Question

Can I get an analysis of the issues addressed in the Ashok Leyland's ISO 14001 journey case

Answer 1

Abstract: The case examines the initiatives taken by leading Indian Medium and Heavy Commercial Vehicles (M&HCV) manufacturer Ashok Leyland, to achieve the International Organisation for Standardisation (ISO) 14001 certification. The case discusses in detail the need for ISO 9000 and ISO 14000 standards, their components and benefits, and their adoption by organisations. It also explores Ashok Leyland''s efforts to transform its manufacturing practices to achieve ISO standards. The case is designed to help students: (1) understand the need and importance of global standards such as ISO 9000 and ISO 14000; (2) identify the rationale behind a company''s decision to get ISO certification; (3) examine the initiatives undertaken by Ashok Leyland to achieve ISO certification; and (4) explore the benefits reaped by Ashok Leyland through the modification of its manufacturing practices. The case is aimed at MBA/PGDBA students, and is intended to be a part of the productions and operations management curriculum. Background Note The leading Indian manufacturer of Medium and Heavy Commercial Vehicles (M&HCV) Ashok Leyland Limited (ALL) was formed in 1948 as Ashok Motors Limited (AML). The company initially assembled cars and manufactured diesel engines and vehicle chassis at its Ennore plant in the state of Tamilnadu. In 1950, AML entered into an agreement with British Leyland1 for assembling Leyland commercial vehicles through Land Rover Leyland International Holdings Limited (LRIHL). In 1954, British Leyland bought equity in AML. Subsequently AML's name was changed to Ashok Leyland Limited. From the same year, the company started using Leyland designs for its products. In 1966, ALL became the first company to introduce full air brakes in the country. The following year, it became the first company to introduce double-decker buses on Indian roads. Over the next few years, ALL went on to establish itself as a strong player in the Indian M&HCV markets. In 1980, ALL established a plant at Hosur (Tamilnadu) for manufacturing engines and assembling heavy duty and special vehicles. In 1982, another manufacturing plant was set up at Alwar (Rajasthan) for assembling a wide range of vehicles with an emphasis on passenger chassis. In 1987, a joint venture between the Hinduja Group2 and IVECO Fiat SpA3 bought a controlling interest in LRIHL and consequently in ALL as well. In 1990, ALL acquired its Hyderabad-based (Andhra Pradesh) supplier of iron castings, Ductron Castings Ltd.4 During 1993-94, ALL received the ISO 9002 and ISO 9001 certifications. The company established its second plant at Hosur in 1994 for assembling of cargo vehicles. It also established a plant at Bhandara (Maharashtra) for manufacturing components such as gearboxes and axles. ALL employed around 14,000 people at its six manufacturing plants. The company's product range included buses, trucks, cargo, engines, defense and fire fighting vehicles (under the special vehicles category). It was one of the largest suppliers for India's state transport corporations. Reportedly six out of every 10 state transport corporation buses were manufactured by ALL (Refer Exhibit I for ALL's product profile). To mitigate the negative effects of the recession in the Indian CV industry during 1997-99, ALL implemented various cost cutting measures including manufacturing practices such as Just-In-Time (JIT). To reduce inventory carrying costs, the company entered into agreements with its suppliers to get parts from them on a daily basis. It also improved its communication systems to facilitate the smooth implementation of JIT. ALL began to work on a three-month rolling plan, which was intimated to the suppliers to facilitate timely planning of production cycles. In 1998, company implemented 'Improve 98,' an exercise that involved employees in the generation of new ideas for process improvements. ALL claimed to have saved lakhs of rupees as a resulf this exercise. It also focused on its warehousing practices to reduce inventory of spares and finished products. Besides ALL, the M&HCV segment in India had only one major player, the Tata owned TELCO. The MNC Volvo was only a small player. Unlike TELCO, which diversified into the passenger car segment, ALL and Volvo focused only on the CV segment of the automobile market. In 2000, ALL's overall market share was 33%, with around 98.7% of its sales volume being accounted for by M&HCVs. Over the years, ALL became one of the largest manufacturers in India's CV segment through a number of technological innovations (Refer Exhibit II for ALL's financials). About ISO 9000 & ISO 14001 The Geneva based International organization for standardization (ISO) was formed in 1947 as a non-government organization. It is a worldwide federation of national standards bodies from around 90 countries. The body promotes the development of standardization and related activities to facilitate the international exchange of goods and services and develop intellectual, scientific, technological and economic cooperation. Standardization at an international level was needed to reduce technological barriers, which resulted due to non-harmonized standards for similar technologies worldwide. Since the 1960s, ALL had shown strong commitment towards eco-friendly manufacturing practices. It had replaced the potentially harmful shot blasting technique used for surface cleaning treatment of rough materials and heat treatment scaling at the Ennore unit with the sand blasting technique. Heavy-duty dust collector machines were placed to collect the blasting dust from the machines, and this dust was sent to other companies for making firecrackers. In 1980, ALL stopped using harmful chemicals like sodium cyanide by modifying the processes involved. It thus eliminated the production of poisonous waste... Technology ALL started a round-the-year awareness program for reducing emissions from engines by conducting pollution checks. Action programs were held at operators' meets and campaigns. It also launched a mobile emission clinic that operated on highways and at entry points to the national capital, New Delhi. This clinic carried out tests for emission levels, recommended remedies and offered tips on maintenance and care of the vehicle... Processes ALL constantly reviewed its manufacturing processes and frequently modified/replaced the existing manufacturing processes with eco-friendly processes. Some of the modifications carried out to make its processes environment friendly were: • Scrubbers collected paint particles on the paint shop floor to avoid exposure and adverse reactions. • ALL eliminated the use of certain chemical compounds at its Ennore plant after they were identified as ozone depleting substances... Effluent Treatment The effluent treatment process at ALL aimed at treating the waste generated to produce usable by-products and safe disposal of unused water. ALL established effluent treatment plants at all its manufacturing units. At the Ennore plant, around 1.28 million litres of treated water was discharged everyday. Effluent plants at Hosur I were ranked on par with the most modern plants. These plants could perform primary, secondary and tertiary treatment operations... Greening ALL's management allotted a certain percentage of land on its campuses for greening purposes. Of the total 53.41 hectares ground area of the Ennore Unit, around 10% was used for planting trees, landscaping and maintaining lawns. In order to increase awareness about housekeeping and environmental activities among employees, the 'Ezhil Migu' (full beauty) project was initiated at the Ennore plant. A contest was conducted every year to reward the best workplace environment. Around 15 zones were identified, and each zone was divided into areas. An area consisted of around 50 employees led by 2 coordinators and 4 leaders... Energy Conservation ALL undertook various measures for energy conservation. At the Ennore plant, the following energy conservation methods were adopted: • A control circuit modification was done on 265 machine tools that were used to switch on a coolant motor without switching on any other motor. This enabled energy conservation, as no other motors were required for running the coolant on holidays... Reaping the Benefits Replacement of chemical fertilizers with the manure extracted from sludge resulted in savings of Rs 1,65,000 per annum for the Ennore plant. According to company sources, on an average, around 250,000 litres of recycled water was pumped into the garden and other greening initiatives, saving the company Rs 15 million per annum. The company's energy conservation efforts resulted in reduction in energy required for heat treatment by 70%. As a result of all these initiatives, ALL reportedly saved around Rs 70 million per year. (Refer Table V for process improvements benefits)... Exhibits Exhibit I: Ashok Leyland - Product Profile Exhibit Ii: Ashok Leyland - Profit & Loss Statements Exhibit Iii: Definitions Of Key Elements Of The Iso 14000 Series