Case study JUST IN TIME AT EICHER TRACTORS

BACKGROUND OF THE CASE

The year 1986 was significant for Eicher Tractors as the company was faced with increasing competition and initiated a series of strategic changes to consolidate and improve their position in the market

 They restructured the entire operations and made substantial investments in technology to meet the market requirements. They implemented PLAN M aimed at upgrading product quality and operating systems

Objectives 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

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.

1960s Govt. regulations on imports resulted in the company achieving 85% indigenization. 1970s Achieved 100% indigenization and setup two new factories in Alwar and Parwanoo. 1980s Changed its name to Eicher Goodearth Limited and diversified into LCV. Also, setup a new LCV manufacturing unit in Prithampur .

Major Reorganization in Eicher tractors

The reason of reorganization was increasing competition and sustainability. Each of the three independent plants were reorganized into interdependent plants. Parwanoo Gears and transmission production Alwar Engine manufacturing Faridabad Final assembly

Modernization
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 taken decision to produce 24hp tractors to cater to small farmers.

Total quality management model

Just in time system

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

 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.

Difficulties during implementation of JIT

Negotiation with unions. 1. Employees were afraid they might have to work in harder and stricter work condition. 2. Retrenchment No prior experience with JIT Relatively new method Incentive problems Benefits were not clear

Planning for implementation of JIT

The change required here is to treat each employee as a hole human being rather than as one with a very limited purpose. Mr. M.M. Lal They planned to provide competitive salaries, good working conditions, and intensive efforts for training of employees through manuals, cassettes and video, as a procedure for implementing change.

Implementation and training

Formed core team of four engineers.
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- 1. Designed games in class room 2. Directly on line.

Continued..

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

Eichers approach to incentives

Some times lower production was required so worker producing faster than the others in assembly line served no purpose Rewarding someone for working faster gave no meaning. It also Increased work in progress inventories. Looking the implication company abolished incentive system and bought new system for rewarding by negotiating with the worker unions.

Indicators of Manufacturing Performance

Quality Percentage straight pass. Defects per unit. Demerit rating.

Cost Inventory at various stages. Delivery Target achievement. Safety Measured by no. of accidents. Teamwork

Extending JIT to suppliers

JIT required appropriate quantities for production during shifts. For just in time inventory management the company used two types of supplier :1. Located far from the plant. low coordination because of distance 2. Local suppliers. Vendors using cycle, rickshaws to ship parts directly to the shop floor 2 to 3 times a shift

Total quality control

Production and quality systems:
Product drawings were translated in to the assembly operations sheet. Quality standards were established by the quality planning and production people. Quality checks were carried out at three levels:
Worker Supervisor Quality auditor

Continued..
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.

Total Employee Involvement

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 to increase

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

Indicators of Manufacturing Performance

Quality
Percentage straight pass. Defects per unit. Demerit rating.

Cost Inventory at various stages. Delivery Target achievement.

Safety Measured by no. of accidents. Teamwork

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