Ashok Leyland

２０１７年度
デミング賞
受賞報告講演要旨
Ⅱ
Ashok Leyland Limited, Hosur Unit Ⅱ
Summary of Ashok Leyland, Hosur Unit II Presentation
Contents
1 Organizational profile
1.1 Ashok Leyland (AL)
1.2 Ashok Leyland - Hosur Unit II (ALH2)
2 Organization structure
2.1 Ashok Leyland organization structure
2.2 ALH2 organization structure
3 Business Objectives and Strategies
3.1 Background
3.2 Business objectives (FY12 – 14)
3.3 Formulation of ALH2 Vision
3.4 System to realize Vision
3.5 Business objectives & Strategies (FY15 – 20)
3.6 Alignment of ALH2 vision with AL Vision
4 TQM promotion
4.1 Need for TQM
4.2 TQM framework of ALH2
4.3 TQM diagnosis
4.4 Daily Management
4.5 Policy Management
4.6 Cross Functional Management
4.7 Improvement methods/ initiatives/ techniques
4.8 Education & training
4.9 TQM promotional activities
4.10 TQM maturity index
5 Major management challenges, strategies & progress of TQM initiatives
5.1 Quality Assurance
5.2 New model productionization
5.3 Cost Management
5.4 Human Resource Management
5.5 Delivery Management
6 Effects of TQM
7 Future plan
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1 Organizational profile:
1.1 Ashok Leyland (AL):
AL started in 1948 as Ashok Motors, to assemble cars in Guiding Principles of
Hinduja Group
collaboration with Austin Motor Company, England. Ashok
Motors became Ashok Leyland in 1954 with the equity  Work to Give
participation of Leyland Motors, UK and started  Word is a Bond
manufacturing Commercial Vehicles (CV) in India. Over the  Act Local Think Global
period of time, the company has become one of the key  Partnership for Growth
participants in, and drivers of India’s economic growth. In  Advance Fearlessly
1987 Ashok Leyland was acquired jointly by Hinduja
Group and IVECO. Hinduja Group is a transnational Figure 1.1 : Hinduja Guiding Principle’s
conglomerate with turnover of more than USD 25 Billion, presence across 100 countries and investments in
Automotive, Information Technology, Media, Financial services, Oil & Gas, Power, Real Estate and Healthcare.
Hinduja group and IVECO decided to part ways in 2007, following which Ashok Leyland has become an
independent company manufacturing Commercial Vehicles. In 2010, AL entered into Light Commercial Vehicles
(LCV) to become a full range player in the CV market.
(1) Our Source of Pride:

AL today is the second largest manufacturer of Medium and Heavy Commercial Vehicles (M&HCV, >7.5 Ton)
in India. Globally AL is the fourth largest manufacturer of buses (>8 meters) and twelfth largest manufacturer
of M&HCV Trucks (2016). The company achieved annual revenues of USD 2.8 billion in FY16 and the export
business footprint exceeds across 50 countries. In addition, the company has the track record of being
continually profitable throughout its 68 years of existence.
Ashok Leyland vehicles transport almost 70 million people to their destinations every day and move 10.5 million
tons of goods every day in India. The company is one of the largest bus OEMs in the Middle East, with over
60% market share in several countries. Ashok Leyland has consistently pioneered the introduction of new
technologies and innovative products into its markets is illustrated in Table1.1
Table 1.1: Technologies pioneered by AL
Year India’s First Year India’s First
First Indian made double decker- “Titan India’s first auto company to receive British Standard 7799
1967 2005
Bus” certification - ISMS
1969 Power steering introduction 2010 India’s first Hybrid CNG Plug in Bus
1976 Viking-First Bus with alternator 2012 3718- India’s first 37-tonne 5 axle haulage truck
1978 Cheetah- India’s first rear engine bus 2012 World’s first full flat, single step, front engine city bus
1980 Taurus-India’s first multi-axle truck 2013 Neptune engine - electronic fuel efficient Engine with CRS
1982 India’s first articulated bus-“Vestibule Bus” 2015 Zero Emission Electric Bus
1997 India’s first CNG Bus launched 2016 India’s first Electric Bus named Circuit
2002 India’s first hybrid electric vehicle 2016 Roll over compliance School bus named Sunshine
(2) The Capabilities:

Ashok Leyland is a fully independent manufacturer with the ability to design, develop, manufacture and market
all ranges of commercial vehicles and continuously upgrade its capability to meet customer needs.
 Manufacturing capability:
AL vehicles are powered by any of our four engines platforms, the H-Series, Neptune- series, P-15 and ZD30
series which are well accepted by the Customers. Gearboxes are manufactured under license from ZF (world’s
leading gear box manufacturer). AL also has the capability to design and manufacture application based
specialty vehicles and power solutions.
Trucks Bus Light Vehicles Specialty Vehicles Power Solutions
Long Haul, Mining, City, Suburban, Inter Short Distance Light Special Logistics Power Generator sets,
Construction and City, School, Staff and Material transfer (last Vehicles Marine and Harvester
Distribution Trucks Special Buses mile connectivity) Engines
Figure 1.2: Ashok Leyland Product Portfolio
 Validation capability:
To develop these vehicles, the company has a full-fledged technical center near Chennai, India that is capable
of independent end-to-end product development with advance CAE and simulation facilities. It is also equipped
with testing facilities, which includes six poster chassis dynamometer, crash testing and test tracks.
Figure 1.3 : Ashok Leyland – Technical Centre
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The products thus developed are produced in 6 manufacturing plants spread across India and are strategically
located (Ennore, Hosur1, Hosur2, Bhandara, Alwar & Pant Nagar); in addition, it has an overseas plant at Ras-
Al-Khaimah (RAK) in the Middle East. Plans are in place for establishment of satellite assembly plants as part
of global expansion. These current facilities have a combined assembly capacity of 160,000 vehicles (M&HCV)
and 66,000 vehicles (LCV), besides capabilities in engine machining & assembly, gearbox machining &
assembly, axle & frame manufacturing, cabin stamping, welding, painting and trimming.
Table 1.2: Plant wise Manufacturing capabilities

Aggregates Vehicle Plant
Cab Press, Weld, Axle Gear Box Engine FSM Assy.
Paint & Trim Assy. Assy. Assy. MFG
    Hosur-2
-    -  Ennore
Ras-Al-Kaima
-   - - Hosur-1
- -  - -  Bhandara
- - - - -  Alwar
      Pantnagar
- - - - -  RAK
ALH
Figure 1.4: Manufacturing foot print
(3) Customers: Figure 1.5 : ALH2 plant view
Ashok Leyland operates in India, Sri Lanka, Bangladesh, Middle East and Sub-Saharan Africa, with a small
presence in Russia and UK. Across these markets, Ashok Leyland’s products are primarily used for commercial
activities. Our trucks are used for transportation of goods, mining, construction, special purpose (firefighting,
cement mixer etc.) activities whereas buses are used for transportation of passengers within & outside city.
Our customers comprise large fleet operators, individual small fleet operators, individual vehicle owners,
entrepreneurs, government controlled state transport undertakings, municipal corporations and other
government bodies.
The company reaches out to its customer through 2619 customer touch points (M&HCV and LCV) covering
length and breadth of the Indian Sub-continent & 138 touch points established in international market.
(4) Market size and growth rate:

The global industry volumes for M&HCV Trucks (>7.5 T GVW) is estimated to grow from ~2.77 million in FY12
to ~3.88 million by 2020, i.e. an annual growth rate of 5%. The market for medium and heavy duty buses was
much smaller, at ~388,000 units in FY13. It is estimated to grow to ~538,000 units by 2020.
The Indian market for medium and heavy commercial vehicles industry has been recovering from a deep
recession. Total industry volumes dropped to a five-year low of 208,000 units of vehicles in FY14, from which
it recovered to 247,000 units of vehicles in FY15. Total Industry Volumes had further grown to reach 318,000
units in FY16 and was expected to remain flat during FY17.
Ashok Leyland achieved a market share of 31.2% in Medium and Heavy Commercial vehicles in India (its
dominant market) in FY16. This further grew to 32% in FY17. This represents the highest ever market share
achieved by the company in the past six years. The company also enjoys significant market share in the
segments that it competes in and grew from 17th position to 12th position in trucks globally & from 6th position
to 4th position in bus globally (from CY09 to CY16 respectively).
(5) Ashok Leyland Vision:
Ashok Leyland has decided to remain an independent OEM. To do so, Ashok Leyland needs to grow its scale
substantially, to achieve economies of scale across development and production. To focus the organization
towards growing scale, Ashok Leyland has defined its vision as follows:
To be in the Global Top 10 in M&HCV trucks (> 7.5T GVW) & Global Top 5 in M&HCV Buses
(8m and above) in volume terms.
The Indian commercial vehicle business environment has become extremely competitive with the entry of
several global players. While the market is expected to grow, installed capacities are expected to grow faster
and reach over 1.5 times the expected demand. Hence, to achieve the above scale, Ashok Leyland needs not
only just defend its market share in an increasingly competitive domestic market, but also grow its volumes
internationally.
AL long term strategy is to focus on “low cost and “budget” truck segments both in domestic and targeted
regional markets. Given this, Ashok Leyland has set its objectives to not just hold its current market share in
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India, but to grow its international sales volumes to 1/3 rd of its overall volumes, in its targeted markets of
SAARC, Middle East, Africa, CIS, ASEAN and Latin America.
These goals will be achieved primarily through the introduction of budget truck platforms that not only compete
successfully with new entrants in India, but also enable the company penetrate international markets.
1.2 Ashok Leyland - Hosur Unit II (ALH2):
Ashok Leyland, Hosur Unit 2 was established in 1994, with assembly facilities and one of the largest press
facilities in India for frame side members. The plant spreads over 946,964 sq. m of which 184,750 sq. m is
built-up and the balance is rich in greenery with more than thirty-four thousand trees.
ALH2 is producing a very wide range of products in truck business, including specialty vehicles. The only plant
among AL and competitors to produce vehicles of all segments in a single plant.
Based on the vehicle tonnage (Gross Vehicle Weight – GVW), the segments are classified by AL as given in
Table 1.3.
Table 1.3 ALH2 vehicle Segment and Range (current classification)
Truck
# Segment Sub-segment Range (GVW)
1 Light Light Commercial Vehicles (LCV) 2.5 to 7.5 Ton
Commercial
M&HCV LCV Vehicles (LCV)
2 Medium & Medium Commercial Vehicles >7.5 to 12 ton
Heavy (MCV)
Specialty Commercial Heavy Commercial Vehicles (HCV) >12 to 49 ton
MCV HCV Vehicles
vehicles Specialty vehicles Various
(M&HCV)
Chart 1.1 : ALH2 presence in segment
Table 1.4 History of Vehicle production at ALH2

ICV
   
(currently MCV)
Specialty vehicles X   
HCV X X  
X X X
LCV 
1994 1997 1998 2011 2017
(1) M&HCV business:

ALH2 started its production in FY94 under the license from IVECO FORD TRUCK with
an investment of Rs. 2650 million. It was first set up to produce fully built
Intermediate Commercial Vehicles (7.5 to 15 ton) with factory fitted cabin. Initial
capacity of ALH2 was 9600 numbers per annum in single shift basis. From FY’97,
ALH2 started producing specialty vehicles leveraging the factory built cabins for the
applications like firefighting, logistics and recovery. FY98 onwards ALH2 started
Figure 1.6 : M&HCV truck
catering to M&HCV models (16 to 49 ton).
Over a period of last 10 years, more variants in M&HCV has been added in various
segments. New cabin facilities were added in 2008 for higher tonnage vehicles in
tipper, tractor and haulage applications. From 2012, higher tonnage haulages with
multi axles were also added. Hence the varieties of vehicles in ALH2 has grown
from 205 to 518 cumulatively from FY14 to FY17 along with production volume
increasing from 13,700 nos. to 31,600 nos. in the same period.
Figure 1.7 : Specialty vehicle
(2) LCV business:
The cyclical nature of M&HCV business made Ashok Leyland to rethink its strategy
to better insulate itself from the vagaries of recession. Towards this the Company
started to diversify its business by focusing more on “Power Solution Business”,
“After Market” and “LCV Business”. Later these businesses really did handhold the
company during the recessions in 2009 and 2011. The major contributor for this
outright success was LCV Business and became a game changer in Indian LCV
Market.
Ashok Leyland and Nissan Motor Company came together as a Joint Venture Figure 1.8 : LCV vehicle
(JV) in 2007 to capture the growing Light Commercial Vehicle market in India
by jointly leveraging their mutual strengths. In the year 2011, JV successfully launched DOST, a sub 2.5 tonner
vehicle which found its way to a variety of applications from city material mover to Ambulances and Garbage
Dumpers. ALH2 was chosen as the right location for contract manufacturing of LCV for this JV. This decision
was driven mainly by a) the versatility and skill level of the ALH2 team b) the availability of highly flexible lines
and c) the availability of a panel pressing and painting shop, which was critical for LCV production. Later in
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Nov’16, Ashok Leyland acquired the entire stake of Nissan Motors from the JV and became independent in
Design, Development and Manufacturing of LCV Vehicles. With renewed rigor and courage, ALH2 started foray
into newer sectors, and started production of “Mitr” mini buses and “Partner” LCV trucks.
(3) Customer for ALH2:

For ALH2, Marketing is the Customer. The Customer–Supplier relationship is shown in Table 1.5
Table 1.5: Customers – M&HCV and LCV vehicles
Supplier Inputs Process Outputs Customers
MPS plan
Production plan Assembled vehicle  Global Trucks
Bought out
Materials/ child parts Aggregates and meeting Customer (M& HCV)
material
Skilled manpower Vehicle assembly requirements in terms  Sales &
suppliers
Machine of quality and delivery Marketing–LCV
Standards (Technical/ work)
(4) Salient Features:

• Strategic location closer to three southern states and western part of India.
 Capable of producing all range and types of vehicles in a single facility
 Facility for fully built trucks
 Factory fitted cabin vehicles to cater to domestic and export markets
(5) Products & Aggregates:

ALH2 is a manufacturing plant with the capacity to assemble over 50,000 (M&HCV) and 65000 (LCV) vehicles
annually. It can manufacture a full portfolio of trucks with rated load capacities from 2.5T GVW to 49T GVW,
engine power from 58 to 230 hp, six kinds of cabins and front end structures, four engine families and fully
built ready to use vehicles. It also has the capability to assemble bus chassis. Currently, ALH2 has produced
more than 100 models and more than 700 variants in 8 platforms progressively so far. The list of products and
aggregates manufacturable at ALH2 are shown below (Table 1.6).
Table 1.6 Products and aggregates manufactured at ALH2

Product and Aggregates:
Chassis assembly Cab Frame Side Member
Cab
Frame Side
Member
Front Axle Rear Axle
Rear Axle Front Axle
(6) Business Impact:

