Mahindra & Mahindra – Implementing BPR“In our never ending quest for quality and increasing productivity at all levels, the various projects initiated by the company – including BPR – are helping us achieve higher productivity, reduction in costs and improved quality.” - Keshub Mahindra, Chairman, Mahindra & Mahindra (M&M), in 1996. M&M‟S PROBLEM PLANTS In the mid-1990s, India‟s largest multi utility vehicle (MUV) and tractor manufacturer M&M was facing serious problems at its Igatpuri and Kandivili plants in Maharashtra. The plants were suffering from manufacturing inefficiencies, poor productivity, long production cycle, and sub-optimal output. The reason: highly under-productive, militantly unionized, and bloated workforces. The company had over the years been rather lenient towards running the plants and had frequently crumbled under the pressure of union demands. The work culture was also reportedly very unhealthy and corruption was widespread in various departments. Alarmed at the plant‟s dismal condition, Chairman Keshub Mahindra tried to address the problem by sacking people who allegedly indulged in corrupt practices. M&M also tried to implement various voluntary retirement schemes (VRS), but the unions refused to cooperate and the company was unable to reduce the labor force. During this period, M&M was in the process of considering the implementation of a Business Process Reengineering (BPR) program throughout the organization including the manufacturing units. Because of the problems at the Igatpuri and Kandivili plants, M&M decided to implement the program speedily at its manufacturing units. The program, developed with the help of the UK-based Lucas Engineering Systems, was first implemented on an experimental basis at the engine plant in Igatpuri. Simultaneously, an exercise was initiated to assess the potential benefits of implementing BPR and its effect on the unions. M&M‟s management was not surprised to learn that the unions expressed extreme displeasure at the decision to implement BPR and soon went on a strike. However, this time around, the management made it clear that it would not succumb to union demands. Soon, the workers were surprised to see the company‟s senior staff come down to the plant and work in their place. With both the parties refusing to work out an agreement, observers began casting doubts on the future of the company‟s grand plans of reaping the benefits of BPR. BACKGROUND NOTE Mahindra & Mahindra Ltd. (M&M) was the flagship company of the Mahindra group, one of the top ten industrial houses in India. The company‟s history dates back to 1945, when two brothers, J.C.Mahindra and K.C.Mahindra, decided to start a business of general-purpose utility vehicles. The brothers formed a company, Mahindra & Mohammed Ltd., in association with their friend Ghulam Mohammed. In October 1947, the first batch of 75 jeeps was released for the Indian market. In 1948, the company was renamed Mahindra & Mahindra Ltd. Over the next few decades, the group promoted many companies in areas as diverse as hotels, financial services, auto components, information technology, infrastructure development and trading to name a few (Refer Exhibit I for M&M‟s history). Though M&M had established itself in the markets and was among the leading players in many of the segments it operated in, it realized that some of its businesses were not closely related to its core business. This realization marked the beginning of the biggest change exercise since the company‟s inception. In 1994, a major restructuring exercise was initiated as part of a BPR program. M&M introduced a new organizational model, in which various divisions and companies were regrouped into six distinct clusters of related businesses, each headed by a president. M&M‟s core activities, automotive and tractors were made autonomous business units. The other activities of the group were organized into infrastructure, trade and financial services, telecommunication and automotive components. According to company sources, the whole exercise was intended to develop a conceptual map to provide direction for the future growth of various business lines. It was decided that, in future, the group would confine its expansion to the identified thrust sectors. The two main operating divisions of the company were the automotive division, which manufactured UVs and LCVs, and the farm equipment division, which made tractors and farm implements. The company employed over 17,000 people and had six state-of- the-art manufacturing facilities spread over 500,000 square meters. The plants were