Discernment and farsightedness is what Dr Pawan Goenka, MD, Mahindra & Mahindra, carries with him in rewriting the rules for the auto industry.
by Jayashree Kini Mendes
More than two decades ago, when Clayton Christensen introduced his theory of disruptive innovation, little did he know that one 75-year-old Indian multi-national has long been working quietly to achieve this goal without giving it a name. One of India’s oldest and most respected firms, Mahindra & Mahindra, has been at the forefront of introducing novelty in the constantly changing dynamics of the automotive industry.
M&M has a strong pool of well-trained shop floor personnel who ensure they meet demand schedules.
The man at the helm leading the change is Dr Pawan Goenka, MD, Mahindra & Mahindra (M&M), and one of India’s most followed leaders in the automotive industry. He is aware that two factors drive the automotive market: Technology and innovation. You cannot offer one without the other. The home-grown auto maker proved this with its most recent launch, Marazzo. The company left no stone unturned to launch a globally-engineered vehicle — a collaboration between Mahindra Automotive North America (MANA) and Mahindra Research Valley (MRV). The much-talked about shark-inspired design of the vehicle came from Mahindra-owned Pininfarina and its own design house. With a one-of-its-kind ladder-on-frame chassis and a front wheel drive configuration along with a transversely-mounted engine, the patented architecture offers ruggedness, which is what the company wanted to achieve.
Besides technology and innovation, Dr Goenka says the automotive business has three parts to it: manufacturing, the product itself, and distribution. “The product is out there for everyone to see. But if you look at how we have evolved in manufacturing, it is something that few people would like to know and understand. But before this comes the product planning and design. It’s here where we have progressed rapidly taking each aspect at a time and thoroughly too,” he adds.
Design in the DNA
Dr Goenka finds it irresistible not to be involved in every characteristic of vehicle development. An important dimension of success for him is the ability to visualise the customer’s need, and their willingness to pay for it. From planning a new model to its manufacturing (launching) has a gestation period of four years. He elucidates, “The right product planning and design will make the vehicle a runaway success. What we need to prognosticate is that the vehicle we are designing today will continue to hold good when the customer sees it four years into the future.”
M&M has ensured that even its older plant like the Kandivali one has been replaced with modern equipment.
However, Goenka knows there is a dire need to strengthen the company’s position in the growing UV segment. For some time, it has been working on its flagship SUV—codenamed Y400—which will be the brand’s most expensive SUV. Simultaneously, four more launches are expected from Q1 2019 to late 2019, including the KUV100 electric model showcased at the 2018 Delhi Auto Expo. Firing on all cylinders is what an automotive maker is required to do. And Goenka is not resting on his laurels.
It’s the reason why M&M has retained a team of 30 designers exclusively for the auto segment, and another 15-20 for tractors. The design centre in Kandivali plays a strong role in collaboration with others like Pininfarina.
“Their only job is to understand trends and product strategy, unearth the gaps, and interface with customers, engineers and the marketing team, to decide the product that will arrive four years down the line. We have frozen the vehicles designs for 2020 and 2021 and the product planning department is working on products to be designed in 2020 and launched in 2024,” he adds.
At a time when most auto makers prefer to play across segments, M&M has continued to sit comfortably with utility vehicles. It had launched the Verito (sedan and hatchback) early this decade, but a cool response to the product compelled the company to focus on UVs alone. “We have had some great hits like the Scorpio, XUV, and the Bolero in UVs and pick-ups, not to forget the Thar. Some others haven’t done as well as we would have liked,” Dr Goenka says with a shrug. “We could keep attributing them to numerous things, but product planning will always play a role in the success of the product and its failure,” he adds.
There are three things that can lead to failed launches: product problems, wrong pricing and wrong product. “Of course, issues with product problems and pricing takes time to realise, but not a wrong product. History has taught us that good looking products can be unsuccessful because the planning was wrong,” adds Dr Goenka with a faraway look.
The team at M&M constantly keeps itself updated on product changes and tweaks through regular customer interaction. It may come at a cost, but M&M prefers not to take chances. Getting the product right is the motto.
Besides new launches, auto makers are also expected to upgrade existing vehicles. Different body style, change in proportions, design change, better safety features, powerful and premium interiors, are details that need to be regularly looked into.
There’s no one single formula that works in product planning and design. Whether it’s offering comfort to the driver or the passenger, or lower height and therefore good dynamics or higher height and better visibility are the trade-offs often made during design. More often than not, it’s also good fortune that plays a role.
They’re behind you
The dynamics of the global a
Batch production helps the company meet demand expectations.
utomobile industry are undergoing rapid change and though India is not far behind when it comes to new technologies, there is much left to be done. Clearly, some of the whirlwind changes have been in R&D. From 53 people two decades ago, M&M now has a team of more than 2,000 in R&D alone. What was missing then was some of the modern controls and techniques; today M&M has world-class infrastructure.
Without seeking to reinvent the wheel, Dr Goenka thinks it’s quite fair to leverage on the technology readily available around the globe, as long as the company is not falling behind in terms of offering customers the best. He’s seems content that most innovations are developed by new-age companies and they are happy to offer the same to OEMs. But profound expertise in certain areas is obviously a plus point. It’s the reason M&M has set up an R&D centre in Detroit, built access to Pininfarina, an R&D centre for tractors in Japan through acquisition of Mitsubishi Agriculture, and a Mahindra Ag Tech Centre in US at Virginia Tech Corporate Research Centre (VTCRC).
