Just in Time at Eicher Tractors

Presented By,Group 2Kritanjali Maltiar (201066)Kunal Jha (201068)Mini Aggarwal (201077)Prashant Pallaw (201106)Rakesh Kumar (201115)Virendra Anand (2011120)

Case Overview

• In 1986 Eicher Tractors because of ease in getting loan for purchasing Tractors for farmers and to make the complete use of the opportunity the company had to undergo a complete restructuring of the way the work was done to consolidate and improve their position in the market hence ‘PLAN M’.

Case Overview (Cont..)

• PLAN ‘M’ aimed at upgrading product quality and operating systems.

Objective of ‘Plan M’

To produce every component and assembly as per drawings and specifications with less fatigue and effort from workmen.

To change handling of stores and materials in all stages of production to ensure that material was available in the right quantity at the right time in the right place

Company History

1948 – Good Earth Company was established to sell and service imported tractors.

1959 – Eicher Tractor Corporation of India Pvt. Ltd. was setup by Mr. M.M. Lal. in collaboration with Gebr Eicher of West Germany

1960 – The first tractor manufactured in India rolled out of the Faridabad plant.

Company History (Cont..)1960’s – Govt. regulations on imports resulted in the company achieving 85% indigenization.

1970’s – Achieved 100% indigenization and setup two new factories in Alwar and Parwanoo.

1980’s – Changed its name to Eicher Goodearth Limited and

diversified into LCV. Also, setup a new LCV

manufacturing unit in Prithampur. They entered into

strategic alliance with Enfield to take advantage of

their plants and supplier base

Step By Step Approach to implement JIT

Reorganization and Modernization

Introduced Just in time

Increased Employee Involvement

Implement quality checks

Use Kaizen (continuous improvement)

Reorganization at Eicher

• Because of the opportunity and to achieve sustainability, Eicher launched a major reorganization effort.

• Each of the three independent plants were reorganized into interdependent plants.

• Parwanoo – Gears and transmission production• Alwar – Engine manufacturing• Faridabad – Final assembly

Modernization at Eicher

• Introduced the concept of producing every component and every assembly as per drawing and specifications.

• Company moved existing machinery and installed new ones.

• Changed production and procurement processes, renovated buildings and changed layouts on the shop floor.

• Company took decision to produce 24hp tractors to cater to small farmers.

Eicher TQM Model

Total Em-ployee In-volvement

Just In Time

Total Quality Control

TQM Model

World Class Continuous Improvement(PDCA)

JIT Prologue

• Initial impetus for JIT implementation came from Plan ‘M’ which called for streamlining operations and material flow so as to achieve higher product quality and productivity.

• Efforts were made to attract and retain young bright engineers.

• Experimentation and adaptation were encouraged.

• Negotiations with the unions at all their plants to communicate the changes that were being brought about.

JIT Implementation• A core team of four engineers was made.

• Initially trained them for a month on JIT philosophy and technique.

• Implemented firstly at faridabad and then extended it to Prithampur, Alwar and H.P. plants

• Twelve workers were identified to work on the new line under JIT implementation program.

• These workers were trained by core team of engineers.

• Training was given to workers which alternated between the classroom and the assembely line.

JIT Implementation• It was introduced in stages.

• Transmission sub assembly was chosen for starting work on JIT implementation.

• Line was designed by analyzing the work content and choosing a target cycle time.

• Cycle time was measured as one vehicle every so many minutes

• This cycle time would match the required capacity of the plant in terms of vehicles per day.

JIT Implementation (Cont..)

• The work was broken down so that each work station had a work content that took less time than the cycle time.

• Smaller lot size- To synchronize production with the customer demand, Eicher determined the quantity of production by the Linearity measure:-

• In line with the philosophy of JIT the work content at which station was not sought to be equalized rather it was designed so that most work stations work for full cycle time with some allowance for rest and fatigue and other work stations had a fair amount of idle time.

• The space available at each work station did not allow the worker to produce the next item until the person succeeding him had physically moved it over to his work station.

Linearity= [1-3*Daily Target- Actual*/Monthly target]*100%.

JIT Implementation (Cont..)

• Work station was designed using ‘surgeon’ concept.

• All tools and parts were within one arm or leg movement from workers position on the line.