situated at Kandivili (MUVs and Tractors), Nasik (MUVs), Zaheerabad (LCVs, Voyager, three-wheelers), Igatpuri (Engines) and Nagpur (Implements and tractors). The company had 33 sales offices supported by a network of over 500 dealers across the country. These offices were connected to the company‟s plants by extensive IT infrastructure. By 2001, the company had firmly established itself as one of the leading players in the Indian automotive industry, with revenues of Rs 43.53 billion and profits of Rs 1.2 billion[1] (Refer Exhibit II for a summary of M&M‟s operations). The Kandivili and Nagpur plants were the production hubs for the farm equipment division. This division, reportedly the single largest facility of its kind in the world, received the ISO-9001 certification in 1996. In 2001, the division marked its 16th year as the market leader; its products were being used by over 600,000 Indian farmers. The division was a successful exporter to many countries: the US, South Africa, Sri Lanka, Bangladesh, Nepal, Zimbabwe and several European countries. The division had set itself the goal of becoming the world‟s largest tractor manufacturer in terms of volume by 2005, from its 2001 position of number four. M&M‟s decision to undertake BPR implementation at the plant was largely influenced by its ambition to become the largest tractor manufacturer in the world. This was accompanied by a decision to focus on enhancing productivity and delivering world- class quality at the least possible cost. The company also decided to undertake a total quality management initiative. Various initiatives such as supplier upgradation, strategic and global sourcing, product development, channel management and lean manufacturing were also identified as thrust areas. Problems at the individual factories played a major part in the management‟s decision to hasten the implementation of the BPR program. ABOUT BPR The concept of BPR was popularized in the early 1990s by Michael Hammer and James Champy in their best-selling book, „Reengineering the Corporation.‟ The authors said that radical redesign and reorganization of an enterprise was necessary to lower costs and increase the quality of service. According to them, IT was the key enabler for that radical change. Hammer and Champy felt that the design of the workflow in most large corporations was based on assumptions about technology, people and organizational goals that were no longer valid. They recommended seven principles of reengineering for streamlining work processes and, consequently, achieving significant levels of improvement in quality, time management and cost (Refer Table I). Table I BPR Principles 1. Organize around processes, not tasks – Instead of work being divided among different people, one person is given the responsibility for an entire process. Each person’s job is designed around an outcome, such as a finished component or a completed process, rather than one of the tasks necessary for producing the finished component or completing the process. This could mean replacing functional departments such as manufacturing and marketing with interdisciplinary teams that concentrate on completing a particular business process. 2. Have output users perform the process – Instead of departments functioning as distinct specialized entities doing only ‘their work,’ passing the output to someone else, BPR requires each department to take full responsibility for one complete process. 3. Have those who produce information process it – People responsible for generating a piece of information should be involved in processing all the information regarding it. For instance, instead of the traditional way of receiving goods (involving receiving, accounts payable and other departments), only one receiving clerk receives the goods using specialized software. 4. Treat geographically dispersed resources as centralized – To provide better customer service, companies decentralize operations. With current technology, a company’s data can be centrally located and yet be made available to all its geographically dispersed units. This way, companies get the benefits of centralization as well as decentralization. 5. Link parallel activities in the workflow instead of just integrating their results – Certain processes, such as product development, are performed in parallel and then integrated at the end. However, quite often, the teams involved do not communicate well. In such a scenario, BPR would put people from various functional areas on the team in charge of a particular product. 