ALH2 is one of the largest plant of Ashok Leyland. The turnover of this plant is 0.80 Billion USD/ Rs 51.9 Billion
(24% of Ashok Leyland turn over) in FY’17.The LCV volumes started contributing to 50% of entire Vehicle
Volumes within 2 years from the start of JV and ALH2 volume contribution is 27% out of total AL M&HCV
volume. The Hosur plant’s competitiveness and proximity to south & west markets has played a key role in
Ashok Leyland’s transformation in the past few years. This has enabled Ashok Leyland to compete effectively
in these markets and improve market share.
Production volume - product segment wise (ALH2) Products volume
70000 contribution (FY'17)
60000
1%
50000
Numbers
40000
50%
30000 49%
20000
10000
0
FY'95
FY'96
FY'97
FY'98
FY'99
FY'00
FY'01
FY'02
FY'03
FY'04
FY'05
FY'06
FY'07
FY'08
FY'09
FY'10
FY'11
FY'12
FY'13
FY'14
FY'15
FY16
FY17
LCV M&HCV Specialty Vehicles

M&HCV Specialty vehicles LCV
Chart 1.2 : Production Volume - segment wise Chart 1.3 : Volume contribution of ALH2 products
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Production Volume - M&HCV ALH2 sales Turnover

70
344 319
319 265
Rate of increase in times

315 2.2X
300 198
ALH2: 27%
230 2X
50 1.7X
Contribution
No's in '000
200
1.3X
95.5 78.5 112.4 119.5
95.0 76.7 X
100 57.0 30 0.9X
31.7 X 0.8X
25.6 18.8 22.4
14.7 13.7 18.5
0
FY11 FY12 FY13 FY14 FY15 FY'16 FY'17 10
TIV AL-Total ALH2 Volume FY12 FY13 FY14 FY15 FY16 FY17 (e)
Chart 1.4 : Production Volume of ALH2 Chart 1.5 : ALH2 Turnover
2 Organization structure:
2.1 Ashok Leyland Organization Structure:
Ashok Leyland Limited is headed by the Managing Director (MD) who reports to the Chairman and the Board
of Directors. The organization structure comprises of corporate functions and plants. Head Manufacturing &
Project planning who is reporting to MD is responsible for all the manufacturing plants and Project planning.
Head manufacturing of ALH2 reports to him. The organization structure of ALH2 is shown in Figure 2.1.
2.2 ALH2 Organization structure:
Legend:
Manufacturing ALH2
Direct reporting
TQM
Indirect reporting Report to
[1] promotion
Corporate TQM
Manufacturing
Quality Report to Central
Human Resource Production
Production Quality and
Development Engineering Services Sourcing & Supply
Sourcing & chain
Supply chain
Report to
M&HCV Production LCV Production Unit Planning Corporate Finance
Plant Finance
(Chassis, (Chassis, and Industrial
Maintenance
Aggregates & PPC) Aggregates & PPC) Engineering Report to
Information Corporate IT
Figure 2.1: ALH2 organization structure Technology
(1) Cross Functional Management:

In order to achieve the common goal of achieving the Plant Head
plant objectives and strategies, 5 cross functional teams
were formed at ALH2. These Cross Functional
Management teams were led by senior leadership in the QA Cost Delivery NMP HR
Plant with members selected from various departments. CFM CFM CFM CFM CFM
The KPIs are deployed to respective level. These CFM’s
role was to set system and process to achieve strategic CFM Members from departments
objectives derived from the plant Vision. The CFM
Figure 2.2: CFM structure of ALH2
objectives and focused activities are explained in section 5.1 to 5.5.
3 Business objectives & Strategies:

3.1 Background:
ALH2 started its production in FY95 under the license from IVECO FORD TRUCK with an investment of Rs. 2650
million. It was first set up to produce fully built Intermediate Commercial Vehicles (7.5 to 15 Ton) with factory
fitted cabin. Initial capacity of ALH2 was 9600 numbers per annum in single shift basis. From FY’97, ALH2
started producing specialty vehicles leveraging the factory built cabins. FY98 onwards ALH2 started catering
to M&HCV models (16 to 49 ton).
In FY09, AL started LCV business (2.5 to 7.5T) in collaboration with Nissan Motor Company and from FY’12
onwards, ALH2 plant started LCV production by utilizing the existing plant, machineries and sharing the paint
shop facilities. This posed newer challenges to the plant like 1) Painting processes; 2) Handling of increased
number of variants in Weld shop; 3) Converting the existing ICV line for LCV and accommodating the ICV
products in M&HCV chassis line
With the exit of Nissan from the LCV JV business during FY17, ALH2 will have to face more challenges with
widening of LCV product range in coming years.
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3.2 Business objectives (FY12 – 14):
Until FY14, KRAs were formulated at corporate level based on AL vision and deployed in terms of KPI’s and
targets. The corporate targets were deployed to ALH2 in the form of KPIs and these KPIs were further deployed
to next levels. A gist of year on year KPIs and target given during that time are illustrated in Table 3.1.
Table 3.1: Business Objectives- Before Vision Formulation
# Key performance Indicators FY 12 Actual FY 13 Plan FY 14 Plan
1 Volume adherence (%) 79 90 95
2 0 MIS @ sales yard (DPV) 2.4 0.8 0.4
3 DMP – cabbed vehicle functional (Score) 313 220 175
4 MQMI (%) 87.1 90 95
33 Man Engagement Time (MET) % 63 85 85
34 Production Over Head (Rs/HECU) X 0.95X 0.67X
35 Improve Labor productivity (HECU/100 man days) 2.53 2.71 3.07
This process had some weakness which is given in Table 3.2.
Table 3.2: Weakness and points to improve
Year Weakness Points to Improve
FY12 to 14  Too many KPIs; difficult to  KPI prioritized and split into daily management and policy
manage and control management items
FY15  Lack of clarity on the role of  Formation of ALH2 Vision based on AL top management
ALH2 to achieve AL vision directives
 Establish Strategic objectives linking with Vision and Strategies
3.3 Formulation of ALH2 Vision:
Based on the Company vision, top management directives, study of implications and internal situational
analysis, ALH2 formulated its Plant Vision during Dec’14. ALH2 vision was framed as “To be a Flexible plant
with Wide Product Range aiming towards Operational Excellence”. The strategic objectives and strategies
were formulated based on this Vision. The meaning of key vision elements is summarized in Table 3.3.
Table 3.3: Meaning of vision elements
Vision Vision elements Meaning
Capacity to produce multi variants of small batch size to meet order
Flexible plant
requirements on time
Wide Product Capability to produce most models of the organization (the only plant in AL
To be a
Range to have to do so)
Flexible Plant
with a Wide a) ALH2 vehicle quality must compete with that from any other modern plant,
Product Range as seen by Customers
aiming towards b) Customers must get on-time delivery despite wide variety, low volume and
Operational fluctuating demand
Operational
Excellence c) ALH2 must show cost competitiveness through low depreciation cost and
Excellence
comparable maintenance costs (despite old plant) and relentless cost
improvement activities, although labour cost is higher
d) Also it is necessary to upgrade ability and competence of permanent and
temporary employees.
3.4 System to realize Vision:

Inputs Plant vision
Based on the inputs from the Deming prize committee, the gap
in existing system was addressed by improving the process in
 AL objectives &
a structured way. The schematic diagram of ALH2’s improved Strategies Strategic objectives
 Top management
system is shown in Figure 3.1. policies
3.5 Business Objectives and Strategies (FY15 ~ FY20): Annual objectives

Strategies
(Table 3.6)
 Analysis of past
results
The Strategic objectives have been revisited and the long term  Customer
requirements
strategic objectives and annual objectives were evolved to  TQM diagnosis Focused
 Critical issues DM PM activities
realize ALH2 Vision which is shown in Table 3.4. Alignment
with the ALH2 vision is thus ensured. Strategies were Figure 3.1: Schematic diagram of realizing vision
formulated by analyzing the environment and past data.
Table 3.4 Strategic objectives
Strategic FY 14 FY 15 FY16 FY 17 FY18 FY20
# Key Words Key performance Indices
Objectives Actual Plan Plan Plan Plan Plan
1.1.1) Service level –
1.1) Capacity to 88 90 XX - - -
M&HCV, n≤10 (%)
1 Flexibility deliver small batches
1.1.2) Incomplete deliveries, Scope changed 12
(n) 8 5 1
- M&HCV n≤10 (%) from FY’16  (Base)
Wide Product 2.1) Capability to started from FY’17 99
2 2.1.1) Readiness (Numbers) 101 114 147
Range produce new models  (Base)
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2.2) Early
2.2.1) Stabilization ratio Started 1.0
stabilization of new 0.5 0.4 0.2
(Ratio) from FY’17  (Base)
models
3.1.1) “0” MIS at sales yard –
0.4 0.3 @ 0.2 0.2 0.2 @ 0.2
M&HCV (DPV)
3.1) Competitive 3.1.2) “3” MIS – labour started
Quality levels 0.95 0.67 0.5 0.3
claims – M&HCV (FPV) from FY’16 
3.1.3) AVES score (Score) 31.8 22 21 20 19 18
3.2) Cost 3.2.1) Conversion cost
106.3 106.7 99.4 106.3 95.7 91.9
competitiveness (Rs/HECU) (in ‘000)
3.3.1) Monthly service level –
Operational 89.3 95 XX - - -
3 M&HCV (%)
Excellence Weekly service level – Scope changed
85 90 95 XX
3.3) On-time M&HCV (%) from FY’16 
delivery 3.3.2) Monthly service level -
90 95 XX - - -
LCV (%)
Weekly service level - LCV Scope changed
80 90 95 XX
(%) from FY’16 
99.8 100 XX - - -
3.4) Employee 3.4.1) Total Employee
Scope changed
participation Involvement (TEI) (%) 70 80 @ 85 95 @
from FY’16 
XX – Scope/ frame work changed @ - scope revision
3.6 Alignment of ALH2 Vision with AL Vision:
ALH2 is one of the key players to help AL to achieve top 10 position in Truck segment. The relation between
AL Vision and ALH2 Vision depicted in Table 3.5, which shows the importance of ALH2 towards achieving
Company Vision. The effects of TQM implementation are given in section 6.
Table 3.5: Relationship between AL vision and ALH2 vision
ALH2 Vision elements
AL Vision
Wide product range Flexibility Operational Excellence
Global top 10 in Trucks   
Global top 5 in Buses ∆ ∆ ∆
 Strong relationship  Moderate relationship ∆ Weak relationship
The annual objectives are managed through Cross Functional Management (CFM) teams. These CFM formulate
strategies (Table 3.6) and focused activities to achieve the objectives. The various focused activities
implemented by CFM are explained in sections 5.1 to 5.5.
Table 3.6: Objectives & Strategies
# Vision Strategic ALH2 Strategies CFM CFM theme CFM strategies Focused
elements Objectives activities
1 Flexibility Capacity to Transformation Delivery Meeting small and  Enhance Model mix Section 5.5
deliver initiatives bulk volume flexibility
small requirements  Supply chain flexibility
batches
2 Wide Capability to Infrastructure NMP Making ALH2  Leverage technology to Section 5.2
Product produce creation& capability ready for enhance plant readiness
Range new models development producing new
Early Control at NMP models and  Early stage involvement
stabilization upstream: achieving early  System introduction of
of new Establish early stabilization ST strategy for
models stage controls effectiveness
3 Operational Competitive Improvement in Quality Producing Quality  Developing system for Section 5.1
Excellence Quality Quality and Assurance products and defect flow out and
levels Reliability satisfying the recurrence prevention
customers  People development
 Supplier capability
building
Cost Develop IT Cost Overcoming the  “Essential” and “Muda” Section 5.3
competive- enabled cost cost disadvantage reduction
ness management due to wide range
system and flexibility
while maintaining
old plant
On time Augmentation of Delivery Meeting small and  Capacity enhancement Section 5.5
delivery Capacity and bulk volume  Efficiency improvement
efficiency requirements
Employee Establish Role, HRM Enhancing the skill  Promote improvement Section 5.4
participation responsibility and & competency as activities, reward and
Individual work well as enhancing recognition
employee
participation
Thus the unique vision and strategies of ALH2, when realized, will make ALH2 a vital part of the achievement
of the vision of the company.
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4 TQM promotion:
4.1 Need for TQM:
ALH2 is set to play an important role in Organization’s vision through Flexibility, Wide product range and
Operational excellence. To reach operational excellence, ALH2 need to excel in Quality, Cost and Delivery.
Though ALH2 was achieving its production targets, being a two-decade old legacy plant, it had challenges of
achieving company’s overall requirements in terms of producing all ranges of vehicles with fluctuating volumes
and order quantities. Also relocation of two batches of permanent manpower from ALH1 between FY10 and
FY14 to ALH2 led to further increase in conversion cost. As a part of AL strategy in FY12, LCV range of vehicles
was added in to ALH2’s product portfolio. Thus the challenges became multifold in meeting the delivery and
operational efficiencies along with sustaining the quality levels. Hence the most appropriate way to manage
the complexities in a structured way was to adopt TQM.
4.2 TQM Framework of ALH2
AL developed its model for TQM in 2012. ALH2 started AL Vision:
practicing daily management from FY13 to resolve “To be in the top 10 in M&HCV Trucks
& Global top 5 in M&HCV Buses”
abnormalities and critical issues based on factual data.
ALH2 Vision:
However, the TQM diagnosis by Deming Prize committee in “To be a flexible plant with a Wide Product Range aiming towards
Operational Excellence”
FY16 has given specific guidance to improve alignment of
Value creation to the Customers:
ALH2’s vision statement and framework based on the issues Objectives and Strategies (Q, C,D)
and challenges faced by ALH2. Accordingly, the frame work Management systems: Vehicles: Improvement methods/
 Quality assurance
was revised and changes incorporated (Figure 4.1). (QA)
 Policy Management
(8 steps methodology)
Techniques/initiatives:
 Kaizen (JDI and KKD)
Our house of TQM has the intent on the top, which is  New model
productionization
 Daily Management
(4 stage methodology)
 Problem solving
[QC story methodology
creating a win-win for all stakeholders. AL’s corporate tag  Cost management
 Delivery management
 Cross Functional (BPS and APS)]
[Statistical tools and
Management
line “Aapki Jeet Hamari Jeet” is framed keeping the  Education & Training
 Safety management
 5S initiatives techniques]
[Process Reliability Rank
customer’s interest as paramount. It denotes that “your  Environment Up]
management  Job ability and
victory is our victory”. This mean our aim is to make the competency development
customer successful and that is the only way we can be   
successful. Leadership creates the vision and strategy for Make people to make products
Guiding principles:
the businesses, and the values that we abide by. The [Work to give] [ Word is a Bond] [Act local Think Global] [Partnership for
ultimate aim is to realize AL Vision. ALH2 vision is aligned to Growth] [Advance fearlessly]
achieve this goal. Figure 4.1: ALH2 TQM Framework
The Beam below the roof represents the “way we manage”. ALH2 vision can be realized through objectives
and strategies that create value to all stakeholders in terms of QCD. This is supported by three major pillars.
Pillar 1 represents the Management systems which are put in place to effectively and efficiently manage the
QCDSM Objectives and strategies. These cover Quality Assurance, New model productionization, Cost,
Delivery, Education and training, Safety and Environmental Management.
Pillar 2 represents TQM Vehicles. ALH2, in order to realize its vision uses vehicles like Daily management (DM)
and Policy Management (PM) to align the efforts of the entire organization. ALH2 believes that its organizational
capability lies in the ability to improve, maintain and transform itself to reach heights and sustain in the
changing world. Big improvements and transformation are dealt through PM (Breakthrough) while the
maintenance and small improvements are handled through DM. DM and PM bring in stability to operations,
and manage large scale improvement, ably supported by Cross Function Management.
Pillar 3 represents Improvement methods/ techniques/ initiatives which help to resolve the problems and
achieve tasks identified through DM and PM. Kaizen (JDI/KKD) and Small Group Activity (SGA) are for Total
Employee Involvement (TEI), while QC Story approach is to enhance the problem solving capabilities of
managers.
The foundation of this whole TQM house is built on Human development. People development (Hitozukuri)
is very important in ALH2 TQM initiative, as it makes people ready to face the challenges of constantly
developing technical skills and improved ability to solve the problems. Job ability and competency of working
and managing associates are important in making right products (Monozukuri). This helps employees to
use their expertise and knowledge to give suggestions and carry out Kaizens in their work areas. Human
development helps to align & achieve the common goals of ALH2. The job ability and competency development
of ALH2 is explained in Human Resource Management section (section 5.4).
4.3 TQM Diagnosis
ALH2 underwent External TQM diagnosis from the Deming prize committee in Aug’15. Major areas of
improvement exhibited in Diagnosis report led to major systemic changes at ALH2.
In order to address major critical issues of plants, exhaustive top management diagnosis system (Management
Process Evaluation) was developed and practiced from FY16. This diagnosis covers 7 evaluation category like
1) Understanding of superordinate polices and vision, 2) Exercising of leadership, 3) Planning and deployment
of annual policies, 4) HRD and work place activation, 5) Business/operational process management, 6)
Information sharing, analysis and utilization and 7) Activity results. This enabled plant to develop policies for
FY17.
― 71 ―
4.4 Daily Management

