The programme of ancillarisation
includes motivation of public and private sector units to offload
production of components, parts, sub-assemblies, tools, intermediates,
services etc., to ancillary units.
The program of ancillary development has specific advantages both for
large as well as small industries and also for the total economy of the
country. The large scale units have the advantages in the form of savings
in investments, inventories, employment of labour, etc. and getting the
items of the desired specifications, while the small scale units have the
advantage of getting assured market for their products, availability of
technical assistance and improved technology from the parent units.
This program also helps in overall economy of the country. Sub contracting
to Ancillary industries has many advantages:
- It results in spread of entrepreneurial base
- it promotes industrial development and for
the prime or parent company
- regular supply of right quality items is
assured
- all the components procured from ancillary
industries cost the parent company much lesser as compared to their
own in-house manufacturing cost
|
There are a few problems associated
with Ancillary units. Ancillary units are best fit when the parent company
continues with the existing products. If the primary company embarks on a
major modification of the existing product (s), ancillary units probably
will not be able to meet the requirements of new products. Again the
benefits, the parent company, otherwise would gain by buying from outside
an outside supplier, in the form of sharing his superior quality and vast
experience is lost (to the parent company). Providing technical and
managerial guidance and offering other facilities for the development of
ancillaries, add to the operational problem of the parent company. But
this problem can be overcome by allowing Ancillary units to supply
products to other industries as well and providing financial assistance to
install new machinery when the parent company goes for modification of
existing products.
|