Lucas-TVS was a joint venture between Lucas Industries UK and TVS India established in 1961 to manufacture automotive electrical systems. It faced challenges in the 1980s from increasing competition and needed to improve quality, costs and delivery. It underwent a transformation between 1985-1995 which included changing to a product layout, implementing quality systems like ISO 9001, and empowering employees. Further changes from 1995-1998 involved just-in-time production, single piece flow cells, and quicker changeovers. These changes helped Lucas-TVS improve productivity, quality and the ability to respond quickly to customers. The case study outlines the challenges Lucas-TVS overcame through extensive changes to processes, systems and employee involvement.

1. CASE STUDY ON LUCAS-TVS
A Journey towards Manufacturing Excellence
Presented By:
Jude Abreo (81)
Ketan Mokal (82)
Mridu Sharma (83)
Namish Sharma (84)
Namrata Kumar (85)
Nikhil Nagdeote (86)

2. Background:
Lucas-TVS was set up in 1961 as a joint venture of Lucas Industries UK (now Lucas Varity) and
T V Sundaram lyengar & Sons (TVS), India, to manufacture Automotive Electrical Systems.
Lucas Varity:
1998 revenue: $7.5 billion.
Products:
• Braking Systems
• Diesel Fuel Injection Systems
• Electronic and Electrical Systems
After-market product sales and service.
OEM Vendor to:
• Volvo
• Mercedes-Benz
• Volkswagen
• Audi
• Ford
• Fiat
• Peugeot
• Alfa Romeo

3. TVS is India’s fourth largest automotive component manufacturer
• Turnover in excess of Rs. 8600 Cr.
• Products:
• Auto Electricals
• Braking Systems
• Automotive Wheels
• Axle Fasteners
• Diesel Fuel Injection Equipment
• Two Wheelers
• India‟s largest automotive marketing group, with the largest sales and distribution
network

4. Current Customers of Lucas-TVS:

5. Auto Electrical
• Products:
• Headlamps
• Alternators
• Wipers
• Distributors
• Dynamos
• Starters
• Plant Locations:
• Padi (Chennai)
ISO 9001 and
QS 9000 (in
1997)
• Eripakkam
(Pondicherry)
QS 9000 (in
1999)
• Rewari
(Haryana)
Fuel Injection
Equipment
• Products:
• Diesel Fuel
Injection
Equipment
• Plant Locations:
• Mannur
(Chennai) ISO
9001 and QS
9000 (in 1999)
Lucas Indian
Services
• Products:
• Sales and
service of auto
electricals and
fuel injection
systems
manufactured
by Lucas-TVS
• Locations:
• 4 Regional
branches in the
4 metros
• 22 Branch
offices covering
every major
state
India Nippon
Electricals Ltd.
(INEL)
• JV between
Lucas Indian
Services and
Kokusan Denki
Co. Ltd., Japan
est. in 1985
• Products:
• Ignition systems
for two
wheelers and
portable
gensets
• Plant Locations:
• Hosur
(Bangalore) ISO
9001
India Japan
Lighting Ltd. (IJL)
• 50/50 JV
between Lucas-
TVS and Koito
Manufacturing
Company Ltd.,
Japan Inc. in
Dec. 1996
• Products:
• Headlamps
• Rear
Combination
Lamps
• Plant Locations:
• Thiruvallur (25
km from Padi)
Divisions and Joint Ventures:

6. Before
1983
•Market
dominated
by
Hindustan
Motors and
Premier
Automobiles
Ltd.
1983 to
1993
•Maruti
Udyog
Limited
(MUL)
captures
83%
market
share.
1993
onwards
•Market is
liberalized
and
international
giants like
GM, Ford,
Honda,
Mitsubishi,
Mercedes-
Benz,
Hyundai,
Daewoo and
Fiat launch
passenger
car models in
India.
1993 to
1997
•19.5%
growth
rate of
the
Indian
auto
industry
1998-1999
•Decline in
auto sales
due to
economic
slowdown
•Tata Motors
launches the
Indica in
1998 spurring
intense
competition
in the small
car industry.

7. Challenges in the Indian Auto-component Industry:
Two of the major charges levelled against the domestic component manufacturers are that they
lack quality consistency and delivery reliability.
Rejection rate for Indian auto components is 2,900 parts per million (PPM), which is more than
ten times the world level of 240 PPM.
Estimated sub-suppliers' rejection rate is 31,500 PPM.
Entry of global component manufacturers.
Increasing shift towards reduction in vendors.

