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Old 20th August 2007, 23:40   #1
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Post Lean Manufacturing in Indian Automotive Industry

Hi there,

Recently i am completed my thesis on Lean Manufacturing In Indian Automotive Industry. This dissertation only not fullfilled my academic purposes but also i gained so much knowledge about Indian automotive Industry. I thought of sharing my analysis with Team BHP members.

Lean Manufacturing

The use of the term "Lean" in a business or the manufacturing enviornment describes a philosophy that incorporates a collection of tools and tecniques used into the business or in a an organisation to optimiza human resouce, assets and productivity simultaneously improving the quality level of products and services to their customer (1).

There is sort of conflict for taking the credit of introducing lean manufacturing. Some say it was Henry Ford who introduced it and some other believe that it was Toyota.

Techiques of Lean Manufacturing
  • Just in Time
  • Six Sigma
  • Kanban
  • Kaizen
  • 5's
  • Cellular Manufacturing
[left]I won't go on detail about Lean manufacturing or implementing its tecniques as it would result in re-writing my whole thesis.

Lean Manufacturing In Indian Automotive Industry

Personally the figures which reveals that Indian Automotive Industry is booming is statistical nonsense to me. The Indian Automotive Industry is relatively labour intensive by global standards and is in transition stage as low cost base for exporting labour intensive products. The important question arises "Is Indian Automotive Industry moving up the value chain"?The answer might be temporarily "yes", the Indian automotive industry is booming with high growth in the domestic as well in the export market. Till date all the grwoth has been possible because of Foreign automotive manufacturers and there valuable experience. To safegurard the interest of these manufactures in the long run in the Indian economy, the manufacturers need to be competitive simultaneously maintaining the quality standards which could be possible with implementing lean techniques in their system.

The basics of implementing lean begin with having a proper infrastructure of the economy, to which Indian economy is no where near. According to MUL during FY1994-95, a total of 724 vehicles were damaged in transportation (2). Even if we take the average cost vehicle would have been Rs 3 lac, then MUL nearly lost Rs 217,200,000 because of poor transportation system in India. This money should have been well spent somewhere else.

The government of India needs to realize the threat to Indian automotive Industry from China. If the Indian government continous with rigid automotive policies (high import duty, taxes, FDI), then the foreign investors will simply loose their interest in India and could move to other countries like Poland, China etc.

Japanese are known to be Pandits of Lean manufacturing techniques. Indian automotive market is not new to Japanese manufacturers, they have been here for good number of years. But till today they have not been able to implement even 20% of their work lean techniques. Reasons behind it corruption, poor infracstructure, social excursion within Indian economy.

There is hardly evidence of R&D in Indian Automotive Industry. The government of Australia provides companies 125% rebate on their R&D taxation if the company set up its R&D base. Maruti which has been in India for more than 20 years, most of technology is imported from Japan. Just for the sake of name Maruti has set up a small R&D in its factory which apparently does nothing apart from trying new colors on bumper.

In my point of view Indian automotive Industry has long way to go before the world could trust "Made In India" brand.


1) Zoe J Radnor, Ruth Boaden (2004), Developing an understanding of corporate anorexia, internal jounral of operation and production management, vol24, Issue no4, pp 424-440
2)Sumila Gulyani (2001), effects of poor tranportation of lean production and industrial clustering evidence from the Indian Auto Industry, Vol 9, No 7, pp 1157-1177.

Last edited by normally_crazy : 21st August 2007 at 10:02. Reason: Fonts / Tags edited
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Old 21st August 2007, 01:13   #2
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Very interesting indeed. If you don't mind, could you possibly post a little bit more ?
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Old 21st August 2007, 01:23   #3
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What you have written is not only applicable for the auutomobile industry but for the general industrialisation scenario as well. Need for better infrastructure is to some extent me in the modern times by the GQ and other projects. However R&d facilities would need to do more and thats where companies like Tata or Mahindra come in, need more (more of the former as they mostly develop their own vehicles with little help from the acclaimed players).
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Old 21st August 2007, 02:03   #4
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I agree with TATA and Mahindra are trying their best to come up with new technology. But still they are years and years behind. I recently read that TATA was bidding to buy Jaguar and Landrover from Ford. Simply for the fact beacsue TATA have got no experience in building SUV, same as when BMW bought Rover for 5 years. Got all the technical experience, launched X5 and then sold it. Infact Mahindra's best seller Scorpio's CRdi technology comes from Bosch. Here i would also like to mention that 13 Indian companies have won Deming Prize (Nobel Prize in manufacturing industry) so far like Rane Brake Lining, Sundaram Brake Lining (part of TVS group), Sona koya ( manufacturers steering systems for Maruti and other OEM) etc for implementing lean techniques in their system. But the point to note is none of the companies could have won the prize without the help of foreign collaborators. The government needs to safeguard there interest.

