20 years of TQM practices at Indus Motor Company Ltd.

ICQI-Lahore, 2-3 May 2011

1

20 years of TQM practices atIndus Motor Company Ltd.

Karachi – Pakistan

M. Ilyas SuriPakistan's 12th International Convention on Quality Improvement & 2nd

ANQ Regional ConferenceMay 2-3, 2011, Lahore, Pakistan


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Historical background (pre-nationalization era)

• A fast growing economy during the sixties [6~8% growth]

• Assembly plants were set-up to produce cars, trucks,motorcycles & tractors

• Mostly European products were assembled• Components & sub-assemblies manufacturing factories

started to come-up sponsored by autonomous PIDC &private investors [ex. PMTF, BECO, Allwin etc]

• Pakistan’s pace of development was highly rated.• Its Progress exceeded many countries of the region

Victims of Nationalization [1972]

• Ali Automobiles – Ford products• Ghandhara Industries – GM/Vauxhall products• Haroon Motors – Chrysler products• Kandawallla Industries – American Motors jeeps• Rana Tractors – Massey Ferguson• Batala Engg. Co. – Industrial equipment & components• Pakistan Machine Tools Factory – Automotive gearboxes &

machine tools

Banks, educational institutions, cement and several other units werealso nationalized under ERO [Economic Reform Order 1972]


3

Re-emergence of car manufacturing industry

• Many nationalized enterprises stagnated and evendecayed during late seventies & early eighties.

• Rapidly growing population and declining share ofindustrial sector

• Automobile sector shackled with Government sanctions.Only tractor manufacturing showed some signs ofimprovement

• Pakistan Automobile Corporation signed technologytransfer agreement with Suzuki, Japan to start localmanufacturing of Suzuki cars, vans & pick-ups in 1983

• In 1989 Indus Motor Company was sanctioned to launchits project for production of Toyota vehicles in Karachi

• In 1992, after a full 20 years circle, automobile industrywas unshackled paving way for several new plants toemerge. [Honda, Dewan, Master etc]

Guiding PrinciplesThe promoters, Toyotas and House of Habib,had set 4 Guiding Principles for establishingthe new plant in Karachi

1. Invest aggressively to build plant with the latestfacilities

2. Develop culture to implement TPS for assuring built-in quality

3. Develop good labor-management relations tocultivate mutual trust & high degree of motivation

4. Enable and continue to support business partnersfor high quality contribution by them in terms of localcontents & customer services.


4

TOTAL QUALITY MANAGEMENT

The essence of TPS:• Eliminate wasteThe Building Blocks of TPS:• Just in Time• Jidoka (autonomation)• Shojinka (Flexible Workforce)• Kaizen (Creative Thinking)

Deming's Principles:

• Create constancy of purpose to improveproducts and services.

• Be ready to adopt new philosophy• Cease dependence on inspection to achieve

quality.• Try to minimize total cost by working with a

single supplier rather than achieving itmerely by the lowest cost suppliers.

• Improve constantly and forever everyprocess for planning, production, andservice.

• Institute training on the job.• Adopt and institute leadership.• Drive out fear.• Break down barriers between staff areas.• Remove barriers that rob people of pride in

their work.• Institute a vigorous program of education

and self-improvement for everyone.• Put everybody in the company to work to

accomplish the transformation

CPD

ASSYSHOP

TRAINING

CENTER

Plot size - 105 Acres (426,500 M2)

From sand dunes to the 1st Corolla


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TEAM LEADER & TEAM MEMBER CONCEPT

The word ‘Team Leader’ and ‘Team Member’ are used instead of‘supervisor’ and ‘worker’, which gives the following benefits;

• Team Leader is almost indistinguishable from the Team Members.

• Interaction with a wide cross-section of Team Members and Staff..

Workers Team MembersSupervisors Team Leaders, Coach,Them UsYou & I WeOrders Consensus making

FROM TO

(CHANGE IN COMMONLY USED TERMINOLOGIES)

COMMON UNIFORM, TRANSPORT AND CANTEEN

These are the elements thatthe IMC Management hasmost emphatically stressedright from the beginning.

• Common uniforms for all staff,• A common canteen,• Common toilets and• Joint morning safety meetings.• Common Transport

The manifestations of aculture that espoused nosocial or hierarchicaldifferences.


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How a Day StartsA typical day begins 10-15 minutes before the official shift time.There is a flurry of activity before the shift begins;•Cleaning of individual work places• Morning Exercises and• A quick safety circle meetingActual production operations begins exactly on time.

