Sundaram Clayton: Winning the Deming Prize


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Case Details:

Case Code : OPER010
Case Length : 11 Pages
Period : 1998 - 2002
Organization : Sundaram Clayton
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Automobile Components

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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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Excerpts

SCL'S Deming Prize Journey

SCL had decided to apply for the Deming Prize in the early 1990s itself. This decision was the result of management's belief in the total quality control efforts that had started in 1979, after Venu Srinivasan (Srinivasan) became the CEO (1977). A SWOT analysis conducted by Srinivasan in 1997 revealed that though the company had a 90% share of the air-brake systems market in India, it was not competent enough to deliver world-class quality products. This analysis prompted the company to seek excellence through total quality control/management. As a part of this initiative, SCL managers were introduced to the concept of Total Quality Control (TQC) and exposed to the quality control practices of world's leading companies.

The managers were also trained in modern manufacturing techniques. By the mid-1980s, the TQC culture was well established at SCL. Famous Japanese quality control experts like Yoshio Kondo and Washio trained managers and employees extensively in TQC. The company also introduced the concept of quality circles. To remain focused on quality control and to keep the employees interested in quality control practices, external targets such as winning national quality awards were set, following which the company won the Quality Circle Award of the Confederation of Indian Industry (CII) in 1989 and the Quality Circle Federation of India awards successively for the next few years...

After Winning the Prize

The defect rate in the manufacturing process at SCL decreased substantially and customer returns came down as a result of these quality control initiatives. New-product development time was reduced from 24-to-30 months to12-to-14 months. The turnover per employee increased by an estimated 18% annually while the gross value addition by every employee increased by 12% per annum. The quality practices in the company also reflected in its financial performance. Between 1992 and 1997, sales grew at an annual rate of 35% while its net profits grew at an annual rate of 83%...

Exhibits

Exhibit I: SCL - Profit & Loss Statements
Exhibit II: Dr. Deming's maxims
Exhibit III: Various TQC Tools
Exhibit IV: Reasons Why TQM Fails

 

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