TQM in AUTOMOTIVE INDUSTRY

[Year]TQM in AUTOMOTIVE INDUSTRY

ContentsINTRODUCTION3PRINCIPLES OF TOTAL QUALITY MANAGEMENT3Customer Focus3Executive Management4METHODOLOGY AND TOOLS5DECISION MAKING5CONTINOUS IMPROVEMENT6THE QUALITY STANDARD FOR THE AUTOMOTIVE INDUSTRY7ISO/TS 169497ISO 140018QUALITY AWARDS8Demings Prize8CII-EXIM Bank Award For Excellence9Six Sigma in Automotive Industry10Implementation of Six Sigma at Ford10CONCLUSION12CASE STUDY13MAHINDRA AND MAHINDRA LIMITED FARM EQUIPMENT SECTOR13REFERENCES19

INTRODUCTIONTotal Quality management involves efforts by an organization to install and make permanent an environment in which an organization continuously improves its ability to deliver high-quality products and services to customers. TQM became popular in late 1980s and early 1990s.Some of the automotive companies implementing TQM are Ford Motor Company, ToyotaMotor Corporation, Honda Motor Co. Some of the advantages of applying TQM in Automotive industry are: Effective use of organizations resources so as to achieve maximum client Satisfaction. Increase in Revenue and market share which is achieved by quickly reacting to market opportunities. Improvement in product quality and service leads to increase in customer loyalty which results in repetitive buying process. Effectively measuring clients needs and requirements and accordingly working towards obtaining the desired results. Gaining competitive advantage over other firms.PRINCIPLES OF TOTAL QUALITY MANAGEMENTTotal Quality Management is a business approach to improving the efficiency, competitiveness and elasticity of an organization which is beneficial for all stakeholders of an organization. Customer FocusCustomer is the king for every company. The automotive industry also depends on their customers and strives to meet their needs and also exceed their expectations (ISO) by providing a perfect product. It is never easy to determine what a client desires due to their changing tastes and preferences for cars. The automotive companies must constantly gather information constantly, by research groups, market studies, and meetings with clients, in order to remain close to clients tastes.Customer Focus indicates how a customer can be satisfied by having the product or service of a company. For this, the company has to improve the quality of the product or service so that people willing to pay for it and want to buy more and more. If the customers get satisfied it will lead the company to create more profit as well as to gram the market. Taking the example of Maruti Suzuki in India, customers relate to a company in multiple ways. They expect the company to serve them with care, offer products that give them best value and fulfill their desires including unstated ones . When a company is able to do this over time, through repeated instructions, a relationship is born. In the three decades Maruti Suzuki has been in existence, the passenger car landscape has changed considerably. Today, the companys relationships with customers go beyond just transactions. Maruti have connected with the millions of families through trust and faith .This truth and faith is contingent upon the company continuing to deliver better service, superior products and unmatched value. Maruti Suzuki is Indias largest passenger vehicle company with a market share close to 40%. Founded in 1891, with the Maruti 800 as its first product offering, the company today offers 14 models with over 200 variant across the Industry segment like Passenger cars , Utility vehicles and Vans . 5 plants in the Gurgaon and Manesar areas of Haryana equip Maruti Suzuki with a production capability of 1.55 million units per annum. Maruti is of the opinion When performance is not negotiable. There are those who like their cars and There are those who love them.

