Chennai: Indian industries need to learn a lot from the Chennai-based, 27-unit, $1.6-billion TVS group (www.tvs.et.tudelft.nl). Two Deming awards (for Sundaram Clayton and Sundaram Brake Linings) in quick succession, and the continuous 'Supplier of the Year' award to Sundaram Fasteners from General Motors, USA, is not something easy to achieve for any industrial group.
The winds of quality excellence are blowing across all the group units located at Padi, irrespective of their size. For instance, Sundaram Brake Linings (SBL) (www.tvsbrakelinings.com), the latest company to win the prestigious Deming award, closed last fiscal with a turnover of Rs 81.87 crore (see report).
The interesting point to note is that only five companies in the world have won this award in 17 years after the Deming Prize was made open to the world. And SBL is the first friction material- brake linings, clutch-facings company in the world to get the award from the Union of Japanese Scientists and Engineers.
Talk to company employees and others in the industry, and they will tell you about SBL chairman and managing director K Mahesh's obsession with quality to the extent that even the accounts division practices TQM (total quality management) concepts. Mahesh is a man of interesting management concepts that are seldom heard in India. "I am like Indira Gandhi; I will listen to others but take my own decisions," he says.
He will proudly say that his order-book position is just three days. "Customers should not be put on wait," he says. Such a philosophy has a direct beneficial impact on the company's finances, as not much money is locked up in inventories while plant efficiencies improve a lot. "Take care of your employees, and they will take care of your customers," is one of his concepts.
SBL's quality excellence strategy started 14 years back at a time when a majority of Indian industries was blissfully unaware about various quality and customer satisfaction concepts. "You don't prepare for Deming all of a sudden. Our achievement is the result of 14 years of conceptual change," Mahesh says. "Deming was not in my agenda until a Japanese quality consultant sowed the idea in my mind."
From an obese company initiated to TQM, SQC/A team practices, today SBL boasts of implementing concepts like TPM (total project management), TQM and lean manufacturing practices simultaneously. "The days of better quality-fetching premium price are over. Today, quality is taken for granted and the war is over the price," he says when asked about the quality-versus-price equation.
About the Deming prize he says: "We have caught the tiger by its tail. There is now no escape route, as we have to hold on to our achievement. In the quality race there is no finishing line." Excerpts from an interview with him:
Two TVS group companies have won the Deming Award. Another company is winning year after year the 'Supplier of the Year' award from General Motors, USA. What is that driving the group companies towards quality excellence?
Commitment to our customers and our obsession with quality permeate throughout the group - at boardrooms and at shop floors of group constituents. For many other industrial groups it exists only in seminars and conferences. Right from the beginning, the group focused on customer satisfaction for growth in all activities. For instance, TVS service stations showed how an automobile service station should be - and should - satisfy its customers.
With the group as a whole practicing quality excellence concepts, is it not better to have a separate outfit like the Tatas to guide the companies?
TVS group consists of just 27 units, unlike the Tata group that has 300. Given this situation, it is better if each company follow their own path towards quality excellence. However, we do share information with other group companies. Brakes India and Lucas India are the other companies that practice quality excellence concepts in detail.
Why Deming, instead of the Malcolm Baldrige model? Where will SBL figure when its processes are measured as per Baldrige scales?
The US government brought the Baldrige model. The model has a pro-American slant and focuses on results, instead of process. On the other hand the Japanese model is more focused on getting the processes right, as the results will automatically follow. Further, the Deming model gives more weightage on social commitment. It is unfair to compare two systems. Frankly I don't know where we will be standing when measured on the Baldrige model. And I am interested to know. All I can say is that a company that practices TQM should show good profits.
Your path towards Deming Award included a lean manufacturing system, TPM, TQM and other concepts. What impact these practices had on your bottomline? How does your performance compare with that of global majors?
Well, returns and rejects came down drastically, thereby reducing losses. Customer returns, which was at 3, 000 parts per million (PPM) four year back, came down to 450 PPM. The plant rejects came down to 1.5 per cent from the earlier levels of 5 per cent. The machine-related scrap came to almost nil. The raw material turnover touched 50 times and the work-in-progress is just one day. The equipment efficiency went up to 80 per cent and the inventory turnover increased to 45 times from 6.5 times. The set-up and shift change overtime reduced a lot. Similarly, productivity per worker, too, went up. In our passenger car-brake lining-line, the productivity per man per shift went up by 424 per cent. The lead-time improved tremendously and our order-book position is not more than one day. As regards benchmarking with other global players, I don't have their figures. It should be noted that they don't execute small orders. Strictly speaking, my figures can't be compared with them.
Labour strikes in TVS group are an unknown phenomenon. Your company hasn't lost even a single day during the last 25 years due to a strike. How did you achieve this? Is it due to a better pay package?
We rank among top three in terms of wages in this area. But salary is only one part of labour relations. We take workers in confidence in all our activities. I made a pledge that not one worker will be sent out as a result of rationalising our production process, and we stuck to that. There is transparency in all our dealings. 'Take care of your employees, and they will take care of your customers' is the motto of our group. Six per cent of the time is allotted to train workers.
What does SBL's new tag, 'A Deming Company,' mean to your overseas markets? Will this result in increased sales?
No doubt, this is an added advantage. We are exporting to 55 countries and our plan is to increase the same by 12 more in three years' time. In the US, when we say ours is a Deming company, there are two kinds of reactions. One, our clients are proud to deal with such a company and the other reaction is of surprise.
Post-2003, India is expected to see global auto component players setting up their shops here. How are you going to meet the challenge?
We are waiting for somebody to come and set up shops here. Even if the import duty is zero, they can't match my costs - we can compete with price as well as quality. At the global level, consolidation is happening in our industry. As and when needed we can increase our production.
What is the future of domestic auto component industries? New vehicle manufacturers that import kits and assemble them here are clocking good sales, while Indian vehicle-makers are registering lower sales?
A similar situation existed in Mexico. There, 30 to 40 per cent of the existing component suppliers closed their shops. Companies that neglect quality and customer satisfaction will have to exit business.
Will setting up a plant in China give our auto component units an edge over the rest?
Setting up a plant overseas doesn't give any great advantage. Moreover, having a plant in China is like chasing your own shadow. China gives me shivers. In my opinion, China is a powder-keg. Why aren't manufacturers doing well there? Five years back I went there as part of a delegation and came back as confused as I went there. For our product-range, China is not a major threat and one has to get quality approvals from different countries to enter OEM (original equipment manufacturer) lines.
As for your future plans for Sundaram Brake Linings…
The plan is to become the No 1 friction material manufacturer in the country and figure in the top 10 players in the world. Our presence is strong in the truck segment and we would like to become one of the top three in the commercial vehicles segment in the world. Two years down the line, we are planning to become the tier-I supplier by selling the complete brake panel assembly for two-wheelers. We would like to proceed in stages. Now we are in tier-II. The other plan is to diversify the business by technology transfers.
The future goals include:
- Promote increased use of asbestos-free brake linings in India and outside.
- Gain commercial advantage with the insitu-moulding technology.
- Obtain OEM approvals overseas.
- Penetrate the global commercial vehicle disc pad market.
The routes to achieve our future goals are: Applying deep analysis to gain a technological advantage in developing new products and upgrading existing products. We will also apply TQM with sub-sects like TPM and Lean to gain customer satisfaction in quality, cost and delivery.