Management of Multi Alliances for Innovation Sona Koyo Steering

8/11/2019 Management of Multi Alliances for Innovation Sona Koyo Steering

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http://ajc.sagepub.com/content/6/2/135The online version of this article can be found at:

DOI: 10.1177/097282010900600205

2009 6: 135Asian Journal of Management CasesShilpi Jain and Pallavi Srivastava

InitiativesManagement of Multi Alliances for Innovation: Sona Koyo Steering Systems Limited

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MANAGEMENTOFMULTIALLIANCESFORINNOVATION:

SONAKOYOSTEERINGSYSTEMSLIMITEDINITIATIVES

Shilpi Jain

Pallavi Srivastava

Sona Koyo Steering Systems Limited (SKSSL) is one of the major automobile component

manufacturing organizations in India. A decade ago, SKSSL realized that they couldnot totally depend upon their technology partners for orders but needed to expandindependently within the global market. The company had to become a partner ofchoice for its technical partners as well as for its global corporate customers. It wasfacing constraints because of contractual obligations under which the organizationcould not supply auto components to its partners customers. Further constraints wereimposed by the Research and Development (R&D) investments and establishments.This case is about how Dr Surinder Kapur, founder chairman of SKSSL, was able tostrategically increase the companys global customer base and take the organizationon the path of innovation.Keywords: Innovation, alliances, academia, strategy, automobile, technology,

partnerships, India.

On a chilly morning of January 2007, Dr Surinder Kapur left his Delhi home to visit SonaKoyo Steering Systems Limited (SKSSL), his auto component manufacturing plant situatedat National Highway 8 (NH-8), Gurgaon.1Dr Kapur, founder and CEO of Indias largeststeering manufacturing group was contemplating, how his company could increase exportsales from the current 2 per cent to 45 per cent by the year 2010? What strategic changes

ASIANJOURNALOFMANAGEMENTCASES, 6(2), 2009: 135156

SAGEPUBLICATIONS LOSANGELES/LONDON/NEWDELHI/SINGAPORE/WASHINGTONDC

DOI:10.1177/097282010900600205

This case study was written by Shilpi Jain and Pallavi Srivastava, Doctoral candidates, ManagementDevelopment Institute, Gurgaon, India. The authors are grateful to Dr Ajay Kumar Jain, AssociateProfessor, Management Development Institute, Gurgaon, India for his valuable inputs in writingthis case.

1Gurgaon, situated in the state of Haryana (India), has emerged tremendously as an IT outsourcing anddevelopment destination and also as a real estate market.

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136 SHILPIJAINANDPALLAVISRIVASTAVA


and efforts towards innovation could establish his group as a partner of choice to itsglobal customers? While sitting in the rear seat of his chauffer-driven car, his thoughts

took him twenty years back. Gurgaon then had been barren and deserted with only asmall number of industries. Today, he was driving through the same route but on an eightlane expressway, newly constructed between Gurgaon and New Delhi. Glancing at world-class buildings on both sides of the road, he wondered how his organization could growand achieve high profitability through technology innovations. Should they invest heavilyin research and development for new products? How can they build an organization ofengaged employees and what policies do they need to build in order to serve their globalOriginal Equipment Manufacturers (OEMs)?

He began reflecting on his groups achievements so far. The thirteenth day of November2003 was a special day for his company. It was awarded the 2003 Deming Prize by the

Chairman of Toyota Corporation for excellence in Manufacturing and Quality Systems,making it the first recipient of this award among the steering system manufacturers innorthern India. This accomplishment was followed by a remarkable increase in customer

base. They even bagged an international order from General Motors (GM) supplying themwith 20,000 steering units per month. The dream that he had conceived twenty five yearsago had turned into a reality. He had come a long way and still had many more milestonesto reach. As the driver entered the porch of the company premises, he broke from hisreverie to the present and called a meeting with his department heads.

COMPANYBACKGROUND

Sona Koyo Steering Systems Ltd (SKSSL), the flagship company of the Sona Group, wasformed in technical and financial collaboration with JTEKI Corporation, Japan under theentrepreneurship of Dr Surinder Kapur. Established in 1985, it was the largest manufacturerof steering systems for the passenger car and utility vehicle market in India. The companywas involved in the manufacture and supply of steering systems and driveline products.Sona Koyo steering systems product portfolio included manual steering, hydraulicpower-steering, steering column and column-type electronic power steering systems.Their products were supplied to passenger car and UV manufacturers. The company hadthree plants, one in Haryana and one each in New Delhi and Tamil Nadu.2In 2007, the

company added the manufacturing capacity of 300,000 units of electronic power-steeringsystems at its Gurgaon plant in Haryana.

