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Transcript of Maruti Suzuki Change Over Mgt
8/3/2019 Maruti Suzuki Change Over Mgt
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AMITY UNIVERSITY
UTTAR PRADESH
ASSIGNMENT ON- “CHANGEOVER MANAGEMENT IN
MARUTI SUZUKI INDIA LTD.”.
Submitted to- Submitted by-
Mr. Pranshu Chomplay Rafiul Hassan Khan
Faculty, PL (OTM), ASH 1st
Semester, MBA-HM
Amity University, Uttar Pradesh. Enrolment no- A2701411002
Amity University, Uttar Pradesh.
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Acknowledgement
I have taken efforts in this project. However, it would not have been
possible without the kind support and help of many individuals andorganizations. I would like to extend my sincere thanks to all of them.
I am highly indebted to Mr. Pranshu Chomplay sir his guidance and
constant supervision as well as for providing necessary information
regarding the project & also for his support in completing the project.
My thanks and appreciations also go to my colleague in developing the
project and people who have willingly helped me out with their abilities.
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Maruti Suzuki plant in Manesar
Maruti Suzuki is India and Nepal's number one leading automobile manufacturer
and the market leader in the car segment, both in terms of volume of vehicles
sold and revenue earned. Until recently, 18.28% of the company was owned by
the Indian government, and 54.2% by Suzuki of Japan. The BJP-led government
held an initial public offering of 25% of the company in June 2003. As of 10 May
2007, the government of India sold its complete share to Indian financial
institutions and no longer has any stake in Maruti Udyog.
Maruti Udyog Limited (MUL) was established in February 1981, though the actual
production commenced in 1983 with the Maruti 800, based on theSuzuki Alto kei
car which at the time was the only modern car available in India, its only
competitors- the Hindustan Ambassador and Premier Padmini were both around
25 years out of date at that point. Through 2004, Maruti Suzuki has produced
over 5 Million vehicles. Maruti Suzukis are sold in India and various several other
countries, depending upon export orders. Models similar to Maruti Suzukis (but
not manufactured by Maruti Udyog) are sold by Suzuki Motor Corporation and
manufactured in Pakistan and other South Asian countries.
The company exports more than 50,000 cars annually and has an extremely large
domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004,
was the India's largest selling compact car ever since it was launched in 1983.
More than a million units of this car have been sold worldwide so far. Currently,
Maruti Suzuki Alto tops the sales charts.[citation needed ]
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Due to the large number of Maruti 800s sold in the Indian market, the term
"Maruti" is commonly used to refer to this compact car model. Its manufacturing
facilities are located at two facilities Gurgaon and Manesar south of Delhi. Maruti
Suzuki’s Gurgaon facility has an installed capacity of 350,000 units per annum.
The Manesar facilities, launched in February 2007 comprise a vehicle assemblyplant with a capacity of 100,000 units per year and a Diesel Engine plant with an
annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon
facilities have a combined capability to produce over 700,000 units annually.
More than half the cars sold in India are Maruti Suzuki cars. The company is a
subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of
Maruti Suzuki. The rest is owned by public and financial institutions. It is listed on
the Bombay Stock Exchange and National Stock Exchange in India.
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported.In all, over six million Maruti Suzuki cars are on Indian roads since the first car was
rolled out on 14 December 1983. Maruti Suzuki offers 14 models, Maruti 800,
Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Gypsy,
Grand Vitara, Kizashi. Swift, Swift DZire, A-star and SX4 are manufactured in
Manesar, Grand Vitara and Kizashi are imported from Japan as completely built
units(CBU), remaining all models are manufactured in Maruti Suzuki's Gurgaon
Plant.Suzuki Motor Corporation, the parent company, is a global leader in mini
and compact cars for three decades. Suzuki’s technical superiority lies in its ability
to pack power and performance into a compact, lightweight engine that is cleanand fuel efficient. Nearly 75,000 people are employed directly by Maruti Suzuki
and its partners. It has been rated first in customer satisfaction among all car
makers in India from 1999 to 2009 by J D Power Asia Pacific.
