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TOTAL QUALITY MANAGEMENT

ACKNOWLEDGEMENT One of the pleasant aspects of preparing a project report is the opportunity to thank those who have contributed to make this project possible. We are extremely thankful to Prof XYZ, whose active interest in the project & insight helped us to formulate, redefine implement our approach to the project. We are also thankful to our College Library & other seen unseen hands which have given us direct & indirect help in completion of this project.

THANK YOU.

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CONTENTS  Introduction of TQM.

pg no 4

 Characteristics of TQM.

pg no 7

 Fundamental Elements of TQM

pg no 7

 Classification of TQM

pg no 8

 Guideline to Improve Product Quality

pg no 16

 Dr W. Edward Deming's 14 Principles

pg no 20

 DMAIC Six Sigma approach

pg no 22

 Advantages of TQM

pg no 23

 Problems & Solutions

pg no 25

 Case no. 1 – Mahindra Group

pg no 27

 Case no. 2 – G.C.M.M.F. LTD. (AMUL) pg no 49  Recommendations on TQM

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 Introduction of Total Quality Management Major Project objectives are to: 1.

Understand what Total Quality Management (TQM) is and why it is important.

2.

Outline various definition of quality and project TQM’S viewpoint about quality.

3.

Trace the various ways TQM has been defined and give its comprehensive definition.

4.

Bring Out the characteristic features of TQM.

5.

Give special attention to the way TQM has been presented as a model.

6.

Explain the benefits of TQM.

7.

Discuss the evolution of TQM in its present from thought the four phases of inspection, SQC, Quality Assurance & TQM.

Although the concept of quality is very old, today it is perhaps the major preoccupation of organization world-wide. However, in the recent years, Total Quality Management (TQM) has captured the world-wide attention and is being adopted in many organizations, both profit & non-profit. TQM is being accepted as a management philosophy. Many organizations around the globe are conduction Organizational Development (OD) programmes to enhance quality awareness and change the attitudes of their employees. These efforts towards understandings, adopting and promoting TQM are primarily because of the changes taking place in the global economy, changing market conditions and customer’s expectations and increasing competitive pressure. Many large organizations have recognized the important contributions that TQM can make in dealing with these challenges. The objective of this chapter it to trace the evolution of TQM as a general philosophy and a set of paradigms. Attempt is also made to discuss the significant contributions of various pioneering promoters of TQM philosophy towards the design, development and application of TQM systems. Various definitions and models of TQM are also outlined is this chapter to have a preliminary but fundamental grasp over the subject.

MEANING OF TQM TQM, thus, can be considered as being constituted of two composite elements namely Quality Management meaning that aspect of the overall function that determines and implements the quality policy ; and Quality Systems meaning the collective plans, activities and events that are provided to ensure that a product, Process or service will satisfy given needs. 3

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TQM means many things to many organization. It has evolved itself to be associated more often with statistical tools and process control, than with a method of management. In its essential sense, TQM is a means of operating a business that seeks to maximize an organization’s value through maximizing customer satisfaction at the lowest possible cost and is achieved by continuously improving all processes within the organization and collaborating with people. Total Quality Management is thus based on the concepts and philosophies advocated by Juran, Deming, Crossby, and Feigenbaum. Conceptually, TQM emphasizes on:

 Top management commitment and support for quality improvement.  Creating a production oriented total quality culture.  Creating a Customer-oriented manufacturing environment.  Improving participation and teamwork  Prevention of errors at source.  Respect for humanity.  Recongnition and reward for improvement efforts.

QUALITY DEFINED ‘Quality’ though familiar to everyone has a variety of uses and meanings. The classic perception of quality is the position of a product attitude on a good-bad scale. Most people associate it with defects in products. However, quality relates not only to the product but also to the instruction for its use, to installations, to service, to marketing and so on. Quality has been defined in various ways, Some of the important definitions of quality are presented below : 1.

Quality is fitness for use (Juran, 1974).

2.

Quality is conformance to requirements (Crossby, 1984).

3.

Quality means The actual use and the selling price of the product (Feigenbaum, 1961).

Quality is the capability composite of products or services to knowingly satisfy those preconceived composite wants of the user(s) that are intelligently related to the characteristics of performance, and do not cause major overt or convert reaction or actions by other people. (Johnson, 1987). 4.

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The Totality of features and characteristics of products or services that bears on its ability to satisfy given needs (ANSI & ASAC, 1978).

5.

` Quality is, thus, both a user-oriented and a production-oriented expression. From the user’s point of view, quality is an expression of the products/services usefulness in meeting the needs and expectations and its reliability, safety, durability and so on. From the production point of view, the quality of a product is measured by the quality of its performance which depends on the quality of design and the quality of conformance. Quality of design is concerned with the stringency of the specifications for manufacturing the product. The quality of conformance is concerned with how well the manufactured product conforms to the original requirements.

Different views of quality are held by marketing, engineering and manufacturing departments. Garvin (1988) outlines these as :

Transcendent – Qualtiy as a Simple analyzable property recognized only though experience.

Product based – Quality as a precise and measurable variable.

User based – ‘Quality lies in the eyes of the beholder’

Manufacturing based – Quality as conformance to the requirements.

Value based – Quality as performance or conformance at acceptable price or cost. Quality, therefore, is

defined by the customers.

a measure of achievement of customer satisfaction.

fulfilling the customer’s needs/requirements.

value for money.

keeping one’s word.

ensuring no defects.

image of the company and customer confidence in the organisaton.

a precise and measuring variable.

utility to the society.

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 CHARACTERISTICS OF TQM: The Characteristics of TQM, as revealed from the above definitions and models are as follows: 1. TQM is customer oriented. 2. TQM requires a long term commitment for continuous improvement of all processes. 3. The success of TQM demands the leadership of top management and continuous involvement. 4. Responsibility for establishment and improvement of system lies with the management of an organisation. 5. TQM is a strategy for continuously improving performance at all levels and in all areas of responsibility.

 FOLLOWING AS THE FOUNDATIONAL ELEMENTS OF TQM. 1.

People: TQM aims at empowering people so as to accomplish optimal business results through teamwork. This involves training that focusses on communication skills, interactive skills and effective meeting skills. Such training enables people to be actively involved in the continuous improvement of products and processes and leads to improved teamwork.

2.

Continuous improvement: It involves the fundamental principle of quality, the Daming cycle and th4e PDCA (Plan, Do, Check, Action) cycle. The iteration of cycle is the never ending pursuit of excellence.

3.

Process : The use of problem solving process as a guide to analyze a problem, choose a solution, develop an action plan and evaluate implementation results ; and the use of quality improvement process for reducing customer requirements to a specification and specification to a defined work process so as to focus attention on the customer and customer requirements.

4.

Customer: TQM’s primary focus is the customer and customer satisfaction. Customer perceptions of quality that correlates with customer’s satisfaction are expected quality, satisfying quality, delightful quality, indifferent quality and reverse quality. These must be aimed at to prevent customer dissatisfaction, to meet customers’ expectations and delighted them.

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ď ś CLASSIFICATION OF TOTAL QUALITY MANAGEMNT Quality management evolution Quality management is not a recent phenomenon. Advanced civilizations that supported the arts and crafts allowed clients to choose goods meeting higher quality standards than normal goods. In societies where art and craft (and craftsmanship) were valued, one of the responsibilities of a master craftsman (and similarly for artists) was to lead their studio, train and supervise the work of their craftsmen and apprentices. The master craftsman set standards, reviewed the work of others and ordered rework and revision as necessary. One of the limitations of the craft approach was that relatively few goods could be produced, on the other hand an advantage was that each item produced could be individually shaped to suit the client. This craft based approach to quality and the practices used were major inputs when quality management was created as a management science. During the industrial revolution, the importance of craftsmen was diminished as mass production and repetitive work practices were instituted. The aim was to produce large numbers of the same goods. The first proponent in the US for this approach was Eli Whitney who proposed (interchangeable) parts manufacture for muskets, hence producing the identical components and creating a musket assembly line. The next step forward was promoted by several people including Frederick Winslow Taylor a mechanical engineer who sought to improve industrial efficiency. He is sometimes called "the father of scientific management." He was one of the intellectual leaders of the Efficiency Movement and part of his approach laid a further foundation for quality management, including aspects like standardization and adopting improved practices. Henry Ford also was important in bringing process and quality management practices into operation in his assembly lines. In Germany, Karl Friedrich Benz, often called the inventor of the motor car, was pursuing similar assembly and production practices, although real mass production was properly initiated in Volkswagen after world war two. From this period onwards, north American companies focused predominantly upon production against lower cost with increased efficiency. Walter A. Shewhart made a major step in the evolution towards quality management by creating a method for quality control for production, using statistical methods, first proposed in 1924. This became the foundation for his ongoing work on statistical quality control. W. Edwards Deming later applied statistical process control methods in the United States during World War II, thereby successfully improving quality in the manufacture of munitions and other strategically important products. Quality leadership from a national perspective has changed over the past five to six decades. After the second world war, Japan decided to make quality improvement a national imperative as part of rebuilding their economy, and sought the help of Shewhart, Deming and Juran, amongst others. W. Edwards Deming championed Shewhart's ideas in Japan from 1950 onwards. He is probably best known for his management philosophy establishing quality, productivity, and competitive position.

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He has formulated 14 points of attention for managers, which are a high level abstraction of many of his deep insights. They should be interpreted by learning and understanding the deeper insights and include: Break down barriers between departments Management should learn their responsibilities, and take on leadership Improve constantly Institute a programme of education and self-improvement

• • • •

In the 1950s and 1960s, Japanese goods were synonymous with cheapness and low quality, but over time their quality initiatives began to be successful, with Japan achieving very high levels of quality in products from the 1970s onward. For example, Japanese cars regularly top the J.D. Power customer satisfaction ratings. In the 1980s Deming was asked by Ford Motor Company to start a quality initiative after they realized that they were falling behind Japanese manufacturers. A number of highly successful quality initiatives have been invented by the Japanese (see for example on this page: Taguchi, QFD, Toyota Production System. Many of the methods not only provide techniques but also have associated quality culture aspects (i.e. people factors). These methods are now adopted by the same western countries that decades earlier derided Japanese methods. Customers recognize that quality is an important attribute in products and services. Suppliers recognize that quality can be an important differentiator between their own offerings and those of competitors (quality differentiation is also called the quality gap). In the past two decades this quality gap has been greatly reduced between competitive products and services. This is partly due to the contracting (also called outsourcing) of manufacture to countries like India and China, as well internationalization of trade and competition. These countries amongst many others have raised their own standards of quality in order to meet International standards and customer demands. The ISO 9000 series of standards are probably the best known International standards for quality management. There are a huge number of books available on quality. In recent times some themes have become more significant including quality culture, the importance of knowledge management, and the role of leadership in promoting and achieving high quality. Disciplines like systems thinking are bringing more holistic approaches to quality so that people, process and products are considered together rather than independent factors in quality management.

Quality improvement There are many methods for quality improvement. These cover product improvement, process improvement and people based improvement. In the following list are methods of quality management and techniques that incorporate and drive quality improvement— 1. 2. 3. 4. 5.

ISO 9004:2000 — Guidelines for performance improvement. ISO 15504-4: 2005 — Information technology — Process assessment — Part 4: Guidance on use for process improvement and process capability determination. QFD — Quality Function Deployment, also known as the House of Quality approach. Kaizen — 改善, Japanese for change for the better; the common English usage is continual improvement. Zero Defect Program — created by NEC Corporation of Japan, based upon Statistical Process Control and one of the inputs for the inventors of Six Sigma.

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6. 7. 8. 9. 10. 11. 12.

13. 14.

Six Sigma — 6σ, Six Sigma combines established methods such as Statistical Process Control, Design of Experiments and FMEA in an overall framework. PDCA — Plan, Do, Check, Act cycle for quality control purposes. (Six Sigma's DMAIC method (Design, Measure, Analyze, Improve, Control) may be viewed as a particular implementation of this.) Quality circle — a group (people oriented) approach to improvement. Taguchi methods — statistical oriented methods including Quality robustness, Quality loss function and Target specifications. The Toyota Production System — reworked in the west into Lean Manufacturing. Kansei Engineering — an approach that focuses on capturing customer emotional feedback about products to drive improvement. TQM — Total Quality Management is a management strategy aimed at embedding awareness of quality in all organizational processes. First promoted in Japan with the Deming prize which was adopted and adapted in USA as the Malcolm Baldrige National Quality Award and in Europe as the European Foundation for Quality Management award (each with their own variations). TRIZ — meaning "Theory of inventive problem solving" BPR — Business process reengineering, a management approach aiming at 'clean slate' improvements (That is, ignoring existing practices).

