EXTENDED ESSAY

Should A A Autotech (P) Ltd. work on quality

control parameters to serve its Customers in a
better way?
ABSTRACT
ACKNOWLEDGMENTS
TABLE OF CONTENT
 RESEARCH QUESTION

Should A A Autotech (P) Ltd. work on quality

control parameters to serve its Customers in a
better way?
 INTRODUCTION

A A Autotech (P) Ltd. is an automotive components manufacturing company,

supplying, machined, painted and assembled components to different OEMs in India
and abroad. A group company of Friction Material Major, ASK Automotive (P) Ltd.,
A A Autotech (P) Ltc. Was founded in 2010 with a vision to provide best quality
products to its esteemed customers at a very competitive cost ensuring timely
delivery1. With its commitment to innovation, competence to process improvements,
quality control and customer service company has been able to position itself as a key
resource for leading OEMs and have successfully added leading names like Hero
Honda, Honda Motorcycle, Suzuki Motorcycle, Yamaha, Bajaj Auto, Tata
Motors, Ford, TVS, Maruti to our clientele list.

AIM OF THE FIRM: The firm aims to provide the best quality product to its
valuable customer and strongly believe that quality is the attraction base for long-term
customers. It gives priority to its customers and their need; this loyalty towards the
customer makes it renowned among its clients. This consistent hard work of the
company has won many appreciation awards and Quality certifications.

PRODUCT INFORMATION2
 Pressure die casting: Die castings are among the highest volume, mass-
produced items manufactured by the metalworking industry, and they can be
found in thousands of consumer, commercial and industrial products. AA
Autotech formed with the Entry of ASK Automotive in the field of die casting
with the establishment of its die casting plant in manesar in year 2010.
 Paint shop: AA Autotech has in-house paint Shop facility that use Liquid and
Powder coating and Shot blasting techniques for Painting of aluminum and
plastic parts providing superior finish and durability.ASK has Paint Shops

1
Source: http://www.aaautotech.co.in/index.html
2
Source: http://www.aaautotech.co.in/products.html
 with Liquid and Powder coated Painting and Shot blasting facilities exist with
Painting of aluminum, sheet metal and plastic parts.
 Tool room and design centre: In AA Autotech we believe in providing end
to end solutions to our customers. We aim to achieve our development
commitments with our customers by providing related tooling solutions well
within stipulated time frame. We offer design and manufacturing service using
our extensive in-house engineering experiences in tooling manufacture and die
design for achieving optimum manufacturing and quality standards.

CURRENT QUALITY CONTROL PROCESS3

Commitment to quality encompasses not only product and process quality but also an
attitude and culture that creates and promotes and environment, innovation thrive and
flourish. At AA Autotech we follow stringent quality procedures in every step of
operation right from procuring raw material / making alloys to dispose of the final
products and maintained delivery schedules and after sales services also. Vast
experience, technical expertise, modernized equipments and enthusiasm has enabled
us to provide high quality finished product with required dimensions. 'Quality is our
prime concern to sustain and survive in the highly competitive Automotive Market'

Some of the key indicators of our quality & delivery standards are:

 The supplies are made on JIT and DOL basis.

 The delivery PPM to all our customers is ZERO
 Similarly, Quality PPM of our products is within the accepted norms of our
OEMs
 We supply to all the 2-wheeler manufacturers in India with part numbers
ranging from 2 to 25.
 The product range include Brake Shoes, Clutch Plates, Clutch Shoes, Brake
Panel Assys, various types of PDC parts ranging from 20 gms to 2.00 kgs, and
host of painting job work despite exports.