Executive ManagementAnother important aspect for successful TQM implementation is employee participation promoted at all levels. Individual responsibility can be discharged only if power is delegated in different degree at all levels across the organization. Also the mission, vision and policies of a company should be consistent with those of TQM. Visionary leadership of the top management and complete involvement of the middle management along with the support of employees results in TQM being a successful endeavour in the company.It is has been found out that 62% of the Indian automotive sector believes to follow TQM as a guiding philosophy while 38% has still not adopted TQM as a guiding philosophy. It is estimated that 70 % of the India automotive sector promises on time delivery more than 80 % of times. According to the world standards, Indian automotive industry is lagging behind. Only 52 % of the automotive companies are working towards achieving a cost reduction of more than 5% while shockingly still 48% of the organizations do not consider cost reduction as an important aspect.Unfortunately only 10-15% Indian automotive companies are using quality cost as measure of their quality performance thereby loosing an opportunity to spot critical areas for improvement. In an organization the administration department or top management has to control the total quality management as a main manager. Training is an essential factor in total quality management to get success. The employees should get training about the concept and methods to maintain the quality or quality control.METHODOLOGY AND TOOLSThere have to be use appropriate methodology and tools to find out the problems which are responsible for low quality. Once the problems are short out, the company has to try to solve the entire problem by using appropriate methods and tools. It will reduce time to solve the problems.TQM requires the employees to identify and correct quality problems using certain graphical and statistical methods to plan work activities, collect data, analyse results, monitor progress, and solve. These are also known as the seven means for quality control which are:1. Cause and effect diagrams2. Scatter diagram3. Flowcharts4. Pareto chart5. Histogram6. Control charts7. ChecklistDECISION MAKING Decision making is very important to every company. It is not only helping the company to maintain the quality but also the overall performance depend upon it. A good decision can lead the company to higher position whereas a bad decision can make the company worst. There have to be made quality decisions based on measurement, in terms of total quality management.A classic example is the poor quality of Skoda cars. In the 80's and early 90's Skoda was known for it poor quality and this in turn affected both the brand image and also sales of the company. Once the Volkswagen Group overtook it in 1994, strategies have been implemented to put quality back into the product.CONTINOUS IMPROVEMENT Maintaining the quality is not a short time job for a company. To get success in long run, the organization has to do work continuously to improve the quality and performance.Maruti Suzuki has continued its energy conservation drive more prominently through various energy saving activities and adaptation of new technology. Energy saving initiatives throughout the plant helped the company in reducing energy consumption by 2 per cent in most of the areas. Some of the activities carried out during the year towards environment, energy and water conservation are mentioned under: Fluidized bed type incinerator was installed in Manesar plant for cleaning of paint booth gratings instead of direct burning type incinerator to reduce emission. The Companys R&D team has been working with the following vision - Build on our engineering skills to design and develop cars to delight the Indian consumer and establish Maruti as the R&D hub of Suzuki Motor Corporation (SMC) in Asia outside Japan. The Company has envisioned the path of achieving the vision through: New model and minor change design and development; and Engineering capability development for design and development of full body change. The Company has taken every possible step to scale up its R&D strength and infrastructure. Skilled manpower is the key for achieving the goals of any company. The Company has increased the strength of R&D manpower from 1070 numbers in 2010-11 to 1210 numbers in 2011-12. The Company has a plan of increasing this manpower from 1210 numbers to more than 1400 numbers in 2012-13.EMPLOYEE INVOLVEMENTEmployee should be encouraged to be pro-active in recognize and addressing quality related difficulty. Without employee involvement the total quality management will not be successful for what it stands for. Ultimately, the affects will reflect on the performance of the company. Tata Motors believe in a well-engaged workforce which is the key driver to achieve business goals and make our operations more sustainable. A well engaged employee is a valuable asset to organization. Tata Motors aims at unifying workforce with a common charge and energizing culture, dramatically enhance employee engagement and bring in operational architecture changes to enable the new culture of Accountability, Customer Focus, Excellence and Speed. They have a bouquet of engagement initiatives introduced for their employees at all levels and functions owing to the motto,We are a Peoples Place!THE QUALITY STANDARD FOR THE AUTOMOTIVE INDUSTRYStandards address the needs of organizations in training, quality auditing and quality-management systems. The ISO 9000 Series, for example, is a set of international standards for quality management and quality assurance. The standards were developed to help companies effectively document the elements they need to maintain an efficient quality system. They are not specific to any one industry.The global automotive industry demands world class levels of product quality, productivity and competitiveness as well as continual improvement. To achieve this goal many vehicle manufacturers insist that suppliers are certified to the quality management standard for suppliers to the automotive sector.The standard presents the qualitative structure defining the special requirements in the supply relationship in order that the process itself appears to guarantee the specific requirements in terms of repeatability and compliance. This approach allows to direct the organization toward an evolutionary path aimed at eliminating the defects and the common recognition of such standards, capable of providing automotive warranty in the process.There are two popular standards used in the automotive industry: ISO/TS 16949, developed by the International Automotive Task Force, aligns existing American, German, French and Italian automotive quality standards within the global automotive industry. ISO 14001 environmental standards are being applied by automotive suppliers as a requirement from Ford and General Motors.ISO/TS 16949The ISO/TS16949 is an ISO technical specification aiming to the development of a quality management system that provides for continual improvement, emphasizing defect prevention and the reduction of variation and waste in the supply chain. It is based on the ISO 9001 and the first edition was published in March 2002 as ISO/TS 16949:2002.It was prepared by the International Automotive Task Force (IATF) and the "Technical Committee" of ISO. It harmonizes the country-specific regulations of Quality-Management-Systems.About 30 percent of the more than 100 existing automotive manufacturers affiliate the requirements of the norm but especially the large Asian manufacturers have differentiated, own requirements for the quality management systems of their corporate group and their suppliers.TS16949 applies to the design/development, production and, when relevant, installation and servicing of automotive-related products.ISO 14001Released in 1996 as part of the ISO 14000 series of environmental management standards, the ISO 14001 Environmental Management System(EMS) Standard is aimed at providing organizations with an effective EMS that can be integrated with other management requirements, and assisting organizations in achieving their environmental and economic goals.Honda,TVS , Maruti Suzuki and Honda Siel Cars India are some of the automotive companies that follow ISO 14001 Standards.QUALITY AWARDS Indian companies were able to win some notable TQM awards in recent times. Some of the awards won by companies in Indian Automotive sector have been covered below:Demings PrizeDeming Prize is one of the highest awards given for TQM initiatives. It was established by Japanese Union of Scientists and Engineers (JUSE) in December 1950. Any company in the world is allowed to participate and get recognized. It is annually awarded. For the Demings Prize, the following is the checklist for application by any company: Outline of the organization Organization and management TQM promotion Policy management Human resource development Information management Implementation status of quality control Overall defects Future plan

