E.i.d. parry (india) limited

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Summary

E.I.D.Parry sugars founded in 1788, presently engaged in wide range of diversified products. In 1981 parry sugars became a member of Murugappa groups and parry sugars started to grow steadily. Parry sugars after making the break even it started to expand its market by manufacturing and marketing wide-range of products with comprising of sugar, co-generation, alcohol, Bio-pesticide, Neutraceuticals. The report contains an evaluation of Parry sugars performance. An interview has been conducted with Deputy Manager as a part of investigation.

Introduction

E.I.D. Parry (India) Limited, Murugappa Group, is a pioneer in the manufacture of plantation white sugar from sugarcane and it's the first company in India to breed an indigenous cane hybrid variety. Parry set up the first Sugar Factory in 1842 at Bandipalayam, now at Nellikuppam. With the course of time, three other plants at Pugalur, Pudukottai and Pettavaithallai were established to manufacture sugar. The Pudukottai plant has the rare distinction of employing women on the shop floor, which is a unique feature in the industry. Today, the integrated sugar complex, situated in Nellikuppam has a crushing capacity of 5,000 Metric Tons of cane per day (TCD). The Nellikuppam plant holds the distinction of being one of the largest sugar plants in India.

A keen interest in manufacturing environmental friendly bio-products led EID Parry to develop their own bio-products division. EID Parry Bio products division developed in-house technology for extraction of Azadirachtin from neem seeds. The facility is located at Thyagavalli produces and exports nearly 2000 kilograms of Azadirachtin every year. In a similar fashion, the bio-fertilizers unit at Nelikuppam produces eco-friendly fertilizers under the commercial name of Farm Boon and Garden Bloom (www.eidparry.com).

2.0 Problem identification

2.1 Fish bone diagram

2.2 Hard problems:

Unstable economy:

The current economical problems like recession and credit crunch have affected the cash flow and the market has been subjected to risk. There was an option to the company to cut jobs, but considering their contribution to the company the farmers and the staffs are safe as the management managed the financial issues.

High labour costs of production.

The cost of production and labour expenses for the farmers has gone ever high with an increase in the price of all raw materials and commodities. Increasing production and exports is an option under company's consideration to compensate increasing labour cost. However without the farmers the production can't be increased.

Lack of Labour

As most of the villagers going for high paid jobs there is a scarcity in labour. Also as the literacy rate is increasing in south India most of the agriculture related industries are suffering to overcome the scarcity of labour.

Elaboration of associate brands:

Headquartered in Chennai, the Rs. 15,907 crores (USD 3.14 billion) Murugappa Group is one of India's leading business conglomerates. Market leaders in diverse areas of business including Engineering, Abrasives, Finance, General Insurance, Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, Bio-products and Nutraceuticals, its 29 companies have manufacturing facilities spread across 13 states in India. Even though the Murugappa group has many companies across, the total contribution of production is 10% which is not highly established.

Cross price elasticity:

The competition is commonplace in contemporary marketplace and the price elasticity has been an issue of concern. Established companies like Rajshree sugars, coromandel, Nizam sugars and Modi group are the main competitors in the sugar production industries while Intellect Associates, Indian Sugar Exim Corporation, Dhampur Sugar Mills Limited are those which contest in exporting sugars and retailing the pesticides, fertilisers and cements in rural area.

Market share:

The Murugappa Group is today an industry leader in many fields and enjoys a high degree of credibility in the market place. The group is one of the first Indian corporate to begin the process of transformation from being a family owned business to a professionally run organisation. But the competitors had already gone a mile ahead, so it's all about using different strategy to capture the market share and customers in exporting as well as in domestic market.

Machinery:

Due to increasing labour cost and lack of labour in most of the Villages the company decided to import machines. The machines require high investment and the spare parts are not available when it is needed. However it reduces the labour force where ever it is necessary.

Output to Drop:

The sugar production estimated to drop, because of the number if farmers planting cane has been reduced. As the labour cost increased the farmers couldn't afford. Either the government should increase the price per tonne or the company should lease the land from farmers, so that the production doesn't come down to meet the demand in the market.