LIST OF CLIENTELE4
3
Source: http://www.aaautotech.co.in/quality.html
4
Source: http://www.aaautotech.co.in/clients.html
  Domestic customers
o Honda
o Hero
o Suzuki
o Bajaj
o Yamaha
o TVS
o Maruti
o Mahindra
o Honda
o Ford
o Denso
o Magneti Marelli

 Overseas customers
o USA
o Sri Lanka
o Dubai
o Netherlands
o Turkey
o Iran
Why Did I Choose This Topic
Indian auto component industry is one of the emerging markets in the world which is
now able to compete with international competitors. Market thinkers have projected
that India will soon going to have its own auto component hub. Since the competition
has become global; domestic suppliers need to work hard towards quality and cost i.e.
best quality at competitive rate with timely delivery.
As discussed in earlier section, AAA supplies its product to leading OEMs (Original
Equipment Manufacturers) which means quality of final product is dependent on
intermediate goods supplied by AAA. Therefore, AAA needs to enhance its Quality in
order to improve its own profitability and stand by the competitive environment. AA
knows it very well that it is a part of auto component industry where the bargaining
power is in the hand of buyer that is OEMs; OEMs are the one who decide about the
quality and price. Each and every component is gone through inspection and defective
components are subject to get replaced by standard product.
 Procedure
I visited the corporate office and plant of the company and interview its Operation
Head (Mr. S. K. Awasthi, and Finance Head (Mr. Naresh Sharma), to understand the
company, its customers, their needs and company’s strategy to meet the customer
expectations. I collected the data in the area of quality to understand the gaps, causes
of gaps, measurements taken by company, effectiveness monitoring system and
standardization of new process. I collected data about machine-wise, component wise
productivity, quality and delivery. Company is using ERP 5 (Enterprise Resource
Planning) to capture all the data and have dedicated team to analyze the same.

Secondly, I conducted my research with the help of financial data of the company like
balance sheet and profit and loss account6. Secondary data was collected from the
sources like journals, articles, company website, books and magazines etc. online
sources and Internet has been used to collect articles and facts for my analysis.

Data validity declaration, the data provided is only partially valid, the company was
not able to provide all Financial Data due to high confidentiality, because of which it
was difficult for me to do the analysis.

5
ERP - Enterprise resource planning (ERP) is business management software that
allows an organization to use a system of integrated applications to manage the
business.
6
See Sales figure and Balance Sheet of the company
 Main Results and Findings

Following results were observed and documented7:-

A. Quality: - Company has set up QA (Quality Assurance) Department for IQC
(Incoming Quality control), in process Quality and Final Inspection.
a. Incoming Quality: - Company was having a problem of poor quality
material from its suppliers in some cases. To improve incoming
quality, company audited the facilities of its supplier and established
quality checking and certification at their end. Now the quality of
incoming material is improved and direct on line in the case of Major
Raw Material. It saved cost of poor quality.
b. In Process Quality: - The concern of the company was production of
poor quality and its delayed detection. Company introduced operator
training to produce good quality and on-line inspection so that the
defective items are unidentified at the initial stage to avoid any further
value addition of these products. All the rejections are analysed
through Product-wise and Defect-wise Pareto Analysis. Root causes
are analised and correction measures are defined with implementation
timeline with specific responsibility. Now with the help of these steps,
company is able to achieve rejection level of 7% from the 8% earlier.
The next target of the company is 5%.
c. Final Inspection: - Company is supplying many products duly painted
to its customers in a state of the art paint shop. But being A class
products, these are to be checked for aesthetic look. As it is a very
subjective matter and hence there were high rejections. To come out of
it, company categorised the products in A class, B class and C class
components. In a class items, first of all a Limit Sample was got
freezed by the Customer to compare the finished goods with the Limit
Sample. Further inspection Work Instructions were consistent with the
help of customers.
7
Refer Interview Transcript
 B. Cost: No OEM pays for the in-efficiencies of the supplier. There are some
wastages and in-efficiencies in the system which increases the cost of
production. Company identified the areas and acted up on it. Following were
the key areas were problem was identified and resolved: -
a. Weight of component: - Some components were found to have excess
material, which was not required for the functioning of the component
in the vehicle. Like there was a design defect in one of the brake
panels.
Now the R&D department of the company is working on all the
components for this type of design change possibility without
hampering the use-ability of the product.

