Making Mobility Safer & Smarter. Everyday

CEAT’s TQM Journey

Date: 8th Dec, 2017

Presenter: Anant Goenka

No. of Slides: 27

Time: 30 minutes

Introduction

November 8, 2017 2

India’s leading tyre company with over 50 yrs of presence

Distribution Network : 3500+ dealers, 300+ exclusive CEAT franchisees

6 Manufacturing facilities - Bhandup, Nasik & Halol, Nagpur, Ambernath and Srilanka

100+ countries where products are sold with strong brand recall

#No 1 player in Sri Lanka in terms of market share

Breakup by Market (FY17)

64%

23%

13%

Replacement OE Exports

Making Mobility Safer & Smarter. Everyday

Situation before FY11

Poor Plant condition and Market position

4

Old plants with low

reliability

Adverse IR relationship

Leading to poor financial condition

5

1. Volatile Profits 2. High Debt to Equity Ratio

61

197

-37

239

33

FY07 FY08 FY09 FY10 FY11

PBT in Rs Crore

Lowest growth in Market Cap

6

Making Mobility Safer & Smarter. Everyday

CEAT’s TQM Journey

November 8, 2017 8

Why TQM?

We were in a near crisis situation

There was no CEAT’s way: “flavour of the month” initiative

Fire Fighting culture

Limited pride in working with CEAT

November 8, 2017 9

Why TQM?

We decided to take a leap of faith and adopted TQM!

Indian automobile and component businesses were

following TQM model

Could this be adopted by CEAT?

In 2006-07, 4 members of CEAT top management:

a) Attended JUSE’s TQM seminar

b) Also made visits to Deming prize winning companies

In 2008, TQM awareness workshop was conducted by

Indian TQM expert.

CEAT’s definition of TQM

TQM in CEAT is called QBM (Quality

Based Management)

Management centered on the primacy

of quality through customer focus at

apex

Process and People focus form the base

QBM has adopted principles from

Total Quality Management (TQM)

Toyota Production System (TPS)

Total Productive Maintenance (TPM)

November 8, 2017 10

2009 - 2011

QBM Early Success provided confidence for

Company wide roll-out

~1000 Muri eliminated in plants

Accidents in plants reduced by 20%

Delivery metric improved from 59% to 72%

Workmen trust level with management went up

November 8, 2017 11

QBM Initiatives

QBM Piloted in Old Plants

Muri Elimination

Improving Trust levels with

Workmen

Initiated Cross-Functional Management

Delivery Control

Quality Assurance

Workmen Training – Overcoming boundaries Recognition to Worker with his family

Doubts in our mind

12

Argumentative Indian

All lights green

Is this “flavor of the month”?

Too long term

Different levels of belief, capability and alignment across functions

But we did 4 things…

13

1. Top management belief- went “All- in”

2. Sensei to guide us

3. Set up Academies to learn and train

4. Bottom up buy in through small successes

2012 - 2016

November 8, 2017 14

QBM Initiatives

Deployed company vision and strategy through Policy Management

Initiated Customer Centric practices in all functions

Strengthened adoption of PDCA and SDCA cycles through Daily Management

Encouraged total employee involvement in improvement activities

Transformation of Relations with WorkmenChallenges

Initiatives

11 November 8, 2017

Festival Celebration with Workmen

Effects

Unique Quarterly Workmen Happiness Survey

Frequent work stoppages

High level of Muri, accidents and

absenteeism

Poor Infrastructure

Low worker involvement and lack of

trust

Muri reduction & elimination of

unsafe condition program

Improving basic infrastructure of the

plant

Proactive collection of employee

voices / irritants and resolving them

Celebrations with employees and

their families

Infrastructure Development

Before After Before After

Transformation in Neighbourhood Relationship

November 8, 2017 16

Effects

High dissatisfaction in neighbourhood due to

air and noise pollution

Old plant buildings unwelcoming

17

10

5 4 42

0

0

2

4

6

8

10

12

14

16

18

FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18YTD

No’s

Number of Complaints on Environmental Issues

GO

OD

Festival Celebration with Neighbourhood

Challenges

Dedicated welfare center

Replaced fossil fuels with green

fuels

Improved plant appearance and

infrastructure

Community participation in plant

celebrations

Initiatives

November 8, 2017 17

2016-2017

Need for Development of Purpose

Need a bigger aim than just the financials

Gives us core reason to exist

Motivates everyone towards the single goal at an

organization level

Purpose

November 8, 2017 18

MAKING MOBILITY SAFER

AND SMARTER. EVERYDAY.

Safer

2 deaths per minute in India due to road

accidents

‘Safety’ identified as core consumer need

Smarter

Reduce cost and time of travel and improve convenience through innovation in products and services

Everyday

Continuous Improvement in

our way of working

Meaning of CEAT’s Purpose

Making Mobility Safer & Smarter. Everyday

Overall Effects

Overall Effects: Quality, Delivery, Safety and Morale

November 8, 2017 20

1. Quality 2. Delivery

3. Safety 4. Morale

95% Reduction in Accidents 66% Reduction in Unpaid Absence

96% Reduction in product claims (before first use) 85% Reduction in plant breakdown hours

GO

OD 100.0

63.9

20.0 14.9

0.0

20.0

40.0

60.0

80.0

100.0

FY08 FY11 FY15 FY17

Breakdown hours

GO

OD

GO

OD 100.0

91.0

38.4 33.9

0.0

20.0

40.0

60.0

80.0

100.0

FY08 FY11 FY15 FY17

Unpaid absence

GO

OD

100.0

27.1

7.2 4.4

0.0

20.0

40.0

60.0

80.0

100.0

FY08 FY11 FY15 FY17

Claim % before usage

100.0

68.8

8.8 4.7

0.0

20.0

40.0

60.0

80.0

100.0

FY08 FY11 FY15 FY16

No. of accidents

Overall Effects: Customer

21

No. 1 in J. D. Power Survey (2017) in Passenger car segment

No. 1 across all parameters

Appearance

Durability

Ride

Traction Handling

November 8, 2017

Overall Effects: People

22 November 8, 2017

8 23

121

216

296

350

26

76

108

0

25

50

75

100

125

0

50

100

150

200

250

300

350

400

FY12 FY13 FY14 FY15 FY16 FY17

Nos.

Per

Year

No. of Improvement Projects Closed (Per Year)

No. of QIPs

QIPs scoring more than 60

GOOD

Happier people and higher people involvement in improvement activities

Overall Effects: Financial

November 8, 2017 23

PBT (Rs. Bn)

Share price movement versus competition

16.4% CAGR

Industry wide

profit

reduction

Key Intangible Effects

24

Long term orientation in Capacity

Planning, Technology & Product roadmap

November 8, 2017

Strong relations with OEMs and Suppliers

Higher Brand Recall

Better team work and collaboration

Improved problem solving capability

Happy and proud employees

Recipient of Deming Prize in 2017

25 November 8, 2017

1st Tyre company outside Japan to win Deming Prize

What we learnt…

26 November 8, 2017

1. Take a leap of faith

2. Pilot and customize

3. Constancy of purpose

4. Primary focus of business is quality and not quantity

5. Focus on means and not end

6. Do the right things (strategy). And do them in the right way (TQM).

7. Develop a culture of Gemba

Making Mobility Safer & Smarter. Everyday

SCHEDULE A

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