Changing the quality mindset at Ashok

Leyland (Parts A and B)

Ii 6&118t&tJEA· W#hr:U-S~ ---lii?'.ll-lEIIElelllllll:l!ll-----;lii!l&2lllilBlll!lllm:l-_ _ _ _ _ _ _ _ _ _ _ _ _
IAA!HSHt¥AM!M#1'

Anuradha M.V., Rajan C.R. and Uma Rao Ganduri

Changing the quality mindset at Ashok Leyland (A) Anuradha M.V. is based at
the Department of
When R. Sivanesan joined Ashok Leyland (AL) as the Chief of Quality in 2011, the Organization Behavior,
organization was at a turning point. The competition was increasing, sales were Indian Institute of
plummeting and finances were dwindling. The organization, led by Vinod Dasari, Management
decided to beat the competition by providing customers with unmatched quality in Visakhapatnam.
their products and services. The Chief of Quality, therefore, became a crucial player Visakhapatnam, India.
Rajan C.R. is based at the
in this change initiative .
Department of Strategy,
Sivanesan was an engineer from the reputed Madras Institute of Technology and had Great Lakes Institute of
a degree in Global Leadership from the Indian Institute of Management, Lucknow. He Management, Chennai,
brought with him more than 20 years of experience in Japanese and European quality India. Uma Rao Ganduri is
management systems. However, Sivanesan knew that his work at AL would not be based at the Department of
Human Resources, Ashok
easy . His long work experience was with passenger vehicle manufacturing
Leyland Pvt. Ltd., Chennai,
organizations such as Maruti Suzuki and Fiat. AL was a market leader in the India.
commercial vehicles segment. Second, AL was conceived as a symbol of post-
independence Indian industrialization. This legacy made it culturally very distinct from
the organizations Sivanesan had worked for before. He says, "I knew that this
organization (Ashok Leyland) was different from the highly structured places I had
worked in before . The job offer at Ashok Leyland was an opportunity for me to
experiment and see if I could drive a change in such an organization ."
Despite his realistic appraisal of the situation, Sivanesan felt overwhelmed by the
challenges he faced in trying to change the quality practices at AL.
How could he convince the members of a large organization that had been a market
leader for decades, that their practices might not yield the same results anymore?

Ashok Leyland: the organization

In 1948, a freedom fighter from Punjab, Raghunandan Saran was persuaded by Pandit
Jawaharlal Nehru, the first Prime Minister of India (and a fierce believer in industrialization as
key to the growth of the nation) to set up an automobile plant in Tamil Nadu. Saran accepted
the Prime Minister's offer and set up Ashok Motors (named after his only son), in Ennore, a
small fishing village in north Chennai. Ashok Motors initially assembled and distributed the
English AustinA40 cars in India. Disclaimer. Tris case 1s
intended to be used as the
basis for class discussion
Saran felt that there was greater potential in entering the commercial vehicle rather than to 11lustrate either
segment and started negotiations with Leyland Motors of England for the assembly effect ive or ineffective handling
of a management s1tuat,on The
of their commercial vehicles In 1950, Ashok Motors got the right to import , assemble case was compiled from
and progressively manufacture Leyland trucks for seven years . Unfortunately, Saran oubl,shed sources .

JC.I 1~ ' ' 0& TC~ 1: 201.9 .';119

died in an air crash even before the deal could be finalized. Finally, in 1954, the
Madras. state government and various shareholders signed an agreement with
Leyland Motors to assist as a technology partner. This agreement led to the change
in the company name from Ashok Motors to Ashok Leyland (AL). The company at
that time had British expatriates as managers and Indians as executives.
In 1987, the Hinduja Group and IVECO (part of the FIAT group) took over British Leyland,
which was known as Land Rover International Holdings Limited at that time. In 2007, the
Hinduja Group bought out the stakes of IVECO in AL, making it the biggest promoter (51%
shareholdings) of AL.

AL produces buses, trucks, light vehicles and defense vehicles. It has been the second-
largest manufacturer of commercial vehicles in India for many decades.
The organization pioneered various innovations in the Indian automobiles' domain. AL
manufactured the first Indian double-decker bus with 50% indigenous parts in 1967.
In 1969, power steering was introduced in commercial vehicles for the first time in
India by AL. AL also pioneered the innovations in alternate fuel technology leading to
the production of India's first compressed natural gas (CNG) and hybrid CNG plug-in
buses. It was the first Indian manufacturing company to receive the prestigious
quality certifications by the International Organization for Standardization (ISO). AL
proudly advertises its association with instances of national pride. For example, it was
an AL vehicle that was used for flagging off a friendship initiative with a neighboring
nation. An AL double-decker bus carried the Indian cricket team around Bombay for a
felicitation tour after their World Cup win. AL also manufactures vehicles for the Indian
Army.

In 2011, AL had a total of seven manufacturing plants in India - one in Ennore in the
state of Tamil Nadu, three plants at Hosur in the state of Karnataka, one each in
Bhandara (state of Maharashtra}, Pantnagar (state of Uttrakhand) and Alwar (state of
Rajasthan). It also had manufacturing units in Great Britain and the UAE (Ras Al
Khaimah).

