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Sujata Agrawal
It's been
a year of accolades for Tata Motors CVBU. Not only did
the division win the coveted JRD QV Award, the pinnacle
of excellence in the Tata Group, it has also received
the prestigious CII-Exim Bank Award for Business Excellence
It was a proud moment for the
Tata Motors commercial vehicles business unit (CVBU)
when managing director Ravi Kant, and K. C. Girotra,
head of business excellence, received the JRD QV trophy
from Group Chairman Ratan Tata on July 29, 2005, in
Mumbai. It signalled the successful culmination of an
arduous and challenging journey that has seen the company
rise like a phoenix from the ashes.
Tata Motors CVBU has the most visible brands in the
Tata Group — seven out of 10 trucks on Indian roads
proudly sport the Tata logo. But this industry leader
faced tough times in the 1990s due to a combination
of factors. A cyclical downturn coincided with large
investments in upgrading capacity and introducing new
products, even as the unit had to face increased competition
from international auto giants, post-liberalisation.
In 2000-01 the company reached an all-time low and Tata
Motors reported a loss of Rs 500 crore.
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It seemed like the end of the
road for the auto major. But before anyone could strike
it off the map, the company shifted gears and looked
at a new route to success. "We asked ourselves
some fundamental questions," explains Shyam Mani,
vice president, sales and marketing, CVBU. "What
are the drivers of the business? What is the segment
that will be driven in future? What's happening in the
industry globally? "
Research on industry trends,
markets and segments, both global and Indian indicated
that the Indian commercial vehicle industry, though
cyclical, showed a positive secular growth trend. In
addition, the government's ambitious road development
plans are poised to create a significant increase in
the requirement for goods and passenger vehicles. India
being a developing country, the expected yearly market
growth rate is nearly 9 per cent!
Research also showed that segments
that CVBU was strong in (medium trucks) were declining;
other segments where it was not so strong [light
commercial vehicles (LCVs) and buses] were growing. Competition was intensifying and
customer expectations were rising. MD Ravi Kant's oft-quoted
statement says it all: "Customers expect European
quality at Chinese prices!"
A new direction
Clearly, CVBU needed to reorganise its business in terms
of customers and products and, most critically, develop
a strategy to build the organisation. By mid-2000, the
turnaround strategy was crystallised in the form of
a three-phase strategic business direction plan. The
first phase focused on an immediate turnaround through
cost reduction initiatives. Next was domestic and international
growth through new products and improved sales and service.
Finally long-term growth, which would come from increased
business in LCVs, new product segments and new geographies.
The strategy was captured in
the framework of the balanced scorecard (BSC), with
the objectives divided into four perspectives: finance,
customers, business processes, and learning and growth.
Driving all this was the Tata Business Excellence Model
(TBEM).
TBEM, it is said, is not
just about the management of quality, but the quality
of management. This is where CVBU's executives showed
their mettle. They worked on galvanising the entire
organisation to implement the initiative down the line,
from the corner office to the shop floor.
Managing change
"Our biggest challenge was changing the organisation's
culture. People were spread across plants and offices
all over the country, so the emphasis was on teamwork
and on highlighting the fact that competition was outside
the company, not within," says Mr Girotra.
Steering committees at every
level — from top management down to work groups
— drilled down the BSC to the employees, and held
monthly reviews. The company broke down its goals into
smaller elements which were implemented at different
times, to keep employees focused. A simple traffic light
system tracked deployment quality at every level; red
meant below target, yellow said targets had been met,
and green indicated that targets had been surpassed.
The Business Excellence
Services (BES) team helped integrate TBEM to drive the
company's business growth. It mobilised more than 200
internal and external assessors to mentor people in
need-to-improve areas. Over 300 employees were activated
to deploy 10 major quality initiatives, to be driven
by 'champions' across the organisation. Regular workshops
helped review the progress with inputs from Malcolm
Baldrige experts. "It has been a great team effort,
right down to the blue-collar workers," adds Mr
Girotra.
Upwardly mobile
To motivate its people, CVBU introduced a performance-centric
HR culture, with variable pay and a 'fast track opportunity'
scheme for talented young employees to grow faster.
Decision-making was driven downward and delegated. There
are now benchmarked HR processes to recognise employees,
send them for training programmes, and give them challenging
assignments. "We have moved beyond employee satisfaction
to employee engagement," explains Pravin Kadle,
executive director, finance and corporate affairs.
Creating customer delight
On the customer front, the company realised that they
needed clear customer segmentation. It also had to change
employee mindsets to be oriented towards customer expectations
in terms of quality and value for money products.
Management gurus from Harvard
Business School helped CVBU carry out a comprehensive
customer survey. Customers were asked to give a wish
list of small improvements. "Developing a new product
takes three to four years," explains Mr Girotra, "and
we did not have the luxury of time."
