Monday, January 28, 2008

TVS Motors - A disciple of Japanese quality management

This interesting article appeared in Financial Time and records a remarkable turn around by TVS group after implementing TQM. It just goes to prove that superior quality reduces cost in the long term. A true life account of TVS's quest for excellence in the words of its head honcho! Editor

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By Amy Yee

Order and efficiency are hallmarks of the TVS motorbike factory near Bangalore in southern India. To direct foot traffic, arrows are painted on the shiny shop floor of India's third-largest motorcycle maker. Large banners with exhortations such as "Let Us Achieve Zero Defects" and "Quality is a Way of Life" hang across the bright facility where nearly 2,000 vehicles are built each day on neat assembly lines. Tea breaks are 9:15 to 9:22 and 14:15 to 14:22, according to a memo on the wall.

Japan's veneration for order has been fully transplanted to this TVS factory in the city of Hosur.

Venu Srinivasan, the mild-mannered 55-year-old managing director and chairman of TVS, has indoctrinated the company with the Japanese management strategy of total quality management (TQM). TVS's turnaround has hinged on principles of attention to process, consistency, transparency and employee involvement.

TQM was launched at TVS in 1989 and is credited with reviving the ailing company. Since then, TVS and sister companies in the $2.2bn TVS Group have won the prestigious Japan Quality Medal and the Deming Prize, a quality award from Japan.

TVS rolled out 923,000 motorbikes last fiscal year in India with sales growing 19 per cent to reach about $900m. It recently opened a factory in Indonesia and aims to globalise its business over the next few years.

The scenario before and after TQM reflects how far TVS has come in nearly two decades. Productivity, quality and sales have improved dramatically. Previously, the rate of "re-work" - parts plagued by faults - was 15 per cent. That figure has fallen to 100 parts per million. The factory used to make four deliveries a month to customers compared with two daily now.

It was no easy task to overhaul the family-owned company that was founded in 1911 by Mr Srinivasan's grandfather, TV Sundaram Iyengar. For three decades after 1960, India closed its markets to global competition. Imports were restricted and licences were required to start businesses, creating little incentive to improve or strive for quality.

After earning a degree in engineering from Madras University in today's Chennai, Mr Srinivasan went to the US for graduate studies, like many scions of India's business families. In 1979 he earned a master's in science and management at Purdue University in Indiana - the degree became known as an MBA in 2001 - where he received a "strong dose" of industrial engineering.

He visited factories of US automakers such as General Motors (NYSE:GM) but was unimpressed. "US factories did not have that exactness," he recalls.

A trip to Japan in 1981 and visits to the Suzuki and Honda (NYSE:HMC) factories proved pivotal. "Even the bullet train aligned exactly on the platform. People were highly motivated and committed." He was inspired by "a country that could create this kind of excellence" and sought to restore the high quality for which TVS was known in the 1940s when it ran a highly-efficient bus network and General Motors dealership.

Mr Srinivasan began reading books about TQM and "desperately tried to get hold of Japanese professors, but India was not on the radar" in the early 1980s.

The mission to restructure TVS grew more urgent in the 1980s when, profits slipped although sales grew. "That triggered the need for change. I knew that if we continued like that we wouldn't be in business."

Mr Srinivasan introduced TQM to the company in 1989 and implemented and improved it over the next nine years. Experts from Japan still visit the company.

TVS's adaptation of TQM rests on five pillars. They include policy deployment; involving every person at the company; kaizen, or continuous improvement; standardisation of processes; and new product development.

Seated at a long boardroom table at the TVS office, Mr Srinivasan takes a pen and draws a series of boxes to illustrate the "silos" that hobbled the company before. There were six layers of management. With little co-operation or communication between divisions, "most meetings were full of fault-finding and finger pointing".

Under the new regime, silos were broken down. For instance, different teams collaborated on design of new motorcycles so staff from R&D worked jointly with production and assembly.

As a result, innovation has been boosted. TVS rolled out its first 20 models in 21 years but it has produced 10 new products in the past three years alone. This year TVS expects to roll out six new models.

On the factory floor, inefficiencies were identified and weeded out. TVS used to keep 10 weeks of inventory at its factory compared with two weeks now. The assembly line suffered frequent delays. "We couldn't predict what we could supply to customers," says Mr Srinivasan. "It used to be a real mess."

Mr Srinivasan recalls that previously the factory floor was haphazardly organised. "One man operated one machine with another man doing inspections. Relative to today it would be dirty." Today employees are trained to operate different machines, allowing for a leaner workforce.

In traditionally hierarchical India, Mr Srinivasan shocked employees by picking up cigarette butts from the factory floor in keeping with one of the pillars of involving every employee.

He started tracking all the company's statistics and breaking them down, line by line. Figures were conveyed to employees through charts displayed in the factory.

"Everybody could see the actual graph. Before, people would fudge," says Mr Srinivasan. "But every hour productivity is displayed. We created a feedback loop."

Changing an entrenched mindset was a difficult task. "It requires a high degree of understanding between employees and management," says C. Narasimhan, formerly president of Sundaram-Clayton, the auto components firm and sister company of TVS.

But employees were encouraged to offer suggestions for improvement. "Some employees give 200 suggestions a year," says Mr Narasimhan. "Awards are given for the best suggestion."

Roles of each employee are now clarified and targets clearly assigned. Results are displayed for everyone to see in order "to hold the gains". Changing his own role at TVS was also a challenge for Mr Srinivasan, whose position as family trustee shifted as the company's president became more empowered. "For me to move back and change my role took a lot of change myself," admits Mr Srinivasan. "You've got to look at yourself in the mirror honestly. But you have to make the change to get other people to make the changes you expect of them."