6. Empower workers and use built-in controls – Most organizations have many layers of personnel working and several more to manage, audit and control them. BPR empowers the people actually doing the work by giving them the authority to take certain decisions. This results in faster responses to problems and increases the quality of the task performed. 7. Capture information once and at the source – Different departments capturing their own data at their own pace leads to inefficiency, resource wastage and data discrepancy errors. By utilizing information technology effectively, data can be captured electronically at source, entered once in an online database, and made available to all who need it. Source: ICMR. Simply put, BPR refers to a complete overhaul of the way an organization does its business. Instead of focusing on improving or modifying processes, it focuses on reinventing the way the company carries out its business. And instead of focusing on the existing business, it tries to determine what business the company should be involved in. BPR thus results in dramatic changes in a company‟s business activities. The kind of results the company looks for are not marginal in nature, BPR results in dramatic and huge improvements in the processes being reengineered. The most important aspect of BPR is the proper identification of the business processes. A business process can be defined as „a collection of closely-related tasks performed to create value for the customers.‟ According to analysts, in most organizations, processes have traditionally not been earmarked or identified clearly. Thus, examining and dealing with business processes is a radical change in the way organizations and managers have traditionally functioned. BPR seeks to remove the belief that by focusing on the efficiency of the tasks involved in carrying out a piece of work, the organization is doing its best to complete the task in a timely and cost-effective manner. Instead, it requires the organization to focus on the outcomes of its processes in the way a customer would. For instance, a customer of a furniture vendor who has asked for a wooden partition to be installed in his house would be concerned only with the overall time taken for the work to be completed. He would not be concerned about individual processes: the time the company takes to get the request approved and dispatched to the carpenters, the time the carpenters take to finish their job, and the time the painters take to finish their work. Once the company begins looking at the above transaction from the customer‟s point of view (i.e. getting the partition installed within a certain timeframe), it will get a fresh perspective on customer expectations regarding quality, responsiveness and cost- effectiveness (Refer Table II for the effects of BPR). Table II The Effects of BPR Work units change from functional to process teams Jobs change from simple tasks to multidimensional. Roles change from controls to empowered. Advancement criteria changes from performance to ability Executives change from scorekeepers to leaders. Performance measures change from activity to results Source: www.geocities.com BPR can be categorized into „Process Improvement,‟ „Process Redesign‟ and „Business Transformation.‟ Process improvements involve improving processes that are part of a single business function, and are not cross functional. They result in small improvements to the existing process, usually through eliminating non-value-added activities. Process redesign on the other hand, involves the total redesign of an end-to-end process. This usually results in considerable performance improvement in terms of cost, quality and cycle time. Business transformation begins with a study of the basic elements of people, processes, information and technology involved by the top management. It is the highest degree of BPR. It focuses on reinventing the business through a top-down reappraisal and redesign of the total business. The organization has to evaluate itself and ask why it exists and what it is trying to achieve. A typical BPR implementation exercise can be divided into three phases comprising two stages each (Refer Table III). Table III BPR Implementation Cycle Phase 1 Phase 2 Phase 3 1. Business Understanding 3. Business Process Identification 5. Process Redesign 2. Project Planning & Training 4. Process Envisioning 6. Process Implementation Source: www.geocities.com According to analysts, companies usually opt for reengineering when they are in serious trouble, have foreseen trouble or are taking proactive measures to avoid landing in trouble. Companies that implement