2All three are states in India.



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MANAGEMENTOFMULTIALLIANCESFORINNOVATION 137


In 2007, the company set up an associate company, Sona Autocomp Europe, to providelogistics management services for auto components sourced from India. During the same

period, the Sono Koyo entered into a majority owned joint venture with Arjan Auto PrivateLtd to manufacture stamped parts for steering columns and seat recliners for the Europeanmarket. They also acquired technology from JTEKI Corporation and Fuji Autotech AB,Sweden for electronic power-steering systems and steering columns, respectively. SonaKoyos customers included major vehicle manufactures in India such as Maruti Suzuki,Toyota, Hyundai, Tata Motors, Mahindra and Mahindra, General Motors and Mahindra-Renault. The company was exporting high quality precision products to USA, Europe andJapan (see Exhibit 1 for Sono Koyos achievements).

SETTINGANAGENDAFORFUTUREGROWTH

As a result of heated discussions and analysis, major plans of expansion were laid outin the meeting called by Dr Kapur. These included incorporation of 3 million pieces ofmanual steering gears, 250,000 units of hydraulic power-steering and increasing thecapacity of steering columns from one million to two million parts. It was decided thatthe organization would invest US$3108 million to achieve a turnover of US$ 270 million

by 2010. It was expected that by 2010, the company would earn 45 per cent of its revenuefrom exports.

The foremost aim of the organization was to become a partner of choice to global auto

manufacturers, which would be possible only when SKSSL could deliver new technologyto its customers at a reasonable cost. For this, the company needed to innovate and havetheir own registered patents and Intellectual Property Rights (IPRs).

During the meeting, Mr Kiran Deshmukh, the Chief Operating Officer of SKSSL acknow-ledged that:

If Indian companies want to build their outsourcing business, it is imperative for themto build on their technological strength. It is not just about using low-cost labour; it isabout using technological strength. Therefore, they need to develop innovative manu-facturing technologies and processes suited for India.

3US$ 1 = Indian Rs 39.12 as on 1 February 2008. The market rate exchange to the US dollar fluctuatesmarginally.



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The second challenge was to increase revenue through exports. The company hadcontractual obligations and tie-ups with their technology partners. Thus, they could not

serve customers who were also their partners clients in the same product segment.The third challenge was to develop a culture of innovation among their employees.

This could be achieved by grooming managers as leaders, transforming leaders into iconsso that they could create an empowered organization, by allowing employees to thinkand innovate and by positioning the management in line with future organizational goalsand risks.

The journey was definitely not so easy, as huge amounts of cost and time were involvedto set up an in-house Research and Development (R&D) centre. One brainstorming ses-sion among employees resulted in the identification of leading technology instituteswith which strategic alliances could be formed for exponential expansion. The selectionof these institutes was based on three important factors, namely research initiatives bythe institutes (publications, aids, industry interaction, patents, etc.), infrastructure andits intellectual capital.

Scenario in the Indian Automobile Sector

In 200304, at the same time when SKSSL management was planning its strategic goals,the Indian government liberalized the norms for foreign investment and import oftechnology. This appeared to have immense benefits for the automobile sector in Indiaand resulted in an increase in the production of total vehicles from 4.2 million in 199899

to 7.3 million in 200304 (see Exhibits 2 and 3). It was perceived that the production ofsuch vehicles would exceed 10 million in the next few years. Global leaders in the industrywere keenly looking towards India as a potential market for their vehicles and also as amanufacturing destination. The auto component sector posted a significant growth of20 per cent in 200304 to achieve a sales turnover of US$ 6.7 billion. The manufacturersalso realized the potential for higher growth as a result of outsourcing activities by globalautomobile giants.

The global manufacturing trend had spread to developing countries with large popula-tions because of lower cost of skilled manpower and design capabilities. It was expectedthat the automotive sector would contribute to 10 per cent of the countrys GDP and ap-

proximately 30 per cent of the industry. About 3.1 billion dollars were invested in theauto component industry for manufacturing world-class auto components.