Turn of events
In 2011, Vinod Dasari took over as the Chief Executive Officer and Managing Director at AL.
Dasari was a graduate of the Kellogg School of Management, USA, and had previously held
various leadership positions at Timken (USA and India) and Cummins before he finally
moved to AL in 2005 as the Chief Operating Officer.

When Dasari started as the Managing Director, he had several challenges at hand.
Competition in the commercial vehicle segment was rising, with many new players
entering the Indian market. At this juncture, the quality of their vehicles was more
crucial than ever before. The finances of the company were also dwindling, and by
2013, it would become a grave cause of concern. Nevertheless, Dasari's approach
was clear "We are not going to cut our costs towards glory, that is not what we will do .
We will create a company which will be restructured, and be prepared for growth"
(Barooah, 2017). His determined style led to many aggressive restructuring initiatives
and process changes within AL.

As a first step, the services of Ricardo - a European agency, were recruited to audit the
existing metrics and systems at AL. "This was the first step in the journey to execute the new
DNA at AL," said Bharat Sharma, a vital member of the quality team. He added, "At that
time, some audits used to happen, but the quality and effectiveness of the processes were
not being assessed thoroughly. Different functions had different metrics, mostly defined in
terms of the internal customer."
 The management decided to focus on the superior quality of their vehicles as a
differentiator to beat the competition. Recruiting Sivanesan as the head of quality,
was, therefore, a significant move in this direction. Dasari's management style, as
per his admittance, was to "find the right people, tell them what needs to get done,
and do not tell them how to do it. Let their ingenuity surprise you." (Barooah, 2017)

Diagnosing quality issues

The Ricardo report was the first document that Sivanesan was given when he started
at AL. It compared the quality of AL vehicles against the global benchmarks at that
time (see Exhibit 1). The report was far from positive. It indicated that the durability (i.
e. longevity) of the vehicles was reasonable. The vehicles had a life of 5,00,000km, or
more. However, reliability (i.e. the probability that an item will perform a required
function without failure under stated conditions for a stated period) was questionable.
There were a lot of reported breakdowns and servicing issues in their vehicles quite
early in its life cycle.
One of the first things that Sivanesan did was to visit the plants. His visits to the plants
reiterated the existing disarray in processes. In one instance, for example, he checked
some vehicles for torque and found gaps. He suggested measures to rectify the problems
then and there. The assembly head assured him that the problem would be fixed. However,
when he returned to check on the progress after a couple of hours, he was dismayed to find
only 50% compliance with his instructions.
The culture at AL then was one where several interdependent players were acting towards
their departmental objectives. The plant head, for example, was under immense pressure to
deliver an assigned number of vehicles at the end of the month. This pressure led to
compromises in quality. The quality check was done after the vehicles were assembled. If
any defect was noticed at that point, it meant around 500--600 defective vehicles had
already been produced.
Sivanesan also found that the AL officials did not check for the quality of the parts
provided by the suppliers. The suppliers self-certified their products. The storage
space for parts was insufficient, resulting in damage to the goods after they were
delivered to AL.
A meeting was organized with the dealers to understand issues related to quality that they
faced. Many problems emerged. One of them was that the time taken for a pre-delivery
inspection (POI) was very long. Once a customer purchased a vehicle, it was sent for the
usual inspection, polishing, washing and greasing. This inspection took an average of
10--24 h for AL vehicles because some defects or the other would be noticed in the vehicle,
and it would take time to fix that.
The organization was finding it difficult to sell the vehicles manufactured at its
Pantnagar plant (situated in Northern India) in the southern parts of India. By the time
the vehicles traveled 3000-4000 km, they were rusty. The vehicles were waxed to
avoid storage rusting. However, the wax did not work in the sun because it could not
withstand UV rays . As a result, the paint would crack, making the vehicles look rusty
and old.
All these practices seemed unacceptable to Sivanesan as he was trained in the Japanese
system of thorough quality management. He realized that a sense of complacency had set
in within the organization Therefore , any effort towards change in quality-related practices
would require a change in this mindset of complacency. He knew that cultures usually
developed over long periods, and any quantum change would require a well-planned
strategy.