(1) Background
ALH2 follows a DM framework which covers all aspects of DM in 4 stages as shown in Table 4.1.
Table 4.1: Illustrations of Daily Management Stages
Stage-1 Stage-2 Stage-3 Stage-4
 Process Mapping,  Review Mechanism - Monitoring of  Correction/CA as  Horizontal
Organization KPIs appropriate deployment as
 Role & Responsibility for all  Identification of abnormalities &  Revision of standards as applicable
(KPI Table) deviations appropriate  Knowledge sharing
 Standardization (PFMEA, (Daily Monitoring and identification  Stability Vs. Capability of shining ideas
Control plan, SOP/WIS) of abnormality by barbaric limit) Matrix – KPI improvement (DM Success stories)
(2) DM in Phase 1 (Establishment & Improvement): Daily Management is in practice at ALH2 since FY13
with the objective to establish proper management over key performance indicators of Quality, Cost, Delivery,
Safety and Morale. Internal DM trainers were developed to initiate this activity in model areas and after gaining
success in these areas, this has been disseminated across the plant by providing training to all managers. The
abnormalities are addressed as and when it occurred and in case of chronic issues, the analysis and action is
done at the end of every month. The guiding approach of ALH2’s DM system is to attain stability first and
simultaneously progress towards capability. The four stage approach for DM implementation which starts from
role identification and KPI finalization is being followed. Once the practice started yielding results, the plant
started widespread implementation of the system throughout the plant, including all non-manufacturing areas.
Also to enhance the capability of the people to implement DM, regular training programs were conducted.
 Alignment through Management System Charts:
Once DM started gaining momentum, then the major challenge was to establish alignment across the
departments and to eliminate overlapping & missing responsibilities. In-order to overcome these challenges
“Management System Charts “(MSCs) were introduced across the plant in a phased manner. The business or
operational processes were identified in ALH2 and MSC was prepared for each of these processes including
CFM processes with clear objectives. It explains the sequential activities to be carried out by each member
with clear Roles & Responsibilities and has references to the standards. These MSC’s have two types of KPI’s
namely; Result KPI and Effect KPI. These KPIs are monitored as Daily Management items. In order to review
the effectiveness of Quality Management System, Management review is carried out periodically. This has
resulted in further refinement of roles and responsibilities aligning to business processes.
 Review Mechanism (Stability vs. Capability):

DM practice was spread across the organization and the entire organization was connected through KPIs. The
health of the organization was nothing but the performance of these KPIs. A management analysis & review
system was established to understand the performance of the KPIs in-terms of two major criteria (Stability &
Capability). All the KPIs were reviewed based on this 2 x 2 matrix on a monthly frequency & the KPIs were
categorized into 4 quadrants as shown in Table 4.2. This analysis was also useful for the management to
identify management issues that has to be acted upon to improve the performance of the plant. With the help
of DM implementation, ALH2 has increased DM KPI achievement ratio (number of KPIs in Q4) from 17% (FY15)
to 82% (FY17) which is shown in Chart 4.1. Few irrelevant KPIs from FY15 were identified and dropped
subsequently.
Table 4.2: Stability Capability Matrix DM KPI Stability & Capability Status
2X2 Stability 1000 KPI-828 KPI-862
KPI-1071 186
matrix Not OK OK 800
114 221
Q1 Q2 600 Q4
Not OK
(Many abnormalities (No abnormality; but 268 131 707

400 Q3
Capability
& target not met) target not met) 173
Q3 200 403
303
Q2
Q4 56 27 72
(Abnormalities not 0 Q1
(No abnormalities
eliminated; but met FY15 FY16 FY17
and met the target)
OK
the target)
Chart 4.1: DM KPI stability and capability Status
(3) DM in Phase 2 (Expanding the Horizon):
DM system was further improved based on the comments of the TQM Diagnosis report. The framework of DM
system was further fine-tuned based on the collective experience and practice. An exhaustive guideline on DM
in the form of Management System Chart was prepared. Based on the improved system, trainings were
conducted throughout the organization. Also the next batch of DM trainers called TQM Leads were also
developed. The major improvements in the Daily Management System in this phase are introduction of 4
Quadrant Analysis & Abnormality reports.
 Abnormality Reports:
During the KPI monitoring, the abnormalities captured were addressed through JDIs & KKDs. This approach
yielded results in initial phase to resolve the low hanging issues. However, some of the true causes were not
directly in the control of the KPI owner as they were related to other functions/departments. Hence there came
a requirement to handle such abnormalities. Abnormality reports were thus introduced for effective
― 72 ―
communication to the concerned departments. The analysis portion was made more specific by the use of
abnormality reports which helps in the resolution of abnormalities through CFT approach.
 4 Quadrant analysis:
To enable management visualize and decide on the progress of DM KPIs, 4 quadrant analysis was introduced
to compare the KPIs’ migration over a period of time from one quadrant to other as follows:
1. Stagnant KPIs – those KPIs that remains to be in same quadrant (either 1st, 2nd or 3rd Quadrant)
2. Worsening KPIs – those KPIs that falls back from a better quadrant to worse one.
3. Improving KPIs – those KPIs that migrates from a quadrant to another better quadrant.
4. Achieved KPIs – those KPIs that have achieved both stability and capability and are in 4th quadrant.
This analysis in-turn enables the management to take decisions to enable the KPIs achieve stability and
capability. Also it is evident that all KPIs in stagnant category and Worsening category are to be given utmost
attention and be improved.
(4) Daily Management - Major System and its improvement:
Table 4.3 Table for Major System Improvement
Establishment & Expanding the Horizon (FY16 onwards)
Pre-TQM
# Improvement Pre-TQM
Before FY12 Post TQM diagnosis
(FY13 ~ FY15) diagnosis
1  No  Systematic implementation  MSCs introduced.  MSC for DM prepared
structured of DM  Management  The guidebook on “AL approach to Daily
Daily  Training on DM by consultant summarization of Management” introduced and training given to all
management  4 stage Implementation of DM KPIs through 2  MSC concept introduced for all the Business
Practice was DM x 2 matrix was process and Effects & Result KPIs identified.
available.  AL Wide DM Trainers introduced.  Existing formats revisited and new system
program launched in 2013 introduced – 4 Quadrant analysis, etc.,
4.5 Policy Management

(1) Background:
 Pre TQM: ALH2 followed KRA deployment process until FY14 for planning the yearly business and other
operational targets. The deployment was done based on the traditional method of functional KRA and targets
being deployed to plant as a Corporate Planning (CP) metric.
 Establishment & Improvement: To align the effort of all employees towards the company goal, ALH2
developed a procedure for policy setting based on 8 steps methodology. Based on 1) Factors important to the
company's performance; 2) Priority issues and; 3) Efforts required. The Break-Through objectives are identified
aligned to the Vision. Policy Deployment process was adopted as a tool for managing business in FY16 and
deployment of organization’s vision and strategy up to department head levels. Training cum workshop was
conducted to impart the knowledge about the process. Six Blitz policies were identified in FY16, monitored,
reviewed and actions initiated to achieve the policies identified.
 Expanding the Horizon phase: During the TQM diagnosis of ALH2, there were gaps identified by the
Deming prize examiners in PM. For example, there is no clear basis for plan, PDCA demonstration - review of
previous year is not taken in to consideration, target not realized and Top management diagnosis is missing.
Hence in order to address the gap, the entire PM system was revisited considering the comments and inputs
given by Deming prize examiners. The bottom up approach also strengthened as issues arriving from various
sources are also considered as inputs for prioritizing the items for policy direction.
Table 4.4: Illustrations of Policy management stages
Stage-1 Stage-2 Stage-3 Stage-4
Setting Deployment Implementation Review
 Previous year analysis  Policy deployment  Implementation of  Review of policy items
 Critical issues from various  Budget planning means & projects  Policy review
sources  Resource allocation  Monitoring of results  Top management diagnosis
 Critical issues for the period  Gap analysis  Period end review
 Evolving Annual policies  Countermeasures  Student model analysis
(2) Policy Setting FY17:

Policy Management process: The policy cycle begins in the month of April in a Financial Year. Various inputs
are considered for arriving annual policies given in Table 4.5.
― 73 ―
Table 4.5 Inputs for Policy Management process Based on prioritized critical issues and the year’s
Inputs till FY16 Inputs (Current Process) Strategic objectives & Policies are developed.
 External  Critical issues to address strategic objectives
These policies are deployed to the HODs/CFM and
Environment  Top Management diagnosis
 Corporate  TQM diagnosis by DEMING PRIZE based on it, goals and means are deployed as
Issues COMMITTEE projects. For each of the policy identified, target
 Department critical issues (Unresolved DM was set based on the analysis of previous year
issues) issues. Strategies identified for the issues were
 Status of previous year policies also deployed as projects.
 Super ordinate policies (Upper policies)
Table 4.6 Improvement summary
The breakthrough improvements are done through QC story approach and
others by daily management improvements. The summary of the projects # Item Total
identified for FY17 and implemented status are listed in Table 4.6. 1 QC story 52
2 KKD 17
(3) Policy Review System 3 Poka-Yoke 4
The progress of policies is reviewed by the upper level managers on a regular
basis. Gap analysis are discussed and countermeasures are taken. Plant level and department reviews are
done and further reviews are extended to deep thorough review of Problem solving & Task achieving themes.
Plant level reviews are carried out in Policy rooms by plant head. Policy directions are reviewed half yearly and
guidelines & directions are provided and in some cases even policies are revised, where required. The issues
arising from the reviews have not only helped to improve achievement level, but also the policy management
system.
(4) Results of Policy Management at ALH2 Table 4.7: Student model analysis
Goals
To understand status of policy implementation, KPI attainment
2X2 Matrix Implemented Partially/ not
ratio was calculated using the student model. This analysis considers implemented
not only the achievement of the objectives but also whether goals Achieved
and means identified to achieve the objectives have been fully A B
Objectives
implemented. The gist of the results of the policy objectives of FY17 is Partially/
given in Table 4.8. The policies implemented in FY17 are all explained not C D
in the CFM sections (section 5.1 to 5.5). achieved
Table 4.8 Status of policy objectives (FY17)
Policy Objective Actual Student model
# KPI Target Actual Goal Target
(FY17)
Capacity Model mix flexibility 62 % 62% A
enhancement to
1 Volume 35000 31759 Cycle time reduction 11.6 8.8
meet future
in chassis line min min
volume
Improve Straight pass DEOL 65% 58% B
Straight
2 straight pass 84 82 Straight pass 32%
pass % 40%
(LCV) shower
Manning vs actual 90% 90% A
Improve Labor LECU / 100 Line balancing 85% 85%
3 3.01 2.95
productivity man days Contract 0.91%
0.9%
productivity
(5) Policy Management - Major System and its improvement:

Table 4.9 Table for Major System Improvement
Establishment & Expanding the Horizon (FY16 onwards)
Pre-TQM
# Improvement Pre-TQM
Before FY12 Post TQM diagnosis
(FY13 ~ FY15) diagnosis
1  Traditional Goal  Introduction of PM  Training by  MSC for Policy Management prepared
Deployment  Training on PM by consultant internal faculty  Manual for PM prepared covering all the
methodology was  Vision formulated for plants. covering all stages Policy evolved based on various
followed to deploy  Formulation of Blitz policies HODs. sources including previous year analysis
CP Metrics.  8 steps methodology for  Systematic target setting
 AL Company policy management was  System introduced for Top management TQM
Vision introduced. diagnosis
formulated.  Introduction of Policy  Systematic policy deployment
Management FY16 System introduced for Year-end policy review
 X matrix  Student model analysis introduced
4.6 Cross Functional Management

Explained in section 2.2 (1) and 5.1 to 5.5.
4.7 Improvement methods/ Techniques/ Initiatives:

(1) Problem solving:
ALH2 emphasizes improvement activities involving all front line employees to create a sense of belongingness
and achievement. During the pre-TQM phase, it was observed that:
― 74 ―
a) Involvement of employees across departments is not uniform; b) There was no systematic monitoring to
track department-wise performance; c) The reward and recognition system needed improvement
d) Knowledge of employees on 7-QC tools was low
Accordingly, a system of involving all the front-line employees under the banner of small group activity (SGA)
teams has been institutionalized across the company. Employees were trained on basic 7 QC tools and
Suggestion scheme (SS) has been formed.
To institutionalize problem solving and task achieving methodology at ALH2 the following were done:
a) An IT enabled system for managing Improvement projects was designed and implemented
b) Education & Training was provided to improve problem solving skills of employees
d) Six sigma Green belts and problem solving experts were developed.
(2) Deployment of TQM Initiatives through “Mission Gemba” People participation:

To deploy all TQM initiatives with 100% involvement of all employee, “Mission Gemba” has been started in
2005. The objective of Mission Gemba was to drive frontline attitudinal change and improve work culture to
achieve significant business performance improvement. Mission Gemba is based on ISER (Information, Skill,
Empowerment, and Reward & Recognition) concept. Various TQM initiatives such as 5S, Quality, Cost, Safety,
Go green, Inventory, Critical machines, EEI and Agility have been promoted through Mission Gemba. The
participation is through Suggestions schme, SGA and CFT.
 Problem solving process through QC Story:

For further enhancement of analytical capability of managers & supervisors, Basic Problem Solving (BPS) and
Advanced Problem Solving (APS) techniques with QC story approach was introduced in the plant. Managers
and supervisors, who have selected the projects for resolution, undergo 2 days training for BPS and 6 days
intensive training on APS in two phases. Total 228 Managers have been trained as of FY17 (Covers 68% of the
executives). Review by champion, project sponsors, plant head and subject expert is being done. Majority of
the SGA projects are completed following BPS techniques; complex problems are resolved using APS
methodology. Chart 4.2 shows the improving trend of the total improvement projects completion. Chart 4.4
shows the trend of the increase in QC story projects. Recently ALH2 introduced the Task achieving methodology
and measures implementation also in addition to problem solving. Going a step ahead, “Deep Dive” project
have been started for big problem which is existing across organization in nature and heavy in impact. These
initiatives have helped ALH2 in achieving the TEI in improvement activities.
Total Improvements Improvements - FY12 to 300 QC story (BPS & APS)
20000 54637 18011 60000 1136, FY17 1512, 240
Projects in Nos. (Cum)
2%
Cumulative numbers
14857 3%
7358, 225
Numbers
15000 12004 228

40000 14%
10000 22633 150
6035 Total:54637 , 41% 66
20000 45
5000 75
13652365 21968 10 19
, 40% 80
0 0 0 20 40
FY12 FY14 FY16 FY12 13 14 15 16 FY17
Year value Cumulative SGA JDI Suggestion CFT KKD
Plan Actual
Chart 4.2 Total Improvements Chart 4.3 Improvement type distribution Chart 4.4 QC story projects
(3) Internal / External Competition

With the objective to promote improvements, teams are encouraged to participate both in internal and external
convention. Plant level convention “Mini Improve” and organization level convention “Improve” have been
started at ALH2 since FY03. All SGA teams first participate in plant level and then go for AL level convention.
In FY16, total 50 teams participated in plant level and 10 teams participated at AL level. Top 3 teams were
sent to National level (CII, QCFI, etc.) and international level.
4.8 Education & Training:
Education and Training is vital part of human resource development and it is the backbone of the overall
development of the company. It is an important function for the alignment of individual growth with the
organizational business plans to develop a work force proficient in knowledge, skill & competence. Training is
being continuously imparted to all permanent and temporary employees in ALH2. Trainers, both internal and
external, are identified based on their competency. External trainers include TQM consultants. ALH2 is handling
wide variety of products, the product requirements & quality expectation is varying product to product. This
requires a high degree of skill to perform the operations. Hence ALH2 developed a unique system of “Job
ability development” for associates and role based “competency development” for executives. The job
ability and competency development are explained in section 5.4. With active management support and
participation, several TQM training programs have been designed and are organized for the various level of
employees.
― 75 ―
4.9 TQM promotional activities:

(1) TQM Promotion Organization: Corporate
Since the inception of TQM, Corporate TQM and Plant TQM cell was TQM Plant TQM
Champion
supporting the plant in TQM education and promotion. Steering
committee was formed in FY13 headed by the plant head, supported by Plant TQM Department
department heads and the department heads are supported by the Heads
department coordinators. Plant TQM cell is supported by the Corporate Department

TQM. The role of TQM organization is given in Table 4.10. Coordinators
Fig.4.2 TQM Organization Structure

Table 4.10 Role of TQM organization
Department Department
TQM secretariat (Corporate) TQM champion TQM cell (Plant)
Heads coordinators
• Planning & research • Mentoring & • Training and coaching • Scheduling • Facilitating &
• Allocate resources & budgets driving plant level the team on TQM actions, reviewing progress
• Capture customer & stakeholder’s TQM implementation & timely course monitoring
expectations • Development of corrections
• Formulate implementation strategies standards & system
• Liasoning with JUSE and TQM sensei specific to plant
• Development of systems
(2) Visits to Deming prize winning companies: In order to learn and apply the best TQM practices, visits
of Employees to Deming prize and Deming Grand Prize winning companies such as Denso, GC
Corporation, Wabco, TVS Motors, Rane, RSB & SGC and guest lectures by top management of Deming prize
winning companies had been arranged in FY15 and FY16 for top management leaders and TQM leads.
(3) TQM Leads development: To promote the TQM culture across the plant, DM trainer and TQM leads
programs were conducted and representatives from each department/ functions trained by TQM Sensei on
various aspects of TQM like PM, DM and Kaizen approach. Upon successful completion, they were certified as
“TQM Leads”. These Leads play the role of front-runner cum facilitator for TQM initiatives in their processes.
As of FY17 there are 11 TQM leads and 15 DM trainers developed in ALH2. This has helped the departments
address DM and PM issues systematically thereby improving the DM attainment ratio to 82%.
4.10 TQM Maturity Index: TQM Maturity index

5.0
To gauge the progress of TQM initiatives a maturity index has been 4.0
4.0 1 to 5 scale
3.4
established and monitored under 4 categories such as TQM Basic, TQM way, 2.7
Criteria
3.0 revised
TQM culture and Deming prize activities. These 4 categories cover various
Index
in FY17
items such as policy management, daily management, cross functional 2.0
management, problem solving, training and development and Deming Prize 1.0
activities etc., Monthly PDCA of TQM activity is rotated based on TQM 0.0
maturity index. The TQM maturity index has been improved from 2.7 (FY15) FY15 FY16 FY17
to 4.0 (FY17) in 1 to 5 scale.
Chart 4.5: TQM maturity index
5 Major management challenges, strategies & progress of TQM initiatives

5.1 Quality Assurance:
(1) Background:
ALH2 Quality Assurance System started with Intermediate Commercial Vehicles (ICV) in the year FY94, and
expanded with legacy AL models of Medium & Heavy Commercial Vehicles (M&HCV) manufactured in other
units in FY98. Subsequently in FY11, AL-Nissan Joint Venture (JV) for contract manufacturing of Light
Commercial Vehicles (LCV) started with inputs of AVES (Alliance Vehicle Evaluation Standards) & Quality Gates,
which were subsequently adopted in M&HCV also. The overall Quality Assurance System of ALH2 is focusing
on Quality related aspects of New products, Incoming Parts, Inprocess, Outgoing Products, and Field Quality
to meet the Customer requirements.
With the company’s growing needs as per the vision, ALH2 requires a high degree of Flexibility to handle
Wide Range of products aiming towards Operational Excellence, in spite of being a two decades old plant.
Hence Quality Assurance CFM addresses the requirements to meet the objective of achieving “Competitive
Quality Levels”. With increase in the number of variants produced in each models & platforms and high
expectations on quality levels, led to increased complexity of manufacturing, resulting in more defect
generation & outflow.
(2) Detailed explanation of focused activities – Examples:
 Improvements in Outgoing Quality:
Introduction of Process Reliability Rank Up methodology to reduce In-process defects
 PRRU methodology introduced, 12 CFT’s identified and Quality gates PRRU
training provided on PRRU methodology. Focus on defect Focus on recurrence
 All defects modes were consolidated and mapped detection & correction prevention
Figure 5.1.1 – Approach for in-process
issues
― 76 ―
 Based on the existing process controls (PFMEA, Control plan and WIS) occurrence & flow out controls were
evaluated and general assessment rank (A, B, C, D, E, F) was given for each defect mode and target ranks
identified based on kaizen plan with the target 50% of reduction of defects in one of the high volume models
 170 defect types were resolved through PRRU approach in lift axle model (Chart 5.1.1).
Table 5.1.1: M & HCV Chassis Line 3 Process control Rank (Lift Axle models):
Lift Axle Models Table 5.1.2 – Kaizen
Before Occurrence After Occurrence
170 category
        250 215 defects # Kaizen Nos.
No of defect
<1> A A A B <1> A A A B
resolved category
types
125 1 Standar 126
Flow out
45
<2> A B C (1) D <2> A B (1) C (0) D dization
0 2 Process 35
Flow out
C Defect Defect
<3> A C D (125) E (1) <3> A (125)
D
E (0) Kaizen
(1) types - types -
FY16 FY17
<4> B D E (39) F (4) <4> B D(39 E (4) F (0) 3 Tool 9
Chart 5.1.1 – Defect TOTAL 170
Introduction of Human Error Prevention Techniques(HEP): reduction in lift axle
models
In PRRU network sheet, the in-process defects
Human Errors Operations Abnormalities Effects
against each operation & upstream defects were
 Replacement
mapped and the current control rankings were  Facilitation
 Detection
 Mitigation
mapped. From the process defects, the defects  Elimination
attributed to Human errors were stratified and Figure 5.1.2 – HEP methodology
kaizen planning done to eliminate Human errors (Table 5.1.3). To reduce Human error, HEP techniques were
introduced along with Process reliability rank up (PRRU) methodology.
Table 5.1.3 – HEP actions
Problem Cause Action Results
Process Inadequate  63 team members were trained for HEP techniques Poka-Yoke Vs DPV at PDI
DPV at PDI
issues process Framework has been created for implementation of 500
Poka-Yoke
100
in Nos.
250 75
related to control HEP techniques based on learnings, 50
25
human  Cumulative 369 Poka-yoke improvements initiated, 0 0
FY12 FY14 FY16
errors due to this PDI defects reduced from 107 to 18 Poka-Yoke Defect at PDI
defects as shown in the Chart 5.1.2 Chart 5.1.2 – Poka Yoke vs Defects reduction
Sustenance of these improvements are monitored though periodic process audits.

 Improvements in Incoming Quality:
Supplier initiatives - System improvements for Surface protection & dimensional issues
During FY’12, the incoming rejection was very high (7196 ppm). The major contributors were Aesthetics,
Dimensional, Welding and Casting defects. In order to reduce the incoming rejections, various initiatives like
Painting & handling improvements drive, 100S, Weldone and Castright were taken to address the
management and technical issues at supplier end over the period of time. The typical example of key
initiatives (Painting & handling and 100S) taken and the results are summarized in Table 5.1.4.
Table 5.1.4: Supplier improvement initiatives
Problem Cause Initiative Actions Results

Surface Painting &
Process design  Process improvement for Salt spray resistance Surface Protection Issue (Focus 35
protection / product Handling with suppliers, Powder coater’s 5000 4262 suppliers)
Issues design on Improveme  Assessment & improvements, Zinc rich primers & Actual
Plan
contributed surface nts drive: sealant introduction, etc. 2500 1378
to 57% of treatment (FY13)  Packing standards revised to reduce handling 662 512
183 95
PPM
Overall specification(25 Part defects through Painting & Handling sign off 0
rejections not adequate families in 2  Development of surface protection FY12 FY13 FY14 FY15 FY16 FY17
(FY 12) Phases) guidelines/inspection standard Chart 5.1.3 - Surface protection defects
Dimensional  Inadequate 100S  Quality Gates concept introduced at supplier Dimensional Issues (Focus 100
Issues defect flow initiative: end to control defect flow out at PDI stage 5000
4247 suppliers)
Actual
contribute control at (FY15)  Quality Gate Manual was created & training Plan
to 40% of supplier end PPM > 100 imparted to all the identified Suppliers. 2500 1327
644 316 153
Overall Suppliers,  Checklist was created to evaluate Q gate
0
PPM
rejections identified for effectiveness & monitoring done on a regular FY13 FY14 FY15 FY16 FY17
(FY 14) improvement basis to ensure the effectiveness Chart 5.1.4 - Dimensional issues
 Improvements in-process quality (Occurrence Prevention Control):

In FY 15 straight pass was taken as one of the objective to improve in-process Quality. Analysis, showed that
process defects were high in order to reduce occurrence, PFMEA, SPC and Poka-Yoke were used. Defects
attributed to skill were addressed through Job ability development and HEP as in Table 5.1.5.
Table 5.1.5 System improvement for occurrence prevention
Existing system - Gap Analysis System Improvements Initiated Results
System improvement in Potential Failure Mode Effect Analysis (PFMEA)
 No structured feedback of actual  Extensive training was imparted to 24 executives and 8 CFTs 131 Operations
failure modes to PFMEA. All formed across for PFMEA System improvement completed, which
potential process failure modes  Comprehensive way of identifying failure modes based on defect resulted in 131 Poka
not addressed data bank in addition to potential causes. Yoke implementation in
 Despite coverage of failure modes  For each element of operation 16 types of human errors listed & FY 17
in PFMEA, defects were recurring possible effect on product is termed as failure mode
and Occurrence ranking was not  Multiple inputs & fact based occurrence ranking
fact based.  Use of HEP for Detection & Prevention Controls
― 77 ―
Early stage control through new model stabilization

 No comprehensive system to  To achieve the quicker stabilization of new models, stabilization  Stabilization ratio
achieve early stabilization of new index has been created consisting of a) Lead time b) Build achieved as 0.43 (FY17)
models considering QCD targets. quality issues and c) Cost. against the base of 1.0
 Introduced Stabilization-Time (ST) strategy to reduce losses. (FY16)
Job Ability Development for Associates for defect reduction

 System lacks assessing skill level  New Framework Job Ability Standard (JAS) created for assessing DPV due to permanent
of permanent associates skill on 9 parameters considering QCDSM associates reduced from
considering rejections, reworks &  JAS implemented in Cab Trim as pilot - 87 associates are 0.31 to 0 DPV in cabin
safety were not considered; more assessed, further in Frame & Chassis Assembly and Cab Weld of trim area.
defects due to men M&HCV covering 668 permanent associates in FY 17
SPC Implementation for CTQ parameters
 Existing Framework was  Framework created for Quality Gate DPV
inadequate SPC techniques reduced from 8.7
 Being an assembly plant, usage  Attribute type: 50 U - (FY16) to 4.9 (FY 17) by
of attribute Charts like U & P Chart for Defects using the application of
Charts for defects was not monitoring in QG. attribute Charts in cab
adequately applied.  Variable type–Monitoring of 6 CTQ parameters such as Clutch trim section
 Barbaric control limits used for stand out, coating thickness, etc., thro’ variable control Chart.
attribute parameters Actions initiated against abnormalities and chronic issues.
(3) Effects:
Reduce 0 MIS DPV @ sales yard (M&HCV) Reduce AVES Score at sales yard (LCV)
A) 0 MIS DPV @ Sales yard (M&HCV) 48.1
2.4 50 41.4B) AVES SCORE
Standard revised in FY15 40 31.8 57% reduction
2.1
1.2 33 24.9
DPV
92% reduction
30
Score
0.86 28 21 20.3
1.1 0.47
0.23 0.2 20 18 22 21 20
0.8
0.1 0.2 0.2 10
0.4 0.3
FY12 FY13 Q4 FY14Q4 FY15Q4 FY16Q4 FY17Q4 FY12 FY13 FY14 FY15 FY16 FY17
Plan Actual Actual New Standard
Plan Actual Benchmark
Chart 5.1.5: “0” MIS DPV at sales yard
Chart 5.1.6: AVES score at sales
(M&HCV)
yard (LCV)
Incoming rejection ppm Straight pass @ Firewall stage (M&HCV)
C) Incoming Part Rejection PPM D1)Straight Pass @ Firewall Stage (M&HCV)
8000 7196 90
65 80
6000 4352 96% reduction
50
PPM
4000 80
1834
%
3000 1091 50
582 297 63
2000 2000 44
1000 18 4.5 times improvement
0 500 275
10
FY12 FY13 FY14 FY15 FY16 FY17
Plan Actual FY14 FY15 FY16 FY17
Chart 5.1.7: Incoming parts rejection ppm Plan Actual
Chart 5.1.8: Straight pass (M&HCV)
Straight pass @ Firewall stage - LCV 3 MIS

