Al-Ghazi Tractors Ltd. Production and Operations Management


Al-Ghazi Tractors Ltd. is located in rated among the Top Companies of Pakistan Dera Ghazi Khan, has been The market leader of tractors in Pakistan Al-Ghazi consecutively for the years 1994, 1995 and 1996 by the Karachi Stock Exchange. Al-Ghazi Tractors was conferred the Management Excellence Award by the Management Association of Pakistan for demonstrating the best Corporate Performance in the Engineering Sector of Pakistan for the years 1995 and 1996. Al-Ghazi Tractors is the first Company in the Automobile sector of Pakistan to have achieved the highest quality award “The ISO 9002” registration that gives Al-Ghazi Tractors Ltd. the international recognition as Producers of Fiat and New Holland Tractors.

With a strong dealer-network dotting the country form Karachi to Gilgit with over 300 service workshops to attend to the 100,000 Fiat Tractor Models 480-S and 640 and newly introduced model New Holland operating in the country. Al-Ghazi Tractors today is the market leader with bookings exceeding 50% of the total tractors market in the country. The company is capable of producing 15,000 tractors on a single assembly line.

Company was incorporated in June 1983 as a limited company. The date of commencement is September first 1983. Management control at that time was in the hand of Habib Group as a result of joint venture between Pakistan Automobile Corporation (PACO), Habib Group, NDFC and Fiat of Italy.

On the expiry of seven years term of Habib Management control was taken by PACO in September 1990. The company was privatize in September 1991 taken over on December 8th 1991 by Al-Futtaim Group of Dubai (UAE) with 46% shares with the help of Fiat’s 5% stake.

LOCATION

Decision about location about operations of any organization is a most critical factor in the establishment of the organization. Because during the establishment many locations are identified and only those are selected which are more suited for the organization. For manufacturing operations, the decisions about selection of location are of much importance. Because it has a much impact on operating cost, profit and price at which products are offered to the customers. As far allocation is concerned the company’s strategy consists of selecting the location from which the potential market will be served. The location of facility involves the commitment of resources to long range plans. Locations take on even greater significance because those plans represent the basic strategy for assessing markets and may have significant impact in revenue, cost and service level to customers and clients. Technological constraints eliminate most of possible locations. Location of industry is selected on the basis of:

Ø Availability of inputs to products or raw materials on cheap prices and maximization of profits.

Ø Proximity to potential customers to be served.

Ø Proximity to required labor for performing the operations.

Ø In plant location objective is to minimize the sum of all costs, not only current but also long term costs.

LOCATION OF AL-GHAZI TRACTORS LTD.

The location of Al-Ghazi Tractors Ltd. is about 12 kilometers on main Sakhi Sarwar Road from Dera Ghazi khan in the South Punjab. Total land area covered by the plant is approximately 100 acres. AGTL select D.G.Khan because Govt. gave option to AGTL to select either D.G.Khan or Khushab. Both were tax free zone. The location had been selected in early 80’s during the period of late President Of Republic Of Pakistan Gen. Zia-ul-Haq when it was declared free industrial zone for five years.

FACTORS

Due to following factors the on was selected at the above location.

TAX FREE ZONE

To promote the back-word areas of Pakistan certain areas were announced as tax free zones in all provinces. The district of Dera Gazi Khan was one of them. Habib and group decided to establish a tractor factory in this region. A factory “Al-Ghazi Tractors Ltd.” was established by joint venture of PACO, HABIB GROUP, NDFC, and FIAT of Italy in September 1983.

FAVORABLE LABOR CLIMATE

The labor plays an important role in the selection of the labor-intensive company. So the selection of this location was also favorable labor for construction of the factory.

TAXES AND REAL ESTATE COSTS

One important factor was that the real estate’s cost was too much lower as compared to the to other areas of the country. That was the other main reason for the selection of the site.

CONSTRUCTION COST

The major cost involved in any organization is in the shape of the construction costs. That took a large amount. But at that time the labor was available at the cheaper rate. Due to which the site was selected at that place.

PROXIMITY TO MARKETS

It is located in the district Dera Ghazi Khan of province Punjab whose boundaries attaches to all four Provinces of Pakistan, especially the most fertile areas of Province Punjab and Sindh. So, it has more proximity to the market, as Dera Ghazi Khan and Multan Divisions are famous of being Cotton Belt.

AVAILABILITY OF UTILITIES

The basic utilities are easily available at the place. The facility of fax, electricity, Sui Gas and telephone was provided by Govt. at that time to encourage the partners to establish plant there. So these utilities proved much helpful to contact with the global market at every moment is a key to success. The transportation facility is easily available at factory place.

FACILITIES PROVIDED TO ATTRACT THE EMPLOYEES

AGTL has the following facilities for his staff. Which are considered to be important.

HOUSING FACILITIES

It is having housing facilities for 126 family homes and quarters for executives and workers. The population of the staff colony is approximately 500.

MOSQUE HOSPITAL AND SCHOOL FACILITIES

There is a Mosque, Hospital with ambulance and AGTL primary school for the children of staff residing in the colony. AGTL is having a school bus for pick and drop services to school and college for the children of staff studying in Dera Gazi Khan City.

UTILITY FACILITY

Clean water supply with U.V filter and private electric generator for Un-interrupted power supply for the staff because the weather in summer is much hotter here.

RECREATION CENTERS

Recreation centers for executives, workers, children and ladies with indoor games TV, Videos, Dish Antennas and other facilities are available at AGTL staff colony.

EMPLOYEES

There are 536 employees which, are working in the factory.

OFFICES

Head office Karachi

Factory D.G.Khan

Marketing area Multan

Lahore

Peshawar

Islamabad

Sukhar

PRODUCTION DEPARTMENT

Al-Ghazi Tractors Limited its own production department where they assemble the tractors in the production department they have 450 employees. The plant for assembling the tractor is installed by Italians. It is fully well equipped with the advanced technology. The material used for assembling the tractor is purchased by the head office Karachi. Then they sent to the factory. The vendors for supply of material are near about 360.