8. LUCAS TVS BEFORE 1985
Challenges:
• Crisscross material movement.
• Lots of Work in Process(WIP) on shop
floor.
• Roughly 30% of the processes were not
capable of meeting product
specifications.
• Frequent breakdowns of machinery.
• Less focus of timely delivery(delivery
reliabilities) ,product quality(delivery
consistency).
• High scrap levels (3%)
Drilling
D D
D D
Grinding
G G
G G
G G
Milling
M M
M M
M M
Assembly
A A
A A
Lathing
Receiving
and shipping
L
L L
L L
L L
L

9. NEED FOR CHANGE
• Entry of Maruti Udyog Ltd. (MUL) in 1983 increased market competition.
• Entry of world class component manufacturers like Bosch & Nippodenso triggered a change.
• Some OEM‟s were also setting up subsidiaries to supply auto components.
• To remain competitive, cost , quality and response time needed to be improved.
• It became a business requirement to look beyond India and compete globally.
• New product variants and technology demanded.
• Completely dependent on foreign partner for designs, no in-house capability leading to long
development cycles.

10. CHANGE MANAGEMENT STRATEGY
A three member task force is setup to recommend and direct the changes within Lucas-TVS.
Recommendations of the three member task force were:
• Systems approach to manufacturing.
• Focus on maximizing current resources - Lower priority to investments in new technologies.
• Effective training to workforce.
• Encourage employee engagement through formation of small groups (Continuous
Improvement)
"This Padi facility at that time looked nothing like it looks today. We had a plant that was built in the early 60s. We
knew that it had to be considerably modified to transform it into a world-class facility. However, in 1985, there were
not many firms in India that had gone through this kind of massive transformation. This posed considerable
challenges to us." - Mr T K Balaji, CEO and MD, Lucas-TVS

11. LAYOUT CHANGE AND EMPLOYEE EMPOWERMENT
1986-1991
Measures Taken:
Employee Engagement was encouraged with the following measures
• Employee training in batches of 30 at Taramani Training Centre on SPC,QFD,FMEA
• Kaizen suggestion scheme started
• News letter in Tamil “Siru Kuzhu Cheythi Malar”(Small group newsletter).
Schedule to change plant layout from process to product based layout was designed so as
not to affect regular production.
Results:
• Net worth and sales per employee doubled with negligible change in workforce size.
• Process layout changed to product layout
• Reduction in floor space occupied.
• Increased no. of Inventory turns/year.
"This change that we need to undertake is not an option. This is something that is becoming inevitable.“
- Mr T K Balaji, CEO and MD, Lucas-TVS

12. PLANT LAYOUT AT PADI IN 1985
(PROCESS LAYOUT)

13. PLANT LAYOUT AT PADI IN 1999
(PRODUCT LAYOUT)

14. DORMANT PERIOD & IMPENDING CHALLENGES
1991-1992
Challenges:
• Drop in suggestion scheme from 4534 in 1990-91 to 2830 in 1991-92.
• Deregulation of market.
• Increase in market size.
• Increase in no. of competitor(s).
• Recession Period.
Measures taken:
• Low cost automation.
• Nagare cell formation.
Result:
• Fatigue reduction.
• Cycle time reduction.
• Quality & productivity improvement.
"In 1991, after finishing the layout changes, we felt as
if we had achieved nirvana. Since we were one of the
first few companies to have gone through this change
process, there was a state of complacency within the
organization about the improvements achieved in our
performance," - Mr Balaji, CEO and MD, Lucas-
TVS

15. NAGARE CELL IMPLEMENTATION
Status after CellStatus before Cell
1 MKL Lathe
2 Gimping Press
3 4 Way Drill
4 S4 Drill
5 Bench
Benefits From To
Manufacturing Lead
Time
300min 2min
Manpower 5 2
Transfer Batch Size 150 1
Space in Sq. ft. 150 120

16. QUALITY INITIATIVES
1992-1995
Challenges:
• Absence of ISO 9000 certification limited market penetration.
• Mindset that quality is the responsibility of only Quality Assurance department was inefficient.
Measures taken:
• Stress on importance of quality systems
• Maintaining Quality control charts & visual displays.
• Following Work Instructions and Standard Operating Procedure (SOP).
• Defect prevention systems(Poka-Yoke)
• Continuous improvement philosophy.
Results:
• Award of ISO 9001 in 1993.
• Allowed TVS-LUCAS to participate in global tenders.
• QS 9000 in October 1997.