D2)Straight Pass at Firewall stage - LCV 1.5 E) "3" MIS
95 93.5 42% reduction
1.2
%
Failure per
91
0.97
vehicle
88 93 1
90
90.7 0.7
7% improvement
0.95
87.8 88.8 0.5
85 0.67
FY14 FY15 FY16 FY17 FY15 FY16 FY17
Plan Actual Plan Actual
Chart 5.1.9: Straight pass (LCV) Chart 5.1.10: 3 MIS overall failures
5.2 New model productionization:

(1) Background:
ALH2 started production from 1994 to produce cargo range of (ICV) Intermediate Commercial Vehicles (7.5T
to 15T). Later the plant facilities were modified to produce M&HCV (Medium & Heavy commercial vehicles) and
LCV (Light commercial vehicles). In FY14, all the models produced in ALH1 were transferred to ALH2 and
further multi axle vehicles (M&HCV) were added at ALH2 portfolio to cater market demand. This has resulted
in considerable increase in new models and variants of M&HCV during FY14 to FY16. With this ALH2 has to
cover wide range of products from 2.5T to 49T in 8 platforms.
Even though the number of models and variants are increasing year on year, the contribution of new models
in overall volume is at 6% and in small order quantities. This posed a challenge to accommodate wide range
of vehicles and be flexible enough to handle small batches. Further to the increase of new models and
variants, the demand for M&HCV is also nearing to the capacity level. Hence it is very important for ALH2
― 78 ―
should have the readiness to produce most of AL models and to quickly stabilize production of the
new models.
New model introduction was being carried out based on 3 months rolling plan of Master production scheduling
(MPS). New model introduction process during pre-TQM period was being followed through various phases of
GenMod process (New product development), which is shown in below Figure 5.2.1. In plant, the
productionization process starts from only Phase 6.
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5A Phase 5B Phase 6 Phase 7
Proto Pilot
High Launch of
Concept Concept Detailed Verification Proto Validation Production
Level Mass
Definition Evaluation Design & Process & Homologation & Pre-
Design Prodution
Design Launch
Up to FY15
Expanding the horizon phase FY15 onwards
Handover to mass production
Figure 5.2.1 – Process of New Product Development with NMP Scope
In pre-TQM phase, the objective of new model introduction was mainly focusing on new product delivery time
in line with the regular models delivery time (“Laydown” to “Pass to Sales (PTS)”). First production vehicle at
unit was taken as a pilot vehicle and is signed off. After correction of the sign off points, the first 50 vehicles
are monitored for product delivery time (Laydown to PTS). However, it was observed that defects and the
delivery time was high. The following were major challenges faced.
1) High defects in Pilot vehicle and 2) New product delivery time high (Laydown to Pass to Sales)
Establishment and improvement phase (FY13-FY15):

During establishment and improvement phase, even though the
product delivery lead time and Pilot vehicle defects were reduced with
the help of focused activity of offline proto build, the new model lead
time was still high because the rework at post off-track and quality gate
issues (after pilot and before mass production) still existed. Hence it
was necessary to focus on quality gate issues to reduce delivery time
further. Based on the above quality gate issues & rework, a
comprehensive system to measure quality, delivery and cost has been
derived to “achieve early stabilization of new models”.
Considering the wide range and small batch quantity of new models a
new objective has been derived as readiness of plant to produce
most of AL models. For ALH2, Readiness is defined as “the plant is
equipped to produce most of AL models”. The Figure 5.2.2 indicates
how the readiness of models is being handled for existing as well as
new platforms of vehicles. Figure 5.2.2 Process flow for model readiness

 Introduction of ST (Stabilization - Time) ratio to achieve early stabilization.
In order to verify the quicker stabilization of new models, a stabilization index has been created covering a)
Lead time b) Build quality issues and c) cost. Target for each of these parameters were set and monitored
during new model productionization. A model will be considered as “stabilized” when all the 3 parameters
reached the set target value of index 1. The Table 5.2.1 illustrates the stabilization index and criteria.
Table 5.2.1 – Criteria, Rating and target for stabilization index
# Parameters 5 4 3 2 1
1 Observed defect at off-track (Q) >100 75 ~ 100 51 ~ 75 26 ~ 50 ≤25
2 Delivery time: In days (D) (LD to PTS) >60 31 ~ 60 11 ~ 30 4 ~ 10 ≤3
Cost: % over vehicle cost (C) 0.5 ~ 0.3 ~ <0.3 Target
3 (Inventory carrying cost + Rework cost till >1% 0.1 0.5 cost
PTS)
ST (Stabilization – Time) ratio: MCR & ECR status (FY15)
Stabilization ratio is calculated to understand the rate of improvement by 200 Number of ECR’s & MCR’s
comparing the stabilization index and number of vehicles to achieve the improved by 6 times
Number of change
109
during detailed design
index value between new and base models.
stage.
request
Stabilization ratio = (S2 x T2) / (S1 x T1); where S2 = Stabilization index 12 69 24

value of new model, S1 = Stabilization index value of base model; T2 = 0
Number of vehicles taken to achieve the target Index value of 1 (new N2523 N4019
model) and T1 = Number of vehicles taken to achieve the target Index value Detailed design Pilot
of 1 (base models) Chart 5.2.1 – MCR & ECR STATUS
The model (N2523) produced in FY16 was taken as a base model to compare with future new models. During
FY’17, a new model (N 4019) was introduced and stabilization was monitored through ST ratio. Based on the
issues faced during proto & pilot production of N2523 and two other similar base models, issues were
consolidated in the form of ECR and MCR and proactively addressed in the Design mock up stage and the
― 79 ―
detailed design stage for N 4019. The above activity has helped in identifying 69 ECRs like wiring/air piping
routing and clamping, accessibility issues, drawing errors and other issues. For wiring/air piping routing and
clamping issues, inputs like sagging, length, strain, bend and fouling are given in product detailed design stage.
Based on this input, product development has developed 3D modelling and released installation drawing to
take care of these issues. With this the new model N4019 was stabilized in 27 vehicles compared to the base
model of N2523 in 38 vehicles and stabilization ratio is 0.43.
 Plant readiness for future product & process technology roadmap of the company:
AL evolved a product technology road map over the period of time based on the market analysis, Customer
requirements, emerging trend, regulatory requirements, competitor analysis & benchmarking. Based on new
model requirements, product and process technology inputs are received from product development & project
planning. To meet these new model requirements, it is important to upgrade facilities and process. ALH2
evolved a process technology road map to adopt these changes and improve the capability for readiness for
new models. This will help to reduce new model productionization lead time and capability to include a wide
range models in ALH2.
Technology development – WIFI ECU flashing technology (example):
One of the process technology implemented in ALH2 for product readiness is explained below.
Table 5.2.2: Technology development - Example
Product technology Challenges Process technology Results
Until 2013, the ECU This require 4 data sets A new innovative on line WIFI enabled technology  Elimination
(Electronic Control Unit) per vehicle.Correct data introduced for feeding correct data input to 4 ECU’s. of wrong
only for Engine, data input to be fed to the 4 (Poka-Yoke). Multiple ECU can be handled through this data input
input through computer ECU’s. Any wrong ECU process technology.
manually. Later 4 ECU’s data input will lead to
were introduced for failure.
Engine, Chassis, Cabin
and Cluster electrical ACTIA ACTIA Bar
Wi-Fi AL
controls. Flashing
server
Flashing code
Tool Tool printer
(3) Effects:
Pilot vehicle defects New product delivery time
80 64 A) Pilot vehicle defects B) New product delivery time
30
50% reduction (FY12 to FY16) 21
60 53 16 76% reduction
Number of Defects
48 20
40 50 13
40 52
Days
48 33 9.3
38 32 25 40 7.3
20 10 4.9
Quality gate issues 15
capturing started
18 11
0 9
0 6
FY12 FY13 FY14 FY15 FY16 FY17 4
Plan Actual
Plan Actual
Pilot defects of 64 in FY12 reduced to 32 in FY16. Quality gates defects Product delivery time reduced from 21 days to 4.9 days (as average for first 50
added in FY17 and base line revised as 50 Chart 5.2.2 – Pilot vehicle defects vehicles) Chart 5.2.3 – New product delivery time
Early stabilization of new models

6.0 C) New model Stabilization ratio Base model -N2523 Original Implementation: S1 x T1 = 5.0 x38 = 190
ST Loss Reached
With ST strategy -N4019 ST Reduction Plan : S2 x T2 = 3.0 x 27 = 81
reduction stabilization target ST Ratio = 81 / 190 = 0.43
4.0
Stabilization Index, S
(n vehicles) Verification of stability

(n+20 vehicles) 1.2 New model Stabilization ratio
2.0 57% reduction 0.8 1 0.5 0.43
[57% reduction from the
Ratio
0.4
0.0 base model in terms of
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
Number of vehicles, T 0 stabilization ratio]
FY16 (Base) FY17
Chart 5.2.4 – New model stabilization ratio Plan Actual
Stabilization of the new model N4019 achieved within 27 vehicles compared to the base model
of N2523 (38 vehicles). Chart 5.2.5 – New model stabilization ratio
5.3 Cost Management:

(1) Background:
ALH2 is a 23 years old plant running with considerably depreciated assets, yet produces the widest range of
vehicles with ever growing volumes and delivering products which fully satisfy the customer demands with
flexibility on a continuous basis at low cost Production volume vs Investment
compared to other plants in AL Family. FY’07: FY’11: 63521
64000 FY’94: ICV
Investment - Rs million
Investment
Unlike other plants, this feature of ALH2 was (7.5 to 15T)
Initial
Investment
for Line 3 set for LCV
49733 2250
Volume in No's
evolved only by its steady and unrelenting efforts investment up facilities

48000 of Rs. 2650 Range: 2.5
towards incremental improvements. For the last Millions to 7.5T
10 years, ALH2 witnessed two economic FY’98: 1500

32000 M&HCV
25587
slowdowns, price increases due double digit (15 to 49T)
Addition of
18543
inflations and depreciation of currency in the 16000 ranges 670 546 750
5775
economy. But the plant withstood all these 954 60 114
economic difficulties with steady reduction in 0 0
FY'95 FY'98 FY02 FY'07 FY'12 FY'17 (e)
operating cost through prudent cost management Volume Investment
initiatives. These cost management initiatives Chart 5.3.1 Status of Production Volume Vs. Investment
― 80 ―
were tailor made, holistic in nature and were best suited to the ALH2 culture, which in turn helped to garner
support from all functions in the plant towards operational excellence.
Since inception, the only investment of significance has been during setting up LCV line. Other than that, all
the other capacity enhancements, flexibility improvements and machine upgradations were done by the plant
to bring more operational excellence in terms of operational cost. Currently, the capacity of M&HCV is 50000
per annum on 2 shift basis, which is 2.6 times the capacity which was laid down 23 years back.
The key management challenges of ALH2 are given in Table 5.3.1
Table 5.3.1: Challenges faced
Environment Challenge CFM
s Theme
Old plant and older machines: Equipment addition  Maintaining Overcomin
2400
 Old machines were transferred from IVECO 1650 the old g the cost
Equipments
Cum. no. of
1800
during plant commissioning 1440
plant disadvanta
1200
 Constant upgradations of machines 828 (maintenan ge due to
391
 Producing wide range products (2.5T to 49T) 600
0 237
448
ce cost) wide range
with varying work contents requires flexibility 0
FY95 FY98 FY08 FY12 FY17
 Cost and
Manpower costs: Initial Machines Addition competitiv flexibility &
 Permanent manpower transferred from ALH1 Chart 5.3.2 Equipment addition e higher
due to business consolidation (FY’10: 353, status
Manpower vs Direct manpower containing fixed
Manpower Numbers
FY14: 499 persons) 5000 50000 the manpower
Rs / Person /Month
cost/head
 Wage revision and welfare facilities to 4000 40000
manpower cost while
3000
employees
30000
cost maintainin
2000 20000
Other operational costs:  Reducing g old plant
1000 10000
 The economy was in inflationary phase-FY’05 0 0
plant with lower
to FY’14 operating maintenan
 The Power cost was steadily increasing Temporary manpower
Permanent manpower
cost ce and
coupled with frequent power cuts, lesser wind Manpower cost/head  Reducing depreciatio
power availability and less minimum demand Chart 5.3.3 Manpower – Direct manpower direct n cost
cost
quota given Tamil Nadu Electricity Board material
(TNEB) which compelled the plant to run Gen cost
sets.
 Tools, Consumables & Logistics were on an
increasing trend due to price increases
 Increased repair cost to ensure upkeep of
aged machines and upgradations
Increase in direct material cost:
Contribution of direct material costs per vehicle: 75 to 85% of total cost.
ALH2 plant’s endeavor on Cost Management Initiatives (CMI) made the plant to get an edge when deciding on
production models, as it delivers vehicles of any range at lowest cost living up to its Vision statement.
(2) Detailed explanation of focused activities – examples:

 Reduction of energy procurement cost by optimizing the energy mix:
During FY’12, the power requirement of ALH2 was met from Tamil Nadu 100%
Energy mix
8.3
Electricity Board (TNEB), wind power and generator set. As there was a 27.5 41.6
kWh in Lakh unit
75% 57.1
88.8 10.1
restriction for TNEB supply, the usage of generator was high. The price of 50% 14.7
8.4
generator unit was 3 times higher than TNEB. This led to increase in power. 25% 77.5
91.2 60.5 35.4 59
Hence cost CFM adopted a strategy of diversifying the sources of 0% 1 4.1

