organizational level indicators are useful pointers towards implementing ZED Maturity Assessment Model at the operational level. These indicators may include the manufacturing capabilities, design capabilities, Quality/Environment/Safety assurance systems, people development and engagement systems, standardization and ‘measurement systems for quality and environment, learning and improvement ystems and legal compliance. ‘Thus an organization applying to be evaluated on the ZED Maturity Assessment Model was required to demonstrate and was to be assessed on the following parameters at the ‘operational level ‘The ZED parameters Enablers for product qual Total Process design for quality 5 Product design for quality 2 Post-production activities 4Maturity Assessment Model <2ZED Enablers for emission, effluent and waste disposal activities Total 4 management Pre-production (start - up activities) 1 forenvironmental management Production and maintenance activities. 2 Product design for environment 1 Postproduction activities 1 Enablers for resource management Total Facility 3 Human resource 2 Outsourced activities Innovation and creativity — safeguarding Outcomes Total Outcomes for quality performance 3. Outcomes for process performance Outcomes for environmental performance Outcomes for overall company 4 performance Total Parameters Enablers Outcomes. 14 Total 50 1.4.2. ZEDRATING ‘There were 0 parameters desired on which the MSME were to be assessed and rated. The MSME applicant is required to comply with identified 20 essential parameters & at least 10 other parameters as per the MSME's domain competence. Hence, the MSME was to be rated on a minimum of 30 parameters. MSMEs were free to ZED rating on more than 30 parameters as per the processes and systems available at the MSME, Bach parameter has 5 levels. The rating is based on a simple average of the levels on each of the parameter. The company is encouraged, handheld and trained to achieve a higher level for each parameter and thus grow in the maturity model. The exhibit below shows the ZED rating scheme. ZED RATING SCHEME Abone 4.0 INN Above 35 eUpoo QD {Ges — e035 oat Su Above 22 ato; aD 22 &Bdlow NO RATING43ZED PILOT PROJECTPilot Project <3ZED Chapter 1 summarised the philosophy of ZED and how it ‘was conceived to help the Indian MSMEs in the global supply chain thereby becoming an important cog in the wheel of Make in India, This chapter describes the important activities conceived and milestones in the ZED journey, ZED Journey In September 2014, soon after the Prime Minister's Speech ‘on the Independence Day of 2014, the Quality Council of India (QCI) commenced work on developing a maturity assessment model for the Indian MSMEs, After numerous, ‘meetings and brainstorming by the drafting committee that included members from the Ministry, Industry associations and other stakeholders, a concept document on the model ‘was presented at the 22nd National Quality Summit of CI chaired by Chairman of QCI, in November 2014 in an exclusive session on ZED. The model further evolved with inputs from Mi ry of MSME and rating agencies and the first draft was presented at the MSME convention in February 2015, After detailed discussions a joint meeting of DIPP and MoMSME was called. it was decided that DIPP will stat a Pitot Project of the ZED Maturity Assessment Model. In March 2015, a multi stakeholder team came on Board and the maturity matrix was ereated with $0 parameters with @ vertical assessment spread (Bronze to Platinum). ‘The funding for Pilot Project was released by DIPP on March 31, 2015. 2.1. SANCTION OF PILOT BY DIPP ‘Chapter one showed the relevance of ZED to Make in India and its importance in making India a manufacturing hub. ‘The National Accreditation Board for Education & Training (NABET), constituent Board of QCI, submited a proposal with the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Government of India. On March 31, 2015, DIPP sanctioned a National Pilot Project to QCI with a clear objective to test the ZED Maturity Assessment Model on a sample set of SO MSMEs across India and provide a platform totest value proposition and reveal deficiencies before spendinga significant amount of time, eneray or money on the envisaged large-scale activity, Another objective was to provide quantitative evidence that the ZED system has potential to sueceed on a full-scale basis 2.2. PILOT BENEFICIARIES. The pilot helped various stakeholders involved in the following way: = Government he pilot data is desired to help the Government know the readiness of Indian MSMEs for the Make in India initiative and subsequently design relevant strategies and interventions, = MSMEs : ‘The pilot has helped the participating MSMEs to benchmark their current performance on various dimensions of the ZED model. MSMEs who are the beneficiaries were motivated to make use of the scheme through industry awareness programmes. They have been facilitated with pre-assessment and certification assistance through ane-platform. = Assessors and Consultants : The capacity building exercise has helped them understand and apply the ‘model in fall scale wp, = ZED Cells : Have been created in Industry Chambers, OEMs, Universi pilot, as loci for awareness, training & facilitation of MSMEs. & Industry Associations during thePilot Project <3ZED = Other stakeholder of this project were the team members working on the 5 The other group of ben project. A key objective of the project was to increase the skills of the staff dealing with companies and assessors/consultants, especially those involved inthe pilot project, 2.3. ROADMAP. PILOT ROADMARyargness workshops for Capacity Building The skills, instincts & abilities of consultants & assessors were assessed and strengthened as per the requirements of the ZED Model. During the Pilot, a need for establishing regional centres for capacity