BPR to avoid landing in trouble usually have ambitious and aggressive managements. As a result, they are able to implement BPR effectively and derive the benefits of reengineering. Many BPR exercises fail because the concerned organizations do not ensure the presence of critical success factors for BPR implementation (Refer Table IV). Often, BPR is confused with practices such as automation, downsizing and outsourcing. However, such practices are only tools that can be a part of the overall BPR program; they can never „be the all‟ of such an exercise. Table IV BPR Success Factors Strong and consistent top management sponsorship. Addressing cultural transformation through effective change management. Proven methodology including a vision process. Reengineering team composition (in both breadth and knowledge). Compelling business case for change (with measurable objectives). Strategic alignment with company strategic direction. Line ownership (pair ownership with accountability). Source: www.geocities.com M&M‟S EXPERIENCE WITH BPR By the mid 1990s, BPR had become a popular tool globally, with many leading organizations implementing it. However, when M&M undertook the exercise, it was still a new concept in India. M&M‟s workforce, as mentioned earlier, resisted this attempt to reengineer the organization. Soon after the senior staff began working on the shopfloors, the first signs of the benefits of BPR became evident. Around a 100 officers produced 35 engines a day as compared to the 1200 employees producing 70 engines in the pre-BPR days. After five months, the workers ended the strike and began work in exchange for a 30% wage hike. As the situation returned to normalcy, BPR implementation gained momentum. M&M realized that it would have to focus on two issues when implementing the BPR program: reengineering the layout and method of working, and productivity. M&M worked on the principle of cellular manufacturing.[2] In this type of manufacturing, plant layout is reorganized drastically and workers are required to do multi-tasking through multi-machine manning. The plant and machinery layout at the company had to be revamped to reduce non-productive activities and introduce cellular manufacturing. To enhance productivity, M&M moved from a batch to a modular process[3] and implemented TPM[4] and Kaizen.[5] The company then revealed plans to enhance the capacities at its plants and asked the workers to start working harder and become more flexible. A group of workers voiced their resentment against this and, at one point of time, even halted production. However, the management stood its ground and called the opposition as „the dying gasp of any resistance to the new model of working.‟ Anand Mahindra commented, “All said and done, I think our point was proven though it meant a loss in production. It was necessary for the management to show the required commitment without which everything would have come unwounded.” In line with its decision to adopt practices followed by international auto players, M&M decided to replace its existing setup with the „Platform Concept.‟ The platform concept focuses on customer requirements. It requires the formation of cross functional teams consisting of professionals from R&D, manufacturing, processing, marketing etc. These teams jointly develop the product, keeping in mind the needs of the final customer. M&M took the help of its 600 strong R&D team consisting of engineering professionals with experience across industries, for this purpose. This move was a complete shift from the traditional form of product development, which was product/function centric – (i.e. R&D, manufacturing and other departments worked in isolation at the development stage and came together only at the assembly stage). To focus on customer requirements, M&M had to bring in features of concurrent engineering[6] at the development phase itself. This was accompanied by the formation of three full-time teams to bring the product development process in line with the platform concept. The teams were named – Horizon I, Horizon II and Horizon III. While Horizon I concentrated only on some improvements in existing products, Horizon II specialized in the upgradation of existing products. Horizon III was concerned with the development of new products. This initiative resulted in the introduction of several new features like constant mesh gearbox for easy gear shifting and power steering to reduce steering efforts (besides a range of improved as well as new products). Continuing with the BPR exercise, M&M decided to utilize information technology (IT) to seamlessly integrate all business functions and processes with each other. Several IT systems were installed at various locations and various functions, and officers were directly linked with each other. The IT solutions were integrated with an ERP package by SAP.