Crompton Greaves' Operations Overhaul

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Themes: Operational Restructuring
Period : 1990-2000
Organization : Crompton Greaves
Pub Date : 2002
Countries : India
Industry : Electrical Equipment

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Case Code : OPER003
Case Length : 05 Pages
Price: Rs. 200;

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The Nashik Unit Overhaul

Nohria began by talking about improving quality and response to customer demands and improving delivery. Shopfloor workers were sent to visit customers and get first-hand responses on products. Cross-functional task forces were created to look into rejections and deliveries began to be monitored closely.

The most evident of the company's efforts were at the switchgear unit in Nashik, Maharashtra. This 1400 worker unit was one of CGL's heaviest investments, with the maximum CNC machines , high voltage testing laboratories and state-of-the-art manufacturing facilities.

As part of the plans to increase resource productivity, the unit had its first total quality management program in December 1991 wherein CGL emphasized that the entire approach should be changed to 'value added management.' In the earlier setup, CGL followed an European model wherein the planning department worked out the optimum load based on capacities, and told marketing what mix of orders to bring in.

In the new setup, the marketing department gave the customer demand figures and everything was geared to deliver on the date the customer wanted. During 1993-95, the unit had over 21,000 kaizens , making it the unit with the highest number of kaizens in the country. The biggest change was regarding the reorientation of the production process itself. The unit began using the concept of single piece flow (SPF), which had been successfully used by different industries abroad. One group of machines was arranged so that work proceeded in an anti-clockwise, 'U' shape. Rather than one product being made at different points on an assembly line, one entire product was made from start to finish by one cell.

This was combined with the concept of kitting, (providing only enough material to produce one item at a time) which meant less wastage and better inventory control. The inventory carried declined from 2.87 months in 1992-93 to 2.35 months in 1994-95. The inventory-turnover ratio went up from 2 in 1992 to 7.5 in 1995. This was largely due to a computerized model installed for inventory control. Minimum, maximum and re-order levels were determined by this model and it covered all the 'A' and 'B' items . At any given point of time, the growth in sales was always greater than the inventory build up.

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