The following Indian companies from automotive sector have won the Demings prize: Sundaram-Clayton Limited, Brakes Division (1998) TVS Motor Company Limited (2002) Mahindra and Mahindra Limited, Farm Equipment Sector (2003) Sona Koya Steering Systems Limited (2003) Rane Brake Lining Limited (2003)

CII-EXIM Bank Award For ExcellenceThe CII (Confederation of Indian Industry) and Export Import Bank of India give this award in collaboration with each other. It is an award for Business Excellence with an aim to improve the Competitiveness of India globally. It is based on the internationally recognized European Quality Award given by the European Foundation for Quality Management (EFQM).The model has 500 points. The points are awarded as follows:- Leadership (100) Strategy (100) People (100) Partnerships and Resources (100) Processes, products and Services (100)The following Indian companies from Automotive sector have won the CII-EXIM Bank Award For Excellence: Bosch Ltd, Diesel Systems Business-Nashik (2013) Tata Motors Ltd (2005) Maruti Udyog Ltd. (1998)\

Six Sigma in Automotive Industry

Both Lean Manufacturing and Six Sigma originated in the automotive industry. Not only larger companies, but also more and more small and medium size companies are exploring Lean Six Sigma and realising the benefits.Lean Six Sigma combines of all of these philosophies and helps you select and implement the best tools and methods.Six sigma studies in Automotive sector is an innovative idea. Studies in automotive sector during the course of Six sigma (certificate awarded by ASSOCHAM & QCI)revealed that almost every automotive industry is widely using six sigma tools and techniquesfor control of their products defects, but, without focusing on environmental hazards.They are adopting the environmental factors only to make their factory neat and clean by using 5S or 6 S, TPM programs and not looking outside factors where discharge of hazardouseffluent to surface water is polluting our environment.