Proponents of each approach have sought to improve them as well as apply them to enterprise types not originally targeted. For example, Six Sigma was designed for manufacturing but has spread to service enterprises. Each of these approaches and methods has met with success but also with failures. Some of the common differentiators between success and failure include commitment, knowledge and expertise to guide improvement, scope of change/improvement desired (Big Bang type changes tend to fail more often compared to smaller changes) and adaption to enterprise cultures. For example, quality circles do not work well in every enterprise (and are even discouraged by some managers), and relatively few TQM-participating enterprises have won the national quality awards. There has been well publicized failures of BPR, as well as Six Sigma. Enterprises therefore need to consider carefully which quality improvement methods to adopt, and certainly should not adopt all those listed here. It is important not to underestimate the people factors, such as culture, in selecting a quality improvement approach. Any improvement (change) takes time to implement, gain acceptance and stabilize as accepted practice. Improvement must allow pauses between implementing new changes so that the change is stabilized and assessed as a real improvement, before the next improvement is made (hence continual improvement, not continuous improvement). Improvements that change the culture take longer as they have to overcome greater resistance to change. It is easier and often more effective to work within the existing cultural boundaries and make small improvements (that is Kaizen) than to make major transformational changes. Use of Kaizen in Japan was a major reason for the creation of Japanese industrial and economic strength. On the other hand, transformational change works best when an enterprise faces a crisis and needs to make major changes in order to survive. In Japan, the land of Kaizen, Carlos Ghosn led a transformational change at Nissan Motor Company which was in a financial and operational crisis. Well organized quality improvement programs take all these factors into account when selecting the quality improvement methods. 9

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Quality standards The International Organization for Standardization (ISO) created the Quality Management System (QMS) standards in 1987. These were the ISO 9000:1987 series of standards comprising ISO 9001:1987, ISO 9002:1987 and ISO 9003:1987; which were applicable in different types of industries, based on the type of activity or process: designing, production or service delivery. The standards have been regularly reviewed every few years by the International Organization for Standardization. The version in 1994 and was called the ISO 9000:1994 series; comprising of the ISO 9001:1994, 9002:1994 and 9003:1994 versions. The last revision was in the year 2000 and the series was called ISO 9000:2000 series. However the ISO 9002 and 9003 standards were integrated and one single certifiable standard was created under ISO 9001:2000. Since December 2003, ISO 9002 and 9003 standards are not valid, and the organizations previously holding these standards need to do a transition from the old to the new standards. The ISO 9004:2000 document gives guidelines for performance improvement over and above the basic standard (ISO 9001:2000). This standard provides a measurement framework for improved quality management, similar to and based upon the measurement framework for process assessment. The Quality Management System standards created by ISO are meant to certify the processes and the system of an organization and not the product or service itself. ISO 9000 standards do not certify the quality of the product or service. Recently the International Organization for Standardization released a new standard, ISO 22000, meant for the food industry. This standard covers the values and principles of ISO 9000 and the HACCP standards. It gives one single integrated standard for the food industry and is expected to become more popular in the coming years in such industry. ISO has a number of standards that support quality management. One group describes processes (including ISO 12207 & ISO 15288) and another describes process assessment and improvement ISO 15504. The Software Engineering Institute has its own process assessment and improvement methods, called CMMi (Capability Maturity Model — integrated) and IDEAL respectively.

Business benefits of ISO 14000 This section identifies typical benefits for organizations of implementing ISO 14000 standards. Most managers will try to avoid pollution that could cost the company a fine for infringing environmental legislation. But better managers will agree that doing only just enough to keep the company out of trouble with government inspectors is a rather weak and reactive approach to business in today's environment-conscious world. The ISO 14000 standards are practical tools for the manager who is not satisfied with mere compliance with legislation – which may be perceived as a cost of doing business. They are for the

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proactive manager with the vision to understand that implementing a strategic approach can bring return on investment in environment-related measures. The systematic ISO 14001:2004 approach requires the organization to take a hard look at all areas where its activities have an environmental impact. And it can lead to benefits like the following:     

reduced cost of waste management savings in consumption of energy and materials lower distribution costs improved corporate image among regulators, customers and the public framework for continual improvement of environmental performance.

The manager who is "too busy managing the business" to listen to good sense about environmental management could actually be costing the business, instead of achieving benefits like those above. Certification

(i)

Certification is not a requirement of any of ISO's management system standards. This section provides a basic understanding of what certification and related terms mean.

(b)

Certification, registration and accreditation

In the context of ISO 9001:2000 or ISO 14001:2004, “certification” refers to the issuing of written assurance (the certificate) by an independent external body that it has audited a management system and verified that it conforms to the requirements specified in the standard. “Registration” means that the auditing body then records the certification in its client register. So, the organization’s management system has been both certified and registered. Therefore, in the ISO 9001:2000 or ISO 14001:2004 context, the difference between the two terms is not significant and both are acceptable for general use. “Certification” is the term most widely used worldwide, although registration is often preferred in North America, and the two are used interchangeably. On the contrary, using “accreditation” as an interchangeable alternative for certification or registration is a mistake, because it means something different. In the ISO 9001:2000 or ISO 14001:2004 context, accreditation refers to the formal recognition by a specialized body – an accreditation body – that a certification body is competent to carry out ISO 9001:2000 or ISO 14001:2004 certification in specified business sectors. In simple terms, accreditation is like certification of the certification body. Certificates issued by accredited certification bodies may be perceived on the market as having increased credibility.

Quality terms •

Quality Improvement can be distinguished from Quality Control in that Quality Improvement is the purposeful change of a process to improve the reliability of achieving an outcome.

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• •

Quality Control is the ongoing effort to maintain the integrity of a process to maintain the reliability of achieving an outcome. Quality Assurance is the planned or systematic actions necessary to provide enough confidence that a product or service will satisfy the given requirements for quality.

Implementation of Total Quality Management (TQM) Total Quality Management is a management approach that originated in the 1950's and has steadily become more popular since the early 1980's. Total Quality is a description of the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs. The culture requires quality in all aspects of the company's operations, with processes being done right the first time and defects and waste eradicated from operations. Total Quality Management, TQM, is a method by which management and employees can become involved in the continuous improvement of the production of goods and services. It is a combination of quality and management tools aimed at increasing business and reducing losses due to wasteful practices. Some of the companies who have implemented TQM include Ford Motor Company, Phillips Semiconductor, SGL Carbon, Motorola and Toyota Motor Company. The Concept of Continuous Improvement by TQM TQM is mainly concerned with continuous improvement in all work, from high level strategic planning and decision-making, to detailed execution of work elements on the shop floor. It stems from the belief that mistakes can be avoided and defects can be prevented. It leads to continuously improving results, in all aspects of work, as a result of continuously improving capabilities, people, processes, technology and machine capabilities. Continuous improvement must deal not only with improving results, but more importantly with improving capabilities to produce better results in the future. The five major areas of focus for capability improvement are demand generation, supply generation, technology, operations and people capability. A central principle of TQM is that mistakes may be made by people, but most of them are caused, or at least permitted, by faulty systems and processes. This means that the root cause of such mistakes can be identified and eliminated, and repetition can be prevented by changing the process.1 There are three major mechanisms of prevention: 1. 2.

Preventing mistakes (defects) from occurring (Mistake - proofing or Poka-Yoke). Where mistakes can't be absolutely prevented, detecting them early to prevent them being passed down the value added chain (Inspection at source or by the next operation).

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3.

Where mistakes recur, stopping production until the process can be corrected, to prevent the production of more defects. (Stop in time).

Implementation Principles and Processes A preliminary step in TQM implementation is to assess the organization's current reality. Relevant preconditions have to do with the organization's history, its current needs, precipitating events leading to TQM, and the existing employee quality of working life. If the current reality does not include important preconditions, TQM implementation should be delayed until the organization is in a state in which TQM is likely to succeed. If an organization has a track record of effective responsiveness to the environment, and if it has been able to successfully change the way it operates when needed, TQM will be easier to implement. If an organization has been historically reactive and has no skill at improving its operating systems, there will be both employee skepticism and a lack of skilled change agents. If this condition prevails, a comprehensive program of management and leadership development may be instituted. A management audit is a good assessment tool to identify current levels of organizational functioning and areas in need of change. An organization should be basically healthy before beginning TQM. If it has significant problems such as a very unstable funding base, weak administrative systems, lack of managerial skill, or poor employee morale, TQM would not be appropriate.5 However, a certain level of stress is probably desirable to initiate TQM. People need to feel a need for a change. Kanter (1983) addresses this phenomenon be describing building blocks which are present in effective organizational change. These forces include departures from tradition, a crisis or galvanizing event, strategic decisions, individual "prime movers," and action vehicles. Departures from tradition are activities, usually at lower levels of the organization, which occur when entrepreneurs move outside the normal ways of operating to solve a problem. A crisis, if it is not too disabling, can also help create a sense of urgency which can mobilize people to act. In the case of TQM, this may be a funding cut or threat, or demands from consumers or other stakeholders for improved quality of service. After a crisis, a leader may intervene strategically by articulating a new vision of the future to help the organization deal with it. A plan to implement TQM may be such a strategic decision. Such a leader may then become a prime mover, who takes charge in championing the new idea and showing others how it will help them get where they want to go. Finally, action vehicles are needed and mechanisms or structures to enable the change to occur and become institutionalized.

Process Oriented Management V/S Result Oriented Management:

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“Let’s consider this,” said the professor. “How is Process Oriented Management (PROM) different from Result Oriented Management (ROM)? Is it that in Process Oriented Management, you don’t bother about the result? No. That is not the case. Process oriented management is based on the paradigm (mindset) that the result is the effect of a number of causes, If we concentrate on the causes an ensure that the causes operate exactly as the way we want to, the result is bound to happen (barring a random element that is uncontrollable by its very nature, such as major earthquake.) Since results are bound to happen when the causes are perfected, Process Oriented Management recommends that we stop worrying about the result. (Incidentally, the philosophy of ‘karmanye wadhikaraste ma phaleshu kadachana” implies the same thing; concentrate on perfecting the causes in the process and the result is bound to come since the result is bouondto be achieved, we can therefore, forget about it. This philosophy is often misunderstood as ‘keep working without caring for the result’) Process oriented management is deeply concerned about the result. An analogy might help. A student is told “Get good marks, I don’t care how.” What kind of management is it” Is it good? Another student is told, “You must get the marks, so find out the correct way to study, and study with regularity and diligence.” Would this policy work? Which kind of management would you like to use in your organization? Western management has gone too far with result oriented management; managers find that they have to produce result by hook or by crook. Naturally they find that producing result is a marathon exercise every time. In Process Oriented Management, you first study the process. What is the difference between a process and an operation? A Process is summation of activities such as operations, inspections, delays, storage, transports, and every thing else that happens between the beginning and the end of the process. In contrast, an Operation does not include inspection, delays an all the other aspects. There are two types operations: ‘Do’ and ‘Make ready’. For instance, warming up an electric iron till it reaches the desired temperature is a ‘make ready’ operation, while ‘ironing’ is a ‘do’ operation. There are tow types of activities: Value Adding Activities (VA) and Non Value Adding Activities (NVA). By definition, Value Adding Activities are those that add value to product as seen from the customer’s point of view. All others are Non Value Adding activities. Even ‘make ready’ operations are NVA’s. Process oriented management first classifies all activities performed as VA or NVA and attacks Non Value Adding activities first! This is because if you conduct actual studies on any process, you are most likely to find that the amount of time spent of Non Value Adding activities exceeds the amount of time spent of Value Adding activities. Typically, result oriented management attacks Value Adding activities and tries to make them more efficient in the belief that it is only the VA activities that matter. They often end up making VA more efficient and losing more than what was gained because the NVA, that were ignored, increased enormously.

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Many companies have increased production rate; simultaneously increasing inventories (storage, delays and transports). They often find that the bottom line does not improve; though the production rate has increase. They can’t understand why. Now, having learned about process oriented management, we can understand the reason”. We should first have a clear understanding of the entire process in terms of all those activities, which are ‘Value Adding’ and ‘Non Value Adding’. Normally the NVA activities are much more in number and the time taken for the NVA activities is also very large as compared to the VA activities. The NVA activities should be eliminated be eliminated or mad efficient in terms of time taken, till they become equivalent to the VA activities in terms of time taken. Now, both the VA and NVA activities should be simultaneously considered for improvement.

 GUIDELINES TO BE FOLLOW TO IMPROVE QUALITY OF PRODUCT. This document introduces the eight quality management principles on which the quality management system standards of the revised ISO 9000:2000 series are based. These principles can be used by senior management as a framework to guide their organizations towards improved performance. The principles are derived from the collective experience and knowledge of the international experts who participate in ISO Technical Committee ISO/TC 176, Quality management and quality assurance, which is responsible for developing and maintaining the ISO 9000 standards. The eight quality management principles are defined in ISO 9000:2000, Quality management systems Fundamentals and vocabulary, and in ISO 9004:2000, Quality management systems Guidelines for performance improvements. This document gives the standardized descriptions of the principles as they appear in ISO 9000:2000 and ISO 9004:2000. In addition, it provides examples of the benefits derived from their use and of actions that managers typically take in applying the principles to improve their organizations' performance. Principle 1: Customer focus Organizations depend on their customers and therefore should understand current and future customer needs, should meet customer requirements and strive to exceed customer expectations. Key benefits:   

Increased revenue and market share obtained through flexible and fast responses to market opportunities. Increased effectiveness in the use of the organization's resources to enhance customer satisfaction. Improved customer loyalty leading to repeat business.

Applying the principle of customer focus typically leads to:

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Researching and understanding customer needs and expectations.  Ensuring that the objectives of the organization are linked to customer needs and expectations.  Communicating customer needs and expectations throughout the organization.  Measuring customer satisfaction and acting on the results.  Systematically managing customer relationships.  Ensuring a balanced approach between satisfying customers and other interested parties (such as owners, employees, suppliers, financiers, local communities and society as a whole). 

Principle 2: Leadership Leaders establish unity of purpose and direction of the organization. They should create and maintain the internal environment in which people can become fully involved in achieving the organization's objectives. Key benefits:   

People will understand and be motivated towards the organization's goals and objectives. Activities are evaluated, aligned and implemented in a unified way. Miscommunication between levels of an organization will be minimized.

Applying the principle of leadership typically leads to:       

Considering the needs of all interested parties including customers, owners, employees, suppliers, financiers, local communities and society as a whole. Establishing a clear vision of the organization's future. Setting challenging goals and targets. Creating and sustaining shared values, fairness and ethical role models at all levels of the organization. Establishing trust and eliminating fear. Providing people with the required resources, training and freedom to act with responsibility and accountability. Inspiring, encouraging and recognizing people's contributions.

