MATERIALS MANAGEMENT

PRESENTED BY-HARSHDEEP SINGH [2010C03]PRIYANKA HARJANI [2010C10]MANOJ JAJU [2010C13]KUNAL SINGH [2010C43]

Maruti’ s Materials Management Strategy

Strategic Materials Management

Tactical Materials Management

Operational Materials Management

Recommendation

AGENDA

• Local Vendor Development (Company’s domestic suppliers, around 86

percent of them, are located within a 100-km)

• 'Materials Division’ was rechristened 'Supply Chain Division’

• New Vendor Development

• Move to CKD from CBU

• Pairing its sourcing agreements with its suppliers

• Focus on cost reduction from vendors instead of price increase (3-5 %/ year)

• Consolidation of Suppliers

• Global suppliers are prepared

• Indigenisation of components

STRATEGIC MATERIALS MANAGEMENT

• Localization of component – Reduction in material

cost

• Local Vendors – Reduction in transportation cost

and lead time.

• Supply Chain Division - Worked jointly with

suppliers to lower the cost of components (5%).

• New Vendor Development – Control over cost,

quality & delivery.

• Pairing sourcing agreements – Sharing default loss

STRATEGIC MATERIALS MANAGEMENT: MERITS

• Relations strained with Suzuki Motor Corporation

due to the issue of localisation of gear boxes

• Vendor Consolidation – Reduction on bargaining

power

• Pairing sourcing agreements – Less room for

taking independent decisions.

STRATEGIC MATERIALS MANAGEMENT: DEMERITS

• Turning entrepreneurs into vendors, facilitating loans,

licenses, technical know-how

• Change of Material (plastic instead of a metal fuel tank

or light tinting of glass to keep the car cool)

• 'Maruti Production System' based on lean manufacturing

programme

• 'Shikhar' - ‘Poor' vendors were identified and even

eliminated.

• Raising the bar - 500 defective parts in a million, would

not make the grade

TACTICAL MATERIALS MANAGEMENT

• Smaller suppliers absorbed in Tier II vendor list

• ‘Full systems supply' from Tier I vendors.

• A shorter pipeline and effective logistical control

• Exports from Thailand, Germany increased due to

tax benefits(40%exmeption)

• Vendors connected to E-Nagare system

• Single main warehouse for components after sales

TACTICAL MATERIALS MANAGEMENT (CONT.)

• Turning entrepreneurs into vendors – Innovation & ideas

for efficient operations

• Change of Material - Reduction of cost

• Shorter pipeline - Relocation of vendors within a 100 km

radius of its plants.

• Weeding out of poor vendors - Improved efficiency and

processes

• E-nagare system - Better connectivity and planning for

vendors.

• Single main warehouse – Reduction in warehousing costs.

TACTICAL MATERIALS MANAGEMENT: MERITS

• New Vendor development - Higher Investment

requirement

• Single main warehouse - Increases transportation

costs the costs due to CST.

• Elimination of poor vendors - Develop sense of

insecurity and dissatisfaction among smaller

vendors

TACTICAL MATERIALS MANAGEMENT: DEMERITS

• Production plans from the vendor to Maruti's

shopfloor (Two hour cycle from 30 days in the past)

• Components to arrive in mobile trolleys and line up

outside factory sheds directly feeding multitasked

assembly lines. (e.g Multi-coloured bumpers)

• Just-in-time basis and Directly online

• An online system for replenishment of inventory on

an Electronic Card System

• Trucks and not Rail for transportation

OPERATIONAL MATERIALS MANAGEMENT

OPERATIONAL MATERIALS MANAGEMENT (CONT.)

• Company responsible for shipments to its own

factory (Shipping, Port Clearance, Customs Clearance and Inland

transportation.)

• Yearly, Half-yearly, Quarterly, Monthly and Daily

plans to suppliers

• Electronic Card System (Online system for

replenishment of inventory)

• The vendors keep up an unending supply of critical

components like body panels, bumpers etc.

• Systematic production plan for every stage - Reducing the cycle

time.

• Automation Incorporation (mobile trolleys) - make the operations

smooth.

• Just-In-Time - Efficient production Schedules and less working

capital requirement.

• Transportation by road - Better connectivity covering 202 cities.

• An online system - Right track of the inventory, minimising

errors and accurate forecast.

• Handling shipments to own factory - Better control and less

transportation cost.

OPERATIONAL MATERIALS MANAGEMENT: MERITS

• Road Transport - Increases the cost.

• JIT system – Highly efficient management

required and responsiveness of the process

decreases.

• Handling shipment to the factory – Overhead for

supply chain division.

OPERATIONAL MATERIALS MANAGEMENT: DEMERITS

RECOMMENDATIONS

• Knowledge transfer to be done with Suppliers.

• Multiple warehouses for low cost item to reduce

transportation cost.

• Elimination of poor vendors – a detailed parameters to

be specified to justify the decision

• Implementation of CPFR

• Collaborate with its vendors on Capacity & Investment

issues.

• Early supplier involvement in new product introduction

• Contractual Agreement with the suppliers with “Right

of first refusal” Clause

• Improve relations with big LSP players

THANK YOU