The Crompton Greaves' Operations Overhaul
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Case Details:
Case Code : OPER003
Case Length : 05 Pages
Period : 1990-2000
Organization : Crompton Greaves
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Electrical Equipment
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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The Nashik Unit Overhaul
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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.
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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...
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Reaping Benefits
CGL's efforts seemed to have paid off initially as between 1990-95, CGL
doubled its turnover crossing the Rs 1000 crore mark. Productivity went
up from Rs 6 lakh per man per year to Rs 12 lakh. Profits also increased
by six times. There was a 30% reduction in the total number of workers
needed because of the increased efficiency. However, CGL did not
retrench any workers and instead redeployed them where necessary. The
time spent by employees on training also went up from 1% to 3%. Since
CGL assured job security to the workers, the union agreed to
productivity increases of 38% in 1991, and a further 20% in 1994... |
Down Again
CGL could not replicate the success of its Nashik factory on a corporate level. Over the next decade, CGL's performance declined significantly. A main reason behind this was the fact the company's presence was predominantly in low margin businesses and its pricing power was low...
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