Principle 3: Involvement of people People at all levels are the essence of an organization and their full involvement enables their abilities to be used for the organization's benefit. Key benefits:   

Motivated, committed and involved people within the organization. Innovation and creativity in furthering the organization's objectives. People being accountable for their own performance.

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People eager to participate in and contribute to continual improvement.

Applying the principle of involvement of people typically leads to:       

People understanding the importance of their contribution and role in the organization. People identifying constraints to their performance. People accepting ownership of problems and their responsibility for solving them. People evaluating their performance against their personal goals and objectives. People actively seeking opportunities to enhance their competence, knowledge and experience. People freely sharing knowledge and experience. People openly discussing problems and issues.

Principle 4: Process approach A desired result is achieved more efficiently when activities and related resources are managed as a process. Key benefits:   

Lower costs and shorter cycle times through effective use of resources. Improved, consistent and predictable results. Focused and prioritized improvement opportunities.

Applying the principle of process approach typically leads to:      

Systematically defining the activities necessary to obtain a desired result. Establishing clear responsibility and accountability for managing key activities. Analysing and measuring of the capability of key activities. Identifying the interfaces of key activities within and between the functions of the organization. Focusing on the factors such as resources, methods, and materials that will improve key activities of the organization. Evaluating risks, consequences and impacts of activities on customers, suppliers and other interested parties.

Principle 5: System approach to management Identifying, understanding and managing interrelated processes as a system contributes to the organization's effectiveness and efficiency in achieving its objectives. Key benefits:  

Integration and alignment of the processes that will best achieve the desired results. Ability to focus effort on the key processes.

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Providing confidence to interested parties as to the consistency, effectiveness and efficiency of the organization.

Applying the principle of system approach to management typically leads to:       

Structuring a system to achieve the organization's objectives in the most effective and efficient way. Understanding the interdependencies between the processes of the system. Structured approaches that harmonize and integrate processes. Providing a better understanding of the roles and responsibilities necessary for achieving common objectives and thereby reducing cross-functional barriers. Understanding organizational capabilities and establishing resource constraints prior to action. Targeting and defining how specific activities within a system should operate. Continually improving the system through measurement and evaluation.

Principle 6: Continual improvement Continual improvement of the organization's overall performance should be a permanent objective of the organization. Key benefits:   

Performance advantage through improved organizational capabilities. Alignment of improvement activities at all levels to an organization's strategic intent. Flexibility to react quickly to opportunities.

Applying the principle of continual improvement typically leads to: Employing a consistent organization-wide approach to continual improvement of the organization's performance.  Providing people with training in the methods and tools of continual improvement.  Making continual improvement of products, processes and systems an objective for every individual in the organization.  Establishing goals to guide, and measures to track, continual improvement.  Recognizing and acknowledging improvements. 

Principle 7: Factual approach to decision making Effective decisions are based on the analysis of data and information Key benefits: 

Informed decisions.

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 

An increased ability to demonstrate the effectiveness of past decisions through reference to factual records. Increased ability to review, challenge and change opinions and decisions.

Applying the principle of factual approach to decision making typically leads to:    

Ensuring that data and information are sufficiently accurate and reliable. Making data accessible to those who need it. Analysing data and information using valid methods. Making decisions and taking action based on factual analysis, balanced with experience and intuition.

Principle 8: Mutually beneficial supplier relationships An organization and its suppliers are interdependent and a mutually beneficial relationship enhances the ability of both to create value Key benefits:   

Increased ability to create value for both parties. Flexibility and speed of joint responses to changing market or customer needs and expectations. Optimization of costs and resources.

Applying the principles of mutually beneficial supplier relationships typically leads to:       

 1.

2.

Establishing relationships that balance short-term gains with long-term considerations. Pooling of expertise and resources with partners. Identifying and selecting key suppliers. Clear and open communication. Sharing information and future plans. Establishing joint development and improvement activities. Inspiring, encouraging and recognizing improvements and achievements by suppliers.

Dr W. Edward Deming's 14 Principles Constancy of purpose: Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short term profitability, with a plan to become competitive, to stay in business, and to provide jobs. The new philosophy: Adopt the new philosophy. We are in a new economic age, created in Japan. We can no longer live with commonly accepted levels of delays, mistakes, defective materials and defective workmanship. Transformation of Western management style is necessary to halt the continued decline of business and industry.

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3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

Cease dependence on mass inspection: Eliminate the need for mass inspection as the way of life to achieve quality by building quality into the product in the first place. Require statistical evidence of built in quality in both manufacturing and purchasing functions. End lowest tender contracts: End the practice of awarding business solely on the basis of price tag. Instead require meaningful measures of quality along with price. Reduce the number of suppliers for the same item by eliminating those that do not qualify with statistical and other evidence of quality. The aim is to minimize total cost, not merely initial cost, by minimizing variation. This may be achieved by moving toward a single supplier for any one item, on a long term relationship of loyalty and trust. Purchasing managers have a new job, and must learn it. Improve every process: Improve constantly and forever every process for planning, production, and service. Search continually for problems in order to improve every activity in the company, to improve quality and productivity, and thus to constantly decrease costs. Institute innovation and constant improvement of product, service, and process. It is management's job to work continually on the system (design, incoming materials, maintenance, improvement of machines, supervision, training, retraining). Institute training on the job: Institute modern methods of training on the job for all, including management, to make better use of every employee. New skills are required to keep up with changes in materials, methods, product and service design, machinery, techniques, and service. Institute leadership: Adopt and institute leadership aimed at helping people do a better job. The responsibility of managers and supervisors must be changed from sheer numbers to quality. Improvement of quality will automatically improve productivity. Management must ensure that immediate action is taken on reports of inherited defects, maintenance requirements, poor tools, fuzzy operational definitions, and all conditions detrimental to quality. Drive out fear: Encourage effective two way communication and other means to drive out fear throughout the organization so that everybody may work effectively and more productively for the company. Break down barriers: Break down barriers between departments and staff areas. People in different areas, such as Leasing, Maintenance, Administration, must work in teams to tackle problems that may be encountered with products or service. Eliminate exhortations: Eliminate the use of slogans, posters and exhortations for the work force, demanding Zero Defects and new levels of productivity, without providing methods. Such exhortations only create adversarial relationships; the bulk of the causes of low quality and low productivity belong to the system, and thus lie beyond the power of the work force. Eliminate arbitrary numerical targets: Eliminate work standards that prescribe quotas for the work force and numerical goals for people in management. Substitute aids and helpful leadership in order to achieve continual improvement of quality and productivity. Permit pride of workmanship: Remove the barriers that rob hourly workers, and people in management, of their right to pride of workmanship. This implies, among other things, abolition of the annual merit rating (appraisal of performance) and of Management by Objective. Again, the responsibility of managers, supervisors, foremen must be changed from sheer numbers to quality. Encourage education: Institute a vigorous program of education, and encourage self improvement for everyone. What an organization needs is not just good people; it needs people that are improving with education. Advances in competitive position will have their roots in knowledge. Top management commitment and action: Clearly define top management's permanent commitment to ever improving quality and productivity, and their obligation to implement all of these principles. Indeed, it is not enough that top management commit themselves for life to quality and productivity. They must know what it is that they are committed to-that is, what they must do. Create a structure in top management that will push every day on the preceding 13 20

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Points, and take action in order to accomplish the transformation. Support is not enough: action is required!

DMAIC six sigma approach. The six sigma approach for projects is DMAIC (define, measure, analyze, improve and control). These steps are the most common six sigma approach to project work. Some organizations omit the D in DMAIC because it is really management work. With the D dropped from DMAIC the Black Belt is charged with MAIC only in that six sigma approach. We believe define is too important be left out and sometimes management does not do an adequate job of defining a project. Our six sigma approach is the full DMAIC. Define (DMAIC). Define is the first step in our six sigma approach of DMAIC. DMAIC first asks leaders to define our core processes. It is important to define the selected project scope, expectations, resources and timelines. The definition step in the six sigma approach identifies specifically what is part of the project and what is not, and explains the scope of the project. Many times the first passes at process documentation are at a general level. Additional work is often required to adequately understand and correctly document the processes. As the saying goes “The devil is in the details.� Measure (DMAIC). Many think when they start a journey the most important thing to know is where they are going. While we agree knowing where you want to go is very important, we believe some of the first information you need before starting any journey is your current location. The six sigma approach asks the Black Belt project manager to quantify and benchmark the process using actual data. At a minimum consider the mean or average performance and some estimate of the dispersion or variation (maybe even calculate the standard deviation). Trends and cycles can also be very revealing. The two data points and extrapolate to infinity is not a six sigma approach. Process capabilities can be calculated once there is performance data, Analyze (DMAIC). Once the project is understood and the baseline performance documented and verified that there is real opportunity, it is time with the six sigma approach to do an analysis of the process. In this step, the six sigma approach applies statistical tools to validate root causes of problems. Any number of tools and tests can be used. The objective is to understand the process at a level sufficient to be able to formulate options for improvement. We should be able to compare the various options with each other to determine the most promising alternatives. As with many activities, balance must be achieved. Superficial analysis and understanding will lead to unproductive options being selected, forcing recycle through the process to make improvements. At the other extreme is the paralysis of analysis. Striking the appropriate balance is what makes the six sigma Black Belt highly valuable. 21

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Improve (DMAIC). During the improve step of the six sigma approach ideas and solutions are put to work. The six sigma Black Belt has discovered and validated all known root causes for the existing opportunity. The six sigma approach requires Black Belts to identify solutions. Few ideas or opportunities are so good that all are an instant success. As part of the six sigma approach there must be checks to assure that the desired results are being achieved. Some experiments and trials may be required in order to find the best solution. When making trials and experiments it is important that all project associates understand that these are trials and really are part of the six sigma approach. Control (DMAIC) Many people believe the best performance you can ever get from a process is at the very beginning. Over time there is an expectancy that slowly things will get a little worse until finally it is time for another major effort towards improvement. Contrasted with this is the Kaizen approach that seeks to make everything incrementally better on a continuous basis. The sum of all these incremental improvements can be quite large. As part of the six sigma approach performance tracking mechanisms and measurements are in place to assure, at a minimum, that the gains made in the project are not lost over a period of time. As part of the control step we encourage sharing with others in the organization. With this the six sigma approach really starts to create phenomenal returns, ideas and projects in one part of the organization are translated in a very rapid fashion to implementation in another part of the organization.

 POTENTIAL BENEFITS OF TQM: The advantages of adopting TQM system compared to conventional quality system are numerous and are outlined below: 1.

TQM helps to focus clearly on the needs of the market. The traditional approach of quality control focuses on the technical details of a product so as to satisfy the customer. However, the customer longs for different satisfaction perspectives which are generally overlooked in the traditional approach. The needs change from person to person and also from place to place. As TQM focuses on the concept of universality, it tries to abstract the satisfaction perceptions of market and thus helps the organisation to identify and meet the requirements of the market in a better way.

2.

TQM facilitates to aspire for a top quality performer in every sphere of activity. It is a well accepted fact that the negative attitudes of employees and non-participative culture of the organisation’s success, growth and prosperity. TQM emphasises, on bringing about attitudinal and cultural change through promotion of participative work culture and effective team-work. This serves to satisfy the higher human needs of recognition and self-development and enhances employee’s interest in the job. The employee’s performance, thus, is not restricted to the product or service areas but reflects in other spheres as well.

3.

It channelises the procedures necessary to achieve quality performance. Quality in its true sense can not be achieved instantly. It requires a systematic and a long-term planning and strategic approach. By focusing on defining the quality policies, goals and objectives, and

22

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communicating these properly to one and all in the organisation, adopting SQC and SPC techniques and developing and using a system of evaluation, the organisations can channelize their efforts to achieve the desired and objectivated quality performance. 4.

It helps examine critically and continuously all processes to remove non-productive activities and waste. The organisations always aim at improving productivity as it leads to reduction in cost resulting in increase in profitability. The efforts in this direction are contributed because of the formation of quality improvement teams which meet regularly and through a systematic approach which tries to remove non-productive activity. A continuous effort to identify the problems and resolve them helps to reduce the waste. The culture of well being thus improves housekeeping, cost-effectiveness and safety.

5.

It gears organisations to fully understand the competition and develop an effective combating strategy. The dynamic changes in the global market and the open market policies adopted by a large number of organisations ha resulted in increased competition and for many organisations the survival has become a key issue. For this cause, it is essential for the organisations to understand the competitions and develop and adopt suitable strategies to meet the challenge. As TQM helps to understand the pulse of the customer and thus the market, it gives an edge to the organisation to meet the competition.

6.

It helps to develop good procedures for communication and acknowledging good work. Improper procedure and inadequate communication are yet another bane of many organisations, which result in misunderstanding, confusion, low productivity, duplication of efforts, poor quality, low morale and so on. TQM brings together members of various related sections, departments and different levels of management thereby providing an effective vehicle of communication and interaction.

7.