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RESEARCHANDDEVELOPMENTINITIATIVESANDALLIANCES

Certain immediate actions were taken by SKSSL to not only move up on the value chainbut also broaden its customer base. The organization decided to adopt a multi-prongedapproach. With a long product development cycle, SKSSL felt the need to upgrade itsengineering side as well. They automated their engineering functions after a thoroughevaluation by the R&D team. As a result, many auto majors such as Maruti Udyog Limited(MUL: renamed Maruti Suzuki India Limited on 17 September 2007), Hyundai Motors,Tata Motors, Toyota Motors, General Motors and Mahindra and Mahindra were added tothe companys client list. MUL continued to be the single largest customer accountingfor 45 per cent of SKSSLs revenues. The company supplied Electronic Power Steering(EPS) systems to MUL and Hyundai. For the first time in India, a fully functional EPSwas assembled on Indian production lines. They also became the sole supplier of manualsteering wheel for Toyota Motors.

SKSSLs Initiatives Towards Innovation

Under the umbrella of strategic decisions, the organization first focused on its researchand quality systems because the requirements of the customers (vehicle manufacturers)were becoming more complex and demanding. For example, the earlier demand for a40,000 km warranty was now increased to 100,000 km to provide vehicle owners with ahassle-free driving experience. Such warranty liabilities needed commitment from manu-

facturers and could only be achieved if the organization trusted its research abilities,production processes and quality systems from conception to implementation. This wastrue with SKSSL. It also had the advantage of being competitive in its prices, because oflower production costs in India.

The second step was to have an efficient production system. They implementedToyota Production System (TPS) across the board. TPS laid stress on kaizen teams,kanbanandjidoka(see Exhibit 8 for background note on kaizen, kanban, andjidoka). Self-study groups and visits from experts were integrated into the work ethos at SKSSL. TPSstreamlined operations at the manufacturing end, reduced costs, eliminated waste andimproved quality. The company also expanded its capacity at its Chennai plant, whichplaced it in a better position to serve car makers such as Hyundai and others based insouth India.



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Lastly, SKSSL understood its limitations in investment in indigenous technologies. Itwas realized that in order to expand exponentially, the organization needed to identify

and form strategic alliances with technology leaders.

PARTNERSHIPWITHACADEMIA

Under the visionary leadership of Dr Kapur, the team expanded its research capabilitiesto attain excellence and meet customer expectations at a lower price. A consensus wasachieved to emphasize industryinstitute interactions for enhanced technological innov-ations and developments to provide India an edge over other countries.4As a result, thecompany entered into many parallel partnerships with technology institutes such as:

Indian Institute of Technology (IIT), DelhiTo build advanced steering columnapplications.

Indian Institute of Technology (IIT), MumbaiTo build a prototype for steer bywire steering, a futuristic project.

InnosightA project on the development of the new ideas conceived by SKSSLemployees.

University of San DiegoWorking on Driverless Driving project with US scientistsand manufacturers.

Indian Alliances

IIT Delhi

Instead of underestimating their capabilities, the management decided to exploit avail-able resources. SKSSL engaged in strategic alliances with Indian research institutes tostrengthen its research capabilities. At first it partnered with Indian Institute of Technology(IIT),5Delhi for new steering column applications. There were plenty of supporting fac-tors for choosing IIT Delhi. The prominent ones were: (a) availability of expertise withinthe institute and (b) absence of immediate competitive threat identified with academic

alliances.

4In his lecture at 11th National Conference on Machines and Mechanisms (NaCoMM-2003)5IIT Delhi is one of the Indias best technical engineering institutes.



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Mr Ashish Singh, Manager Design & Development (D&D) at SKSSL mentioned:

We do not have these specialized skills. Those skills cannot be attained in a small fractionof time; it is also difficult to acquire them since such information is not available withinthe industry. We are working in collaboration on a futuristic project. The idea is to havethat know-how and then our internal R&D can help to employ some of that learning inour existing products. We dont work with the aim of immediate commercialization. Weare working together to develop a concept. Once the concept is proven, then internalR&D can go a step further and develop products to get commercial benefits.

Such an alliance was a sure shot practical example of application engineering andsystems engineering. The project was funded by SKSSL and the technical expertise was

provided by IIT Delhi. The review committees met periodically to monitor the progressof the project.

IIT Mumbai

SKSSL and Indian Institute of Technology, Mumbai agreed to work jointly for two years, theperiod could be extended, on the development of steer-by-wire prototype. The futuristictechnology steer-by-wire already existed in military jets and the latest civilian airplanes

but it was hard to implement it in cars because of costs, reliability without maintenanceand the required steering precision of less than one centimeter. Once successful, it wasconsidered to be a major breakthrough in the passenger cars segment. In alliance withIIT Mumbai, SKSSL closely monitored the growth of this project.

