Case Study on LUCAS-TVS

A Journey towards Manufacturing Excellence

Presented By: Jude Abreo (81) Ketan Mo al (8!) Mridu "#ar$a (8%) &a$is# "#ar$a (8') &a$rata Ku$ar (8() &i #il &agdeote (8)

Bac ground:
Lucas-TVS was set up in 1961 as a joint venture of Lucas Industries UK now Lucas Varity! and T V Sundara" #yen$ar % Sons TVS!& India& to "anufacture Auto"otive '#ectrica# Syste"s(
*ucas +arity:
199) revenue* +,(- .i##ion( Products: /ra0in$ Syste"s 1iese# 2ue# Injection Syste"s '#ectronic and '#ectrica# Syste"s After-"ar0et product sa#es and service( ,EM +endor to: Vo#vo 3ercedes-/en4 Vo#0swa$en Audi 2ord 2iat 5eu$eot A#fa 6o"eo

-+" is .ndia/s fourt# largest auto$oti0e co$1onent $anufacturer

Turnover in e7cess of 6s( )688 Cr( 5roducts* Auto '#ectrica#s /ra0in$ Syste"s Auto"otive 9:ee#s A7#e 2asteners 1iese# 2ue# Injection ';uip"ent Two 9:ee#ers India<s #ar$est auto"otive "ar0etin$ $roup& wit: t:e #ar$est sa#es and distri.ution networ0

2urrent 2usto$ers of *ucas3-+":

4i0isions and Joint +entures:

Auto '#ectrica# 5roducts* =ead#a"ps A#ternators 9ipers 1istri.utors 1yna"os Starters 5#ant Locations* 5adi C:ennai! IS> 9881 and ?S 9888 in 199,! 'ripa00a" 5ondic:erry! ?S 9888 in 1999! 6ewari =aryana! 2ue# Injection ';uip"ent 5roducts* 1iese# 2ue# Injection ';uip"ent 5#ant Locations* 3annur C:ennai! IS> 9881 and ?S 9888 in 1999! Lucas Indian Services 5roducts* Sa#es and service of auto e#ectrica#s and fue# injection syste"s "anufactured .y Lucas-TVS Locations* @ 6e$iona# .ranc:es in t:e @ "etros AA /ranc: offices coverin$ every "ajor state India Bippon '#ectrica#s Ltd( IB'L! CV .etween Lucas Indian Services and Ko0usan 1en0i Co( Ltd(& Capan est( in 19) 5roducts* I$nition syste"s for two w:ee#ers and porta.#e $ensets 5#ant Locations* =osur /an$a#ore! IS> 9881 India Capan Li$:tin$ Ltd( ICL! -8D-8 CV .etween LucasTVS and Koito 3anufacturin$ Co"pany Ltd(& Capan Inc( in 1ec( 1996 5roducts* =ead#a"ps 6ear Co".ination La"ps 5#ant Locations* T:iruva##ur A0" fro" 5adi!

Before 158%

158% to 155%

155% onwards

155% to 1556

15583 1555

3ar0et do"inated .y =industan 3otors and 5re"ier Auto"o.i#es Ltd(

3aruti Udyo$ Li"ited 3UL! captures )EF "ar0et s:are(

3ar0et is #i.era#i4ed and internationa# $iants #i0e G3& 2ord& =onda& 3itsu.is:i& 3ercedes/en4& =yundai& 1aewoo and 2iat #aunc: passen$er car "ode#s in India(

19(-F $rowt: rate of t:e Indian auto industry

1ec#ine in auto sa#es due to econo"ic s#owdown Tata 3otors #aunc:es t:e Indica in 199) spurrin$ intense co"petition in t:e s"a## car industry(

2#allenges in t#e .ndian Auto3co$1onent .ndustry:

Two of t:e "ajor c:ar$es #eve##ed a$ainst t:e do"estic co"ponent "anufacturers are t:at t:ey lac 7uality consistency and deli0ery reliability( 6ejection rate for Indian auto co"ponents is !8599 1arts 1er $illion 553!& w:ic: is "ore t:an ten ti"es t:e wor#d #eve# of !'9 PPM( 'sti"ated su.-supp#iersH rejection rate is %18(99 PPM( Entry of global co$1onent $anufacturers( Increasin$ s:ift towards reduction in 0endors(

*:2A" -+" Before 158(

Lathing Milling Drilling

Challenges: Crisscross material movement. Lots of Work in Process(WIP) on shop floor. Roughly 30 of the processes !ere not capa"le of meeting pro#uct specifications. $re%uent "reak#o!ns of machinery. Less focus of timely #elivery(#elivery relia"ilities) &pro#uct %uality(#elivery consistency). 'igh scrap levels (3 )
L L Assembly A Receiving and shipping A A A L L M M

