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Quality Management Practices by

TVS Group India


OPERATIONS MANAGEMENT
PROJECT REPORT




Course Instructor: Samir K Srivastava



Snata Nayak- PGP29210
Yeshwanthi AC- PGP29225
Raka Sardar- PGP29223


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INDEX
1. Introduction..........3

2. Implementation of TQM in Automobile Industry...4
2.1 Customer focus.......4
2.2 Continuous Improvement...5
2.3 Plan-Do-Check-Action.......5
2.4 Employee empowerment....5
2.5 Quality Tools......6
2.6 Product design....6
2.7 Supplier Quality Management...7

3. Quality Management in Indian Industries.......8

4. Quality Practices at TVS....................9
4.1 TQM..........................9
4.2 Advance Engineering......................10
4.3 Small Group Activity..............10
4.4 Just in Time.....................11
4.5 Employee Empowerment............12

5. Financial impact of Quality Control Measures.........13
6. Limitation and scope for future work............18
7. References.19




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1. Introduction to Quality Management
Total quality management (TQM) is a management philosophy that encompasses the commonly
known customer perception of values and includes customer satisfaction. In simpler words it
depicts consistent delivery of quality products to the customers. The quality management gurus
like Deming, Juran and Crosby have mentioned factors like organization leadership, employee
empowerment through education, self-improvement, leadership, promotion of change, inclusive
transformation process management, strategic planning etc. to judge quality management in an
organization. It consists of organization-wide efforts to install and make permanent a climate in
which an organization continuously improves its ability to deliver high-quality products and
services to customers. While there is no widely agreed-upon approach, TQM efforts typically
draw heavily on the previously-developed tools and techniques of quality control. TQM enjoyed
widespread attention during the late 1980s and early 1990s before being overshadowed by ISO
9000, Lean manufacturing and Six Sigma.
In the highly competitive environment industries are facing in todays world,
they believe in continuous improvement of their products and services with changing customer
demands. Most of the organizations belief that quality begins and ends with the customer have
been continuously identifying customer needs and comprehensively meeting them. This belief
forms the basis of its approach to Total Quality Management (TQM). Quality assurance methods
like ISO certification, Advanced Product Quality Planning, Statistical Process Control
Techniques, PDCA, Just in Time, Lean Manufacturing, Benchmarking, and Taguchi practices
form the backbone of the system approach adopted.










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2. Implementation of TQM in Automobile Industry
A TQM redesigns the business objective, by nudging the firm to focus on few common strategic
planning objectives like continuous improvement in product and service quality, flexible internal
and external supply processes, responsiveness and cost elimination. TQM approach helps in
simplifying and stabilizing strategies of an organization. The companies adapting TQM are
focused on the systematic management of data in all processes and approaches to eliminate waste
and pursue continuous improvement. The goal is to provide the highest value for the customer at
minimal cost while simultaneously achieving profit and economic stability for the company.
While every organization should implement its own specialized form of quality management,
there are some basic core principles that guide every quality effort. The single most important
element of quality management is the focus on the customer. TQM principle involves following
listed concepts which is implemented by all types of automotive industries as shown by table
below. Ford Motor Company, Maruti Suzuki, TVS, Motorola and Toyota Motor Company are
few automotive companies which have adapted TQM for controlling quality of the products.

Concept Main idea
Customer focus Goal is to identify and meet customer needs
Continuous improvement A philosophy of never ending improvement
Employee empowerment Employees are expected to seek out, identify, and correct
quality problems
Use of quality tools Ongoing employee training in the use of quality tools
Product design

Quality should be built into the process; sources of
quality problems should be identified and corrected
Managing supplier quality Quality concepts must extend to a companys suppliers

Table1 : Concepts of TQM Philosophy
2.1 Customer focus
This is the first and important feature of TQM. The TQM details that a perfectly produced
product has minimal value, if it is not something what customer wants. In automotive industry,
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the customer preferences change fast, from small cars to spacious cars and then back to small
cars. The companies must always update their database about customer preferences through
various market research techniques to deliver great value products.
In the automotive industry, this feature of TQM leads to effective utilization of resources and
influences degree of customer loyalty. It provides easier way to research and comprehend needs
and expectations of clients. It assures that organizational goals are designed around preferences
of customers. They also aim at understanding the features that provide customer satisfaction by
measuring the satisfaction level and communicate the obtained results within the organization to
integrate if any changes needed. The relationship with the clients is managed by this feature of
TQM and available market opportunities are grabbed easily.
2.2 Continuous improvement
Another concept of TQM is continuous improvement which is termed as kaizen by Japanese. It
believes that company can strive to reach better performance gradually through learning and
problem solving. There are two types of approaches namely plan do study act (PDSA)
approach and benchmark approach. One of approaches that is followed by most automotive
companies for continuous improvement: PDSA cycle which describes the activities that a
company needs to perform to incorporate continuous improvement in its operation. The circular
character of this cycle details that continuous improvement concept is a never-ending process.