building of MSMEs & other stakeholders was identified and as a result ZED Cells were created in Chambers of Commerce, OEMs, u sities, Industry Associations etc. 10 aease tung MSM capt bling leverage their domain competencies and FlotpoestyDW'e oteanscans Sssessors, Stnastssnents ad ‘onlinesalt assessment ‘completion their reach to MSMEs. a ~ ~ arts tags ovneets ©—O—O—© ©—© Awareness & Promotion a pn ia A nationwide plan for awareness was Development of Systm, + Oagost sty & Saminiont executed covering different states and “Mie hoareeee aneting fnareport, Werkshere orcs compton oe scotors of MSMES. Extensive contributions + 22Dealeereston ‘Thestrategy and planning for pilot took almost three months. for finalization. It contained meetings with various stakeholders to ereate sectoral model, fi e tune the rating ‘matrix, strategy for awareness about ZED, creating self assessment portal, creating modules for training of assessors and consultants, discussions on establishing regional and sectoral networks for facilitating MSMEs et. It was decided to cover as many sectors during the Pilot phase, It therefore concentrated on the 25 Make in India sectors. It was also decided to capture the information regarding participation of these units in various MoMSME_ schemes so as to obtain an objective evaluation at a later stage. The pilot included manufacturing sectors such as chemicals and automobiles to eleetronies and defence and took them through self-assessment, handholding as well as on-site assessment. To drive awareness about the ZED effort, multiple workshops were conducted across India, A fully functional online learning system with training modules isalso deployed and was tested asapartof the pilot & came from Industry Chambers, Industry Associations & other agencies in conducting these workshops. Website A bilingual (Hindi & English) website (zed.org.in) was launched that contains all information about the ZED Maturity Assessment Model and how an MSME can participate inthe process. The link to onfine self-assessment ‘module was made available through the same websit the MSMEs registered and completed the self-assessment. where A machine based self-assessment report was generated which was then validated by the assessors to provide a development path to MSMEs. Employability portal ‘A Leaming Management System was prepared for training and capacity building modules (through self-learning mode). Small training modules are prepared on Quality Tools & Techniques, ZED Model, various interventions propagated by ZED, consultant & assessor raining ete. ThePilot Project <2ZED assessment of these courses on LMS will be facilitated by an intelligent face recognition engine. This partis a continuous process and has gone through alpha and beta phase and bugs havebeen removed, Implementation After the completion of the online self-assessment, shortlisted MSMEs underwent @ gap analysis and handholding of their unit by QCI empanelied consultants The shortisting of these MSMES was done through an automated algorithm based on random number function, on the basis of regional representation, sector presence, ZED rating (through online self-assessment), participation in Government Schemes and the MSME size. The ZED National Steering Commitee, which was chaired by Joint Secretary (DIPP) with members fiom MoMSME, CII, FICCI & QCI(NABET), approved the selection/shortist. PROCI Taenticaton| acceptance by ‘Companytor2ED ating #ofmsmes FLOW FOR MSME RATING ASSI ‘This comprehensive Gap Analysis activity was conducted to identify key strengths and areas of improvement followed byan on-site assessment leading to rating & certification Rating Assessment & Certification For the onsite assessment of the pilot companies, 2 Assessors were allocated to each company to ensure expertise on both quality & environment parameters. An Assessment plan was created by them offline. Assessors checked the relevance of parameters selected by companies during self-assessment & handholding and assessment on relevant parameters was conducted. A steering committee evaluated the assessors’ reports fo approve the rating ot provide their specific concerns & ‘queries after checking each parameter & their evidences for all assessed companics. The exhibit below highlights the step by step process of MSME ratingi the pilot SMENT IN THE PILOT word of 0 Rating ‘Approval oh ratings by ‘sein commas, sirelinceFae 43ZED PILOT OUTCOMESPilot Outcomes <2ZED This section ofthe report highlights specific success stories from sample MSMEs and supports the approach of MSME handholding by the consultants to improve on the assessed parameters It is evident thatthe ontine infrastructure set up for MSMEs supports rapid understanding of the model and clear improvement actions arising out of the assessment 3.1. CAPACITY BUILDING ‘The pilot demonstrated the value of adopting the consultant and assessor approach by ZED to handhold and toassess the pilot MSMEs. A 5-day rigorous training programme, which culminated with a programme-end assessment for consultants & assessors, was designed. A total of 36 consultants and 30 assessors were trained during the pilot project and empanelled for Gap Analysis, handholding and site-assessment of Pilot MSMEs. These consultants and assessors have been drawn from reputed rating & certification agencies and the faculties for these programmes were highly experienced professionals who were drawn from industry and academia. The details of ‘raining can be found in annexure L ‘Simultaneously 11 ZED Cells have been ereated at Industry Chambers, OEMs, Research Institutes & Universities, Centres for Excellence and State Industry Associations. Details canbe found in annexure. 