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TRANSCRIPT
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Jyoti RajguruMaulik ParekhAmit SavinkarDaman Shabong
WCM
TVS - Lucas
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Lucas-TVS was set up in 1961India's largest automotive componentsmanufacturer Largest automotive marketing group, selling and servicing a wide variety of vehicles and spares TVS is one of India's 20 large industrial
houses, and has 25 manufacturing companies and a turnover in excess of Rs 8600 crore It has the largest distribution network for
automotive products in India It reaches out to all segments of the
automotive industry
Background Division: (1996 -1997 )
10%
32%
1%
6%9%11%
30%1%
Division: Business Profile (1996-97)
HeadStartersOtherDynamosWipersDistributorsAlternatorslamps
Product Range
Auto electricals Braking systems Automotive wheels Axle fasteners Diesel fuel injection equipment Powder metal components Two-wheelers
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Journey towards Manufacturing Excellence
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Auto Electrical Division Fuel Injection Equipment Division
Manufactures a complete range of auto electrical products from starters to wipers It has production facilities at Padi (Chennai), Eripakkam (Pondicherry), and Rewari (Haryana) The Padi plant has already been certified under ISO 9001 and has obtained the QS 9000 certification in 1997 The Pondicherry plant has also received the QS9000 certification in 1999
In 1990, Lucas-TVS, in collaboration with the Lucas group, set up a factory on a 33 acre site at Mannur near Chennai Manufacture diesel fuel injection equipment for both direct and indirect diesel engines The division, which is already certified with ISO9001, received its QS 9000 certification in 1999
Lucas-TVS : Two divisions
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SALES
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Indian Automotive Industry : Three distinct phases
First Phase
Advent of Maruti Udyog Limited (MUL) in 1983
Industry never matched up to the performance of its counterparts in other parts of the world.
Government's license raj Industry was sheltered from external
competition Considerable inertia existed in the industry
during this phase and as a result very little innovation took place
pHASE1
Second Phase
Ten years from 1983 during which Maruti won
its no-contest battle against Hindustan Motors Premier Automobiles and emerged as a formidable competitor with a staggering 83 per cent shareThe industry slowly started responding to the changing needs of customers.
PHA S 2
Last Phase
It began with the advent of liberalization in 1993 after the deregulation of the Indian passenger carGM, Ford, Honda, Mitsubishi, Mercedez-Benz, Hyundai, Daewoo, and Fiat launched their passenger car models in IndiaSignificant investments in India, more attractive climate for foreign auto-makers than the climate that exists in other countries in Asia Passenger car industry has notched impressive growth rates of about 19.5 per cent in the period between 1993 and 1997TELCO‘s launch of Tata Indica in late 1998 has again spurred intense competition in India's small car industry
PHASE3
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Manufacturing before 1985 : Need For Change
Operating with less inventory
Coping economically with higher productvariety
Operating economically with small batchsizes
Rapidly changing between products
Having a shorter manufacturing lead time, Guaranteeing delivery with high quality
Frequent breakdowns resulted in downtime, resulting scrap levels as 3 per cent
30 per cent of the processes were not capable of meeting the product specifications
Workers were encouraged to keep producing and accumulate inventory levels utilization of machines
Very little emphasis on timely deliveries and schedule adherence
Incapability for frequent introduction of new, high quality products
Padi Plant In World
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• Convince everyone in their organization about the importance of becoming leaner and more efficient
• Lack of infrastructure in India• Uncertainties with respect to procurement• Arms length relationship with suppliers, and lack of quality• Delivery consciousness within many organizations• These techniques were effective in foreign soil, they would
not work as well in the Indian environmentChallenges and Myths
Journey towards World-Class Manufacturing
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Set up a task force to study the issue in greater detail and prepared a feasibility report for adoption of the change process at the Padi plant
First six months task force visited a number of innovative plants in the UK and received extensive training in the implementation of these modern production methods
Spent another six months collecting and analysing company-specific data to assess the potential impact of the change process.
