domain-b.com : Back-to-basics at Sona Koyo

Sona Koyo has been using TQM to increase productivity through employee participation while eliminating wastage and rework, reports V Jagannathan. In an interview, The Deming journey, Dr Surinder Kapur, chairman, explains how

Chennai: The chairman of Sona Koyo Steering Systems Limited, the passenger car and utility vehicle steering systems and columns manufacturer, Dr Surinder Kapur was worried as he pored over the production data.

For it was only in November 2003 that Sona Koyo had won the prestigious Deming medal awarded by the Union of Japanese Scientists and Engineers (JUSE), widely considered the Nobel equivalent for manufacturing.

What bothered him was a minuscule increase in plant level rejects. Dr Kapur didn't want the smooth workflow to be disturbed since Sona Koyo is targeting export revenues of Rs1 billion, up from Rs6 crore today, through global automobile manufacturers who are looking at India as their base for sourcing components.

Dr Kapur, a PhD in fluid dynamics, embarked on corrective action - a back-to-basics programme was initiated at the Rs286-crore-turnover Sona Koyo.

Today, top officials like chief operating officer K M Deshmukh, spend one day in the shop floor observing the work process and coming out with at least 20 new ideas to ease the work flow.

Says Dr Kapur, "All examinations exert pressures and pulls. Similarly during the run up to the Deming medal, we too faced severe pulls and pressure."

During the four-year run up to the Deming medal, employees put in nearly ten hours of work everyday and remained totally focused.

"After we received the medal, the organisation slackened a bit. This will be true of all companies and each one will find its own ways of tackling the issue."

According to him, the slackening was the signal that the systems and procedures had yet to be assimilated fully within the organisation, necessitating the back-to-basics programme even after being awarded the prestigious medal.

Under this programme, each of the 50 senior managers will compulsorily spend one day a month at the shop floor. The mandate is to observe the production process and how each worker performs his task, in order to generate ideas for improvements.

"The manager is not there to appraise or review the worker's performance," explains Dr Kapur. On the other hand, he has to observe the work and come out with at least with 20 suggestions every month for improving and easing the work.

Dr Kapur candidly admits that he does not expect 1,000 ideas to be generated by the 50 managers tasked with coming up with 20 ideas each, every month. Rather, it is to challenge them to generate substantive ideas for continuous improvements in a systematic manner.

The other benefit is that top managers, who were earlier focused on functional responsibilities away from the shop floor, will now have to be equally focused on the shop floor and workers' issues.

Ever since the company started the total quality management (TQM) process, Sona Koyo is mining ideas after ideas. The average ideas raked per employee have risen to 20.6 from the meagre two in 1997. Interestingly the company pays its workers Rs10 per idea whether it is implemented or not. According to Dr Kapur, each employee has to generate 24 ideas every year.

Similarly, the 120-member junior management team has to ensure the company wide diligent practice of the following cardinal principles of 5S:

Sona Koyo also initiated measures like (a) identification of goals for each activity (b) promotion of an office for quality systems (c) conducting a kick-off meeting for promotion (d) training and educating the employees (e) ensuring success stories are communicated to all the employees and (f) formal monitoring of projects.

To ensure that these systems are ingrained firmly, workers' training is conducted with missionary zeal. Each employee has to undergo a minimum of 60 hours of training courses per year, up from 36 hours prior to the TQM process having been set in motion.

At the time of presenting the award, JUSE (which conducts intensive studies on each company being audited) usually also suggests additional improvement areas for companies which receive the award. One of suggestion made by JUSE for Sona Koyo was that the marketing department should strengthen its coordination with customers. "We have taken this suggestion in earnest," says Dr Kapur.

Similarly, the company has extended its ambit of customer feedback collection from dealers and vehicle owners to even drivers. Sona Koyo's research and development (R&D) engineers seriously study such responses for improving the product design. As a matter of fact, one of the Deming award criteria is the ability of a company to innovate and launch new products.

Sona Koyo has a history of innovations. For instance, when the Alto model was launched by Maruti Udyog Limited, it had a three-piece steering column. In order to reduce the cost, the company telescoped the three pieces into two and brought down the weight by 15 per cent, which resulted in lower costs.

With that success, Sona Koyo went ahead to design a single-piece steering column. "We have tested the new design in the virtual world - as a computer design. We are now doing physic tests," discloses Dr Kapur.

According to him, the suggestions are both for the short term and the long term. Some of the suggestions have been implemented while others are still under implementation. After the TQM process was set in motion, the lead-time for new products has come down to 5.67 months from 12.33 months in 1998.

With TQM and TPM in place, Sona Koyo has started implementing the just-in-time (JIT) inventory management system.

Diversification of risks
Meanwhile, at the macro level, too, Sona Koyo is going back-to-the basics. The company is actively charting a de-risking strategy including broad-basing its customer portfolio to reduce its dependence on Maruti Udyog.

Part of the strategy is to increase exports, get new clients and expand its product portfolio.

Towards expanding its export basket, Sona Koyo commissioned its Rs19-crore export oriented unit (EOU) near Chennai. The new plant is adjacent to its existing facility that supplies manual steering systems to Hyundai Motors India Limited for the Santro, Getz and Accent and Hindustan Motors Limited's Lancer.

The export plant, which has a capacity to assemble 2.5 lakh manual steering systems, will be expanded to add another one million. The first year's revenue from the new plant is expected to be around $4 million and will go up to $12 million in two years. The company targets an export of Rs30 crore this year.

In addition to passenger cars, the new plant will also assemble steering systems for golf carts, being exported to the US-based Mando. Initially Mando will source 5,000 units per month before doubling it later. The company is also negotiating with two European prospects for this product.

Sona Koyo is also planning to set up a power steering line at its non-EOU Chennai plant to cater to Hyundai Motor. The Rs12-crore 1.2 lakh per annum line is due to commence operations in January 2005.

For the mainstay of its business, Maruti Udyog, the company will set up a dedicated facility in Gurgaon to produce electronic power steering systems at an investment of Rs125 crore spread across the next two years.

On its customer diversification plans, Dr Kapur says, "Derisking is a gradual process. Our target for this fiscal is Rs300 crore sales. The revised sales share will be - Maruti: 50 per cent; Mahindra and Mahindra Limited and Hyundai Motors: 17 per cent each; Toyota Kirloskar Motors Limited: 7 per cent; Tata Motors Limited: 5 per cent and others: 4 per cent." The company is currently also engaged in talks with Tata Motors.

Sales to Maruti Udyog, Last fiscal, amounted to 57 per cent of total sales, to Hyundai Motors and Mahindra and Mahindra 10 per cent and 17 per cent respectively.

Part of the risk diversification and the global plan is the acquisition of 21 per cent stake in the French company Fuji Auto Tech. With the stake acquisition, the French company is expected to provide the technology for Sona Koyo's entry into the heavy vehicles segment.