3.2. AWARENESS AND PROMOTION ‘To build the awareness on the ZED model, 43 awareness workshops were conducted covering 1851 MSMEs in 30 cities across India, There were contributions from Federation of Indian Chambers of Commerce & Industry (FICCI, Confederation of Indian Industries (CI, The Associated Chambers of Commerce & Industry of India (ASSOCHAM), National Productivity Couneil (NPC) and various state industry associations in propagating ZED across MSMEs. The details of awareness workshops can be found insannexure Feedback from MSMEs on pain points & areas where they require help was collected through the ZED awareness workshops. The key areas of concern highlighted through this activity are summarised in the exhibit below. TOP AREAS OF CONCERN HIGHLIGHTED IN MSME, AWARENESS WORKSHOPS, centages ndeg Fre tacos ms WK ah ae are ‘Sites Tecotgy Finance Regulations Nihon RAD sport alae fale wanes magonet aig sco eee eee ‘Toc tse rdsu bs upgrade SOS SSE 1 Cow tenet rowertcnsogy ‘coving poesia oe wade ae ‘rest ais be mre oat *Sapectr a to bereaues or SMEs Itis interesting to note thatthe above findings also resonate with the areas of coneem highlighted in @ 2013 report by Espirito Santo Investment Bank Research on Indian Demographics, where the most problematic factors for doing business in India (on global competitiveness) were highlighted as: inadequately educated workforce, restrictive labor regulations, tax regulations, access to financing, inflation, policy instability, corruption and inadequate Supply of Infrastructure. 3.3. DEVELOPMENT (IT/ITES) The ZED Website was launched on May 25, 2015 in both Hindi & English and the online self-assessment link was activated from July Ist to July 10th 2015, which was later extended to July 17th on requests from various MSMEs & Industry Associations, who were not able to complete their application onlinePilot Outcomes <2ZED Quest, the online learning portal, was also designed concurrently to help professionals for strengthening their quality management and assessments skills and is expected to populate more than 100 courses during the next one yeat TThe portal is also being developed to provide certification through onsite assessment of competencies and skills learnt ‘on the portal through various institutional aspects. eQuestis| based on best experiences of MOOC through quality interventions such as e-books, 2D simulation, 3D modules, vvideo lectures ete., with an in-built assessment engine based. on the latest face recognition technology. The online portal hhas successfully gone through alpha & beta testing and courses are now being populated on it, Details can be found inannexure IIL 34. IMPLEMENTATION OF MODEL During the online self-assessment, 374 companies registered online from all over India, Out of these registrations, 179 companies attempted the online self assessment and submitted their applications successfully 74.companies were shortlisted to undergo the ZED process. The process of gap analysis & handholding was conducted in 8 man-days to prepare companies for site-assessment providing the confidence on the training and process used The pilot also provides Key understanding that the site assessment requires to be conducted before the gap analysis and handholding, ‘The exhibit below highlights the hhandholding approach and success examples from the pilot. CONSULTANT HANDHOLDING TO DRIVE IMPROVEMENTS IN PILOT MSME Case examples of successful MSME handholding by consultants BEFORE roc Coen Peete) eer Ev) ruts ment AFTER.Pilot Outcomes <2ZED 3.5. ASSESSMENT, RATING AND CERTIFICATION Out of the 74 MSMEs selected, it was found that 6 MSMEs ‘were underservice sectorand the manufacturing model was not applicableon them to undergo assessment. Two MSMEs expressed a wish to prepare more and participate during national roll out snd hence were dropped. | MSME could not participate due to natural disaster affecting its operations severely while I MSME dropped out, hence leaving the total participating MSME to 64, These 64 companies were then prepared for the ZED process & final rating. The final assessment highlights that about 72% of the pilot MSMEs did not receive any rating while only about 28% companies received a rating in the Bronze, Silver & Gold categories. No MSME was able to achievea diamond ora platinum rating. This highlights a critical gap between the perceived maturity level of the MSMEs and the actual status of practices on quality and environmental consciousness. It points out to the urgent need of national scale assessment and handholding of MSMEs through the ZED scheme. MSME PILOT HIGHLIGHTS URGENT NEED FOR NATIONAL SCALE MSME ASSESSMENT AND HANDHOLDING TH Large number of MSMEs did not meet the criteria for bronze rating % of total MSMEs 100% > MSMEswhich [iPryM received rating MSMEs with No rating ven Of rated MSMEs only 6% were ‘Gold’ rated age of rated MSMEs OUGH ZED SCHEME 83% 11% 6% Bronze Silver GoldZED ANALYSIS AND FINDINGS FROM THE PILOTAnalyses and Findings from The Pilot <3ZED led in chapter 3, the pilot highlights early MSME success stories on parameters like layout & inventory ‘management and waste disposal process. This provides a confidence in the handholding and improvement process envisaged under ZED. Inthe pilot, 179 MSMEs wereable to complete the selfassessment process ina very limited time through the online infrastructure set up. This demonstrates scale up capability of online infrastructure ‘The analysis of pilot data provides rich insights on two fronts: assessment of pilot MSME performance and opportunities for improvements in ZED scheme for effective national rollout 4.1, ASSESSMENT OF PILOT MSME. PERFORMANCE The pilot covered MSMEs from multiple sectors with highest MSMEs from auto components sector. The sector-wvise pilot performance of MSMEs shows that percentage of MSMEs which received a rating from a particular sector was highest in textiles. The exhibit below summarises the sector-wise MSME performance. ‘THE PILOT INVOLVED COMPANIES ACROSS DIVERSE SECTORS WITH THE LARGEST PARTICIPATION FROM AUTO AND AUTO-COMPONENTS. ‘Sector wise participation of SMEs and thelr performance sued elt ad eae oe ‘Auto-components ™ 7 2% ‘Automobile 10 2 20% L_ ected eee By . 