Fig: PDCA
2.3 Plan-Do-Study-Act Cycle
This concept ensures that improved activities are always inclined towards the strategic
intentions of the organization and prepares it to react rapidly to opportunities in changing
automotive industry. This aims at providing adequate training regarding the techniques and
instruments for the continuous improvement and also helps in establishing specific objectives
that guides this concept.
2.4 Employee empowerment: In TQM, the role of employees is totally different from that in
traditional systems. Workers must be empowered to make decisions about the quality of the
product under production. They are even asked to detect quality problems before releasing it to
PLAN
DO STUDY
ACT
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the customers. Employees who identify and solve defects in the process are rewarded then being
punished unlike in traditional systems. In order to handle this function, employees undergo
continual and extensive training in quality measurement tools. This concept helps in making
decisions logically based on real available information. It increases the ability to demonstrate the
effectiveness of previous decisions with reference to real records.
2.5 Use of Quality tools:
TQM relies on workers for detecting and correcting the quality of the products/services. To
handle this effectively, workers use different type of quality tools which are simple to use, yet
very useful in identifying and analyzing quality problems. There are 7 quality tools which are
extensively used in the industry to check the quality which are shown below
Fig: Seven Tools of Quality Control

Most of companies in automotive industry use checklist, cause and effect diagram and control
charts to measure the quality of the product. Based on the results, they analyze the findings and
set a benchmark to compare the quality of the components being produced and test whether the
quality meets the customer specifications.
Product design:The critical aspect of TQM is to achieve the desired goal is to ensure whether
product meets customer specifications. It is achieved by a function called Quality Function
Deployment (QFD) which converts customer words into technical aspects. On the similar lines,
the customer expectations are recorded in terms of scores, and further these scores are used to
1) Cause & Effect
Diagram
2) Flow Chart 3) Check List
4) Control Chart
5) Scatter Diagram
6) Pareto Chart 7) Histogram
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analyze the common quality features of product with its competitor. The results obtained from
this comparison is further used in correcting the identified problem. Further QFD is also used to
build strong communication between functions and variables of production system.
Management Supplier Quality:The philosophy of TQM extends its quality principle to the
suppliers of an organization. Traditionally, the company used to inspect the raw materials on
arrival from suppliers. This approach was later considered to absorb more time and cost. So
companies these days extend their TQM approach even at the supplier end by having their
employees at supplier field, thus reducing the time and cost involved in raw material inspection.
The following diagram shows supplier and client interaction in managing product quality.


Internalizing the relation client supplier

This provides ability to control cost and resources in production and also increases the flexibility
of the both client and suppliers to adapt to the changing market. This aspect helps in identifying
important suppliers and also in maintain long term good relationship which is helpful in creating
value at both the end.








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3. Quality Management in Indian Industries
Traditionally Indian auto mobile makers were growing through vertical integration before
Japanese company Suzuki became operational with their joint venture from 1981. When Maruti
was taking components from local suppliers it established a strong quality conscious component
supply chain for the first time. With liberalization and making regulations in favor of removal of
capacity restrictions, import of technology, increase in competitiveness.
The expert of auto-components had witnessed a CAGR of 24% in the period of 2004-05. Almost
80% of the auto components exported in 2009 was to Tier 1- OEM market which has been
increased from 25% export to OEM market a decade ago. This implies the improvement in
quality of the auto-components produced in India and also the compliance to the strict global
quality standard etc.
Quality implementation has attributed to success in both manufacturing and service industry.
The sig sigma certified companies include globally known IT service companies like Tata
Consultancy Services, Wipro Ltd, Infosys to commercial banks like ICICI Bank. On the other
hand multiple manufacturing firms like Tisco, Tata Steel, Telco, Asian Paints, Pidilite Industries,
Thermax, Lucas TVS, Sundram Clayton, Eicher, Tata Auto Comp Systems etc.

