Implementation of Business Process

Reengineering in Thermax Ltd.

By: Mr. Pramod Patil

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

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

Cntd..

3

Business Process Reengineering

• “Reengineering is the fundamentalrethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed.”

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.

Why Reengineer?

• Customers– Demanding– Sophistication– Changing Needs

• Competition– Local– Global

• Change– Technology– Customer Preferences

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.

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

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

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)

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

Implementing a BPR Strategy

The C’s related toOrganization Re-engineering Projects

The 3C’s of

organization Re-

engineering:

The 4C’s of effective

teams:

- Customers

- Competition

- Change

- Commitment

- Cooperation

- Communication

- Contribution

Key Steps

Select The Process & Appoint Process Team

Understand The Current Process

Develop & Communicate Vision Of Improved Process

Identify Action Plan

Execute Plan

Selection of process

• Manufacturing process of boiler starting from order

receiving from customer to order dispatch to

customer.

Understanding of current ProcessCustomer requirement

sales dept

Engineering dept (design)

Job folder released to preparatory Shop by Engg dept

Material offer to boiler preparatory plant (Mfg. dept.)

IBR check for material identification

Plate cutting

Plate punching

Plate rolling for shell up to 2500mm length

L-seam set up of rolled shell

Tacking on shell

IBR inspection

CO2 root welding on shell

L-seam saw welding outside of shell

Back Gouging and DP test

L-seam saw welding inside of shell

Dress up punching

Proposal dept

Material dept

QC dept

QC dept

No

yes

ok

C-seam setup on shell

Tacking on shell

IBR inspection

CO2 root welding on shell

C-seam saw welding outside of shell

Back Gouging and DP test

C-seam saw welding inside of shell

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

Cntd..

IBR inspection

Flux Coated Arc Welding

Hydro. test.

Final assembling

Painting

Boiler sent to dispatch

Customer

QC dept

Process Mapping

Manufacturing capability development

Strategy development

Product development

Order fulfillment

Customer design

support

Customer communication

concept

development

manufacturingmarket

customer

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

Modified ProcessCustomer requirement

sales dept

Engineering dept (design)

Job folder released to Shop floor by Engg dept

Material offer to preparatory plant (manufacturing dept)

Plate cutting, punching

Plate rolling for shell up to 2500mm length

L-seam set up and tacking of rolled shell

IBR inspection

L-seam welding by waving mechanism

Proposal dept

Material dept

QC dept

Cntd..

Noyes

ok

C-seam setup and tacking on shell

IBR inspection

C-seam welding waving mechanism

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

Cntd..

IBR inspection

Flux Coated Arc Welding

Hydro. test.

Final assembling

Painting

Boiler sent to dispatch dept

Customer

QC dept

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.

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.

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

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

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.

The performance measurements must include indicators for:

• Delivery performance

• Resource utilization

• Flexibility

• Work in progress

• Claims from customers

• Planning and scheduling performance

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

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.

Thank you