908 Torts ‘ 2 & others . 4 wh Total o 1. &&® + Other sectors include Chemicals, Pharmaceuticals, Electron systoms, Leather Defenceand Olt and Gas etc. ‘The pilot MSMEs represented a total of 1 states with largest participation from NCT of Delhi and Haryana state, The state-wise MSME performance shows that percentage of MSMEs which received rating from a particular state was highest in Haryana, The exhibit on the next page summarises the state wise MSME performance. &Analyses and Findings from The Pilot X2ZED ‘THE PILOT INVOLVED COMPANIES ACROSS STATES WITH THE LARGEST PARTICIPATION FROM NCT OF DELHI AND HARYANA; STRONGEST PERFORMANCE FROM HARYANA ‘State wise participation of MSMES and thelr performance SMEs assessed in plot Rated MSMES cent rated sushes susMes: Pereent NC OF Det 3 5 Haryana ° 6 Uttar Pradesh 1 4 Punja 7 4 Gujarat Maharashira ters 6 5 Total 64 The pilot data was scrutinised to assess MSME performance on mandatory parameters of the model and other parameters. The analysis suggests that the average score on mandatory parameters is lower than the overall MSME score and the trend is consistent across sectors, regions and the types of MSME. PILOT MSMES HAVE SCORED LESSER ON MANDATORY PARAMETERS THAN ON ALL PARAMETERS; SIMILAR TREND ACROSS SECTORS, TYPE AND REGIONS Sexe mado parma | ant vol ce cameron yer Mar ‘Componentsnebiios — Machinory Nandstory vs overall score comparison by region op 218 sas 104 i 208s oO 059 0.78 Nort Most East South andar va velar comparsonty pe 3 182 a sz 148 44g 120 a} Mero Salt Medium &Analyses and Findings from The Pilot <2ZED ‘The pilot shows hat although auto components sector had the highest participation, the average score of this sector is lower than ‘overall average score. A further scrutiny of this finding suggests that MSMEs from auto component sector have performed better on three key parameters as compared to the average of all other sectors. These parameters are process design for quality process design for environmental management and outcomes for overall company performance. Following exhibit describes the performance ofauto components MSMEs. AUTO COMPONENTS WAS THE LARGEST SECTOR IN MSMES; HOWEVER, PERFORMAN E ON SOME PARAMETERS DIFFER SIGNIFICANTLY ‘versus overall score of other sectors Comparison of auto components score HE Auto components vera 145 147 ‘Auto components Al TThe analysis of pilot data shows that electrical machinery sector is the best performing sector in terms of the average score. Primary contributors for this above average performance are identified as resource management and emission, QD ey here auto components do better ‘Average score 73 a 44 E 09 on on Process des Outcomes for Forenvironmental Overall company management performance Koy parametors where auto components do worse than average Averagescore 24 47 ye oe Production & Outcomes ‘Outcomes for Maintenance For quality Process setvities performance performance disposal management. Following exhibit summarises the performance of electrical machinery sector. ELECTRICAL MACHINERY IS THE BEST PERFORMING SECTOR DRIVEN BY RESOURCE, SION, EFFLUENT MANAGEMENT ‘ovr score by sate cee ‘Key paar where ciel machin ‘cite atptig cer |_| br en Ao comer 14s | Enision eter (= Swat pos actos a = 7 ee Mach, snl 1s Testes 148) | promt quiny a tere 18 e Bec. ach AlAnalyses and Findings from The Pilot X2ZED ‘Comparison ofthe average scores of MSMES that received a rating with that ofthe MSMEs without any rating suggests that the rated MSMEs performed better than the unrated MSMEs on a set of parameters. The margin of performance for the rated. MSMEs was highest on environmental as well as quality parameters, Following exhibitillustrates this finding. ‘Comparison of average scores of ratod and unrated MSMEs across onablors and outcomes Average BE Unratd RATED MSMES SCORE aa ated HIGHER THAN 22 2A ZA. ACROSS DIFFERENT ES 44 44 GROUPS OF »ARAMETERS: on DIFFERENCE HIGHEST IN ENVIRONMENT a a Maan Teees ou and waste management disposal activities, As mentioned in previous chapters, while starting the pilot & during selection, the Committee decided to test the model on two es & two, those who did not. The comparison of the types of MSMEs; one who had participated in various MoMSME sche performance of MSMEs under various schemes with that of MSMEs under no scheme suggests that on a percentage as well as, absolute scale, MSMEs underno scheme received better ratings than the MSMEs who had undergone a prior intervention (like MCS, ISO ete.) supported by the Government to improve their processes or quality. This points out to the need of increasing, MSME understanding onthe schemes, Exhibit below highlights the comparison, Performance of plot MSMEs by schemes HofMSMEs 35 PILOT MSMES NOT UNDER ANY SCHEME, RECEIVED BETTER RATINGS THAN MSMES UNDER SPECIFIC SCHEMESAnalyses and Findings from The Pilot <2ZED 2. IMPROVEMENT OPPORTUNITIES FOR EFFECTIVE NATIONALROLLOUT The analysis of assessment data for pilot MSMEs indicates ‘opportunities for improvement which can be incorporated during the national rollout, These are primarily in three areas ofthe assessment scheme a) Clarifying the meaning as well as levels for select parameters to further improve understanding of the ‘modle] among MSMEs, b) Emphasising the importance of environmental parameters and increasing awareness of IPR related parameters. ‘¢) Further standardising the end toend assessment process to minimize the impact of hum: CLARIFY SELECT PARAMETERS FURTHER TO. MSMES (On average, MSMEs selected more parameters than actually relevant parameters for them as determined during, the inal assessment. Itwas reveating to observe that in more than 85% of the pilot sample, MSMEs chose more