Just in Time at Eicher Motors

Case Analysis
Group 6: Ashish Ladda Eshita Batta 2010129 2010136

Harsh Agrawal 2010139 Komal Takavale 2010143 Pankaj Arora 2010153 Praveen Trivedi 2010156

Case Background
y In1986, 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.
y They restructured the entire operations and made substantial investments in

technology to meet the market requirements.

Main objectives

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 place

A Step By Step Approach
Reorganization and Modernization Introduced Just in time Increased Employee Involvement Implement quality checks Use Kaizen (continuous improvement)

Major Reorganization in Eicher tractors

Reasons ± I. Increasing Competition from other Companies II. To improve their position in the market III. Sustainability Decision to reorganize three independent plants into interdependent plants ‡ Parwanoo ± Gears and transmission production ‡ Alwar ± Engine manufacturing ‡ Faridabad ± Final assembly


Advantage ± Focus on similar, smaller activity , hence streamlining of process and supply is easier.

y Substantial investment in technology y Company moved existing machinery and installed new ones. y Changed production and procurement processes, renovated buildings and

changed layouts on the shop floor.
y Introduced the concept of producing every component and every assembly

as per drawing and specifications.
y Company taken decision to produce 24hp tractors to cater to small farmers


Just in time

Total quality control

Continuous Improvement PDCA

Total employee involvement

Issues - Just In Time System Implementation
y JIT was Relatively new method of organizing operations in India, hence benefits

of implementing JIT was not clear.
y Employee perception ± I. II. III.

Harder and Stricter work conditions for workers Fear of Retrenchment Lower Incentives

y Implementation of JIT in one go was difficult as final product was quite complex

and involved a large no. of components and operations.
y Supply side issues y y

Small quantities of material needed to be supplied frequently during every shift. Difficulty in coordination.

JIT Elements and implementation

Formed a 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 . Implementation in stages starting with smaller assembly lines. Twelve workers were identified to work on the new line under JIT implementation program.


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Elements -y Operational y Vendors (suppliers) y System y Quality

JIT Elements - Operational
Set up time reduction/Short lead-time The work was broken down so that each work station had a work content that took less

time than the cycle time. 
Cycle time measured as one vehicle every so many minutes. The cycle time would

match with required capacity in terms of vehicles per day.

Balance workstation capacityThe 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 ± results in Automatic elimination of work in process build up on the line.

Multifunctional Worker- They trained the workers to work on station immediately
succeeding and preceding their workstations. € Training- 1. Designed games in class room 2. Directly on line.

JIT Elements - Operational contd..
Smaller lot size- To synchronize production with the customer demand, Eicher
determined the quantity of production by the Linearity measure:-

Linearity= [1-3*Daily Target- Actual*/Monthly target]*100%.

Worker Motivation Rewarding someone for working faster gave no meaning as when lower production

was required, worker producing faster than the others in assembly line served no purpose and increased work in progress inventories. 
Eicher Tractors abolished incentive system and bought new system for rewarding

by negotiating with the worker unions. 
They planned to provide competitive salaries, good working conditions.  It followed the employee recognitions system like giving gift of a pen in front of

his colleagues

JIT Elements - Vendor
Kanban Systemy JIT required appropriate quantities for production during shifts. y The materials from suppliers arrived in small quantities during every shift. y Vendors using cycle, rickshaws to ship parts directly to the shop floor 2 to 3 times a shift y At the same time, it kept stocks of items that could not be procured in just-in-time


Regular Quality and reliability auditing- It began working with local suppliers
to upgrade their quality and production processes and bring them into harmony with the JIT.

Elements of JIT- Systems
Layout improvement ² 
µSurgeon¶ concept for workstation design ± To increase the productivity of workers, 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.

Error Prevention (Poke-yoke) ² 
Eicher has implemented Poke-yoke in Faridabad factory.  for e.g. line automatically stopped whenever the pump stopped working. The pump was found to have too much power and was being derated and run at 2kg/sqcm instead of the rated 5.5kg/sqcm.  Then the pump was replaced with about 25% over specification.  Finally it was found that the previous operation of hot water washing produced a lot of moisture which caused problems for the pump. Hence curtains were installed to separate pump operation from hot water vapors.

Elements of JIT- Systems contd..
Kaizen (Continual Quality Improvement )² 
Institute a system to encourage continuous improvements in production

process .  System to follow up worker suggestions. During line stoppages workers gathered & discuss methods of improvement.  There were quality audits which were discussed in monthly meetings.  Each worker & supervisor is authorized to invoke CAPP (Corrective Action Plan Procedure) 
If any problem noticed with the supply, with maintenance or with received

upstream of the assembly line.  Guidelines on when to raise or close a CAPP  Use a prominent notice board on shop floor where problems are highlighted and solutions conveyed.

Kaizen ² Example
Before After

Elements of JIT - Quality
Process control ²
y The product drawings were translated into assembly operation sheets. These were

then translated to final bill of materials, the process sequence and pictorial representations of each sub assembly.
y Quality standards were set as each operation had a set of parameter which were

precisely specified.
y For e.g. washing of the assembly , prior to painting requires the temperature to be

between 60 to 70 degree Celsius, pressure to be 5 to 5.5 kg/cm2 and the duration of the washer to be 2 minutes.

Elements of JIT - Quality contd..
Total Quality Control and Quality control authority to workery cooperation of all people in the company, including top management, managers,

supervisors, and workers in all areas at every level. LEVEL 1: Workers - Check every item coming off and into the work station - Do a quick traditional check using ruler etc. - Data may be stored only for the shift LEVEL 2: The Supervisor - Analyzing problems at sub-assembly - Check samples once or twice per shift - Use vernier calipers (tools) to check the compliance LEVEL 3: Quality Auditor - Check samples from inputs & outputs once a day - Use sophisticated tools of measurement & more reliable -The data is used for periodic audits

Elements of JIT - Quality contd..
Quality circle y The quality feedback of finished aggregates from each line was obtained from the

supervisors¶ and quality auditors¶ checksheets.
y Finished products were sent to quality control inspectors ± given 57 counts as

checklist. Inspection done only on those counts. Which provided additional feedback.
y In addition there was a Quality system audit which tested a sample of finished goods

coming out of the plant. 

The purpose of this was not to feed the information back to the line on a daily basis for rework, but was used to assess the level of quality coming out of the plant. The quality audits were discussed in monthly meetings 

Indicators of Manufacturing Performance
Quality ‡ Percentage Straight Pass: Percentage of items without defects. ‡ Defects per unit ‡ Demerit rating: Weighted number of defects per unit Cost
‡ ‡ ‡ ‡

Inventory at various stages Manufacturing variables: no. of rejects per shift and quantity of consumables and tools used Productivity: Man-minutes per unit Overheads: Power, repair, maintenance, canteen etc.

Delivery ‡ Target Achievement: achievement per model ‡ Linearity: degree to which the average rate of production required for a month was adhered to. ‡ Customer Line Stoppages: the customer was defined as the succeeding line to which its output was fed


Number of accidents

‡ Housekeeping work done by the workers ‡ Training ‡ Number of Kaizens implemented

Future Course of Action
y Eicher should go ahead and implement the same system in other

two plants.
y They should go step by step and implement JIT in sub processes

y Employee training, awareness and encouragement along with

supplier coordination would be critical factors in success of this system.
y Develop the culture of continuous improvement among workers,

as they have done in Faridabad


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