MAIN OBJECTIVES OF AGTL

· Main competitive priority of AGTL is the quality. other objectives are as follows

· To achieve the production capability so that the cultivator may get his tractor readily.

· To pay special attention to the quality of the finished products to get customer satisfaction.

· To provide prompt and effective after sales services and tactical advice together with adequate supply of spare parts.

· To contribute towards national self reliance in engineering industry.

· To promote industrialization in remote areas of the country.

· To achieve maximum localization of components.

“Inventory is a stock of anything held to meet the future demand”.

It is one the function for which management pays much of attention. Often an amount is fixed for inventory level. Keeping inventory to appropriate level is very difficult task. Because a huge part of firms capital investment is dedicated to inventory. All organizations have some type of inventory planning and control system.

Al-Ghazi Tractor is manufacturing organization, the management gives more emphasis on raw material inventory and mostly inventory is held in terms of input products and raw material. Most of the inventory is treated as dependent demand for the assembling. Here there is a separate Material Management department.

TYPES OF INVENTORY MANAGEMENT

The inventory can be divided into two broad categories.

1. Raw Material Inventory.

2. Finished Goods Inventory.

RAW MATERIAL

The company needs for the purpose of the production by the company can divide the items, which come under the raw material, into two broad categories.

a) Imported material

b) Local material

1). IMPORTED MATERIAL

The main items, which are imported by this company, are the gear cases and Engine and the critical items, which are necessary for the purpose of the production by the company. The company imports these items from Italy, Turkey.

The raw material fall under this category for

a) Model 480-S is 15%

b) Model 640 is 24%

2). LOCAL MATERIAL

AGTL is having 359 vendors from all over the Pakistan. These vendors are responsible for providing the high standards products to the AGTL. This contains the main portion of raw material. These are also categories according to the Models

a) Model 480-S 85%

b) Model 640 76%

METHODS FOR INVENTORY MANAGEMENT AT AGTL

REORDER POINT

At any time the raw material of 200 tractors is present in the factory premises. Whenever the material falls below it a fax is sent to Head Office for more raw material. The reorder point in the company is the raw material of 200 engines of the tractors.

ABC PLAN FOR INVENTORY

AGTL uses ABC, system that is the process of dividing items into three classes according to their Rs. Value and usage.

Category A:

A category includes those items that require largest money investment about 80 % of the overall investment while they account for only20 % only. It requires continuous review of the items included.

It includes the following items

1). Engine of tractor

2). Gear box of tractors

3). Imported items

Category B:

B category is the second important category includes those items that require second largest money investment about 15 % of the overall investment while they account for only 30 % only. It requires periodic review of the items included.

It includes the following items

1). Items used in transmission

2). Nozzles

3). Tires

Category C:

The last category is C category includes those items that require least money investment about 5% of the overall investment while they account for 50 % of all items. It includes items, which are prepared by local vendors.

FINISHED GOODS

There is no inventory being utilized by the company for the purpose of the finished products. The reason behind this strategy is that the tractors are sent to dealers or they may receive themselves. So the company is having the zero inventories for these items. The company is fulfilling the orders, which are coming to them.

“A forecast is the prediction of future events used for the planning purposes”.

Forecasting has an important role in scheduling all the operations of the organization. Forecasting is based on qualitative as well as quantitative methods. Management needs accurate forecasting of demands to make schedule of all operations and to cope with lead-time of different and reduce inventory levels. Accurate forecast allows schedulers to use machine capacity efficiently, reduce production times, and cut inventories.

There the four forecasting techniques are available for the purpose of the forecasting of the demand, which are as under.

1) Qualitative techniques

Ø Sales Force Estimate

Ø Executive Opinion

Ø Market Research

Ø Delphi Method

2) Quantitative techniques

Causal Techniques

Ø Regression

Ø Correlation

Time Series Method

Ø Naive Method

Ø Simple Moving Average

Ø Weighted Moving Average

Ø Exponential Smoothing Method With trend & Seasonal Effect

FORECAST AT AL-GHAZI TRACTOR LTD.

The sales data of sales of Fiat tractors of Al-Ghazi Tractors Ltd. for the last thirteen years is given below.

YEAR. PRODUCTION SALES

UNITS. UNITS.

1983-84 7683 8140

1984-85 9832 9351

1985-86 8500 8178

1986-87 7197 8101

1987-88 6604 6679

1988-89 8167 8189

1989-90 6607 6621

1990-91 5664 5734

1991-92 3327 3402

1992-93 6182 5955

1993-94 5547 5798

1994-95 6415 6420

1995-96 6617 6617

1996-97 4939 4701

From the above data we see that there is no concept of time series here. Its reason is because sales of tractors are through Agriculture Development Bank of Pakistan. Which account for 98% while only 2% sales are on cash. The farmers get loan from bank to buy a tractor because it is unable to buy it on net pay. The Bank at the end of each month initiates a order to HEAD OFFICE, which is situated in Karachi. However in peak season from JANUARY TO MARCH during harvesting season an order may be place after fifteen days. The orders are filled by the company in the during the next month of receiving the order. If the demand exceed the schedule than it is filled by overtime working.

There is no forecast method at Al-Ghazi Tractors Ltd. The advance booking period is normally six months. So, Head Office, Karachi, sends monthly production schedule to the factory according to the number of bookings. Al-Ghazi Tractors Ltd. has a strong dealers network from Karachi to Gilgit at the district level but the sale is done through ADBP. The bank prepared the draft and send to AGTL for booking. The plant is capable of providing 15,000 tractors per year. Whatever the demand is fulfilled by producing that required amount of tractors.

MATERIALS MANAGEMENT

“Materials management concerns short range decisions about supplies, inventories, production level, staffing patterns, schedules, and distribution”.