parameters than that applicable to them. A detailed serutiny of this trend shows that there are a select set of parameters which were selected by MSMEs though not applicable to thom, The top three such parameters are post production customer service, outsourced activities and product design, ‘This suggests that these parameters require a more detailed clarification to MSMEs in order to ensure better self assessment. Exhibit below summarises the difference in parameter selection, ‘Multiple parameters identified as not relevant during final assessment, selected by MSMEs during self-assessment Difference ‘Average SELECT MODEL, 42 PARAMETERS CAN BE CLARIFIED FURTHER TO. MSMES TO FACILITATE ‘THEIR UNDERSTANDING. Self assessment Parameters of parameters chosen Final and choose accordingly” assessment eee “Fine tuning needs to be ‘considered for few parametors as we were less clear on few 33, ‘parameters for our sector” “The booklet available with tho assessor should be available {0 us also to understand the ‘meaning of various parameters Crectioret Ee aad design for environment require further clarification to MSMEs<2ZED Analyses and Findings from The Pilot cin the self-assessment score and the final assessment score of MSMEs and the Itis observed that there isa significant different self-assessment scores are higher than the final scores in more than 90% of the cases. This variation is consistent amongall the types of MSMEs. This difference is predominantly observed in select parameters which are quantitative in nature and require a deeper understanding of the scoring methodology and calculations involved. This suggests that the MSME understanding of such quantitative parameters and the calculation methodology needs to be improved to facilitate better self-assessment. Italso highlights the difference between perception and reality when the benchmark so defined is globally competitive. a ( 30 / “Tmotanguage of | —* “Dung UNDERSTANDING OF fececosces! oot ‘ aa ames cer QUANTITATIVE 2 apanadui i - a TEE Eee “awestomarocan |g ‘givon self a ieeiis rownernm || Seseeneee eee ees aoe SELP- ASSESSMENT Sere so Papers re aroropeatingagarn | Within} 10-30% 30-50% 4 >50% of | evidence was ‘The pilot data also reveals that certain non-mandatory parameters were selected less often than others by majority of MSMEs Among the non-mandatory parameters, 8 parameters were selected by 10 or fewer MSMEs, Within these 8 parameters the parameters of Industrial design, copyright and patent were the least selected. This analysis and feedback from MSMEs indicate that overall awareness and understanding of parameters related tothe intellectual property needs to be improved, Exhibit below h lights the findings on these parameters. Coen ‘Some categories of nonmandatory parameters ‘0g IPR wore chosen for very fewMSMES. lor ple ‘Ave. MSMEs selecting a catagory of parameters ing particular paramo! IPR RELATED 7 PARAMETERS ARE LEAST SELECTED AT sae MAJORITY OF MSMES oe INDI i INCREASING : Tae Pate ndutitconr AWARENESS ON THESE ‘SSeS | PARAMETERS, ResourceProduet Oulconed Emiesions IPR clone mutipte process product innovations over Effluent fhe fast decade but we never eomploted the patont process" ) Monege- ay | Inde etc for ain pron ‘tres for eneral company roaAnalyses and Findings from The Pilot X2ZED FOCUS ON ENVIRONMENTALPARAMETERS, The pilot data shows that in the final assessment, average score on environmental parameters is lower than average seore on non- environment parameters. The feedback from the pilot MSMEs also indicates the understanding of this problem among the MSMEs across sectors and size. It is imperative that environmental parameters are critical for the MSMEs and need impetus 10 drive the improvement actions. Exhibit below summarises the environmental performance of MSMEs from the pilot ‘Score on environmental parameters is significantly lower than score on non- ‘environmental parameters* Average ENVIRONMENTAL, MSME quotes ied Assessor quotes SCORES ARE, “Zero Effect is a key “Energy performance SIGNIFICANTLY LOWER thome of ZED model indeators are not tly which is otherwise 1.18 defined in the MSMEs THAN NON- neglected by most of that we assessed” | ENVIRONMENTAL the industries. : 7 SCORES — EMPHASIS ON ra Ciicl environmental We want to closely performance indicators ENVIRONMENTAL imonitor the lke solid waste PMT ‘emissions and ‘disposal require PARAMETER IS CRITICAL feed nota |e rere | eee lee won ofnatrel ‘environment score ation and monitoring 1 Average ssetement score onal parameters other han ensioramental parameters STANDARDISE THE E} The pilot data shows that for 18 MSMEs which received the rating, there is a small difference between the average score by assessors and the score by the panel of experts, A scrutiny of assessment reports and feedback from the pilot MSMEs together with the analysis on model parameters suggest three potential drivers which has led to this slight difference. These drivers are model design, difference in understanding of the model and variation in assessment process and depth. As part ofthe robust assessment process that will be institutionalised in ZED national roll out, the primary drivers have been identified and the Lifference in the assessment score will be further minimised. Diferance in average scare by remedy ee ee 1 Model design specie parameters with insufficient ‘Score (Number) {tara on scoring levels a explained Inthe previous ASSESSMENT PROCESS ce two analysis CAN BE FURTHER 24 4.59% 2 Understanding ofthe mode! ~afernce in the REFINED TO REDUCE interprotation and training of assessors on same VARIABILITY eee ee 12 Ascessmont process and depth diferences inthe 1 This i the average score of 18 MSMEs Assessor Panel of Syl of essedement and richness of information teeere allected on each parameter & whieh receved ratingZED RECOMMENDATIONS FOR ROLL OUT AY ey ! eSRecommendations