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Operations Management
@Maruti Suzuki India Ltd.
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Market share : 47%
Sales network : 802 centres in 555 towns and cities
Service network : 2740 workshops in over 1355 towns and cities
Manufacturing centres : 2, Manesar and Gurgaon
Manufacturing Capacity : 1.2 million
14 brands and over 150 variants
Employee Strength : 7600
Fact Sheet 2010
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Indias most trusted brand 2010 by Economic Times
2001-2010 JD Power Customer Service Index Award
Hatchback of the year 2010 Ritz (Autocar)
Best car of the year 2010- Ritz (Business Motoring)
First automobile company in the world to be honored with an ISO9000:2000 certificate
Fact Sheet 2010
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Segment Models In December Till DecemberApril'09 -
March'10
2010 2009%
Change2010-11 2009-10 % Change
A1 M800 1798 2574 -30% 18982 24594 -23% 33028
A2
Alto, Wagon-
R, Estilo,
Swift, A-Star,
Ritz
64492 52236 24% 585523 459507 27% 633190
A3 SX4, D'zire 9362 7843 19% 92418 69613 33% 99315A: Total
Passenger
Cars
75652 62653 21% 696923 553714 26% 765533
B: MUVGypsy, Grand
Vitara270 259 4% 4698 2835 66% 3932
C: Van TypeOmni, Versa,
Eeco13547 8088 68% 118729 68859 72% 101325
Domestic 89469 71000 26% 820350 625408 31% 870790
Export 9756 13804 -29% 107315 105535 2% 147575
Total Sales 99225 84804 17% 927665 730943 27% 1018365
* Eeco was launched in January2010.
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Source: MSIL Website
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Source: MSIL Website
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Source: MSIL Website
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Source: MSIL Website
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February 24, 1981 - Maruti Suzuki India Ltd incorporated
October 2, 1982 - joint venture agreement with Suzuki Motor Corporation,Japan.
1983 - launched Maruti 800.
1984 - introduced Maruti Omni 1985 - launched Maruti Gypsy
1987 - Entered foreign market by exporting first lot of 500 cars toHungary.
1990 - launched India's first three-box car, Sedan
1992 - Suzuki Motor Corporation, Japan increased their stake in thecompany to 50%.
1993 - introduced the Maruti Zen
1994 - launched Maruti Esteem
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1997 - started Maruti Service Master.
1999 - the third plant with new press, paint and assembly shopsbecame operational.
2000 - launched Maruti Alto
2002 - Suzuki Motor Corporation increased their stake in the companyto 54.2%.
2002 - Maruti True Value launched.
2005 - the company launched the first world strategic model fromSuzuki Motor Corporation 'the SWIFT' in India.
2006 - launched WaganR Duo with LPG and also the New Zen Estillo.
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2006-07 - commenced operations in the new car plant and thediesel engine facility at Manesar, Haryana.
2006 - inaugurated a new institute of Driving Training and Research(IDTR), set up as a collaborative project with Delhi Government atSarai Kale Khan in South Delhi.
2007 - launched Swift Diesel and SX4- Luxury Sedan with Tag line'MEN ARE BACK' during the year.
2007 - launched the new Grand Vitara
September 17, 2007 - changed their name from Maruti Udyog Ltd toMaruti Suzuki India Ltd
2007 - joint venture agreement with Magneti Marelli Powertrain SpAfor manufacturing Electric Control Units.
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2007 - joint venture agreement with Futaba Industrial Co Ltd formanufacturing Exhaust Systems Components.
2007 - pact with Shriram City Union Finance Ltd
2008-09 - launched A-star in India and in Europe as the new Alto.
2008-09 - raised their production capacity to a landmark 1 million cars.
In June 2008 - the company launched Maruti 800 Duo, which is a dualfuel (LPG-cum- petrol) model car.
In March 2009 - the company launched A-star or Suzuki Alto at GenevaMotor Show, sales begin at EU
In April 2009 - revealed new Ritz K12M engine at Gurgaon plant.
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Manufacturing Process
Blanking and Forming
Welding
Painting
Assembly
Machine and Engine Shops
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Product Layout
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Installed Capacity
20,000
2,00,000
3,50,000
7,50,00010,00,000
1984
1995
1999
2006
2009
* Units per annum
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Improving Operational Efficiency
Improvement in Quality and Productivity, both in-house and at thevendors end.
Challenge 50 Initiative started in 2002 to improve productivity by 50%
and reduce costs by 30% by 2004-05
Replication of several best practices from Suzukis production system
Participative ManagementTeam Work
Communication and InformationSharingOpen Office System
Kaizen (Continuous Improvement)Multi Skilling of Operators, Flat
structure5SConcept of Quality Circles
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Implementation of Kaizen
Emphasis on making incremental improvements in the processand products
Suggestion Schemes launched among employees to contribute
ideas for improvement and cutting costs
Annual savings of ` 1920 million in 2002
An 81% increase in Employee productivity (730 cars perday/4800 employees in 1995 to 1700 cars per day in 2003)
Per Capita Output of over 100 cars in 2003 as compared to 140of Suzuki despite using far fewer robots and automation invarious processes
As of 2010, Per capita output had reached 131 cars
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PDCA
PLAN DO CHECK ACT
Planning by setting a target and time line and Dividing into Actionplan with value to each factor/element
Doing the standardized operation as decided
Checking through gap analysis whether the operation wasyielding the desired results
Acting to Freeze if effective or Correct
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Improving Operations-contd..