I r,(u~ 03
THE C1'5E JCU~ L[
 &,1
~ r-

t,;rf-

I
Presentation to the CEO
I
As a first step, Sivanesan decided to share his concerns with his superiors and take
them into confidence. He presented all the lags he saw in the processes to the
c-:-
Managing Director - Vi nod Dasari and the Executive Vice Chairman - Sehasayee.
C=-
Sivanesan was brief and to the point - he pointed out that the root of the problems came I
from the fact that quality was just another activity done by the manufacturing department. C=;;._
There were no clear metrics to carry out quality inspections. The lack of metrics led to I
inadequate inspections and almost no escalations in case a quality-related issue was
noticed. An escalation, if any, was also likely to be subdued, given the enormous pressure
related to production quantity. At that time, two-thirds of the aggregates were in the red e=::
zone as per the quality standards (there were a total of 14 aggregates in the entire
production line. For example, engine was one aggregate, axel wheel was another and e=::::
clutch was another aggregate). Sivanesan underscored that poor quality practices should
be a great cause for concern for the organization.
His suggestions were as follows. The quality function should be separated from all t..=:::::
other functions and should become a centralized unit. Quality inspections should
C=:::::_
happen at every stage of production, and not at the end of the production line. Clear
customer-centric metrics need to be identified for every aggregate. This change in
structure would mean a significant shift from the prevailing culture of complacency to
C=:::::::
a culture driven by precision.
Vinod Dasari was at first unwilling to accept that the quality of their products could be so I
poor. However, when he visited one of the plants on Sivanesan's insistence, he realized that
I
the defect rate presented to him was a moderated version of the actual reality. Even a rough
inspection of a randomly selected vehicle indicated around 15 defects. That was alarmingly

:;
high! He agreed to back Sivanesan in all his efforts and said, "I will create a steering
committee for this, we can also create a cross-functional team. We can take in young
project leaders. Hardcore engineers in the specialized areas who are also high performers.
They can be pulled out from their present roles and put on this team for a year." He assured
Sivanesan that the team would have his complete support; however, they would have to
drive it from the front.
The next primary task was to let the Board of Directors know. "Are you sure of this?"
I
asked Dasari when Sivanesan decided to present the facts and figures to the Board.
"It will only create panic!" Sivanesan reiterated that presenting to the Board meant
that they would demand a progress report on this issue every couple of months. This
external pressure was required to move things at a fast pace. Besides, Sivanesan was
not aiming at a repair; he wanted a complete overhaul of the system. The support of
the Board members was critical for this. The situation was grave, and its gravity had to
be conveyed to everyone!

Presentation to the Board

When Sivanesan ended his presentation to the Board of Directors on a fine morning in
September 2011, there was a pregnant silence in the room . His report of the prevailing
quality standards in the organization was unacceptable. Then, the floodgates opened. "If
things were so bad, how could they have been market leaders for so many years?" "How
come no one ever brought out these issues earlier?'; As Sivanesan was caught between the
barrage of questions, Dheeraj Hinduja, the promoter of the company, listened calmly. He
then came forward and addressed the Board members, "It is rare that we come across
such a report in Board meetings, where every bare fact is presented to us, as it is. It takes
much courage to do this. So, let us hear him out and see what suggestions he has to offer to
rectify this situation."

t>(trt04
{ ' j rrittAsE JOURNAL I
I
 Hinduja asked Sivanesan for a detailed roadmap going forward and a timeline to put
things in place. It was decided that the organizational structure would be revised.
Quality teams would be designed around verticals (see Exhibit 2). A cross-functional
team (CFT) was formed under the leadership of Vinod Dasari to help implement new
practices. A total of 23 frontline leaders from various functions were roped in to be
part of this team. For the first time, in the history of AL, it was decided that quality
would be incorporated into the business plan, and shown as one critical pillar.
Hinduja assured Sivanesan of three things - he said: "You will receive all the
resources you require. We will ensure that all the roadblocks that come in the way of
quality implementation are removed, and most importantly, be assured that your job
will be secured throughout this initiative."
Vinod Dasari sent out an office order announcing the appointment of the Chief of
Quality. The reporting structure was slated to change; however, these aspects were
kept vague in his communication to the employees. Probably because he felt the
benefits of a slow buy-in of stakeholders would be higher than a sudden
announcement of the change.
Now that Sivanesan had the support of the leadership team, the next task for him was to
convince the other stakeholders. Convincing the stakeholders turned out to be the toughest
part of his journey. There was resistance from every quarter.