Jobs and roles were well defined in the alliance. SKSSL was responsible for providingfunds for the project. In different phases, it paid approximately US$ 68,000 to the insti-tution. It also agreed to pay the institution US$ 80,000 towards transfer of technologyon completion. Besides this, all of the electronic Research and Development work andsimulations were the responsibility of IIT Mumbai to whom SKSSL was supposed toprovide mechanical and integration support. A full-time electronic engineer was alsodeputed by SKSSL to provide support and necessary assistance to both the parties. Fundstowards expenses were provided by the organization. However, intellectual assistance andexperimentations were the institutes responsibility. Any title to inventions, copyrights,patents as an outcome of the project was to be in the joint name of SKSSL and IIT Mumbai.Moreover, SKSSL could have exclusive rights to commercially exploit any developmentresulting out of the research. It had to pay a royalty of 10 per cent of the net sales value ofthe product(s) for a period of six years, from the date of the first unit sold, to the leading



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academician of the institution once the patent was granted. People at SKSSL were veryexcited about this partnership. Dr Ravindra Sharma, Director Research & Development

at SKSSL was optimistic in his statement as follows:

We will be able to exploit and explore new resources through the esteemed faculty ofthe institution. IIT professors are world renowned for their excellence in knowledgeand access to theory and information. If we work in close association with these insti-tutions, we are more close to innovations.

International Alliances

A tie-up with JTEKT Corporation (erstwhile Koyo Seiko) of Japan worth US$3 billion

helped SKSSL to have access to the strong Research and Development base of its parentorganization that owned a 20 per cent stake in the Indian company. They enabled SKSSLto work in close association with the Japan Institute for Plant Maintenance, Tokyo to im-plement Total Quality Maintenance (TQM) and Breakthrough Management.

To have global competence and excellence in the development of new products, SKSSLsigned a technical collaboration agreement with two Russian institutions namely, Instituteof Power Electronics at Siberia and Sibtehnomash to conduct joint research on steeringapplications and electronics with a focus on control systems.

To develop a new concept, they also tied-up with a US-based firm Innosight. This entitywas conceived by Prof. C. M. Christensen.6They provided concepts and mechanisms

to evaluate innovative ideas. Based on their rating, the ideas were selected for furtherdevelopment. The management at SKSSL showed interest in these ideas and agreed toprovide funding for the development of these ideas.

Innosight

Innosight was using Professor Christensens research as a foundation. The organizationhad customers as varied as multinationals like Procter & Gamble (P&G), start-up firmslike Vanu Inc. of India and even governments of different nations. They determined thecausal factors behind successful and failed innovations for their clients. Innosight helped

them apply critical thinking to real practice, thereby finding new growth.

6Professor Clayton. M. Christensen is the founder CEO of Innosight and also an author of the famous bookInnovators Dilemma. The author introduces theories on disruptive innovation. Innosight was founded inJanuary 2000 to help companies understand and overcome the challenges of disruptive innovation.



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SKSSL approached Innosight to understand the process of how to evaluate new ideas?The Research & Development and D&D departments of SKSSL had a system in place where

a register was maintained and employees were invited to write their ideas, irrespective oftheir designations. All those ideas were discussed in formal meetings and some potentialones were selected for further discussion. SKSSL approached Innosight with the list ofsuch selected ideas for evaluation. After the evaluation, ten ideas were chosen by theteam members of both the organizations for further development. Since this was just a

beginning, SKSSL management initiated the process to develop one idea from the top tenby providing resources in terms of money and manpower.

The partnership between SKSSL and Innosight was crystallized in March 2007. A separatecompany in Singapore was set up with each party having a stake of 40/60. The entiredevelopment was to be monitored and reviewed in three phases. SKSSL had an optionto be released from the agreement after any phase, in case they were unsatisfied by theoutcome of the project. In fact, SKSSL could even take control of the entire project.

Jobs and roles were well defined for both the parties. SKSSL was to provide projectfunding close to US$ 100,000 in phase one and then US$ 200,000 to 400,000 dependingupon the progress of the business. Sona Koyo also agreed to provide relevant technicaland engineering skills. On the other side, Innosight was responsible for judgments re-garding the design and set-up, the vendor management system, vendor negotiation,programme management skills and capacity, commercial development in terms ofcustomers, advertising, promotions, sales, gap-filling technical skills, and management

recruitment skills.