[7] The solution integrated every facet of business operations to provide a complete update of all organizational activities, at any point in time. ERP made customer requirements available. Every department and location was connected through information technology. Since they were informed of the work at hand, they could adjust their schedules and inventories accordingly. The whole system was designed to be controlled not by the average user, not by IT professionals. By April 2000, the BPR program was successfully implemented at M&M. At the Igatpuri plant, even as the number of employees declined to 760, the number of engines produced went up by 125 per day. The 400 excess workers at the plant were redeployed at the assembly plant in Nasik. The Nasik plant soon achieved a 125% improvement in productivity. Employee costs at these two plants came down from 12.4% in 1994 to 10.1% in 1996. The number of vehicles produced overall increased from 47,760 in 1995 to 65,405 in 1996 and 75,568 in 1997. A large part of this increase was attributed to the improvement in productivity because of the BPR program. During the same period, inventory levels also came down from 74 days of net sales to 56 days, and value added per employee increased from Rs 0.3 million to Rs 0.46 million. Over the next few years, the BPR initiatives enabled the company to maintain steady gross margins, reduce working capital levels, and rationalize manufacturing processes. BPR not only enabled M&M to achieve a new and modern working relationship with its employees (with productivity as the main criteria), but also brought its manufacturing systems up to international standards. The benefits of the BPR exercise included bbetter inventory control, better sourcing, better order distribution across plants, online availability of data, transparent access to data, process transparency and an integrated sales and supply chain. THE FUTURE Summing up the company‟s BPR experience, Anand Mahindra said, “Let me put it in a simple way. If we have facilities in Kandivili today, which are not just surviving but thriving, it is all due to BPR. If you go back to the 1990s, there was no shortage of pundits telling us that it would not be possible to manufacture in Mumbai due to the fact that the plants are old and depreciated, workers are too highly paid and not producing good quality. In fact, some of our compatriots in the city have met a similar fate. So BPR was a way of reengineering our plants and making them viable in a competitive environment.” Having reaped handsome gains from the BPR exercise, M&M decided to adopt other globally accepted practices to improve its business. Towards this end, the company hired McKinsey & Co in 1997 to offer restructuring proposals. Following McKinsey‟s recommendations, the farm equipment division undertook „Project Vishwajeet,‟ a major restructuring exercise, in May 2000. This project divided the tractors business into 38 business units classified under five business divisions. The hierarchy structure in each of these divisions was limited to just five layers to ensure autonomy and clear accountability. The company continued with its efforts to further streamline its operations by undertaking a cost-saving program in May 2001 to reduce break-even volumes in the automotive and farm equipment divisions. The program, undertaken as part of the restructuring proposals made by McKinsey, was expected to result in savings of 20-30% on business redesign, including sharing of resources to prevent duplication of capital expenditure. In addition, M&M envisaged 10-15% savings on process redesign and 5-10% savings on engineering redesign. The company also started outsourcing non-core manufacturing activities, sourcing most components of a particular model from the same vendor, and increasing the volume of business transactions with a few select suppliers. M&M, however, continued to manufacture critical components. There was one unexpected, welcome change brought about by the BPR program and the company‟s other initiatives aimed at the shopfloor and its workers. Commenting on this, Anand Mahindra said, “Today the atmosphere is so different that every morning all the workers recite the company oath, which is a sea change from the situation ten years ago when workers used to play cards on the shopfloor during working hours.” QUESTIONS FOR DISCUSSION: 1. Comment on the circumstances that led M&M to implement a BPR program. Why do you think the company-faced resistance from the unions when it decided to implement BPR at the plants? 