Stories of resistance
The Executive Director (Manufacturing) had worked for various leading manufacturing
organizations in the country before joining AL. He was skeptical of the implementation of in-
house quality checkpoints. According to him, this would appear like a step backward,
especially when all organizations were moving towards self-certifications for quality
parameters.
Sivanesan argued that the process of quality inspections must be customized around the
organizations' maturity level and not just by popular market practices. At this point, no
department in the organization felt ownership of quality. Someone needed to make it their
job to give due importance to the quality of the products, take the initiative and set the
metrics and processes in place! These changes would make the processes more
customer-centric.
t The ED (Manufacturing) also pointed out that the manufacturing department worked
under tremendous pressure to produce a target number of vehicles in a day. They had
almost no control over the quality of the supplies or design. Quality, therefore, could
not just be a manufacturing problem. All the functions had to be involved.
Sivanesan understood the manufacturing head's concern regarding the
interdependence of various functions. Therefore, he first approached the suppliers.
He was clear in communicating to them that no compromise on quality would be
accepted. They initially dodged responsibility. They had been supplying to AL for
years without any questions asked. "It is an abuse of application of our supplies and
its servicing , not in its quality," they said. Sivanesan understood the supplier psyche
well. He knew that the supplier would only understand the language of money.
Therefore, he developed clear metrics for supplier quality. For example, 300 h of salt
spray resistance (SSR) would be the specification to test the quality of the supplier
product. Before this initiative, some parts such as the engine, for example , had to
comply with these SSR standards by default. It was the first time that quality
parameters were defined for all the components of the vehicles . Sivanesan was clear
that their customers should feel the superiority of their products in terms of reliability
as well as aesthetic appeal. The quality specifications were therefore developed with
the customer in mind. A penalty system was introduced for non-compliance . The
 suppliers reacted with sharp resistance. In fact, the AL sourcing team also strongly
objected to the imposition of penalty. Most of their fears arose out of the uncertainty
about how these changes would be enforced . "We have to be extremely cautious;
this is a sure way to jeopardize our long-standing relations with the suppliers! " they
said.
The Design Engineers were unhappy too. They were not pleased with the suggestion that
they should go to the field to understand the issues related to design failures. "Our work is
on the drawing board! Moreover, a 1-2% failure rate could be due to any reason, how could
poor reliability be attributed to design issues alone! " It was difficult to argue with them . They
were heard complaining about the implementation of quality parameters in design.
Sivanesan believed in a more hands-on approach to problems. "If there is a reported 4%
spring failure rate, one needs to know under what circumstances this failure has occurred.
Was it the result of an overload or s; m~thing else? Even a design engineer needs to have
his/her ears on the road. That is how we understand the problems in design. That is how we
improve our quality," he tried to convince them . The engineers were used to their
comfortable corporate offices; they had not envisioned a job on the field for themselves .
They remained unconvinced.
Many times, Sivanesan had to make the tough decision to stop the production line if the
production department did not adhere to the quality parameters. This action led to stiff
opposition. These were the times when the Managing Director stepped in and provided
unquestioned support to Sivanesan. The office of the MD sent out an official communication
across the organization that the quality department would be authorized to stop the
production line if required, and everyone should provide their cooperation if such a situation
arises.
Time and again, Sivanesan found himself getting entangled in the blame game being
played by the various parties. The quality team was also under severe pressure for time and
cost. He had to defend the impact made by the new quality division continually and weigh it
against the cost it incurred. On the business front, new players had entered the industry.
Issues related to the reliability of vehicles were now more significant for the profit margins of
AL than ever before. The Managing Director wanted an aggressive strategy to beat this
situation. The Board was keenly looking out for results . In 2011, the internal stakeholders
were unable to see the bigger picture and remained staunchly opposed to Sivanesan's
strategy!
Sivanesan felt overwhelmed. How could he ensure that all the functions of the organization
start looking at quality as their priority? He was not someone who would give up easily. He
had to think of something!

.,1.0.6
ff:r~l ~l,E;cunr,JAL I
I
 Changing the quality mindset at Ashok Leyland (8)
The only way forward for Sivanesan was to stick to his plan and break through the
resistance . However, he wondered what he could do to break the resistance? He
articulates his belief system by saying 'that "the quality department only acts as a
catalyst. If there is a fault in the design, the quality department cannot change it
directly; the quality team needs to make the design engineers do this work. So, as the
head of quality, one needs everyone's cooperation. Using authority to bring about this
change would be inappropriate if the aim is to bring about a change in the culture and
mindset."

Sivanesan knew that culture change usually takes a top-down approach. The active
collaboration of the top management was crucial in communicating the urgency of
changing quality-related practices. It was not difficult to get Dasari on board. His support
for Sivanesan till now was constant yet quiet. Both Dasari and Sivanesan realized that more
active participation by the MD was required. Therefore, Sivanesan and Vinod Dasari
embarked on a journey to bring about this change together.
A quality board was constituted comprising five members, including Sivanesan and
Dasari. The goal of the Board was designed in a staggered fashion. In the initial years
(2011-2013), their goal was to focus on improving the hygiene factors in quality
practices at AL. Functional excellence had to be slowly brought about by the year
2014 (2011-2014). The final goal was to be able to implement total quality
management (TOM) practices by 2016. The quality board met every 15days for a
review of the quality processes.

Change initiatives for hygiene improvement (2011-2013)

The priority for Sivanesan now was to ensure that AL moves out of the red zone in the
reliability and quality aspects of their vehicles and matches the global standards. A
senior management team visited many customer sites. Metrics impacting the
customer were defined for all departments such as the design, central audit and
production departments within the organization. More rigorous quality metrics were
also laid down for the suppliers.
Supplier engagement. The quality team identified 805 "critical to quality" (CTQ) processes
affecting reliability. Of these, 491 were supplier CTQ processes, and 314 were in-house
CTQ processes. A core group was formed to tighten the inspection standards, quality and
aesthetics of the automobile parts. A two-by-two matrix was designed to assess the quality
levels of the various suppliers. For the top 100 suppliers falling in the most inferior quality
quadrant, various "quality gates" were introduced. The quality gates required suppliers to
appoint in-house dedicated and trained quality inspectors, to inspect the quality of the
products daily. This inspection was done using a specially designed quality checklist. The
in-house quality inspector would also maintain a log of the rejections and the corrective
action taken to reduce rejections. All these practices led to an 88% reduction in the parts
per million (PPM) defects in these 100 suppliers (see Exhibit 3).
Poka-Yoke (a Japanese lean manufacturing method that identifies and corrects quality
defects at the source) was also implemented for the critical products and processes of the
suppliers.
AL initiated a major drive to improve the fundamental processes such as welding ,
painting, heat treatment, sheet metal pressing, polymer processing and assembly
processes by developing a model of three-party engagement , namely , the supplier ,
AL and an external subject matter specialist. Clusters of suppliers were formed based
on the sim ilarity of their products. Best practices were shared within the clusters . AL
also facilitated the interaction of the suppliers with the dealers through visits to the