2.3 SOFT PROBLEMS:

Motivation:

The employees lack motivational back up with incentives, bonuses and other means of encouragement.

Delegation of powers:

There has been an internal chaos in the processes as there were constraints related to the delegation of powers. The responsibilities are not accurately sorted out with uncertainty voids in management and administration level.

Internal staff conflicts:

Co-ordination and communication between internal staff were below par and a very less number of employees were found satisfied with their respective jobs.

Service quality:

There has been a flaw in service quality as the company gave predominant consideration in reducing labour costs by using machines. The quality of goods is based on the hybrid cane which gives more sugar, which is totally based on the farmers and the company choosing which land is suitable for the cane which has direct impact on quality. E.I.D. Parry has to consider that farmers and customers in the present contemporary environment have variety of options to choose, as a result of large number of existing players in the market and to meet those demand and quality should not be compromised at any cost (Zairi, 1994).

3.0 Quality: The paradigm of performance

Quality is a concept with vague definitions and it tends to vary from one perspective to another. In earlier stage when the manufacturer tried to implement quality management, there has been a issue with lack of skills and contemporaneous production model has become an issue for keeping up the standards, so most of the organizations adopted efficient quality management tools and support to increase their standards ( Aravindan et al., 1996). However the intangible aspects of quality can be defined in several ways as the organization can follow various approaches like product-based, manufacturing, customer- based and adding value to the product (Sebastianelli and Tamimi, 2002). This can be segmented into three broad quality levels in sugar production industry (E.I.D. Parry group) i.e. customer relationship, production and labour force. The quality of customer relationship brings loyalty of individuals towards the firm and entails consistent buying patterns of the same product, which is going to be fixed assets for the company in the form continuous flow of revenue. Consumers tend to by the same brand for every next purchase. Production is the key role in every organization which decides the future of the company, to meet the required target the management should ensure that the staffs and labours are satisfied with their work and salaries which has an impact on customer satisfaction. Production and service quality is the decision perceived on the expectation in the market in relation to expectation they possess on the overall performance (Gronroos, 1990).

There are different operational processes or tools to detect and rectify quality flaws posed by an organisation like TQM, Six-sigma, Just-in-Time, M.R.P, M.I.S and several others. These differ from each other in the methodology followed and the related applications. TQM and Six-sigma are the most discussed ones among quality enhancement tools. TQM is the management of quality through team work by improving the performance by narrowing the defects to zero. It considers culture of the organisation, organisational structure and processes/systems as the defining areas of quality management. In contrast Six-sigma is more elaborate approach with a disciplined and statistical methodology to eliminate defects from all processes of an organisation and thereby improving the quality. Define, measure, analyze, improve and control are the different stages involved in the introduction of six sigma into an organisation.

4.0 Quality in Murugappa group

Murugappa group is an ISO 9001:2000 certified organisation which is a generic management system standard which highlights the quality centric approach they possess. International organisation for standardisation is a quality management system controller or an international setter of code for standards which helps to ensure the value of money people spend. It assures the level of products and services expected by the customers. Murugappa group is assured by ISO for being efficient, integrated sugar complex, safer and cleaner and hones the company's vision of ‘Go beyond' to the customer by all fair means of service. This consistent delivery of products and thereby customer satisfaction under other statutory and regulatory requirements has been met with effective application of management system. Murugappa group has swore and been working towards the continuous improvement and the assurance of conformity to customer as per the codes of ISO suggests. All requirements of ISO 9000 series has been established which includes:

  • Focused on customers
  • Using full resources to meet the quality
  • Innovation in bio-products
  • Effective management
  • Total quality management
  • Advanced machinery to reduce time consumption
  • Communicate results
  • Maintain momentum
  • Set targets for improvement
  • Modern quality technology
  • Control of monitoring and measuring device

(http://www.iso.org/iso/iso_catalogue/management_standards/iso_9000_iso_14000/more_resources_9000/9001supchain.htm)