Some of the objectives of six sigma in automotive industry can be : To improve customer satisfaction level To prevent environment pollution due to heavy metals and dyes discharged to the surface water without treatment. To prevent losses occurred from the absenteeism of employees. To improve productivity of staff works by utilization of manpower in an appropriate manner. To understand their relevance and find the extent to which they are actually beingapplied in the work situation;

Implementation of Six Sigma at Ford

The Ford Motor Company has been a leader in the automotive industry for over 28 years, which focused and succeeded to some degree on cost reduction, increase market share, as well as the quality of its products. Ford Motor Company saw an error in the quality of its products, which caused detrimental effects in two areas; customer satisfaction and market share . Ford's CEO Jacques Nasser knew that an organizational change needs to occur to withstand the decrease in profits and customer satisfaction. The company adopted a new vision "to become the world's leading consumer company for automotive products and services". CEO Nasser speech about organizational change reinforced the notion of the importance of the company adoption of Six Sigma and the impact change will have on the company.Ford introduced Six Sigma as their means to change the current dynamics of the organization in many ways. It affected all parts of the business and resulted in many positive results. Ford applied the results of each change process by department. Ford selects which projects will involve Six Sigma based on three different criteria. They must relate to customer satisfaction, The results must reduce defects by at least 70 percent, and Each project should average $250,000 in cost savings .

Each time Ford identifies a problem, a commitment of two years is expected from "Black Belts" or middle management.The initial change principles that have been instituted at Ford have been to focus on continuous problems with vehicle lines. Once Ford feels all possible change principles are completed in relation to vehicle lines, they are then to readjust their focus to supply chain management.persisted" (SME). Once Ford feels all possible change principles are completed in relation to vehicle lines, they are then to readjust their focus to supply chain management.Six- Sigma has been in process at Ford since 1999. There is no evidence that Ford will ever veer away from using the Six Sigma plan in the future. Since its inception at Ford, Six Sigma has saved about $1 billion in waste elimination globally. Year-over-year savings worldwide was $359 million last year. Moreover, customer satisfaction has risen five percentage points in the company's internal customer satisfaction survey. All employees of Ford have either totally accepted Six Sigma or are in the process of learning all the benefits of each project resulting from the Six Sigma initiatives. Therefore the action plan for Ford is to continue with the successful program that Six Sigma is for them. Their corporate culture is extremely positive in regards to the implementation.The programs that are a direct spin-off from the Six Sigma implementation were things such as the DMIAC Cycle. The DMIAC Cycle is defined as Define, Measure, Analyze, Improve and Control. By using this cycle Ford Motor Company feels no project is successful unless all steps in the DMIAC cycle are completed. It acts as a tool for measurement.The second phase of Six Sigma for Ford is called Design for Six Sigma. This phase, which is just beginning, focuses on using Six Sigma in product design processes to prevent problems before they occurFord Motor Company had an interesting method of determining if the process was successful. The company had two groups of workers, where one was the uncontrolled and the other was the controlled group. The controlled group was given training on how to better install parts on the Ford vehicle, while the uncontrolled did not. The study indicated that the controlled group had a lower defect per vehicle than the uncontrolled group . The change was very successful because the defect per vehicle decrease and the business was able to save over 300 million dollars.Benefits to Ford from Six Sigma implementation Customer satisfaction increased over 5% in its inaugural year. It became much leaner in their manufacturing process, saving the company over $350 million. The revamped manufacturing process also decreased the defective part count, limiting additional work needing to be preformed by the Ford employees. Reducing the time needed to complete a given project.

