engineering BPR case of TherMax company.pptx

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1. Case Study Implementation of Business Process Reengineering in Thermax Ltd.

2. Company profile Thermax Group is an INR 5577 crore company, providing a range of engineering solutions to the energy and environment sectors. It is headquartered in Pune, India and operates globally through 19 International offices, 12 Sales & Service offices and 12 manufacturing facilities - 7 of which are in India and 5 overseas.   Solutions Suite – Innovative and Eco-friendly Heating equipment - using a variety of fuels, including biomass Absorption chillers - fired by waste heat or steam Power and captive cogeneration plants Waste heat recovery units Waste water management systems – pre-treatment, waste water treatment and chemical conditioning of water, sewage effluent treatment and recycling Air pollution control systems Performance improving chemicals Solar based heating, cooling and power

3. Business Problem Decline in profit after tax from 350 Cr in FY 2012-13 to 253 Cr in FY 2013-14 even though order booking increased by 11%. Manufacturing Inefficiencies Increased manufacturing cost Poor productivity Long production cycle (90 days) Sub-optimal output (629 units per year) Backlog orders Unhealthy work culture

4. Cntd ..

5. 3 Business Process Reengineering “Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed.”

6. 4 Key Words Fundamental Why do we do what we do? Ignore what is and concentrate on what should be. Radical Business reinvention vs. business improvement Dramatic Reengineering should be brought in “when a need exits for heavy blasting.” Companies in deep trouble. Companies that see trouble coming. Companies that are in peak condition. Business Process a collection of activities that takes one or more kinds of inputs and creates an output that is of value to a customer.

7. Why Reengineer? Customers Demanding Sophistication Changing Needs Competition Local Global Change Technology Customer Preferences

8. Business Process Reengineering Integrate people, technology, & organizational culture To Respond to rapidly changing technical & business environment and customer’s needs to achieve Big performance gains in terms of Cost, Quality, Service and Speed.

9. Principles of BPR Organize around processes, not tasks Have output user perform process Have those who produce information process it Treat geographically dispersed resources as centralized Link parallel activities in the workflow instead of just integrating their results Empower workers and use built-in controls Capture information once and at the source

10. BPR Success Factors Strong and Consistent top management sponsorship. Addressing Cultural Transformation through effective change management. Proven methodology including a vision process. Reengineering team composition. Compelling Business for a change Strategic alignment with company strategic direction. Line Ownership

11. Circumstances that lead Thermax to implement BPR Factors Manufacturing Inefficiencies Poor productivity Long production cycle Sub-optimal output. Unhealthy work culture Decision to focus on enhancing productivity and delivering world-class quality at the least possible cost. Ambition to become the largest boiler manufacturer in the world. The three C’s (customers, competition, change)

12. Why Thermax will face 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

13. Implementing a BPR Strategy

14. The C’s related to Organization Re-engineering Projects The 3C’s of organization Re-engineering: The 4C’s of effective teams: - Customers - Competition - Change - Commitment - Cooperation - Communication - Contribution

15. Key Steps Select The Process & Appoint Process Team Understand The Current Process Develop & Communicate Vision Of Improved Process Identify Action Plan Execute Plan

16. Selection of process Manufacturing process of boiler starting from order receiving from customer to order dispatch to customer.

17. Understanding of current Process Proposal dept Material dept QC dept QC dept

18. No yes ok main shell length = or < 2500mm Dress up punching, marking for RT test. Nozzle and tube plate set up RT test and material test shell sent to assembly plant (Mfg dept) Not ok Removing test plates and sending to Material testing lab Rerolling of shell Material testing lab Rework yes ok RT dept

19. Cntd .. QC dept

20. Process Mapping Manufacturing capability development Strategy development Product development Order fulfillment Customer design support Customer communication concept development manufacturing market customer

21. Modified Process Combining plate cutting and punching process Use of waving mechanism welding for L-seam welding and C- seam welding( eliminates CO2 welding, BG & DP test and dressing up activities) CNC rolling machine which takes 10 minutes for rolling or rerolling operations (existing system it takes 120 minutes) Combining preparatory and assembly dept. ERP implementation for tracking process and reducing paper work, online approval system for next stage of process, vendor management. Encouraging multiskilling

22. Modified Process Proposal dept Material dept QC dept

23. Cntd .. No yes ok main shell length = or < 2500mm Dress up punching, marking for RT test. Nozzle and tube plate set up RT test and material test shell sent to assembly plant (Mfg dept.) Not ok Removing test plates and sending to Material testing lab Rerolling of shell Material testing lab Rework yes ok RT dept QC dept

24. Cntd .. QC dept

25. Case for action We are disappointed by the length of time we require to develop and deliver the boiler to customer in domestic as well as international market. Our leading competitors achieve significantly shorter lead time & product development cycles because they have established large scale, highly flexible and lean manufacturing facilities with uniform set of work practices and information system. The competitive trend goes against our traditional way manufacturing of boiler. To sustain our business in long run we need to be innovative, lean and advanced technology driven make our product with better quality in minimum cost. We have strong competitive and economic incentives to move quickly as possible towards lean and highly efficient model of operation. Each month we can increase number units of boilers from currently 2 units per day to 3 units per day. It will help to reduce order backlog and increase profit.

26. Vision We aspire to become a leading technology company with a global outlook delivering world-class products and services to customers. We exist to fulfill the needs of our customers with on time delivery of products. We have shortened product development and production cycle time. We are an acknowledged leader in the energy efficient and ecofrienldly boiler manufacturing. We have established uniform and more disciplined product development planning, decision making and operational processes across all sites. We employ innovative technology based tools to support our work and management practices at all levels and between all manufacturing sites. Our challenge is to continually expand and define new markets by expanding the frontiers of research and engineering and customer applications in our chosen field of business. We have developed and implemented a common information technology architecture worldwide.

27. Action plan Focus on customer requirement. Concurrent engineering: Formation of cross functional teams Formation of 3 full-time teams Horizon1: Increase in productivity Horizon2: Improvements & Up-gradation in existing products Horizon3: Development of new products

28. Execution of BPR Implementation will start Resistance from the unions Re-engineering the layout and method of working Cellular Manufacturing Multi-tasking through multi-machine manning Reduction in non-productive activities Implementation of TPM & Kaizen Implementation of ERP

29. Measures taken by manager in a shop floor to ensure BPR success Training and Motivating workforce Identifying leaders Creating a conducive environment and changing work culture.

30. The performance measurements must include indicators for: Delivery performance Resource utilization Flexibility Work in progress Claims from customers Planning and scheduling performance

31. Information Technology & BPR Implementation of ERP to make common platform for all manufacturing facilities and integrate with all department. It Enables Product & Service Innovations Improve Operational Efficiency Coordinate Vendors & Customers in the Process Chain

32. Benefits of BPR Reduction in employee costs Better inventory control (reduction in WIP) Better sourcing Better order distribution across plants Online availability of data Transparent access to data Process transparency Integrated sales and supply chain Reduced production cycle time. Reduction in manufacturing cost. On time delivery of product to customer leads to customer satisfaction. So order booking increased. Reduced defects, rework and improved quality.

33. Thank you