Decisions in these areas affect the whole of the organization, either directly or indirectly.

IMPORTANCE OF THE MATERIALS MANEGEMENT IN AGTL

Because Al-Ghazi is a engineering organization and assembling it depends upon the materials input to assembling. The other reason behind it is that is of short-range decisions so it requires more attention of the management.

The following are the reasons due to which the AGTL gives more importance to the materials management.

(1) Central Role of the Materials.

As the AGTL is a manufacturing organization so they need the input material for the purpose of the production of tractors from the vendors in country as need as well as the foreign countries. This material takes round about the 80% while staff takes 20% of the resources of the organization.

(2) Impact of inventory on profitability.

The other reason is the impact of inventory on the profitability of the organization. As on keeping more inventories the organization has to bear much more holding.

FUNCTIONS OF THE MATERIAL MANAGEMENT

The Sales, Vendor Development, Purchasing, Production Departments are tied collectively to perform the functions relating to the materials. The Sales Department makes the forecasts of the month, on the basis of orders paid by Agriculture Bank of Pakistan. Then these are send to the production department, then Production Manager makes the monthly production plan, then depending upon the production, they need the raw material which is asked by Sales Department to the Purchasing department, then this department makes the required purchasing plan. This plan is made for the purchase from the inside as well as from the foreign countries. The purchasing is made according to documented procedures of ISO 9002 standards discussed in ISO 9002.

RAW MATERIAL:

The company for the purpose of the production divided the items, which come under the input product and raw material, into two broad categories.

IMPORTED MATERIAL.

The main items, which are imported by this company, are relating to Engine and the critical items that are necessary for the purpose of the production by the company. The company imports these items from Italy, Turkey.

The raw material fall under this category for

c) Model 480-S is 15%

d) Model 640 is 24%

LOCAL MATERIAL:

AGTL is having 359 vendors from all over the Pakistan. These vendors are responsible for providing the high standards products to the AGTL. This contains the main portion of raw material. This is also categories according to the Models

c) Model 480-S 85%

d) Model 640 76%

Lead-time is the time required for receiving goods from the suppliers. AGTL has two types of suppliers.

1) Vendors from Lahore area have lead-time of 10 days.

2) Vendors from Karachi area have lead-time of 30 days.

Foreign suppliers

Lead-times for foreign vendors from Italy and Turkey have usually 6 months.

Quality Policy

The heart of Al-Ghazi Tractors Ltd. is quality, is the first company in the automobile industry of Pakistan to have achieved the highest Quality Award-The ISO 9002 registration which gives Al-Ghazi Tractors Ltd. the international recognition as producer of Fiat and New- Holland Tractors. Besides it Al-Ghazi was conferred the management excellence award by the Management Association of Pakistan for demonstrating the best Corporate Performance on quality in the Engineering Sector of Pakistan for the year 1995 and 1996.

In Al-Ghazi quality is a dynamic state associated with the products, services, people, processes and environment that meets or exceeds the expectations of their customers and it is a strong edge on the basis of quality against the competitors. There is well-established Quality Control department in the company that assures quality by incorporating other departments.

DEPARTMENTS

There is well-established setup to ensure quality in the company. The following departments are directly concerned with quality assurance in the company.

· Quality Control department.

· Purchasing department.

· Inspection department.

· Production department.

· Vendor development department.

There is a strong integration of all the departments to make assurance of quality at the every stage of whole the process starting from purchasing to final inspection of finished products.

Quality Control in purchasing

About 85% parts of 480 model and 75% of 640 model are obtained from local vendors while the remaining parts are imported from Italy. For local parts the Vendor department gives drawing and material specification to Vendors. Samples are obtained from them and are sent to well establish Material & metallurgical Laboratory, which is situated in the plant for calibration of, required specification of the part and strength of the material. If the results are up to mark then ordered are placed to them. Otherwise engineers of the company assist them in solving the problems relating to strength and specification of the part.

The purchased parts are inspected in the company and Karachi where company’s headquarter is situated, by taking sample among them on the following criteria.

13 out of 100 items.

32 out of 200 items.

The specification of the items, quality and the strength of material of materials used in parts are checked by material and metallurgical engineers in the laboratory. If the items are 2% of the total sample are defective than the whole lot is not accepted. Then all the items are checked and cost of checking and inspection of these items is beard by the vendors and all defective items are replaced and repaired by the vendors. If defective items are less than 2% than all defective are replaced and repaired by the vendors.

QUALITY CONTROL DURINDG WORK IN PROCESS

As the lot is accepted on the basis of sample and it may be possible that there are some defective items in the lot, due to this during the process on assembly line these defective parts are identified and than Quality Inspector or the employees working on assembly line separate them out and latter than these are returned to vendors.

The following are major activities/operations on the assembly line.

1) Gear box checking

2) Transmission

3) Coupling of Transmission with Gear box

4) Test Bench

5) Coupling of Engine with Transmission

6) First line

7) Paint shop

8) Second line

9) Final inspection

There is chained relationship among all above activities and operations. If one person fails to identify a defective item than the next one will identifies it. The Quality Inspector is on the assembly line to check the quality of the items and to identify defective parts.

FINAL INSPECTION

In the last a group of Quality Inspectors examines the finished product. They check the paint and performance of tractors on the “Roller test” to check the gear, speed and working of the tractors. After it each and every tractor is checked on the road before the delivery. For this purpose meter reading is noted before and after the test. Each and function is checked in the Road Test. After it pre delivery test is completed.

TOTAL QUALITY MANAGEMENT

“Total Quality Management is an approach to doing business that attempts to maximize the competitiveness of organization through the continual improvement of the quality of its products, services, people, processes and environment”.

In Al-Ghazi Tractors Ltd. management has been taking the following steps for Total Quality Management.

