This year's Deming list is monopolised by Indian companies - five out of eight. V Jagannathan talks to the people behind these enviable honours
23 December 2003
Chennai: Indian companies seem to be in the favourites list of Deming Awards. This year's Deming list is nearly monopolised by Indian companies - five out of eight. The other three are also from Asia.
The five winners of this prestigious honour (termed as the Nobel prize in the world of manufacturing), awarded by the Union of Japanese Scientists and Engineers (Juse), include Rane Brake Linings, Mahindra & Mahindra (farm equipment and tractor division), Brakes India (foundry division), Sona Koyo Steering Systems, and Grasim Industries (Birla Cellousic, Kharach unit).
While the first four companies got the Deming Application Award, Grasim Industries' unit got the Quality Control Award for operations business units. It is not just winning a medal. Indian companies have got their names etched in the record books. For instance, Mahindra's tractor unit is the first tractor unit in the world to win the Deming (See: Rich harvest).
Similarly, Rane Brake Linings became the world's second brake lining manufacturer to become a Deming company. The first one was also an Indian company - TVS group's Sundaram Brake Linings in 2001.
From 1998 onwards, Indian companies started figuring in the Deming prize list with Sundaram Clayton's brakes division claiming the honours first. Till last year, the Indian winners belonged to the 27-unit TVS group - Sundaram Brake Linings (2001) and TVS Motor Company (2002).
Apart from the Deming, the group outfits have been winning other quality medals. In 2002 Sundaram Clayton's brakes division got the Japan Quality Medal, also awarded by Juse. And this year, TVS Srichakra Tyres has won the total productive maintenance, TPM Excellence Award-First Category, from Japanese Institute of Plant Maintenance (JIPM).
It may not be wrong to call the TVS group as the Deming group. The winds of quality excellence are blowing across all the group units irrespective of their size.
Says V Narasimhan, executive director, Brakes India: "Our quality manual was written within two years of our start-up." And that was 22 years ago. Those were the times when a majority of Indian industries was blissfully unaware about various quality and customer satisfaction concepts (See: No stopping).
Similarly Sundaram Brake Linings' quality excellence strategy started 15 years back. The first non-TVS Indian company to figure in the Deming list is Hi Tech Carbon (2002), part of the $6-billion Aditya Birla group. Like the TVS group, Deming is not new to the Aditya Birla group.
Two of the group's Thailand-based companies (Thai Acrylic Fibre Company and Thai Carbon Black Public Company) have won the prestigious quality award in 2001. Given this position it is heartening to note that 2003 Deming list contains non-TVS/Aditya Birla group outfits, too.
"We were not pressured by Sundaram Brake Linings or other TVS group companies winning the award. It is just that we wanted to go forward," says S Sundar Ram, president, Rane Brake Linings.
What is remarkable is that Rane Brake Linings won the award in the shortest time - three years - from the date of starting its total quality management (TQM) practice (See: The Deming dash).
Speaking about the company's pre-Deming days, Ram says: "We were focussing only on production value. The company had high level (2.1 per cent) of plant level rejections and customer returns. There were small individual kaizens (continuous improvement programmes). No systematic initiatives for improvements were in place."
One may wonder as to how Indian auto ancillaries are increasingly reaching the quality summit. Not long ago domestic car manufacturers allowed 10 per cent defective parts in supplies. A car normally has around 10,000 parts. In all probability every car that was rolled out of a factory had some defective parts fitted in, as the production capacity was also low.
Manufacturers have realised that quality actually contributes to the bottomline in terms of reduction in scrap/waste, inventory turnover, productivity and lead-time to execute an order. The road to success is not smooth. It is really years of hard-grind even before the companies to think of challenging the award.
Apart from auto ancillaries, there are converts to TPM religion in other industries too, like cement and condoms. Says J Srinivasan, managing director, TTK LIG, the world's largest condom manufacturing company: "Our productivity has improved manifold and waste has come down drastically. There is no company in the world that can meet our production costs now. Today we are catering to the global demand from here." The company has won the award for TPM Excellence-Second Category from JIPM this year (See: The condom experience).
While the groups like TVS, Birla, Mahindra and Rane follow the Japanese quality processes, the $11.21-billion Tata group has its own model - the Tata Business Excellence Model (TBEM), a derivative of the American Malcolm Baldrige quality model.
Tata Quality Management Services (TQMS), an arm of Tata Sons, benchmarks the quality standards and systems to be followed by the Tata companies. The company that excels in various parameters is awarded the JRD QV award, instituted by the group.
The Maruti factor
Looking back, the quality movement among the domestic auto ancillaries actually was initiated by the country's premier car manufacturer, Maruti Udyog, through its cluster approach.
Maruti got 11 of its vendors to adhere to quality systems and processes. The idea was to showcase a couple of units so that others too can follow. Today the cluster approach is what is being practised to teach small-scale units to adopt quality practices.
Many of the auto ancillaries that have won the Deming award are members of the cluster and some others are in the Deming race. Brakes India's foundry division, a Deming winner this year, is also a cluster member.
With many foreign auto ancillaries setting up shops in India (Korean ancillaries tagged along with Hyundai Motors, and Daewoo Motors and Visteon with Ford Motors) the domestic units had to perforce upgrade themselves to ward off competition within India and also take advantage of the export possibilities.
Not a day passes without an overseas automobile manufacturer announcing sourcing possibilities from India. However, they have laid down stiff qualifying norms. For instance Ford Motor Company has mandated that its vendors are to be Q1-certified.
What do these awards really signify for the domestic companies? In addition to increased exports it gives the confidence to go global. After getting the production process right in India, replicating the same in other parts of the globe will not be an issue.
Such a trend has already started. Auto ancillary groups like TVS and Kalyani are putting up and buying out units abroad. Sundram Fasteners is setting up a high-tensile fastener unit in China and has announced its intention to buy the UK-based forging company Dana Spicer. Two-wheeler manufacturer TVS Motor Company is planning a unit in Indonesia.
Bharat Forge, the flagship company of the Pune-based Kalyani group recently acquired Carl Dan Peddinghaus, Germany. In the long run the positive rub-off of quality awards like Deming on the Indian industry will be the image improvement of the domestic manufacturing sector and the realisation of its human resources and capabilities.
From being looked as the global brain base-many multinational companies are setting up their research and development wing here - India will be seen through the prism of quality manufacturer. Consider this: during the software boom everybody wrote the epitaph for the Indian manufacturing sector.
But the positive image alone will not result in increased foreign investments towards making India as the production base for the global markets, say, like China. "Technical capability alone will not entice industrial investments. On the other hand it is the existence of good infrastructure like roads, ports, power that would entice multinational corporations to set up their shop floors here," says an industry expert.
According to industry officials, China may be a volume player but when it comes to quality engineering products, India is way ahead. Not very long ago, Indians looked at the Japanese products with disdain because of its poor quality. Now the elephant is gathering speed.