MGT606 OM-II, Case: Nagare Cell Formation at Lucas –TVS Limited1

In early April 1992, Mr. N. Ravichandran had called an emergency meeting of all his managers to discuss the
need to achieve productivity gain and operations flexibility at various units within the Padi plant. Mr. N.
Ravichandran was the executive vice president for the Padi plant operations and was part of the task force
that was instrumental for the major changes that were undertaken during the 1985-90 period at the padi plant.
During this period, the major tasks that were undertaken were reorganization of the plant and changing the
layout of the facility to streamline the product flow.
In his meeting with the managers, Mr. Ravichandran requested Mr. A. L. Vasudevan, Assistant General
Manager (Manufacturing System Engineering) to take up the “Core Assembly unit” as an experimental unit
and come up with a plan to reorganize the six operations of the “Core Assembly” (CA) to improve its labor
productivity and provide operational flexibility. The current setup of the core assembly unit, as shown in
figure 1, is along the lines of multi-product, traditional assembly line with dedicated workers and large
process and transfer batch sizes. Specifically, the core assembly unit employed five workers and is currently
paced to produce 500 units per shift of 500 minutes.

1 2
i Operations:
i
1. Thread Roll
4 2. Ind. Moulding
Input
5 3 3. Final Grinding
4. Gauging
Output 5. Staking
6. Core Driving
6
Figure 1: Core Assembly Unit before cellular formation
The details of the six tasks and the operating times are shown in Table 1. The process times do not provide
any allowance for labor slack and represent the required times. In view of the repetitive nature of the tasks
involved, it is considered desirable to provide 10% slack in the line design to prevent worker fatigue.
Table 1 “Core” operations data –before reorganization
Operator # Task # Task Description Task Time (seconds)
1 1 Thread roll 12
2 2 Ind. Moulding 24
3 3 Final grinding 42
3 4 Gauging 15
4 5 Staking 10
5 6 Core driving 25

During the meeting, Mr. vasudevan, Assistant General Manager, MSE group, suggested that instead of trying
something completely new, productivity could be improved by reducing the number of workers and
rebalancing the line. This conventional approach would require each worker to be trained on one or two
tasks. While this scheme was feasible and would provide immediate gains in productivity, the solution was
not completely satisfactory to Mr. Ravichandran, as it did not address the issue of operational flexibility. All
recent market developments in the auto ancillary industry pointed to a more dynamic and volatile
environment in the future and Mr. Ravichandran would ideally like a line capable of handling volumes in the
range of 300 - 800 units per shift. Based on the experience gained with Toyota Production System and his

1
Prepared by Professors Kannan Sethuraman and Devanath Tirupati, Indian Institute of Management, Ahmedabad
observations of the factories in UK which implemented the system, Mr. Ravichandran felt very strongly that
a cellular design would be more appropriate for such a volatile environment.
To explore further the ideas of Nagare cell formation, the MSE study group led by Mr. Vasudevan, examined
in detail the six tasks of core assembly unit. The team focused on final grinding and core driving operation
(task 3 and 6) that involved significant machine time. With inputs from experienced operators that group
developed method for automating the two operations. This “low cost” automation would permit machining
operations to be performed without worker supervision, thus allowing the worker to attend to other tasks in
the cell. However, the automation was not complete and the two operations would require some manual pre
and post processing. The impact of low cost automation on process times is presented in table 2. While the
scheme was attractive, it involved some new investment in tools and electronic control system. The total
investment for the low cost automation was estimated at Rs. 5 lakhs (Rs 3.5 lakhs for grinding and Rs. 1.5
lakhs for core driving operations).

Table 2 “Core” operations data – after low cost automation

Task # Task Description Total Task Time Task time in auto Task time in Manual
(sec.) mode (sec.) mode (sec.)
1 Thread roll 12 0 12
2 Ind. Moulding 24 0 24
3 Final grinding 42 30 12
4 Gauging 15 0 15
5 Staking 10 0 10
6 Core driving 25 15 10

Getting ready for his report and presentation at the next meeting, Mr. Vasudevan was wondering
about the advisability of cell formation for Core Assembly unit.
Assignment Questions:
1. What is the production capacity and labor productivity (e.g., labor utilization) of the current set up?
2. Re-balance the line and determine the number of workers required and the corresponding task
assignment for achieving a production rate of 500 units per shift. What is the resulting labor
productivity (e.g., labor utilization)? Assume that a worker can be trained in more that one task.
3. Consider a Nagare cell design for CA with one operator. What is the resulting productivity? What
are the costs and benefits of cellular design? State your assumptions. Note: Nagare cell is U
configuration where a worker can tender multiple workstations due to negligible distance distances
between the stations (see Figure 2 b, in which A, B and E are done by a single worker).

A,B

Figure 2. Balancing for a) straight line; and b) U-shaped line

4. How would the Nagare cell operate with two workers assigned to the cell? What is the corresponding
production capacity and labor productivity?
5. Repeat 4 with three workers assigned to the cell.