Jamil Ashraf can barely hide his pride. The 54-year-old Vice President of Sandhar Locking Devices has returned just the previous evening from Madurai, where a group of 14 "cluster" companies had gathered for a review meeting, and he's dying to break the big news: Sandhar, which supplies locks to two-wheeler companies, is way ahead of the cluster targets. In fact, its performance has been so good that the other members, Ashraf says, have asked Sandhar to go slow and set its own improvement benchmarks. ''We have already met our second-year targets, which means we have nothing to do for the next three months,'' says Ashraf, with mock exasperation.

It's been 21 months since the Automotive Component Manufacturers Association of India (ACMA), with help from the Confederation of Indian Industry (CII), put together a cluster of companies with the idea of helping them improve quality, lower costs, and become more competitive. Tools of their three-year change programme: Total Productive Maintenance (TPM), Total Quality Management (TQM), and lean manufacturing. The provocation is obvious: the auto industry, in India and elsewhere, is going through a bad squeeze in terms of volumes, prices, and margins. And that pressure is being passed along the supply chain to vendors, who now have to guarantee year-on-year price cuts. Those who can't, have no place in the game.

The good news is that at most companies there's mountain-load of waste to eliminate, starting with things as simple as shopfloor clutter. And that's resulting in huge savings. Quips K. Mahesh, Chairman and Managing Director, Sundaram Brake Linings, and the cluster's muse and mentor: "This is just the tip of the iceberg."

While the progress reports at these companies vary, the fundamental transformation-evident in Ashraf's enthusiasm-is the same: for the first time, they have learnt to question what they do and how they do it. No mean task considering that more than 300 of the 400-odd ACMA members have less than Rs 50 crore in annual sales, are largely family-managed, and have little exposure to global best practices. But as N. Srinivasan, Deputy Director General, CII Institute of Quality, points out: ''When survival is at stake, there is a greater incentive to learn.''

Still, a large number of suppliers in the Rs 19,600-crore industry haven't shown any interest in the cluster initiative. And that's a problem. Says Mahesh: "We'd love to do a copy *.* command and create at least another 10 clusters, but I think this is beyond both CII and the ACMA Centre for Technology (act); the OEMs must chip in too." A willingness to change, then, is the first necessary step on the long road to world class competitiveness. And as the following case studies show, a concerned few are already off the mark.

HI-TECH GEARS
Getting More From Less

Deep Kapuria (left) and son Pranav: Lean's new, but passionate, converts

Messy forge shops are usually not the places where manufacturing history is made. But that's not stopping people at Hi-Tech's Bhiwadi factory from taking a shot at it. In just three months, this manufacturer of two-wheeler timing gears has scooped out rejections at its forge shop from a staggering 35 per cent to just 1 per cent. Is that a record of sorts? Pranav Kapuria, Hi-Tech's 26-year-old Director thinks so. And as he turns his 106-kg frame-the gym enthusiast can do a 150-kg bench press-to tell you that, you know better than to disagree with him.

Jokes apart, Hi-Tech is one of the companies best placed to break records. For, driving the change at the 16-year-old company are Pranav and his father Deep Kapuria, who is also the new President of ACMA. In fact, so profoundly have the Kapurias been inspired by Mahesh's lean evangelism that Pranav was actually sent to study at lean guru Dan Jones' Lean Enterprise Research Centre at Cardiff University Business School. Now, Kapuria Jr is proselytising the others at Hi-Tech. Says he: "Lean is about innovation, you need to develop an eye for waste."

Over the last year-and-a-half, Hi-Tech has done just that. Using cross-functional teams it has worked on improving its equipment reliability and process flow. There are three model lines (each representing Hi-Tech's three business units), where the improvement efforts are focussed. The results have been impressive. In many cells, production per shift has risen from 1,000 units to 1,500 units; machine shop defects are down from 16,645 PPM to 14,100 PPM and inventory turn ratio (calculated as material cost of sales divided by raw material plus work in process plus finished good stock multiplied by 12) is up from 7 to 17. Even machine cleaning time at one of the model lines has been reduced from almost two hours to five minutes by implementing a simple suggestion: manufacturer-installed protective guards were replaced with smaller, touch-free guards, making the machines more accessible. But the biggest gains have been in the area of asset utilisation. Hi-Tech's sales have jumped 30 per cent without any additional investment in machinery. Says Deep Kapuria, MD, Hi-Tech: "The beauty of lean thinking is that it pushes you to discover ways of doing more with less. After all, it doesn't make any sense to increase production of the back on new investment." You bet it doesn't.