• Heavy physical work was minimized by use of over head cranes to lift and move heavy parts.

• Workers were encouraged to write down the operating standards which specified the sequence of steps for each item on the assembly line going through his station.

JIT Implementation (Cont..)

• Error Prevention (Poke-yoke) –

Eicher has implemented Poke-yoke in Faridabad factory.

for e.g. line automatically stopped whenever the pump stopped working. The pump was found to have too much power and was being derated and run at 2kg/sqcm instead of the rated 5.5kg/sqcm.

Then the pump was replaced with about 25% over specification.

Finally it was found that the previous operation of hot water washing produced a lot of moisture which caused problems for the pump. Hence curtains were installed to separate pump operation from hot water vapors.

Eicher’s approach to Incentives

• Rewarding someone for working faster gave no meaning as when lower production was required, worker producing faster than the others in assembly line served no purpose and increased work in progress inventories.

• Hence it was decided to abolish the incentive system.• A special allowance for the 12 selected workers was

negotiated after talking with the union.• Union leaders were convinced after exposing them to

new methods through in class training and simulation games designed for experimental learning.

JIT for Suppliers• Kanban System-• JIT required appropriate quantities for production during shifts.• The materials from suppliers arrived in small quantities during every shift. • Vendors using cycle, rickshaws to ship parts directly to the shop floor 2 to

3 times a shift• At the same time, it kept stocks of items that could not be procured in

just-in-time basis.

• It began working with local suppliers to upgrade their quality and production processes and bring them into harmony with the JIT system. Once they were satisfied with the quality and performance of a vendor, he was allowed to ship material directly to the assembly line.

Total Quality Control

Production and quality systems:• Product drawings were translated in to the assembly

operations sheet which consisted of a top down approch.• Quality standards were established by the quality planning

and production people.• Quality checks were carried out at three levels:

– Worker– Supervisor– Quality auditor

Total Quality Control (Cont..)• Worker checks every item coming in and coming out of his work station.

• Supervisor checks a sample of items once or twice a shift.

• Quality auditor checks a smaller samples once a day.

• Workers used simple methods, supervisor used bit more sophisticated methods like vernier calliper, auditor uses methods equivalent to supervisor.

• Finished products were inspected by quality control inspector who were given a list of 57 counts on which the units were inspected.

Kaizen (Example)Before Kaizen After Kaizen

Total Employee involvement

• Kaizens and Monitoring Systems– The company believed that once the workers were properly trained

and had imbibed spirit of TQM & JIT they were in the best position to observe and suggest improvements pertaining to there area of work .

– Company implemented the system to follow up on worker suggestions.

– Since empowerment and involvement were important so if a workers achievements were recognized his ability to contribute increase.

– It followed the employee recognitions system like giving gift of a pen in front of his colleagues.

Total Employee Involvement (Cont..)

• Each worker & supervisor is authorized to invoke CAPP (Corrective Action Plan Procedure)– If any problem noticed with the supply, with

maintenance or with received upstream of the assembly line.

– Guidelines on when to raise or close a CAPP

Indicators of Manufacturing Performance

• Quality– Percentage Straight Pass: Percentage of items without defects.– Defects per unit– Demerit rating: Weighted number of defects per unit

• Cost– Inventory at various stages– Manufacturing variables: no. of rejects per shift and quantity of consumables and tools used– Productivity: Man-minutes per unit– Overheads: Power, repair, maintenance, canteen etc.

• Delivery– Target Achievement: achievement per model– Linearity: degree to which the average rate of production required for a month was adhered to.– Customer Line Stoppages: the customer was defined as the succeeding line to which its output was fed– Safety– Number of accidents

• Teamwork– Housekeeping work done by the workers– Training– Number of Kaizens implemented

Future of JIT at Eicher

• The results were very encouraging and the JIT system has achieved substantial improvements.

• However JIT has just been implemented at its assembly plant at Faridabad.

• The much bigger task of extending JIT to all its plants and suppliers is still awaited by the company.

Future of JIT at Eicher (Cont..)Eicher should go ahead and implement the same system in other

two plants.

They should go step by step and implement JIT in sub processes first.

Employee training, awareness and encouragement along with supplier coordination would be critical factors in success of this system.

Develop the culture of continuous improvement among workers, as they have done in Faridabad

.

Thank You!!!!