In-house Initiatives

In the annual meeting of SKSSL, Dr Surinder Kapur addressed his team:

I have been stressing on the imperative need of building in-house technological andR&D capabilities to transform from being a manufacturer of components to a full ser-vice provider and becoming a critical partner for OEMs in the product developmentprocess.

While encouraging partnerships for outsourcing R&D, Dr Kapur also felt the need for anin-house R&D team for the long-term sustainability of the organization. Thus, the founda-tion for SKSSLs first fully-equipped research centre for technological innovations anddevelopment was laid in Gurgaon in 2004 under the supervision of Dr Ravindra Sharma



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and four new employees. According to Dr Sharma, Some employees had apprehensionsand doubts on its success, but ultimately everyone was proven wrong.

MILESTONESACHIEVED

In 2006, believing in continuous research and innovation, the team of scientists andengineers at SKSSL made the first electronic power steering prototype, indigenouslydeveloped in their laboratories (first time ever in India). The company filed a patent forit in India and in the US and registered it as EPAM (Electric Power Assist Module).

SKSSL continued to harness its in-house design capabilities in concurrence with insti-tutional alliances. In 200506, it invested Rs 15.7 million in R&D that had a positiveoutcome. In the same year they filed six patents compared to the cumulative four pa-

tents in the previous years. Besides this, other incremental innovations were coming upsimultaneously in the Department of Design and Development (D&D) under the super-vision of Ashish Singh (Manager D&D). All of the new design and development processeswere contributed by the international partners. The department attained skills to re-engineer existing products to save costs. For example, it redesigned the steering systemfor a small car produced by Suzukis Indian venture, the Maruti Alto (an economy carfor Indian households available in the market for only US$ 6,000). The rework combinedthree components into one and reduced the weight of the system by 15 per cent.

The list of innovation initiatives did not end here. The company further entered into apartnership with US based manufacturers on a project called Driverless Driving with the

University of San Diego. They teamed with international manufacturers and US scientists.With these two core coordinators, the role of SKSSL was to provide a 500 metre platformfor testing in India, besides the steering testing tools.

Achievement from Multi-Alliances

The result of having in-house R&D centres and alliances helped SKSSL to achieve manybusiness goals. It successfully rolled out Total Quality Management (TQM) and Total Pro-ductive Maintenance (TPM) practices throughout the organization, including the shop floorunder the supervision of Dinesh Sharma, General Manager, Quality Assurance at SKSSL.

He believed that after getting the production process right in India, gaining acceptabilityin other parts of the globe would not be an issue.

In 200203, sales had increased by only 6.4 per cent whereas in the next calendar year,they showed a significant growth of 23.74 per cent [see Exhibit 4] which was close to fourtimes than that of previous years. Since then there was no looking back.



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SKSSL as a Global Growth Company in 1997. In 2007, SKSSL was upgraded by ICRA(Investment Information and Credit Rating Agency of India Limited) and was given the

rating of A1+, indicating the highest investor safety level awarded by the agency.SKSSLs partners were interested in multi-faceted relationships, though the expected

outcome was yet to come, because the technologies they were working on, were allfuturistic and could not be immediately commercialized. However, there were someintangible benefits which both the partners were already aware of and many that wereyet to come. Institutions needed funds to continue with their research initiatives whileorganizations engaged with universities to make greater use of exploratory university-basedresearch alliances. Such alliances emphasized exploration, tapping external knowledgeto aid in investigating trajectories that were new to the firm. These alliances would helpSKSSL in enhancing competitiveness compared to their competitors. They could presentthemselves as a full solution provider to their clients, from proposing newly designedtechnical solutions to actually developing a product.

According to Dr Surinder:

The emerging scenario in Indias small car industry holds promise and excitementfor all involved. The growing liberalized economy, favourable demographics, healthyenvironment for investment, will help propel the growth of the automotive industryin India.

The company had a planned capital expenditure of US$ 22 million. It also planned aninvestment of US$ 4.5 million to set up manufacturing facilities for electronic steeringsystems and another US$ 9 million to increase the capacity of its existing facilities.Dr Surinder continued:

The automotive industry (OEM and auto components) is poised to become the thirdlargest market by 2050..We are at a historic juncture, where the exports revenueof some Indian suppliers will exceed their domestic revenues and their outlook willtransform to be a global supplier of the automotive industry.. SKSSL employees be-lieve that we are well on our way to achieving our vision of being a Supplier of choice

to global customers.