EDUCATION AND TRAINING

The management has established a training center in the premises of the company for training to the managers and workers to increase the performance at every level. This improvement in performance is directed towards satisfying such cross-functional goals as quality, schedule, and others activities. Before audit of ISO 9002 implementation in the company all the employees who are concerned with quality were given training so that all the employees could understand all the documented procedures, authorities and responsibilities of each other in the company. Some managers were sent to different seminars and workshops to learn about ISO 9002.

Now a days the companies has introduced their new product New Holland tractor in the market. For this they are giving training to new hired employees about assembling of the tractor.

TEAMWORK

In Al-Ghazi there is strong existence of teamwork. These are the managed group of the employees doing their best competitive efforts to cope with the barriers, rivalries and distrust among different departments to improve the quality of the their products. In the company the employees have

In Al-Ghazi all operation is directed satisfaction to both external or internal customers .The product produced, to the external customers is totally checked by the internal customers. The internal customers in Al-Ghazi check the quality of items, semi-finished goods during process because the work of one depends on the work that proceeds them.

OBSESSION WITH QUALITY

For obsession with quality the employees are trained from time to time to learn the philosophy “ how can we do better ” the suggestion given by the employees about quality are appreciated in the company.

SCIENTIFIC APPROACH

As the engine of the tractors are produced in Italy for Fiat and for New-Holland . From New-Holland Company which is a subsidiary of Fiat group. These both are operating 13 research and development center located in Brazil, Belgium, Canada, England, India, and Italy a united satiates. Besides it both is directly operating 19 manufacturing centers and 26 sales offices around the world? These research centers are using scientific approaches to develop and modify their existing and new products.

CONTINUAL IMPROVENENT OF SYSTEM

The management of Al-Ghazi tractors Ltd. has taken many steps to improve their system in order to continually improve the quality of products and services. Employees are trained from time to time and new technologies are adopted. Recently company has introduced hydraulic pressure engine in their 486 and 640 models.

A new product New-Holland has been introduced in the market that is symbol of new technology.

EMPLOYEE INVOLVEMENT

Employees are involved in all the matters relating to quality, purchasing and other functions of the company. It results in good decision making and more effective improvement by bringing more minds to bear the situation.

PRODUCTION PROCESS

The process design in the assembly line of tractors consists of the following operations an activities.

1. Gear Box

2. Transmission

3. Coupling of transmission with Gear-Box

4. Test Bench

5. Coupling engine with transmission

6. First line

7. Paint shop

8. Second line

9. Final inspection

GEAR-BOX

Engines and many parts of the tractors are imported from Fiat manufacturers in Italy and Turkey. During the journey from Italy to the plant many parts of gearbox get loose. On arriving in the plant, during assembling certain operations are performed by technical individuals, are discussed as under.

1- CLEANING OF CASE FROM INSIDE

Here the case of gearbox is cleaned from inside because it is much effected due to dust. The dust is removed from inside the case by cleaning it with some dust-removing agents.

2- COUNTER SHAFT NUT TIGHTING AND STAKING.

Some parts of gearbox get loosed because of journey in ship and later on trucks. Here shaft is tightened and some other items are assembled to it.

3- TRANSMISSION SHAFT COVERS TIGHTENING.

After counter shaft nut tightening next the transmission shaft cover is tightened because of above reasons.

4- SPILTER TIGHTENING AND LOCK PLATE BENING.

After transmission shaft cover tightening a splitter of weight of 9.5 kg is fixed into the gearbox by tightening bolts and locking plates are bent.

5- CHECK POSITION OF MAIN SHAFT INNER AND SEAL AFTER INSERTION OF P.T.O. SHAFT.

It is a final operation in the gearbox checking. Here it is checked and assures that our shafts are on its right place or not, further corrective actions are taken to make it ready. Then gearbox is totally sealed after insertion of P.T.O. shafts.

TRANSMISSION

The following are the operations that are performed during transmission.

6- CLEANING FROM INSIDE.

Here nozzles that are to be fitted into gearbox are cleaned. Others parts are also cleaned and oiled.

7- BEVEL PINION NUT TIGHTENING.

It is the second operation in transmission. Here the bevel pinion nut is tightened into the gear- box.

8- BEVEL PINION ROTATING TORQUE.

Bevel pinion rotating torque is cleaned and made ready for assembling into the gearbox.

9- DRIVE HEAD TIGHTENING.

Drive is a separate part, which is later adjusted to the gearbox, is tightened with some of other parts.

10- BEVEL DRIVE ROTATING.

Bevel drive rotating is cleaned and its specification is checked and is sealed by adjusting it into the gearbox.

11- BEVEL DRIVE BACKLASH.

Here the bevel drive is recoiled so that it is ready for coupling to gearbox and engine.

COUPLING OF TRANSMISSION WITH GEAR-BOX

Here gearbox and all other parts, which are prepared in transmission, are coupled and the following operations are performed.

12- GEARBOX WITH TRANSMISSION TIGHTENING.

Here gearbox is coupled with transmission by tightening that integrates them.

13-FINAL DRIVES TIGHTENING.

Drive head, which is a separate part, is tightened into coupled gearbox and transmission.

14- BREAK PEDAL ADJUSTMENT .

Here the position of break pedal is adjusted for both forward and back Tires with the engines.

TEST BENCH

Here the engine is checked to check that are its parts are at their its correct places or not, further actions are taken later on.

15-OPERATION TEST.

Here the engine is checked by engintioning it and the performance of the engines are checked to ensure its performance.

16- CLUTCH TO FLY WHEEL TIGHTENING

Here the flywheel are checked and tightened strongly with the transmission.

17- ENGINE WITH TRANSMISSION

Here the engine is combined with the transmission and bolts are strongly tightened.

18- MASTER CLUTCH PEDAL ADJUSTMENT

Here the master clutch pedal is adjusted.

19- P.T.O HAND LEVEL ADJUSTMENT

20- HYDRALIC LIFT TRANSMISSION TIGHTENING

Here hydraulic lift is fixed and tightening with transmission.