.S (!lf07
I rHE CAS E.,ounNAL I
 ..-..

regional sales office. These interactions helped suppliers get feedback about the
performance of their products directly from the customers. Regular monthly
performance reviews were also held with the suppliers. - 1
These multiple checkpoints for quality assessment led to a total reduction of 93% in the f
PPM (defective PPM pieces) in the parts supplied to the organization between 2011 and
2015. I

In-house process improvement. The processes of the six manufacturing plants were
t l
revamped through machine reconditioning and refurbishing to deal with the 314 in-house
CTQ issues.
Dasari and Sivanesan personally visited all the plant locations at least once every month.
Ihe intention was to interact with the employees on the ground. While interacting with the
._
shop floor workers, Dasari joined to work with them at times. These interactions touched a
chord with the workers. The message that quality was a priority was now not just words
spoken by an inaccessible individual. It was a tangible goal for them, communicated
._
through the actions of the senior leaders whom they now knew personally. The
Manufacturing head, the Product Design head, the Quality and Sourcing head all followed
suit. These interactions helped break resistance on the issue of quality and underscored its
urgency for the organization. liF.--
Quality circles had always existed in AL. Dasari breathed life into it once he joined AL
around 2005. He introduced the GEMBA initiative, which was strengthened further by
Sivanesan's arrival. The word GEMBA translates to the "place where value is created" in
Japanese. The underlying belief of GEMBA is that the solutions to the real-life problems can

.,_,_
be found only at the place where the problem arose. Therefore, on every shop floor, a
workspace was set up exclusively for the GEMBA initiative. Whenever the workers faced
any problem at work, they could assemble here and discuss a solution to the problem.
Through this initiative, the workers were encouraged to come up with innovative ways to
.-..
...
deal with the challenges they faced at work on a day-to-day basis. The innovations
implemented by the workers on that shop floor were displayed in the GEMBA workspace.
Useful innovations were rewarded with a small gilt. The reward encouraged more and more
people to participate. Workers who had never addressed an audience in their life were
using their native language to present ideas to the leadership.
Slowly this initiative was expanded. Each year, during October/November, "Quality Month"
celebrations were observed in each factory location. During this month, all the employees of
the organization received snippets of quality-related achievements by various individuals.
Many guest lectures were organized, and several innovation contests were also held. The
quality month was formally inaugurated by the MD and ended with all the employees taking 6_,;..
a pledge of quality in unison. The pledge read as follows: "As a committed member of the
Ashok Leyland Family, I hereby pledge to give my best to achieve the company's vision: "To
be in the global top 10 in the Medium & Heavy Commercial Vehicles - trucks and global top
5 in the M & HCV - buses." I believe that delighting customers is the only way to improve
the prosperity of the company. To realize this, I pledge to improve the quality of my work
continually by inculcating TOM to achieve excellence in all processes, products, and
services that I am responsible for. I commit to be a team player and improve the quality
culture across the organization."
Communication is crucial for any change. Regular communications by the Managing
Director and the Chairman always stressed on the need for quality improvement. The
new quality policy and vision of the company were displayed across the organization
(see Exhibit 4). The message was loud and clear: "Let us win with quality and not
price!"

Several policy initiatives were also introduced at the organizational level. For example,
quality became an essential indicator in the Managing Director's and Sivanesan's key
 performance indicators (see Exhibit 5). These cascaded down to the heads of all the
departments and eventually to all employees in the organization.

Change initiative for functional excellence (2011-2014)