M Grinding

&eed for 2#ange

'ntry of 3aruti Udyo$ Ltd( 3UL! in 19)E increased "ar0et co"petition( 'ntry of wor#d c#ass co"ponent "anufacturers #i0e /osc: % Bippodenso tri$$ered a c:an$e( So"e >'3<s were a#so settin$ up su.sidiaries to supp#y auto co"ponents( To re"ain co"petitive& cost & ;ua#ity and response ti"e needed to .e i"proved( It .eca"e a .usiness re;uire"ent to #oo0 .eyond India and co"pete $#o.a##y( Bew product variants and tec:no#o$y de"anded( Co"p#ete#y dependent on forei$n partner for desi$ns& no in-:ouse capa.i#ity #eadin$ to #on$ deve#op"ent cyc#es(

2#ange Manage$ent "trategy

( three mem"er task force is setup to recommen# an# #irect the changes !ithin Lucas)*+,.

Recommen#ations of the three mem"er task force !ere Syste"s approac: to "anufacturin$( 2ocus on "a7i"i4in$ current resources - Lower priority to invest"ents in new tec:no#o$ies( 'ffective trainin$ to wor0force( 'ncoura$e e"p#oyee en$a$e"ent t:rou$: for"ation of s"a## $roups Continuous I"prove"ent!

"This Padi facility at that time looked nothing like it looks today. We had a plant that was built in the early 60s. We knew that it had to be considerably modified to transform it into a world-class facility. Howe er! in "#$%! there were not many firms in &ndia that had gone through this kind of massi e transformation. This posed considerable challenges to us." - .r * / 0ala1i& C23 an# .4& Lucas)*+,

*ayout c#ange and E$1loyee E$1ower$ent 158)31551

Measures -a en: '"p#oyee 'n$a$e"ent was encoura$ed wit: t:e fo##owin$ "easures '"p#oyee trainin$ in .atc:es of E8 at Tara"ani Trainin$ Centre on S5C&?21&23'A Kai4en su$$estion sc:e"e started Bews #etter in Ta"i# ISiru Ku4:u C:eyt:i 3a#arJ S"a## $roup news#etter!(

Sc:edu#e to c:an$e p#ant #ayout fro" process to product .ased #ayout was desi$ned so as not to affect re$u#ar production( ;esults: Bet wort: and sa#es per e"p#oyee dou.#ed wit: ne$#i$i.#e c:an$e in wor0force si4e( 5rocess #ayout c:an$ed to product #ayout 6eduction in f#oor space occupied( Increased no( of Inventory turnsDyear(

"This change that we need to undertake is not an option. This is something that is becoming ine itable.' - .r * / 0ala1i& C23 an# .4& Lucas)*+,

Plant *ayout at 1adi in 158( (Process layout)

Plant layout at 1adi in 1555 (Product layout)

4or$ant 1eriod < i$1ending c#allenges 15513155!

2#allenges: 1rop in su$$estion sc:e"e fro" @-E@ in 1998-91 to A)E8 in 1991-9A( 1ere$u#ation of "ar0et( Increase in "ar0et si4e( Increase in no( of co"petitor s!( 6ecession 5eriod( Low cost auto"ation( Ba$are ce## for"ation( 2ati$ue reduction( Cyc#e ti"e reduction( ?ua#ity % productivity i"prove"ent(

Measures ta en:

;esult:

"&n "##"! after finishing the layout changes! we felt as if we had achie ed nir ana. (ince we were one of the first few companies to ha e gone through this change process! there was a state of complacency within the organi)ation about the impro ements achie ed in our performance!" .r 0ala1i& C23 an# .4& Lucas)*+,

Ba$are ce## I"p#e"entation

"tatus before 2ell
"tatus after 2ell
Benefits 3anufacturin$ Lead Ti"e 3anpower
1 A E @ -

=ro$ E88"i n 1-8 1-8

-o A"in A 1 1A8

Transfer /atc: Si4e

3KL Lat:e Gi"pin$ 5ress @ 9ay 1ri## S@ 1ri## /enc:

Space in S;( ft(

>uality .nitiati0es 155!3155(

2#allenges: A.sence of IS> 9888 certification #i"ited "ar0et penetration( 3indset t:at ;ua#ity is t:e responsi.i#ity of on#y ?ua#ity Assurance depart"ent was inefficient( Measures ta en: Stress on i"portance of ;ua#ity syste"s 3aintainin$ ?ua#ity contro# c:arts % visua# disp#ays( 2o##owin$ 9or0 Instructions and Standard >peratin$ 5rocedure S>5!( 1efect prevention syste"s 5o0a-Ko0e! Continuous i"prove"ent p:i#osop:y( Award of IS> 9881 in 199E( A##owed TVS-LUCAS to participate in $#o.a# tenders( ?S 9888 in >cto.er 199,(