21- LEVER TO STEERING BOX TIGHTENING

Here lever of tractor is tightening with the lever to transmission.

22- FRONT AXLE SUPPORT TIGHTENING

The bolts of front axle are tightened to the transmission.

23- DRAG LINK TO STEERING ARM AND AXLE TIGHTENING

Here small and big axles are tightened to transmission.

24- CORRECT APPLICATION OF PROTECTION TO VARIOUS PARTS

Here different parts are checked and adjusted to their correct places.

25- WASHING

Here to remove dust the body of engine , the body of the engine is washed with hot mixture of hot water and chemicals.

26- PRIMER

Here the body is make prepared for paint by allowing to remained in the hot air.

27- PAINT

Here the steel body is painted in the “Paint Shop”.

SECOND LINE

28- INJECT GREASE IN ALL LUBRICANTS

Here grease and other lubricant oils are injected to engine and moving parts of the tractors like wheel.

29-ELECTRICAL SYSTEM

Here all electrical wiring system is built ion to the tractor a d a battery is adjusted in the tractor. All lighting bulbs are put bonnets relevant places.

30- ALIGNMENT OF STEEL METAL

Here the painted body of the tractor is aligned tom the engine and other body of the tractors.

31- FRONT WHEEL TIGHTENING

Here the bolts of front line are tightened and also are injected grease to it

32- REAR WHEAL TIGHTENING

Here the bolts of the back wheel are tightened, and the inner parts are oiled with Mobil Oil.

33- WHEEL ALIGNMENT

Here the front and back wheels are alighted and their bolts are tightened.

34- OIL CHECKING

Here the oil levels are checked and fill oil to it and after it the final inspection is made.

FINAL INSPECTION

The following are the operations, which are performed during final inspection of finished tractors.

1) Engine oil level checking

2) Gear Box oil level checking

3) Air cleaner oil checking

4) Water level checking

5) Weight test of Hydraulic pressure

CHECKING OF OPERATING PARTS:

6) Clutch play tightening and sound test

7) Tightening of break L/H & R/H

8) P.T.O Clutch test

9) High, low gear sound checking

10) 1-2-3-4 & reverse gear checking

11) break seal of L/H & R/H

12) Final drive tube leak

13) Differential case hole and sound checking

14) Gear box top cover leak checking

15) P.T.O top cover leak checking

16) P.T.O plate leak checking

17) P.T.O cover leak checking

18) P.T.O seal leak checking

19) Differential leak checking

20) Engine sound checking

21) Lift pump support checking

22) Automisophry support checking

23) Paint cover checking

24) Fuel engine pipe leak cover checking

25) Top hydraulic leak checking

26) High pressure pipe leak checking

27) Low pressure pipe checking

28) Steering plate leak checking

29) Steering loose/tight/free checking

30) Wheel alignment checking

31) Tie rood (rubber boot/pin) checking

32) 640 fender & distance checking

33) Sheet metal (paint/welding/crack) checking

34) Grease checking

35) Tire’s air checking

36) Self starter checking

37) Leaving box checking

ELECTRICAL LIGHTING SYSTEM CHECKING :

38) Parking lights checking

39) Parking indicators checking

40) Neutral switch checking

41) Head light low checking

42) Head light high checking

43) Beam indicators checking

44) Oil pressure checking

45) Alternate light checking

46) Alternate junctions checking

47) Fan belt (extension/loose) checking

48) Fuel gauge checking

49) Temperature gauge checking

50) Main wire clip checking

51) Back lights checking

52) Horn checking

53) Yellow lamp checking

54) Fuse box checking

55) Wire fitting checking

56) All body paint checking

57) Sheet metal checking

ISO 9000

ISO 9000 is quality system standards are highest criteria of quality in the world. Many companies in EC, Arab countries, USA and other countries are now demanding ISO 9000 registration from the suppliers around the world. Approximately 45000 companies around the world are ISO 9000 certified. ISO 9000 is effecting industry and business in every sector. Due to the importance of the ISO 9000 many companies in Pakistan have start their journey on the certification.

ISO 9000 IN AGTL

AGTL is the first company in the automobile industry of Pakistan who has achieved ISO 9000 quality award. The ISO 9000 registration which gives AL-Ghazi Tractor Limited the international recognition as producer of FIAT and New Holland Tractors.

REASONS FOR OBTAINING ISO 9000

q To maintain the world class standard of Fiat.

q To produce quality confirmed tractors.

q To determine all steps in the production so that it can identified and corrected.

q To have quality control over the purchases from the vendors to all over the Pakistan.

q To have an effective internal audit to identify mistakes and takes corrective actions.

q To be automobile leaders in Pakistan.

q To expand the market to the other nearest Asian countries.

ISO 9002 IMPLEMENTATION IN AGTL

Al-Ghazi Tractors is the first Company in the Automobile sector of Pakistan to have achieved the highest quality award “The ISO 9002” registration which gives Al-Ghazi Tractors Ltd. the international recognition as Producers of Fiat and New Holland Tractors.

The customers of every organization in response to new global competitive environment have become more quality conscious. Now due to it some of your customers might already asked you about the ISO 9000 series quality standard and your attention in this regard. Now a-days, no matter what business you are in, you will be eventually be asked, “Are you ISO certified” by your customers. Now a days in the World, just about every business, from the large multinationals to the local organizations have pursued or pursuing certification to satisfy and win the hearts of their customers.

In Pakistan about 90 companies have still certified ISO 9000 that is a positive indicator as it laying a foundation of Quality Management in the companies. Its nice to see so many companies achieving ISO 9000 registration the growth is extraordinary. Al-Ghazi Tractors Ltd. the market leader in tractors in auto industry is the pioneer in getting the highest quality standard of World ISO 9000 in Pakistan. The management and employees have taken it a real challenge to integrate the Quality Management into their business operations as an essential part of their work.

