1. Jyoti Rajguru
Maulik Parekh
Amit Savinkar
Daman Shabong

2. Background Division: (1996 -1997 )
 Lucas-TVS was set up in 1961
Division: Business Profile (1996-97)
India's largest automotive components
1%
manufacturer Head
 Largest automotive marketing group, 30%
10%
Starters
selling and servicing a wide variety of 32% Other
vehicles and spares 11%
Dynamos
 TVS is one of India's 20 large industrial 9% 6% Wipers
houses, and has 25 manufacturing Distributors
companies and a turnover in excess of Rs 1% Alternators
8600 crore
 It has the largest distribution network for
automotive products in India Product Range
 It reaches out to all segments of the
automotive industry  Auto electricals
 Braking systems
 Automotive wheels
 Axle fasteners
 Diesel fuel injection equipment
 Powder metal components
 Two-wheelers

3. Journey towards Manufacturing Excellence

4. Lucas-TVS : Two divisions
Auto Electrical Division Fuel Injection Equipment Division
 Manufactures a complete range of auto  In 1990, Lucas-TVS, in collaboration with the
electrical products from starters to wipers Lucas group, set up a factory on a 33 acre site at
 It has production facilities at Padi Mannur near Chennai
(Chennai), Eripakkam (Pondicherry), and Rewari  Manufacture diesel fuel injection equipment
(Haryana) for both direct and indirect diesel engines
 The Padi plant has already been certified under  The division, which is already certified with ISO
ISO 9001 and has obtained the QS 9000 9001, received its QS 9000 certification in 1999
certification in 1997
 The Pondicherry plant has also received the QS
9000 certification in 1999
3500
3000
2500
SALES 2000
1500
1000
500
0
1985 1991 1998

5. p First Phase
P
Second Phase
H  Advent of Maruti Udyog Limited (MUL) in
1983 H  Ten years from 1983 during which Maruti won
A
its no-contest battle against Hindustan Motors
 Industry never matched up to the
performance of its counterparts in other
A Premier Automobiles and emerged as a
S parts of the world. S formidable competitor with a staggering 83 per
cent share
E  Government's license raj
 Industry was sheltered from external 2 The industry slowly started responding to the
1 competition changing needs of customers.
 Considerable inertia existed in the industry
during this phase and as a result very
 little innovation took place
Last Phase
P  It began with the advent of liberalization in 1993 after the deregulation of the Indian passenger car
GM, Ford, Honda, Mitsubishi, Mercedez-Benz, Hyundai, Daewoo, and Fiat launched their
H passenger car models in India
Significant investments in India, more attractive climate for foreign auto-makers than the climate
A that exists in other countries in Asia
S  Passenger car industry has notched impressive growth rates of about 19.5 per cent in the period
between 1993 and 1997
E TELCO‘s launch of Tata Indica in late 1998 has again spurred intense competition in India's small
car industry
3

6. Manufacturing before 1985 : Need For Change
Padi Plant In World

7. Journey towards World-Class Manufacturing

8. Task Force Formation
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

9. Recommendations
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 and
automation, but decided to concentrate on these hard investments later

10. Top Management Initiative
Stage I Steps Taken
1) Mr Balaji recognized the importance of worker involvement and worker commitment
2) 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
Top Management
Initiative
Challenges faced
1) Changing their mindset was critical

11. Layout Changes – 1986-91
In 1986, Lucas-TVS began modifying the layout from a process layout to a product-
based layout
Stage II 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
Layout Changes 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
Challenges faced
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

12. Padi Plant - 1985

13. Padi Plant - 1999

14. Employee Empowerment
Stage III Steps Taken …..
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
Employee exposure for five days on a variety of new techniques to manage the change process
effectively
Empowerment 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

15. 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 factory
4) The changes led to considerable reductions in floor space requirements and resulted in improved inventory turns

16. Continuous Improvement
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
Implications Steps Taken…
1) With the entry of a number of
international auto manufacturers
1) The task force proposed a hierarchical, modular approach
into the Indian market, the sector
2) This approach builds on the product focus resulting from the plant reorganization
was expected to grow and provide
factory in the plant dedicated to production of a subset of product families
improved opportunities for auto
3) Modules within each unit comprise of subassemblies whose operations are typically
component suppliers
performed in sequence
2) The resulting export opportunities
4) A cell is a subset of sequential activities within a module that could be assigned
were also significant
Manufacturing Systems Engineering group (MSE)
3) The competition was expected to
5) Which evolved out of the task force, played a key role at this stage and was
intensify and force auto
instrumental in identifying opportunities, designing the cells, and finally
component manufacturers to cut
implementing the scheme
their prices and costs. Further, the
6) The MSE department was influenced significantly by adoption of flexible cells or
steep rise in product variety
"Nagare” cells
increased manufacturing
7) Creation of a flexible work-force with each worker trained to perform multiple tasks
complexity and quality emerged
was one of the key elements of the new paradigm to permit "lean“ operations in the
as an important requirement for
face of growing variety and demand uncertainty
competing successfully in the new
market

17. Nagare Cell – Yoke Machining Operation
Hierarchical Approach for
modularization

18. Continuous Improvement
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
Quality Initiatives since management systems that provide for structured control and continuous
improvement, enabling defect prevention and reduction of process variation and waste
1992 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
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
Since 1995 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

19. Setup time Space Utilisation Index
600
5
500
4
400
3
300
2
200
1
100
0
0
1985 1991 1998 1985 1991 1998
Downtime Annual Production (Millions of
2.5 units)
1.6
2
1.4
1.2
1.5
1
0.8
1
0.6
0.4
0.5
0.2
0
0
1985 1991 1998
1985 1991 1998

20. Rejection (%) Inventory turns
12
16
10 14
8 12
10
6
8
4 6
2 4
2
0
1985 1991 1998 0
1985 1991 1998
Scrap Sales per Employee
3.5 1.2
3 1
2.5
0.8
2
0.6
1.5
0.4
1
0.5 0.2
0 0
1985 1991 1998 1985 1991 1998

21. Goals Achieved
Financial Operational Customer Investor
- Increase market share - On schedule production - Increase customer - More market share
satisfaction
- Reduce lead time
- Increase net sales - Reduce installation / - Improved earnings
- Deliver on time and
staff ratio with better quality
- Become an industry - New product - Improved customer
leader satisfaction
development - Cheaper price
- Higher manufacturing
capability utilization
- Lower overheads &
inventory size

22. The road ahead……..
Supplier 1) Long term agreement with suppliers - has not made much progress so far.
alignment 2) Only about 10 per cent of suppliers have developed capabilities to match
requirements
Product
offerings 1) To match the product offerings of world-class
competitors, TVS would have to enhance our new product
development capabilities
Technological
capabilities 1) Match the technological capabilities of the competitors.
1) TVS has got QS 9000/ISO 9001 certifications, but still they
Quality have to do a lot of homework to match world-class standards
2) To reduce defects to 150 PPM
1) Developments in the area of information technology are bound to
IT influence all major companies in the coming decade
2) IT in many organizations has become an end rather than a means for
achieving goals
Supply
Chain
1) To survive in Global environment supply chains need to compete with one another