They analysed the market, product, quality, and flow within their plants. They also benchmarked their performance with the best in the industry both within and outside the country
The task force came out with a clear recommendation to go ahead with the project
Task Force Formation
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The task force identified several tangible/ measurable performance targets
It targeted raising productivity levels and reducing inventory, rejections, scrap levels,and warranty losses by 50 per cent in a span of three years while simultaneously aiming at maximizing customer satisfaction
Lucas-TVS should focus initially on maximizing the potential of current resources
Emphasis was on harnessing the full potential of the human resources, on changing the mind-set of the work-force at all levels, and on improving the layout to facilitate a smooth flow with the processes and manufacturing equipment already in place
The task force accorded lower priority to investments in new technology andautomation, but decided to concentrate on these hard investments later
Recommendations
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Top Management Initiative
Steps TakenStage I
Top Management Initiative
1) Mr Balaji recognized the importance of worker involvement and worker commitment2) He addressed employees at all levels in batches articulated the need to transform the
company into a lean and flexible organization, able to deliver better, more timely products with better use of resources
3) He helped them understand the changing market scenarios and the need to look at effectiveness in operations as a source of long-term competitive advantage
4) he promised his workers that if the mission were to be successful, he would ensure rightful recognition to all his workers
Challenges faced
1) Changing their mindset was critical
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Layout Changes – 1986-91
Challenges faced
Stage II
Layout Changes
1) Making changes to the layout without halting production no interruptions of the deliveries scheduled for our customers, we had decided to perform all layout changes during the weekends to avoid stoppage of production. It required a phenomenal level of planning at the operating level focusing on individual process flow, availability of alternative machines, and alternative possible routings for production and organizing special tooling where and when they were needed
2) It took five years to complete the layout changes in the entire plant, almost two years more than the targeted time period
Steps taken ……
1) The task force decided to classify Lucas-TVS's products into six product units (alternators, axial starters, dynamos, pre-engaged starters, wipers and distributors, and headlamps, regulators, and process services)
2) The team also advised a team of engineers to relocate equipment and machinery to create focused factories, each capable of handling a single product type. This product focus was confined primarily to assembly and a few immediate upstream operations
3) Processes further upstream such as heat treatment and painting were still organized by process and represented resources common to all products
4) massive effort requiring rationalization of machines and equipment, movement and relocation of heavy machinery with corresponding changes in the building structure
In 1986, Lucas-TVS began modifying the layout from a process layout to a product-based layout
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Padi Plant - 1985
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Padi Plant - 1999
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Employee Empowerment
Steps Taken …..Stage III
Employee Empowerment
1) All employees were provided special training on a variety of new techniques to manage manufacturing processes effectively
2) Workers were trained to perform multiple tasks to offer higher flexibility to the organization
3) The workers were sent in batches of 30 to the Training Centre and were given training and exposure for five days on a variety of new techniques to manage the change process effectively
4) They were given exposure to change management, Statistical Process Control (SPC) techniques, preventive maintenance, flow production concepts, usage of Kanbans,15 and the new roles that they would have to play in the envisioned organization
5) This training programme was also designed to provide the basics of Toyota's 5S
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Challenges -- Overcome …
Steps Taken ……
1) There was considerable scepticism about the suitability of these techniques for the Indian environment and their effectiveness at the Padi plant
2) One of the mechanisms by which the management obtained the support of their work-force was through the initiation of small group activities (SGA)
3) Once a week, these groups met to take up a specific problem and came up with an improved solution. A number of such Kaizen suggestions at the operational level, spanning the entire plant, was primarily responsible for the productivity gains achieved during this period
4) The number of Kaizen suggestions received increased ten-fold during this period and these activities, still continuing today, have fostered a culture of continuous learning and improvement among the employees
5) Also, once in every three months, the SGA organizers publish a newsletter in Tamil called "SiruKuzhu Cheythi Malar" (Small Group Newsletter)
Results Achieved
1) Changing their mindset was critical The layout changes and worker training together involved an investment of Rs 1.7 crore. The benefits of these changes to the Padi plant were immediate
