MAHINDRA AND MAHINDRA LIMITEDFARM EQUIPMENT SECTOR

About the company

Awards

Success factors

Farm Equipment Sector (FES) is one of the six sectors in whichMahindra and Mahindra Ltd (M&M) operates. Mahindra and MahindraLtd (M&M) is the flagship company of the US$ 1.96 billion MahindraGroup.

The Sector is involved in designing, manufacturing and marketingagricultural tractors since 1963. For the last 21 years, Mahindra andMahindra Ltd (M&M) has been the market leader in the highlycompetitive Indian tractor market.

The Sector manufactures 15 major models of tractors at fourmanufacturing plants located in Mumbai, Nagpur, Jaipur and Rudrapur,with a total employee strength of over 4000. Over 400 suppliers and450 dealers are also a part of the extended Mahindra family.

About 15 per cent of the FES production is exported to variouscountries, with the USA being the largest importer, where the tractorsare sold and serviced by its subsidiary, Mahindra USA (MUSA), sincealmost a decade.

Mahindra and Mahindra Ltd (M&M) was awarded the Deming Prizeby JUSE in 2003.

With this, Mahindra and Mahindra Ltd (M&M) achieved the distinctionof becoming the first tractor manufacturer in the world to win thiscoveted prize.

Prior to this, two of M&M's tractor plants at Mumbai and Nagpurlocated in western India were certified to International QualityStandards ISO 9000, QS 9000 and ISO 14001 by the GermanCertification Agency RWTUV.

Evolution of Total Quality Management (TQM) Systemleading to recognition

The TQM journey at FES started in 1985. It can be broadly dividedinto four phases till 2003, when the company won the Deming Prize.a) Orientation Phase - 1985 to 1989b) Introduction Phase - 1990 to 1994c) Promotion Phase - 1995 to 1999d) Development Phase - 2000 to 2003

a) Orientation Phase - The focus was on Quality Circle movementfor employees staff and workmen during this phase. Themovement started on a pilot basis in Mumbai in 1985,

India’s Deming Prize Winners

subsequently spread to Nagpur and substantially increasedin scale over the next decade, with about 50 per cent of theemployees being involved. The Quality Circles solved hundredsof problems in operational areas to improve quality, housekeeping,safety and reduce wastage and cost.

b) Introduction Phase - During this phase, FES focused on solvingmajor cross-functional quality problems through involvementof managers as well as enhanced product quality by improvingquality of manufactured and bought out components. Thisphase was marked by the use of Dr Juran's process of qualityimprovement for problem solving, use of Statistical ProcessControl (SPC) for all critical machining processes and systematicsupport to all suppliers to improve their processes and productquality.

c) Promotion Phase - The focus during this phase was onimprovement through implementation of robust systems.Accordingly, both the Mumbai and Nagpur plants were certified,first to ISO 9000 and subsequently to QS 9000. Business ProcessRe-engineering (BPR) was implemented in the manufacturingareas, with substantial improvement in employee involvement andproductivity. During the same phase, the Global Leadership Visionto become the largest tractor manufacturer in the world wasconceived and the application of Deming Prize guidelines, underthe guidance of Dr Y Washio, an eminent TQM expert fromJapan, was initiated.

d) Development Phase - This stage focused on improving at a rapidpace, to progress towards the Vision of Global Leadership andchallenging the Deming Prize before 2004. The New ProductDevelopment process was improved and brought to internationalstandards under the guidance of Dr Washio. His inputs enabledsubstantial improvement in manufacturing and supplier supportprocesses. Sales, dealer support and customer operations weresystematised under the umbrella of Mahindra Sales System (MSS).

Leadership and employee participation

Commitment 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.

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Employee Involvement was another feature of TQM and the DemingPrize. Introduction of Continuous Improvement Teams (CIT) forworkmen, Officers' Improvement Teams (OIT) and need-based CrossFunctional Teams (CFTs) for officers ensured 100 per cent employeeinvolvement over the last three years. The total 100 per centemployee involvement and improved labour-management relationshipwas another aspect appreciated by the Deming Examiners.

Regular improvements in business processes

Due to implementation of TQM, marked improvements wereperceptible in all key business processes:

a) Manufacturing

· Due to Standardisation, effective usage of SPC and practiceof 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 numberof complaints in first 250 and 500 hours of operations,improved substantially.

· Productivity improved considerably on account ofimplementation of Business Process Re-engineering (BPR).

b) Supplier Management

· The quality of outsourced components improved substantiallyowing to the support to suppliers.

· Similarly a marked improvement in Supplier ScheduleAdherence was achieved.