Strategic issues such as enhancing competitiveness and the value of the firm motivatedthis growth in alliances, rather than focusing on only short-term cost efficiencies. SKSSL



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was helping Management Development Institute (MDI),8Gurgaon to develop a centre forinnovation excellence and promotion of entrepreneurship. It also sponsored an Incubation

Centre for Innovation and Entrepreneurship which was inaugurated in February 2008.The group allocated funds of worth US$ 400,000 to develop a support structure for entre-preneurs and research and development. According to Dinesh, the whole idea was toencourage young minds to innovate because innovations could transform a nation andgive it better global positioning.

THEROADAHEAD

In 200708, the Indian auto components industry witnessed a turnover of US$ 18 billion.Between 200207 it grew at a compound annual growth rate (CAGR) of 27.2 per cent andaccording to the Auto Components Manufacturers Association of India (ACMA), it waslikely to grow at a CAGR of 10.5 per cent between 200715 to touch US$ 40 billion by201516. Investments in the Indian automobile components industry were witnessingcontinuous growth. Investments grew at a CAGR of 21.7 per cent during 200207 andwere worth US$ 7.2 billion in 200708. ACMA expected investments to grow at a CAGRof 14.2 per cent during 20072015 and reach US$ 20.9 billion by 2015 (Refer to Exhibits 6and 7 for the growth in the automobile sector).

With the burgeoning potential in the Indian auto component sector, industry leaders sawa huge latent opportunity. Dr Surinder Kapur had some pertinent issues hammering in his

mind. Should his organization expand its research initiatives and diversify from auto partsmanufacturing to other fields? What should be the level of indigenous R&D infrastructureat SKSSL? Should it be 100 per cent R&D, indigenous R&D with technical collaborationsor non-indigenous R&D with total dependency on technical collaborations? Dr Kapurknew that heavy investments in R&D were not feasible. Hence, should his organizationgo for collaboration with technical academic institutions with no equity, collaborationwith international auto-component companies with equity stake or purchase technologyfrom international auto-component companies with no equity stake? However, such tie-ups with academic institutes may complicate things further. Would a collaboration withan academic institution lead to impractical innovations that could not be applied?

Dr Kapur was also concerned about the balance between new product developmentand improvements or improvisation of existing products so that the focus on new product

8MDI is one of the premiere management institutes situated in the state of Haryana in India.



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development may not lead to neglect of existing products. How could he ensure this? Didhe make sound investments in improving the production processes and quality systems, in

R&D for existing product improvisations, and in alliances with institutes for new productor process development?

REFERENCES

ACMA. 2008. Status Indian Auto Industry. Retrieved from http://www.acmainfo.com on 29 November2008.

Acma Annual Reports 20062007. 2007. Automotive Components Manufacturers Association ofIndia. Retrieved from http://www.acmainfo.com/annual_report2006-07/ann_rport_pg1.htmon 16 October 2007.

Annual Financial Report 200405. 2006. Retrieved from the Sona Group Website: http://www.sonagroup.com/Annual Report 2005.pdf on 5 June 2007.

Annual Financial report 200506. 2007. Retrieved from the Sonagroup Website: www.sonagroup.com on 5 June 2007.

Auto Components.2008. AprilJune. Retrieved from India Brand Equity Foundation: http://www.ibef.org/industry/autocomponents.aspx on 17 June 2008.

. (2007).Auto Components Exports..issues and challenges.India: Avalon Consulting.Davila, T., M.J. Shelton and Robert Epstein. 2006. Making Innovation Work: How to Manage It,

Measure It, and Profit from It.Upper Saddle River: Wharton School Publishing.IBEF. 2008, OctoberDecember.Auto Components. Retrieved from Indian Brand Equity Foundation

website: http://www.ibef.org/industry/autocomponents.aspx on 29 November 2008.

India Automobile Industry. 2005. Retrieved from Economy Watch Web site: http://www.economywatch.com/business-and-economy/automobile-industry.html on 9 July 2007.

Outlook from Directors report 200506. 2006. Retrieved from Baljeet Securities Web site: www.baljeetsecurities.com on 15 June 2007.

Sona Koyo bags Order from GM India. 2005, 29 November. Retrieved from The Financial ExpressWeb site: http://www.financialexpress.com/old/fe_full_story.php?content_id=109997 on23 October 2007.

Sona Koyo eyes at Rs 1,000-crore turnover. 2006, 4 April. Retrieved from Jim Trade Web site: http://news.jimtrade.com/200604/1266.htm on 17 June 2007.