4. Quality practices in TVS
Lucas TVS has received the prestigious Deming award in the year 2004 and won the best
exporter award in 2011. While the organization has been pioneer in implementing quality control
measures in Indian auto-component making industry, its practices has been discovered to be
exceptional outside countries like Japan, Korea known for their quality practices.
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Fig: Timeline of TVS Industries
4.1 TQM
In the continuous pursuit of technological and methodological excellence, Lucas-TVS
has added yet another new dimension to manufacturing by not only adopting the Cellular
Manufacturing System / JIT but also extending the same to its Suppliers. After implementing this
system components from its suppliers are delivered on a pull basis with FIFO concept supported
by simple visual controls and supplied to the line on an hourly basis with KANBAN system.
The below mentioned diagram depicts how TVS has implemented quality assurance measures at
every step of production.
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Fig: Process Management
4.2 Advance Engineering
L-TVS continuously monitors the requirements of international customers for Auto
electrical products. To meet the requirements of OEMs in the next 3 5 years, several new
breakthrough products are under development in Advance Engineering section. Teams of
engineers in Advance Engineering continuously innovate and develop new products to
delight the customers and end-users. The basic requirements of such developments are
based on continuous interactions with customers and end-users to understand their
unfulfilled needs. This team also continuously reviews the usage of L-TVS products by the
end-users and identifies the new requirements and design add-on features and functionalities
to these products, in advance of the requirements proposed by OEMs.
Also the teams have developed contacts and access to the contemporary technology under
development in our range of products, in other parts of the world, so that new innovations
and breakthroughs can be created further for implementation in the near future.

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4.3 Small Group Activity:
Quality Improvement Teams is a forum for engineers/managers to solve their work-related
problems. This works on a higher plane by using advanced quality tools and techniques such as
Taguchi, Shainin etc. and conducting experiments/deep analysis etc.
Apart from continuous feedback regarding improvement from the SGA teams, a suggestion
scheme is prevalent in TVS. Suggestions schemes are incentivized by monetary awards but other
groups like Quality Improvement Teams, Cross Functional Teams, Task Force, and Work Teams
are platforms where supervisors and engineers participate in continuous improvement activities.
The unique feature of the people involvement in Lucas-TVS is the co-existences of both the
suggestions scheme -linked to Monetary Awards and the SGA-with no monetary awards. It is to
be noted that the SGA Teams are proud to present their case studies and derive immense
satisfaction and pride when felicitated by the top Management.
Voluntary Work Team or Sunday Club is a unique concept conceived during 2001 (TQM
promotion phase) to promote the Total Employee Involvement and sense of ownership of factory
at workforce level .The movement started off with one team (Shop Floor 5S) of twenty members
and eventually grew over the last 5 years to 8 different teams (TPM, Enviro, Office 5S, Safety,
Kanban , QCT , APS) to a membership of 625.The concept encourages the teams to create
improvements in the above areas in different modules /offices of the factory on a schedule on
Sundays
4.4 Just In Time-Lean Manufacturing
TVS is the first organization outside Japan and Korea to receive JIT Grand Prix a prestigious
award given by JIT implement Kanban in JIT. The first four Indian companies to win the
Deming Prize, a prestigious international award for total quality management, were all from the
TVS Group - Sundaram Clayton, Sundaram Brake Linings, Brakes India, and TVS Motor. TVS
followed a five step process to implement JIT. While the first step was to make the employees
aware of JIT to ensure their participation. In the second step they started reorganizing the factory
to reorganize the manufacturing process. Without these manufacturing architectural changes
important JIT features like Kanban, quick change over, multi process etc. could not be started.
Better scheduling and planning techniques were used to standardize operations and level
productions.

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Fig: Implementation of Lean Manufacturing
The result of JIT was evident within a short time. Kanban helped to reduce the inventory
significantly, even with increased production superior control of the process was possible. Sales
per employee increased from 1.96 lakh from the time JIT started to be implemented (1995) and
reached to 13.8 lakh in 2002. Rejection rate decreased to less than 1% from 10% and scrap rate
decreased to 0.8% from 3%.
Implementation of 5s in 1999- The 5s: Seiri, Seiton, Seison, Seiketsu, and Shitsuke-all Japanese
terms that form the basis of efficient housekeeping.
Seiri, for example, focuses on sorting out parts and supplies on the shop floor. The objective:
keep only those parts and supplies needed on the factory floor. The second s, Seiton, is about
assigning a permanent place for everything on the shop floor, including the dustbin. Seison, or
shine, urges operators to keep their machines and workplace clean and tidy. Once all this is done,
the focus moves to manufacturing. The fourth s, Seiketsu, emphasizes standardization-there must
be a set way of doing everything. Finally, Shitsuke ensures that there are continuous
improvements in all the other four s's.
4.5 Employee Empowerment- Among the 30 companies of TVS only 4 has witnessed one labor
strike in their 100 years history and rest of the companies never faced a labor problem. The
management has always treated the workers as extended family and L-TVS has been ahead of
industry counter parts in providing employee benefits from a long time. Attrition levels at the
group are low as well. Wheels India, for instance, has an attrition level of 10 per cent against the
auto component industry's average of well over 15 per cent.
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Fig: Principles behind HR policies adapted by Lucas-TVS








Treat employees like family, constantly communicate with
employees to build trust
Put employees' interests ahead of that of the company's
Empower employees at work, Extend relationships
with employees beyond work
Always honour assurances given to employees
Adopt an open-door policy, Involve employees while
taking major decisions
Do not pressure employees to engage in unethical acts
Condone errors of judgement but punish dishonesty
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5. Financial Impact of Quality Control Measures