Partner for the joint venture
Sanjay Gandhi owned the Maruti Technical Services Limited, which ran into
trouble and was liquidated. After the death of Sanjay Gandhi, the Indira Gandhi
government assigned a delegation of Indian technocrats to hunt for a collaboratorfor the project. Initial rounds of discussion were held with the giants of the
automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor
Corporation was at that time a small player in the four wheeler automobile sector
and had major share in the two wheeler segment. Suzuki's bid was considered
negligible.While the major companies were personally represented in the initial
rounds of discussion, Osamu Suzuki, Chairman and CEO of the company ensured
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that he was present in all the rounds of discussion. Osamu in an article writes that
it subtly massaged their (Indian delegation's) egos and also convinced them about
the sincerity of Suzuki's bid. Suzuki in return received a lot of help from the
government in such matters as import clearances for manufacturing equipment
(against the wishes of the Indian machine tool industry then and its ownsocialistic ideology), land purchase at government prices for setting up the factory
Gurgaon and reduced or removal of excise tariffs. This ensured that Suzuki
conscientiously nursed Maruti Suzuki through its infancy to become one of its
flagship ventures.
PRODUCTION MILESTONES
1st vehicle produced, December 1983
1,00,000 vehicles produced by August, 1986
5,00,000 vehicles produced by June, 1990
10,00,000 vehicles produced by March, 1994
15,00,000 vehicles produced by April, 1996
20,00,000 vehicles produced by October, 1997
25,00,000 vehicles produced by March, 1999
30,00,000 vehicles produced by June, 2000
35,00,000 vehicles produced by December 2001
40,00,000 vehicles produced by April, 2003
45,00,000 vehicles produced by April, 2004
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CHANGEOVER MANAGEMENT MARUTI SUZUKI INDIA LIMITED
MUL to change gear on performance appraisal -- 100% link
between pay, productivity
RENEWING its efforts at cutting costs and improving productivity, MarutiUdyog Ltd (MUL) has drawn up a new human resources policy, which for the
first time, entirely links performance to pay packets for all its executives and
managers.
MUL has traditionally had a performance-based component of about 30 per cent
in its compensation package for its executives. But now it has gone the whole hog
and decided that in addition to the hike in individual perquisites,
increments to even the basic salary will now depend on the employees'
performance during the year.
The new performance appraisal and compensation system is likely to affect
over 1,000 employees -- executives and senior and middle level managers.
Company officials said the changeover to a completely performance-based
compensation system has been under discussion amongst MUL's senior
management and directors for quite sometime now.
So, the new appraisal process has not come as a surprise for most of the
employees and has been accepted by them, the official said. ``Over the pastweek, the principle underlying the new system has been communicated at
length throughout the company and feedback has been obtained,'' the
official said.
In the run-up to the new remuneration system, the company has also
developed a new performance measurement and development method along
with the noted consultant, Mr. M.B. Athreya. The performance measurement
process will complement the new remuneration s ystem.
MUL sources said rather than appraise employees through confidential
reports, the new performance measurement system involves an interactive
process of goal setting, review and counselling by managers throughout the
year. It incorporates qualitative aspects, along with quantitative targets.
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The employees are being put through workshops to train them on the
various aspects of the system developed with Mr. Athreya. The new system
will take effect from this year.
The new system is expected to help enhance managerial performance andskills, while making the organisation more capable of assessing its costs and
returns. The move is also indicative of the company's renewed stress on
increasing per employee productivity.
MUL, which has been beleaguered by low margins and a falling bottom line,
has also been forced to take a hard look at its costs this year. For the first
time, MUL has slipped into the red and recorded a loss during the year 2000-
01.
MUL has also drawn up a voluntary retirement scheme (VRS) for its
employees. The VRS programme received in-principle approval from the board
last month. While the VRS proposal is yet to be formally notified and offered to
the company's employees, it is expected to apply equally to all the staff members,
including the shop floor workers, company sources said.
Maruti adopts `360 degree' appraisal system ( February '5,2007,
HBL)
Maruti has introduced a unique 360-degree feedback system, starting with itssenior leadership. The new system has been co-developed with Ernst & Young
and has been put in place recently.
Under the 360-degree feedback system, the employee is rated not just by
his superiors, but also by his peers and subordinates.
"We are starting the 360-degree feedback process with employees in the top
management such as chief general managers and general managers, whose
performance will now be assessed based on feedback from their peers and junior management employees within the same department. Till last year,
their performance was being appraised only by the Directors and the
Managing Director," says Maruti's Chief General Manager (HR), Mr. S.Y.
Siddiqui.
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Ernst & Young, in consultation with Maruti, has listed a set of leadership
competencies that are expected in a general manager. Based on that, it has
prepared a questionnaire to which peers and subordinates can respond
online.
