It was a proud moment for the Tata Motors commercial vehicles business unit (CVBU) when managing director Ravi Kant, and KC 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.
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.
"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.
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.