Around 2001-02 TVS made changes in its Quality Task Force Approaches. These changes
included incorporation of:
1. Autonomation
2. Total Kanban System
3. TPM
4. Poka Yoke
In our analysis of the major changes after these implementation we found that the net worth of
the company slowly and steadily started to improve. Since no other major internal changes were
recorded after the above mentioned changes and no major business environmental changes took
place so a certain amount of the increase in TVSs net worth can be attributed to these
operational changes. In 2004 when TVS received the Deming Application prize its market share
went up by almost 59 points and in the subsequent year by 122 points this was also the time
when the Indian Automobile sector was booming and hence the award had only a secondary role
to the increase in the net worth of the company. But as TVS had established a good and strong
quality image for itself the 2008-09 recession didnt hit the company as badly as it did to some
other competitors of TVS. It even managed to bounce back a year after the recession.
We even notice that even though TVS has not given high Earnings per Share has been low it has
been able to maintain a decent inventories turnover ratio. If we look at the inventory turnover
ratio we will see that even during the recession time the turnover ratio was satisfactory. This
shows that the operational efficiency was well oiled even during the recession. The company was
able to maintain its quality standard and thus was able to get over the recession without any
major falls.
0
500
1000
1500
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
562
614
673
751 769
735
835
999
1170
1225
N
e
t

W
o
r
t
h
Years
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One major indication of quality can be the sales of the company. TVS has had consistently
increasing sales after the implementation of TMQ. Even if we cannot attribute all the increase to
TQM a major part of it can be because of TQM. Even the senior management has gone on record
to state that TQM had led to improvement in efficiency and operations which has made the
company grow.

A comparison of certain other financial aspects of the company we see that TVS has grown and
done well over the years. The TQM implementation has been an added boost it. TVS received
the Challenge Japan Quality Medal in 2007. This might just have provided it the required shield
13.22
12.69
11.06
11.86
9.61
13.31
17.21
13.27 13.19
15.17
0
5
10
15
20
Inventory Turnover Ratio
0
5
10
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
E
a
r
n
i
n
g
s

P
e
r

S
h
a
r
e
Years
2856
2955
3306
3921
3310
3741
4485
6324
7163
7089
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Sales over the Years
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from the recession that happened a year later as TVS was one of the few in the industry that was
able to survive the worst of the economic downturn.

Earnings before Interest Tax Deprecation and Amortization to Turnover of the company.

Profit before Tax to Turnover Ratio

Return on the Net worth of TVS had been better compared to the competitors. This might also
reflect upon the fact that the company has a high standard of quality and hence, has the trust of
the people and market.
11.1
11.2
9.6
6.5
6.6
6.6
6.8
7.4
7.3
6.5
0 2 4 6 8 10 12
2003-04
2005-06
2007-08
2009-10
2011-12
EBITDA/Turnover
Y
e
a
r
s
7.5
6.8
5.1
2.3
1.1 0.8 1.7
3.9
4.4
3.6
1
PBT to Turnover Ratio
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
0
10
20
30
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Return on net worth
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Return on Capital Employed

In the above graphs the various other financial aspects have been analyze. These show that after
implementation of various quality and efficiency measures TVS has done relatively well and has
emerged as a strong player in the market.














30.1
23.8
18.3
10.4
2.8
5.6
8
16.4
19
14.7
0
5
10
15
20
25
30
35
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Return on Capital Employed
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6. Limitations and Scope for Future Work

1. The definition of quality might differ across the company which results in difference in
quality standards and thus not adhering to the expected customer quality standards
2. It involves high amount of cost in implementing TQM in the organization because of the
intense training required by the employees to understand the complete TQM process
3. Emphasis on financial profits and benefits for the short term instead of applying for the
long term
4. Employees may resist to adopt TQM as they believe that increasing business performance
by philosophy of TQM will result in loss of their job
5. One of the major constraints faced during the working of the project was finding the
appropriate data to work on and analyze.
6. Quality being a more subjective matter the interpretation if the numbers and facts could
vary from individual to individual
7. Lack of proper set standards against which quality efficiency can be measured was
another issue faced during the working.











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7. References

A Journey towards Manufacturing Excellence- Kanan Senthuraman, Devanath Tirupati,
http://businesstoday.intoday.in/story/tvs-group-labour-problem/1/15784.html
Lucas TVS- the joy of JIT- Manufacturing excellence Business today
Operations Management Theory and Practice- R. Madhavan
Quality Management Practices and Product Quality Outcome in Indian Manufacturing
Industry- D. Mishra, T. Mishra, R. P. Mohanty
Operations Management by Jay Haizer, Barry Render, Jagadish Rajasekhar
Moneycontrol.com