A view of safety circle Meeting in IMC

OPEN COMMUNICATION SYSTEMThere are number of meetings for a bettercommunication such as;

• Daily Safety Meeting

• Monthly Production Meeting

• Monthly & Weekly Management Review Meetings

• Interdepartmental Coordination Meeting

• Daily Shop Floor Meetings, etc.

OPEN OFFICE SYSTEM

• There is no cubicles or separate office rooms.• Managers, executives and supporting staff sharethe same space & work environment.• No walls or partitions come between them.• Easy approachability and accessibility.


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Monitoring, Highlighting & Removing bottlenecks thru effective communicationduring meetings in Ohbeya Room for smooth Project Execution.

OHBEYA ROOM

Indus PeopleIndus People

TEAM MEMBERS

Average Age 26 years

MANAGEMENT

Average Age 37 years

(34%)below 30

(18%)above 40

(48%)between

30-40

(77%)below 28

(5%),above

35

(18%)between

28-35

Graduate(1%)Technical

(15%)

Secondary(76%)

High Secondary(8%)

Graduate(44%)

Post Graduate(21%)

Secondary(16%)

High Secondary(19%)

EducationEducation


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TrainingTraining

GM/Sr. Mgr.325

Managers455

TeamMembers352

GL / TL / ATL7,916

9,540Man Days

• In-house trainings• Domestic trainings• Apprenticeship trainings

LOCAL TRAININGFOREIGN TRAINING

Training Man-hours

• ICT• On Job and Multiskill Training• AOTS• Technical Training

220,

400

238,

793

257,

869

272,

592

297,

883

318,

031

350,

370

404,

853

500,

040

577,

621 76

7,34

6 886,

521

998,

137

1,13

5,50

5 1,25

0,82

5

1,30

3,42

3

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

94-9

5

95-9

6

96-9

7

97-9

8

98-9

9

99-0

0

00-0

1

'01-

02

'02-

03

'03-

04

'04-

05

'05-

06

06 ~

07

07 ~

08

08 ~

09

09 ~

10

• 29 ICTs as on 2009-10• 10 more by 2012

I.C.T

IMC Training CentreInaugurated in June’08


9

Safety Torque Application

On-Job TrainingOn-Job Training

21

17

1

8

3

6

1

45

11

1

9

13

2

6

1

6

4

2

10

2

13

5

2

56

4

211 11

21

6

3

11 12

112

1 11 1

10

20

8

0

5

10

15

20

25

Productivity SystemImprovement

Quality Safety Cost

Vendors WeldPaint AssyQA PPMCMaint. PDService PartsFinance MarketingHR&T Jig ShopPress Shop CPD

AREA OF THEMES

DEPARTMENT WISE THEMEFROM 1993~2009 =

NU

MB

ER

OF

TH

EM

ES

94

43

47

7

46

237


10

15,0

00

18,0

00

20,0

00

26,0

00

29,0

00

32,0

00

34,0

00

37,0

00

53,0

00

10,0

00

109121 130

144

38

75

100

200

5770

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

Pre557N Mar'02 Aug'02 Jan'03 'Mar'03 'Aug'03 'Oct'03 'Jan'04 Sep'04

Capacity/YearProduction/Day

History of Capacity EnhancementHistory of Capacity Enhancement

SEPARATEHILUXLINE

EXTENDED SHIFT

TWOSHIFT

6.5

4.2

Takt Time

LaunchedNew

Corolla

2 hrs OTdaily

7

8.5

77.5

‘Mar’05

44,0

00

‘Jun’06

PAINT FACILITIESEXPANSION,

INTRODUCTIONOF

RECIPROCATOR

180

5

FUTURE PLAN

Vendors’ DevelopmentVendors’ Development


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Auto parts industry scenario in early nineties

• The set back caused by nationalisation had badly hit auto partsindustry too.

• It was essentially small scale owners’ run businesses to servetractors producers and later Pak Suzuki to some extent.

• Business volume and customer requirement did not supportinvestment in technology and also production & quality managementset-up of an appropriate scale

• The existing OEM were using more than one supplier for Cost• Our joint survey in 1989 revealed our inability to meet the local

contents expectations of GOP• GOP policy on indigenisation was unclear. It needed

overhauling.• For Toyota, neither Quality nor Delivery could have been

compromised so FACE THE CHALLENGE

The Challenge (Toyota Global Standards & QCD)

• Select only those who can demonstrate capability forbuilding long term partnership

• Take risk to have one supplier (Deming key principle)• Establish framework & rules to develop products and

processes for built in quality throughout life cycle• Teach TPS and continuously promote its enforcement• Transfer viable technology where needed• Encourage staff to participate in joint kaizen activities• Create communication networks nationally &

internationally.


