How Exide creates the magic at Hosur

Strange as it might sound, the chief operating officer of Exide Industries, Tapas Roy, insists that his employees create defective parts! Suspend disbelief for a moment and look at the logic behind it, and the company’s strategy for excellence comes alive.

Roy explains the rationale at the company’s Hosur unit, which makes both automotive and industrial batteries. His mantra is that once you know how to make a defective part, it is easy to get to its roots, find out a solution and eliminate it for ever. This process also creates a poke yoke which will then become the one stop solution for this problem.

FULL CAPACITY

It is practices like these that have embedded excellence into the very DNA of the company. The Hosur plant is already running at full capacity, but demand for both industrial and auto batteries is growing. To cater to this demand, Exide has nine plants – two plants each in Tamil Nadu and West Bengal, four in Maharashtra and one in Haryana – of which eight are operational and one is under renovation.

Besides it also has manufacturing facilities in Sri Lanka and Singapore and a joint venture in the UK. The company has a technical collaboration with Shin-Kobe of Japan. The foundation for the Hosur plant was laid in May 1996 and production began June 1997. In the meantime, the workforce recruited for the plant was trained at other Exide facilities on machines that were intended for the new plant. This allowed for a smooth regularisation of production almost from day one, Roy says.

According to him, the company was in a ‘confirmatory’ mode between 2000 and 2003, and till 2005 the aim was to take it to higher levels of quality. Between 2006 and 2008, the effort has been on achieving excellence. The eventual objective is to assume a model industry role by 2009-10.

WHAT LIES AHEAD

In line with this, Exide plans to double capacity to 100 million amp hour in the industrial batteries segment and boost annual output of auto batteries to 1,800 lakh plates by 2009-10. The projects will involve an investment of Rs 50 crore. Perhaps the objective of excellence is already being met. It has received a zero ppm award and Best Quality supplier award from Toyota Kirloskar Motor, a 100-ppm award from Hyundai Motor, SHE award from CII southern region and the Best Industrial Garden Award for 2006.

A typical work shift at Hosur begins with the affirmation: ‘I despatch only zero defect batteries to customers’. Then there is an oath: ‘I attack DSWW’, which stands for defects, scrap, warranty and waste. Recently, an ‘I’ (inventory) has been added to this oath. Every morning rejections from the previous day are analysed and corrective action taken so that it is impossible to repeat the mistake. The workforce at Hosur follows a three-step process that corresponds to ‘I L U’. Rather than the cinematic ‘I Love U’, Roy says that that the three letters are visual representations of the way workers are initiated into the production process.

##### HOW IT WORKS

In the first – the vertical ‘I’ – stage fresher are trained to operate the machines. In the second stage - ‘L’, where the vertical is extended to the horizontal at the bottom - workers are trained to take care of the machine they work on. In the third stage – ‘U’, two parallel verticals with a horizontal in between – expert workers train freshers or other workers. “This helps boost the workers’ self esteem and also helps in developing successors. It is also a contingency plan to combat any crisis brought on by absenteeism,” Roy says.

Monthly review meetings require managers to present performance parameters in terms of people, process, customers and finance. Exide has a vendor quality improvement programme which helps them move up the value chain. The progress of companies in the programme is discussed at these meetings. These initiatives have led to an overall improvement in performance. One area where this is most apparent is in use of resources. For instance, during 2002-03 it consumed 1,558 kWh of power per tonne but careful reviews and improvement programmes have now brought this down to 1,190 kWh.

The company has been paying attention to renewable sources of energy through Arkay Energy, which it co-owns. This entity produces electricity through gas and Exide has been able to avail of concession in tariffs for the electricity. There are plans expand this programme to windpower and talks are on with a manufacturer to set up a windmill farm. These strategies are part of a larger environmental concern that drives many initiatives. Among these are efforts to contain air and noise pollution besides creating a green belt around the plant. More than half of the 74-acre plot on which the plant is situated is earmarked as a green zone.

This area contains a variety of plant life including 2,000 mango trees. A large part of the produce is distributed to employees and the rest sold in the market. The proceeds are used for ‘greening’ initiatives. The effort has gathered pace with four more acres within the premises used to plant about 2,000 ‘birds of paradise’ ornamental plants. These are in demand overseas . There are also plans to pant marigold and 2,000 papaya plants.

So effective has the ‘greening’ programme been that it is hard to believe that the plant is in an area where there is acute water scarcity. To address this, the company has put in place a comprehensive water management system which includes a water harvesting plan as well. And the eco-friendly initiative does not stop here. It has earmarked Rs 25 lakh to change street lights within the factory premises to solar lighting. It also plans to convert all canteen wastes to bio-waste that can be used in greening programmes.

THREE-TIER APPROACH

The company follows a three-tier bottomline approach comprising three Ps – people, planet and profit. The turnover at Hosur was up from Rs 26 crore in 1997-98 to Rs 413 crore in 2005-06. The target for 2006-07 is Rs 535 crore. It employs over 500 people with an average age of 29 years, of which more than 300 are ITI-qualified technicians and engineers. In line with its ‘people first’ strategy, Exide encourages active participation of family members in cultural events. After such events, the management and office bearers of the union meet and analyse what Roy calls ‘WWW’ and ‘WWR’ – ‘what went wrong’ and ‘what went right’.

Community-based initiatives include financial help given to rural hospitals to buy medical equipment. Recently it deputed eight employees to spread awareness on chikungunya. Exide began its Six Sigma journey in February 2007 and the audit for OHSAS certification will happen in June. It hopes to get the TERI Environmental award next year and will challenge the TPM Excellence award next March.