Case Study on Lucas TVS- A Journey towards Manufacturing Excellence
•
3 likes•5,596 views
Lucas-TVS was a joint venture between Lucas Industries UK and TVS India established in 1961 to manufacture automotive electrical systems. It faced challenges in the 1980s from increasing competition and needed to improve quality, costs and delivery. It underwent a transformation between 1985-1995 which included changing to a product layout, implementing quality systems like ISO 9001, and empowering employees. Further changes from 1995-1998 involved just-in-time production, single piece flow cells, and quicker changeovers. These changes helped Lucas-TVS improve productivity, quality and the ability to respond quickly to customers. The case study outlines the challenges Lucas-TVS overcame through extensive changes to processes, systems and employee involvement.
Report
Share
More Related Content
What's hot
What's hot (20)
Viewers also liked
Viewers also liked (20)
Similar to Case Study on Lucas TVS- A Journey towards Manufacturing Excellence
Similar to Case Study on Lucas TVS- A Journey towards Manufacturing Excellence (20)
Recently uploaded
Recently uploaded (20)
Case Study on Lucas TVS- A Journey towards Manufacturing Excellence
- 1. CASE STUDY ON LUCAS-TVS A Journey towards Manufacturing Excellence Presented By: Jude Abreo (81) Ketan Mokal (82) Mridu Sharma (83) Namish Sharma (84) Namrata Kumar (85) Nikhil Nagdeote (86)
- 2. Background: Lucas-TVS was set up in 1961 as a joint venture of Lucas Industries UK (now Lucas Varity) and T V Sundaram lyengar & Sons (TVS), India, to manufacture Automotive Electrical Systems. Lucas Varity: 1998 revenue: $7.5 billion. Products: • Braking Systems • Diesel Fuel Injection Systems • Electronic and Electrical Systems After-market product sales and service. OEM Vendor to: • Volvo • Mercedes-Benz • Volkswagen • Audi • Ford • Fiat • Peugeot • Alfa Romeo
- 3. TVS is India’s fourth largest automotive component manufacturer • Turnover in excess of Rs. 8600 Cr. • Products: • Auto Electricals • Braking Systems • Automotive Wheels • Axle Fasteners • Diesel Fuel Injection Equipment • Two Wheelers • India‟s largest automotive marketing group, with the largest sales and distribution network
- 4. Current Customers of Lucas-TVS:
- 5. Auto Electrical • Products: • Headlamps • Alternators • Wipers • Distributors • Dynamos • Starters • Plant Locations: • Padi (Chennai) ISO 9001 and QS 9000 (in 1997) • Eripakkam (Pondicherry) QS 9000 (in 1999) • Rewari (Haryana) Fuel Injection Equipment • Products: • Diesel Fuel Injection Equipment • Plant Locations: • Mannur (Chennai) ISO 9001 and QS 9000 (in 1999) Lucas Indian Services • Products: • Sales and service of auto electricals and fuel injection systems manufactured by Lucas-TVS • Locations: • 4 Regional branches in the 4 metros • 22 Branch offices covering every major state India Nippon Electricals Ltd. (INEL) • JV between Lucas Indian Services and Kokusan Denki Co. Ltd., Japan est. in 1985 • Products: • Ignition systems for two wheelers and portable gensets • Plant Locations: • Hosur (Bangalore) ISO 9001 India Japan Lighting Ltd. (IJL) • 50/50 JV between Lucas- TVS and Koito Manufacturing Company Ltd., Japan Inc. in Dec. 1996 • Products: • Headlamps • Rear Combination Lamps • Plant Locations: • Thiruvallur (25 km from Padi) Divisions and Joint Ventures:
- 6. Before 1983 •Market dominated by Hindustan Motors and Premier Automobiles Ltd. 1983 to 1993 •Maruti Udyog Limited (MUL) captures 83% market share. 1993 onwards •Market is liberalized and international giants like GM, Ford, Honda, Mitsubishi, Mercedes- Benz, Hyundai, Daewoo and Fiat launch passenger car models in India. 1993 to 1997 •19.5% growth rate of the Indian auto industry 1998-1999 •Decline in auto sales due to economic slowdown •Tata Motors launches the Indica in 1998 spurring intense competition in the small car industry.