It helps to review the process needed to develop the strategy of never ending improvement. Quality improvement efforts cannot be restricted to any time period. They nee to be continuous to meet the dynamic challenges. TQM emphasises on a continuous and periodic review so as to make the required changes. The benefits derived by the organisations, therefore, are many and multi-faceted. Many of these can be measured in quantitative terms. However, the intangible benefits, which include enrichment of the quality of the worklife and many more are not quantifiable. At the same time, it has to be established whether they do occur or not in order to prove or disprove the efficacy of the concept. This can be assessed by a well-planned research project or by carrying out an opinion survey periodically. The tangible and intangible benefits of TQM are as presented

ďƒ˜ ADVANTAGES OF TOTAL QUALITY MANAGEMENT. TQM is a collaborative system. It can be conceptualized as a network of processes and activities through which various people in the organization can see different aspects of a problem and can constructively explore their own limited vision of what is possible. TQM thus is an interdepartmental and inter organizational effort to address problems of improvement. TQM provides a foundation for moving towards answering the questions of why, how and with what consequences people participate in multiple dimensional problem solving. 23

TOTAL QUALITY MANAGEMENT

TQM does not rely solely on the chain of command; it develops multi-channel interactive networks throughout the organizations. TQM is essential to establish cooperative links within the organization that can span the various gaps among people to enable coordinate the action. TQM can be viewed to play a transformational role within the organization. Transformational changes occur only when hard issues like budget, manufacturing marketing, disturbing and so on are blended with soft issues like values, culture, vision, leadership style, innovative behavior and so on. THE ISSUES ARE ( MAY BE USE FOR PRESENTATION)  HOW DO WE GET EVERYBODY TO WORK TOGETHER ( Team Player)  HOW DO WE MAINTIN THEIR INVOLVEMNT (Interest/Motivation)  HOW DO WE MAKE THEM CONTIBUTE THEIR BEST (10% stretch game)  HOW DO WE CREATE THEIR SATISFACTION  HOW DO WE CONTINUOUSLY IMPROVE

Problems/Issues

Situation ABC bank is one of the biggest banks in Asia established 85 years back. Recently it was faced with some problems such as increased. Customer complaints, inconsistent service at the front counter, unbalanced investment resulting in reduced profit margins and a significant drop in customers.

Solution: The Organization, therefore, set up a quality improvement team which took up a ‘Customer Care’ program to bring about a change in managing customer service. The program primarily focused on trouble shooting, customer service improvement and improving the management and staff relations. In building quality this, the groups were composed of people from all levels and no status titles were assigned. Groups were set up keeping in view the group dynamics and small group bonding principles in mind. The workshops were arranged for the groups focusing on a super ordinate goal to put the ‘Customer First’ as a philosophy. The workshops opened with personal value searching session so as to create a motive for action. To further the value motive the prospects of personal growth were reviewed. A congruence between personal value and organizational goal was established. The workshop programmes emphasized on creative problem solving approach to permit innovation, and challenge the existing cultural norms. During the workshops the culture, work environment and attitudes towards customers in the banking section were discussed openly, resulting in developing a sense of trust and commitment amongst participants. 24

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Through these workshops a network of committed people was established across the branches. To promote commitment and strong bonding, the rewards were given. The process percolated downwards and the cultural change upwards. Thus, by stepping outside the system and focusing on motivation and reward, the organization brought about a necessary cultural change to keep the satisfaction of the customer as a primary goal of all the employee.

TQM FAILURES CASE EXAMPLE: Mr. Pandit, President of G.T. Electronics, read a lot about the TQM. He instructed the subordinates to arrange a meeting with all department heads and plan to implement TQM in G.T. Electronics. Mr. Pandit personally addressed the meeting and subsequently also wrote an enthusiastic article about TQM in the company newsletter. He sent the top managers for TQM training programs and declared that the TQM be initiated. However, he himself later got involved with joint ventures in Europe. The TQM program was forgotten. When he returned to the country. After few months, he found that very few people showed interest in TQM. The earlier initiative and interest waned out because of the CEO’s lack of convication.

Academic resources International Journal of Productivity and Quality Management, ISSN 1746-6474, Inderscience International Journal of Quality & Reliability Management, ISSN: 0265-671X, Emerald Publishing Group OUT OF THE CRISES-WRITTEN BY EDWARDS W. DEMINGS THE TOYOTA WAY -WRITTEN BY STEPHEN R. COVEY

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CASE NO 1.

COMPANY’S NAME MAHINDRA & MAHINDRA GROUP. – [Farm Equipment Sector]  Mission Statement Our core values are influenced by our past, tempered by our present and are designed to shape our future. They are an amalgam of what we have been, what we are and what we want to be. These values are the compass that will guide our actions, both personal and corporate. They are: •

Good corporate citizenship As in the past, we will continue to seek long term success that is in alignment with our country's needs. We will do this without compromising on ethical business standards. Professionalism We have always sought the best people and given them the freedom and the opportunity to grow. We will continue to do so. We will support innovation and well-reasoned risk-taking, but will demand performance. Customer first We exist and prosper only because of our customers. We will respond to their changing needs and expectations speedily, courteously and effectively. Quality focus Quality is the key to delivering value for money to our customers. We will make quality a driving value in our work, in our products and in our interactions with others. We will do it "first time right".

Dignity of the individual We value individual dignity, uphold the right to express disagreement and respect the time and efforts of others. Through our actions, we nurture fairness, trust and transparency.

 Objective 26

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Our Core Purpose Indians are second to none in the world. The Founders of our nation and of our company passionately believed this. We will prove them right by believing in ourselves and by making Mahindra & Mahindra Ltd. known worldwide for the quality, durability and reliability of its products and services.

Goals 1.

The Core Purpose and Core Values of M & M

A.

The Core Purpose

"The Indians are second to none in the World. The founders of our Nation and of our Company passionately believed this. We will prove them right by believing in ourselves and making Mahindra and Mahindra Ltd known Worldwide for Quality, Durability and reliability of its Products and Services". B.

The Core values

1. 2. 3. 4. 5.

Good Corporate Citizenship Professionalism Customer First Quality Focus Dignity of the Individuals

2. M & M organization Since 1994 M & M is organized into six Sectors, each a Strategic Business Unit, as Follows 1. 2. 3. 4. 5. 6.

Automotive Sector Farm Equipment Sector (FES) Automotive Components Sector Infrastructure Sector Trade and Financial Sector Telecom and Software Sector

ď ś INTROUDUCTION OF CO. & THEIR PRACTICES The US $6.7 billion Mahindra Group is among the top 10 industrial houses in India. Mahindra & Mahindra is the only Indian company among the top tractor brands in the world. Mahindra’s Farm Equipment Sector has recently won the Japan Quality Medal, the only tractor company worldwide to be bestowed this honour. It also holds the distinction of being the only tractor company worldwide to win the Deming Prize. Mahindra is the market leader in multi-utility vehicles in India. It made a milestone entry into the passenger car segment with the Logan.

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The Group has a leading presence in key sectors of the Indian economy, including the financial services, trade and logistics, automotive components, information technology, after-market and infrastructure development. With over 62 years of manufacturing experience, the Mahindra Group has built a strong base in technology, engineering, marketing and distribution which are key to its evolution as a customercentric organization. The Group employs over 50,000 people and has several state-of-the-art facilities in India and overseas. The Mahindra Group has ambitious global aspirations and has a presence on five continents. Mahindra products are today available on every continent except Antarctica. M&M has one tractor manufacturing plant in China, three assembly plants in the United States and one at Brisbane, Australia. It has made strategic acquisitions across the globe including Stokes Forgings (UK), Jeco Holding AG (Germany) and Schoneweiss & Co GmbH (Germany). Its global subsidiaries include Mahindra Europe Srl. based in Italy, Mahindra USA Inc. and Mahindra South Africa. M&M has entered into partnerships with international companies like Renault SA, France, and International Truck and Engine Corporation, USA. The US based Reputation Institute recently ranked Mahindra among the top 10 Indian companies in its ‘Global 200: The World’s Best Corporate Reputations’ list.

 Background/History of Co. Foundation of organisation This company was founded by two Mahindra brothers - Jagdish Chandra and Kailash Chandra in the year 1945. Around this time, Independence for India was seen as a certainty and the National Leaders of that era had given a call to all Indians, especially to the youth, to contribute their best in the 'Building of a strong and self reliant Nation'. This had prompted the Mahindra brothers to leave their then existing professions and start this new venture. Few groups can identify as closely with India's destiny and industrial progress as the Mahindra Group. In fact, Mahindra is like a microcosm of India. Both were born around the same time, had the same aspirations and both experienced the inevitable troughs

and crests in the journey towards their goals. And both continue to march on the path to progress and global recognition.

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The birth of Mahindra & Mahindra began when K.C. Mahindra visited the United States of America as Chairman of the India Supply Mission. He met Barney Roos, inventor of the rugged 'general purpose vehicle' or Jeep and had a flash of inspiration: wouldn't a vehicle that had proved its invincibility on the battlefields of World War II be ideal for India's rugged terrain and its kutcha rural roads? Swift action followed thought. The Mahindra brothers joined hands with a distinguished gentleman called Ghulam Mohammed. And, on October 2nd, 1945, Mahindra & Mohammed was set up as a franchise for assembling jeeps from Willys, USA. Two years later, India became an independent nation and Mahindra & Mohammed changed its name to Mahindra & Mahindra. Ghulam Mohammed migrated to Pakistan post-partition and became the first Finance Minister of Pakistan. Since then, Mahindra & Mahindra has grown steadily in size and stature and evolved into a Group that occupies a premier position in almost all key sectors of the economy. The Group's history is studded with milestones. Each one taking the Group forward. In fact, today, its total turnover is about 6 billion dollars. These days, Mahindra is a group in a hurry, engaged in an ambitious, sustained and prolonged penetration into the global arena. Its spirit can be encapsulated in the words of the poet Robert Frost, a favourite of India's first Prime Minister, Pandit Jawaharlal Nehru: "The woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep." For Mahindra & Mahindra, this translates into many more milestones to be set up before it rests. If ever.

OTHER ACTIVITIES Mr. Mahindra is the co-founder of the Harvard Business School Association of India, an association dedicated to the promotion of professional management in India. The association has grown substantially over the years. He is Past President 2003-04 of the Confederation of Indian Industry and has also been President of the Automotive Research Association of India (ARAI). Mr. Mahindra is a Director of The National Stock Exchange of India Limited appointed under the “Public Representatives� category. He takes a keen interest in matters related to education and apart from being a Trustee of the K.C. Mahindra Education Trust, which provides scholarships to students, he is also on the Board of Governors of the Mahindra United World College of India. Mr. Mahindra is the Founder Chairman of the Mumbai Festival, which was launched in January 2005. The event was the first comprehensive festival to celebrate the rich cultural diversity of the city. 29

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He is the Co-Chairman of the International Council of the Asia Society, New York. Mr. Mahindra is a Member of the following organisations: 1. 2. 3. 4. 5.

Harvard Business School - Asia–Pacific Advisory Board Harvard Business School - Member of the Board of Dean’s Advisors Harvard University Asia Centre - Advisory Committee Asia Business Council National Sports Development Fund (NSDF), Government of India – Council and Executive Committee 6. The Nehru Centre, Mumbai - Executive Committee 7. National Council of Applied Economic Research 8. National Institute of Bank Management, Pune – Governing Board

 How are the organizations implements Quality Management.

Title: - 1. QUALITY MANAGEMENT SYSTEMS 1.1. General Requirements FES has established and documented a Quality Management System which is implemented, maintained and continuously improved for effectiveness in accordance with requirements of International Standards ISO / TS - 16949:2002 and Japan Quality Medal Guidelines. For this the organization has identified the following processes for application throughout the organization. The list of processes is as follows:LIST OF PROCESSES IN FES Sr. Process No. Number

Main Process

Process Owner

1

Business Planning

1

1a

Strategy Formulation

Strategic Planning Head

2

1b

Annual President Policy formulation

Strategic Planning Head

3

1c

Key Assumptions Documentation and Tracking

Strategic Planning Head

2

Human Resource Management (Officers)

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Sr. Process No. Number

Main Process

Process Owner

4

2a

Capability Building & Training

HR & PMS Head

5

2b

Staffing & Compensation

HR & PMS Head

6

2c

Employee Care

HR & PMS Head

7

2d

Improving Employee Morale

HR & PMS Head

8

2e

Policy Deployment

HR & PMS Head

9

2f

Performance Management

HR & PMS Head

3

Sales & Customer Operations

10

3a

Dealer Appointment Process

Channel Development Head

11

3b

Dealer Planning, Monitoring and Recognition

Channel Development Head

12

3c

Service Provision Process

Customer Care Operations Head

13

3d

Spares Management Process

Customer Care Operations Head

14

3e

Product Launch

PMMS Head

15

3f

Sales process (Mahindra Sales System MSS)

Special Projects, Sales Zonal Heads

16

3g

Customer Satisfaction Measurement Process

Customer Care Operations Head

17

3h

Marketing Planning Process

PMIS Head

4

International Operations

18

4a

Identification of New Market

Regional Head – International Operations

19

4b

Appointment of Distributors

Regional Head – International Operations

20

4c

Sales Management

Regional Head – International Operations

21

4d

Product Complaint resolution Process

Regional Head – International Operations

22

4e

Spares Management

Regional Head – International Operations

5

Product Quality

23

5a

Field Quality Assurance

Head PQPU- Field Quality

24

5b

Supplier Quality Assurance

Head PQPU- Supplier Quality

25

5c

In-house Quality Assurance

Head PQPU- In-House Quality

26

5d

IQS

Head PQPU- In-House Quality

31

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Sr. Process No. Number

Main Process

Process Owner

27

5e

Material Testing

Head PQPU- Laboratory

28

5f

Improving DR Preparedness

Head PQPU- NPD

29

5g

Receipt Inspection

Head PQPU – Receipt Inspection

6

Manufacturing

30

6a

Manufacturing Process

Head- Manufacturing

31

6b

Supply Module Process

Head- SCPC

32

6c

Manufacturing Support (Maintenance)

Head- Manufacturing

33

6d

Manufacturing Engineering Support

Head- Manufacturing

34

6e

MSA

Head- Manufacturing

35

6f

Production Planning

Head- SCPC

36

6g

Logistic Processes (Inbound and Stock yard)

Head- SCPC

37

7

Control of non conforming products

Head- PQPU, Manufacturing, SCPC,CDMM, PDRDS

8

Human Resource -Cell Members

38

8a

Competency Building & Training

Head- ER & D

39

8b

ER & D services to employees

Head- ER & D

40

8c

Improving Employee Moral

Head- ER & D

41

9a

Safety

Head- Central Maintenance & Safety

42

9b

Central Maintenance

Head- Central Maintenance & Safety

43

9c

Statutory Compliance

Head- ER & D, Central Maintenance & Safety

10

New Product Development

44

10a

MNPD- Integration process

Head- Horizons.