25.1 44.5 25.3
procurement and through this the DG share has come down by 62%. FY'13 FY'14 FY'15 FY'16 FY'17
Various sources of power identified and the mix is optimized year on year TNEB Wind IEX Biomass DG CPP
based on the cost/unit of the power source at that point of time and the Chart 5.3.4 – Energy mix
availability. The various sources identified and energy mix optimized is given in Table 5.3.2
Table 5.3.2 Reduction of energy procurement cost T – TNEB, W – Wind mill, I – IEX, B – Bio mass, D – Diesel generator,
C – Captive Power Procurement
Energy mix (%)
Year Problem Cause Actions taken Effects
T W I B D C
Restriction for
46 53 DG usage Alternate source identified - Energy cost
FY13 1 TNEB power & 7
  high Biomass 12000 11616 7
wind power
TNEB poer cost - Rs /
Non-availability of
Rs / HECU
9000 6 6
Procurement on Bio-mass
3 9 20 DG usage TNEB power & 6500
FY14 68 increased & TNEB power
KWh
   still high limited usage of 6000 5

situation improved
bio mass 4.4 5005
17 3 3000 4
FY15 41 6 - - - FY12 FY14 FY16
 5 Plan
Bio mass Government Captive power plant (CPP) Actual
1 24 TNEB Power cost
FY16 26 20 9 6 become restriction on bio- & short term procurement
5 
unstable mass from online trading IEX
38 IEX cost Fluctuating cost by Chart 5.3.5 – Power cost
FY17 17 39 5 Roof top solar introduction
 increased IEX
― 81 ―
 Consumable cost reduction through optimization, negotiation, Indirect Consumable Cost

alternate sourcing & technology upgradations: Analysis -FY'12
MUDA
600 146
The consumable cost was classified in 2 categories i.e. Essential and Muda. The 386 Essential
Rs / HECU
400
top contributors for consumable cost were identified and improvement projects 200 274
511 50
57 22
92 97
were implemented to reduce Muda. The actions initiated on the major 0 68
Shots
Diesel BS
Chemical
Liquid CO2
Oil
Steel
contributors. The consumable cost has come down through various
IV
improvement projects implemented on “MUDA elimination”, “Incidental cost
reduction” and “Essential cost reduction”. Chart 5.3.6 – Indirect consumable
Consumable cost reduction – Typical example CO2 gas consumption: cost
CO2 gas is being used in M&HCV weld section as a consumable. During FY’13, the CO 2 consumable cost was
high. Hence in order to reduce the CO2 consumption, daily Management approach was used. CO2 consumption
was taken as a DM KPI and monitored. The abnormalities were captured on daily basis, causes analyzed and
actions initiated. The improvements were done in 3 phases. The daily management practices helped to achieve
the process stable and capable over the period. The DM success story is given in below Table 5.3.3.
Table 5.3.3 DM Success story – CO2 Consumption reduction
Stage 1: Standardization Stage 2: Visualization & Stage 3: Stabilization with Stage 4: Breakthrough
improvements CAPD improvement with CAPD
Standards created: 5 Nos. & JDI: 47 Nos. KKD: 6 Nos. & Standards revised: 1 No. QC story projects: 1 No.
Training given: 18 members
30 PDCA 1 CO2 consumption Trend
Consumption
Kgs/Cabin
1) Gas delivery Pressure redused from 5 to 2.5 bar

2) Gas flow rate revised and ensured to 12 to 15LPM
20
PDCA 2 1) Refrigeration system introduced PDCA 3
2) Load cell introduced .
10 Sustenance Period x bar=2.79
x bar=1.58
0
1-Mar-13
1-Mar-14
1-Mar-15
1-Mar-16
1-Apr-15
1-May-15
1-Feb-16
1-Apr-16
1-May-16
1-Feb-17
1-Feb-13
1-Apr-13
1-May-13
1-Feb-14
1-Apr-14
1-May-14
1-Feb-15
1-Aug-16
1-Aug-13
1-Aug-14
1-Aug-15
1-Jun-16
1-Jul-16
1-Sep-16
1-Oct-16
1-Sep-12
1-Oct-12
1-Jun-13
1-Jul-13
1-Sep-13
1-Oct-13
1-Jun-14
1-Jul-14
1-Sep-14
1-Oct-14
1-Jun-15
1-Jul-15
1-Sep-15
1-Oct-15
1-Nov-16
1-Nov-14
1-Nov-15
1-Nov-12
1-Nov-13
1-Dec-15
1-Jan-16
1-Dec-16
1-Jan-17
1-Dec-12
1-Jan-13
1-Dec-13
1-Jan-14
1-Dec-14
1-Jan-15
Consumption in Kg Target UBL LBL

Chart 5.3.7 – DM Success story on CO2 consumption
 IT enabled Cost Management Initiative (CMI): Energy Consumption

(FY'12)
Variable Energy - analysis
100
Till FY16, cost data for ALH2 was monitored manually at an 750 81
97 Varia
ble
Cumulative %
75
kWh/HECU
overall level. Actions were initiated when related KPI trend 516 Energ
500 57 y
were abnormal. This required systematic approach was 224
50
910
63%
required to handle huge data effectively. Also during TQM 250 141
29
25
Fixed
diagnosis, one of the comments given by examiners was that Energy 0 0 0
“essential” cost to be reduced after reducing the “Muda”. 542
37%
Cabin Assy & FSM
Testing
Axle
Hence in order to address this issue, IT enabled cost Chart 5.3.8: Variable energy analysis
management system (CMI) evolved at ALH2 through SAP system to monitor the cost drivers like Power, Tools
and Consumables etc. Per unit cost norms is derived from well-established source such as OEM or Unit planning.
Permissible cost for a specific resource is, norms of that resource multiplied by number of units produced.
Actual cost is the expense recorded in system for producing that many units. Difference between actual cost
and permissible (essential) cost is non- essential (MUDA). Implementation of this system was a major activity
for ALH2 as it involved updating 10 million records related to various processes carried out. Implementation of
this IT enabled system has helped ALH2 identify MUDA department wise, line wise, part number wise which in
turn helped us to take theme specific projects for better cost management and control.
Table 5.3.4: CMI frame work and Gemba portal
CMI framework: Gemba portal – IT usage:
Identification of abnormality Update item master- Update online Include operation Update work Update material
tools & consumables process sheet wise tools & content master resource master
(PPS) consumables in
List of actual and PPS
permissible abnormality Update the tool Update the Update the part Update the material
norms master consumable norms Update the power numbers with applicability values
operation-wise for all master operation- norms master respect to Gemba
Identification of the part numbers wise for all the part part number-wise and work content
abnormalities – cost numbers
element wise Gemba portal – IT usage
Brainstorming
Idea generation
Not ok
Idea
evaluation?
Ok
Idea implementation
Norms upgradation
― 82 ―
Overview of improvements: (FY12 to 17) Kaizens and Cost savings:

Number of Kaizens vs Cost Savings
2000 1833 300
Cost System Technology MUDA Savings in 1439 1595
1024 200
Category Improvement improvement /Others Rs. Crore
Rs. Milion
1000 289 649
Power 12 44 40 12.4
(Cum)
15 62 140 191 263 276 100
Numbers
Consumable 14 5 12 1.84
(Cum)
0 0
Tools 16 1 12 0.60 FY12 FY13 FY14 FY15 FY16 FY17
R&MV 19 41 47 5.45 Cost savings Kaizens
Chart 5.3.9 – Kaizens vs cost
savings
(3) Effects:
Reduce Total conversion cost
Effects
A) Total Conversion cost
138.8 Table 5.3.5 Comparison of cost with respect to Inflation (Consumer price index)
145 Additional shift Total Shop Plant
Peak Maintenance All other costs/
production in selective 127 Conversion Cost Manpower Cost Depreciation/
Cost / HECU HECU
volumes areas Year CPI / HECU /HECU HECU
120 M&HC M&HC M&HC M&HC M&HC
106.6 106.7 LCV Total LCV Total LCV Total LCV Total LCV Total
Rs/ HECU (in '000)
106.3 V V V V V
106.0 FY12 100.0 100 100 100 100 100 100 100 - 100 100 - 100
95
FY13 108.5 108 100 60 131 100 67 79 100 62 79 100 44 93 100 57
83.4
499 associate transfer from
70 ALH1, H2 LTS & Recession FY14 119.6 133 79 77 175 156 96 80 95 62 74 132 48 106 111 66
FY15 130.4 115 92 78 148 217 100 65 75 52 58 139 45 101 112 69
Estd
Target
FY16 137.7 108 87 77 140 216 100 52 74 46 44 125 37 99 99 68
Actual
FY17 143.3 93 92 76 117 236 98 55 74 50 33 122 32 93 102 72
Chart 5.3.10 – Total conversion Cost
Base year - for M&HCV (FY12) and for LCV (FY13), as the LCV manufacturing was initiated in FY12
The consumer price index (CPI) increased from 100 (FY12) to 143.3 (FY17) whereas the total conversion cost index has
reduced to 76 from the base year (FY12 - 100) in spite of Consumer Price Index (CPI) has gone up. ALH2 could reduce the
conversion cost considerably in spite of old machines, increased man power cost & inflation rate (Consumer prince Index)
due to Cost Management Initiatives.
Achieve cost savings in direct material cost
Results Effects
Cost reductions ideas - VA/VE Direct material cost savings (ALH2) 1800
900 8… 2000
800
achieVE500
800 720 1500 1770
850
Value Rs in Millions
No of Ideas
750 1588
(Cumulative)
700 K54 950

600 800 achieVE MORE
194 achieVEMore
550
500 0
FY 14 FY 15 FY 16 FY 17 estd FY 14 FY 15 FY 16 FY 17 estd
Actual Target Target Actual
Chart 5.3.11 – Cost reduction ideas Chart 5.3.12 – Cost savings in direct material
5.4 Human Resource Management:
(1) Back Ground: Volumes and Variants

247
ALH2 plant, commenced in 1994, was designed to manufacture fully 236 80000
built vehicles. From 1995 onwards Hosur became a full-fledged
Number of Variants
200 154 158

Volumes in numbers
60000
industrial belt, thereby increasing the demand for skilled workmen. 118 121
Thus it became the need of time for local industries to enhance 40000
63511
100
technical knowledge and skill of local youth to make them “Ready
52652
50121
45590
41887
26539
20000
to Hire”. To fulfill business need & to provide skilled people back to
society, ALH2 in collaboration with state government came out with 0 0
a scheme in 1996. This scheme was named as “SEEUS” Scheme FY12 FY13 FY14 FY15 FY16 FY17
Volume Variants
for promoting Education and Employability for Underprivileged
Students. This scheme started with the training in trade of fitter, Chart 5.4.1 – Growth of Volume and Variants
welder, painter and Mechanic Motor Vehicle.
Later in FY12, Company entered in LCV production and manpower requirement went up drastically. By this
time, many industries building up their operations which led to shortage of manpower.
The number of variants and volumes produced are increasing year on year (Chart 5.4.1). To produce high
volumes, with flexibility to accommodate larger varieties in smaller batches became the critical challenge for
ALH2. To handle this challange, capability development of all employees became significant need. Hence,
ALH2 decided to focus on “Making people to make products” with thrust on improving build quality.
In FY06, Mission Gemba, an employee engagement initiative was launched to engage employees in
improvements. Through Suggestions Scheme and Small Group Activities, AL H2 achieved 100% people
participation in FY13. As we matured, we decided to revisit the computation methodology and to widen the
scope.
― 83 ―

 Trust building and Muri reduction program: With the initiation of TQM, Plant started “Trust building”
initiatives to make ALH2 a great place to work having productive and happy manpower. Following initiatives
were taken to build trust across all levels of hierarchy.
 Employment to needy family members of associates
 Family engagement through (Felicitation of students, Personality development and Career guidance etc.)
 Performance based proactive incentive schemes
 TQM training program for permanent associates
 Improve work place safety
 Muri Reduction through Effort and Ergonomic Index (EEI) initiative: Muri reduction program has been
started under EEI pillar of Gemba for making work easier involving all employees. EEI methodology focus on
reduction of Efforts (Walking, Bending, Grasping, Placing, Process itself) and Ergonomic (Fatigue) reduction. It
helps personnel to reduce adverse impact of Muri i.e. pain, illness, low morale, frustration and irritation. Till
now, ALH2 has completed 3242 projects. One of the examples is given below in Table no. 5.4.1.
Table 5.4.1 : Progress and Example of Muri reduction Program
EEI Projects Progress Bell Crank Level Lifting & Mounting
Muri (EEI) Reduction Projects Before EEI 4327 After EEI 2186
3082 3242
4000
Cumulative
3000 2182 3200

2500 - 50% EEI
Nos.
2000 1182 1600 Reduction

722
1000 294 1000 - One Man
500
0 100 - No Bending
FY12 FY13 FY14 FY15 FY16 FY17 - No Lifting
Plan Actual
Chart 5.4.2 EEI reduction
projects
Above initiatives helped ALH2 in productivity enhancement from 2.53/LECU/100 Man-days (FY12) to 3.32
LECU/100 Man-days (FY16).
 Revamping SEEUS program: SEEUS program was continuing to develop “Ready to hire”
people but success rate was low at 58% in Pre TQM phase. ALH2 along with institute of
management brainstormed on cause and taken countermeasures like additional revision classes,
upgradation in equipment & tools, enhanced infrastructure and Soft skill training. Time to time,
syllabus of each branch was revised and improved.
 Hands-on training for SEEUS Students: In order to make students ready for the industrial
environment, skill training is given for 30 days through “Skill Up” program. This program focuses on industrial
work along with Safety, 5S, knowledge on ALH2 products & processes, Cognitive, Dexterity, Assembly
operations, understanding of 2nd generation WIS etc. Till now, total 354 students are hired by ALH2 and other
companies after getting certification from SEEUS. Dearth of Painters and Welders has been reduced through
this scheme. Above activities, contributed significantly to the success rate of SEEUS which increased from 58%
(FY12) to 96% (FY16).
 “Road to School” Initiative: As SEEUS enrolled students were from poor and rural
background, they were found lacking in basic primary education which was affecting the input
quality of SEEUS program. To improve the Quality of incoming students in to SEEUS, ALH2
started focusing on basic primary education through a holistic development mission called
‘Road to School’, a unique initiative of its kind, 72 Government Schools from remote parts
of Krishnagiri district were adopted under this mission. After detailed diagnosis of the existing
system, an unique methodology was designed focusing on providing individual attention for slow learners,
additional coaching and transportation arrangement. This facilitated significant improvement in the scores of
the identified students (1515 nos from 72 schools). This initiative is not only supporting the society, but also
helping in realization of our Prime Minister’s vision of Skill India (New India through Skill upliftment).
 Process specific skill enhancement for permanent associates:
During pre TQM, as the business need for skill based training was limited (low volumes, models/variants),
training for permanent associates was provided mainly on Gemba initiatives and critical processes. In FY13,
Traditional Skill Mapping system was introduced and “On-the-Job-Training” was provided using work
standards. In the meantime, volatility in the market is increased and various stranger models & variants are
introduced. In FY15, a need was felt to go more process specific hence process specific / station specific skill
sets were identified by Managers and training identification became more focused to the process requirements.
Till FY15, total 1649 associates were covered in these changed skill sets. This process helped in raising people
skill level and defect reduction of man generated defects from 1.2 DPV (FY12) to 0.47 DPV in (FY15).
 Job Ability Standard (JAS): Even after “process specific skill” mapping system implementation, human
generated defects (“0” MIS) were stagnant at 0.47 (considerably high). To reduce it further, a unique process
to develop the ability among permanent associates on QCDSM parameters connecting with 2 nd generation WIS.
JAS is introduced in FY17 as a tool to assess the ability of an individual on his work area. JAS is implemented
in M&HCV Cab Trim as a pilot, wherein 82 associates are assessed and defects produced by them are analyzed.
― 84 ―
Table 5.4.2 : Job ability standard - Application case

1.Problem definition 2. Grasping current situation
Defects generated from trim Inadequate standard and lack of skill contributed to 95%(5.07 DPV) of total process
process is 5.33 DPV in Cab defects in cab trim.
Trim line quality gate. Data period: FY16 Observation:1) Work instruction sheets (WIS) is not describing the elemental operation
5 Process related DPV - M&HCV trim steps. Hence, WIS is not comprehensive. 2) The current system evaluates only
4.7
common skills not supported by data but based on supervisor knowledge and experience.
0.37 0.21 0.05
Also, 99% associates (Total 82 associates) of Cab trim, met their skill requirement (L3 &
0
L4); still, Defects are generated >> Skill assessment system not adequate.
competency
Lack of skill
standard
facility/ tool
Supervisory
Lack of
Current skill: L1-Beginner, L2-can read & do, L3-can do independently, L4- can teach
Lack of
Chart 5.4.3 Defect contributor