Target to avoid 3Ms
Muri for inconvenience
Muda for wastage
Mura for inconsistency
Strategy of low cost automation to improve productivity and reduceoperator fatigue
Examples include multispot automatic welding design and automatedtrolleys
Resulted in a 30% fall in HPV* in 2001-02
* Hours Per Vehicle
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Reducing Costs
Reduce Reuse Recycle
Major focus areas were Energy, Water and Lighting
Use of Skylights to improve natural light in shops
Diesel driven forklifts converted to CNG
Reduction in Steam consumption by shortening of pipeline and bypressure and temperature optimization
Reduction in consumption of water by 66% through recycling ofwastewater
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Improving Quality
Measuring Quality through a Quality Index Audit
Quality Gates at various stages in order to raise alarms for correctionand immediate action on defects
Fool-Proofing to prevent defects arising from human errors during the
manufacturing process
Real time feedback system, cross linked with overall targets
Drastic reduction in Defects per vehicle from 1999 through 2001-02
Helping Suppliers to improve quality by deputing its engineers
Vendors were grouped together, trained in quality management andassisted in obtaining ISO 9000 certification (cluster approach)
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Implementation of TPM
TPM or Total Productivity Management
5S system as a prerequisite for achieving TPM
Seistri (Sorting)
Seiton (Systemizing) Sharing of ideas between cluster companies for continuous
improvement
The point of TPM is not to reduce breakdowns for the sake of it. Instead the focusat all times should be on how by reducing breakdowns, you can reduce cost and
increase productivity --- Yamaguchi
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Production Management System
Strategy to achieve Manufacturing Excellence through participativeapproach
People driven and ensures involvement of all levels (Managers,Executives, and Supervisors)
Derived from the basic Japanese principles of 5S, 3G and 3K
Results :
Clarity of content
Better understanding
Openness towards feedback
Non-duplication of work, ownership, commitment and Standardization in allour process and systems across the production division.
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Vendor Management
Vendor Management forms the fundamental of ensuring operationalefficiency.
Yearly procurementworth Rs 5000 Cr
Top Vendor accountedfor about 34% of itsaggregate purchasesof components fromIndia
Maruti was working on a3.5% per annumreduction in vendorprices
Delivery InstructionSystem
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Delivery instruction System
One of the Suzukis best practices
Provided details of Marutis component requirements for every 15days across all its variants to its vendor
Web Initiatives helped Maruti to bring down procurement timeand cost
Maruti connected to its vendor through an Internet basedinformation network
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Inventory Timings before JIT
Maruti average inventory was 1.5 days for domesticallysourced components.
For imported components the 1 months inventory wasfollowed
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Steps to implement JIT
Frequency of supply was increased from nearby vendors
Far away vendors were encouraged to set up assembly plantsnear Maruti.
Encourage far off vendors to setup warehouses in Gurgoan. Vendors received details instructions from Maruti two weeks in
advance
Implementation of online system for replenishment of inventory.
Vendor only produce only what is indented and made suppliesonly after receipt of indent card.
Extension of electronic card system to 26 vendors from 10vendors.
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JIT Implementation- Contd
Reduction of number of Vendor to 100(earlier they had 299)
Buy from one big tier 1 supplier who assembled parts supplied bysmaller vendors
Join hands with vendors for common sourcing Materials were pooled from different vendors so that a trucks
carrying capacity was fully utilized
Ensure exclusive agreements with vendors
Integrate vendors to World Wide purchase (WPP) program
Ensure payment to vendors within 10 days
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Results of implementation of JIT
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Leveraging Information Technology
In early 1990s there was no ERP vendor support available in thecountry. So company itself came out with the ERP solution.
Variety of applications were made covering areas like
Inventory Management
Receipt
Excise
Consumption
ProductionSales
Invoicing
Exports
Payroll
Auditing
Bank Reconciliation
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The Home made system was expanded to its sales and dealernetwork through an email based ordering system with about 250outlets
Later on implemented an in-house supply chain application thatextended ERP on the extranet and linked both dealers and vendors
To increase the flexibility vehicle tracking system were put in placealong with technology enabled vehicle build sequence system
Warehousing reengineering using bar coding
Leveraging IT Contd
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Results
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Source: MSIL Website
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Source: MSIL Website
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Source: MSIL Website
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Source: MSIL Website
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Future Plans
Maruti has set itself a target of getting 60 % of market share.
Launch new car models catering to all the sections of society.
Plans to export to Middle East and Far-East Asian.
Expand Capacity beyond 1.2 million vehicles/annum
Setting up R&D facility in Rohtak, Haryana which will be a hub forSuzukis Asias operations
Plans to launch Kizashi, a premium segment sedan in India
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Operational Strategy of MSIL
Challenge 50 initiative
Value analysis and Value Reengineering initiatives
Reduced Cost development by localised sourcing and
flexible Welding lines. Use of best practices like Kaizen, Plan Do Check and
Action(PDCA)
Use of production management systems(5-S, 3G, 3K)
Use strategy to implement low cost automation.
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Key Learnings from the Case
Establish long term partnerships and strategic alliances withvendors to improve quality levels and supply chain efficiency.
Focus on enhancing labor productivity to reduce ratio ofaggregate costs to total income.
Emphasis on reducing the productivity cost by assimilating theadvantages of Information technology. This includes electronicvendor managed inventory system.
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Thank you !!
The Black Swan
Abhinav Varshney (03)
Kishan Kunal (25)
Mohit Jhurani (28)
Dr. Prashast Jain (36)