45

10b

Project Management

Head - Program Office

46

10c

CAE

Head- CAE

47

10d

Testing & Evaluation

Head- T & E

48

10e

Technology Support (Aggregates)

Head- Technology

49

10f

Product Improvement

Head - Product Improvement

11

Component Development

11a

New Component Development

50

Head- Component Development

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Sr. Process No. Number

Process Owner

51

11b

Target costing

52

11c

Supplier Quality Assurance and Handover Head- Component Development of components

12

Manufacturing Engineering

53

12a

Capital Resource planning & Installation process

Head- ME

54

12b

Calibration

Head – Strategic Manufacturing

55

12c

Tooling Management

Head- Strategic Manufacturing

56

12d

New Product Productionizing

Head- ME

57

12e

Tooling Design

Head- ME

58

12f

Strategic Manufacturing

Head – Strategic manufacturing

13

SSBU

13a

Supplier Up gradation

14

Business Excellence

60

14a

Continuous Improvement process

Head- Business Excellence

61

14b

Control of documents process

Head- Business Excellence

62

14c

Control of Records

Head- Business Excellence

63

14d

Establishing, Implementing & continually Head- Business Excellence improving the QMS

64

15

Purchase of Indirect Material

16

Information Technology

65

16a

Provision of IT resources

Head – IT

66

16b

Helpdesk - IT services

Head – IT

67

16c

Software Development

Head – IT

68

16d

Asset Management

Head – IT

69

17

ER Implementation process

(Cross Functional Team )

59

Main Process

Head- Component Development

Head- Supplier Up gradation

Head- Capital Purchase

The sequence of activities in each process is shown in the process flow chart with references of respective procedures, formats and work instructions. The Interrelationships between processes are shown in the attached Annexure. Criteria and methods needed to ensure both the operation and control of these processes are specified in the process matrix and flow diagrams of the processes, procedures, formats etc. wherever applicable. These are available in the documented system.

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• •

• •

• -

-

Resources are made available to support all the processes and procedures through the determination of required infrastructure for each of the processes. Monitoring, Measurement and analysis of Main processes is done through various measures as listed in Policy Deployment Documents of the ELs, PULs and PGLs & Sub Processes will be monitored. All processes shall be reviewed once in a year in the month of April and modified if necessary. Actions are implemented to achieve planned results and continual improvements of these processes. The outsourced processes under the scope of this manual are- The Strategic Sourcing Business Unit (SSBU) processes. The supplier is selected by this unit and is formally approved for supplying components to FES which suffice the delivery and quality requirements. However, the inter phase of SSBU with various PUs at FES is as follows The PQPU is responsible for monitoring & improving supplier Quality and is responsible for Quality Assurance of existing Supplier Component combination. Process No.5b. Supply Modules from SCPC PU are responsible for procurement of material from the suppliers approved by SSBU with SOB and Pricing guidelines. The order is put on supplier as per production plan and market requirements. Supplier Module is responsible for monitoring and improving the delivery schedule adherence performance of the suppliers. Process No.6b. CD PU is responsible for development of new components at suppliers and Quality Assurance of such suppliers. Once Quality Assured, those suppliers are handed over to Supplier Modules for regular buying. Process No.11c. The Supplier Up gradation PU from SSBU is responsible for providing support to FES suppliers for up gradation of their quality systems and improves QCD performance. Process No.13a.

1.2. Documentation requirements 1.2.1 General The quality management documentation includesa. b. c. d. e.

Documented statement of Quality Policy Quality System Manual (Level 1) Documented Processes/ procedures required by International Standard ISO/TS 16949:2002 (Level 2 documents) Documents like Standard operating procedures, Work Instructions etc required for ensuring effective planning, operation and control of processes by those, who actually implement the processes (Level 3 documents) Records required for monitoring the results of the processes

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1.2.2 Quality Policy

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1.2.3 Scope of Documentation 36

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The documentation methodology is as follows-

Mahindra & Mahindra Ltd; FES has prepared, documented and implemented procedures and processes in consistence with requirements of ISO/TS-16949:2002. The procedures make reference to other documents.

The Manual includes the Policy and describes the Quality Management System, of Mahindra & Mahindra Ltd; FES. The scope of the documented system is Design, Manufacturing, Marketing and Servicing of Tractors, Aggregates & Components.

It also consists of organization structure, responsibilities and authorities of the management personnel with executive responsibility.

The manual briefly explains methodology adopted for meeting the requirements of the various clauses of ISO/TS 16949:2002 QMS, and also includes some broad procedures.

References of critical departmental procedures are given in the Manual at appropriate places in each section.

The procedures, flow charts and listing of processes is applicable to each area. These are decision oriented, management activities. These documents give the information related to the sequence of activities, control points and different agencies involved at different stages of a process.

Control Plans, SOPs and Work Instructions are working documents and these include guidelines for performing a task/ set of activities, which are repetitive in nature.

1.2.3.1 The Document control methodology is as follows 1.

The Management Representative is responsible for documenting and maintaining this manual as well as the policy document which is signed and approved by the Chief Operating Officer. The Management Representative is also responsible for maintaining, revising and updating the various management systems standards.

2.

Management Representative is responsible for maintaining and improvement of Quality Management Systems at FES. The various external national & international standards for Product Design and materials are controlled by BM group from Technology PU at PDRDS.

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3.

Approval mechanism for various types of documents is as follows Sr.No. 1 2 3 4 5 • Sr. No. 1

Level of Document Quality Manual - Level I Common Procedures and Formats Process Flow Diagram & Process maps Work Instructions / SOPs Formats

Approval Authority MR office MR office Respective Process Owner PGL/Manager of respective Processes PGL/Manager of respective Processes

The numbering of the documents shall be as follows:Level of Document Quality Manual

2

Procedures

3

Process Flow Diagram & Process maps

4

Work Instructions / SOPs

5

Formats

Methodology Level I as per clause numbers • Common Procedure - QAP14.1 • Common MQS Manual - C._ • Supplier QA Manual - PQ/S Main Process no. code. - * Sub Process no code .- *a, * b.*c -(*-> Ref. Table X for those nos.) QAP AA.1,---(AA stands for sub process no code) Common Formats:- TQM 1/---Other Formats: - To be decided by respective process owner. Generally starts with PU name abbreviation.

The above documents are available in the company’s ERP System with Read Access to all and the new documents shall be numbered by the next serial no. for all types of documents. Also regarding documentation the following shall be ensured1. 2. 3. 4. 5.

The changes and current revision status of documents will be identified as per the document control procedure. The relevant version of applicable documents shall be made available at appropriate points of use. The documents shall be ensured to be legible and readily identifiable. The identification and distribution of documents of external origin is ensured by KM and BM group of Technology PU from PDRDS. Obsolete documents shall be destroyed and suitably identified if required to be retained for any purpose.

Title: - 2. MANAGEMENT RESPONSIBILITY 2.1. Management Commitment • Top Management i.e. the President and Chief Operating Officer and the respective ELs and PULs along with respective PGLs directly or indirectly through the PU Managers provide evidence of its commitment to the development and implementation of the quality, system and

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continually improving its effectiveness through the process of Policy Deployment and so also by: 1. 2. 3. 4. 5. 6.

Communicating to the organization the importance of meeting customer as well as statutory and regulatory requirements, through both formal and informal feedback training/ discussions, notices and reviews at different levels and forum as also through the quality policy. Establishing the Quality Policy through deployment of annual president's policy and meeting the objectives listed thereof. Ensuring that the Quality Objectives are established for each area in line with President, EL & PU Policy and are documented and reviewed periodically. Conducting Management Reviews as per the documented procedure QAP14.1 and Process No.14d. The Quality Systems meeting requirement of Mahindra Quality System (MQS) are communicated to the whole organization through local Website. In addition the Statutory and Regulatory requirement are available with respective department. Process Efficiency - The results of satisfaction of Managing Points at all levels are reviewed by the Top Management. Process No.1b and Process No.2e and No.2f.

2.2. Customer Focus The key processes are mapped using format TQM 32 i.e. Process Mapping Format, which requires the Process Owner to identify the Customers of the process and Requirement of the customers. Also the processes are managed to identify and address the final customer needs 4a, 5a, 5c, 5d, 10a, and 10f) and improve CSI (ProcessNo.3g).

(Process Nos. 3f,

2.3. Quality Policy 1.

A Quality Policy appropriate to the purpose of the organization has been established. It is in line with the organization's strategy and aims at improvement of Customer Satisfaction, Employee Satisfaction and Profitability. Our Strategy focuses on • • • • •

2. 3. 4.

Customer Understanding Speed to Market Cost Leadership Employee Empowerment Execution Excellence

The Quality Policy is displayed at strategic locations throughout FES organizations. The understanding of Quality Policy is ascertained through each Internal Audit and necessary actions are taken. The Quality Policy shall be reviewed annually during the policy formulation of the President and periodically reviewed during Management Reviews.

2.4 Planning & System 2.4.1 Quality Objectives-

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1. 2. 3.

FES announces the President's Policy every year in February. The responsibility of documenting the President's Policy lies with the Business Planning PU. The President's Policy is generally drawn from FES strategy and Long Term plan with due consideration to earlier year's performance, changes in Business Scenario etc. The President's Policy has two partsa) Objectives to be achieved (including targets) b) Guidelines - How to achieve targets.

4. 5. 6.

The President's Policy is further deployed through more layers of the organization. The deployment is in form of Managing Points (objectives) with targets and Major Measures (how to achieve these targets) Each Policy Holder reviews achievement of respective policy through monthly PDCA. The Quality Management Systems are aligned to the requirement of Policy Deployment.

2.5 Responsibility, Authority and Communication 2.5.1 Responsibility and AuthorityThe Organization chart of FES is as attached herewith. The Responsibilities and Authorities of the PU Leaders as per this chart are as followsOrganization Chart:-

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(* Organization Chart is modified as per Organizational changes in CDMM, Strategic Planning & Business Excellence) 2.5.2 Management Representative The Management Representative is directly responsible to the President. The Management Representative has the full organizational authority to establish, implement and maintain the Mahindra Quality System in the organization as per the documented system of ISO/TS16949:2002. The Management Representative leads the internal audit programme and report findings of the internal audit to the Management. The Management Representative maintains the records of internal audits. The Management Representative interacts with external bodies on matters relating to the Quality System. The Management Representative is responsible for making the standards of ISO/TS-16949:2002 effective through periodic management review of all clauses. Refer the procedure QAP 14.1 and Process No.14d. 2.5.2.1 Customer RepresentativePQPU Head has been designated as Customer Representative with responsibility and authority to ensure that the customer requirements are addressed. They are responsible for deciding special characteristics and are authorized to close PPAPs and also take corrective actions for problems observed. 2.5.3 Internal CommunicationThe Internal communication process at Mahindra & Mahindra Ltd, FES is done at various levels to ensure effectiveness of Quality Management systems. 1. Discussions in the ELC Meeting where-in the President communicates and discusses with Top Management various Business initiatives. 2. Discussions in the Divisional Management Teams (DMT) for cross functional communication with the PUs. 3. Senior management directly communicates with all officers through REACH OUT initiative on a quarterly basis. 4. Circulation of Manual, Procedures and Processes, Formats and Work Instructions available through Electronic Media with ‘Read’ Access to all for Quality System orientation. 5. Discussions with all levels in various meetings at junior management and supervisory and employee's level like Daily Production Meetings, O-R-C Meetings for Officers, Daily Start Up Meeting before the shift and CIT Communication to the Employees. 6. Senior management directly communicates with all employees of all locations through 'KHULA MANCH' on a quarterly basis. 7. Circulation of various information’s, data through E-Mail, Display boards on shop floor & communication regarding customer complaints and feedback is carried out to all employees during the Daily Production Start up Meeting and the CIT Communication Meetings. 41

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8. Effectiveness of the Internal Communication is judged through the outcome of the Business Results of the various processes listed.

2.6 Management Review 1. The Management Representative organizes Management Review Meetings at an Interval of Six months i.e. two meetings in a financial year. This meeting is chaired by the President. 2. These reviews coves performance trends in all areas of sector's operations to ensure continual improvements in all areas. 3. The inputs to the meeting are as followsa) Results of internal and external audits. b) Customer Feedback c) Process performance d) Status of Corrective and Preventive actions e) Follow up actions on earlier meetings. f) Changes that could affect the Quality Management System g) Recommendation for Improvement h) Analysis of actual and potential field failures 4. The outputs of the reviews include decisions regarding actions related toa) Improvement in effectiveness of Quality System based on Internal Audit findings and business trends accrued out of various processes. b) Improvement in product related to customer requirement c) Resource needs desired. 5. Records from Management Review are maintained by Business Excellence (MR office)

3. Range of Products FES manufactures different models of Tractors approximately in 22 HP to 60 HP range for Domestic Market and Tractors in Higher HP Range, approximately up to 80 HP for Export Market. 4. Main activities of FES A. New Product Development

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Developing new products as per requirements of Customers in India and abroad.