Spare Part Industry in India8

Over the years, Indian Auto Spare Parts sector has witnessed a slow yet steady
growth. It has emerged as the preferred manufacturing hub for auto components due
to various reasons. Some of them are:

 The long-established manufacturing industry of India

 Low-priced workforce and easy availability of raw materials making India
cost competitive
 Operational units of leading global auto component makers like Meritor,
Visteon, Bosch, etc in India
 Both auto makers and auto components makers have established their
International Purchasing Offices (IPOs) in the nation
 World class quality auto spare components are manufactured in the country

8
Source: http://automobiles.mapsofindia.com/automobile-components-and-
spares/auto-spares.html
  Research and development activities are conducted in India for global firms
like Johnson Controls, Daimler Chrysler, Suzuki, General Motors, etc.

Testing and Quality to be maintained by spare

part manufacturer9
Testing:

 Lash Measurement Test

 Stub Shaft
 Endurance Testing
 Fatigue Testing
 Side to side end play
 Torque to rotate
 Slip force Test
 Pull Out Force
 Torque Testing at 3000In-lbs

Measurement requirement:

 Dimensional Lab
o Co-ordinate Measuring machine (CMM) Accurate make
o Roundness Tester ( Mitutoyo make )
o Surface finish tester(Taylor Hobbson make)
o Profile projector
o Floating Carriage Diameter Measuring Machine
o Air Gauges
o Linear Height
o Height Gauges
o Granite Surface Plate
o Slip Gauge Box
o Height master
 Metallurgical Lab
o Hardness Tester BHN & Rockwell
o Salt Spray Chamber
o Metallurgical Microscope
o Eddy Current Tester
o Magnaflux
o Carbon Sulpher Apparatus
o Spring Tester

9
Source: http://dir.indiamart.com/impcat/automotive-spare-parts.html
 ANALYSIS

SWOT Analysis
To achieve the desired results company did its SWOT Analysis in the following
manner:
Sr Strengths Sr. Weaknesses
.
1. Company has esteemed OEM 1. The Pressure Die Casting industry
Customers.10 has low margin and high fixed costs.
2. Company has all the latest 2. High Capital Expenditure Industry11.
technology machinery. Mostly
imported from reputed sources.
3. Company has its in-house Design 3. High Labour turnover.12
Centre and Tool Room to give it an
edge over the competition.
4. Company is part of the well reputed 4. Too many operations on the
Group, ASK Automotive13. components increase the risk of
rejections.
5. Company has an expert team in all 5. No price bargaining power against
areas of its functioning. the OEMs.
Sr Opportunities Sr. Threats
.
1. Lot of new OEMs coming to India 1. Increase in input cost by external
for sourcing of auto components. economic factors like exchange rate
and inflation.
2. Being already having good relations 2. Volatility in demand in auto
with the OEMs, there is high industry.
opportunity for addition of new
components.

10
Interview number 1
11
http://cci.gov.in/images/media/ResearchReports/AnujInt200711.pdf
12
Interview question number 3
13
http://www.askbrake.com/
 3. Lot of scope for automation is there 3. High Technology obsolescence in
in the industry to increase the industry.
productivity.
4. Company can diversify in non- 4. Under cutting by competition.
automotive business with the same
facilities. Like home-appliances,
aerospace etc.
5. Horizontal application of 5. Very high cost of expansion.
improvements in one component to
other components is very quick.

Results and impacts of SWOT analysis:

As the weakness of the company are having low weight against the strengths of the
company. Quality improvement can easily overcome the weakness. Further to fight
back the threats and to grab the opportunities improvement in quality is a key.

Ratio Analysis
Under ratio analysis, various profit ratios has been studied to find out the financial
position of the company. The following data is used for the purpose.

Extracted Data From Financial Report14

Year
Gross Profit
Net Profit
Sales
Current Assets
Current Liabilities
Other Income

14