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Indigenisation Policy Past & Present -1

UP TO 1994• The Ministry of Industries

regulated indigenisation levelw/o a proper system

• An approved automobileassembler was required tosubmit its own deletionprogram in %age terms.

• Each company used its ownmethod to allocate %age.

• The system was non standardand lacked transparency.

• Indus played an active role totransform the system to beknown as ‘Industry SpecificDeletion Program’.

1994 to 2006• GOP constituted Engineering

Development Board and tasked topromote industrial development

• Recognizing importance ofautomobile sector, the EDBinitiated dialogue with stakeholders and devised INDUSTRYSPECIFIC SYSTEM “ISDP”

• ISDP emerged as a strong driverto embrace localisation on thebasis of Standardised Parameterse.g. given points for parts ofvehicles categorized according totype & capacity

• The system was reformed later towhat is now known as TBS orTariff Based System.

Indigenisation Policy Past & Present -2

• To comply with WTO regulations ‘ISDP’ hasbeen substituted by TARIFF BASED SYSTEM.

• It consisted of 5 years tariff plan and severalother measures to further uplift the industry

• Indigenisation achieved with ISDP remainsprotected through tariff only.

• Further indigenisation is encouraged oneconomic merit and mutually agreed fiscal andother concessions.


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6HUB

163

21

DASKA

GUJRANWALA

32

Total Suppliers 60

Near IMC 38North Side 22

SUPPLIERS LOCATION MAP

K a ra ch i:

1 A .E.K.

2 A / S pa re s

3 A B Engg.

4 A llco

5 A tla s (A llw in)

6 A lsons

7 A -One

8 A tla s Ba tte ry

9 A utom a te

10 Bro the r Engg.

11 Fe roze Ind.

12 G.I. Ente rp.

13 GT R

14 Hinopak

15 IT S

16 Jaw ed M e ta l

1 7 L a n d h i E n g .

1 8 L o a d s

1 9 L . R . P a k

2 0 M e h r a n

2 1 N o o r En g g .

2 2 O m a r J ib r a n

2 3 P a c i f i c In t ’ l

2 4 P la s te c h2 5 P r o c o n

2 6 R a z i s o n s

2 7 R u b a te c h

2 8 S h a h e e n

2 9 T e c n o P a c k

3 0 T h a l En g g .

3 1 U T C

3 2 Z a ib En g g .

Hub:

1 Agri Auto

2 Exide Pakistan

3 Auvitronics

4 BEWL

5 BWL

6 Omega

Vendors W/o TAAVendor with TAA

Lahore:

1 H. M. Brothers

2 Hawks Engg.

3 Hybrid Techn.

4 Infinity

5 Kentax S irgroh

6 Malik Auto

7 Mecas Engg.

8 Meraj Ind.

9 Metaline Engg.

10 Metaline Ind.

11 Panther Sports

12 SPEL

13 S tanley

14 Techman

15 Thermosole

Islamabad

1 Rastgar Engg

Gujranwala:

1 Jodhala Complex

2 S ilver Falcon

3 UMI

Daska:

1 Alba Engg.

2 Darson

Mannan Shahid16 Mannan Shahid16

• Foreign Suppliers Study Visit(Indonesia / Thailand)

• Financial Assistance Scheme

• TMC/TMAP Instructors visit

• Process Audit by top management

• Quality Confirmation Activities

• 5S & Safety Audits

• Kanban Implementation

VisualControl

Quick DieChange

Quick DieChange

5S5S CheckingFixtures

CheckingFixtures

Die was changed in 22 mins. Inpast this time was above 45mins.

SUPPLIER ASSISTANCE ACTIVITYSUPPLIER ASSISTANCE ACTIVITY


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VALUE OF LOCAL PURCHASES (SUPPLIER PARTS)

59 341

374

477

592

915

1,51

9

1,61

3

1,73

4

1,41

1

4,08

1 6,45

6 8,58

1

9,42

1

8,81

1

9,12

1 10,9

16

15,2

40

31 44 59106

163

258294

383

578

751

864913

1,0331,066

898

1052

1144

1170

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 '01-02 '02-03 '03-04 '04-05 '05-06 '06-07 '07-08 '08-09 '09-10

Mill

ions

0

200

400

600

800

1,000

1,200No. of Parts / AssyBusiness Volume

LOCALIZATION QUANTUM

Highest localization than 1000Cc & abovevehicles achieved in Toyota Corolla

OtherCost Incl.