SANDHAR LOCKING DEVICES
Leveraging Human Capital

Davar (left) and Ashraf: Setting their own benchmark

Jayant Davar is unlikely to forget the year 2002. Not because it happens to be the year when his Vice President Jamil Ashraf beat other companies in the cluster, but because it happens to be the one in which his company achieved a rare distinction: each of its 700-odd operators had a high school certificate. "Your operators have to be able to question and think for themselves; that has to be the foundation of any lean organisation," says Managing Director Davar, who started off with a hole-in-the-wall sheet metal unit, 16 years ago.

Investing in human capital-200 of Sandhar's operators have been trained abroad, and all can operate a computer-has paid off big time. Sandhar is on a roll. For instance, it had set itself a defects target of 500 PPM (parts per million) by December, 2002. By August itself, the figure was down to 599. Similarly, productivity on its model line is up almost 50 per cent to 100 lock sets per operator per shift. Its secret? Low-cost automation, machine lay out changes, mistake-proofing of error-prone processes, and better segregation of sub-assemblies.

Take its raw materials store, for example. In June this year, Sandhar introduced the supermarket concept here, whereby some 55 fast-moving components are placed in a U-chain of carts, and the slow-moving items are put in racks with limited space (to avoid excessive stocking). The result, Sandhar has been able to reduce its fast-moving components inventory to just three hours, and work in process inventory to 0.3 day (or eight hours). Says Ashraf: ''Now we want to reduce our overall inventory to two days (from two-to-five days) by the end of this fiscal.''

Surely, part of Sandhar's stunning gains are due to the relative simplicity of its product line, but a larger part is due to its relentless push. That explains the 43 per cent jump in productivity, 100 per cent customer straight pass (read: no customer rejection), and the rise in value added per employee (defined as sales minus variable cost divided by total number of employees) from Rs 4.6 lakh in 1999 to Rs 11.90 lakh in August 2002. As Davar might say, it's payback time at Sandhar.

UCAL FUEL SYSTEMS
From Good To Better

Mohanaranganathan at the die casting machine: The partnership helps, but Ucal is further tightening the screw on wastes

Its customers should be head over heels in love with Ucal. Last year, the carburettor and fuel injection systems manufacturer gave away almost Rs 10 crore in discounts to its two-wheeler and four-wheeler customers. The savings, reveals P.K. Mohanaranganathan, Ucal's Vice President (Operations), came directly from shopfloor efficiencies. Compared to some other companies in the cluster, the Rs 176-crore Ucal came with a huge advantage. Having Mikuni, a Japanese auto comps major, as a 26 per cent joint venture partner meant that Ucal's Maraimalainagar plant (near Chennai), set up in 1989, started with cellular manufacturing. Says R. Sundararaman, Executive Director, Ucal: ''If others had, say, 45 per cent efficiency during the start of the programme, we had 65 per cent.''

Therefore, while Ucal's gains may not be as significant, it has done pretty well for itself. Its customer delivery is up from 97 per cent to 100 per cent; warranty rejections are down from 2,000 PPM to 200 PPM; inventory has been hacked to 23 days from 72 days earlier, and the plan is to bring it down to 18 days. Finished goods inventory currently stands at one-and-a-half days, but Sundararaman wants to pare it to three hours. If things pan out, he expects the bottomline to rise to Rs 24 crore this fiscal. That's a 50 per cent jump over last year's. Quips Sarita Nagpal, a cluster counsellor: "Some of our members have saved so much money that they don't what to do with it." Now, that's a problem nobody minds.

SONA KOYO
Opportunity In Adversity

Thinking lean: Kapur (middle) with Deshmukh (right) and Koyo's Yoshitaka Akiyama

It is every company's worst nightmare: Idle manufacturing lines. Yet, at the Gurgaon-based steering and axle manufacturer, Sona Koyo Steering Systems, there's no sweat on the brow of its Chairman and Managing Director, Surinder Kapur, although the line that feeds its biggest customer is at a standstill. Reason? As a lean practioner, Sona-not part of K. Mahesh's cluster, but that of TQM-manufactures only against customer order. If that means having to make 16 deliveries a day-as Sona does in the case of Maruti-so be it. Says Kapur: ''If you factor in the inventory carrying cost, the savings of just in time manufacturing far outweigh the cost of idle machines."