Sona Koyos outsourcing biz is built on technical prowess. 2006, September 25. Retrieved from India

Car Web site: http://www.indiacar.net/news/n40744.htm on 10 July 2007.Sona steeringAbout Us. 2007. Retrieved from Sona Group Web site: http://www.sonagroup.com/steer.htm on 10 May 2007.

The Deming Journey. 2004, 27, 29 November. Retrieved from Domain-b Web site: http://www.domain-b.com/management/quality/20041127_journey.html on 12 November 2007.



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Exhibit 1Sono Koyos Achievements

Month Year Description

Jan 1985 Technical Collaboration Agreement with Koyo Seiko Co. Ltd., Japan, forManufacturing

Oct 1987 Commencement of ProductionManual Steering GearManual SteeringColumn

Sep 1994 ISO-9002 Certificate by TUV-CERT, GERMANY

]ul 1996 Production of Hydraulic Power Steering Gear

Dec 1998 Established Plant in Chennai

Oct 2003 Established Export Oriented Unit (EOU) in Chennai

Nov 2003 Deming Award by JUSE, Japan

Oct 2004 Acquired 21% stake in Fuji Autotech France

Mar 2006 Started Production of Column-type Electric Power Steering

Feb 2007 Established Plant at Dharuhera, Haryana

Source:Company profile.

Exhibit 2Industry AnalysisAuto Components Sector

Auto Component IndustryStatistics

200304 200405 200506 200607 200708

(Value in US$ million) Estimated

Turnover 6,730 8,700 12,000 15,000 18,000Exports 1,274 1,692 2,469 2,873 3,615Imports 1,428 1,902 2,482 3,328 4,938Investment 3,100 3,750 4,400 5,400 7,200Export as % of Turnover 18.9% 19.5% 20.5% 19.2% 20.1%

Source:http://www.acmainfo.com

The Hindu Business Line: Sona Koyo Steering:Buy. 2004, 10 October. Retrieved from Blon Net Web site:http://www.blonnet.com/iw/2004/10/10/stories/2004101000960800.htm on 7 July 2007.

Vision & Philosophy: Toyota Production System. (n.d.). Retrieved from Toyota Web site: http://www.toyota.co.jp/en/vision/production_system/jidoka.html on 23 August 2007.



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Exhibit 3Passenger Vehicles Production Growth Trend (Qty in 000 Nos)

Source:http://www.acmainfo.com

Exhibit 4SKSSL Annual Sales Report

Source:www.sonagroup.com



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Exhibit 5Quality Improvement

Source: www.sonagroup.com

Exhibit 6

Automobile Industry-Past Ten Years

Source:www.acmainfo.com



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Exhibit7

IndianAutomobilesSalesGrowth

Source:www.acmainfo.com



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EXHIBIT8 BACKGROUNDNOTE

Company ProfileSona Koyo Steering Systems Limited (SKSSL)

(Source:www.sonagroup.com)

Sona Koyo Steering Systems Limited (SKSSL) is a technical and financial joint venturecompany of JTEKT Corporation, Japan and the global technology leader in steering sys-tems. With a market share of 50 per cent, the company is the largest manufacturer ofsteering gears in India and is the leading supplier of Hydraulic Power Steering Systems,Manual Rack and Pinion Steering Systems and Collapsible, Tilt and Rigid Steering Columnsfor passenger vans and MUVs. The companys product range also extends to Rear Axle

Assemblies and Propeller Shafts. Named as a Global Growth Company in 1997 by the WorldEconomic Forum, the company is now well positioned to lead the Indian AutomotiveComponent Industry to global standards in the coming millennium.

It is surging ahead in the journey of Total Quality Management (TQM). It is also develop-ing its core competence and aligning objectives at all levels so as to realize synergy inoperations. An initiative of improving the most important resources, the Human Resource,as well as the plant equipment has been initiated. This technique, Total Productive Main-tenance (TPM), has been adopted to improve performance through the philosophy ofprevention. SKSSL aims to achieve:

Zero accidents. Zero defects. Zero breakdowns by using the Koyo Production System as the foundation of all

change programmes.

Customer satisfaction continues to be of utmost importance to SKSSL as do consist-ent quality, constant innovation, value engineering, process improvement and customerorientation.