CKD &PlantCost

Localization Level

0

100

200

300

400

500

600

Corolla City Civic Liana Swift

No.

of P

arts

/ A

ssem

blie

s


15

Customers

Focus on Customer Care Developing CR as The Competitive Edge

Dealership Development

INDUS MOTOR COMPANY


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Shareholders, Financial Analysts, PAMA, PAPAAM, EDB, Media…

AwardsAwards1. Asian CSR Award 2007

2. Forbes Asia’s Annual Best Companies Under a Billion List 2007, 2008

3. IMC listed in the top 25 companies of Karachi Stock Exchange, 2006, 2007, 2008

4. Helpline Trust “CSR Award” 2006, 2008

5. Helpline Trust “Putting Consumer First” 2009

6. Environment Excellence Award 2004, 2005, 2006, 2007, 2008

7. Employers Federation of Pakistan 2007

8. ICAP Best Corporate Report 2006

9. National Consumers Choice Awards 2005, 2006, 2007

10. Pakistan Centre of Philanthropy, highest philanthropic contribution 2007, 2008, 2009

11. MAP Corporate Excellence Certificate 2005-06, 2006-07, 2007-08, 2008-09

12. MAP Best Sector-wise Award (Automobile and Parts) 2009

13. IMC’s 2006-07 COP, recognized as “Notable” by UN Global Compact

14. Best Annual Report Cover 2006-07, 2007-08, 2008-09


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Concern beyond cars (CSR)

Annually 1% of PBT is allocated to serve our SocietyAreas of our focus and support are:-

– Education– Health & Community Service– Environment– Sports and– Response to National Calamity

Road Traffic Injury ResearchCentre

Partners

• Jinnah Post Graduate Medical Centre

• Aga Khan University Hospital

• NED University

• Ministry of Health GOP

INDUS MOTOR COMPANY


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IMC Earthquake Relief Operation

TQM - Progression summaryConstruction

Phase89¬92

OperationPhase

93¬2001

RapidExpansion

Phase02¬2008

ConsolidationPhase2009¬

1 P h i l o s o p h y & T P SConcepts Application

Guiding Principles& T P SC o n c e p t s

I M C V I S I O N &E T H I C SF o r m u l a t e d

A C T # 1V isu al i z at ion S e l f - r e l i a n c e

2 P D C A a p p l i c a t i o nc o n s t a n c y P D C A a p p l i e d P D C A a p p l i e d P D C A a p p l i e d P D C A a p p l i e d

3 Team Members OJT, worke t h i c s & T P S

M e r i t B a s e dS e l ec t i o n &O J T

C o n t i n u i n g Upgraded for TMCCerti f ication

4 Team & Group LeadersT r a i n i n g

Selection & OJT inT O Y O T AP l a n t s

C o n t i n u i n g C o n t i n u i n g C o n t i n u i n g

5 K ai ze n or Q CC O rg .&A c t i v i t i e s

O r g a n i z a t i o n &Activities FullyA p p l i e d

Enhanced Scope &P ar t i c ip a t ion

Upgraded per TMCF r a m e w o r k

6 P a r t i c i p a t i o n &E m p o w e r m e n t Fully established S t r e n g t h e n e d S t r e n g t h e n e d

73 S D e a l e r s h i p

D e v e l o p m e n t &t r a i n i n g

6 D e a l e r s h i p sestablished

2 1 D e a l e r s h i p sOperat ional

3 0 D e a l e r s h i p sO p e r a t i o n a l

3 5 D e a l e r s h i p sOperational

8Local Suppliers Selection

& D e v e l o p m e n t Selection ProcessI n i t i a t e d

Sing l e suppl i erse n g a g e d

T e c h n o l o g yE n r i c h m e n t

T e c h n o l o g yE n r i c h m e n t


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In another opportunity wewould repeat all actionsonly with greater humility.

• PLAN with conviction• DO diligently (righteously)

• CHECK judiciously• ACT promptly and

persevere for right result

20 years of TQM practices at Indus Motor Company Ltd.

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