Henkel 2020 Strategy
Henkel Adhesives Technologies India is tackling the difficult market environment with technologically driven changes in line with its 2020 strategy for a differentiated performance.
Henkel Adhesives Technologies India is banking on innovation-led growth. The company expects mega-trends like safety, sustainability, light-weighting and acoustics, Internet of Things (IoT) 4.0 and EVs to drive the course of its future development for the past few years. The company is tackling the difficult market environment with technologically driven changes in line with its 2020 strategy for a differentiated performance. It has also aligned operations to attain higher levels of localisation in line with the government’s ‘Make-in-India’ vision. Besides, the company has worked towards bringing the best global practices in order to introduce high levels of efficiency in the India supply chain resource. Averred Bappa Bandyopadhyay, Director Operations and Projects at Henkel Adhesive Technologies India, “In the OEM business, there are a lot of developments happening. We are working to make vehicles more light and fuel-efficient. We are also working on products for electric vehicles.”
Differentiated performance
The adhesives business delivered a robust performance and contributed significantly to Group sales despite being affected by a significant decline
in demand from key industries. Here, the emerging markets achieved a good organic sales growth of 2.7 per cent with the mature markets showing a negative organic sales development of (-) 2.3 per cent. In the Asia-Pacific region, sales decreased organically by (-) 5.7 per cent. Around 40 per cent of Henkel’s business comes from emerging markets and India plays a major role. At the Group level, sales rose by 0.8 per cent to Euro 5,077 million with an organic decline of (-) 0.3 per cent.
Despite increased investments in brands and digitalisation, the company as per its guidance for the fiscal year 2019 maintained a healthy free cash flow of Euro 823 million. For the fiscal year 2019, Henkel confirmed its outlook based on current estimates and assumptions made by the corporate management of Henkel AG & Co. KGaA expecting an organic sales growth of zero to two per cent for the Group. For Adhesive Technologies, Henkel expects an organic sales growth of (-) one to one per cent. The contribution from acquisitions and divestments amounted to 0.4 per cent. Today, the India centre is a greater support hub for Henkel’s global operations than it previously was.
Collaboration with Global CoE
The company according to Bandyopadhyay is banking on its close association with OEMs. “We work alongside OEMs right from the design stage, and we understand their requirements well. We try to develop right from the start and decide on what is best on light-weighting, noise reduction etc.,” he explained.
Henkel’s product development centre in Pune, for instance, works in close collaboration with the Henkel Centre of Excellence spread across Germany, Europe, the USA and China. Of the opinion that development starts from mature markets, Bandyopadhyay highlighted the work carried out on EVs. He accredited the progress made
to partners in the research domain. “We take the idea from them and act according to the local needs,” he explained.
Technologically Driven
Henkel’s India business is primarily into adhesive, sealants and coating. In line with its 2020 strategy, the chemical company has firmed up a strategy to be technologically driven. Two of the company’s total of seven plants in India have been selected for conversion to a connected facility. Referred to as Industry 4.0, it means that the company is moving towards the trend of automation and data exchange in manufacturing technologies and in processes including Cyber-Physical Systems (CPS), IoT, Industrial Internet of Things (IIOT), cloud computing, cognitive computing and artificial intelligence. Here the company’s Chennai plant and the recently set up facility at Kurkumbh, near Pune are believed to be the early movers in line for the change. For instance, Phase I of the new plant in Pune has been completed with commercial operations known to have begun last year. Phase II at the facility will commence by the end of 2019 or by early next year while Phase III will be commissioned by the year 2021. The company expects a total investment to the tune of Rs.500 crore. Opined Bandyopadhyay, technological changes are the future and can’t be avoided. “We have to make huge advancements in digitalisation and we are working on verticals across the workspace like the 3D printing, e-commerce and several Industry 4.0,” he said.
Henkel’s JV entity Henkel Anand India Pvt. Ltd (HAIPL) in Chennai has collaborated with Toyota Kirloskar Motor Pvt. Ltd (TKM) to establish a self-reliant system with the help of the Industry 4.0 standards. The partnership with TKM is expected to enable the HAIPL in eliminating wastage and achieve zero defects for the product range. In November 2018, the company launched the Jiritsuka line. Based on Industry 4.0 the line integrates the ERP and process control system to a centralised server.
This enables monitoring and control of all manufacturing processes through customised software. Critical process controls are established through IoT devices to ensure error proofing at all manufacturing stages to in turn give the best quality output. Industry 4.0 has also enabled the company to reduce human intervention.
Big Data
With this implementation, the company, said Bandyopadhyay, owns a huge quantum of live data gathered from across the complete value chain. It will come to the aid for predictive quality assurance. “Leveraging Industry 4.0 can improve our supply chain resource efficiency on production by five to six per cent and can help Henkel in pursuing its vision of being 30 per cent more efficient by 2030,” he opined. The system at Henkel’s plant can today gather information on sustainability, efficiency, quality and safety in real-time and allow for cloud-based analytics in the realm of diagnostics, predictions and prescriptions. It can also provide insights to limit shifts on select machines and help optimise the manufacturing process overall. The concept of the golden batch will come in to play too, helping the company reduce the batch cycle time and increase productivity levels.
Differentiated outlook
The differentiated performance is expected to help Henkel attain a differentiated outlook. With the new plant at Pune set to increase its capacity by the year-end, the adhesive manufacturer has export expansion plans for its specialised product range. At a localisation level of about 10-15 per cent, the company is aiming to go higher in the near term. With Industry 4.0 in place, Henkel is confident of spreading out to new areas with growth potential. “We are not present in certain areas and we are looking at partnerships. This will help us expand and grow faster,” concluded Bandyopadhyay.