3) Establish target: 50% reduction in M&HCV cab trim line quality gate DPV
4) Examination and Implementation of measures
1.To overcome the issue (inadequate standards), 2nd generation WIS is developed covering all the elemental operation steps.
2.A new unique system JAS (6 step process) is created to cover the gaps in current system. Cross Function Responsibilities: HR–
Training & Overall Coordination, UP-PFD, 2nd Gen WIS, MFG-Assessment & OJT, QA-Defect capturing & analysis
PFD Responsibilities Abilities Assessment Enhancements Training
• List down the • Responsibilities of • Abilities linking • Assess individuals • Enhancement items • Train individuals
stages an associate to 2nd generation against defined (gaps) for individual on enhancement
available in perform each WIS to perform to perform the
each
abilities of items arrived
the line operation in a responsibilities operations operations
stage – QCDSM
Example of one Associate (M&HCV Cab Trim assembly)

Name: M. Saravanakumar, 62923 Operation 0340 - ASSY OF DOOR LOCK, DOOR PAD & STRAPPING KEY
Training
Level Required Skill Actual Skill Defect Details Gap
details
New Skill Defect Trend
Can work 2nd 15Door lock screw loose
L1 Operator
20
under guidance generation
12
Occurrence in
Can work Door lock not aware
numbers
Post-assessment
L2 WIS- 10 14
independently screw loose of the 0 0 0
tightening
Sep’16 - 15 door lock 0 Pre-assessment
L3 Can troubleshoot sequence
Oct’16 – 12 screw 0
Nov
Jan'17
Dec
Mar
Feb
Oct
Sep'16
education
Nov’16 –14 tightening
L4 Can teach by
sequence
supervisor Chart 5.4.4 Door lock defect trend
Skill assessment was completed for 82 associates and training provided for 29 associates identified with skill gaps.
100 Permanent associates DPV - Trim section
50 Skill level before training Skill level after training Permanent
39 Permanent 0.5 0.31
31 20 17 20 associate
Number of
0.19
associates
associate related
Number of
associates
23 25 0.08
DPV
2017 25 related DPV

DPV before 39 38 0
9 31 after training 0
training was 0.31 23 24
0 0 9 0 was 0.004(Feb-
Jan'17
Nov
Sep
Dec
Feb
Jun'16
0
Aug
Jul
0
(June-2016) Oct
Required Before training After training 2017)
level 1 level 2 level 3 level 4
Required Actual level 4 level 3 level 2 level 1
Chart 5.4.7 Permanent associates
Chart 5.4.5 Skill level before Chart 5.4.6 Skill level After DPV– Trim section
5.Confirmation of effects 6.Standardization
The number of associates generating “0”defects has significantly increased after Job JAS completed for 650 associates
ability standard implementation. out of 1636 & ALH2 has drawn a
90
Number of associates vs defects 6 5.33 DPV M&HCV trim (FY17) roadmap to complete JAS for all
permanent associates by FY18.
No.of Associates
60 >100 defects 4 2.39 2.05

 SOP for Job ability standard
DPV
74 75 79 80 81 50-100 defects 1.3 1.3 1.23 1.17 1.17 1.2 0.9

30 53 63 64 67 2 0.6 0.47
was developed.
1-50 defects
0 0  Management system Chart was
0 Defect
Jan'17
Nov
Sep
Dec
Feb
Jun'16
Aug
Jul
Oct
developed.
May
Nov
Dec
Jan'17
FY16
Sep
Feb
Apr'16
Aug
Jun
Jul
Oct
Chart 5.4.8 No.of Associates vs defects Chart 5.4.9 DPV – M&HCV Trim
 Managers & Supervisors competency enhancement system:

Position Based Competency enhancement: Pre TQM, Supervisors' training need was coming through
annual performance appraisals where supervisor’ used to choose their training need from available menu on
yearly basis. To handle the wide product range and to improve the rapport with associates, a new process
based competency enhancement system has been launched in FY15. Assessment made for all Supervisors and
Managers (365) till FY16.
Competency Competency Training
Training need
identification - assessment by Training Plan Training evaluation &
identification
HOD’s voice managers assessment
Figure 5.4.1 – Process based competency process
― 85 ―
Role Based Competency enhancement: In spite of high training need fulfillment, these trainings were not
enough to improve their performance in QCDSM at Gemba. Hence, role & responsibility based competency
system has been started in FY17. Process of same is given below in Figure no. 5.4.2.
Required
Responsibilit Standards to Assessment on Impart Training
Role of competencies Training Need
ies & perform the Required evaluation &
Supervisor (Knowledge & Identification training
Activities responsibilities Competencies assessment
Experience)
Figure 5.4.2: Role based competency development process
Leveraging Daily Management system, Roles & Responsibilities are identified for each supervisor to support
their deliverables KPIs. Standards are revised/made to perform all responsibilities and activities related too.
Assessment of supervisors are done based on required competencies (knowledge & experience). To establish
the same, a pilot line, M&HCV Cab Trim was identified then planned for horizontal deployment in all
manufacturing and manufacturing service areas (147 supervisors). Example of one supervisor is given below
in Table 5.4.2.
Table 5.4.3 : Example of Supervisor’s training
Name: Mr. Abdul Wajid. A Department : Cab Trim
Level Required Competency Actual Skill Gap Training details New Skill Results
L1 Knows 5S concepts 1. Unable to do audit Training given in 5S JDI By Mr.A
20
L2 Able to apply using 5S check sheet. Jan’17 on : 15 14 16
L3 Able to identify 5S 2. Unable to identify 1. 5S audit using 10
5
and take action for 5S check sheet 4
JDI in
gaps, analyze and
Nos.
0 0 0
take action gaps and 2. 5S abnormalities & Nov'16 Dec'16 Jan'17 Feb'17 Mar'17
abnormalities. countermeasures Chart 5.4.10 Number of JDIs
This new system helped drastically in pilot lines and DM KPI Achievement ratio of supervisors increased from
45% to 90% (FY16).
 Skill Up program for temporary associates / new comers

With regular upliftment in training methodology of permanent associates, significant reduction observed in
their contribution in defects. Later in FY16, Human error data analyzed and found that temporary associates
are still contributing more than 80% due to skill gap and turn over mechanism. Till FY14, ALH2 use to train
temporary associates for 3 days at shop floor. With same, associate use to take long time to adapt to
operational requirements leading to human error. To reduce temporary associate related human error, H2
established Skill Development Center in FY17 after benchmarking with similar Auto industries viz., TVS Motors,
Toyota Motors, Yazaki Ltd, MSSL and AL Pantnagar. Glimpse of Skill Development Centre is shown in Figure.
5.4.3 .
Using this infrastructure, Safety Cognitive Dexterity Simulation
a 6 days training module
has been designed
covering Basic Safety,
Product, Cognitive and
Dexterity training. Real
time simulation of major
process i.e. Chassis Assy,
Figure 5.4.3 – Skill Development Center
Paint, Weld etc. created
within Centre and all associates were trained in free environment. Only passed candidate are allowed to join
shop floor. Till now, 1370 associates have been trained at “Skill Up” facility, evaluated and certified.
(3) Effects:
Production loss due to manpower 0 MIS DPV Total Employee Involvement
shortage Total Employee Involvement
Production loss due to manpower 100 100
0.49 "0" MIS DPV
0.60 shortage
(Men related)
Involvement
71% improvement
percentage
Loss due to manpower shortage 86% reduction 70 89

0.40 1 99.7 99.0 99.8 99.5
eliminated 80
Loss in %
0.20 Old method 62

DPV
0.12
0.20 0.07 52
0.5 1.2 56
0.03 0.47 40 New method 1
0.00
0.00 FY12 FY13 FY14 FY15 FY16 FY17
FY12 FY13 FY14 FY15 FY16 FY17 0 0.16 Target Actual New method 2
Plan Actual
FY12 FY15 FY17
Chart 5.4.11 – Production Loss due to manpower shortage
Chart 5.4.12 – Men related defects Chart 5.4.13 – Total Employee Involvement
5.5 Delivery Mangement:

(1) Background:
ALH2 was the first plant to produce ICV vehicles with cabin among all the AL plants in FY95. Volumes started
ramping up with the introduction of M&HCV models from 950 vehicles in FY98 to 25000 plus by FY11. From
FY12, production of LCV range of vehicles (<7.5 T GVW) started and progressively more specialty vehicles
were added to the product range of ALH2. In the last 4 years ALH2 has become the plant producing the largest
variety of products.
During the period FY12-14, the big slowdown in the economy threw newer challenges for AL to survive and
sustain the market share. In FY13 out of the total orders given to ALH2, 40% of the orders were in batch sizes
― 86 ―
of 10 or less in a month. Hence it was necessary for the plant to be flexible enough to produce and supply
every such order. Also the scenario continued thereafter and flexibility became key for ALH2 to produce high
volume orders as well as lower volume variants with equal importance.
However, in LCV the initial ramp up was very high and the demand was more or less steady thereafter. Hence
the delivery challenges were more towards in-house as well as supplier capacity enhancement.
Therefore delivery management CFM address the flexibility requirements of the plant to produce wide variety
of orders irrespective of batch size to meet the objective of 'on-time delivery of orders irrespective of
batch size’. It also addresses capacity enhancement in ALH2 for the future volumes required to realize the
company vision.
Delivery management process for M&HCV begins with (MPS)-Master Production Scheduling for the purpose of
unit wise resource planning (Man, Machine, Material & Method) and month wise execution. Whereas in LCV the
process begins with Market Planning and it directly is being communicated to ALH2 since there is no need of
unit wise planning as ALH2 is the only plant producing LCV.
Schematic flow diagram of M&HCV delivery management process
Week wise Aligning of
Unit wise
plan from Weekly plan Material materials
plan from Vehicle Vehicle
marketing drilled to requirement for vehicle
corporate production delivered to
to corporate day wise by for the plan prod. by
planning as per plan sales yard
planning PPC scheduled sourcing
cell
cell team
Schematic flow diagram of LCV delivery management process
Fortnightly Aligning of
Material
Monthly plan sequence materials for Vehicle Vehicle
requirement
from Market planning for vehicle Prod. production as delivered to
for the plan
planning production by by sourcing per the plan sales yard
scheduled
PPC team
Figure 5.5.1: M&HCV and LCV delivery management process flow

From FY95, delivery performance was measured on a monthly volume basis. No specific focus was given on
smaller orders. Volume ramped up year on year but the plant was not able to achieve targets.
 Delivery performance measurement:
Table 5.5.1 Operational definition of Delivery performance measurement
Measurement Change in Metrics
# Year Frequency
System From To
*Volume adherence
1 Till FY13 Only Quantity - [Volume adherence = (Number of vehicles Monthly
delivered/ Total vehicles planned) * 100]
* Service level
From FY14
Quantity-in- [Service level = (Number of vehicles delivered as Monthly
2 Volume adherence
Time per plan / Total vehicles planned)*100]
From FY15 * Service level of n≤10 (only M&HCV) Monthly
*Monthly service *Service level for runner models (M&HCV)
Weekly
level * Service level (LCV)
Quantity-in-
3 From FY16 *Monthly service *Incomplete delivery (ID) for n≤10
Time
level of n≤10 [ID= (Number of n≤10 orders not delivered in full / Monthly
(only M&HCV) Total number of n≤10 orders)*100] (M&HCV)
 Establishment and Improvement phase: Delivery performance of orders in small batches(n≤10)

In FY15 ALH2 formulated the vision of being a flexible plant considering the business requirement of servicing
M&HCV orders of small batch size. Hence from FY15 a new metric “service level for small batch variants
(n≤10)” was taken as the metric for “Flexibility. In FY15, the target for service level of n≤10 was achieved
through several focused activities.
Post-recession from FY16, the TIV started increasing. ALH2’s volume was also ramping up, and the number of
variants were also increasing. Subsequently the variants with n≤10 also increased. This increased the complexity
in delivery management system and also it was necessary to not miss any order of small batch orders. Therefore
“% of Incomplete deliveries” a measure of the proportion of orders of variants with n≤10 “not serviced fully as
per the requirement” was considered for delivery performance. This is a stringent measure than service level.

 Supplier Capacity enhancement to meet ALH2’s requirement: (M&HCV)
Production loss due to material shortage was one of the major contributor for low delivery performance,
moreover M&HCV production volume of ALH2 was expected to increase rapidly between FY14 & FY17. As the
RPD was increasing, few major items like load body, G45 cabins, flitches, cross members etc., were found
to have capacity constraints to meet ALH2’s requirement. In order to review & identify the gap in supplier’s
capacity versus projected peak requirement, half yearly capacity review system has been introduced.
― 87 ―
Table 5.5.2 PDCA on Supplier capacity enhancement

Problem Approach / Actions taken Effects
In FY16 around 73 part families which were 12 actionable points with timelines and
identified as critical and categorized as responsibilities were evolved for the
Capacity Mapping - Part
follows: Red & yellow category items and 11/
Family wise
Number of cl Part families

Capacity not meeting peak volume 12 Actions are completed.
90
Cycle time reduction projects
Capacity meeting peak volume but not
Improvement
Quality issue resolution 60
buffer requirement
Capacity meeting peak volume & buffer Layout changes / process 30
requirement Improvement
Domain No. of part 0
Nov'16
Mar'17
Dec'15
Apr'15
May'16
families
Sheet metal 33 1 13 19 Sub-contracting
Non metallic 12 0 4 8 Tools / Fixtures modification Chart 5.5.1: Supplier capacity status
Investment
Proprietary 17 3 0 14 Infrastructure up-gradation
Casting & 1 1 7 Man power enhancement
9
forging
Load body 2 0 1 1 Additional shift operation
Total 73 5 19 49 Additional source development
This periodic evaluation has helped in proactively identifying gaps and improving the capacity to meet the
increasing demand.
 Reduction of Lead time (From Laydown to Sales yard):
The lead time for delivering vehicle which is considered from laydown to sales yard was 6.7 days against the
target of 6 days in FY12. This has a direct impact on the response time to service orders.
Table 5.5.3 Reduction of Lead time
 Delay in rework at VTS after PDI  Quality gates were introduced in
7 6.7 Lead Time - LD to PTS
inspection. (Inspection was done conveyor line to improve the detection at
lead time of n≤10
only at end of line – delay in source and to reduce the rework at 6 5
Plan
feedback to respective stages) Vehicle Test Shop (VTS). 5 6 4.3
Actual
 MUDA in Transport as the  Load body fitment facility was created in 4 5 3 2.9
2.6
assembled chassis was moved to house by shifting CMVR activities to VTS & 3 4
supplier for load & tipper body utilizing CMVR shed for Load body fitment. 2 3
fitment (since the facility was not  Some of the standard activities done at
1 2 2
Days
available in-house), after fitment VTS shop were shifted to conveyor.