Company ProfileInnosight

(Source:www.innosight.com)

To help companies understand and overcome the challenges of disruptive innovation,Christensen and Mark Johnson formed Innosight in January 2000. Professor Clayton



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Christensen of the Harvard Business School shook the business world with his 1997best-selling book, The Innovators Dilemma, which introduced the theories of disruptive

innovation. Christensens follow-up book, The Innovators Solution, shed more light onwhat companies could do to overcome the challenges of disruptive innovation and pro-vided managers with key insight into the business conditions that could be shaped toenable great growth. His most recent release, Seeing Whats Next, coauthored by InnosightManaging Director, Scott D. Anthony, uses the theories of innovation to predict businessgrowth and industry change.

Using Christensens research as a foundation to explain the causal factors behindsuccessful and failed innovations, Innosight was created to apply that thinking to realpractice, helping companies find new growth. Over the last six years, Innosight has workedwith numerous companies in a wide range of industries, from leading corporations likeP&G to start-ups like Vanu, Inc. and even national governments. Through field work,Innosight has uncovered key principles to recognize patterns of success that lead to betterconnection with consumers and reduced competitive threats. Its pattern recognition tools

build internal processes and identify the right opportunities to reduce project time andminimize required investment while increasing revenue potential.

Concepts

(Source:www.wikipedia.com)

Kaizen:Kaizen was created in Japan following World War II. The word Kaizen meanscontinuous improvement. It comes from the Japanese words Kaimeaning school andZen meaning wisdom.

Kaizen is a system that involves every employeefrom upper management to the clean-ing crew. Everyone is encouraged to come up with small improvement suggestions on aregular basis. This is not a once a year or monthly activity. It is continuous. At Japanesecompanies, such as Toyota and Canon, 60 to 70 suggestions per employee, per year arewritten down, shared and implemented. In most cases these are not ideas for majorchanges. Kaizen is based on making little changes on a regular basisalways improvingproductivity, safety and effectiveness and reducing waste. Suggestions are not limited toa specific area such as production or marketing. Kaizen is based on making changes any-where that improvements can be made. The Kaizen philosophy is to do it better, makeit better, and improve it even if it aint broke, because if we dont, we cant compete withthose who do.



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Kanban:Kanmeans visual and banmeans card or board, is a concept related to Lean orJust In Time (JIT) production, but these two concepts are not the same thing. (The Japanese

word kanbanis a common everyday term meaning signboard or billboard). Accordingto Taiichi Ohno, the man credited with developing JIT, kanbanis a means through whichJIT is achieved.Kanbanis a signaling system. As its name suggests,Kanbanhistoricallyuses cards to signal the need for an item. It was out of a need to maintain the level ofimprovements that the kanbansystem was devised by Toyota.Kanbanbecame an effectivetool to support the running of the production system as a whole. In addition, it provedto be an excellent way for promoting improvements because restricting the number ofkanbanin circulation highlighted problem areas.

Jidoka:The termjidokaused in the TPS can be defined as automation with a humantouch. The wordjidokatraces its roots to the automatic loom invented by Sakichi Toyoda,Founder of the Toyota Group. The automatic loom is a machine that spins thread for clothand weaves textiles automatically.

Historically, back-strap looms, ground looms and high-warp looms were used tomanually weave cloth. In 1896, Sakichi Toyoda invented Japans first self-powered loomcalled the Toyoda Power Loom. Subsequently, he incorporated numerous revolutionaryinventions into his looms, including the weft-breakage automatic stopping device, whichautomatically stopped the loom when a thread breakage was detected, the warp supply



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device and the automatic shuttle changer. Then, in 1924, Sakichi invented the worldsfirst automatic loom, called the Type-G Toyoda Automatic Loom (with non-stop shuttle-

change motion) which could change shuttles without stopping operation. The Toyotaterm jidois applied to a machine with a built-in device for making judgments, whereasthe regular Japanese term jido(automation) is simply applied to a machine that moveson its own.Jidokarefers to automation with a human touch, as opposed to a machinethat simply moves under the monitoring and supervision of an operator.

Since the loom stopped when a problem arose, no defective products were produced.This meant that a single operator could be put in charge of numerous looms, resultingin a tremendous improvement in productivity.

Sources of Information

Information has been collected from various interviews conducted at the organizationssite in Gurgaon, India.

The principal members who participated in the interview sessions were:

1. Mr. Dinesh Sharma, General Manager (Quality Systems), SKSSL Gurgaon, Haryana,India.

2. Dr. R.N. Sharma, Assistant General Manager (R&D) SKSSL, Gurgaon, Haryana,India.

3. Mr. Ashish Singh Manager D&D, SKSSL Gurgaon, Haryana, India.

Documents

Management of Multi Alliances for Innovation Sona Koyo Steering