for Roll Out <2ZED ZED will be an industrial movement in the times to come and is destined to become a game changer. It is expected to ereate a roadmap for global competitiveness for the Indian MSMES. It will help MSMEs adopt a quality mind-set and invest in clean technologies. It is considered an important component of the Make in India ecosystem and hence it becomes imperative that a comprehensive & fool proofideployment plan is made for the implementation of ZED amongst the MSMEs of india, ‘Based on the pilot learnings, seven key components for the national rollout are identified, These are summarized inthe exhibit, below. Coe eeu) foray a itd tion Ce eid cronies ‘Toot, mechanism, [people to assess, 'SME, and certify them (Create models for all industries and fine tune parameters 5.1 A CENTRAL PROGRAMME MANAGEMENT OFFICE tis imperative that a central program management office is ‘a key component of the national rollout. It will define and develop relevant work streams and work-plans, track progress through robust governance mechanism and ‘identify resource requirements for ZED, 2 CAPACITY BUILDING THROUGH EXPERIENTIALLEARNING To drive effective capacity building of assessors and consultants experiential leaning and field and forum approach will be adopted. A web based 'eQuest’ (E-Quality platform for Employability through Skill and Training) eee: | te wait Pewon | sans andeonmuneion | Pooper eiiazco | | tausentioanasssmnpces +e cane bas series seomaon | 7 Acton danonzeDva epson | lta system is already set up to support the MSMEs in their improvement journey, eQuest will contain more than 100 high end audio-visual interactive courses and in-built assessment engine based on the latest face recognition logy. The model isnow being scaled up. 5.3. FINE-TUNED ZED MODELS Based on the pilot learning it is evident that national rollout will requite simplifying specific parameters to improve understanding, focusing on key parameters like IPR, environment and creating new models for industries. It will, include adding further clarification in the questionnaire for site assessment for greater uniformity. Additional sector specific model would also need to be created on the above lines.Recommendations for Roll Out <2ZED $4. ITENABLEMENT It will include on-boarding experienced IT vendor, translating key IT requirements into design architecture and building in accelerators for rapid scale up. The IT enablement will cover website up-gradation and development in regional languages, social network e.g. ‘Twitter, Facebook page, ete. self-assessment porta, auto generated self-assessment report, assessment portal for tab (site-assessment), E-learning’ Mobile leaning, online ‘market place for consultants and companies, automated dashboards o track ZED performance ete A robust IT infrastructure will not only increase productivity, but also save valuable costs, The findings from the pilot reflect that automated processes will not only reduce assessor to assessor variation and data errors (recovery costs) but also reduce man-hours. Timelines are currently being created for IT enablement activities and will be coordinated &¢ tracked by an in-house (technical) expert S.S AWARENESS & COMMUNICATION It covers the design & launching of structured awareness programmes with relevant stakcholders. The innovative approach of ZED cells will be adopted. Currently 11 ZED Cells have been created and discussions are underway with 10 more, This will be increased to more than 300 in next 5 years. Additionally, PR ageney can be potentially involved to drive ZED branding activities and other activities conceivable. S.6ROBUST END TO END ASSESSMENT PROCESS, This will set up a system with an end to end robust assessment process which ensures consistency of assessment through tools like checklists, detailed examples, technology enabled deployment and improved assessor capability. % 8.7 ACTION PLAN TO BUILD ZED VALUE. PROPOSITION ZED is expected to act as a catalyst to bring about a socio- {economic transformation and has the potential to become a national movement; not only will ZED improve productivity & performance, it has the capability to change the mind-set of manufacturers and make them more environment conscious. It thus becomes crucial for the Government to enable the opportunity framework for the MSMESof India to achieve the following aspirations |, Increase in the share of MSME contribution from the current 8 per cent to 15 per cent in the next S years, 0 cpp, 2, Increase in MSME exports from 40% 10 45% by 2020, 3. Significant increase in the current MSME workforce of | ‘85 million across manufacturing and services sectors. 4. Significant enhancement in the share of MSME. ‘contribution across key public and private industry sectors, thereby successfully meeting increased domestic demand. AsZED isrolled out nationally itis critical tocreatea strong pull for ZED among MSMEs. In the first 2 years of the national rollout, this pull is essential to ensure adequate participation and to build early momentum. In the long run, buildinga strong and sustainable pull for ZED can reduce or eliminate the need for subsidies as ZED scales up from 20,000 0 | million+ MSMEs. A holistie action plan to ereate this strong pull for ZED needs to be developed. The action plan should address common challenges faced by MSMEs such as financial access, market access and simplifying processes. Additionally, the action plan should help create a ZED community, a strong sensc of pride in being ZED rated andRecommendations for Roll Out <2ZED strong competition among MSMEs towards bettering their ZED ratings. All these elements can be realized through a combination of government actions, national rollout design (by QCI) and actions by other stakcholders e.g., industry associations, OEMs ete. Specifically, the following recommendations have been identified