5.0 Implementation of TQM

Total quality management is seen as a process of continuous evaluation in management strategy which includes values, various techniques and tools, the goal of TQM is to satisfy internal and external customers by using minimum resources ( Hellsten & Klefsjo, 1998). The quality is calibrated into a net value of zero; thereby eradicate waste and unnecessary costs associated with it. Introduction of a quality focussed operational process is substantial in the growth and development E.I.D. Parry. It can render competitiveness, co-operation, co-ordination to the organisation with enhanced performance and quality. The quality addressed by TQM is not the quality of service alone but total quality of the organisation that involves all people, functions, processes and activities as a whole. The sole driver of quality and performance in an organisation is ‘people' which is an imperative factor that governs TQM. The people reflect the culture of an organisation where internal customers work for satisfying external customers. TQM transforms the people which in turn result in a change of culture within the organisation. An active involvement of all work-force from managers to security staffs to housekeeping employees is vital in bringing about this effective change.

The problems that are related to quality fall into categories, problems caused by systems and problems from internal customers (Deming, 1982). A strategic choice has to be made to find solutions towards these issues. An appropriate rectification of these problems can be attained by the implementation of TQM as TQM confronts quality as in a strategic point of view (Gunasekaran et al, 1998; Crosby, 1979). This strategic outlook of TQM is referred as strategic quality management (Leonard and McAdam, 2002) which is considered as competitive weapon by Garvin (1988) who identified performance, features, reliability, Conformance, durability, serviceability, aesthetics and perceived quality as governing factors of SQM. When strategy is the choice, plans follows and proper implementation of those plans are vital in the success of TQM. Moreover, instance where TQM fails to deliver is as common as its success saga (Atkinson, 1990).

The methodology of TQM implementation varies from one organisation to another, depending upon the nature of problems confronted (Atkinson, 1990). To adapt TQM according to the need of organisation and shaping an apt strategy is pivotal. These requirements of an organisation can be tracked by monitoring the existing performance with help of tools and techniques like Statistical process control (SPC), Pareto analysis, surveys, failure mode effect analysis, flow charts, cause and effect analysis, quality costs etc. But there are some common factors that influence the implementation of TQM which are:

  • Leadership and commitment
  • Employee involvement
  • Motivation
  • External customer satisfaction
  • Internal customer co-operation (Team work)
  • Adequate training
  • Eradication and further prevention of errors
  • Continuous improvement
  • Change in culture
  • Just in time
  • Kaizen
  • Quality circles

(Gunasekaran et al, 1998; Allen Waller & Burns, 1995; Samuel, 1995)

Under the light of the outlined principles Murugappa group should implement quality improvement programme in different levels. An awareness campaign is the one to begin with in order to make the entire employees aware of the need of a change in the organisation and an overview about TQM. All staffs including managers should be aware of commitment and responsibility expected. Managers should exhibit better leadership skills by leading in the front changing internal customer attitudes, solving confusions and disputes, empowering and encouraging others and deliver appropriate guidance (Zairi, 1994). A separate brainstorming session is carried out with the managers to sort the current issues of concern and identify problems that need to be addressed. TQM tools and techniques can be used to gather authentic information. The processes with defects are thus identified and performance is measured for every single processes. The workers are divided into quality circles or TQC which is a small group working towards accomplishing higher levels of quality. Quality costs are identified to ensure the maximum quality by spending not any single penny more than that is really required. Non-conformance costs are avoided that are spent with no improvements on quality. Thus a new organisational culture has been thus set up that paves way to growth and stability. Performance has to be continuously monitored using key performance indicators for comprehending the progress of the programme. Kaizen or continuous improvement should be maintained on all levels of organisation, from activities, routine, design, functions, processes and systems to people. This is substantial in the competitive market place which helps the company to adapt itself to the diabolic environment where demand is high and the customers who are not easily satisfied. Just-in-time: JIT is started in Japan as a venture towards reducing inventory (Kanban) by avoiding waste processes and by maintaining continuous flow. Involvement of people, exploitation of all resources like equipments and other materials and eradication of waste are the mean features of just-in-time (Gupta et al, 1994). It helps to reduce lead times, hones quality and profit, decreases costs, render flexibility with zero defects.