Recently, M&M and Ford Motor Company signed two definitive agreements on power train and connected car solutions. Under the agreement, Mahindra Group will develop and supply a low-displacement petrol engine to Ford India for use in its present and future vehicles, starting in 2020.
Measure of excellence
But it’s manufacturing where Dr Goenka says that M&M has been most successful. With eight manufacturing plants across the country (see box), perhaps M&M is the only company that has continuously sought to improve its processes. “Reaching manufacturing supremacy has been a journey that I can say is in three phases. The first started in early 1990 and ended in 2004 where we put productivity and processes in place. This also involved TPM and quality improvement, and inventory management, which convinced us that we are a manufacturer in the true sense of the word,” he says.
M&M has installed a high speed press line from Schuler.
Phase II started soon after the first-generation Scorpio was launched in 2003. M&M knew that it needed to make manufacturing world-class. Benchmarking parameters, training, skill development, safety and sustainability was the bedrock of this phase of growth. In most recent times, M&M has preferred to focus on modernising the plants and adopted Industry 4.0, IIoT, integrating demand and supply, sprucing up back-end technology for efficient supply-chains, etc.
Considering its legacy, M&M is one of the few companies in the country that has an interesting mix of older plants like Kandivali (Mumbai) and modern ones like the Chakan (Pune) and Zaheerabad in Telangana (exclusively for tractors). Dr Goenka says that changes to the older plants did not come without hiccups. “It has been an interesting transformation. The Kandivali plant is probably the only large manufacturing unit left in Mumbai. In the last two decades, we have seen productivity triple. Quality has improved 92%, inventory has reduced from 14 days to 12 days and all this can be attributed to improved processes with little automation. This scenario is vastly different from what you will find at Chakan,” says Dr Goenka.
Dr Goenka rues the fact that while Indian manufacturing has advanced in terms of automation, we have not been able to catch up with advanced countries. On the other hand, Mahindra’s Korea plant has shown stellar results in terms of production and supply chain improvements. However, he does add that even at M&M, the company has improved exponentially as compared to a few years ago.
People for growth
M&M’s attractive remuneration is very appealing and the reason for the company’s low attrition rate.
Few Indian multi-nationals are known to put their heart and soul into cultivating its people and products and safeguarding what should most be treasured. Retaining employees through competitive and attractive remuneration packages has helped in a certain way. A few years ago, M&M also inked a deal with Automotive Skills Development Council (ASDC) to offer skill development programme in the auto sector. The deal was that ASDC would impart skill trainings by partnering with Mahindra and leverage the latter’s existing training facilities, while M&M would provide training aids, including course curriculum based on ASDC Standards and assist trainees to find suitable placements. Besides this, the company has its own training centres across several states where it trains youth to create an employable pool of skilled manpower.
Similarly, last year, the company also signed a MoU with the Maharashtra government to promote the Skill India programme in the state.
However, within the plants, M&M offers extensive training to its employees. “Immaterial of the layout of the plant, we ensure that all shop floor employees deliver equal output. The skills of the operator maybe marginally higher in Chakan due to the level of automation, but it is just that — marginal,” says Dr Goenka.
Over the past few years, the automotive industry has been riddled with recalls. More often than not, it’s a faulty component that has gone past unnoticed. Such instances erode the OEM’s brand. The supplier is little known to the outside world. While OEMs take strict action against the supplier, they have to battle the outside world to retain their image.
Every OEM has a strong checklist and follow a detailed decision metric before taking on a supplier. Large OEMs maintain a catalogue of suppliers for each component and source based on needs and demand chain planning. M&M prefers to work with three suppliers for every component. Dr Goenka says, “For a given engine we may have only one, but overall we may have three suppliers for all engines together. We have reduced the number of suppliers over the years so that they can benefit in terms of volume, quantity, and revenue. It also saves us tooling duplication, and quality checks that that need to done from our side.”
Interestingly, M&M has also changed the way they share the design with the supplier. Build to print and full service is the new way. Suppliers are given the requirement, designs, suggestions, and he does the tooling and supplies the part. This has increased the quality of components that arrive. Dr Goenka says that there is now 92% improvement in quality, and since 70% of parts come from suppliers, in simple terms it means an improvement in supplier’s quality commensurate with an increase in vehicle improvement.
For the moment, this looks nice to Dr Goenka as improvements in quality is what makes M&M stand out in the global market to the countries it exports.
Few understand the auto industry as well as Dr Pawan Goenka. The churn of disruption is one that has never seen before. Long before, he had prophesied that electric vehicles would be the future. Today, Mahindra Electric is the only company in India selling electric cars. While Dr Goenka believes that while one cannot completely eliminate the IC engine going forward, one cannot ignore
M&M has several engines for its variants.
the electric car either. He’s banking on the good sense of fleet operators to adopt them quickly. If the government quickly puts in place charging infrastructure, a lot can be achieved.
In all this, what matters most is how the brand is perceived, not just in India but also outside. Even after customer satisfaction or employee satisfaction, he is unwilling to compromise on anything if it does not reflect on the financial performance of the business.