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'Our productivity increased almost 400% ever since we implemented TQM, TPM practices'

The 'Made in India' label may not be very popular in the global market, but there are a few companies who have managed to overcome this hurdle. Sundaram Brake Linings is one such. It is the first brake lining company in the world to have won the prestigious Deming award.

The award, the highest for the manufacturing sector was instituted in 1951 and is named after Edwards J Deming, an American mathematician who taught the Japanese how to aim for high quality in everything that they do. In the world of manufacturing, the Deming award is considered the equivalent of the Nobel Prize.

A hundred and fifty companies have won the award in the last 50 years. However, it has gone out of Japan only five times and two have come to India -- first in 1999 when TVS Suzuki under Venu Srinivasan won the award and now in 2001, it is SBL's turn.

In a frank tête-à-tête with Shobha Warrier, SBL CEO K Mahesh discusses how his company implemented TQM (total quality management) practices and won the award.

You are the first brake-lining company in the world to win the Deming Prize. When you submitted your entry, what were your expectations?

We have been practising chain management for the last 14 years, and been working with Tsuda San for three years. In the second year, he suggested that we make an application for 'challenging' the Deming award.

In your application, you say, 'Look, we have been doing all this and we want you to evaluate our work. Also, we have long-term vision, which is in alignment with what we are doing'. So, we submitted a summary of our TQM (total quality management) practices.

Then in April 2001, two gentlemen came for the pre-audit of the plant and after talking to the employees of the plant they said that we were ready for the Deming audit.

The Deming audit is very formal where we were not allowed to mingle with them -- they travelled and even ate separately.

These auditors said that we were practising TQM the Indian way. I told them that this was very important as TQM was not brick and mortar, rather it dealt with people.

I was glad that they noticed and appreciated it. As a matter of fact they were such profound guys that they noticed the variances in the TQM practices that we followed in our plant here in Chennai and the one at Madurai.

Five weeks later, we got an email congratulating us for winning the Deming Award 2001.

How did you celebrate?

We are yet to celebrate. May be sometimes in January, (we will celebrate).

I explained to my people that while it is hard to reach the top, it is harder to remain there. Deming is not like QS 9000 or ISO 14001. There is no audit after you are given the award. They basically believe that a Deming company will maintain and improve all TQM practices. It will, however, take another 3-5 years to institutionalise the procedure.

Several companies worldwide apply for the Deming award. What according to you are the factors that favoured SBL?

According to what they said one of the factors that impressed them was the uniformity that we maintained -- be it in what we wear, which leaves no room for differentiating between a manager and a worker to sharing a common canteen in the factory. They thought in India, the social hierarchy is followed strictly!

The other factor that played in our favour was the top management's complete involvement in TQM practices.

The auditors said, 'yours is a truly TQM company….it is in harmony with nature'. This was in reference to the 12,000 trees our two factories have.

They also take the social obligation angle like the enthusiasm level of the workers into consideration.

Finally, the way we handle TQM, TPM (technical performance measurement) and lean management at the same time also impressed them.

Has the small size of your company helped you win the award?

Size does not make any difference. Yes, we are only a $19 million company. They said they were looking for excellence irrespective of size.

Last time when I interviewed you (www.rediff.com/business/1999/jul/14mahesh.htm), you said the outside world was suspicious of anything that bore the 'Made in India' label. Do you think the Deming award will change the world's perception about you?

Yes, the award will help us. Deming is something unique and it is particularly recognised in Japan. We have been trying for an opening in Japan but we couldn't even manage to penetrate the market. They do not even reply to an Indian company but once you say you are a Deming company, people will sit up.

We were the 5th company outside Japan to get it. It is also recognised widely in Europe, and South-East Asia.

Will it put a lot of pressure on you now that both the challenge (to perform better) and customer expectation have increased?

That is part of the game. When you want to become a Deming company, you are already under pressure. It is a way of life. If you don't (live that way), then it becomes a pressure.

Is there any possibility of a strategic partnership with any of the automobile manufacturers in future so that you become a direct supplier of OEM?

We are a tier two company and our products can go only into an axle manufacturer or a foundation brake manufacturer. Our product is such that we can never be a direct supplier of OEM.

Was it because things were not looking up that you decided to practice TQM, lean management etc fourteen years ago?

We were not at all competitive and our profits were really bad. So, we started with basic manufacturing system redesign. Lucas (manufactures brake lining, dynamos and electrical items) helped us but we mainly read books and implemented. Of course, experts like Yamaguchi san, Tsuda san (Japanese TQM experts) and Dan Jones helped us.

Toyota got the Deming award 35 years ago and it is considered as one of the best TQM companies in the world.

When you get the TPS position, TQM becomes an umbrella under which TPM can function. TQM looks at customer satisfaction, which means on time delivery and this also means TPM is essential. Lean is also part of TPS. So TQM is more a way of life or philosophy.

How much has TQM helped you in running the company and improving productivity and profit?

Our productivity increased between 200-400 per cent after we implemented TQM and TPM practices. It was unbelievably good. Our ratio is 1:1, much better than many other Indian companies.

In terms of profit, it was very good two years back. That was when everybody made us invest hoping that vehicle production will go sky high. But it has been bad for 18 months, and I believe it will be bad for one more year.

We are stepping up our exports and in the last seven months, we have exported 50 per cent of our production, against 35 per cent last year. That has helped us to stabilise. But we have been forced to give price reduction to OEMs in India.

TQM also gives tools like deep analysis to solve problems, much more structured and aligned.

You have implemented lean management too. Did you have to go for downsizing?

I promised my employees 14 years ago that I would not retrench any of the confirmed employees to improve productivity. We have a three-year apprentice-training program. So we have a buffer there, a floating population that I can control.

Currently you are number five in the world in manufacturing heavy-duty brake linings. Where do you want to go from here?

We want to become number three in the in the world.

Why not number one?

You will have to be realistic and practical. It is nice to say we want to become number one. But it will not happen. There are a lot of mergers and acquisitions. Ferrodo and Abex have combined together and they are big. When we are at number three, we will be in a comfortable position to compete with these guys.

Are you looking for acquisitions or mergers?

Acquisitions, I am not particularly interested in. It takes a longer time to repair a company. Yes, it is a route for more rapid growth. If something worthwhile comes along, we will look at it.

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