forthe consideration of the Government. However a separate group is considering the various incentives which are required for MSMEs, through ZED. FINANCE, Access to capital, cumbersome loan processing requirements and interest costs are some of the major challenges ficed by MSMEs, ZED rated companies could be provided easier access to loans, faster processing and lower rates of interest, An MoU can be explored with the Department of Financial Services (DFS) & QCI instructing all banks to provide easier access to funds at lower rates for ZED rated companies. At the same time, while not a substitute for regular compliance and KYC activities, the rigorous ZED assessment and rating can provide greater confidence tothe bank on the operations of the MSME, The specific recommendations are given below. Recommendations related to the banking sectors could be implemented through the Department of Financial Services (DFS) ‘= Preferential access to credit e.g. larger credit line, lower collateral requirement for ZED rated MSMEs = Lowerratesofiinterest for loans to ZED rated MSMEs, ‘& Direct & Indircet tax benefits forthe first 4 years = Additional weightage & i ease in cap for ZED rated units with an (additional) special increase for ZED rated companies managedby: — Women Entrepreneurs ~ SC &STEntrepreneurs ~ Entrepreneurs whose units are located in J&K & North East = Low cost credit schemes for ZED rated companies wishing to invest in equipment that reduce environmental footprint MARKETACCESS. In the long run, as ZED rated companies build a strong reputation for quality, sales, exports and margins. However, providing additional support towards these activities can ereate a strong link hey are expected to increase their between immediate business benefits and ZED rating, creating a strong pull in the process, These activities could bbeboth additional quotas in public procurement and support towards export promotion activities to ZED companies. Specific recommendations include: ‘= Enhance provision for ZED rated companies in public procurement & schemes of MoMSME, + Increasein cap of soureing from ZED rated MSMES, or + Defininga fixed percentage within the existing eap + Tiebreaker edge forZED rated units = Quota for ZED rated MSMEs in various interest ssubventions schemes by the Government, ‘= Special export promotion schemes for ZED rated MSMEs + Direct Tax exemption on export income for 4 years + Ease in facilitation of exports, setting up of special calls for ZED Companies + Promotion for exports of patented technologies/products| ‘= Subsidy for export promotion exhibitions, domestic & international, for ZED CompaniesRecommendations for Roll Out 43ZED Regulatory and other processes The number and complexity of regulatory and related ‘processes has been cited by a number of MSMEs as a major ‘overhead affecting business operations. Atthe same time the Parameters undet ZED and the rigorous assessment process ‘can help simplify processes and the requirement for additional serutiny. ‘= Ease in Entry-Exit Policy for ZED rated companies = Dove-tailing of regulatory compliances; with specific reference to performance in relevant parameters of the ZED Maturity Assessment Model. For instance, simplified oversight by CPCB/PCB for 4 years if the ZED rated companies have scored on level 4 & Son Environment & related parameters. = Single window compliance regime for ZED rated companies ‘= Infrastructure: Special schieme for land allocation for ZED rated MSMEs ‘= Fast-track reimbursements under publie procurement Outreach, Lastly it is ertical to establish a high ZED rating asa strong, aspirational objective and create healthy competition between MSMEs to motivate them to take up ZED. Specific actions towards this inelude = Publicity * Include ZED in national promos (Print & Electronic) forMakein Indiacte. ‘ZED Mark” propagation: Advisory to MSMEs to display ZED ratings wherever applicable/relevant, = Awards/Rewards: + Institute annual national awards for high performing ZED rated MSMEsin various sectors. + Reward scheme for innovative practices for ZED rated companies<*ZED CONCLUSION MSMEs which are globally competitive, producing quality products and adhering to environmental standards are integral to the success of“Make in India”, To facilitate this ZED stainable competitive advantage at MSMEs across India by focusing on zero defects (quality) and zero effect (environment) aims to build as ‘The ZED maturity assessment model provides graded benchmarking levels ofan organization's performance and leverages assessor and consultant approach torate and handhold MSMEs, In April 2015, the ZED pilot was designed by NABET, QCI under DIPP to demonstrate the end to end process, validate the model and incorporate the learning reinforces a key hypothesis on ZED that the said model has a potential to provide effective and national roll-out, The pilot ‘comprehensive assessment at scale for MSMEsacross Inia, ‘The objective of the ZED scheme to assess, rate & handhold all MSMEs of India, isa significant task in volume and complexity. To ramp up the ZED national rollout programme, key priorities are identified as : building the ZED Team, developing a central tracking and governance ‘mechanism, building a robust assessment process based on pilot learnings, preparing for ZED Launch and formulating time-critical RFPs to on-board vendors, The scale-up activity for ZED ‘will incorporate the learnings from the pilot and will focus on developing eapacities & build capabilities of the ZED team, creating awareness about ZED and building a solid value proposition for ZED. A holistic and syndicated action plan will be developed to create a strong, pull for ZED among MSMEs.Annexure |: Training & Awareness Programs XXZED Awareness Workshops: Regional spread of participants INDIA Region Participants Central 181 East 255 North 602 South 403 West 410 