The secret sauce that is powering Bajaj Auto’s manufacturing prowess

At the heart of Japanese manufacturing — known for its precision, efficiency, and relentless pursuit of improvement — are techniques like Total Productive Maintenance (TPM), a transformative approach developed by Seiichi Nakajima in the mid-1900s. This methodology first took root at Nippondenso, a key supplier to Toyota. Today, these time-tested principles have transcended borders, finding fertile ground in India at Pune-headquartered Bajaj Auto’s plants.

Bajaj Auto — the world’s fourth largest two-wheeler and three-wheeler manufacturer — has a share of over 46% of India’s total two-wheeler and three-wheeler exports. The company, which likes to call itself the world’s favourite Indian, exported approximately 1.8 million vehicles in FY23, earning export revenue of Rs 14,458 crore. Major global bike companies like Triumph and KTM have tied up with the company, thanks to its precision in manufacturing and quality assurance using TPM. KTM’ssales in India hit a record in FY24, while Triumph sold 42,000 units in the first eight months post launch.

It comes as no surprise that the company’s Chakan plant recently became the first Indian automotive OEM to receive the prestigious JIPM World-Class Award for
achieving outstanding levels of productivity, product quality, cost reduction, and company culture improvement. The Chakan plant, operational since 1998, produces the Pulsar, Avenger, and Dominar range of motorcycles, along with all KTM models, and has a manufacturing capacity of 1.2 million units per annum.

“We were not chasing this award,” says Executive Director Pradeep Shrivastava. “A lot of people say we could have got this award five years back. What TPM does
to people is more important: the improvement mindset, improvement culture, looking for losses, eliminating those losses proactively.”

The programme works by setting targets in fields like productivity, quality, cost, safety, environment, ethics etc. and judging the progress made on each of these
parameters. By adopting TPM, Bajaj has tapped into the core of Japanese manufacturing brilliance, sparking a transformation in their operations. Shrivastava says TPM led to a 10-15% reduction in raw material consumption in the last five years, along with remarkable improvements in efficiency and productivity echoing the Japanese spirit of relentless enhancement.

“The most important thing for TPM to work is the reviews that we do. Every small level is involved. We chose to keep at it because it involves everyone from the
lowest to the highest level and it’s a very investment-light way of doing things. It’s about developing a mindset,” Shrivastava adds. 

Bajaj’s TPM model has two distinct parts: one is deepening and widening, and the second is evolving. “Deepening and widening helps us continuously eliminate losses, whether real or hidden, and we keep on improving. The second one is more important. For example, there’s a management strategy for global markets, cost
control, deep differentiation etc. that puts certain places enormous challenges in front of the company’s manufacturing team.

“For global markets, what are the things that are required? Multiple models, more frequent upgrades and world class quality. We do a SWOT and set targets to
improve those weaknesses. As we enter more countries in the world, these requirements will keep changing,” he notes.

He points out that different countries need different models. “It could be the same model but because of country regulations and other things, it becomes different.
When we started TPM, we had 54 SKUs to handle. Today, that number is 541. The same production equipment has to deliver these SKUs. We said we’ll use TMP to first make our plant efficient, with continuous elimination of loss,” he says.

Agility at its core 

As the global auto industry transitions towards an uncertain future, Bajaj too is focusing on flexibility and agility. “We have to become flexible. This includes
flexibility of people, machines and systems. And we also have to be flexible in an agile way. Whatever we do, it’s the same for Bajaj, KTM and Triumph. And it’s not just us, but also the supply chain that follows it,” he points out. Bajaj Auto has a total of 226 suppliers, out of which 171 are already following TPM, in addition to over 600 dealers who have also adopted the method.

Shrivastava credits TPM with contributing 20% of Bajaj Auto’s total profits. Since 2013, TPM’s contribution to the bottom-line has more than doubled. The company earned net profit of Rs 7,708.24 crore in FY24, up 27% on the year, while revenue rose 23% to Rs 44,685 crore, a far cry from the Rs 4,917 crore registered in FY04.

One of the best examples of how TPM helped the company remain agile, was in 2017 when the Maharashtra government started issuing permits for three-wheelers
and suddenly the demand for CNG three-wheelers went up. “We had a capacity to produce 50,000 units [per month]. In three months, we — including our vendor's
capacities — increased it to 70,000. And in the process, we not only got the market, we increased our market share by 1%. We were faster, better and more effective in taking advantage of that demand,” he points out.

The agility and flexibility are also likely to come in handy when the market transitions to alternate fuel options like CNG, ethanol, etc. Shrivastava feels that
getting a stronghold on the processes will be key.

“Whether you manufacture CNG, ethanol or ICE vehicles, the processes are the same. The way you efficiently manage those processes is the same. So, how
do you differentiate yourself?” he says.

The first thing, he says, are the employees. “There should be skill, knowledge and experience and [they] must have a global outlook, and an improvement orientation that doesn’t let anything be a loss. The second part is an aligned supply chain, setting improvement targets for our vendors. We have a vendor association which helps us do that.

“We have to build the dynamic capability of this organisation, so that when demand comes, we can leverage this and quickly meet the requirement,” he points out.

Shrivastava is sure that TPM will continue to play a key role in keeping the company’s focus on cost control, global markets, deep differentiation and leaner operations.

This feature was first published in Autocar Professional's July 1, 2024 issue.