;esults:

155( ,nwards
2#allenges: =eavy co"petition a"on$ t:e >'3<s #eads to pressure on Tier-1 Supp#iers( >'3<s started de"andin$ ;uic0 response in de#ivery( CIT i"p#e"entation( Sin$#e piece f#ow 16@ ce##s! ?uic0 c:an$e too#in$ S3'1!( >peration accordin$ to Lta0t< ti"e wor0station staffin$!( /i-wee0#y s:ip"ents to 2arida.ad( Si$nificant $ains in productivity A.i#ity to c:an$e wor0er assi$n"ent accordin$ to de"ands( Greater sense of wor0er owners:ip( ?uic0 pro.#e" identification( 9or0ers "otivated to .e desi$nated as Ce## wor0ers(

Measures ta en:

;esults:

"*ll these impro ements in performance ha e been achie ed only through the dedicated and tireless efforts of our managers from top to bottom. The contribution by engineers in de eloping new products and processes has been phenomenal. Without the whole-hearted commitment from e ery single employee at +ucas-T,(! none of these changes would ha e been possible. -.cellence is a mo ing target and we can/t afford to remain satisfied with our current achie ements. We need to continuously seek higher le els of e.cellence. 0or the challenges that we face ahead! we once again re1uire une1ui ocal support from all our constituencies!" 2 .r 0ala1i& C23 an# .4& Lucas)*+,

=inancial "tatistics
Sa#es Bet of '7cise 1uty!
68 8 8 @8 8 8 A8 8 8 8

Capita# '"p#oyed

Gross 2i7ed Assets

@-)A()

-A8A(9

@-,,(E A9-)(E A6EE(A

1--,(9 6-)(9 -9E(1

A111(E 19-,(9

A6,,(9 A@E9

"ales (&et of Excise 4uty) 2a1ital E$1loyed &et @ort# Aross =ixed Assets

19)-

1991

1996

199,

199)

?ear

158( 689() A)@(@ AA,(A)-(9

1551 1--,(9 6-)(9 @18() -9E(1

155) @-)A() A111(E 1)@A(, 19-,(9

1556 -A8A(9 A6,,(9 AE6)(@ A@E9(8

1558 @-,,(E A9-)(E A,99(E A6EE(A

Production and ;e0enue 0sB E$1loyee "trengt#

S a# es V a# u e A n n u a# 5r od u ct i on ' " p # oy ee S t r en $ t : S a# es p er ' " p # oy ee
E1,)(A
A),1

@E8 A88

@8 8 8 E8 8 8 A8 8 8 18 8 8 8 19)E18-

E8-6

1@66(9
,,8 -88

1@88

689()

1188

1991

199)

M "ales +alue Annual Production E$1loyee "trengt# "ales 1er E$1loyee

:nit 6s( In 3i##ion T:ousands of units Bos( 6s( in T:ousand

158( 689() @E8 E18A88

1551 1@66(9 ,,8 E8-6 -88

1558 E1,)(A 1@88 A),1 1188

factory 1erfor$ance $easures

Lot S i 4 es
18 8 8 8 18 8 8 18 8 18
@(A ,(A

Typ i ca# S et u p Ti " e

I n v en t or y Tu r n s

@888 -@8 1A8 @8

1@ 18

1 19)1991

199)

C *ot "iDes -y1ical "etu1 -i$e .n0entory -urns

:nit Bos( 3inute M

158( @888 -@8(8 @(A

1551 @8 1A8(8 ,(A

1558 1 18(8 1@(8

Process 1erfor$ance $easures

6 ej ect i on s
1A
18

S cr ap

1 ow n t i " e

;eEections "cra1 4ownti$e

18

) 6
A(9, E(E A(1(A
8(1(8(A

@ A 8

19)-

1991

199)

:nit F F F

158( 18(8 E(8 A(8

1551 E(E 1(8(-

1558 A(1(8(A

"a0ings $easured
C ap i t a# ' " p # oy ed 2 # oor S p ace Ut i # i 4 at i on A n n u a# S av i n $ s f r o" S u $ $ es t i on s

1- 8 8
18,A(E 11@@(@

18 8 8 -88
-1-

@@A(6 1)1(6
A-@

AA,(A81

119

2a1ital E$1loyed =loor "1ace :tiliDation Annual "a0ings fro$ "uggestions

19)-

1991

199)

:nit 6s( In 3i##ion S;(ft(D6s( 6s( In T:ousand

158( AA,(-1A81(8

1551 @@A(6 A-@ 18,A(E

1558 11@@(@ 119 1)1(6

;eco$$endations:

-FA&K ?,:GG