MANAGEMENT RESPONSIBILITY

OUR QUALITY POLICY:

OUR MOST ENDURING COMPETITIVE EDGE IS QUALITY OF OUR TRACTORS”

RESPONSIBILITY AND AUTHORITY:

The quality control program with in Al-Ghazi Tractors Ltd. has been established at the direction of the Senior Management due to demand of quality as a competitive edge in Auto Industry. The responsibility for development and integration of the quality plan resides within the quality control operation. The responsibility for execution of the quality program is delegated to the Production Manager. The Production Manager has delegated responsibilities to all those who are concerned with quality. Responsibilities and authorities in the company have been documented.

Quality control has the organizational freedom and authority to initiate action to prevent the occurrence of non-conformities, record problems, initiate corrective actions, verify solutions, and if necessary, stop those processes until such time as they fully comply.

Quality Control Manger oversees the quality control operations for the company. The Quality Control Manager has the responsibility for overseeing, incoming material inspection, work in-process test, final inspection, and statistical techniques in conjunction with the production departments.

Independent personnel are trained and appointed by the quality control department, perform the quality audits and can audit any area from which they are trained and appointed.

The management of Al-Ghazi has designated appropriately trained individuals, to meet all the requirements of the quality program. Quality control department has approved personnel performing the quality inspections. The employees who are concerned with quality in the company have been trained to understand and maintained the quality policy of the company.

Ø There are documented job descriptions that define authority and responsibility for quality operations.

Ø There are trained employees have been assigned to internal audit activities and audit reports are transmitted to senior management.

Ø The trained engineers and employees of Materials and Metallurgical laboratory to verify and inspect the conformance of incoming raw materials and products against the design specifications that is managed overseen by quality control department.

Ø The trained engineers and employees of Quality Control department and Production Department perform In-process inspection, final inspection, and functional testing that ensure conformance to product design specification.

The Production and Quality Control Mangers are responsible for insuring that the ISO 9002 requirements are met as well as all other customer requested requirement. It is also the function of the quality control manager to provide regular feedback on the status of the quality system and its progress. This is accomplished via reports on those measures reflective of the quality system.

The Quality Control Manger also acts the primary communications point with reference to any outside bodies affecting the quality system.

From time to time the Quality Control Manager reviews the quality system’s methodology and its application to the ISO 9002 Standard. Revisions to the manual and quality system is made as required to guarantee the quality of the product, services, and the needs of the company.

The Upper Management and staff conduct regular reviews of quality issues. These documented reviews are used for further corrective plans.

In Al-Ghazi Tractors Ltd. the quality control program is a formally documented system of planned activities established to provide evidence of compliance to the requirements of applicable regulation, codes, standards, contractual specifications, drawing, ISO 9002, as well as the company quality policy.

All of these activities are governed by procedures and written instructions supported with records of training and satisfaction compliance of products and processes. The Production Managers establishes measures to implement these requirements as defined in this manual. This include the preparation of procedures, are documentation that are used to assure compliance to the quality control program.

The quality manuals and all the supporting departmental procedures are referred to as the quality plans. The preparations of these plans are responsibility of the Production Department and Personnel Department and maintain them in conjunction with senior management review.

The management of Al-Ghazi Tractors Ltd. has established and maintained procedures for the acceptance and review of customer orders. This is the responsibility of the sales and marketing departments to ensure documented procedures and records are in place to adequately meet the requirements, maintain a documented system with appropriately maintained records to ensure the appropriate review of the customer’s orders. This ensures that the order is well understood by both parties as that we have the capability to meet the requirement. These procedures require agreement prior to the acceptance to the order. It is the responsibility of the sales organization to ensure a comprehensive documented integration of this requirement exists.

AMENDMENTS TO CONTRACTS

Each organization affected shall maintain procedures for the processes used to amend a customer requirement to ensure compliance with the request.

RECORDS

The customer orders (contracts) shall be maintained by the sales organization for the duration of the warranty period plus one-year unless otherwise requested by the customer. Documented procedures shall exist to support the retention of these records.

DOCUMENT AND DATA CONTROL

At Al-Ghazi Tractors Ltd. the management has established document and data control procedures for the collection, maintenance, and distribution, one of key requirements of ISO 9002 implementation. It is the responsibility of each department to follow the established procedures for the collection, maintenance, and distribution and control of all the documents, instruction, and data in their operations to meet the intent of the ISO 9000 standard.

In Al-Ghazi the following documents are maintained and controlled.

Ø Policy Documents

Ø Quality Manuals

Ø Operations Procedures

Ø Quality Procedures

Ø Drawing

Ø Specifications of materials

Ø Inspections & Test Criteria

Ø Process Technology

Ø Quality Plans

Ø Work Instructions

Ø Storage

Ø Handling & Maintenance Instructions

Ø Quality Audit

Ø Training Document

etc.

All departments in Al-Ghazi have established the procedures and maintenance of the documents. Documents and Instructions are established to handle and avoid whenever a lack that could adversely affect the quality of the process, product, or services provided by the operation. Every department is responsible to ensure that the documents are approved by the supervision of the authorized technical individual or concerned manager who is appointed there. In the case of conducting tests for quality assurance, the manager of quality control department is required to approve the document.

A master revision listing of the documents of the vendors is maintained and issued by the quality control department at the end of each month to Vendor Development Department for further purchasing decisions. It is the responsibility of the all departments to ensure that only current documents are available for usage. Obsolete documents must be promptly removed by the department and adequately identified as available for reference only.

DOCUMENT CHANGE

Prior to the issuance of any new procedure/instructions/documents approval is required from the Upper Management. To upgrade a document related to quality, the quality control department required to provide a new revision about it is possible and feasible or not. When making changes, it is required that the changes from the previous instructions be highlighted to ensure the proper changes are readily implemented. All of the department are informed and provided with attested copies by the concerned manager and upper management, with modified or upgraded documents for information and implementation.