Quality had now become a centralized function instead of being a standalone department.
CFTs became the core of the change initiative. The most significant quality-related issues
were identified. They were flagged off as banner projects indicating that they were
extremely crucial for the success of the organization. There were close to 90 banner
projects (known as the Reach 90 initiative) that were implemented in one year (2015--2016).
High-potential employees were identified from various departments and put on these
projects. Dasari personally wrote to them to communicate their selection to the banner
project. Many of the members of the Reach 90 teams eventually also became part of the
Emerging Leaders (EL) initiative at AL- a FastTrack program for high performers.
The banner projects were given complete autonomy and access to resources from all
departments across the organization. At frequent intervals, emails were sent out by the
MD's office to all employees across all locations of AL, highlighting the updates and
achievements of the banner projects.
A Reliability Expo was also started, every alternate year, at the Ennore plant where the Field
Quality Centre was located. All innovations and efforts that enhanced the reliability of the
various aggregates were showcased during the Reliability Expo, and the best innovation
won an award.
Recognizing the need to improve the overall customer experience, the quality team also
worked on improving the look and aesthetics of their vehicles. A department was specially
set up for this purpose and was known as the "Fit and Finish" department. This focus on
improving the look of the vehicles was rare in an industry that was driven by functionality.
To demonstrate the fact that quality was a holistic concept and involved the cooperation of
all stakeholders, Sivanesan and his team worked with the transportation department and
came up with the "Truck on Truck" model for the vehicles manufactured in the PNR plant.
Under this model, the new truck would be loaded onto an older truck when it had to be
transported from one place to another. This model ensured that the vehicles remained new
even after transportation. They also worked with the paint manufacturers to develop
"moisture-cured paints" to ensure the vehicles could be painted even if there was moisture
on them during winters. The moisture-cured paints led to a cost saving of about Rs 33 per
vehicle.
At times, the quality team made extra efforts to argue for a change in design aspects
logically. They would get a similar part from different competitors such as Tata Motors and
compared the difference in dimensions between the competitor's design and theirs. The
comparison was very effective in influencing design engineers.

The tagline "Aap ki Jeet, Humaari Jeet" (Your victory is our victory) was introduced under
the leadership of Vinod Dasari around this time . The underlying thought was to let all the
external and internal stakeholders of the organization know that safeguarding their interest
was the topmost priority for AL. Dasari genuinely believed that the organization would only
flourish when all its stakeholders were happy.

Change initiative for total quality management {2011 - 2017)

All these initiatives slowly brought about a change in the attitude displayed by the various
stakeholders in the organization. The manufacturing department became an active partner
in this change initiative.

(ltfflf9
f&~q~L. I
I
THE CASC
 41
There was a distinct change in the attitude of the Design Engineers as well. They had 41

•
matured through their field visits. The depth of knowledge gained through the process had
significantly increased their confidence.
The improvement in the quality metrics also reduced the time taken for the POis from about
a day to just 2 h. The dealers were directly interacting with the customers and were
C
delighted to see happy customers leave their showrooms. All these initiatives led to a fair
C
increase in the service satisfaction index rated by the customers (see Exhibit 6).
Now that there was a visible change in the mindset, Sivanesan and Dasari charted out C
a more aggressive plan. The TOM initiative was introduced to apply for the Deming
Award. The Deming Prize is the highest honor bestowed on an individual or an
organization that follows the principles of TOM. When Sivanesan decided to apply for
the Deming Prize, no commercial vehicles manufacturing organization outside Japan
'«
had won the Deming Prize.
C
The application for the award meant that the organization would be assessed on its
customer centricity, its focus on continuous process developments and level of stakeholder C
participation.
A customer care task force was created with the primary objective of improving Al's
competitive position. The task force focused on product improvements, benchmarking with C
competitors, reducing warranty costs, improving durability and reliability. This team could
participate in meetings called to discuss the design of the vehicles. It could get a sign off C
from the manufacturing department to receive feedback on-field failures. It used software
such as tableau to statistically analyze the data available on failures and share insights with
the concerned departments.
The GEMBA initiative slowly transformed into an organization-wide competition known as
'•
"Improve." The competition recognized innovations initiated by workers at the lower and
middle management level and was held in many stages. The final round of the Improve
competition was held at various Indian and international locations such as Goa, Dubai and
Colombo. The participants who qualified for this event could get their families along. The
cost was borne entirely by the organization.
For people above the middle management level, the Chairman's Award, and the Hinduja
Award for Excellence was introduced. Breakthrough work that helped improve the quality of
products was assessed by an external jury, and the best innovation received these highest
internal honors within AL.
These initiatives provided a substantial boost to the innovative spirit of the employees.
About 2,232 key performance indicators were identified for preparation of the Deming
process at the Pantnagar and Hosur 2 plants. Close to 755 executives were trained . on
Deming standards in these plants. Training on Basic and Advanced Problem-Solving ability
and Business Process Improvement was implemented with full vigor. These skills were
identified as essential for innovation. The number of employees trained in these skills
increased from 167 in 2011-2012 to more than 1,000 in 2015-2016. This number has
increased over the years (see Exhibit 7).
All these efforts collectively led to a significant change in the quality processes at AL.
Various Lean six sigma projects implemented at the PNR and Hosur 2 plants led to a cost
saving of approximately Rs 336m. A total of 240 design improvements in the various
aggregates were reported within five years of starting the change initiative. In 2015, close to
one-third of the aggregates' reliability standards were questionable; by May 2017, none of
them were in the red zone (see Exhibits 8 and 9).
Vinod Dasari realized that there were countless stories told and retold in the organization
that underscored the spirit of integrity and innovation of the AL family. AL had pioneered
 many innovations in its field, and the stories conveyed this great entrepreneurial spirit of the
organization very effectively. However, there was no formal articulation of the values
underlying these narratives. In 2017, Vinod Dasari led a branding initiative to articulate the
values of the organization. All the employees of the organization participated in it.
Organizational stories were collected. After a thorough and lengthy discussion, four core
values - passion, partnership for growth, uncompromising integrity and thoughtful
innovation, were drawn out as the overarching core values of the organization. The clear
articulation of the organizational values had a two-pronged effect. It portrayed a distinct
brand image of the organization to external stakeholders. It also provided clear guidelines
for acceptable behavior for its employees.
Sivanesan recalls many unusual instances that occurred as a byproduct of the
changes in the quality culture at AL. AL had two kinds of customers: the end-users
who bought the completed vehicles and the bodybuilders who bought the bare
chassis and customized the body as per their requirement. The service engineers
noticed that the AL chassis was being drastically altered by many bodybuilders. For
example, some would tamper with the electrical system by cutting a wire to connect
to a music system. The service engineers realized that these practices could prove
fatal to the driver because these wires were linked to the engine. They conveyed the
information to the design engineers who, in turn, suggested that AL could voluntarily
identify all these customer needs and alter the design of the vehicles to cater to
these needs. For example, if the customers needed an additional amp for
connecting the music system, extra wires with clips could be provided as an add-on
to the existing vehicle. This feature would meet the customer's needs and be safe as
well. Several meetings were also organized with these bodybuilders. They were
educated about the wires that could be altered and the ones that should not be
tampered.
This initiative was unique in two ways: first, it was completely voluntary. AL was not
accountable for the tampering of its chassis after its product was sold. Second, the different
departments worked in perfect synergy to find a solution to a problem that led to absolute
customer delight!
At this point, Sivanesan was confident that the quality mindset had changed. He
proudly recounts: "In 2011, when I joined, we had a defect rate of 7.5%, which was
alarming given that the Japanese maintain a standard of 0.2%. After all the concerted
efforts at AL, the defect rate was drastically brought down to 0.3%! In the last five
years, the market share of AL has gone up from 24% to 32%. An 8% increase in
market share is phenomenal. Usually, companies spend crores of rupees to get a 1%
or 2% increase in market share. This growth is, of course, the effect of multiple factors
like cost reduction, quality improvement, network improvement, and marketing
process improvement. Still, one can do everything else right, but if the product is not
right, then the organization will not gain the market share!" (See Exhibit 10).
In 2016, Al's Pantnagar plant (PNR) became the first truck and bus manufacturing
plant in the world and the only commercial vehicle manufacturer outside Japan to win
the prestigious Deming Prize. In 2017, its Hosur-11 plant also received the Deming
Prize.
By 2021, Vinod Dasari and his team aspire to win the Deming Prize for the entire
organization. Their challenge now was how to make this a reality! (see Exhibit 11).

