Implementing BPR (Business Process Reengineering)

Mahindra & Mahindra

Akshara Jain (045)

Anant Jain (046)

Neha Jain (047)

Ningsang Jamir (048)

Amitabh Jasuja (049)

Varun Jindal (050)

Pranav Joshi (051)

Agenda

• Brief introduction of M & M• What is BPR• Principles of BPR• BPR success factors • BPR @ M & M Questions• Highlights• Key Events

Brief Introduction of M&M

Started in 1945 by J C Mahindra & K C Mahindra

In Oct. 1947 first batch of 75 jeeps released for Indian market

Diversified business in other segments viz. hotels, financial services, auto components, information technology etc.

In 1994 a major restructuring exercise was initiated as part of a BPR program.

The company was regrouped in six distinct clusters of related businesses

Contd…..

Current Price in the stock market at Rs 472

Automotive divisions ( UVs & LCVs)

Farm equipment division (tractors and farm implements)

In 1996, Nagpur and Kandivali plants received ISO 9001

In 2001 it was 4th largest manufacturer of tractors in the world

Tractors were exported to countries viz. US, SA, Zimbabwe, Nepal, Sri Lanka and most of the European countries

Contd…..

Acquired Kinetic Scooters having 80% stake to strengthen its two wheeler segment

Amalgamation with Punjab Tractors Limited to strengthen its three wheeler segment

Current Price in the stock market at Rs 472 with a market capital of 143 billion

52 week Low/High 391/830

What is BPR?

BPR is about radical redesign and reorganization of an enterprise to lower the cost and improve quality and services

IT was assumed to be the key enabler for that radical change

Focus on reinventing the way of company carries out rather on improving or modifying process

It was recommended for the corporations where technology, people and organizational goals were no longer valid

Principles of BPR

1. Organize around processes, not tasks 2. Have output user perform process3. Have those who produce information process it4. Treat geographically dispersed resources as

centralized5. Link parallel activities in the workflow instead

of just integrating their results6. Empower workers and use built-in controls7. Capture information once and at the source

BPR Success Factors

Strong and Consistent top management sponsorship. Addressing Cultural Transformation through effective

change management. Proven methodology including a vision process. Reengineering team composition. Compelling Business for a change Strategic alignment with company strategic direction. Line Ownership.

BPR @ M&M Questions

Circumstances that lead M&M to implement BPRFactors

• Manufacturing Inefficiencies

• Poor productivity

• Long production cycle

• Sub-optimal output.

• Unhealthy work culture

• Corruption was widespread.

Continued…….• Decision to focus on enhancing productivity and delivering

world-class quality at the least possible cost.

• Ambition to become the largest tractor manufacturer in the world.

• The three C’s (customers, competition, change)

Why M & M faced resistance from unions while implementing BPR?• Fear of Downsizing

• Several jobs were combined into one.

• Management accepting the Union demands every time.

• Lenient approach of management towards running the plant.

• Inflexibility of the workers.

• Idle time available to workers due to unorganized processes

• Censorship of disclosure

Analyze the BPR implementation exercise at M & M• Implementation started in mid 1990s

• Resistance from the unions

• Re-engineering the layout and method of working

• Cellular Manufacturing

– Multi-tasking through multi-machine manning

– Reduction in non-productive activities

• Implementation of TPM & Kaizen

How do you think the ‘Platform Concept’ helped the company?• Focus on customer requirement.

• Concurrent engineering: Formation of cross functional teams

• Formation of 3 full-time teams

– Horizon1: Improvements in existing products

– Horizon2: Up-gradation of existing products

– Horizon3: Development of new products

Comments on the benefits M&M reaped as a result of BPR program

• Around a 100 officers produced 35 engines a day as compared to the 1200 employees producing 70 engines in the pre-BPR days.

• Igatpuri Plant: Employees declined by 400 but productivity went up by 125 engines per day

• Nasik Plant: 125% improvement in productivity

• Reduction in employee costs

– 1994: 12.4%

– 1996: 10.1%

Continued……• Value added per employee increased from 0.3 million to 0.46

million

• “BPR was a way of reengineering our plants and making them viable in a competitive environment”

– – Anand MahindraAnand Mahindra

Continued……• Better inventory control

• Better sourcing

• Better order distribution across plants

• Online availability of data

• Transparent access to data

• Process transparency

• Integrated sales and supply chain

How is BPR different from TQM?

Continuous incremental improvement-Feature of TQM

BPR seeks breakthrough, not by enhancing existing process but by discarding them & replacing them with entirely new one

It is about inventing new approaches to process structure and no resemblance to those of previous era

Measures taken by manager in a shop floor to ensure BPR success

Training and Motivating workforceIdentifying leadersCreating a conducive environment and

changing work culture.

Highlights

Improve PTL’s capacity utilization from 45% to 55%

With the launch of Ingenio, 10-12% growth in the UV industry

6-8% growth in the tractor segment FY09Margins to reduce – increase in steel, fuel and

raw material prices, to improve in FY10

HighlightsNet sales increased for the quarter Q1

increased YoY 26.1% to Rs. 32.9 bn

Sales volume grew 18.9% YoY to 90160 unitsAutomotive – 23.7% increase YoY to 60,054

unitsFES – Revenues up by 27.5% to 13.2bn

Key EventsAcquires Kinetic MotorsTalks to acquire Italian motorcycle maker

Malaguti MotoJV with Jiansu Vueda Yancheng Tractor

Manufacturing Company (JVYTMC). 51% stake through Mahindra Overseas Investment Company

BPR implementation in M&M had seen radical change for the better

not only in its functions but also in its results. This can be summed up

with the statement of Anand Mahindra “Today the atmosphere is so

different that every morning all the workers recite the company oath,

which is a sea change from the situation 10 years ago when workers

used to play cards on shop floor during working hours.”

THANK YOU