2) In six years, the net worth and sales per employee of the company doubled with almost negligible change in the work-force size.3) The product layout eliminated criss-crossing of material across the factory and resulted in smoother flow of products through
the factory4) The changes led to considerable reductions in floor space requirements and resulted in improved inventory turns
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Continuous Improvement
Implications
1) With the entry of a number of international auto manufacturers into the Indian market, the sector was expected to grow and provide improved opportunities for auto component suppliers
2) The resulting export opportunities were also significant
3) The competition was expected to intensify and force auto component manufacturers to cut their prices and costs. Further, the steep rise in product variety increased manufacturing complexity and quality emerged as an important requirement for competing successfully in the new market
Indian government went in for economic liberalization and adopted several reform policies that eased many of the restrictions and opened up the economy to foreign competition and investors
Steps Taken…
1) The task force proposed a hierarchical, modular approach2) This approach builds on the product focus resulting from the plant reorganization
factory in the plant dedicated to production of a subset of product families3) Modules within each unit comprise of subassemblies whose operations are typically
performed in sequence4) A cell is a subset of sequential activities within a module that could be assigned
Manufacturing Systems Engineering group (MSE)5) Which evolved out of the task force, played a key role at this stage and was
instrumental in identifying opportunities, designing the cells, and finally implementing the scheme
6) The MSE department was influenced significantly by adoption of flexible cells or "Nagare” cells
7) Creation of a flexible work-force with each worker trained to perform multiple tasks was one of the key elements of the new paradigm to permit "lean“ operations in the face of growing variety and demand uncertainty
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Nagare Cell – Yoke Machining Operation
Hierarchical Approach for modularization
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Continuous Improvement
Quality Initiatives since 1992
1) Since 1992, considerable attention was devoted to streamlining quality assurance systems, resulting in the award of ISO 9001 in 1993
2) Subsequently, Lucas-TVS also received the QS 900021 certification in October 1997.It achieved this distinction through development and implementation of fundamental quality management systems that provide for structured control and continuous improvement, enabling defect prevention and reduction of process variation and waste
3) This process involved educating the work-force in the following areas:• Stressing the importance of quality systems• Maintaining quality control charts• Using visual displays• Following work instructions and procedures
Since 1995
1) The company has been focusing on developing capabilities and flexibility to implement single piece flow within the plant while simultaneously achieving just-in-time (JIT) deliveries to customers
2) The company had streamlined the distribution system ,Implementation of the above was facilitated by building additional capabilities in manufacturing, planning, scheduling, and operations
3) Currently, worker assignments are done on a weekly basis, and production rates are determined daily in response to changing customer demands
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1985 1991 19980
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Setup time
1985 1991 19980
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Downtime
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Space Utilisation Index
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Annual Production (Millions of units)
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1985 1991 19980
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Rejection (%)
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Scrap
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Inventory turns
1985 1991 19980
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Sales per Employee
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- Increase market share
- Increase net sales
- Become an industry leader
- On schedule production
- Reduce lead time
- Reduce installation / staff ratio
- New product development
- Higher manufacturing capability utilization
- Lower overheads & inventory size
- Increase customer satisfaction
- Deliver on time and with better quality
- Cheaper price
- More market share
- Improved earnings
- Improved customer satisfaction
Goals Achieved
Financial Operational Customer Investor
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1) Long term agreement with suppliers - has not made much progress so far.2) Only about 10 per cent of suppliers have developed capabilities to match
requirements
Supplier alignment
1) To match the product offerings of world-class competitors, TVS would have to enhance our new product development capabilities
Product offerings
1) Match the technological capabilities of the competitors.
1) TVS has got QS 9000/ISO 9001 certifications, but still they have to do a lot of homework to match world-class standards
2) To reduce defects to 150 PPMQuality
Technological capabilities
The road ahead……..
IT
Supply Chain
1) Developments in the area of information technology are bound to influence all major companies in the coming decade
2) IT in many organizations has become an end rather than a means for achieving goals
1) To survive in Global environment supply chains need to compete with one another
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