Reference
Barooah. s .B . (2017) . "Autocar professionals man of the year 2016: vinod dasari, MD , ashok leyland".
Autocar Professional, 6th January, available at: www autocarpro.in/feature/2016-vinod-dasari-23132
(accessed 13 June 2019).

r'
. 1.f_1J~1
{>
I fHE CAS~J;.,~A~
 Exhibit 1. Quality report in 2011

Source: Ashok Leyland Ltd.

LI
,ui~OURNA
'
Exhibit 2. Organization structure before and after the centralization of quality
function

Mij

Source: Ashok Lcylaml Ltd.

•·11
!' ,) .
! THE CASE"OURNAL
. c• ~
 Exhibit 3. Quality gate initiative for suppliers

~ ·
100 S Initiative
ASHOK LEVLANO
Q.u.ality Gate ln~roduction

PPM contribution of worst 100 suppOers

Q Gate - Methodology
Q Gate Placement at Anal inspection area.
·oedlcated trained quality personnel for Inspection.
ltequlred Inspection facility implementation.
Acceptance Standards display
'(Master Hmple /Photograph)
·o Ga1:e Inspection check list
EV<lluation check nst.
Dail•/Monlt"oring of internal reJectlons.
Talty sheet maintenance & action against internal 2013-14
ZOU-13
rejections.

Source: Ashok Leyland Ltd

rl\4
1riiE
~ASE JOURNAL I
Exhibit 4. Changes in quality policy at AL

w
A$HOK l.~l.A..NO
QUALITY POLICY
Ashol ,eli,1nd oommi~ 11 .mm QlWll8f .ifofar.oo. by
•fingilflddefmnr,i!Up!ri«,aluelolle~~"~tionlO
~,iownbulilloli,ll>twghlho~i-4~offored 1/ylhe
~snd~jwi~l~~kiyreqol~
Tami ~it kOut~ Pef,q ,JA;hQtl.q!;,id ~•mot,cor.fi!VJ!I
knp,'U,fflll~~Nproaii!681hatoonslM91he0J.ll:~Mi!na\1811l8nl
Sy,!;m,bn-~mnllll!flltM!MllletlmlrAIMire!l!dii-lllf
!f~iwNewiglbl!dclj!tiYM.Jeti'IOlil:
i, i,; alwKrvicm ol!i!OO by

llleC«nfl!/11
i. cl~D!'O Pdonill. ar.lr.lolo lq Qu,lly
!ind Envlrl)(IIOOrll by, P1"lr8511',9 UP'Jradatioo ol thw
~dg_,B!ld!.kJl.l!lpi,t,pri;~blherl~
Ii, Sm.!esi m and duer. ii lhe
mllslln ol~ ~ y II er1te11tu1m':(:fl' e/la~
01«fnndpai1mr,f!/1t~

