MAHINDRA AND MAHINDRA LIMITED FARM EQUIPMENT SECTOR About the company Farm Equipment Sector (FES) is one of the six sectors in which Mahindra and Mahindra Ltd (M&M) operates. Mahindra and Mahindra Ltd (M&M) is the flagship company of the US$ 1.96 billion Mahindra Group. The Sector is involved in designing, manufacturing and marketing agricultural tractors since 1963. For the last 21 years, Mahindra and Mahindra Ltd (M&M) has been the market leader in the highly competitive Indian tractor market. The Sector manufactures 15 major models of tractors at four manufacturing plants located in Mumbai, Nagpur, Jaipur and Rudrapur, with a total employee strength of over 4000. Over 400 suppliers and 450 dealers are also a part of the extended Mahindra family. About 15 per cent of the FES production is exported to various countries, with the USA being the largest importer, where the tractors Awards are sold and serviced by its subsidiary, Mahindra USA (MUSA), since almost a decade. Mahindra and Mahindra Ltd (M&M) was awarded the Deming Prize by JUSE in 2003. With this, Mahindra and Mahindra Ltd (M&M) achieved the distinction of becoming the first tractor manufacturer in the world to win this coveted prize. Prior to this, two of M&Ms tractor plants at Mumbai and Nagpur Success factors located in western India were certified to International Quality Standards ISO 9000, QS 9000 and ISO 14001 by the German Certification Agency RWTUV. Evolution of Total Quality Management (TQM) Systemleading to recognition The TQM journey at FES started in 1985. It can be broadly divided into four phases till 2003, when the company won the Deming Prize. a) Orientation Phase - 1985 to 1989 b) Introduction Phase - 1990 to 1994 c) Promotion Phase - 1995 to 1999 d) Development Phase - 2000 to 2003 a) Orientation Phase - The focus was on Quality Circle movement for employees staff and workmen during this phase. The
movement started on a pilot basis in Mumbai in 1985,India’s Deming Prize Winners
subsequently spread to Nagpur and substantially increased in scale over the next decade, with about 50 per cent of the employees being involved. The Quality Circles solved hundreds of problems in operational areas to improve quality, housekeeping, safety and reduce wastage and cost.b) Introduction Phase - During this phase, FES focused on solving major cross-functional quality problems through involvement of managers as well as enhanced product quality by improving quality of manufactured and bought out components. This phase was marked by the use of Dr Jurans process of quality improvement for problem solving, use of Statistical Process Control (SPC) for all critical machining processes and systematic support to all suppliers to improve their processes and product quality.c) Promotion Phase - The focus during this phase was on improvement through implementation of robust systems. Accordingly, both the Mumbai and Nagpur plants were certified, first to ISO 9000 and subsequently to QS 9000. Business Process Re-engineering (BPR) was implemented in the manufacturing areas, with substantial improvement in employee involvement and productivity. During the same phase, the Global Leadership Vision to become the largest tractor manufacturer in the world was conceived and the application of Deming Prize guidelines, under the guidance of Dr Y Washio, an eminent TQM expert from Japan, was initiated.d) Development Phase - This stage focused on improving at a rapid pace, to progress towards the Vision of Global Leadership and challenging the Deming Prize before 2004. The New Product Development process was improved and brought to international standards under the guidance of Dr Washio. His inputs enabled substantial improvement in manufacturing and supplier support processes. Sales, dealer support and customer operations were systematised under the umbrella of Mahindra Sales System (MSS).Leadership and employee participationCommitment of leadership was fundamental for TQMimplementation, and even moreso in challenging the Deming Prize.The Deming Prize Examiners evaluated this through Schedule Apresentations that were made by the Chief Executive Officer andother senior managers, and additionally through a special ExecutiveSession. The energetic efforts for practising TQM to realise the
Business Strategy under active top management leadership washighlighted in the Deming Prize Committee report. 17
Employee Involvement was another feature of TQM and the DemingPrize. Introduction of Continuous Improvement Teams (CIT) forworkmen, Officers Improvement Teams (OIT) and need-basedCrossFunctional Teams (CFTs) for officers ensured 100 per centemployeeinvolvement over the last three years. The total 100 per centemployee involvement and improved labour-managementrelationshipwas another aspect appreciated by the Deming Examiners.Regular improvements in business processesDue to implementation of TQM, marked improvements wereperceptible in all key business processes:a) Manufacturing · Due to Standardisation, effective usage of SPC and practice of Daily Work Management (DWM), rework and rejection (Quality) came down to less than 1000 PPM levels. · For the same reason, the Field Quality measured by number of complaints in first 250 and 500 hours of operations, improved substantially. · Productivity improved considerably on account of implementation of Business Process Re-engineering (BPR).b) Supplier Management · The quality of outsourced components improved substantially owing to the support to suppliers. · Similarly a marked improvement in Supplier Schedule Adherence was achieved.