CONCLUSIONThe principles of Total Quality Management are to seek to satisfy the external customer with quality goods and services, as well as your company internal customers; to satisfy your external and internal suppliers; and to continuously improve processes by working smarter and using special quality methods. TQM encourages participation amongst shop floor workers and managers. There is no single theoretical formalization of total quality, but Deming, Juran and Ishikawa provide the core assumptions, as a "...discipline and philosophy of management which institutionalizes planned and continuous... improvement ... and assumes that quality is the outcome of all activities that take place within an organization; that all functions and all employees have to participate in the improvement process; that organizations need both quality systems and a quality culture."CASE STUDYMAHINDRA AND MAHINDRA LIMITED FARM EQUIPMENT SECTORFarm Equipment Sector (FES) is one of the six sectors in which Mahindra and Mahindra Ltd (M&M) operates. The Sector is involved in designing, manufacturing and marketing agricultural tractors since 1963. For the last 21 years, Mahindra and Mahindra Ltd (M&M) has been the market leader in the highly competitive Indian tractor market.The Sector manufactures 15 major models of tractors at four manufacturing plants located in Mumbai, Nagpur, Jaipur and Rudrapur, with total employee strength of over 4000. Over 400 suppliers and 450 dealers are also a part of the extended Mahindra family.Mahindra and Mahindra Ltd (M&M) was awarded the Deming Prize by JUSE in 2003.With this, Mahindra and Mahindra Ltd (M&M) achieved the distinction of becoming the first tractor manufacturer in the world to win this coveted prize.Prior to this, two of M&M's tractor plants at Mumbai and Nagpur located in western India was certified to International Quality Standards ISO 9000, QS 9000 and ISO 14001 by the German Certification Agency RWTUV.Evolution of Total Quality Management (TQM) SystemThe TQM journey at FES started in 1985. It can be broadly divided into four phases till 2003, when the company won the Deming Prize.a) Orientation Phase - 1985 to 1989b) Introduction Phase - 1990 to 1994c) Promotion Phase - 1995 to 1999d) Development Phase - 2000 to 2003a) Orientation Phase - The focus was on Quality Circle movement for employees staff and workmen during this phase. The movement started on a pilot basis in Mumbai in 1985, subsequently spread to Nagpur and substantially increased in scale over the next decade, with about 50 per cent of the employees being involved. The Quality Circles solved hundreds of problems in operational areas to improve quality, housekeeping, safety and reduce wastage and cost.b) Introduction Phase - During this phase, FES focused on solving major cross-functional quality problems through involvement of managers as well as enhanced product quality by improving quality of manufactured and bought out components. This phase was marked by the use of Dr Juran's process of quality improvement for problem solving, use of Statistical Process Control (SPC) for all critical machining processes and systematic support to all suppliers to improve their processes and product quality.c) Promotion Phase - The focus during this phase was on improvement through implementation of robust systems. Accordingly, both the Mumbai and Nagpur plants were certified, first to ISO 9000 and subsequently to QS 9000. Business Process Re-engineering (BPR) was implemented in the manufacturing areas, with substantial improvement in employee involvement and productivity. During the same phase, the Global Leadership vision to become the largest tractor manufacturer in the world was conceived and the application of Deming Prize guidelines, under the guidance of Dr Y Washio, an eminent TQM expert from Japan, was initiated.d) Development Phase - This stage focused on improving at a rapid pace, to progress towards the Vision of Global Leadership and challenging the Deming Prize before 2004. The New Product Development process was improved and brought to international standards under the guidance of Dr Washio. His inputs enabled substantial improvement in manufacturing and supplier support processes. Sales, dealer support and customer operations were systematised under the umbrella of Mahindra Sales System (MSS)Leadership and employee participation:Commitment of leadership was fundamental for TQM implementation, and even more so in challenging the Deming Prize. The Deming Prize Examiners evaluated this through presentations that were made by the Chief Executive Officer and other senior managers, and additionally through a special Executive Session. The 'energetic efforts for practising TQM to realise the Business Strategy' under active top management leadership was highlighted in the Deming Prize Committee report. Employee Involvement was another feature of TQM and the Deming Prize. Introduction of Continuous Improvement Teams (CIT) for workmen, Officers' Improvement Teams (OIT) and need-based Cross Functional Teams (CFTs) for officers was implemented.