PURCHASING

Providing the best quality products require best and raw material that meet certain required specifications. It is the most important function in ISO 9000 standards implementation requirement. The purchasing department plays an important role in it that makes documented policies about the purchasing. In Al-Ghazi Tractor Ltd. the purchasing department situated in head office has established and maintained a documented process with appropriate records that ensure the purchased products meet defined specifications.

The purchasing department has established documented procedures with the co-operation of quality department by which supplier are selected. Their selection incorporates at least three considerations in the following priority:

Ø Their ability to deliver material that meets the product specifications.

Ø The evaluation of the quality of the products by quality department to ensure that consistent and desired quality is met and delivery requirements.

Ø A cost competitive delivery of the material.

The purchasing department in conjunction with the quality control department determines the methodology employed to ensure the receipts of the appropriately conforming materials. The purchasing department in conjunction with the inspection of incoming materials maintains records of the supplier’s performance. The purchasing department only purchases materials from approved suppliers/vendors. It is the responsibility of the purchasing department to establish and maintain procedures for the generation of an acceptable supplier listing. The listings of approved suppliers must have the approval of the quality control department.

The purchase orders provided to the suppliers contain appropriate information about standards, specifications, and drawing testing criteria of the company packaging, delivery schedule, mode of transportation.

The purchasing department has defined the documented procedure how they will ensure that all materials introduced into the operations have undergone a review for conformity. The purchasing department looks and checks the materials by commodity grouping according to defined inspection routines for each commodity.

As the tractors are manufactured against the bookings so there is proper documentation of customer supplied products. AGTL is responsible for maintaining the products in good condition before the delivery.

In Al-Ghazi Tractors Ltd. it is the responsibility of each department to develop and maintain process that ensures their continued conformance to customer requirement and the ISO 9002 standards. This includes operating instructions for all department and employees that affect quality. Specific work instructions and procedures have been defined and documented where there is a lack that adversely affect quality, it includes.

Ø Documented work instructions / procedures that define the manner of production, installation and servicing.

Ø Use of suitable production and installation equipment.

Ø Suitable working environment.

Ø Compliance with referenced standards / codes and quality plans.

Ø Monitoring and control of suitable process and product characteristics during production.

Ø Approval of process and equipment as appropriate.

Ø There is suitable maintenance of equipment to assure continued capability.

Specific training and instructions are given to employees to understand and retain specific records for these special processes.

For employees it is recommended that they follow the assembly line instructions flow-charting method.

Al-Ghazi Tractors Ltd. has established and maintained documented procedures for inspection and testing activities associated with verification of specific requirements of the materials / products. There is a well-established computerized Material and metallurgical laboratory in the plant where operations are performed to check the strength and the appropriate specifications of items.

All procedures and activities affecting testing are overseen by quality control and their signature on the proposed procedure is required to the Hovel Card which is attached with gear box and it remain with it until the competition of the product.

At Al-Ghazi it is responsibility of inspection department to ensure that no material can be used until they can verify compliance with the specified material requirements. The inspection is carried out in Material and metallurgical laboratory by taking a sample from the lot and according to the documented inspection procedure. Quality control engineers approve the testing procedures.

The production department is responsible for work in process inspection and testing. At Al-Ghazi Tractors Ltd. the production department has generated a comprehensive inspection and test plan that ensures that all defined testing requirements are met. This testing plan is based on documented testing instructions. No materials may bypass these inspection plans or continued to be processed without successful completion of the test and inspection requirements. For this purpose many quality inspectors have been assigned on the assembly line. On assembly line the output of one is the input of other one, due to this there are less chances of bypassing a defective item.

The production department has generated a comprehensive inspection and test plan that ensures that all defined testing requirements are met. In the last a complete testing plan is formulated to ensure the quality and conformance of the final product. No product may by pass until the final inspection.

Inspection and Testing Records.

A Hovel Card moves on assembly line from beginning to the end. Each observation and testing made by any person is checked and he signed on the card. If any person commits any mistake he is the responsible for it

Control Of Inspecting, Measuring and Test

Equipment

Being a engineering work in the factory, all of work is performed through machines and equipment’s. Quality and Inspection departments in Al-Ghazi Tractors Ltd. have established and maintained documented procedures to select, control, calibrate and maintain inspection, measuring, and test equipment used to demonstrate conformance of the product or items. These devices include measurement tools, gauges, verification software, or any other “device” used to ensure conference. There is a well establish Material and metallurgical laboratory in the factory equipped with inspection, measuring instruments and is computer assisted.

The devices, mechanic is assigned to the appropriate individuals who know who to make it run. For this the employees are properly given training so they are able to handle the instruments for security purposes. History of the equipment is maintained and whenever it become out of order, it is repaired properly to avoid further errors.

The production department in conjunction with inspection department and engineers determine the measurement to be made, the accuracy required and the appropriate device that is capable of the necessary precision.

All the devices are used on a schedule based on usage or duration of time. The schedule has been scheduled in such a way that the all the operations in factory are not affected. Documented inspection procedures exit for the calibration of equipment. That includes maintenance, duration between recalls, as well as the actual testing for which the device is being used. No unauthorized person can make changes in the devices.

Inspection and Test Status:

Production department has established documented process with procedure for ensuring that all materials / products carry a test status. The incoming materials or items are checked by Inspection department, after successful checking they paste a material transfer tag designating transfer for acceptable materials, if the material is not up to the mark than a further tag is pasted on the lot for further decisions.

The work in-process inspection stations demonstrate compliance on HAVEL CARD on which each person who perform a particular activity sign about the conformance and specification of or item used. On assembly line there are many inspection stations where quality control inspectors are assigned that checks the progress and quality of process as well as material used.

Final inspection is done by a group of quality inspectors and it validates the existence of all prior inspection against the check sheet as well as the test data and sign of on acceptance. This check sheet acts as the quality records.