Surprisingly, the most important
thing customers wanted was better mileage. Apart from
reliability, operating cost (diesel consumption and
tyre life) emerged as the single largest factor in customer
preference. CVBU responded with the new generation EX
series, which offered improved engineering, performance
and better fuel efficiency. Not surprisingly, the vehicles
got a good response.
The company also revamped
its customer complaint management and dealership processes.
An application matrix now maps customer profiles and
vehicle usage. "This helps in enhancing features
in our products according to usage," says Mr
Girotra. The
number of dealers and service centres doubled to more
than 6,400 customer touch points in India and over 260
overseas. The company's focus on towns with a population
of more then one lakh and its programme for training
drivers has dramatically improved its reach.
Understanding customer requirements
before designing a vehicle is at the heart of the 'new
product introduction' (NPI) process. Apart from meeting
customer needs, it reduces defects and customer complaints.
This process is followed by all leading global automobile
companies and is now ingrained in Tata Motors' processes.
The recently launched Ace, a
0.75-tonne mini truck, in just five states, is a striking
example of the success of NPI. It has already generated
a demand that's almost double the company's present
manufacturing capacity for this vehicle. Putting the
customer in the driving seat is obviously the fastest
route to success.
The road ahead
CVBU's international business has been equally successful.
Three years ago, the company formulated a new strategy
for global markets. Its earlier export policy, of selling
vehicles in every market, was replaced with a new systematic
global thrust. This involved choosing products that
could build a significant market share in selected geographies,
to ensure a strong, long-term presence. The result:
the emergence of South Africa and West Asia as Tata
Motors' new success stories.
The recent acquisition of Korea's
Daewoo Commercial Vehicle Company (DWCV) and of a 21-per
cent stake in Spanish bus maker Hispano Carrocera will
also help CVBU in expanding its business globally and
developing technologically superior trucks and buses.
Two years ago, for the first
time, the company undertook an international business
customer satisfaction survey, involving dealers and
customers. "We are going beyond management and
engaging with employees and others to ask what we should
be doing. Senior executives now meet dealers directly
to get market information and feedback," says P.
G.
Shankar, head of international business.
Nearly all these developments
are corollary to the rigorous implementation of TBEM
and the BSC. Over 1,200 cross-functional teams and more
than 900 self-directed teams of operatives and white
collar employees have played an important role in cost
reduction, quality improvement and holding sales planning
courses in the field.
People from different plants
have worked together for deployment of processes. "We
are strong on process management. We created a process
management guide that extensively documents business
processes, sub-processes and their deployment, and communicates
them to all," says A. P. Arya, president, heavy and
medium commercial vehicles.
There is a sense of openness.
A scorecard on every shop floor lets people know about
their performance and where they are in terms of their
SQDCM goals (safety, quality, delivery, cost and morale).
CVBU has also implemented all the modules of the SAP
enterprise resource planning system. "No other
automobile company in the world has the same spread
and bandwidth of modules implemented," says Mr Kadle
proudly. In addition, the company put in an enterprise
risk management process last year, to protect its investments
in case of business downturns.
Customer-focussed, process-driven,
investing in employees, recognising leaders —
Tata Motors has climbed the ladder of success step by step.
The company's turnover has doubled in the last four
years. It now has a market share of over 60 per cent.
Last year, it accounted for 1.9 lakh out of the of 3.18
lakh commercial vehicles sold in India. That's not all.
CVBU is the fifth-largest commercial vehicles maker
and the second-largest bus chassis manufacturer in the
world.
But the team at CVBU is
not resting just yet. "A TBEM score of 600+ means
that the company is an emerging industry leader,"
says Mr Girotra, "so there is much more to be done
to consolidate our position, become an industry leader
and sustain it."
There are other challenges
ahead — such as rising input costs and different
emission norms for its 150 products in various segments
— as CVBU gears up to compete in the global marketplace.
Armed with strong processes and imbued with a passion
for excellence, the people at CVBU are ready to meet
them head on.
Roll of honour
No individual can create excellence; it requires teamwork
throughout the organisation. The CVBU steering committee
comprised A. P. Arya, president (H&MCV), P. M. Telang, president
(L&SCV), R. R. Akarte, VP (ERC), Shyam Mani, VP (sales
and marketing), P. G. Shankar, head (CVBU international
business), R. S. Thakur, VP (finance), M. V. Raja Rao, VP
(manufacturing), S. B. Borwankar, GM (manufacturing), and
others.
The company has received
many recognitions and awards: it was recognised as the 'Company of the
Year — 2004' and the 'Commercial Vehicle Manufacturer
of the Year — 2004'. It has also entered the 'Hall of
Fame for Balanced Scorecard' of Balanced Scorecard Collaborative
Limited, bagged the 'India Manufacturing Excellence
Award' and recognised as the sixth-best employer in
India by Hewitt.
Uploaded
on March 9, 2006
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