Despite cutting prices of its steering systems by an average of 3 per cent and battling three consecutive years of declining sales, Sona more than doubled its profit after tax last year to Rs 4.77 crore from Rs 1.78 crore the year before. One of the lines, which had 11 machines and two operators, had historically taken eight hours for set up change. After making dozens of improvements and using a cross-functional team, Sona slashed the set up time to a bare 20 minutes. "That," says Kiran Deshmukh, coo, ''is the power of lean thinking.'' Indeed.

MADRAS ENGINEERING INDUSTRIES
Back From The Dead

Cutting waste: The automatic slack adjuster assembly line

Barely eight years ago, E.K. Parthasarathy was busy shutting down factories. Today, the Executive Director of Madras Engineering Industries is scaring the living day lights out of his Chinese rivals. And even as the price of slack adjusters (part of an air brake system) that his Rs 35-crore company makes has been coming down in export markets from $8 a year ago to $5.5 today, Parthasarathy has increased net profits by 50 per cent. Incredible, but true. "Over the next two years, we want a 100 per cent improvement over the situation prevailing today," says the man, poker-faced.

He isn't being over-ambitious. Two years ago, by Parthasarathy's own reckoning, "everything was chaotic". Even packing for exports, which account for nearly 60 per cent of the revenue, was in a mess. Parts would get mixed up because several orders were processed simultaneously. Now, a kanban system (it clearly links parts with the respective order) has simplified packing by allowing only one crate to be filled up at a time. The use of kanban for raw material inventory has already brought down stock levels from 60 days to 13.5 days, and the plan is to lower it to 7.3 days over the next 12 to 18 months.

There are improvements in other areas as well. Consider: In the shaft cell, manufacturing time is down to 7.5 days from 21.53 days; in the body cell, it has been slashed to 0.91 days from 2.5 days; changeover time has been reduced, for some operations, to 10 minutes; and the number of operators on a line in the old Ambattur factory (there's a new one in Maraimalinagar) used to be 33, compared to 16 today. All these are areas where Parthasarathy is targetting 100 per cent improvement.

FENNER INDIA (MADURAI)
The "Josh" Machine

Brainstorming: L.S. Shashiprakasha (gesturing) at the profile calendering machine

When L.S. Shashiprakasha wanted to sell change to the 1,000-odd workers at Fenner's Madurai plant, he did not roll out any high-priced mass communication exercise. Instead, he had the workforce broken up into groups of eight or 10, and regaled them with stories from the Mahabharata. Incredibly, but not for senior gm (Operations) Shashiprakasha, the approach worked. "More than a thousand improvement suggestions have come in from our workers in the past four months, only that we don't have the resources to implement all of them," he points out.

Like the other cluster companies, Fenner-it makes V-belts and conveyor belts, among others-believes it has got the basics of good manufacturing (like housekeeping, daily work management, and machine maintenance) right, and is now closer to inventory management. The internal rejection rate has fallen by 30 per cent, the lead time for fulfilling export orders has been crunched to four weeks from 12 to 13 weeks earlier, and the work in process inventory is a third of what it used to be. Waste elimination alone has saved Fenner some Rs 2 crore. "Every day improvements are happening because the cluster initiative has filled our workers with josh," says Shashiprakasha.

The Rs 260-crore company's turnover has been stagnating for the last three years because of price cuts. But the bottomline has actually improved 5 per cent. Shashi-prakasha feels that 60 per cent of the cluster targets is still to be achieved. That's good news because every time his men make a small improvement, they are actually making money.

"COMPETITION MAKES COMPANIES CLEVER"

Yamaguchi: The ideas man Guess where Sueo Yamaguchi was on his 56th birthday? No, not at home in Japan, but on a podium at the India Habitat Centre, Delhi, vetting not one or two, but 46 presentations from his TPM cluster companies. But then you wouldn't expect anything else from a man who is teaching India Inc. quality. BT's R. Sridharan buttonholed Yamaguchi recently at CII's first Kaizen conference. Excerpts: You've been advising some Indian companies on TPM since 1998. How do you view their progress? There's a drastic change. Earlier nobody used to talk about cost reductions. Now, that's a widespread concern, because the market condition has drastically changed. Competition is making companies clever. What's been the hardest part about changing the attitude of companies? The CEO, and the top management. The union is not a problem. If the ceo is not serious (about change), how do you get the others to change? Original product development is still an issue with Indian companies. That's because they wait for their joint venture partners to give them the knowhow. But that can change. Look at TVS Motor. Earlier its motorcycles were from Suzuki. Now, Victor is TVS' own idea. Similarly, Sundaram Brake Linings exports to many countries but has no foreign collaboration. So, if Indian companies want to do own R&D they must sever their JV partnerships.