Production and Operations Management - II

Total Quality Management at Maruti Suzuki Motors Ltd.

Submitted to: Prof

Submitted By: Section B, Group 3 (Himanshu & Co.) Bhakti Khanwalkar 2010071 Rakesh Deenbandhu Mishra Shrivastava 2010075 Himanshu Nassa 2010080 Ketaki Joshi 2010088 Ankur Raj 2010105 Varun Chopra 2010115

Section B, Group 3 - Himanshu & Co.

Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog Limited) is a subsidiary of Suzuki Motor Corporation, Japan. MSIL has been the leader of the Indian car market for over two and a half decades. It is India's largest passenger car company and now has a market share of 53.3%. In 2009-2010, it was the only Indian car company to manufacture and sell 1 million cars in a year. The Company is engaged in the business of manufacturing, purchase and sale of motor vehicles and spare parts (automobiles). The other activities of the Company include facilitation of pre-owned car sales, fleet management and car financing. The company offers a wide range of cars across different segments. It offers 14 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4 and Swift DZire In an environment friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and Sx4.

Maruti turned around from a loss of Rs.2690 million in 2001 to a net profit of Rs.1045 million, in 2002. This turnaround had been facilitated by sharp improvements in quality and productivity. Maruti Suzuki followed a Do it right first time principle to avoid wastage in terms of repairs and replacements. Robots were deployed especially where they reduced worker fatigue and were critical in delivering consistent quality. Maruti measured the relative quality of dispatched vehicles on a random, daily basis through a quality index audit. To improve quality, Maruti had full-time task forces for improvement in initial quality study problems and departmental cross-functional teams to work on defined problems with challenging targets. In 2002, Maruti started a program "Challenge 50 initiative" to improve productivity by 50 % and reduce cost by 30 % by 2004-05. Maruti started implementing new manufacturing techniques and various value analysis and value engineering initiatives.With consistent improvements in the plant the company was able to manufacture over 600,000 vehicles in 2006-07 with an installed capacity of just 350,000 vehicles per year. Recognitions: (Exhibit 1) Rated as No. 1 in JD Power Customer Satisfaction Index (CSI): 11 years in succession (2000-2010) Rated as No. 1 in J D Power Sales Satisfaction Index (SSI) Martin K. Starr Excellence in Production and Operations Management Practice Award 2010 2010 Manufacturer of the year by CNBC Overdrive

Section B, Group 3 - Himanshu & Co. Maruti Suzuki Wins Prestigious Global MMA Award ICSI awards for Maruti Suzuki and NTPC

CNBC-Autocar India Best Value For Money Car Award: Maruti Suzuki SX4

Key Results :

CNBC-Autocar India Best Mid Size Car Award : Maruti Suzuki SX4 CNBC-Autocar India Car of the Viewers' Choice Award : Maruti Suzuki SX4 CNBC-Autocar India Manufacturer of the Year Award : Maruti Suzuki India Limited

Mission Challenge 50: Rolled out in 2002 50 per cent improvement in productivity by 2005 Result: 46 per cent increase in Productivity, and a 30 per cent improvement in quality and cost in 2005 through PMS Mission 1 Million Sales in 2010: Achieved sale of 1018365 through sustained operations and service strategy 2008: ICWAI national Award for Excellence in cost National Award for the Best Value Engineering Company In India 2008 by INVEST 'Golden Peacock Eco-Innovation Award' IN 2009

The basics of TQM are a framework of values which are deeply ingrained into an organizations culture. It doesn't depend on any particular attribute, but rather a multitude of them. Suzuki has brought a whole new manufacturing culture to Maruti that includes participative management, team work, communication and information sharing, open office system, Kaizen (continuous improvement), multi-skilling of operators, common canteen and uniform, flat hierarchy, immaculate housekeeping (the famous Japanese 5 S way), bottomup innovation, in-line quality assurance processes and widespread quality circle movement. Maruti employs the Production Management System (Exhibit 2) as a strategy to achieve manufacturing excellence. It evolved through the participative approach. Excellence through Participative approach:

Section B, Group 3 - Himanshu & Co.

PMS enabled bottoms up approach where people on the floor are encouraged to give solutions to a problem. The solution is then implemented at all levels. This motivates the operator and ensures his ownership all through the solution finding process. Clarity of Roles: Clarity on what is expected out of a supervisor, a manager or a technician at the shop floor has brought in structure and standardization to production management at Maruti.

Maruti uses many tools of Total Quality Management in their processes. One of the tools which is used for generating ideas is a fishbone diagram (Exhibit 3). From the diagram we can analyze that the main problems leading to customer dissatisfaction are placed on fish bone diagram. The four attribute as shown in it are responsible for their own causes thus known as cause and effect analysis. A tool used to organize data is a Pareto chart. The chart is based on the Pareto principle, which states that when several factors affect a situation, a few factors will account for most of the impact. Other such kind of Quality tools which Maruti uses are Control Charts, Decision Trees, Fault Tree Analysis, Value Analysis& Check Sheets. Apart from these basic ones some of the advanced techniques followed by them are Advanced Product Quality Planning (APQP), Measurement Systems Analysis (MSA), Failure Mode and Effect Analysis(FMEA), Statistical Process Control (SPC), Problem Solving and Root Cause Analysis, Coaching and Implementation Assistance. Maruti carries out regular training programs to teach their eomployees these techniques.

Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog Limited), a subsidiary of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting for majority of the domestic car market. In the year 2009-10, Maruti Suzuki manufactured 10 lakh units. Maruti Suzuki offers 14 brands and over 150 variants ranging from peoples car Maruti 800 to the stylish hatchback Ritz. Their range of cars include people movers - Omni and Eeco, international brands - Alto, Alto-K10, A-star, WagonR, Swift and Estilo, off-roader - Gypsy, SUV - Grand Vitara, sedans - SX4 and Swift DZire. Even though Maruti is well ahead of its other rivals, its market share has been declining. As competition intensifies, Maruti has realized the importance of getting closer to its customers. Maruti Suzuki is gearing up for the challenge, and will focus on its strengths making small cars at competitive cost and pushing them through its wide retail networks. Even as it launches more and more new cars to keep customers within its fold by offering a wide basket of products. The company has launched various initiatives to improve customer service. Maruti has improved its operational efficiency by

Section B, Group 3 - Himanshu & Co.

increasing productivity, cutting costs and launching new products. By its quality initiatives, Maruti has reduced its defects per vehicle significantly.

Maruti should set a target of achieving zero defects, zero breakdown and zero accidents in their operations with the help of TQM practices. It got 11 of its vendors to adhere to quality systems and processes and it should aim to bring more vendors to follow the quality system. Cross functional teams should start a company-wide campaign to identify and eliminate wastes on the shop floor. Marutis employees should be able to anticipate possible accident areas and they should continuously work to make the factories safer to work. TQM tools that have been deployed in Maruti include reengineering the production processes to eliminate waste, reduce costs, improve output and speed of delivery and reduce inventories

Section B, Group 3 - Himanshu & Co. Exhibit 1: Media Press Release by Maruti for Feb 2011
Car market leader Maruti Suzuki India Limited sold a total of 1,11,645 vehicles in February 2011. This includes 10,102 units of exports. The company had sold a total of 96,650 vehicles in February 2010. In February 2011, the company sold 1,01,543 units in the domestic market, up 19.8 per cent over corresponding month last year. Sales were up 19.4 per cent in A2 and 27 per cent in A3 segment. In C segment, company recorded a growth of 26.9 per cent. In February 2011, Maruti Suzuki launched the Super Turbo Diesel SX4. During the month, company also launched the Luxury Sporty Kizashi sedan. The Kizashi units despatched in February are display / test drive vehicles for dealers. Deliveries of Kizashi to customers will begin this month. The sales figures for February 2011 are given below:
In February Segment Models 2011 A1 A2 A3 A4 M800 2712 2010 3178 60380 10254 0 73812 285 10668 84765 11885 96650 19.0% -45.3% 26.9% 19.8% -15.0% 15.5% % Change -14.7% 19.4% 27.0% 2010-11 23570 730092 117362 35 871059 5046 146210 1022315 126738 1149053 2009-10 30266 578427 88862 0 697555 3255 90450 791260 131982 923242 24.9% 55.0% 61.6% 29.2% -4.0% 24.5% % Change -22.1% 26.2% 32.1% Till February April'09 March'10 33028 633190 99315 0 765533 3932 101325 870790 147575 1018365

Alto, WagonR, Zen, 72090 Swift, Ritz, A-Star SX4, D'zire Kizashi * 13024 25 87851 156 13536 101543 10102 111645

A: Total Passenger Cars B: MUV Gypsy, Grand Vitara

C: Van Omni, Versa, Eeco Type Domestic Sales Export Sales Total Sales

Section B, Group 3 - Himanshu & Co.

Exhibit 2: Production Management System of Maruti Suzuki Motors Ltd.

Challenge 50 helped us improve our plant productivity by 46 per cent in three years and cost & quality improved by 30 per cent. Moving ahead, the next target was to sustain this momentum. Production Management System (PMS) was the next bold step in this direction. PMS is a strategy to achieve Manufacturing Excellence evolved through participative approach. PMS is A system which is people driven and ensures involvement of all levels ( Managers, Executives, Supervisors ) A system which ensures ownership A system which brings in standardization of systems & processes A system which ensures Sustainability PMS has entered the fourth phase of implementation and the results have been overwhelming. Excellence through participative approach PMS is a bottoms-up approach where people of the work area are encouraged to give solutions to the problems at their end. It is implemented across levels. This motivates the operator and ensures his ownership all through the solution finding process. The concept ensures participation and error free communication. The result is clarity of content, better understanding and openness towards feedback. These values make PMS a sustainable system. Clarity of the Role One of the aspect that have bothered hierarchical structures is the clarity of the roles and responsibility across strata. Clarity on what is expected out of a supervisor, a manager or a technician at the shop floor has brought in structure and standardization to production management at Maruti. The result is that job duplication is eliminated and no man-hours are lost in understanding what each person is expected to do. The outcome of such clearly defined roles is increased efficiency of operations. Bringing in Standardization Through such people participation, PMS has brought in standardization that eliminates any scope of confusion at shop floor. A visual consistency across the manufacturing facilities is notable. Bins and trolleys are earmarked for tools and components. Pictorial charts explaining processes and procedures are pasted at convenient and strategic points helping shop floor employees understand various mechanisms with ease. Wherever possible a colour coding control or visual control is followed to eliminate operator errors arising out of language constraints. This helps in clear distinction of different model and its components. All around Gains These processes have led to many operational improvements that have saved cost and time. At the same time these have brought in operational ease and a defined activity flow and sequence. Marching ahead towards the goal of selling a million vehicles by 2010, PMS will lead the production team towards greater enhanced productivity with perfection.

Section B, Group 3 - Himanshu & Co.

Exhibit 3: Fishbone Diagram