Regular improvements in business processes:Due to implementation of TQM, marked improvements were perceptible in all key business processes:a) ManufacturingDue to Standardization, effective usage of SPC and practice of Daily Work Management (DWM), rework and rejection (Quality) came down to less than 1000 PPM levels.For the same reason, the Field Quality measured by number of complaints in first 250 and 500 hours of operations, improved substantially.Productivity improved considerably on account of implementation of Business Process Re-engineering (BPR).

b) Supplier ManagementThe quality of outsourced components improved substantially owing to the support to suppliers.Similarly a marked improvement in Supplier Schedule Adherence was achieved.

c) New Product DevelopmentExact customer requirements could be developed and marketed.Use of tools like Failure Mode Effect Analysis (FMEA) helped reduce quality problems at the Product Development stage itself.Development Cycle Time was reduced substantially.Due to this initiative, the company could produce 15 new models, including some specifically for export, over the last three years. This led to a sharp rise in export figures.

d) Sales and Customer OperationsFollowing application of various innovative service initiatives like Mobile Service Van, Single-Window concept for spares procured from Original Equipment Manufacturers, the Overall Customer Satisfaction Index improved.Standardized Sales process introduced in the form of Mahindra Sales System (MSS) and support offered to dealers in various forms contributed to increased Market Share.Strength as an organization to attract overseas attention:FES could attract overseas attention on account of following strengths:Global vision backed by long term strategy, with specific focus on exportsCapability displayed in developing new products required for the export marketWorld-class manufacturing qualityLow costs due to improved productivity and various cost re-engineering effortsSkilled and motivated workforceSustained market leadership in the Indian tractor market, the largest in the worldRapidly increasing exportsWorld-class Quality and Management systems certified first through ISO/QS 9000, and subsequently recognized with the Deming Prize

Technological edge:FES' technological edge lies basically in three areas:a) World-class Product Development and R&D facilities manned by over 300 well-qualified engineers and equipped with world-class design and testing facilities. These have contributed to the development of new and attractive product offerings for export and domestic markets.b) Manufacturing facilities complete with world-class engine assembly plant, CED Paint Shop and resourced by a skilled work force.c) Constant exposure to the sophisticated US market through subsidiary-MUSA.BUSINESS EXCELLENCE MODEL:FES model of Excellence, which was in general based on the Deming Model, can be summarized as follows:a) Foundation comprised the following:Company core purpose and core values.Top management leadership, Vision (of Global Leadership) and Strategy.

b) The main pillars of their model of TQM comprised:Quality Assurance systems (based on standards) in New Product Development Manufacturing Supplier Management Sales and Customer OperationsPolicy Deployment - A top management led process/system of setting and deploying long-term targets that were effectively pursued with employees integrating them into their annual targets. Their achievement was assured through the effective practice of Daily Work management. Continuous improvement with 100 per cent employee involvement, using scientific problem solving tools and quality information data.Standardized Support Services like IT, Cost Management, Delivery Management and Human Resource Management.

c) On the top of this structure/model stood the Purpose:Satisfaction of all stakeholders, employees, customers, suppliers and society.Excellent business results.

The Deming Prize Examiners additionally appreciated the following:Ambitious and attractive Global Vision and road mapDeployment of Policy to divisional and further levelsMature New Product Development system using various toolsCorrect use of SPC giving process capabilities of over 1.33 in all important processesImprovement in labour-management relationship was achievedDrastic reduction in rejection and rework and improvement inField QualityKaizen activity with 100 per cent involvement of employeesSupplier Support resulting in drastic reduction in receipt rejectionSupport provided to dealers in Sales and Service eventsSystematic Training and Education system

REFERENCESAspinwall, S. M. (2001). Case studies on the implementation of TQM in the UK automotive SMEs. IJQRM .Isac, N. (n.d.). PRINCIPLES OF TQM IN AUTOMOTIVE INDUSTRY. Romanian Economic and Business Review .Pant, N. K. (2013). Critical Success Factors of Total Quality Management in the Indian Automotive Industry. International Journal of Economy, Management and Social Sciences .Vrat, V. .. (2007). TQM implementation in Indian Automotive sector. Journal of advances in Management Research .

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