In UK when City Rover (Indica) was launched. The car was a ultimate disaster in UK market. It depreciated like anything. I quite clearly remember how Richard Hammond in Top gear critised City Rover to best of his abilites. Simply because the car lacked quality. The car was launched in UK for 6,999. For the same price one could have bought 207 or Matiz or Colt.

My only concern this boom in the Indian automotive industry might not last long enough if the manufacturers are not competative enough for the domestic as well as for the export market.
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Old 21st August 2007, 02:33   #5
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even johnson controls(they make seats for tata and assemble seats for mercedes and bmw) follow "just in time".when i was doing my internship there,i was very impressed with the techniques that they were following.
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Old 21st August 2007, 08:33   #6
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Nice write-up Amit, although I'm surprised you did not mentioned about VSM (Value Stream Mapping). But good writeup nevertheless on Lean Manufacturing in the automotive industry. If anyone is interested in learning more, I recommend reading up the book "The Toyota Way". It give quite some insights into how Toyota became what it is today through their Lean methods.
Ps: I'm an IT guy with a Tata Indica that I really like, so I'm not promoting Toyota in anyway. But they had established some best practises in Automobile Manufacturing that are followed by most of the top manufacturing companies today. And this knowledge is good to share.
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Old 21st August 2007, 08:51   #7
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If I remember right, amongst the component manufacturers, adoption of Japanese manufacturing practises commenced with SUndaram Fasteners, and it was one of the TVS group cos. which received the first major contract from GM for radiator caps. This information from the snare market, and may not be accurate.

May be slightly OT for this post, but cant help saying this.
Actually, lean manufacturing started with Hindustan Motors in India. As somebody posted in the thread about Mumbai Taxis, they had ALL dials / sensors in instruments panel as optionals for some random cars.
My grand father had pruchased 2 brand new ambys (at different points of times, about 10 years apart) and both were promptly taken apart to the shells to be given a 4 layer coat of white paint. The original seats were used as sofas for servants and new seats went in. That way back several years back. The padminis of course, were drivable for a few weeks before receiving this kind of "treatment". Of course, you will disagree, but as a consumer / user, IMHO, putting in as little features as possible IS lean manufacturing for me.

Even maruti is guilty of this - remember the withdrawal of 5 speed 800s in favour of altos? and withdrawal of 1L altos in favour of WagonRs? That is lean manufacturing of a different kind.
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Old 21st August 2007, 09:40   #8
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A good writeup!

I do not know your knowledge level or the purpose of the thesis, yet, the writing seem to be too generalistic to me.

"Lean manufacturing", in strict terms is a Manufacturing way of thought. I expected your focus to be on how Indian manufacturers are implementing different "lean namufacturing" practices, and how much they are successful in that. Instead the writing wanders into "poor infrastructure", "lack of govt help" "poor R&D" and a final patriotic jig.

Anyway, all the best
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Old 21st August 2007, 10:03   #9
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Dell follows JIT, they have their supplier setup around their assembly plants, as soon as they receive a customer order a Dell order is sent for the various components, which are dispatched by the manufacturers and assembled by Dell, shipped to the customer. Although manufacturers have to follow Dell's quality standards for those components.

This reduces your inventory costs but in India, due to uncertainty (strikes, natural calamity, transport time etc) sometimes its not viable to use JIT. An assembly line stopping due to non-availability of components can cost more losses than stocking up the inventory.

Kaizen is related to quality improvement and continuous improvement over existing processes.

Kanban is a term related to JIT but not the same, it a procurement meachanism used to maintain inventory levels.

5s is also related to Kaizen.

Net net, its about optimizing your manufacturing and reducing your overall operational cost, using these methods and processes.

Most manufacturing units in India have management gurus in their structures/employment but most of the time the forces around them do not allow them to use these processes to the fullest potential and there is often a tradeoff.

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Old 21st August 2007, 10:22   #10
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well - i totally agree that indian auto mfgs have a long way to go to be globally competitive. Sometimes i wonder - why cant good quality be given to Indians? Someone was telling me- the BEST bullets are the ones being exported. Mahindra exports.
At times - we need to learn from others. During the japanese industrial revolution - they studied the mfg techniques from other companies and countries and then improved on it. That way - one does not need to re-invent the wheel. Why must Indian companies not collaborate? TVS suzuki was good - but now TVS motors is better. That way - you must give them credit for that.
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Old 21st August 2007, 15:27   #11
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Post Lean manufacturing in Indian Automotive Industry

During my resarch i came across few companies which are implementing lean manufacturing techniques (not upto full extent) in India like Ford India Limited, Rane Brake Lining, Sona Koya in India etc
As the data which i received from them is just for my academic purposes and i cannot publish that on internet.
That is the reason i made it too generalisitc.
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