JiM!)2001

Source: Ashok Leyland Ltd.

j rHE CASE
•1J.6
foh~~L.{
I
 ~ T

c;-- .,. .__

I
c;;-._
~-- I

Exhibit 5. Cascading of quality-related key result area's (KRA's) from the MD's
KRAs I,
C-:- :::

c-..1.
I
I
c=:....
Improve lmpn,ve Current 15 OMJS 1. ResoluUon of a) Banner Projects/ CFT• for I
0.87->0.4 Design Issues Top 10 Issues
~~m;s!~s Proclu~ Quality
NPD % Deviation < 5
c; -
Strengthening new

"
PPM
" 6432->3000
SOMI
2. Resolution of
Supplier duality
Supplier Approval Process
CIR Closure cycle tima
86·>90 Issues b) Faster resolution of Q
Issues from tine <30 days
No of Supplier&> 1000 I

d
c) Dropping Non Performing
Suppliers Pl:'M red:ction by 25%

3. In Procesa a) Strengthening of Quardy

r•13 / .------.
dl
Quallty Gales by Introducing OM
Improvements ac:rossallQGatM

b) Improving CpK or crilicaI

N~ of ¢,tt!ca1-s~~S---,
process in engines & 1m·proved>~~ '
transmission ane.mbly.
' Jmpl~ent~.ilon' of -~

5
c) Torquelng & marking lmerovem9nts as-:Pflr .
improvements ~o•~~l>-\>t .

Source: Ashok Leyland

:t
Exhibit 6. Trend in service satisfaction rating by customers

Service Satisfaction Index

800 I
750 '
I 100 i 731

650 1
600 '
FY 16 FY 17 FY 18 FY19

j --Artual -+-Plan \

Source: Ashok L~yland Ltd.

'p , J•
f ;'t'.SE
I
JOURNAL I
I
Exhibit 7. Trend in basic and advanced problem-solving training

Building Problem Solving Culture

Executives Trained in Problem Solving (cum nos.) _________ ,.

'------ --·
I 224) :

j : BPS+BPI

- -• Jll!t-U
II
Notes: BPS: Basic Problem Solving, BPI: Business Process Improvement, APS: Advanced
Problem Solving
Source: Ashok Leyland Ltd.

Exhibit 8. Aggregate reliability changes

Aggregate Reliability RYG status

End May'17

As of 31st Mar'17

Mar'16 . 1"

Start level (Apr'lSI

Source: Ashok Leyland Ltd.

;-l.J117
\ HIE'C~'S E-.b\JRNr\l
I
l
 .._..
Exhibit 9. Percentage of changes in defects per vehicle in comparison with the
global standards
---
.....
11::;-
c...-
fc:-;=.

c,-
11-12Ql 11-U U-13 13-14

Note: *DPV: Defects per Vehicle

13-14 14-15 14-15 15-16 :t 1

Source: Ashok Leyland Ltd.

Exhibit 10. Peer comparison of AL in terms of volumes and market share

(j'k-

«.;-T

~1
~, r
Q..__I

1·
 Exhibit 11. Deming Prize roadmap for AL

TQBM Roadmap

=>=
. -~
·iil?W77J

@
'
2011
ID.\
WJ
TQM TQBM
!Total Quality In Buslnoss Management)

Source: Ashok Leyland Ltd

About the authors

Anuradha M.V. is an Associate Professor in the Organizational Behavior Area at Indian
Institute of Management, Visakhapatnam. She received the Fellow in Management (PhD)
degree from XLRI and is a postgraduate in Psychology from the University of Delhi. She has
published and presented her research work in various national and international journals
and forums. Anuradha M.V. is the corresponding author and can be contacted at:
anuradha@iimv.ac.in

Dr Rajan C.R. is a Professor of Strategy at Great Lakes Institute of Management. Prior to

getting into teaching, Dr Rajan was the President (Strategy) and ombudsman of the
Murugappa Group, a $7bn group. He serves as an Independent Director on the Boards of
PEIL and was on the board Parry Sugars India Ltd.

Ms Uma Rao Ganduri is the Vice President, Human Resources, at Ashok Leyland Ltd. A
graduate of the Tata Institute of Social Sciences (TISS), Mumbai, she has also completed
the Global Advanced Management from the Kellogg School of Management. Uma has
worked for various MNC's and Indian organizations in multiple sectors such as Petroleum,
IT, Telecom. FMCG and Manufacturing.

-3

I
THE CASE ll~