6.0 Investigation

Interview with Prem kumar, Deputy Manager of E.I.D.Parry, Murugappa group, India

   The Deputy Manager of E.I.D.Parry, Murugappa group has been interviewed via E-mail and the conversation is as follows:
04/01/2010 07:59 PM To Prem Kumar < premkumara@parry.murugappa.com >
Subject: - Empirical research.

Sir

I am confronting some QMS regarded queries which I would like to discuss with you. I would like to know about the approach Murugappa group adopts towards the operations of providing effective and quality service in Sugar cane production industry. I reckon it would be quite clear if I frame my thoughts in the form of some questions. Hope you won't find it tedious and time consuming. Thanks a lot for your quick response and any inconvenience caused is regretted.

I am answering your questions in as precise manner as possible and would request you to take this on board and not pursue this any further.

Answers are given in blue.

Regards,

Prem kumar

Murugappa Group

Tamilnadu, India

  • What would be your choice of quality statement in the lights of Murugappa group's pursuit of performance?

I do believe that our tag line listen, “Go beyond” is relevant to the Company philosophy and Murugappa Group pursues the performance.

  • 2Do you think that an ISO accreditation is important in a competitive market place where customers are well-informed and conscious and what is your ISO status?

Any kind of accreditation is important in a competitive market place but these are merely medals. What actually matters is the products on the market and the "value" perception that the customer derives from the purchase of these products.

  • Quality operational processes like TQM, MRP, MIS and six sigma are becoming defining dictums of quality operations and thereby reflect firm's performance and profitability. Sir, what is your argument? What would be Murugappa group's option of quality operations?

Yes TQM, six sigma etc are important benchmarks to run a quality operation.

  • Why is the chose operational process an ample option for Murugappa group in contrast to others?

No comments.

  • What is your vantage on the relationship between service quality and customer relationship quality, if at all u think a rapport exists?

The rapport must exist between the service and customer relationship to keep bringing the customer back to use our product.

  • Murugappa group hosts a customer& farmers loyalty programme, is this a measure towards enhancing quality?

Yes it is a measure to enhance the customer service and quality. The loyalty program enables us to understand the customer and farmers habits and reach out to them a little bit better to service their needs and introduce new variety of hybrid cane.

  • What are the other measures Murugappa hones to improve quality?

They are many measures which are undertaken from time to time which I cannot enumerate in the mail.

  • Do you think cost-effectiveness causes friction in the pursuit of quality and performance?

In such times, it is imperative to be cost effective without comprising on quality and performance.

7.0 Analysis

The interview reveals the uncertainty of higher level administration on their focus on quality. Delivering value has been given the highest priority with respect to accreditation and other certified accomplishments. It can be argued that quality comes along with delivering value but at the time it is important to hold certified credits like that of ISO which can help the company to gain trust and loyalty of the customers. Murugappa group realises the importance of operational tools in enhancing quality and performance but takes no initiatives in implementing one. This is aimed to increase customer satisfaction there by establishing good rapport with customers and farmers (loyalty).

8.0 Conclusions

Murugappa group has several areas of constraints in the vantage of quality as a paradigm of performance. Instead the company has to focus on quality that hones cost effectiveness. This can be achieved by implementation of an operational system like TQM and Six-sigma. TQM as a strategic option is the best tool towards this vision.

However, the company's performance is satisfactory in the domestic market which is evident from laurels won in the last two years. Elaboration of associate brands and expansion of market across international boundaries demands performance excellence rather than being satisfactory.

9.0 Recommendations

  • Implementation of TQM in all levels of organisation
  • Managers should exhibit improved leadership skills
  • Murugappa group has to improve market share by more investment and other lucrative association
  • Innovation in all fields of organisation; culture, people, function, systems, designs, processes etc

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