Implementing BPR

(Business Process Re-engineering)

Mahindra & Mahindra

Brief Introduction of M&M

Started in 1945 by J C Mahindra & K C Mahindra

In Oct. 1947 first batch of 75 jeeps released for Indian market

Diversified business in other segments viz. hotels, financial

services, auto components, information technology etc.

In 1994 a major restructuring exercise was initiated as part of a

BPR program.

The company was regrouped in six distinct clusters of related

businesses

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Contd…..

Current Price in the stock market at Rs 472

Automotive divisions ( UVs & LCVs)

Farm equipment division (tractors and farm implements)

In 1996, Nagpur and Kandivali plants received ISO 9001

In 2001 it was 4th largest manufacturer of tractors in the world

Tractors were exported to countries viz. US, SA, Zimbabwe,

Nepal, Sri Lanka and most of the European countries

2

Contd…..

Acquired Kinetic Scooters having 80% stake to strengthen its

two wheeler segment

Amalgamation with Punjab Tractors Limited to strengthen its

three wheeler segment

Current Price in the stock market at Rs 472 with a market

capital of 143 billion

52 week Low/High 391/830

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What is BPR?

BPR is about radical redesign and reorganization of an

enterprise to lower the cost and improve quality and services

It was assumed to be the key enabler for that radical change

Focus on reinventing the way of company carries out rather on

improving or modifying process

It was recommended for the corporations where technology,

people and organizational goals were no longer valid

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BPR in M&M

Circumstances That Lead M&M To

Implement BPR

Factors

• Manufacturing Inefficiencies

• Poor productivity

• Long production cycle

• Sub-optimal output.

• Unhealthy work culture

• Corruption was widespread.

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Continued…….

• Decision to focus on enhancing productivity and delivering

world-class quality at the least possible cost.

• Ambition to become the largest tractor manufacturer in the

world.

• The three C’s (customers, competition, change)

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Why M & M faced resistance from unions

while implementing BPR?

• Fear of Downsizing

• Several jobs were combined into one.

• Management accepting the Union demands every time.

• Lenient approach of management towards running the plant.

• Inflexibility of the workers.

• Idle time available to workers due to unorganized processes

• Censorship of disclosure

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BPR Implementation Exercise At M & M

• Implementation started in mid 1990s

• Resistance from the unions

• Re-engineering the layout and method of working

• Cellular Manufacturing

– Multi-tasking through multi-machine manning

– Reduction in non-productive activities

• Implementation of TQM & Kaizen

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How did the ‘Platform Concept’ help the

company?

• Focus on customer requirement.

• Concurrent engineering: Formation of cross functional teams

• Formation of 3 full-time teams

– Horizon1: Improvements in existing products

– Horizon2: Up-gradation of existing products

– Horizon3: Development of new products

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The Benefits M&M Reaped As A Result Of

BPR Program

• Around a 100 officers produced 35 engines a day as compared

to the 1200 employees producing 70 engines in the pre-BPR

days.

• Igatpuri Plant: Employees declined by 400 but productivity

went up by 125 engines per day

• Nasik Plant: 125% improvement in productivity

• Reduction in employee costs

– 1994: 12.4%

– 1996: 10.1%11

Continued……

• Value added per employee increased from 0.3 million to 0.46

million

• “BPR was a way of reengineering our plants and making them

viable in a competitive environment” – Anand Mahindra

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Continued……

• Better inventory control

• Better sourcing

• Better order distribution across plants

• Online availability of data

• Transparent access to data

• Process transparency

• Integrated sales and supply chain

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Measures taken by M & M to ensure

BPR success

Training and Motivating workforce

Identifying leaders

Creating a conducive environment and

changing work culture.

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Highlights

Improve PTL’s capacity utilization from 45% to 55%

With the launch of Ingenio, 10-12% growth in the UV industry

6-8% growth in the tractor segment FY09

Margins to reduce – increase in steel, fuel and raw material prices,

to improve in FY10

Net sales for the quarter Q1 increased YoY (Year over Year) by

26.1% to Rs. 32.9 bn

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Sales volume grew 18.9% YoY to 90160 units

Automotive – 23.7% increase YoY to 60,054 units

FES – Revenues up by 27.5% to 13.2bn

Acquires Kinetic Motors

Talks to acquire Italian motorcycle maker Malaguti Motor

JV with Jiansu Vueda Yancheng Tractor Manufacturing Company

(JVYTMC).

51% stake through Mahindra Overseas Investment Company

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BPR implementation in M&M had seen radical change for the better

not only in its functions but also in its results. This can be summed up

with the statement of Anand Mahindra “Today the atmosphere is so

different that every morning all the workers recite the company oath,

which is a sea change from the situation 10 years ago when workers

used to play cards on shop floor during working hours.”

Conclusion

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THANK YOU