B. Manufacturing • • •

Machining of key components at Mumbai and Nagpur plants. Assembly of aggregates like Engine / Transmission (at Mumbai, Nagpur & Rudrapur Plants ) Assembly of tractors at all locations.

C. Marketing and Servicing • •

Selling and Servicing of tractors in India through Dealers controlled by Area / Sub Area Offices. Selling and servicing of tractors abroad either through MUSA, MCTCL, Mahindra Australia and various other distributors in different countries.

5. Manufacturing and Other facilities A. Manufacturing Plants •

Integrated Plants at a. b. c. d.

Mumbai Nagpur Rudrapur. Jaipur

The Mumbai plant also houses divisions like Product Development and R & D Services (PDRDS), Component Development & Manufacturing Engineering (CDME), Accounts, IT Division, HR & PMS, International Marketing, Business Planning and Quality & System. Nagpur and Rudrapur Plants are also equipped with necessary manufacturing infrastructure and support services. Jaipur Plant is supported by the above three plants for manufacturing of Tractors. C. Marketing establishment • •

Head Office at Mumbai. Area / Sub Area Offices - all over India.

6. Employee Strength The Employee strength of FES consists of employees located at Mumbai, Nagpur, Rudrapur and Jaipur plants and employees located at Marketing Establishments.

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6. Market Share Manufacturer MAHINDRA FES

F03 25.8

F04 25.5

Market Share F05 F06 26.5 29.5

FO7 29.7

7. Sales •

F-94

Domestic Sales Volume F-95

F-96

F-97

F-98

F-99

F-00

F-01

F-02

F-03 F-04 F-05 F0-06 F0-07

No. of 32743 40162 48524 55573 67119 67744 68739 77201 54485 39449 44807 60005 78048 95006 Tractors • Export Volume (Rest of World- ROW) F-03 F-04 F-05 F-06 F-07 No. of Tractors

516

680 923 1488 2868

8. Vision of FES To become the largest Tractor Manufacturer in the World by year 2009. (To have more Brand of Tractors Sold around the World compared to any other single Brand of Tractor) 9. Scope Design, Manufacturing, Marketing and Servicing of Tractors, Aggregates & Components.

 Strategic workflow 1. Foundation FES was established as a separate company i.e. International Tractor Company of India Ltd (ITCI) in 1963. This was a Joint Venture between M & M, International Harvester (IH) - UK, a subsidiary of IH- USA, one of the largest companies in the World then and Voltas Ltd, an Indian company with vast experience in Marketing and Servicing of Engineering Products. The company was expected to manufacture Agricultural Tractors as per IH design & these were to be marketed and serviced by

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Voltas Ltd. This product, which was very essential for helping the country to become self-sufficient in important commodity like Food was earlier being imported from abroad. 1.

The Important Milestones in the History of FES Year 1963 1964

Event ITCI was incorporated. The plant at Mumbai was established. The first tractor was rolled out from the Mumbai plant.

1970

Establishment of Implements Division at Nagpur, to manufacture Farm Implements.

1978

ITCI merged with M & M to become Tractor Division.

1981

100000th Tractor was produced.

1983

FES achieved Leadership position in Indian Tractor Market - a position retained till today.

1988

200000th Tractor was produced.

1994

The Tractor Division became a Sector (SBU) of M & M, to be known as Farm Equipment Sector (FES). Mahindra USA (MUSA) was formed in USA as subsidiary company. The Implements Division at Nagpur started manufacturing tractors.

1996

The Business Process Re-engineering (BPR) process was implemented at Nagpur. 500000th tractor was produced. Mumbai plant certified to ISO 9001.

1997 The Vision of Global Leadership was conceived. 1998

BPR implemented at Mumbai.

1999

QS 9000 for Nagpur

2000

First Satellite plant established at Rudrapur. QS 9000 for Mumbai

2001

ISO 14000 for Mumbai and Nagpur

2002

Second satellite plant established at Jaipur.

2003

ISO 9000:2000 certification for Mumbai. DEMING PRIZE Won for FES. TS 16949 for Nagpur.

2004

One Millionth Tractor Produced Entry in China – JV established Won the ‘Golden Peacock National Quality Award’

2005 2007

Establishment of Mahindra Australia • Acquired PTL • Won the “Golden Peacock Occupational Health & Safety Award” for the year 45

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2007 • Won the “Golden Peacock National Quality Award” for the year 2007 • Won the coveted “Japan Quality Medal”.

Organogram of Organization

The Board of Directors of the Company has, as its members, eminent persons from Industry, Finance, Investment and other branches of business, who bring diverse experience and expertise to the Board. The Company's current Board of Directors is as follows: NAME 1.

Mr. Keshub Mahindra

DESIGNATION Chairman Vice Chairman and Managing Director

2.

Mr. Anand G. Mahindra Deepak Shantilal Parekh

Director

4.

Nadir Burjorji Godrej

Director

5.

M. M. Murugappan

Director

6.

Bharat Narotam Doshi

Executive Director & Group Chief Financial Officer (Group CFO)

7.

Arun Kumar Nanda

Executive Director & Secretary

8.

Narayanan Vaghul

Director

9.

Dr. Ashok Sekhar Ganguly

Director

3.

10. R. K. Kulkarni

Director

11. Anupam Pradip Puri

Director

12. Thomas Mathew T.

Nominee of LIC

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 MAHINDRA & MAHINDRA LTD. Turnover /Financial Results

MAHINDRA & MAHINDRA LIMITED Registered Office : Gateway Building, Apollo Bunder, Mumbai 400 001. AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31ST MARCH, 2006 Rs Lakhs st

1

Gross Sales/Income from Operations

2

Less: Excise Duty on sales Net Sales/Income from Operations Other Income (Note 1) Total Expenditure : (Increase)/ Decrease in Stocks

3 a. b. c. d. e. 3.1 3A . 4 5 6A. 6B. 6C .

Consumption of raw materials (including bought out components sold) Staff cost Other Expenses Provision for contingencies (Net of reversals) Total Expenditure (a+b+c+d+e) Profit before Interest, Depreciation, Exceptional Items and Tax (1+2-3) Interest (Net) (Note 2) Depreciation / Amortisation Profit Before Exceptional items and Tax (3A – 4 - 5) Exceptional items (Net) (Note 3) )

2,008.00

Year ended 31 March, 2,007.00

2,006.00

934,757.32

769,559.22

591,454.02

(112,489.36) 822,267.96 10,385.98

(103,504.06) 666,055.16 10,850.27

497,075.91

(10,320.18)

(17,405.43)

(2,143.23)

581,696.75 55,178.39 98,910.85

477,669.10 46,425.17 82,272.72

78.45 725,544.26

33.99 588,995.55

107,109.68 (1,840.16) 20,000.53

87,909.88 (557.56) 18,405.45

62,550.02

88,949.31 21,001.18

70,061.99 1,355.16

40,871.47

109,950.49 28,540.00 (4,300.00) 85,710.49

71,417.15 21,500.00 (1,350.00) 51,267.15

43,819.30

(94,378.11) 8,668.76

337,429.75 41,745.39 65,820.74 342.00 443,194.65

5,158.65 16,519.90

2,947.83

8

Profit Before Tax Provision for current tax (including FBT) Provision for deferred tax Profit After Tax (6C-7A-7B)

9

Adjustment pertaining to previous years (net of current & deferred tax)

10

Extra-Ordinary Items

11 12

Share of Profit of Associates for the year Balance of Profit (8+9+10)

85,710.49

51,267.15

34,854.30

13

Paid-up Equity Share Capital (Face value Rs. 10 per share) (Note 4)

23,339.96

11,164.79

11,600.86

14

Reserves and Surplus excluding Revaluation Reserve (Note 4 & 5)

266,054.93

185,845.57

164,414.67

15 16

Basic Earnings per Share (not annualised *) Rs.(Note 6) Diluted Earnings per Share (not

38.07 34.93

23.04 20.72

30.04 30.04

7A. 7B.

-

-

6,350.00 2,615.00 34,854.30 -

47

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17

18

annualised *) Rs (Note 6) Aggregate of non-promoter shareholding : Number of Shares Percentage of Shareholding

185,962,626.00 0.77

88,185,587.00 0.76

86,565,251.00

Included in above are GDRs the voting power of which is vested with the Board Number of Shares Percentage of Shareholding

14,623,601.00 0.06

7,226,243.00 0.06

8,874,783.00

10.00

13.00

9.00

Dividend per Ordinary (equity) Share (Rupees)

0.75

0.08

Achievements in Quality System Mahindra’s Farm Equipment Sector wins the Japan Quality Medal  

First global tractor manufacturer to be awarded the Japan Quality Medal Customer Centricity and focus on Quality the key to the award

Mumbai October 22, 2007: Mahindra & Mahindra’s Farm Equipment Sector (FES), the 3rd largest tractor company worldwide, was awarded the coveted Japan Quality Medal on October 16, 2007, by the Union of Japanese Scientists and Engineers (JUSE), Tokyo. Mahindra is the only tractor manufacturing company in the world to win this highly acclaimed award for excellence in Total Quality Management (TQM). Mahindra is also one of the very few companies globally to win this rare honour. FES was also the first tractor company in the world to win the prestigious Deming Prize in 2003. It had won the award for customer focus, commitment and demonstrated results in improving product and process quality.

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CASE 2

 COMPANY’S NAME GUJARAT CO-OPEREATIVE MILK MARKETING FEDERATION LTD.(GCMMF )

 INTRODUCTION OF CO. Gujarat Co-operative Milk Marketing Federation established in November, 1973 is a Co-operative organization jointly owned by 7.6 million milk producers with annual sales turnover of Rs. 5255.41 crores (52.55 billion) in 2007-08. GCMMF incorporates more than 12, 700 village Producers Cooperatives affiliated to 13 District Co-operatives Milk Producers Unions. GCMMF has 16 affiliated dairy plants with total milk handling capacity of 10.16 million liters day and milk drying (powder manufacturing) capacity of 594 MTs per day. GCMMF has 44 offices pan India and one office in Dubai. It has more than 3000 wholesale dealers extending its reach to more than 5 lakh retailers. The federation managers its business with total 750 emplyees pan India.  THEIR PRCACTICES Basically GURAJARAT CO-OPERATIVE MILK MARKETING FEDERATION LTD. Are into Milk industry Markets a wide range of dairy products under the brand names of Amul & Sagar. Amul is the largest co-operative movement in India with 7.6 million milk producers organised in 12,700 co-operative societies in 2007-2008. The country's largest food company, Amul, is the market leader in butter, whole milk, cheese, ice cream, dairy whitener, condensed milk, saturated fats and long life milk. Amul follows a unique business model, which aims at providing 'value for money' products to its consumers, while protecting the interests of the milk-producing farmers who are its suppliers as well as its owners. Despite being a farmers' co-operative, Amul has given multinationals a run for their money. In butter, cheese and saturated fats, Amul has remained the undisputed market leader since its inception in 1955, by offering quality products at competitive prices. In other categories, Amul has nullified its late mover disadvantage through aggressive pricing, better quality, innovative promotion, and superior distribution

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 GCMMF : MISSION STATEMENT. GCMMF, endeavour to satisfy the taste and nutritional requirements of the customers of the world, through excellence in marketing by our committed team Through Co-operative networking. They are committed to offering quality products that provide best value for money.

 OBJECTIVE            

GOALS Customer Orientation Commitment to Producers Belongings Co-operation Pride in Organisation Employee Satisfaction Integrity Excellence Leadership Quality Innovaton Growth Orientation – New Products

 BUSINESS THEY ARE INTO GCMMF markets a wide range of dairy products under the brand name the brand names of Amul and Sagar. The product categories are infant Milk Food. Skimmed Milk Powder, Instant Full Cream Milk Powder, Dairy Whitener, Table Butter, Cheese, Cheese Spreads, Ghee, Sweetened Condensed Milk, Chocolates, Malted Milk Food, Blended Bread-Spreads, Fresh Milk, Dahi Icecream and ethnic Indian sweets like Shrikhand and Gulabjamun. GCMMF is also the laregest exporter of dairy products and its products and its products are exported to USA, Middle East, Singapore and other Far East markets and neighbouring countries like Bangladesh, Sri Lanka etc.  HISTROY/BACKGROUND OF GCMMF LTD. THE success of the Amul brand name has, no doubt, resulted in my being asked to comment on its history and the reasons for its success. I have, therefore, reflected on the long history of the brand to see if I could distil reasons why Amul is a name widely recognised and respected, not just in our cities and towns, but in our villages as well. Probably the easy, but nonetheless wrong, answer is that Amul has been advertised well. Certainly it has helped that those responsible for keeping the Amul name in the public eye have used

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considerable imagination and, if I do say so, ‘The taste of India’ is nothing short of brilliant. However, there is much more to it. A successful consumer product is the object of thousands, even tens of thousands of transactions every day. In these transactions, the brand name serves in lieu of a contract. It is the assurance to the buyer that her specifications will be met. It is the seller’s assurance that quality is being provided at a fair price. If Amul has become a successful brand – if, in the trade lingo, it enjoys brand equity – then it is because we have honoured our contract with consumers for close to fifty years. If we had failed to do so, then Amul would have been consigned to the dustbin of history, along with thousands of other brands. The tough part of the use of a brand as a contract is that every day is a renewal; if, just once, the brand fails to meet the customer’s expectations or, more exactly, if it fails to delight the customer, then the contract loses its value. If Amul’s sales continue to rise, it is because that contract has been honoured, again and again. I would like to think that the granddaughters of some of our first customers are now ‘contracting’ with us to buy their butter, cheese, baby food, chocolates and other fine Amul products. It is also a fact that when we first thought of exporting to West Asia and even to the United States, it was because of the loyalty of Amul customers who, even when far from home, still craved our ‘taste of India’. What goes into the ‘contract’ that is a brand name? First is quality. No brand survives long if its quality does not equal or exceed what the buyer expects. There simply can be no compromise. That’s the essence of the contract. In the case of a food product, this means that the brand must always represent the highest hygienic, bacteriological and organoleptic standards. It must taste good, and it must be good. Second, the contract requires value for money. If our customer buys an Amul product, she gets what she pays for, and more. We have always taken pride in the fact that while we earn a good income for our owners – the dairy farmers of Gujarat – we don’t do it at the cost of exploiting the consumer. Even when adverse conditions have reduced supplies of products like butter, we have resisted the common practice of raising prices, charging what the market would bear. Rather, we have kept prices fair and done our best to ensure that retailers do not gain at the consumers’ expense.

