MAHINDRA AND MAHINDRA LIMITED

FARM EQUIPMENT SECTOR

About the company Farm Equipment Sector (FES) is one of the six sectors in which
Mahindra and Mahindra Ltd (M&M) operates. Mahindra and
Mahindra
Ltd (M&M) is the flagship company of the US$ 1.96 billion Mahindra
Group.

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 a total employee strength of over 4000. Over 400 suppliers
and
450 dealers are also a part of the extended Mahindra family.

About 15 per cent of the FES production is exported to various

countries, with the USA being the largest importer, where the
tractors
Awards are sold and serviced by its subsidiary, Mahindra USA (MUSA), since
almost a decade.

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

Success factors located in western India were certified to International Quality
Standards ISO 9000, QS 9000 and ISO 14001 by the German
Certification Agency RWTUV.

Evolution of Total Quality Management (TQM) System

leading to recognition
The 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 1989
b) Introduction Phase - 1990 to 1994
c) Promotion Phase - 1995 to 1999
d) Development Phase - 2000 to 2003
a) 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,

Indias Deming Prize Winners

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 moreso in challenging the Deming Prize.
The Deming Prize Examiners evaluated this through Schedule A
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.

17
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 ensured 100 per cent
employee
involvement over the last three years. The total 100 per cent
employee involvement and improved labour-management
relationship
was another aspect appreciated by the Deming Examiners.

Regular improvements in business processes

Due to implementation of TQM, marked improvements were
perceptible in all key business processes:
a) Manufacturing
Due to Standardisation, 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 Management
The quality of outsourced components improved substantially
owing to the support to suppliers.
Similarly a marked improvement in Supplier Schedule
Adherence was achieved.
Indias Deming Prize Winners
C) New Product Development
With the usage of tools like Quality Function Deployment
products meeting more exact 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 Operations
Following 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.
Standardised Sales process introduced in the form of Mahindra
Sales System (MSS) and support offered to dealers in various
forms contributed to increased Market Share, widening the
gap between Farm Equipment Sector (FES) and the next
best competition.

Strength as an organisation 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 exports
Capability displayed in developing new products required for
the export market
World-class manufacturing quality
Low costs due to improved productivity and various cost
re-engineering efforts
Skilled and motivated workforce
Capability to develop sales and service network, as
demonstrated
in the US markets
Sustained market leadership in the Indian tractor market,
the largest in the world
Rapidly increasing exports
World-class Quality and Management systems certified first
through ISO/QS 9000, and subsequently recognised with the
Deming Prize
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 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 summarised 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 Operations
Policy 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.
Indias Deming Prize Winners
 Standardised 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 Specific comments from the auditors during evaluation and
recognition specific points mentioned during the investiture ceremony

The Deming Prize Examiners pointed out, There are several

excellent
features in the company-wide energetic efforts for
practising TQM to realise the business strategy under the
leadership of the President.
They further added that,The results of Top Management driven
TQM
activities had shown remarkable improvement in the last few years
as follows -

In a short span of time, entry in the American market was

successfully achieved and the turnover in the new market
was being continuously improved.
Various management systems, not only within FES, but even
involving Suppliers and Dealers had been inducted and
deployed.
Large scale BPR aimed at improving profitability and productivity
was put in practice.
Improvement in labour-management relationship was achieved.
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 The Deming Prize Examiners additionally appreciated the following:

Ambitious and attractive Global Vision and road map

Deployment of Policy to divisional and further levels
Mature New Product Development system using various tools
Correct use of SPC giving process capabilities of over 1.33
in all important processes
Drastic reduction in rejection and rework and improvement in
Field Quality
Kaizen activity with 100 per cent involvement of employees
Supplier Support resulting in drastic reduction in receipt
rejection
Support provided to dealers in Sales and Service events
Systematic Training and Education system

On November 11, 2003, Dr Hitoshi Kume, Chairman, Deming Prize

Sub-committee, handed over the Deming Prize Medal and
Certificate
to the FES President, Mr K J Davasia, at Tokyo. At the time, Dr Kume
read the following from the Certificate:

Mahindra and Mahindra Ltd, Farm Equipment Sector, India has

achieved outstanding performance by practising Total Quality
Management, utilising statistical concepts and methodology based
on company's excellent business philosophy and leadership as
demonstrated by the senior management. In recognition thereof,
the Deming Prize committee hereby presents the Deming
Application
Prize to them.

Contribution to further The journey undertaken for challenging the Deming Prize gave FES
growth/business and many benefits, which could be divided into two categories, namely:

international recognition Culture-related

Business result-related

Culture related

The whole organisation was steered in one direction, due to

effective implementation of policy deployment.
Involvement of all three major stakeholders, namely, employees,

suppliers and dealers, in working together improved

 tremendously

Business result related

Product Quality improved substantially.

Fifteen new models could be developed over 2000-03
Customer satisfaction and domestic market share improved
Export volume increased substantially

Indias Deming Prize Winners

FES has set its next target to challenge the Japan Quality Medal before
2007, which is also awarded by JUSE. Only the Deming Prize winning
companies are eligible for challenging this award. Till date only 10 per
cent Deming Prize-winners have progressed and won this award. This
award will require FES to benchmark itself with the best in the world
and improve its core processes substantially, to achieve improved
results. Dr Washio has agreed to guide the company in this journey.
Inspired by his encouragement as well as continued commitment by
the firm's top management, FES has decided to accept this challenge.
FES is certain that the next established target would help realise its
dream of Global Leadership with substantial international presence.