Although acknowledged as an effective tool for leadership development in the
West, Indian companies have been shy of introducing such a feedback system for
fear of disturbing traditional hierarchical structures.
HR consultants feel that the critical issues in implementing such a system
include assuring respondents that their feedback will remain confidential and
convincing the person receiving the feedback that this is a development tool
and not an appraisal tool. Maruti has handled this by getting E&Y and other
consultants to make detailed presentations to the senior management
personnel before the process got under way. The company has a committee
of general managers, called Human Resource Inter Divisional Committee
(HRIDC), which is consulted on all major HR issues.
The initiative has been unveiled with an e-mail by Maruti's Managing
Director, Mr. Jagdish Khattar, asking people to support the online
questionnaire process. The 360-degree feedback system will alsoinclude a self-appraisal by the general manager. At the end of the process,
he can compare his self-appraisal with the assessment of his subordinates
and peers.
One of the benefits that Maruti is hoping to get out of the 360-degree feedback
process is the sense of empowerment and importance felt by subordinates, when
they are asked to offer their feedback about their superiors. Maruti currently has
over 4,000 employees on its rolls.
EMPLOYEE QUALITY MEASURES
Kaizen is based on the concept of making incremental improvements in
our products. It incorporates a series of continuous small and simple
improvements, which aim at involving employees at all levels.
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The Suggestion Scheme is based on the same principle. Under this scheme,
employees are encouraged to make suggestions for improvement in any
area of our operation. Over 50,000 suggestions are received from employees
every year. Ma r u t i h as w o n t h e F i r s t p l a ce in "Exce llence in
Suggestion Scheme Contest2003", which is the 6th consecutive award won inas many years. This contest is organized by Indian National Suggestion Schemes
Association (INSSAN). Since1998 Maruti has won this award 10 times."Quality
Circles" are groups of five to eight members from a particular work area
who work as a team to identify priorities and solve work related problems in the
area. They believe that it is this unwavering commitment to quality that will lead
to the further growth of the organization as competition increases.
ISO 9001:2000
At Maruti, their approach to quality is in keeping with the Japanese practice--
"build it into the product". Technicians themselves inspect the quality of work.
Supervisors educate and instruct technicians to continually improve productivity
and quality. Th e mov eme nt of qua l it y ind ica tors is re vie we d in
we ek ly me et in gs by th e to p management.
In 2001, Marut i Udyog L td became one of the f i rs t automobi le
companies anywhere in the world to get an ISO 9000:2000 certification.
AV Belgium, global auditors for International Organization for Standardisation
(ISO), certified Maruti after a four day long audit, covering varied parameters like
Customer Focussed organisation, Leadership, Involvement of people, Process
approach,System approach to Management, Continual improvement, etc.
In May 1995, Marut i got ISO 9002 cert i f i cat ion.
The audit for this coveredquality assurance in production,
installation, marketing and sales as well as after sales services. We
were also one of the first companies in the world to pioneer ISO9000
certification for our dealers.
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In October 1993, MUL passed the Conformity Of Production (COP)
Audit,which is based on a European Union Directive.
This authenticated our quality systems and testing facilities for export to Europe.
Their emphasis on total quality has meant that today they are in a position to
guide vendors and dealers in establishing and consolidating their individualquality systems. This commitment to quality has ensured a consistently
satisfying product and world-class sales and after-sales services.
TS16949:2002 -A new feather was added recently in Maruti’s cap in the
field of quality when the Quality Management System of its Press Shop &
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assoc iated funct ions (co l lect ive ly termed as Press Funct ion) got
ce rt i f i cat ion for conformance to the requirements of TS16949:2002
standard. The nee d fo r T S ce rt i f ica tio n of Pre ss Fu nct ion had its
ge ne si s in th e pr es ti gio us project that Maruti earned for the supplyof stamped panels to General Motors India for one of its forthcoming
models. A s a p a r t o f Q u a l i t y s y s t e m r e q u i r e m e n t s , G M
r e q u i r e s a l l i t s s u p p l i e r s t o b e certified to either ISO TS 16949 or QS
9000.These standards address Qual i ty System requirements ,
which are particularly specific to the automotive industry and
requires an organization to be in compliance with ISO 9000 systems as a
basic requirement. However, whereas QS 9000 would become defunct
and cease to ex i s t a f ter Dec 2006, TS 16949 i s go ing to be the
standard of the future. The TS 16949 standard, brought out by ISO in theyear 1999, is an extension of the ISO 9001:2000 standard that
prescribes Quality management system requirements that are specifically
applicable to the automotive industry. TS 16949 has gained high popularity and
almost all major automobile players across the globe including GM, Ford,
Daimler Chrysler, Nissan, Honda are embracing & promoting it.