0
of load body the chassis is brought  Subsequently the capacity of load &
again to ALH2 for inspection and tipper body mounting increased from 25
pass to sales. to 45 and 8 to 40 respectively. Chart 5.5.2: M&HCV Lead time trend
….
 In-house capacity improvement in cabin paint & trim shops:

Background:
Cabin paint shop is a facility shared by both M&HCV and LCV production. Initially cabin paint shop was
producing only M&HCV cabins and in FY12 LCV production commenced. In the initial years LCV production
volume was less but it increased rapidly. Paint shop was constrained in meeting the combined requirements
of both M&HCV and LCV production.
Table 5.5.4 In-house capacity improvement in cabin paint line
High lead time in  Improvement of Man Engagement Time (MET) to PTED output Robo paint
Pretreatment Electrode 510 minutes. 120 line output
16 120
Deposition (PTED)  Cycle time reduction through Muda elimination
No. of cabins
0 26
No. of cabins
80
 Concept of Single & multi model painting was 61 80
MUDA of cabins waiting in
introduced. 0
robot painting line, since 40 88 88
Single model: Only LCV cabins will be painted at a 40
M&HCV cabin’s work 41 41
cycle time of 3.8 minutes
content is higher than LCV 0 0
Multi model: Combination of LCV, M&HCV cabin will Before After Before After
cabin.
be painted at a cycle time of 5 minutes Chart 5.5.3: Paint shop capacity
……..
 Reduction of incomplete deliveries of n≤10 orders through policy management:

Background:
ALH2’s volume requirement in small batch sized orders is increasing year over year, This in turn makes
servicing the orders more complex. ALH2’s vision element “Flexibility” focuses mainly on small batch sized
orders, hence it becomes highly important to meet the small batch sized orders.
― 88 ―
Table 5.5.5 Reducing incomplete deliveries

Problem Cause Approach / Actions taken Effects
Non- Volume  A new metric “Incomplete Deliveries” was introduced  Incomplete Deliveries of
Fulfillment adherence and also been taken up as a policy for FY17 M&HCV
Incomplete
delivery %
15
of small was not Incomplete Deliveries:
batch sized focusing The adherence will be in binary (i.e) either 0 or 1. 10
12
orders. specifically 0 - Not supplied in full 1 - Supplied in full
on small Goals, strategies and focused activities identified 5
6
batch sized through past data analysis were deployed to the next 0
orders. level and CFM, wherever applicable. FY16 FY17
Chart 5.5.4– Incomplete delivery M&HCV
(3) Effects:
Table 5.5.6 Effects & results
A. Increase M&HCV delivery performance
Service level - LCV Service level – M&HCV
100 100 M&HCV Delivery Performance

LCV Delivery Performance 100 95 95 95
100 95 95
95 9…
100
94.2
90 95 90
80
89 90 90 89.3 90.2 90
%
80
%
80.2
80 85
79 75 83
70 71.4 78.4
79.2 73.7
Monthly Volume Monthly Weekly
60 Adherence 70
service level Service Level Monthly Volume Monthly service Weekly service
50 Adherence level level
FY12 FY13 FY14 FY15 FY16 FY17 60
Chart 5.5.5 – LCV delivery FY12 FY13 FY14 FY15 FY16 FY17
performance Chart 5.5.6 – M&HCV delivery performance
Inference: Weekly service level improved by 32%
Inference: Monthly service level improved by 20% Weekly
Changed from Volume adherence to Monthly service level service level improved by 13%
Changed from Monthly service level to weekly service
Changed from Volume adherence to Monthly service level
level
Changed from Monthly service level to weekly service level
C. Increase M&HCV delivery performance of small batch variants (n≤10)
M&HCV delivery performance of small batch variant Inference: Monthly service level of n≤10 variants improved by 8%
100 30
(n≤10) 97 and Incomplete deliveries reduced
Incomplete Delivery %
95
95 Service level 19.6 20
95
%
95
90 12 8
90 10 10
90 Incomplete 6
85 88 deliveries 0
FY14 FY15 FY16 FY17
Chart 5.5.7 – Service level for small batch

variants
6 Effects of TQM:
ALH2 leveraged TQM practices to achieve its vision of “To be a Flexible plant with a Wide product range
aiming towards Operational Excellence”.
The various strategies and focused activities implemented has helped ALH2 in realizing the strategic objectives
in line with long term vision. The status of ALH2 long term strategic objectives and AL vision is summarized
below.
― 89 ―
6.1 Tangible:
Strategic objectives:
1) Capacity to deliver smaller batches (n)
1.1) Service level – M&HCV, n≤10 1.1.2) Incomplete deliveries – M&HCV, n≤10
100 Monthly service, n≤10 97 30 Incomplete deliveries, n≤10

Closer to 100%
95 19.6 69% reduction
95 20
12
%
%
90 95 95
90 88 10 8
Metric introduced
90 Metric changed in FY16 from FY16 10
0 6
85
FY12 13 14 15 16 FY17 FY15 FY16 FY17
Chart 6.1 Service level, n≤ 10 Chart 6.2 Incomplete deliveries, n≤ 10
2.1) Capability to produce new models 2.2) Early stabilization of new models
2.1.1) Readiness 2.2.1) Stabilization ratio
105 New model Readiness 1.2 New model Stabilization ratio

1
Cumulatives
100% readiness as of FY17

Number of
57% reduction
models -
101 101 0.8

99 0.5
Ratio
100 0.43
0.4
Monitored from FY17
95 0
FY16 (Base) FY17 FY16 (Base) FY17
Chart 6.3 New model readiness Chart 6.4 New model stabilization ratio
3.1) Competitive Quality levels
3.1.1) “0” MIS at sales yard (M&HCV) 3.1.2) “3” MIS - labor claims (M&HCV)
3 2.4 "0" MIS 3 Month in service

1.5
1.2
Standard revised in FY15
2 1.2
42% reduction
0.97
DPV
0.86 92% reduction

FPV
1 0.47 1
0.23 0.2 0.7
0.8 0.95
0 0.4 0.3 Monitored from FY16
0.2 0.2 0.5 0.67
FY15 FY16 FY17
Plan Actual Actual New Standard Plan Actual
Chart 6.5 “0” month in service Chart 6.6 “3” months in service
3.2) Cost competitiveness
3.1.3) AVES score (LCV) 3.2.1) Total conversion cost
AVES score Conversion cost

150 138.8
48.1 57% reduction 23% reduction in spite of inflation and
manpower transfer
50 41.4 130
Rs/HECU (in'000)
31.8 106.6 106.7

Number
106.3 106.0
24.9 110
30 21 20.3
33 105.5 83.4 106.2 106.7 106.3
28 90 99.4
499 associate transfer from
22 21 20
10 70
81.3 ALH1, H2 LTS & Recession
FY12 13 14 15 16 FY17 FY12 13 14 15 16 FY17

Chart 6.7 AVES score Chart 6.8 Conversion cost
― 90 ―
3.3) On time delivery

3.3.1) Service level – M&HCV 3.3.2) Service level - LCV
M&HCV Delivery Performance LCV Delivery Performance
95 95 95 110 100 100
100 95 95 95 32% improvement
100
90 94.2 90 100 94
90
%
89.3 90.2 95 80
%
79.2 80.2 85 83 90
80 80 89 90
78.4 73.7 27 % improvement
71.4
70 Monthly Volume 70 79 75
Monthly service Weekly Service Monthly Volume Monthly service Weekly Service
Adherence Adherence
level Level level Level
60 60
65.2
FY12 13 14 15 16 FY17 FY12 13 14 15 16 FY17
Chart 6.9 Service level (M&HCV) Chart 6.10 Service level (LCV)
3.4) Employee participation
3.4.1) Total Employee Involvement (TEI)
Total Employee Involvement

100 100
100 71% improvement
Involvement
Criteria revised in
percentage
99.7 99.0 99.8 99.5 89

80 70 FY15 & FY17
80 Scope expanded in
Old method 62
New method 1 FY17.
60 New method 2
52 71% improvement
40 56 from FY16 to FY17
FY12 FY13 FY14 FY15 FY16 FY17 (52% to 89%)
Target Actual
Chart 6.11 Total Employee Involvement
6.2 Intangible:
1. Improved motivational levels and participation exaggerated a 23 Years old plant to 1 Year young vibrant plant.
2. Have gained high level of confidence from the customers by improving the flexibility in delivery.
3. Openness to accept challenges by the plant buoyed confidence for further investments at ALH2 with the recent decision
of running LCV business independent of Nissan.
4. Brand image improved in the Society due to the scale and level of CSR activities done in educating the underprivileged
from remote areas for a brighter New-Gen.
Reference:
1) Overall Sales – ALH2 2) EBIDTA – ALH2
60 Overall sales 2.2X 8 EBITDA

16.3 X
Increased 2.2 times 1.73X
6 Increased 16.3 times 12.3 X
Rs. Billion
40 1.29X
Rs. Billion
X 0.9X 0.8X 4
20
2 1.4X 1.3X
X
-0.07X
0 0
FY12 13 14 15 16 FY17 FY12 13 14 15 16 FY17
-2 (e)
(e)
Chart 6.12 ALH2 sales Chart 6.13 ALH2 EBIDTA
6.3. Status of AL Vision

Global Ranking – Truck (M&HCV) – As of CY16 (Dec’2016)
Global ranking - M&HCV Trucks
200000 400
M&HCV Truck Global ranking - 2016
Top 5 300
150000
Volume in '000
200
Ranking moved from 17 to 12
Top 10
(closer to top 10)
100
Volume In ‘000s
100000 Rank
12
Rank 0
DAYUN GROUP…
ASHOK LEYLAND…
CNH…
WEICHAI POWER…
VOLVO-EICHER…
NAVISTAR (15)
ISUZU (8)
CNHTC (9)
HYUNDAI-KIA (21)
FCA (23)
DONGFENG (2)
TATA (4)
VOLKSWAGEN (6)
VOLVO T&B (5)
DAIMLER (1)
PACCAR (7)
KAMAZ (22)
SAIC (25)
FAW (3)
TOYOTA (10)
LIFAN (19)
VINAMOTOR (24)
FORD (11)
BAIC (14)
JIANGHUAI (16)
17
50000
Top 20
0
2009 2010 2011 2012 2013 2014 2015 2016
Source: IHS market analysis
Chart 6.14 Global ranking M&HCV trucks Chart 6.15 Global ranking of top 25 players
Inference: Volume gap reduced
― 91 ―
7 Future plan:
Implementation of TQM gave ALH2, its right path towards its Vision. While implementing strategic objectives
as per the timeline, ALH2 needed future plan which is well ahead of time and gives a clear edge compared to
its competitors. This will give more benefits of business prosperity and reduce the effects of business cyclicality.
Based on the learnings from TQM journey and remaining problems, future plan has been evolved to realize
long term objectives.
7.1 Remaining problems:

To achieve the goals of the ALH2 vision, the following problems and gaps have been identified.
 Improving the Service level for bulk and smaller batches
 Improve Fit & Finish to international level (AVES & ALVES)
 Improve manufacturing reliability continuously (3 MIS)
 Raise operator and managerial ability levels much higher
 Raise ability to make much greater volume with minimal investment
 Drastically improve straight pass in Chassis assembly
 Digitalize manufacturing work
 Anticipated increase in conversion cost to be contained considering the investment in process and
technology
7.2 Plan to realize Vision and Business Objectives

Table 7.1 : ALH2 Future Plan
Key Word Objective Plan (FY18 ~ FY20)
Capacity to deliver  Enhance model mix flexibility between lines to 73%
Flexibility
small batches (n)  Next phase of transformational initiatives to reduce delivery lead time
Wide Capability to  Develop capability for Modular Business Programs (MBP) in M&HCV
Product produce new models  Productionization of Wave 1 and Wave 2 new LCV program
Range  Increasing the speciality vehicles range
 Leverage process technology for new model readiness
Early stabilization of  Refinement in process technology for early stabilization of new models
new models
Operational Competitive Quality  Improve Fit & Finish of M&HCV vehicles to the global budget truck benchmark
Excellence levels
Cost competiveness  Continuous focus on Muda elimination and essential cost reduction through IT
enabled Cost Management Initiative (CMI)
 Leverage technology for norms upgradation
 Focus of cost planning
On time delivery  Change scope from weekly service level to daily service level
 “Make to Stock” (MTS) to “Make to Order” (MTO)
Employee  Expand the scope to all category of employees including temporary manpower
participation  Expand Job ability development program for temporary work men
7.3 Future Plans for further strengthening TQM

ALH2 seeks to sustain the TQM journey in the future through:
1) Enhance the rigor of KAIZEN among all categories of Employee
2) Strengthening Annual Planning Process
3) Leveraging IT
4) Benchmarking
5) TQM in AL’s plants and Key suppliers
6) Spread TQM
― 92 ―

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What are Ashok Leyland's business objectives for the periods FY12-14 and FY15-20?

What are Ashok Leyland's business objectives for the periods FY12-14 and FY15-20?

What framework does ALH2 use to promote total quality management?

What framework does ALH2 use to promote total quality management?

２０１７年度

(1) Our Source of Pride:

(2) The Capabilities:

Figure 1.3 : Ashok Leyland – Technical Centre

Table 1.2: Plant wise Manufacturing capabilities

Figure 1.4: Manufacturing foot print

(3) Customers: Figure 1.5 : ALH2 plant view

(4) Market size and growth rate:

Table 1.4 History of Vehicle production at ALH2

1994 1997 1998 2011 2017

(1) M&HCV business:

(3) Customer for ALH2:

(4) Salient Features:

(5) Products & Aggregates:

Table 1.6 Products and aggregates manufactured at ALH2

Front Axle Rear Axle

Rear Axle Front Axle

(6) Business Impact:

LCV M&HCV Specialty Vehicles

Production Volume - M&HCV ALH2 sales Turnover

Rate of increase in times

2.2 ALH2 Organization structure:

(1) Cross Functional Management:

3 Business objectives & Strategies:

3.2 Business objectives (FY12 – 14):

3.3 Formulation of ALH2 Vision:

3.4 System to realize Vision:

3.5 Business Objectives and Strategies (FY15 ~ FY20): Annual objectives

achieve this goal. Figure 4.1: ALH2 TQM Framework

4.4 Daily Management

 Review Mechanism (Stability vs. Capability):

(Many abnormalities (No abnormality; but 268 131 707

& target not met) target not met) 173

4.5 Policy Management

(2) Policy Setting FY17:

(5) Policy Management - Major System and its improvement:

4.6 Cross Functional Management

4.7 Improvement methods/ Techniques/ Initiatives:

(2) Deployment of TQM Initiatives through “Mission Gemba” People participation:

 Problem solving process through QC Story:

15000 12004 228

(3) Internal / External Competition

4.9 TQM promotional activities:

department coordinators. Plant TQM cell is supported by the Corporate Department

Fig.4.2 TQM Organization Structure

4.10 TQM Maturity Index: TQM Maturity index

5 Major management challenges, strategies & progress of TQM initiatives

Sustenance of these improvements are monitored though periodic process audits.

Table 5.1.4: Supplier improvement initiatives

Problem Cause Initiative Actions Results

 Improvements in-process quality (Occurrence Prevention Control):

Early stage control through new model stabilization

Job Ability Development for Associates for defect reduction

Straight pass @ Firewall stage - LCV 3 MIS

5.2 New model productionization: