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Importance of using innovative ideas to achieve superior results



Gujarat Ambuja Cements Ltd. (GACL) was established as Ambuja Cements Private Ltd. Case
discuss The company's efforts to improve its operational efficiency through productivity
enhancement, quality control, pollution control and cost -cutting measures are explored in detail.



  



According to analysts, GACL's strategic farsightedness was evident in its decision to locate its
plants in backward areas, so as to take advantage of substantial sales tax and income tax
incentives. GACL's units in the states of Gujarat, HP and Punjab also received sales tax
incentives. This was possible as all new investments in cement after 1986 enjoyed a sales tax
benefit of up to 90% of the value of fixed assets for a period of 14 years.

GACL worked hard to reduce mining expenses. Cement companies normally operate their own
limestone mines. Mines were not only extremely destructive environmentally; they were also
expensive to operate. The explosives used for mining were on the negative list of imports and
substantial costs were involved in implementing safety measures. In 1997, GACL sent its
engineers to Australia to study the extraction of metals. On their return, GACL implemented
new technologies that could access limestone in smaller areas where blasting was not possible.
To reduce the noise and vibration that occurred during the conventional drilling, blasting and
crushing process, the company introduced an Australian device called Surface Miner.

c

Application of CAD in auto industry:



In 1996, GM initiated a program to substantially reduce its VDP time from 42 months to 24
months. In the same year, GM entered into an agreement with Unigraphics Solutions to use its
CAD/CAM/CAE software Unigraphics. In 1999, GM signed a three-year with the company as a
follow up to the 1996 agreement. The agreement included the endorsement of Unigraphics'
Internet-centric PDM application, iMAN .

GM claimed to have saved hundreds of millions of dollars with the CAD/CAM/CAE systems.
The new systems allowed the company to launch innovative new cars and trucks in the market
faster. The company successfully reduced its VDP time to 24 months. GM aimed at reducing the
VDP time to 18 months. The company reported a 13 % improvement in engineering
productivity in 1997 .


c

Lean manufacturing at Boeing:



In a traditional commercial aircraft manufacturing plant, the floor layout was similar to a parking
lot. The planes were docked in stalls ² six on the left side of the factory, six on the right side.
Each plane was surrounded by ramps and workers would go in and out to find parts, install
them.

Boeing had followed the above approach from the beginning and its manufacturing practices did
not change much over the years.

Boeing began implementing lean manufacturing principles in 1993. The company employed a
Japanese consulting firm to assist in the task at its commercial aircraft division.

As a result of the above initiatives, Boeing was able to reduce its inventory levels by $1 billion
since January 1999, and was also successful in reducing the manufacturing time by 60% and
manufacturing floor space by more than 50%. This helped the company to lower the production
cost and also freed the manufacturing capacity.

c





h


  
   

In the late 1990s, the CTV market was characterized by intense competition and unprecedented
price erosion. In an attempt to improve cash flows and bring down inventories, the company
restructured its CTV manufacturing process.

PIL decided to leave the relatively low value adding manufacturing processes such as final assembly
and testing to supplier-partners who were close to the marketplace. These supplier-partners not
only had much lower cost-structures, they were also far more flexible. By having several supplier-
partners in different parts of the country, PIL was able to reach out to customers in the shortest
possible time and with very low inventory in the pipeline.

PIL scrutinized the best SCM practices across the world and carefully studied the SCM models of
successful companies such as Dell Computers. The company decided to use the Supply Chain
Operation Reference (SCOR) SCM model for restructuring its supply chain. According to the model, a
supply chain is broken down into four different processes - planning, sourcing, making and
delivering. These four processes are supported by a set of performance metrics, such as customer
service, costs, flexibility, and assets. Using this framework, PIL worked out a mechanism to assess
itself on a 'process map,' which it referred to as the 'maturity grid'
PIL benefited in many ways from the revamped SCM practices. Transit time was reduced to 7 days
and goods were handled only 5 times. As against a first quarter working capital of Rs 500 million for
2000, the figure was only Rs 200 million in 2001. Significantly, supply chain costs were reduced by
26% in 2001. A majority of these savings were due to the savings in transportation and warehousing.
PIL could reduce warehousing costs because of the direct dispatch model, in which there were no
grouping centers.

Issue 5:

Six sigma at GE

Case:

Before beginning the implementation, studies revealed that GE's operations were carried out
between 3-4 sigma, i.e., about 35,000 defects per million opportunities. According to company
estimates, avoidable expenditure of $7-10 billion was being incurred in the form of scrap, reworking
of parts, correction of transactional errors, inefficiencies, and lost productivity.

According to analysts, the groundwork for the implementation of Six Sigma at GE had begun in 1988
in the form of an initiative known as the 'WorkOut' program. The company realized that employees
were an important source of intellectual power for new and creative ideas.

The WorkOut program gave each employee an opportunity to influence and improve GE's
operations. The program had set four major goals that later helped to lay the groundwork for Six
Sigma. The goals were as follows:

ͻ Build Trust: Employees were encouraged to criticize GE and the way they performed their jobs
without negative consequences to their careers.

ͻ Empower employees: As employees who performed a particular task knew how to do it perfectly,
GE granted them more power, to encourage them to take more responsibility for their jobs.

implementation of Six Sigma enabled Welch to transform an old-economy industrial giant into a
competitive and growing company. No other corporation seemed to have integrated Six Sigma in to
its operations as widely as GE. Within five years of its implementation of Six Sigma at GE produced
annual benefits of more than $2.5 billion for GE worldwide. Analysts remarked that Six Sigma was an
indisputable success at GE whether in terms of customer satisfaction, improvement in internal
performance, or in the improvement of shareowner value,

Issue 6:

Ford has pioneered several innovative automobile manufacturing techniques since its inception. In
the mid 1990s, Ford restructured its manufacturing operations in its efforts to induce more flexibility
and enhance the efficiency of its automobile production systems. The restructuring effort was
known as Ford Production System (FPS).

In January 1995, Ford employed a company-wide re-engineering initiative called Ford 2000. One of
the major objectives of Ford 2000 program was to develop and implement a new manufacturing
system called the Ford Production System (FPS). According to Ford's website, "The vision of FPS is a
lean, flexible and disciplined common production system, defined by a set of principles and
processes, that employs groups of capable and empowered people, learning and working safely
together, in the production and delivery of products that consistently exceed customers'
expectations in quality, cost and time." FPS was an attempt by Ford to transform itself from mass
production system to lean manufacturing system.

y 2003, all the plants of Ford had adopted FPS in their operations. It was estimated that after the
implementation of FPS, Ford had achieved savings to the tune of $500 mn per year.

Issue 7:

Cost Cutting AT TISCO

Case:

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