MARUTI CULTURE
Their employees are their greatest strength and asset. It is this underlyingphilosophy that has molded their workforce into a team with common goals and
objectives. Their Employee-Management relationship is therefore characterized
by:
•Participative Management.
•Team work & Kaizen.
•Communication and information sharing.
•Open office culture for easy accessibility To implement this philosophy, they
have taken several measures like a flat organizational structure. There are only
three levels of responsibilities ranging from the Board Of Directors, Division Headsto Department Heads. Other visible features of this philosophy are an open office,
common uniforms (at all levels), and a common canteen for all. This structure
ensures better communication and speedy decision making processes. It also
creates an environment that builds trust, transparency and a sense of belonging
amongst employees.
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For Investors:
Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, has
been the leader of the Indian car market for about two decades. Its
manufacturing plant, located some 25 km south of New Delhi in Gurgaon, has an
installed capacity of 3,50,000 units per annum, with a capability to produce abouthalf a million vehicles. The company has a portfolio of 11 brands, including Maruti
800, Omni, premium small car Zen, international brands Alto and WagonR, off-
roader Gypsy, mid size Esteem, luxury car Baleno, the MPV, Versa, Swift and
Luxury SUV Grand VitaraXL7.In recent years, Maruti has made major strides
towards its goal of becoming Suzuki Motor Corporation's R and D hub for Asia. It
has introduced upgraded versions of WagonR Zen and Esteem, completely
designed and styled in-house.
Maruti's contribution as the engine of growth of the Indian auto industry, indeedits impact on the lifestyle and psyche of an entire generation of Indian middle
class, is widely acknowledged. Its emotional connect with the customer
continues. Maruti tops customer satisfaction again for sixth year in a row
according to the J.D.Power Asia Pacific 2005 India Customer Satisfaction Index
(CSI) Study. The company has also ranked highest in India Sales Satisfaction Study.
The company's quality systems and practices have been rated as a "benchmark
for the automotive industry world-wide" by A V Belgium, global auditors
for International Organisation for Standardisation. In keeping with its leadership
position, Maruti supports safe driving and traffic management through massmedia messages and a state-of-the art driving training and research institute that
it manages for the Delhi Government. The company's service businesses including
sale and purchase of pre owned cars(True Value), lease and fleet management
service for corporates (N2N), Maruti Insurance and Maruti Finance are now fully
operational.. These initiatives, besides providing total mobility solutions to
customers in a convenient and transparent manner, have helped improve
economic viability of The company's dealerships.
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BUSINESS STRATEGY
They intend to continue to focus on the small car segment, while
offering products in most segments of the Indian passenger car market. They aim
to achieve their principal objectives by pursuing the following business strategies:
Maintain and enhance their product range:
They intend to utilize Suzuki’s expertise in small car technology to produce new
variants of their existing models and to upgrade their products with
contemporary technology and features.
Increase reach and penetration:
They plan to continue to utilize their extensive sales and service network to
increase the reach, in terms of geographical spread, and penetration, in terms of
sales volumes, of their products across India.
Increased availability of automobile finance:
They continue to seek opportunities to expand the size of the Indian passenger
car market, especially in the small car segment, through facilitating easy
availability of automobile finance. To that end, they have recently entered into an
agreement with the State Bank of India.
Secure repeat purchases by offering a “360 degree customer experience”
:On the basis of their belief that securing repeat purchases from an existing
customer requires less expenditure than acquiring a new customer, they aim
to provide customers with a “one-stop shop” for automobiles and automobile-
related products and services.
Continue to benchmark their manufacturing capabilities:
They plan to continue to benchmark our manufacturing capabilities with the most
efficient car manufacturing facilities of Suzuki and its subsidiaries.