2. Analyze the BPR implementation exercise at M&M‟s plants. How do you think the „platform concept‟ helped the company? Also, comment on the benefits M&M reaped as a result of the BPR program. 3. How is BPR different from traditional improvement techniques like TQM? As a manager in charge of a shopfloor undergoing such a program, what measures would you take to ensure its success? Exhibit I M&M – Milestones Year Events 1948 Steel trading business was started in association with suppliers in UK Business connections in USA through Mahindra Wallace. 1949 WallaceSteel trading on behalf of European suppliers; Jeep Assembly. 1950 The first business (for 5000 Tons) with Mitsubishi Corporation for wagon building plates. 1953 Otis Elevator Co. of India established. 1954 Technical & Financial Collaboration with Willys Overland Corporation. 1956 Dr. Beck & Co. formed - a JV with Dr. Beck & Co. ,Germany. 1957 Mahindra Owen formed – a JV with Rubery Owen & Co. Ltd., UK. 1958 Machine Tools Division started. 1960 Mahindra Sintered Products Ltd. (MSP) formed - a JV with the GKN Group, UK. 1961 International Tractor Co. Of India (ITCI), a JV with International Harvester Co., US formed. 1962 Mahindra Ugine Steel Company (MUSCO) formed - a JV with Ugine Kuhlmann, France. 1965 Vickers Sperry of India Ltd., a JV with Sperry Rand Corporation, USA Roplas (India), a collaboration with Rubery Owen. Manufacture of LCVs commenced. 1970 Mahindra Engineering & Chemical Products Ltd.(MECP) formed. 1971 International Harvester collaboration ended. 1975 Switch over to diesel vehicles in-house development. 1977 ITCI merges with M&M, to become its tractor division. 1979 License from Automobiles Peugeot, France, for XDP 4.90 Diesel Engine. 1982 License from KIA for 4 Speed Transmission ‘Mahindra’ of tractors; Siro Plast formed. 1983 M&M becomes market leader in Indian tractor market. 1984 Mahindra Hellenic Auto Industries S.A. formed, a JV in Greece to assemble and market UVs in Europe. 1986 Mahindra British Telecom , a JV with British Telecommunications plc (BT), UK formed. 1987 M&M acquired International Instruments Ltd. 1989 Automotive Pressing Unit (now MUSCO Stampings) acquired from GKW. 1991 Introduction of Commander series. 1992 Triton Overwater Transport Agency Ltd. formed, Implementation of the Service Center project at Kanhe. 1993 MC & NI invited to participate in Steel Service Center Project. JV signed, MSSCL formed. Mahindra Acres Consulting Engineers Ltd. (MACE) formed - a JV with Acres International, Canada. MBT International Inc., USA, a wholly owned subsidiary of MBT The company’s maiden international offering – the US$ 75m GDR issue. Introduction of Armada. 1994 Mahindra Realty & Infrastructure Developers Ltd. (MRIDL) formed; Mahindra USA Inc. formed for distribution of tractors in the US; EAC Graphics (India) Ltd., formed in collaboration with The East Asiatic Company Ltd. A/S, Denmark. Year Events Reorganization of the Group, creating six Strategic Business Units MSL Division (Auto Components) hived off to form Mahindra Sona Ltd. Mahindra Nissan Allwyn Limited merged with the company. 1995 Mahindra Holding & Finance Ltd. (MHFL) becomes a subsidiary to carry out business as an investment company. Technical collaboration with Mitsubishi / Samcor to manufacture L300. 1996 Mahindra Ford India Ltd. (MFIL) - JV with Ford Motor, US, to manufacture passenger cars. The company made a Foreign Currency Convertible Bond (FCCB) issue of US$ 115 million. 1997 Business connections in US through Mahindra Wallace; A new die shop was inaugurated at Nasik. Inauguration of the Mahindra United World College of India. 1999 Launch of ‘Bijlee’ a battery-operated, 3-wheeler, environmental-friendly vehicle. The largest online used vehicle website in India launched by Mahindra Network Services. The business of Intertrade Division and Mahindra Exports Ltd. combined and renamed Mahindra Intertrade Ltd. Mahindra USA Inc. enters into a strategic alliance with Tong Yang Moolsan to distribute its tractors under the Mahindra brand name. The company acquires a majority stake in Gujarat Tractors. 2000 The company unveils new logo. Mahindra Auto Specialties Ltd., a new 100% subsidiary, is formed. M&M sets up its first satellite tractor plant at Rudrapur. The company launches New Age Tractor, the Mahindra Arjun 605 DI (60 HP tractor). The company launches Bolero GLX, a UV, in response to the needs of the urban consumer. 2001 3-wheeler diesel vehicle Champion is launched by the company. The company launches Mahindra MaXX – an MUV positioned with the caption Maximum Space, Maximum Comfort. M&M ties up with Renault for petrol engines. M&M establishes a separate division to provide Defence Solutions. Source: www.mahindra.com Exhibit II M&M – Summary of Operations ( in Rs million) Year end 31 st MarchPRIVATE 1993 1994 1995 1996 1997 1998 1999 2000 2001 Income 14,896 17,151 21,135 28,996 36,205 41,280 42,250 44,760 43,529 Material Direct 8,194 9,218 11,457 15,790 19,668 21,514 22,274 22,102 23,586 Material - Indirect 272 322 260 328 441 491 431 455 489 Excise Duty (Net) 2,331 2,306 3,060 4,065 5,007 6,398 6,536 7,732 7,554 Personnel 1,841 2,098 2,339 3,002 3,417 3,875 3,853 4,094 4,156 Interest 595 562 447 482 805 1,229 1,519 1,415 622 Deprecation (Net) 321 351 336 423 630 993 1,120 1,233 1,401 Other Expenses 1,082 1,324 1,527 2,164 2,804 3,486 3,716 4,261 4,434 Extra-ordinary items - (144) 84 104 - - - 36 - PBT 261 826 1,792 2,846 3,283 3,295 2,801 3,505 1,286 Tax - 148 623 1165 1190 780 515 870 880 Prior period items (22) - (34) (57) - - (27) - - Balance Profit 239 679 1135 1623 2093 2,515 2,260 2,635 1,206 Dividends 108 184 342 441 560 625 631 675 670 Equity Dividend(%) 30 45 65 45 50 55 55 55 55 EPS (Rupees) 6.64 16.64 21.61 16.98 20.56 24.33 21.85 23.85 10.91 Vehicles Prod. (units) 38,813 49,155 47,760 65,405 74,653 77,510 70,639 76,983 63,146 Vehicles Sold (units) 38,887 48,292 49,235 63,623 75,568 76,954 70,548 76,437 62,927 Tractors Prod. (units) 35,454 32,925 40,051 49,651 58,028 71,468 66,211 73,222 80,261 Tractors Sold (units) 34,052 32,875 41,006 50,005 57,379 67,780 69,362 70,571 79,237 Source: www.mahindra.com Additional Readings & References: 1. Radhakrishnan N and M Karthikeyan, The Remaking of M&M, Business India, June 16, 1997. 2. Strategic Management Case Studies on Indian Companies – Volume IV, ICMR, 2000. 3. M&M Kicks Off Cost Saving Drive, Business Standard, May 17, 2001. 4. Mahindra & Mahindra – Tough Road Ahead?, www.karvy.com. 5. Wadia Jamshed, BPR, www.geocities.com. 6. CRISIL Company Profile – Mahindra & Mahindra Ltd., www.debtonnet.com. 7. Mahindra & Mahindra – Farm Equipment Sector, www.managementor.com. 8. Company Annual Reports. 9. www.indiainfoline.com 10. www.mahindra.com [1] In September 2002, Rs 48 equaled 1 US $. [2] Cellular manufacturing allows companies to produce just what is needed with minimum materials, equipment, labor, time and space. This translates to lower operating costs. In addition, a cell has a simple and direct routing between operations, so bottlenecks can easily be identified and eliminated, reducing lead times. As cells can accommodate small lots, quality problems are discovered and corrected sooner. [3] In the batch process, parts are accumulated and processed together repeatedly for manufacturing items of a similar nature. Modular production aims to standardize both the methods of production system design and the machine units for production system construction. This results in fully integrated component production and assembly systems, which can be rapidly configured for producing a wide range of products, thereby enhancing productivity. [4] Total Productivity Management (TPM) is an approach for optimizing the effectiveness of production means in a structured manner. It entails the effective use of all company resources to enhance customer satisfaction, in the context of clear business direction, an integrated, visible improvement plan, a consistent set of improvement strategies and an appropriate performance measurement system. [5] Japanese for „change for the better‟ or „improvement.‟ A methodology of continuous cost reduction, quality improvement, and delivery time reduction through shopfloor involvement and rapid action now practiced in businesses worldwide. [6] Concurrent engineering is a systematic approach to the integrated, concurrent design of products and related processes, including manufacturing and support processes. This approach is intended to make developers consider from the outset, all elements of the product life cycle, from conception through disposal, including quality, cost, schedule, and user requirements. [7] ERP is a software-driven business management system that helps integrate all functions of a business including planning, manufacturing, sales, and marketing. SAP R/3 is a popular ERP software from the Germany based company Systems Applications & Products in data processing (SAP). Source: http://27.251.26.4/casestudies/mumbai2/OPER0008.asp