Control of Nonconforming Product:

Quality is the heart the factory. Quality, Inspection and purchasing departments initiate and maintain procedures with the appropriate records to ensure that non-complying materials are prevented from inadvertent use. These procedures concerning with nonconforming materials ensure the proper identification, documentation, evaluation, disposition of products.

Nonconforming Product Review and Disposition

When a material is found to be defective/nonconforming then according to established procedures are placed for appropriate disposition. Quality department initiates the authority for disposition of products. By taking a sample from the lot the inspection department checks the specification of the product. If it is up to mark than it is accepted. If not than further actions are taken thorough investigation of the defects, the result of which can fall into the following categories.

Ø Reject the lot.

Ø Check whole the lot on the expenses of suppliers.

Ø If less than 20 % lot is defective accept non-defective parts.

Ø If more than 20 % than reject the whole.

All decisions by the Inspection department results from an investigation of the material specifications. Any compromise to the material will require notification of the affected parities.

Corrective and Preventive Action:

All departments in Al-Ghazi Tractors Ltd. have established and maintained procedures for implementation of corrective and preventive actions. It is the slogan of the company that:

We always take corrective actions not just corrections”

These non-conformities are collected, analyzed, and than with root-cause philosophy they are corrected. Safety issues have received top priority and immediate allocation of resources. In all cases where a corrective or preventative action is employed, a record of the changes made shall be recorded and the record is maintained for further actions.

A corrective action results from a customer, employee of factory or a report of a product nonconformance. The sales department maintains a documented process by which the complaints are complies, analyzed, and corrective action will address not only the root cause source of the nonconformity. A report is generated to Senior Management about complaints made by the customers for the solution. Corrective actions are than taken by the management after reviewing the situations.

Preventive Actions:

A preventive action is taken on the information indicating a nonconformity within the operating process that affects quality. These information are gathered by way of internal audits, quality records, yields shortfalls, service reports, customer complaints, employee’s indication or any other areas indicating process failures. The quality department than takes action for the prevention of such failure/shortfalls in the future. The quality control department maintains documented processes by which the shortfalls are complied, analyzed and preventive action initiated and tracked. This prevention action is addressed not only the root causes but also the application of controls to ensure its effectiveness. Senior management reviews a report of the corrective and preventive actions.

Handling, Storage, Packaging, Preservation and Delivery

There is separate department for handling and storage of all the input materials has established and maintained documents procedures for the handling, storage and preservation all input products.

There are appropriate trained employees to ensure the proper and safe handling of materials. All forklift drivers are trained to operate the lift.

When an item or product come in the premises the employees put them to large case which contains their identification number and name of that commodity. There are appropriate trained employees in the handling and storage department that ensure the proper and safe handling of materials. All materials are stored to prevent deterioration as well as support easy retrieval for usage. It is the company’s policy to follow a “first in first out” inventory policy and all material storage procedure is accommodate to this policy.

Those materials that are sensitive to environment like it is very important to make safe the engine from dust (as all around the plant there is much dust) the engine is kept remained within the case in store and it is not place openly. All the material is properly handle, continually monitor, and removed if appropriate. All other materials are monitored at regular intervals to detect deterioration.

Receipts for storage and dispatch of materials from storage and handling department are issued and received by authorize persons.

The trained employees of materials handling and storage department package supporting materials which is given with the tractors. They also maintain packaging of the materials, which are to be use in the internal operations.

A big secure store area has been established in the plant in material and handling department to segregate the input and semi-finished products to ensure its preservation.

There is network of dealers of Fiat and New-Holland tractors from Karachi to Gilgit in Pakistan. About 98 % of tractors are sold through Agriculture development Bank of Pakistan and only 2 % sales are on net cash. The tractors are delivered to customers through the dealers or they nay buy from company premises.

All departments that are related with quality have established and maintained documented procedures on how they handle quality records. These procedures identity the records of all the departments for decision making about quality. Authorization has been served to individuals of quality department for issuing, receiving documents related to quality. The procedures have been establish that through light and guide about

Ø Methods for collection of quality records

Ø Indexing of quality records

Ø Methods for accessing of quality records

Ø Filing the quality records

Ø Storage of quality records

Ø Maintenance of quality records

Ø Disposition of quality records.

The purpose of the records is to demonstrate conformance to the specified requirements of the quality system.

The quality control department have established and maintained documented procedure for the planning and implementation of internal quality audits of operation and the results generated.

The quality control department has assigned duties of internal audits. Then results are use further decisions and for comparison of actual practices to the documented procedure and instructions maintained by the department. The audit is about all areas affecting quality to assess the degree of compliance and effectiveness of the quality system. These audits are conducted according to an audit plan based on the importance of the operation being audited.

Training

There is a well-established training institutes in the company. Where all employees who affect quality are given training from time to time. Training is given to the managers and workers to increase the performance at every level. This improvement in performance is directed towards satisfying such cross-functional goals as quality, schedule, and others activities. Before final audit of ISO 9002 implementation in the company all the employees who are concerned with quality were given training so that all the employees could understand all the documented procedures, authorities and responsibilities of each other in the company. Some managers were sent to different seminars and workshops to learn about ISO 9002.

Now a days the companies has introduced their new product New Holland tractor in the market. For this they are giving training to new hired employees about assembling of the tractor.

The Human Resource department has established their documented procedures.

Servicing

Al-Ghazi Tractors Ltd. has offered after sales service to its customers on both Fiat and New-Holland models. The sales department has established and maintained documented procedures and records as related to the services provided. When a customer has some problem in machinery he contacts the nearby dealer of the company which prepare a claim and send it to head-office for further actions.

Statistical Techniques

Each department in Al-Ghazi Tractors Ltd. has established and maintained documented procedures to implement and control the applications of statistical techniques in their operations. These procedures have been established in conjunction with the quality control department.

To confirm the processes and product performances and in an attempt to increase it, following statistical techniques are being used

Ø Sampling

Ø Formulas for evaluating sampling


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