- 7. Challenges in the Indian Auto-component Industry: Two of the major charges levelled against the domestic component manufacturers are that they lack quality consistency and delivery reliability. Rejection rate for Indian auto components is 2,900 parts per million (PPM), which is more than ten times the world level of 240 PPM. Estimated sub-suppliers' rejection rate is 31,500 PPM. Entry of global component manufacturers. Increasing shift towards reduction in vendors.
- 8. LUCAS TVS BEFORE 1985 Challenges: • Crisscross material movement. • Lots of Work in Process(WIP) on shop floor. • Roughly 30% of the processes were not capable of meeting product specifications. • Frequent breakdowns of machinery. • Less focus of timely delivery(delivery reliabilities) ,product quality(delivery consistency). • High scrap levels (3%) Drilling D D D D Grinding G G G G G G Milling M M M M M M Assembly A A A A Lathing Receiving and shipping L L L L L L L L
- 9. NEED FOR CHANGE • Entry of Maruti Udyog Ltd. (MUL) in 1983 increased market competition. • Entry of world class component manufacturers like Bosch & Nippodenso triggered a change. • Some OEM‟s were also setting up subsidiaries to supply auto components. • To remain competitive, cost , quality and response time needed to be improved. • It became a business requirement to look beyond India and compete globally. • New product variants and technology demanded. • Completely dependent on foreign partner for designs, no in-house capability leading to long development cycles.
- 10. CHANGE MANAGEMENT STRATEGY A three member task force is setup to recommend and direct the changes within Lucas-TVS. Recommendations of the three member task force were: • Systems approach to manufacturing. • Focus on maximizing current resources - Lower priority to investments in new technologies. • Effective training to workforce. • Encourage employee engagement through formation of small groups (Continuous Improvement) "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. However, in 1985, there were not many firms in India that had gone through this kind of massive transformation. This posed considerable challenges to us." - Mr T K Balaji, CEO and MD, Lucas-TVS
- 11. LAYOUT CHANGE AND EMPLOYEE EMPOWERMENT 1986-1991 Measures Taken: Employee Engagement was encouraged with the following measures • Employee training in batches of 30 at Taramani Training Centre on SPC,QFD,FMEA • Kaizen suggestion scheme started • News letter in Tamil “Siru Kuzhu Cheythi Malar”(Small group newsletter). Schedule to change plant layout from process to product based layout was designed so as not to affect regular production. Results: • Net worth and sales per employee doubled with negligible change in workforce size. • Process layout changed to product layout • Reduction in floor space occupied. • Increased no. of Inventory turns/year. "This change that we need to undertake is not an option. This is something that is becoming inevitable.“ - Mr T K Balaji, CEO and MD, Lucas-TVS
- 12. PLANT LAYOUT AT PADI IN 1985 (PROCESS LAYOUT)
- 13. PLANT LAYOUT AT PADI IN 1999 (PRODUCT LAYOUT)
- 14. DORMANT PERIOD & IMPENDING CHALLENGES 1991-1992 Challenges: • Drop in suggestion scheme from 4534 in 1990-91 to 2830 in 1991-92. • Deregulation of market. • Increase in market size. • Increase in no. of competitor(s). • Recession Period. Measures taken: • Low cost automation. • Nagare cell formation. Result: • Fatigue reduction. • Cycle time reduction. • Quality & productivity improvement. "In 1991, after finishing the layout changes, we felt as if we had achieved nirvana. Since we were one of the first few companies to have gone through this change process, there was a state of complacency within the organization about the improvements achieved in our performance," - Mr Balaji, CEO and MD, Lucas- TVS
- 15. NAGARE CELL IMPLEMENTATION Status after CellStatus before Cell 1 MKL Lathe 2 Gimping Press 3 4 Way Drill 4 S4 Drill 5 Bench Benefits From To Manufacturing Lead Time 300min 2min Manpower 5 2 Transfer Batch Size 150 1 Space in Sq. ft. 150 120
- 16. QUALITY INITIATIVES 1992-1995 Challenges: • Absence of ISO 9000 certification limited market penetration. • Mindset that quality is the responsibility of only Quality Assurance department was inefficient. Measures taken: • Stress on importance of quality systems • Maintaining Quality control charts & visual displays. • Following Work Instructions and Standard Operating Procedure (SOP). • Defect prevention systems(Poka-Yoke) • Continuous improvement philosophy. Results: • Award of ISO 9001 in 1993. • Allowed TVS-LUCAS to participate in global tenders. • QS 9000 in October 1997.