The third element of the contract is availability. A brand should be available when and where the customer wants it. There is no benefit achieved in creating a positive brand image, and then being unable to supply the customer who wants to buy it. In our case, over the years we have built what is probably the nation’s finest distribution network. We reach hundreds of cities and towns through a cold chain that not only ensures that our products are available, but they reach the customer at the farthest end of the country with the same quality as you would find in Ahmedabad or Vadodara. The fourth part of the contract is service. We have a commitment to total quality. But, occasionally, we may make a mistake – or, our customer may think we’ve made a mistake, and the customer, as they say, is always right. That is why, for Amul, every customer complaint must be heard – not just listened to. And, every customer complaint must be rectified to the extent humanly possible.

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For close to fifty years now, Amul has honoured its contract with the consumer. The contract that is symbolised by the Amul brand means quality. It means value for money. It means availability. And it means service.

How did the Amul brand become what it is? To answer that, we must journey back in time, to the history books, to the time of India’s independence because Amul’s birth is indelibly linked to the freedom movement in India. It was Sardar Vallabhbhai Patel who said that if the farmers of India are to get economic freedom then they must get out of the clutches of the ‘middlemen’. The first Amul cooperative was the result of a farmers’ meeting in Samarkha (Kaira district, Gujarat) on 4 January 1946, called by Morarji Desai under the advice from Sardar Vallabhbhai Patel, to fight rapacious milk contractors. It was Sardar’s vision to organise farmers, to have them gain control over production, procurement and marketing by entrusting the task of managing these to qualified professionals, thereby eliminating the middle men, the bane in farmers’ prosperity. The decision was taken that day in January 1946: Milk producers’ cooperatives in villages, federated into a district union, should alone handle the sale of milk from Kaira to the governmentrun Bombay Milk Scheme. This was the origin of the Anand pattern of cooperatives. The colonial government refused to deal with the cooperative. The farmers called a milk strike. After fifteen days the government capitulated. This was the beginning of Kaira District Cooperative Milk Producers’ Union Ltd., Anand, registered on 14 December 1946. Originally the Anand pattern included dairy cooperative societies at the village level, and a processing unit called a ‘union’ at the district level. Inspired by the Kaira Union, similar milk unions came up in other districts too. In 1973, in order to market their products more effectively and economically, they formed the Gujarat Cooperative Milk Marketing Federation Limited (GCMMF Ltd.). GCMMF became the sole marketer of the original range of Amul products including milk powder and butter. That range has since grown to include ice cream, ghee, cheese, chocolates, shrikhand, paneer, and so on. These products have made Amul a leading food brand in India.

The

brand name AMUL, from the Sanskrit Amoolya, meaning priceless, was suggested by a quality control expert in Anand. The first products with the Amul brand name were launched in 1955. Since then, they have been in use in millions of homes in all parts of India, and beyond. Today Amul is a symbol of many things: Of high quality products sold at reasonable prices, of availability, of service. There is something more, though, that makes the Amul brand special and that something is the reason for our commitment to quality and value for money. Amul is the brand name of 2 million farmers, members of 12,700 village dairy cooperative societies throughout Gujarat. This is the heart of Amul, it is what gives strength to Amul, and it is what is so special about the Amul saga. In the early days of Kaira Union there was no dearth of cynics. Could ‘natives’ handle sophisticated dairy equipment? Could western-style milk products be processed from buffalo milk? Could a humble farmers’ cooperative market butter and cheese to sophisticated urban consumers? The Amul team – farmers and professionals – confounded the cynics by processing a variety of high-grade dairy products, several of them for the first time from buffalo milk, and marketing them nationally against tough competition.

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What began way back in 1946 was really an effort to carve out a truly Indian company that would have the involvement of millions of Indians and place direct control in the hands of the farmers. It was a mandate for producing, owning and marketing and above all, building your own truly Indian Brand. And successfully at that. You will appreciate that when the lives of lakhs of farmers depend on a brand, and when your history is grounded in the Independence movement, when not only competitors but even your own government questions you, then your resolve to be the best is like the finest steel. Amul, therefore, is a brand with a difference. That difference manifests itself in a larger than life purpose. The purpose – freedom to farmers by giving total control over procurement, production and marketing. Amul and all other milk products produced by cooperatives were born in struggle. It was the producers’ struggle for command over the resources that they create, a struggle to obtain equitable returns and a struggle for liberation from dependence on middlemen. It was a struggle against exploitation. A refusal to be cowed down in the face of what others believed to be the impossible. Amul’s birth was thus a harbinger of the economic independence of our farmer brethren. Amul’s mission was the development of farmers, nutrition to the nation, and heart in heart, the real development of India. Given India’s vast geographical spread, the country had very few dairy plants at the time of independence. As the then Prime Minister Lal Bahadur Shastri had said, ‘One Amul is not sufficient. Many Amuls are the need of the hour.’ This led to replication of the Anand pattern through the Operation Flood programme which has, amongst others, three major achievements to its credit, namely: making dairying India’s largest self-sustainable rural employment programme, bringing India close to self-sufficiency in milk production, and trebling the nation’s milk production within a span of two and a half decades to make India the world’s largest milk producer.

Today, 173 milk producers cooperative unions and 22 federations play a major role in meeting the demand for packed milk and milk products. Quality packed milk is now available in more than 1,000 cities throughout the length and breadth of India. And this is milk with a difference – pasteurized, packaged, branded, owned by farmers – carrying the milk drop logo, like Amul, a symbol of quality. Over the course of Operation Flood, milk has been transformed from a commodity into a brand, from insufficient production to self sufficient production, from rationing to plentiful availability, from loose, unhygienic milk to milk that is pure and sure, from subjugation to a symbol of farmer’s economic independence, to being the consumer’s greatest insurance policy for good health. What of the future? India’s population has risen from 350 million in 1950 to 1,000 million today. As cities draw people to new employment opportunities, the current urban-rural ratio of 26:74 is likely to become 33:67 by the year 2010. As per available projections, the population by the year 2010 would touch 1,190 million people. This means that by the year 2010, rural India will be required to support some 800 million people, an increase of 11% over 1999’s 720 million rural people.

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Based on the current population demographics and projections, we estimate that there will be 260 million women in the age-group of 15-59 years in India by the year 2010 and this would further increase to 302 million by the year 2020, of which only 100 million would be literate. This means that rural women will comprise 21% of India’s total population. In our country, most rural women contribute to agricultural and dairying activities – apart from the household work – and their activities are not included in India’s GDP despite their significant contribution. Dairying is, therefore, very important to our rural women. For many, it is their main source of employment and income, incomes that they often manage themselves. Population gives us one picture. The other is provided by the demand for household commodities. By 2010, the national requirement for food grains will touch 266 million metric ton, rising to 343 mmt by 2020. For milk, estimated consumption will be 153 mmt by 2010 and 271 mmt by 2020. For edible oils, demand will soar to 9 mmt by 2010 and 13 mmt by 2020. It should be clear that agriculture will remain the most important engine of our economy. Amul and its cooperative sister brands are aware of this challenge. The future, they say, is at best a mystery. But, it should be clear that the needs of a nation on the move must be met. The country is young. There are more working women. The needs of an ever-growing population have to be met with sustainable economic development. And the demand for milk and milk products, therefore, is only going to grow further. Couple this with the nutritional needs of the new and the old generations and it is equally clear that there will be a need for more value added milk products. This calls for production to be enhanced at even faster rate than it is at present. There is also something very special about milk, something which requires that any brand for milk and milk products to act not simply as a seller, but as a trustee. Milk is not a white good or a brown good. It is not something people save their entire lives in order to buy – like a car, or a house. Milk is not a status symbol; rather it is the symbol of nutrition. Milk is a nearly complete food, providing protein, vitamins, minerals and other nutrients so essential to maintaining good health. We realise the value of milk on the day the milkman does not bring it to our doorstep, when our children have to go to school without it, when we go without our daily cup of coffee or tea. And what would our lives be like without ghee, butter, cheese, curd, lassi, chaas and the like. Milk is not only an ingredient in our favourite recipes, it is an essential ingredient of life itself. And, by its very indispensable nature, it has one of the biggest markets – a whopping 82 mmt at a very conservative consumption of just 214 grams per day per person in India alone. Our commitment to the producer, and our contract with the consumer are the reasons we are confident that cooperative brands, like Amul, will have an even bigger role to play in the next fifty years. Resources need to be deployed with a purpose and a commitment to deliver better results. There is no limit for a marketing exercise then. It must build India and its culture a second time round. An India, that is the land of our dreams.

 HOW ARE THE ORGANISATION IMPLEMENTING TQM. PRODUCITON PLANNING

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Production Planning helps to plan the supply and demand of products at the union & depot. 1. Annual Production planning 2. Monthly Production planning Annual Production planning. 1. Letter to member union asking for projections of milk procurement and production of dairy products. 2. Federation’s projections of milk procurement after consultations with AGM (Mktg.) 3. Projection of Inter union and private party milk sales. 4. Deciding on the production targets with the help of Marketing Dossier. 5. Deciding on the union production of various products based on fat & SNF availability. 6. Finalising the projections at each stage. 7. Submission of Annual production Plan document to MD, AGM (MKTG.) Monthly Production Planning 1. Projection of current month milk procurement. 2. Projection of Inter union and private party milk sales. 3. Entering the actual figures for milk procurement, milk sales, production, dispatch & closing stocks till date 4. projection sales and stocks for the depots. 5. Indent consolidation for the coming month. 6. Estimation of unionwise production based on availability of fat & SNF. 7. Estimation of packwise, unionwise, productwise production. 8. Get it verified by AGM (Mktg) 9. Verified copies are given to respective Product Officer, Despatch, Purchase & GPM. 10. Month end processing done by Despatch Department. Progamming Committee Meeting (PCM)

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Programming Committee is comparised of Managing Directors of all member unions, GM OF Mother Dairy Gandhinagar, MD and AGM (Mktg.) of GCMMF. PCM is held within first 10 days of the month. In the PCM, last two moth’s procurement figures are chalked out. Apart from procurement, Inter dairy milk sales, Milk procurement prices, Liquid milk sales quantity & prices, cattle feed selling price are decided. Union wise product wise production and dispatch are reviewed against planned ones. Sales and stock figures (at both unions & depots) are discussed. Current month’s planned production and dispatches are also discussed. There will be presentation on performance of one consumer product every month.

QUALITY CONTROL Quality Control happens to be the pillars on which on FMCG’S reputation in the market stands. Essentially the interactions between marketing and QC border on the following. 1. 2. 3. 4. 5. 6. 7.

Name of the product Packaging configuration both primary and secondary. Name of manufacturer. Name of Marketer. Placement of corporate, GCMMF and Operation Flood logos Ingredients used MRP, Batch Number, Date of Manufacture and Date of Expiry.

Self Management Leadership Programme This program conducted by Brahmakumaris. The Self Management Leadership Programme is aimed at achieving the following results.     

To become a better leader through improved self esteem. To develop a clear focus for the next stage in your life. To take responsibility for your own life and stop blaming others or circumstances. To take more personal responsibility for your ‘state of mind’ and emotions. To learn how to improve the quality of your communications and relationships as well as overall quality of life.

HOSHIN KANRI PREPARATIONS One of the most significant activities performed every six months is Hoshin Kanri, The word Hoshin Kanri comes from Japnese and literally means guiding light. The principle objective of this is to set Goals for the brand at the start of the year starting

56

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an end goal in mind called Hoshin, the action plan highlighting the planning steps and in which way it is desired to be achieved, the measure of Performance against which these achievements will be Benchmarked, the time by which it will be completed, the champion responsible for spearheading the same and the resources required. The goals set for the year are reviewed every six months under Hoshin Review. TOTAL QUALITY MANAGEMENT The major initiatives taken by the federation towards its path of change management. In 1994, GCMMF decided to Introduce the concept of TQM with its twin pillars of customer focus & continuous improvement. This entailed employee involvement, waste reduction, and process improvement as tools for TQM. Made various initiatives like Kaizen, Housekeeping, Small Group Activities Etc. TQM INITIATIVES  Values/Mission  Hoshin Kanri  ASC/BRM/Friday Meetings  ICD – Amul Quality Circle  Small Group Activity  Kaizen  House Keeping GCMMF TQM ROADMAP ACTIVITIES      

DATE OF IMPLEMENTATION

Kaizen May, 1995 Small Group Activity July, 1995 Housekeeping October, 1995 Organisation Climate Survey(OCS) June, 1996 Hoshin Kanri January, 1997 Amul Quality Circles October, 1997

KAIZEN o Kaizen is basically small improvements carried out by individuals in his/her day to day work.

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o The purpose of kaizen movement is to create a culture of continuous improvement in the organization. o Kaizen are being done on -Thrust areas. -Systems & processes. -Communication -Learning -Housekeeping, etc. o 100% participation by employees to the kaizen movement. o Creating tension free atmosphere by removing pain areas through kaizens. o Emplyees of the Department select the Best Kaizen of the Department. Award the best kaizens of the year during the celebration.

