Ancillary Development

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.

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Inclusivity Measurement
Present Scenario
Supply Chain

Realigning Supply Chain through :

Direct Procurement from Producers/Primary Suppliers
Use of Information & Technology
Vendor Development
Open Tendering
Ancillary Development
Targeted Procurement
Unbundling of Contract




Digvijay Singh, Dy. Manager (Materials Management)
Research & Development Center for Iron & Steel (RDCIS)
Steel Authority of India Ltd. (Ranchi)


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