- 17. 1995 ONWARDS Challenges: • Heavy competition among the OEM‟s leads to pressure on Tier-1 Suppliers. • OEM‟s started demanding quick response in delivery. Measures taken: • JIT implementation. • Single piece flow(164 cells) • Quick change tooling(SMED). • Operation according to „takt‟ time (workstation staffing). Results: • Bi-weekly shipments to Faridabad. • Significant gains in productivity • Ability to change worker assignment according to demands. • Greater sense of worker ownership. • Quick problem identification. • Workers motivated to be designated as Cell workers.
- 18. "All these improvements in performance have been achieved only through the dedicated and tireless efforts of our managers from top to bottom. The contribution by engineers in developing new products and processes has been phenomenal. Without the whole-hearted commitment from every single employee at Lucas-TVS, none of these changes would have been possible. Excellence is a moving target and we can't afford to remain satisfied with our current achievements. We need to continuously seek higher levels of excellence. For the challenges that we face ahead, we once again require unequivocal support from all our constituencies," — Mr Balaji, CEO and MD, Lucas-TVS
- 19. 1557.9 4582.8 5202.9 4577.3 658.9 2111.3 2677.9 2958.3 593.1 1957.9 2439.0 2633.2 0.0 1000.0 2000.0 3000.0 4000.0 5000.0 6000.0 1985 1991 1996 1997 FINANCIAL STATISTICS Sales (Net of Excise Duty) Capital Employed Gross Fixed Assets Year 1985 1991 1996 1997 1998 Sales (Net of Excise Duty) 609.8 1557.9 4582.8 5202.9 4577.3 Capital Employed 284.4 658.9 2111.3 2677.9 2958.3 Net Worth 227.5 410.8 1842.7 2368.4 2799.3 Gross Fixed Assets 285.9 593.1 1957.9 2439.0 2633.2
- 20. 609.8 1466.9 3178.2 430 770 1400 3105 3056 2871 200 500 1100 0.0 500.0 1000.0 1500.0 2000.0 2500.0 3000.0 3500.0 1985 1991 1998 PRODUCTION AND REVENUE VS. EMPLOYEE STRENGTH SALES VALUE ANNUAL PRODUCTION EMPLOYEE STRENGTH SALES PER EMPLOYEE Unit 1985 1991 1998 Sales Value Rs. In Million 609.8 1466.9 3178.2 Annual Production Thousands of units 430 770 1400 Employee Strength Nos. 3105 3056 2871 Sales per Employee Rs. in Thousand 200 500 1100
- 21. 4000 40 1 540.0 120.0 10.0 4.2 7.2 14.0 1 10 100 1000 10000 1985 1991 1998 FACTORY PERFORMANCE MEASURES LOT SIZES TYPICAL SETUP TIME INVENTORY TURNS Unit 1985 1991 1998 Lot Sizes Nos. 4000 40 1 Typical Setup Time Minute 540.0 120.0 10.0 Inventory Turns 4.2 7.2 14.0
- 22. 10.0 3.3 2.5 3.0 1.5 1.52.0 0.5 0.20.0 2.0 4.0 6.0 8.0 10.0 12.0 1985 1991 1998 PROCESS PERFORMANCE MEASURES REJECTIONS SCRAP DOWNTIME Unit 1985 1991 1998 Rejections % 10.0 3.3 2.5 Scrap % 3.0 1.5 1.5 Downtime % 2.0 0.5 0.2
- 23. 227.5 442.6 1144.4 515 254 119201.0 1072.3 181.6 0.0 200.0 400.0 600.0 800.0 1000.0 1200.0 1400.0 1985 1991 1998 SAVINGS MEASURED CAPITAL EMPLOYED FLOOR SPACE UTILIZATION ANNUAL SAVINGS FROM SUGGESTIONS Unit 1985 1991 1998 Capital Employed Rs. In Million 227.5 442.6 1144.4 Floor Space Utilization Sq.ft./Rs. 515 254 119 Annual Savings from Suggestions Rs. In Thousand 201.0 1072.3 181.6
- 24. •Part traceability to be implemented •Investment in new technology & machineryQuality •New product development & innovation •Modular product designCost •Vendor training & development. •Treating vendors as partners. •Developing a network of suppliers. Supplier Alignment •Developing a Management Information System (MIS) •Implementing ERP for better control over operations •Use of IT to keep track of suppliers and customers (SRM and CRM portals) Information Technology RECOMMENDATIONS:
- 25. THANK YOU!!