Continue to reduce costs to offer more competitive products:
Cost competitiveness has been, and continues to be, central to their strategy as
the leading manufacturer in the small car segment to expand the size of the
market by offering competitively priced, high quality products. The components
of this strategy are:
•Higher levels of localization
•Vendor participation in cost reduction
•Cost reduction on warranties
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•Reduction in initial investment cost
•Reduction in number of vehicle platforms
•Achieve further cost reduction through higher productivity
Lower cost of ownership:Through their business strategies, they seek to reduce the consumer’s cost
of ownership of their cars, which comprises the cost of purchase, the cost of fuel
and maintenance, including spare parts and repairs, during the life of the vehicle,
insurance, and resale value.
NEW BUSINESS INITIATIVES
As the largest manufacturer and leader in the small car segment, they
continually seek new ways to utilize their vast car parc, range of products and extensive sales and service network to expand the size of
the passenger car market in India. They have recently launched new
initiatives to develop the market for automobile insurance, automobile
finance, leasing and f leet management, and pre -owned cars. They aim to
provide customers with a “one-stop shop” for automobiles and automobile-
related products and services, and build on their wide customer base
and e x t e n s i v e s a l e s a n d s e r v i c e n e t w o r k t o m a k e a v a i l a b l e t o
their customers a wide range of Maruti-branded services at
different stages of ownership, which they refer to as the “360 degree
customer experience”.
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Atithi Devo Bhava:
One-stop shop Inspired by the spirit of India. Atithi Devo Bhava, in
Sanskirit, means “a guest is like God”. It captures the Indian tradition of
honoring guests. It's also the inspiration for the welcome you’ll receive ata Maruti Suzuki dealership, and the caring relationship they share with
those who drive their cars. At Maruti Suzuki, you will find all your car related
needs met under one roof. Whether it is easy finance, insurance, fleet
management. se rvices, exchang e Maruti Suzuki is set to provi de a single
window solution for all your car related needs. That's why they have Maruti True
Value, the best place to buy and sell reliable used cars. Maruti Finance an
agglomeration of the biggest finance companies in India brought together by
Maruti Suzuki to ensure that the dream car is within everyone's reach. Similarly,Maruti Insurance brings together some of the biggest names in the car insurance
industry to provide insurance solutions to every type of car consumer. Then,
finally, there is N2N,which offers fleet related solutions.
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Production Management System (PMS) is the next step towards moving ahead tosustain the momentum. It is a strategy to achieve Manufacturing Excellence
evolved through participative approach. The system is people driven and ensures
involvement of all levels (Managers, Executives, and Supervisors).
The concept ensures participation and error free communication. The result is
clarity of content, better understanding and openness towards feedback. These
values make PMS a sustainable system. Having achieved the target of selling a
million cars in the financial year 2009 - 2010, PMS has lead the production team
towards greater enhanced productivity with perfection.
PMS is derived from the basic Japanese principles of 5S, 3G and 3K
In order to bring an improvement in overall processes and systems in Production
Division through involvement of all levels, PMS was launched in Maruti Suzuki.
Through various phases of PMS the company embarked on its journey of bring in
a) Clarity of Role, Non-duplication of work, Ownership, Commitment and
Standardization in all our process and systems across the production division.
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FLEET MANAGEMENT SYSYTEM IN MARUTI SUZUKI INDIA LTD
The Background
To facilitate the corporate sales of MUL cars using the relationship management
approach through Leasing and Fleet Management as two products, MUL launcheda service named N2N Fleet Management Solution.
Through tie ups with other service providers like insurance company, replacement
car service provider, and manpower service provider MUL presented a common
face to the end client with a whole gamut of services.
End-to-end backups/solutions across the vehicle's life like: Leasing, Maintenance,
Convenience services and Remarketing are some of the key services being offered
by MUL. MUL choose Binary Semantics to provide necessary IT support for their
N2N Fleet Management solution.
The Challenges
MUL needed a complete B-2-B solution, in the form of a common platform, for all
the partners, clients and respective MUL departments. And because this service
included interaction and data exchange between multiple organizations, safety
and security of data became vital - not only with regards to MUL, but also for
partners and customers. Furthermore, stringent performance criteria and
deadlines were the other challenges involved in the project.
The Solution
After a rigorous requirement and business process analysis, Binary's Automobile
Fleet Management System came into shape.
The system was based on a modular architecture so that different users
[customers, partners, vendors and MUL] can use the modules as per their
requirements. Scalability, security and flexibility were the key issues kept in mind
while designing and developing of the system.
The Benefits
Binary's Fleet Management system has provided the company with
comprehensive monitoring capabilities for its fleet of vehicles, including
acquisition, maintenance, insurance, accident, rescue, and remarketing.