Mahindra & Mahindra (M & M) Case Study:

The case examines the reasons behind automobile major Mahindra & Mahindra's decision to implement a Business Process Reengineering (BPR) program. The case explores in detail the implementation procedure at the company and the benefits that accrued from the BPR program. In addition, the case discusses the concept of BPR, its benefits, and the steps that need to be taken to ensure the success of such initiatives. Mahindra & Mahindra Ltd. (M&M) was the flagship company of the Mahindra group, one of the top ten industrial houses in India. It was set up as a steel trading company in 1945. It soon expanded into manufacturing general-purpose utility vehicles, starting with assembly under licence of the iconic Willys Jeep in India. 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. 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). 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 labour 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. Business Process Reengineering means not only change -- but dramatic

change. What constitutes dramatic change is the overhaul of organizational structures, management systems, employee responsibilities and performance measurements, incentive systems, skills development, and the use of information technology. 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. 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. Successful BPR Model can result in enormous reductions in cost or cycle time. It can also potentially create substantial improvements in quality, customer service, or other business objectives. The promise of BPR is not empty -- it can actually produce revolutionary improvements for business operations.

On the other hand, BPR projects can fail to meet the inherently high expectations of reengineering. Recent surveys estimate the percentage of BPR failures to be as high as 70%. Some organizations have put forth extensive BPR efforts only to achieve marginal, or even

negligible, benefits. Others have succeeded only in destroying the morale and momentum built up over the lifetime of the organization. Many unsuccessful BPR attempts may have been due to the confusion surrounding BPR, and how it should be performed. Organizations were well aware that changes needed to be made, but did not know which areas to change or how to change them. As a result, process reengineering is a management concept that has been formed by trial and error -- or in other words practical experience. As more and more businesses reengineer their processes, knowledge of what caused the successes or failures is becoming apparent.

ANALYSISE OF CASE About Case:

RE-ENGINEERING AS A CHANGE The above case examines the reasons behind automobile major Mahindra & Mahindra's decision to implement a Business Process Reengineering (BPR) program. The case explores in detail the implementation procedure at the company and the benefits that accrued from the BPR program. In addition, the case discusses the concept of BPR, its benefits, and the steps that need to be taken to ensure the success of such initiatives. It also examines the benefits that a BPR program can offer to an organization when it is effectively implemented. The BPR program with the help of UK-based Lucas Engineering Systems was implemented on an experimental basis at the Engine plant Igatpuri to assess the potential benefits of implementing BPR and its effect on the union. BPR is about radical redesign and restructuring of an organisation to lower the cost and improve quality and services. Successful BPR Model can result in enormous reductions in cost or cycle time. It can also potentially create substantial improvements in quality, customer service, or other business objectives. The result of BPR is not empty; it can actually produce revolutionary improvements for business operations. On the other hand, BPR projects can fail to meet the inherently high expectations of reengineering. Recent surveys estimate the percentage of BPR failures to be as high as 70%. Some organizations have put forth extensive BPR efforts only to achieve marginal, or even negligible, benefits. Others have succeeded only in destroying the morale and momentum built up over the lifetime of the organization. Many unsuccessful BPR attempts may have been due to the confusion surrounding BPR, and how it should be performed. Organizations were well aware that changes needed to be made, but did not know which areas to change or how to change them.

As a result, process reengineering is a management concept that has been formed by trial and error or in other words practical experience. As more and more businesses reengineer their processes, knowledge of what caused the successes or failures is becoming apparent.

Problems:
Mahindra & Mahindra was suffering from manufacturing inefficiencies, poor productivity, long production cycle, sub-optimal output, unhealthy work culture and corruption.So when Company decided to implement BPR it further created problem. The Trade unions expressed extreme displeasure at the decision to implement BPR and soon went on a strike. The reasons above problems were: Manufacturing Inefficiencies. Poor productivity. Long production cycle Sub-optimal output. Unhealthy work culture. Corruption was widespread. Decision to focus on enhancing productivity and delivering world-class quality at the least possible cost. Ambition to become the largest tractor manufacturer in the world. The three Cs (customers, competition, change)

Reasons of resistance from unions while implementing BPR?

Fear of Downsizing Several jobs were combined into one. Management accepting the Union demands every time. Lenient approach of management towards running the plant. Inflexibility of the workers. Idle time available to workers due to unorganized processes. Censorship of disclosure.

BRP Methodology used by M & M:

Introduction of a new organizational structure in which businesses divided into separate Departments each headed by a president i.e. Line Ownership.

Automotive divisions (UVs & LCVs) & Farm equipment division (tractors and farm implements). Re-engineering the layout & method of working. Multi-tasking through multi-machine manning. Reduction in non-productive activities. Focus on customer requirement. Concurrent engineering: Formation of cross functional teams Formation of 3 full-time teams Horizon1: Improvements in existing products Horizon2: Up-gradation of existing products Horizon3: Development of new products Strong and Consistent top management sponsorship. Addressing Cultural Transformation through effective change management.

Benefits as a result of BRP at M & M

Around a 100 officers produced 35 engines a day as compared to the 1200 employees producing 70 engines in the pre-BPR days. Igatpuri Plant: Employees declined by 400 but productivity went up by 125 engines per day. Nasik Plant: 125% improvement in productivity. Reduction in employee costs : 1. 1994: 12.4% 2. 1996: 10.1% Value added per employee increased from 0.3 million to 0.46 million. Better inventory control. Better sourcing. Better order distribution across plants. Online availability of data. Transparent access to data. Process transparency. Integrated sales and supply chain.

Recommendations:
The company should analysis the long term effect of restructuring. The barriers should be identified correctly.

There is a need of sustained top management commitment & leadership. The formation of core team is must. Personal involvement of top management is must. Cultural Resistance must be tackled carefully.

Conclusions:
BRP implementation in M & M had seen radical change for the better not only in its functions but also in its results. This can be summed up as it helps us to achieve higher productivity, reduction in costs and improved quality.