Thursday, January 17, 2008

Citibank India to establish Japan Desk

Citibank has now increased its focus for Japanese corporate clients in India. Looks like Japanese corporate banking business is finally viable enough in India for leading banks to set up a Japanese desk! Editor

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New Delhi, Jan 10: Global banking major Citibank India will set up a Japan Desk in New Delhi to offer banking and associated services to Japanese corporate clients in India.

The desk will offer services like cash management, trade financing, foreign exchange, lending among others, a release issued here today said.

Over the past few years, Japanese investment in Indian infrastructure, inflows touched USD 4 billion and India was high on Japan's priority, India Japan Initiative's Chairperson Geetanjali Kirloskar said.

"While other countries looked at India as a market, the Japanese have looked at India as a partner," she said.

With the setting-up of the new desk, Citi will be able to play a key role in supporting new Japanese companies that are entering into India as well as supporting existing Japanese subsidiaries in India in their expansion plans.

Japan Desk will be staffed with Japanese professionals, allowing a Japanese client interface, the release said.

Presently, Japan is the third largest FDI investor in the country and around 400 Japanese companies operate in India, including joint ventures with Indian partners.

Bureau Report

(Zeenews.com)

Wednesday, January 09, 2008

Daiichi Sankyo sets up manufacturing & research unit

Economic Times recently reported that Daiichi Sankyo had set up a FULL FLEDGED manufacturing unit in India. This marks the first such large scale initiative in manufacturing in recent times, a welcome news from non-services sector player. Editor
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5 Jan, 2008, 0103 hrs IST,Khomba Singh, TNN

NEW DELHI: The $8-billion Daiichi Sankyo Company, Japan’s second-largest pharma company, is in the process of setting up a full-fledged manufacturing and research operation in the country.

Although there are some Japanese pharma companies who have operations in India, their presence is largely limited to marketing of products independently or through local partners.

According to sources, Daiichi Sankyo will operate through a wholly owned subsidiary, Daiichi Sankyo India Pharma. The company plans to initially outsource its manufacturing to local manufactures but later on, it will set up its unit. The company would initially invest Rs 25 crore in its newly-formed subsidiary.

In addition, the Japanese parent also plans to supply and market its patented products in the Rs 30,000 crore pharma retail market in the country. Daiichi Sankyo has a strong focus on research and drug discovery and it plans to set up a research unit in India in future.

However, it would not get into pharma retailing as Indian regulations don’t allow foreign companies to directly sell to consumers. Faced with margin pressure, many American and European companies have either set up or expanded operations in India to tap the low-cost and local talent for drug manufacturing and drug discovery. However, Daiichi Sankyo would be the first major Japanese company to set up large scale operations in the country.

Sankyo, which merged with Daiichi in 2005, has a small joint venture in India. Its 39.9% holding in Unisankyo Company was brought under the merged entity. The remaining 60.1% stake in this venture is held by a group of local promoters led by Jay Soman. The JV manufactures and markets bulk drugs, pro-biotics and few pharmaceutical products.

It is learnt that through the new wholly-owned subsidiary, Daiichi Sankyo will primarily get into pharma products and formulations in cardiology and diabetology — areas where the existing JV Unisankyo is not present.

Thursday, January 03, 2008

Japanese want Indian style schooling

Is this a one-off instance being published or a sign of things to come? In any case, this is an outcome of growing understanding about India in Japan mainly due to the efforts on both sides during India-Japan friendship year in 2007. We hope many more such positives will contribute to a strengthening bilateral relationship. Editor

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Thursday January 3 2008

MITAKA (Japan): Japan is suffering a crisis of confidence these days about its ability to compete with emerging Asian rivals China and India. But even in this fad-obsessed nation, one result was never expected: a growing craze for Indian education.

Despite an improved economy, many Japanese have a sense of insecurity about the nation's schools, which once turned out students who consistently ranked at the top of international tests.

That is no longer true, which is why many people here are looking for lessons from India, the country the Japanese see as the world's ascendant education superpower. Bookstores are filled with titles like "Extreme Indian Arithmetic Drills"and "The Unknown Secrets of the Indians"

Newspapers carry reports of Indian children memorising multiplication tables far beyond nine times nine, the standard for young elementary students in Japan. And Japan's few Indian international schools are reporting a surge in applications from Japanese families.

Viewing another Asian country as a model in education, or in almost anything, would have been unheard of just a few years ago, say education experts and historians. Much of Japan has long looked down on the rest of Asia, priding itself on being the region's most advanced nation. But in the last few years, Japan has grown increasingly insecure, gripped by fear that it is being overshadowed by India and China, which are rapidly gaining in economic weight and sophistication. Grudgingly, Japan is starting to respect its neighbours.

Until now, Japanese saw China and India as backward and poor,?said Yoshinori Murai, a professor of Asian cultures at Sophia University in Tokyo. As Japan loses confidence in itself, its attitudes toward Asia are changing. It has started seeing India and China as nations with something to offer.While China has stirred more concern here as a political and economic challenger, India has emerged as the country to beat in a more benign rivalry over education. India's success in software development, Internet businesses and knowledge intensive industries in which Japan has failed to make inroads has set off more than a tinge of envy.

Most annoying for many Japanese is that the aspects of Indian education they now praise are similar to those that once made Japan famous for its work ethic and discipline: learning more at an earlier age, an emphasis on memorisation and cramming, and a focus on the basics, particularly in math and science.

The founder of the Little Angels school, Jeevarani Angelina a former oil company executive from Chennai, India, who accompanied her husband, Saraph Chandar Rao Sanku, to Japan in 1990 said she initially had difficulty persuading landlords to rent space to an Indian woman to start a school. But now, the fact that she and three of her four full-time teachers are non-Japanese Asians is a selling point.

Copyright: New York Times