Total 1,881 Indian Ocean apnoea sete Capacity Building: Consultants & Assessors Total Empanelled Dates Event participants Participants 14" to 18"July 2015 5-day consultant training 26 15 24" to 28" August 2015 5-day consultant training 21 24 31" Aug to 04"Sept. 5-day assessor training 32 30 2015 &Annexure II: ZED Cells <2ZED VISUALIZATION OF ZED CELLS BEING CREATED, Universities E-commerce pesearch centers MSME OEMs technology centers Industry associations Intent of ZED cells Fits within the mandate to champion quality in the industry Deeper industry-aeademia partnership, especially in MSMEsector Opportunity for students (in case of educational institutions) to pursue internships with grassroot industries Involvement in key nation building agenda ~ Make in India ‘Access to the high quality expertise (experts, professionals, faculty, researchers tc.) Flagship ZED Cell to pave way for greater adoption of ZED Strong direct network to MSME MoUshavebeen signed with: 1. FICCI 2. Maruti (MACE) 3. Ashok Leyland, 4. TIA~Indian Industries Association (Uttar Pradesh) 5. NIQR — National Institution for Quality & Reliability Chennai 6, ALEAP- Assocation of Lady EnrepreneursofTndia 7. PEC University, Chandigarh 8. Chitkara University, Badd 9, Thiagarajar University, Madura 10, Amity University, UP 11, TATA Chemicals LidAnnexure III : Details on eQuest <2ZED THE ECOSYSTEM OF eQUEST FRESH STUDENTS + Courses on quality + Online assessment + On site trainning + Evaluation of competency MsMes About e-Quest + Quest’ (E-Quality Platform for Employability through ‘Skill & Training) is an e-learning service created and. managed by Quality Council of India (QCI), an autonomous body created by the Ministry of Commerce & Industry. + Quest will augment & strengthen ZED, Make in India ‘& Skill India initiatives by helping Indian professionals. to strengthen their quality management and assessment skills along with application of these concepts to real life scenario. + Coursesavailable on the portal will assist the learners to improve their skills and knowledge thereby enhancing theirearcer prospects. +4. For more details please vist hip:tivwwcequescom VEST + Courses on quality + Case studies cscussion + Cortfeation and assessment [ASSESSORS & CONSULTANTS + Courses on specific programs ‘and stancarcs + Bulcing domain oxportso + Homogeneity in assessment ‘and Randnolding + Certfeation & assessment + Courses are planned in domains of Manufacturing, Healthcare, and other service sectors. These include courses on Fire and Safety, TPM, TQM, 5S, Kaizen, GMP, GHP, GAP, and many more. Mission Quest aims to fill quality skills gap and offers courses on quality, environment, energy management and assessments, thereby building capacities of professionals and new centrantsin the quality arena,About QCI 43ZED +The Quality Couneil of India (QC1)' was established as the national body of accreditation on recommendations of expert missions of the European Union after ‘consultations in the Inter- Ministerial Task Force, the ‘Committee of Secretaries and the Group of Ministers in 1996. + The council came into existence in 1997 through a Cabinet decision as an autonomous non- profit, ‘organisation through sced funding by the Indian government and the Indian industry, represented by three premier industry associat — Associated Chambers of Commerce and Industry of India (ASSOCHAM), Confederation of Indian Industry (C11) ‘and Federation of Indian Chambers of Commerce and Industry (FICCI). + ‘The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry (MoC1), is the nodal department for quality and the QCL The Chairman of QCI is appointed by the Prime Ministerof india, Mission ‘The Mission of QCListo lead nationwide quality movement in India by involving all stakeholders for emphasis on adherence to quality standards in all spheres of activities Primarily for promoting and protecting interests of the nation ands citizens, Role + To establish and operate a national accreditation structure and promote quality through the National Quality Campaign. + To function through its own resources through a fee 5. For more deals about OCT pease vst webs wegeivorg fromacereditation and invest in quality promotion, + To play the role of the National Accreditation Body (NAB) asperthe ecosystem of quality around the world With the task of creating @ mechanism for third-party assessment of products, services and processes + To work as an independent org sation away from both government and industry, and funetion as an independent profes ional body with its own rules, powers and functions as perthe MoA of the society. National Acereditation Board for Education & Training (NABET) + NABETis a constituent Board of QCI. The ZED Pilot Project is sponsored by DIPP, MoCI, Government of India, NABET was instrumental in ereating the ZED Maturity Assessment Model and is responsible forthe implementation ofthis Pilot Project. + NABET has been expanding its seope of services to cater to the needs of the industry. It has established a mechanism of accreditation to various service sector and MSMEs and operating the scheme of Lean Manufacturing Competitiveness and ZED Maturity Assessment Model, + [thas a twofold role to play. As an expert body, itis called upon by the Government to provide its services imensuring quality of skill/vocational sectors (IT, and of consultants involved in environmental. impact assessment, + Ithas launched an accreditation programme for quality school governance in the country with a view to providing framework for the effective management and delivery of aholistic education programme.Qcl Quality Council of India National Accreditation Board for Education & Training (NABET), QCL 6th Floor, ITPI Building, Ring Road, NEW DELHI, Tel: +91-11-23321273 email: zed@qcin.org, wwww2ed.orgin EE] roseicekcanironrossnenins Qi mys, 001 Yul hein oaeconchnnesotcatcnera ama