India’s Deming Prize Winners

C) New Product Development· With the usage of tools like Quality Function Deployment

products meeting ‘more’ exact customer requirementscould be developed and marketed.

· Use of tools like Failure Mode Effect Analysis (FMEA)helped reduce quality problems at the Product Developmentstage itself.

· Development Cycle Time was reduced substantially.

· Due to this initiative, the company could produce 15 newmodels, including some specifically for export, over the lastthree years. This led to a sharp rise in export figures.

d) Sales and Customer Operations

· Following application of various innovative service initiativeslike Mobile Service Van, Single-Window concept for sparesprocured from Original Equipment Manufacturers, the OverallCustomer Satisfaction Index improved.

· Standardised Sales process introduced in the form of MahindraSales System (MSS) and support offered to dealers in variousforms contributed to increased Market Share, widening thegap between Farm Equipment Sector (FES) and the nextbest competition.

Strength as an organisation to attract overseas attention

FES could attract overseas attention on account of following

strengths:

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Global vision backed by long term strategy, with specific focuson exportsCapability displayed in developing new products required forthe export marketWorld-class manufacturing qualityLow costs due to improved productivity and various costre-engineering effortsSkilled and motivated workforceCapability to develop sales and service network, as demonstratedin the US marketsSustained market leadership in the Indian tractor market,the largest in the worldRapidly increasing exportsWorld-class Quality and Management systems certified firstthrough ISO/QS 9000, and subsequently recognised with theDeming Prize

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Technological edge

FES' technological edge lies basically in three areas:

a) World-class Product Development and R&D facilities manned byover 300 well-qualified engineers and equipped with world-classdesign and testing facilities. These have contributed to thedevelopment of new and attractive product offerings for exportand domestic markets.

b) Manufacturing facilities complete with world-class engine

assemblyplant, CED Paint Shop and resourced by a skilled work force.

c) Constant exposure to the sophisticated US market throughsubsidiary-MUSA.

Business excellence modelFES' model of Excellence, which was in general based on the DemingModel, can be summarised as follows:

a) Foundation comprised the following:

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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:

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Quality Assurance systems (based on standards) in

– New Product Development

– Manufacturing

– Supplier Management

– Sales and Customer Operations

Policy Deployment - A top management led process/systemof setting and deploying long-term targets that wereeffectively pursued with employees integrating them intotheir annual targets. Their achievement was assured throughthe effective practice of Daily Work management.

Continuous improvement with 100 per cent employeeinvolvement, using scientific problem solving tools and qualityinformation data.

India’s Deming Prize Winners

· Standardised Support Services like IT, Cost Management,Delivery Management and Human Resource Management.

c) On the top of this structure/model stood the Purpose:

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Satisfaction of all stakeholders, employees, customers,suppliers and society.

Excellent business results.

The Deming Prizerecognition

Specific comments from the auditors during evaluation andspecific points mentioned during the investiture ceremony

The Deming Prize Examiners pointed out, “There are several excellentfeatures in the company-wide energetic efforts forpractising TQM to realise the business strategy under theleadership of the President.”

They further added that,“The results of Top Management driven

TQMactivities had shown remarkable improvement in the last few yearsas follows -

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In a short span of time, entry in the American market wassuccessfully achieved and the turnover in the new marketwas being continuously improved.

Various management systems, not only within FES, but eveninvolving Suppliers and Dealers had been inducted and deployed.

Large scale BPR aimed at improving profitability and productivitywas put in practice.

Improvement in labour-management relationship was achieved”.

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The Deming Prize Examiners additionally appreciated the following:·

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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 1.33in all important processes

Drastic reduction in rejection and rework and improvement inField 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 PrizeSub-committee, handed over the Deming Prize Medal and Certificateto the FES President, Mr K J Davasia, at Tokyo. At the time, Dr Kumeread the following from the Certificate:

“Mahindra and Mahindra Ltd, Farm Equipment Sector, India hasachieved outstanding performance by practising Total QualityManagement, utilising statistical concepts and methodology basedon company's excellent business philosophy and leadership asdemonstrated by the senior management. In recognition thereof,the Deming Prize committee hereby presents the Deming ApplicationPrize to them.”

Contribution to furthergrowth/business and

The journey undertaken for challenging the Deming Prize gave FESmany benefits, which could be divided into two categories, namely:

international recognition ··

Culture-relatedBusiness result-related

Culture related·

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The whole organisation was steered in one direction, due toeffective implementation of policy deployment.

Involvement of all three major stakeholders, namely, employees,suppliers and dealers, in working together improved tremendously

Business result related

India’s Deming Prize Winners

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Export volume increased substantially

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 firm's 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.