C) New Product Development · With the usage of tools like Quality Function Deployment products meeting ‘more’ exact customer requirements could be developed and marketed. · Use of tools like Failure Mode Effect Analysis (FMEA) helped reduce quality problems at the Product Development stage itself. · Development Cycle Time was reduced substantially. · Due to this initiative, the company could produce 15 new models, including some specifically for export, over the last three years. This led to a sharp rise in export figures.d) Sales and Customer Operations · Following application of various innovative service initiatives like Mobile Service Van, Single-Window concept for spares procured from Original Equipment Manufacturers, the Overall Customer Satisfaction Index improved. · Standardised Sales process introduced in the form of Mahindra Sales System (MSS) and support offered to dealers in various forms contributed to increased Market Share, widening the gap between Farm Equipment Sector (FES) and the next best competition.Strength as an organisation to attract overseas attentionFES could attract overseas attention on account of followingstrengths:· Global vision backed by long term strategy, with specific focus on exports· Capability displayed in developing new products required for the export market· World-class manufacturing quality· Low costs due to improved productivity and various cost re-engineering efforts· Skilled and motivated workforce· Capability to develop sales and service network, as demonstrated· in the US markets Sustained market leadership in the Indian tractor market,· the largest in the world· Rapidly increasing exports World-class Quality and Management systems certified first through ISO/QS 9000, and subsequently recognised with the Deming Prize
Technological edge FES technological edge lies basically in three areas: a) World-class Product Development and R&D facilities manned by over 300 well-qualified engineers and equipped with world-class design and testing facilities. These have contributed to the development of new and attractive product offerings for export and domestic markets. b) Manufacturing facilities complete with world-class engine assembly plant, CED Paint Shop and resourced by a skilled work force. c) Constant exposure to the sophisticated US market through subsidiary-MUSA.Business excellence model FES model of Excellence, which was in general based on the Deming Model, can be summarised as follows: a) Foundation comprised the following: · Company core purpose and core values. · Top management leadership, Vision (of Global Leadership) and Strategy. b) The main pillars of their model of TQM comprised: · Quality Assurance systems (based on standards) in – New Product Development – Manufacturing – Supplier Management – Sales and Customer Operations · Policy Deployment - A top management led process/system of setting and deploying long-term targets that were effectively pursued with employees integrating them into their annual targets. Their achievement was assured through the effective practice of Daily Work management. · Continuous improvement with 100 per cent employee involvement, using scientific problem solving tools and quality information data.
· Standardised Support Services like IT, Cost Management, Delivery Management and Human Resource Management. c) On the top of this structure/model stood the Purpose: · Satisfaction of all stakeholders, employees, customers, suppliers and society. · Excellent business results.The Deming Prize Specific comments from the auditors during evaluation and recognition specific points mentioned during the investiture ceremony The Deming Prize Examiners pointed out, “There are several excellent features in the company-wide energetic efforts for practising TQM to realise the business strategy under the leadership of the President.” They further added that,“The results of Top Management driven TQM activities had shown remarkable improvement in the last few years as follows - · In a short span of time, entry in the American market was successfully achieved and the turnover in the new market was being continuously improved. · Various management systems, not only within FES, but even involving Suppliers and Dealers had been inducted and · deployed. Large scale BPR aimed at improving profitability and productivity · was put in practice. Improvement in labour-management relationship was achieved”.
The Deming Prize Examiners additionally appreciated the following: · Ambitious and attractive Global Vision and road map · Deployment of Policy to divisional and further levels · Mature New Product Development system using various tools · Correct use of SPC giving process capabilities of over 1.33 in all important processes · Drastic reduction in rejection and rework and improvement in Field Quality · Kaizen activity with 100 per cent involvement of employees · Supplier Support resulting in drastic reduction in receipt · rejection · Support provided to dealers in Sales and Service events Systematic Training and Education system On November 11, 2003, Dr Hitoshi Kume, Chairman, Deming Prize Sub-committee, handed over the Deming Prize Medal and Certificate to the FES President, Mr K J Davasia, at Tokyo. At the time, Dr Kume read the following from the Certificate: “Mahindra and Mahindra Ltd, Farm Equipment Sector, India has achieved outstanding performance by practising Total Quality Management, utilising statistical concepts and methodology based on companys excellent business philosophy and leadership as demonstrated by the senior management. In recognition thereof, the Deming Prize committee hereby presents the Deming Application Prize to them.”Contribution to further The journey undertaken for challenging the Deming Prize gave FES growth/business and many benefits, which could be divided into two categories, namely:international recognition · Culture-related · Business result-related Culture related · The whole organisation was steered in one direction, due to effective implementation of policy deployment. · Involvement of all three major stakeholders, namely, employees, suppliers and dealers, in working together improved
tremendously Business result related · Product Quality improved substantially. · Fifteen new models could be developed over 2000-03 · Customer satisfaction and domestic market share improved · Export volume increased substantiallyIndia’s Deming Prize Winners
FES has set its next target to challenge the Japan Quality Medal before2007, which is also awarded by JUSE. Only the Deming Prize winningcompanies are eligible for challenging this award. Till date only 10 percent Deming Prize-winners have progressed and won this award. Thisaward will require FES to benchmark itself with the best in the worldand improve its core processes substantially, to achieve improvedresults. Dr Washio has agreed to guide the company in this journey.Inspired by his encouragement as well as continued commitment bythe firms top management, FES has decided to accept this challenge.FES is certain that the next established target would help realise itsdream of Global Leadership with substantial international presence.