⇒ o

o o o

SMALL GROUP ACTIVITIES (SGA) 7 QI STEPS -Reason for improvement. -Current Situation. -Analysis -Counter measures. -Results -Standardization -Future Plans Identified themes for Small Group Activities Formation of Teams – Team Leader, Facilitator and 5-7 Team members. This can be cross functional teams. More than 250 SGA’s completed.

HOUSEKEEPING o Principle of Housekeeping -Segregation -Arrangement -Cleanliness -Maintenance of Standards -Discipline (A Place for everything & everything’s in its place) o Creating Audit Formats suitable for 58

TOTAL QUALITY MANAGEMENT

o o o

-Office -Dry -Wet Godowns -Information Audit Discussion on Housekeeping is done in every Friday meeting Dept. meeting and make action plans for further improvements. Conduct House Keeping audit by Housekeeping Coordinators every month Organise ‘Red Tag Day’ every year.

ORGANIZATION CLIMATE SUREVEY (OCS) o Survey conducted among all employee to identify pain areas o The Performance Appraisal System (LEADS) has been redesigned based on the OCS feedback

⇒ o

o

o o

HOSHIN KANRI Principle of Housekeeping -Segregation -Arrangement -Cleanliness -Maintenance of Standards -Discipline (A Place for everything & everything’s in its place) Creating Audit Formats suitable for -Office -Dry -Wet Godowns -Information Audit Discussion on Housekeeping is done in every Friday meeting Dept. meeting and make action plans for further improvements. Conduct House Keeping audit by Housekeeping Coordinators every month

⇒ AMUL QUALITY CIRCLES (AQC) o AQC an excellent forum for dissemination of information, policies, strategies. o AQC used as a forum for cascading Quality initiatives like Kaizen, Housekeeping.

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o AQC used for solving pain areas in the market through selfledership One Example of AQC Report:

Report on AQC meeting for ADAs for the month of …June-2007….. Zone-1, QC-1 Date of

Venue

AQC meeting 17nd June

Office of Desai

2007

Milk Centre

Names of absentee ADAs Hemang Enterprises

Total no. of

No. of members

%age of

members in

present on the day

attendance

the circle 7

5

71

Reason for not attending Out of station

Points discussed in brief Remarks / Suggestions

 ORGANOGRAM OF THE ORGANISATION The Company's current Board of Directors is as follows: NAME 1. Shri PARTHIBHAI G. BHATOL

DESIGNATION Chairman (GUJARAT MKTG. FED. LTD.

CO-OPERATIVE

MILK

Chairman (BANASKANTHA DIST. CO-OPERATIVE MILK PRODUCERS UNION LTD, PALANPUR. 2. Shri B. M. Vyas

Managing Director

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3. 4. 5. 7. 8.

Shri Ramsinbhai P Director Parmar Shri Vipulbhai M. Director Chaudhary Shri Shamalbhai B Patel Director Bank of Baroda, Bankers State Bank of India, HDFC Bank C.C.Choksi & Co Auditors

ď ś GCMMF LTD. TURNOVR/FINANACIAL REPORT

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 Rs In Lacs

BY

INCOME Sales *

" "

Milk & Milk Products Others

"

Less : Excise Duty paid

" " " " "

Other Income Closing Stock Finished Goods Stock-in-process Scrap Stock

"

Net Profit Brought Down (Available for Appropriation)

20062007

20052006

516823.69 9550.46 526374.15

415542.04 8586.79 424128.83

314260.39 7623.12 321883.51

964.39 525409.76 1632.06

847.55 423281.28 2254.51

33245.91

21851.68 137.17 10.80 21999.65

730.71 321152.80 2876.96 0.00 10721.51 20.39 11.49 10753.39

1544.84

1457.29

1369.74

2007-08

32981.85 253.95 10.11

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TOTAL QUALITY MANAGEMENT

TOTAL

To " " "

EXPENSES Openign Stock Finished Goods Stock-in-Progress Scrape Stock

1544.84

1457.29

1369.74

560287.73

447535.44

334783.15

20062007

2007-08

Rs In Lacs 20052006

21851.68

16154.20

10456.72

137.17 10.80 21999.65

300.95 17.84 16472.99

464.73 24.88 10946.33

384150.65

318548.43

252946.21

113584.53

79767.82

45951.11

"

Purchases of Finished Goods (Including procurement Expenses & net of Insurance claims) Raw Materials Consumed

"

Salaries &Other Benefits

4599.00

3527.27

2455.54

" "

Stores Spares & Packing Materials consumed Power & Fuel

7381.26 2264.46

6089.52 1976.76

4797.78 1689.06

548.93

497.92

446.91

117.57

111.55

105.53

867.34

931.72

996.10

80.14

102.63

125.12

16848.56

13639.36

10430.16

"

" "

Other Manufacturing Expenses Rent & Electricity charges

"

Repairs & Maintainance Expenses Rates, Taxes & Insurance

"

Marketing Expenses

"

Turnover Tax, Octroi and Vat Reimbursement

475.35

596.66

717.97

"

Postage, Telephone, Printing & Stationery

331.42

323.29

315.16

"

Traveling & Conveyance

492.45

430.41

368.37

"

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TOTAL QUALITY MANAGEMENT

"

Vehical Running & Maintenance

31.41

31.56

31.71

"

Legal & Professional Charges

76.58

54.24

31.90

"

General Expenses

378.28

346.02

313.76

"

113.29

99.66

86.03

"

Audit fees & Expenses Interest & Bank Commission

201.21

229.14

257.07

" "

Co-operative Development Expenses (Including Breed Improvement Expenses) Donation

616.37 25.00

215.30 0.00

(185.77) (25.00)

"

Depriciation/Amortization

3157.17

3651.88

"

Less: Adjusted against grant received

84.89 3072.28

112.93 3538.95

2662.46

56.85 2605.61

"

Prior Period Adjustment(Net) Provision For Contingencies Provision For Income Tax

"

- Current Tax (Net)

"

- Deferred Tax (Assets)

"

- Fringe Benefit Tax

" "

"

Nat Profit Carried Down TOTAL

-

2.02

265.89

311.80

0.00 357.71 0.00

925.00

710.00

495.00

(227.00)

(55.00)

117.00

750.00

45.00 700.00

38.00 650.00

1544.84 560287.73

1457.29 447535.44

1369.74 334783.15

386.21

364.32

342.43

2.00

2.00

2.00

490.11

480.09

0.00 470.07

666.52

610.88

555.24

52.00

APPROPRIATIONS :

To "

"

"

Transfer to Reserve Funds 25% Contribution to Education Fund Proposed Dividends @ 12%(12%)p.a on Equity Shares Balance Transfer To General Fund

63

TOTAL QUALITY MANAGEMENT

TOTAL

1544.84

1457.29

1369.74

Story Amul Butter Girl Edited from an article by Mini Varma published in The Asian Age on March 3, 1996 The moppet who put Amul on India's breakfast table 50 years after it was first launched, Amul's sale figures have jumped from 1000 tonnes a year in 1966 to over 25,000 tonnes a year in 1997. No other brand comes even close to it. All because a thumb-sized girl climbed on to the hoardings and put a spell on the masses. Bombay: Summer of 1967. A Charni Road flat. Mrs. Sheela Mane, a 28-year-old housewife is out in the balcony drying clothes. From her second floor flat she can see her neighbours on the road. There are other people too. The crowd seems to be growing larger by the minute. Unable to curb her curiosity Sheela Mane hurries down to see what all the commotion is about. She expects the worst but can see no signs of an accident. It is her four-year-old who draws her attention to the hoarding that has come up overnight. "It was the first Amul hoarding that was put up in Mumbai," recalls Sheela Mane. "People loved it. I remember it was our favourite topic of discussion for the next one week! Everywhere we went somehow or the other the campaign always seemed to crop up in our conversation." Call her the Friday to Friday star. Round eyed, chubby cheeked, winking at you, from strategically placed hoardings at many traffic lights. She is the Amul moppet everyone loves to love (including prickly votaries of the Shiv Sena and BJP). How often have we stopped, looked, chuckled at the Amul hoarding that casts her sometime as the coy, shy Madhuri, a bold sensuous Urmila or simply as herself, dressed in her little polka dotted dress and a red and white bow, holding out her favourite packet of butter. For 30 odd years the Utterly Butterly girl has managed to keep her fan following intact. So much so that the ads are now ready to enter the Guinness Book of World Records for being the longest running campaign ever. The ultimate compliment to the butter came when a British company launched a butter and called it Utterly Butterly, last year. It all began in 1966 when Sylvester daCunha, then the managing director of the advertising agency, ASP, clinched the account for Amul butter. The butter, which had been launched in 1945, had a staid, boring image, primarily because the earlier advertising agency which was in charge of the account preferred to stick to routine, corporate ads.

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One of the first Amul hoardings

In India, food was something one couldn't afford to fool around with. It had been taken too seriously, for too long. Sylvester daCunha decided it was time for a change of image. The year Sylvester daCunha took over the account, the country saw the birth of a campaign whose charm has endured fickle public opinion, gimmickry and all else. The Amul girl who lends herself so completely to Amul butter, created as a rival to the Polson butter girl. This one was sexy, village belle, clothed in a tantalising choli all but covering her upper regions. "Eustace Fernandez (the art director) and I decided that we needed a girl who would worm her way into a housewife's heart. And who better than a little girl?" says Sylvester daCunha. And so it came about that the famous Amul Moppet was born. That October, lamp kiosks and the bus sites of the city were splashed with the moppet on a horse. The baseline simply said, Thoroughbread, Utterly Butterly Delicious Amul,. It was a matter of just a few hours before the daCunha office was ringing with calls. Not just adults, even children were calling up to say how much they had liked the ads. "The response was phenomenal," recalls Sylvester daCunha. "We knew our campaign was going to be successful."

The Rebecca Mark favourite

For the first one year the ads made statements of some kind or the other but they had not yet acquired the topical tone. In 1967, Sylvester decided that giving the ads a solid concept would give them extra mileage, more dum, so to say. It was a decision that would stand the daCunhas in good stead in the years to come. In 1969, when the city first saw the beginning of the Hare Rama Hare Krishna movement, Sylvester daCunha, Mohammad Khan and Usha Bandarkar, then the creative team working on the Amul account came up with a clincher -- 'Hurry Amul, Hurry Hurry'. Bombay reacted to the ad with a fervour that was almost as devout as the Iskon fever. That was the first of the many topical ads that were in the offing. From then on Amul began playing the role of a social observer. Over the years the campaign acquired that all important Amul touch. 65

TOTAL QUALITY MANAGEMENT

India looked forward to Amul's evocative humour. If the Naxalite movement was the happening thing in Calcutta, Amul would be up there on the hoardings saying, "Bread without Amul Butter, cholbe na cholbe na (won't do, won't do). If there was an Indian Airlines strike Amul would be there again saying, Indian Airlines Won't Fly Without Amul. There are stories about the butter that people like to relate over cups of tea. "For over 10 years I have been collecting Amul ads. I especially like the ads on the backs of the butter packets, "says Mrs. Sumona Varma. What does she do with these ads? "I have made an album of them to amuse my grandchildren," she laughs. "They are almost part of our culture, aren't they? My grandchildren are already beginning to realise that these ads are not just a source of amusement. They make them aware of what is happening around them." Despite some of the negative reactions that the ads have got, DaCunhas have made it a policy not to play it safe. There are numerous ads that are risque in tone. "We had the option of being sweet and playing it safe, or making an impact. A fine balance had to be struck. We have a campaign that is strong enough to make a statement. I didn't want the hoardings to be pleasant or tame. They have to say something," says Rahul daCunha. "We ran a couple of ads that created quite a furore," says Sylvester daCunha. "The Indian Airlines one really angered the authorities. They said if they didn't take down the ads they would stop supplying Amul butter on the plane. So ultimately we discontinued the ad," he says laughing. Then there was the time when the Amul girl was shown wearing the Gandhi cap. The high command came down heavy on that one. The Gandhi cap was a symbol of independence, they couldn't have anyone not taking that seriously. So despite their reluctance the hoardings were wiped clean. "Then there was an ad during the Ganpati festival which said, Ganpati Bappa More Ghya (Ganpati Bappa take more). The Shiv Sena people said that if we didn't do something about removing the ad they would come and destroy our office. It is surprising how vigilant the political forces are in this country. Even when the Enron ads (Enr On Or Off) were running, Rebecca Mark wrote to us saying how much she liked them."

Amul's point of view on the MR coffee controversy

There were other instances too. Heroine Addiction, Amul's little joke on Hussain had the artist ringing the daCunhas up to request them for a blow up of the ad. "He said that he had seen the hoarding while passing through a small district in UP. He said he had asked his assistant to take a photograph of himself with the ad because he had found it so funny," says Rahul daCunha in amused tones. Indians do have a sense of humour, afterall. Where does Amul's magic actually lie? Many believe that the charm lies in the catchy lines. That we laugh because the humour is what anybody would enjoy. They don't pander to your nationality or certain sentiments. It is pure and simple, everyday fun.

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 Recommendations on TQM We found that Amul is having problem of Butter Shortage, shortage of material supply , etc we recommend them following solutions: 1. Total employee involvement in decision making. 2. Monthly quality review of product 3. Internal quality management for employees In Mahindra & Mahindra – FES we found problem of employee rigidity and beaurocratic behavior towards working style. We recommend them: 1. Employee involvement in decision making & strategic planning 2. Treat all employees on same scale – uniformity in employee treatment. 3. Improvement in Internal quality management for employees

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Project Report on Total Quality Management