17. 1995 ONWARDS
Challenges:
• Heavy competition among the OEM‟s leads to pressure on Tier-1 Suppliers.
• OEM‟s started demanding quick response in delivery.
Measures taken:
• JIT implementation.
• Single piece flow(164 cells)
• Quick change tooling(SMED).
• Operation according to „takt‟ time (workstation staffing).
Results:
• Bi-weekly shipments to Faridabad.
• Significant gains in productivity
• Ability to change worker assignment according to demands.
• Greater sense of worker ownership.
• Quick problem identification.
• Workers motivated to be designated as Cell workers.

18. "All these improvements in performance have been
achieved only through the dedicated and tireless efforts of
our managers from top to bottom. The contribution by
engineers in developing new products and processes has
been phenomenal. Without the whole-hearted
commitment from every single employee at Lucas-TVS,
none of these changes would have been possible.
Excellence is a moving target and we can't afford to
remain satisfied with our current achievements. We need
to continuously seek higher levels of excellence. For the
challenges that we face ahead, we once again require
unequivocal support from all our constituencies,"
— Mr Balaji, CEO and MD, Lucas-TVS

19. 1557.9
4582.8
5202.9
4577.3
658.9
2111.3
2677.9
2958.3
593.1
1957.9
2439.0
2633.2
0.0
1000.0
2000.0
3000.0
4000.0
5000.0
6000.0
1985 1991 1996 1997
FINANCIAL STATISTICS
Sales (Net of Excise Duty) Capital Employed Gross Fixed Assets
Year 1985 1991 1996 1997 1998
Sales (Net of Excise Duty) 609.8 1557.9 4582.8 5202.9 4577.3
Capital Employed 284.4 658.9 2111.3 2677.9 2958.3
Net Worth 227.5 410.8 1842.7 2368.4 2799.3
Gross Fixed Assets 285.9 593.1 1957.9 2439.0 2633.2

20. 609.8
1466.9
3178.2
430
770
1400
3105 3056
2871
200
500
1100
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
3500.0
1985 1991 1998
PRODUCTION AND REVENUE VS. EMPLOYEE STRENGTH
SALES VALUE ANNUAL PRODUCTION EMPLOYEE STRENGTH SALES PER EMPLOYEE
Unit 1985 1991 1998
Sales Value Rs. In Million 609.8 1466.9 3178.2
Annual Production
Thousands of
units
430 770 1400
Employee Strength Nos. 3105 3056 2871
Sales per Employee Rs. in Thousand 200 500 1100

21. 4000
40
1
540.0
120.0
10.0
4.2
7.2
14.0
1
10
100
1000
10000
1985 1991 1998
FACTORY PERFORMANCE MEASURES
LOT SIZES TYPICAL SETUP TIME INVENTORY TURNS
Unit 1985 1991 1998
Lot Sizes Nos. 4000 40 1
Typical Setup Time Minute 540.0 120.0 10.0
Inventory Turns 4.2 7.2 14.0

22. 10.0
3.3
2.5
3.0
1.5
1.52.0
0.5
0.20.0
2.0
4.0
6.0
8.0
10.0
12.0
1985 1991 1998
PROCESS PERFORMANCE MEASURES
REJECTIONS SCRAP DOWNTIME
Unit 1985 1991 1998
Rejections % 10.0 3.3 2.5
Scrap % 3.0 1.5 1.5
Downtime % 2.0 0.5 0.2

23. 227.5
442.6
1144.4
515
254
119201.0
1072.3
181.6
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
1400.0
1985 1991 1998
SAVINGS MEASURED
CAPITAL EMPLOYED FLOOR SPACE UTILIZATION ANNUAL SAVINGS FROM SUGGESTIONS
Unit 1985 1991 1998
Capital Employed Rs. In Million 227.5 442.6 1144.4
Floor Space Utilization Sq.ft./Rs. 515 254 119
Annual Savings from
Suggestions
Rs. In Thousand 201.0 1072.3 181.6

24. •Part traceability to be implemented
•Investment in new technology & machineryQuality
•New product development & innovation
•Modular product designCost
•Vendor training & development.
•Treating vendors as partners.
•Developing a network of suppliers.
Supplier
Alignment
•Developing a Management Information System (MIS)
•Implementing ERP for better control over operations
•Use of IT to keep track of suppliers and customers
(SRM and CRM portals)
Information
Technology
RECOMMENDATIONS:

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