Post-Graduate Programme in Management(PGPM: 2014-16 Batch)
Term: IV (Jun-Aug 2015)
Management Development Institute - Gurgaon
Supply Chain Management
Case-07
Maruti Suzuki: Supply Chain Innovations
ID Name
1 14P095 Pulkit Jain
2 14P122 Abhijit Pradhan
3 14P135 Ashwini Jawale
4 14P136 Atul P Mishra
5 14P149 Mohit Maheshwari
6 14P150 Naman Singhal
7 14P160 Sachin PrasadPresentation Date: 5/8/2015
SCMCase Presentation
Insights from “The Maruti Story”
Logistics & Visual Cargo tracking
Green Initiatives
Supplier/ Vendor Relationship Management
E-Nagare System
JIT
Objectives
Introduction
Agenda
1981- MARUTI UDYOG LTD was incorporated. The company is engaged in the business of manufacturing, purchase and sale of motor vehicles and automobile spare parts
1982- License and Joint Venture agreement signed between Maruti Udyog Ltd. & Suzuki Motor Corporation Japan(SMC)• 1983- Rolled out the first Maruti 800
Since 2009-2010, MSIL sold more than one million units annually both for domestic and exports
MSIL have six plants, three located at Gurgaon, Haryana and other three located at Manesar Industrial Town, Haryana
MSIL manufactures over 1.1 million cars per year and offers 18 brands. MSIL boasts of dealer sales network of 1204 in 874 cities and service network of 3013 in 1436 cities
Introduction
• Maruti Suzuki India Limited has a nationwide dealer sales and service network.
• The innovations in Supply Chain & Logistics management have given positive results in terms of-– Enhancement of operational efficiencies– Cost reductions– Attaining customer satisfaction– Sustainable logistics operations
Objectives
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND OPERATIONS OUTBOUND MARKETING SERVICES LOGISTICS LOGISTICS & SALES
Production Management System
MARGIN
Team building activities Variable- pay e-learning
Electronic Data Processing Data Management Software
Product Life Cycle Management Solution
Vendor quality system audits Maruti Center for Excellence Supplier Club
MARGIN
Partnership approach with all stakeholders
JIT
Effective Material Handling
Presence in 500 cities
with 1500+ distributors
True Value model
Maruti Finance
Anytime Maruti
Maruti on road
Sales operating Standards
Motor training Schools
Cashless insurance
Lean Manufact-
uring
Value Added Value Engg.
(VAVE)
Focus on Cost,
Quality & Safety
Value Chain
INBOUND LOGISTICS
• Just-In-Time (pioneered by Toyota)
• Huge savings on inventory management costs
• Sound demand management system
• Implementation of Logistics improvement systems
OPERATIONS
• Eliminates unnecessary costs using Lean Manufacturing
• Maintains constant prices by using Value Added Value Engineering
• K-Engine (fuel efficient) Plant used in many models & well received by customers
OUTBOUND LOGISTICS
• Presence in 500 cities• 300+ distributors• 1600+ service stations• 16 warehouses• True value dealership model• Decent margins to dealers
PRIMARY ACTIVITIES
MARKETING & SALES
• Anytime Maruti - 24*7 toll-free helpline to attend to customer grievances
• Maruti On road- Maintenance & Repair services
• Maruti Finance – Car finance in 166 cities in partnership with SBI
• Free test drive to customers
SERVICE
• Excellent after-sales service- 1600+ centers with detailed information on website
• Motor training schools• Cashless insurance- Inception of
two subsidiaries- Maruti Insurance Distributors Services Pvt. Ltd. & Maruti Insurance Brokers Pvt. Ltd.
•E-Nagare
•Visual Cargo Tracking
TECHNOLOGYDEVELOPMENT
•MACE•Shikha
r•Junkai
VA•Maruti
Production System
•Quality Circle Competition
PROCUREMENT
•Plants at Manesar & Gurgaon; 7600 employees
•Partnership approach with all stakeholders
•Production Management System aimed at achieving manufacturing supremacy through Japanese principles of 5S, 3G & 3K
FIRM INFRASTRUCTURE
•Innovation forms a core value & is highly encouraged
•Maruti Recruitment System (MARS)
•Classroom training is reinforced through e-learning modules
HUMAN RESOURCE MANAGEMENT
SECONDARY ACTIVITIESInsights from “The Maruti Story” Vendor Selection
• The Company has adopted the Japanese System, JIT to achieve higher operational efficiencies and reduce inventory carrying cost.
• JIT improves the return on investment of a business by reducing in-process inventory and its associated carrying costs.
• To achieve JIT material supplies, the company gives preference to locally based suppliers and encourages far distance suppliers to set up base close to Maruti Suzuki`s facilities.
• Over 76% of the company's 246 suppliers are located within 100 kms of radius.
• Have strategically located the suppliers of bulky components such as instrument panels, fuel tanks, bumpers, seats, etc. adjacent to the company's manufacturing facilities in the Suppliers' Park
JIT at MSIL
• Electronic Flow• Transformed the supply chain• Sequence of production plans from the vendor
to Maruti's shop floor, which now sits at a two hour cycle from 30 days in the past
• Reduced the inventory hold up
E-Nagare System
All packing has been converted into
Reusable packing
Check the pollution level of trucks getting
into Maruti
Kaizen theme & conserve usage of Material and yield
improvement
Help suppliers get ISO 14000
certification
Green Initiatives
Tier I, II & III Suppliers
Localization of suppliers, reduced:• Inventory capital lock up• Exposure to foreign exchange fluctuations
76% of suppliers located within 100 km of radius
Leader in Supplier Relationship Management
Maruti Production System • MPS based on lean manufacturing program• Vendors are given class room training• Focus on strengthening the company’s supply chain
“Shikhar” Initiative• ‘Poor’ vendors were identified & eliminated
Supplier & Vendor Relationship Management
Quality Circle Competition• Identify, discuss & resolve any one core business issue• Add value to the overall functionality & thereby increase efficiency
Junkai VA / Cost Workshops with vendors• To emphasis vendor productivity and quality• Three G- Genmab, Gembutsu, & Genjitsu
Maruti Centre for Excellence (MACE)• Provide training, support & consultancy to suppliers• Help vendors achieve world class standards in quality, cost & service
and technology orientation
Supplier & Vendor Relationship Management
12TH & 13TH JAN‘ 11
12
3
4
5
6
7
8
9
10
1112
13
14
15
16
17
18
19
20
21
22
63%
46%
73%
63% 100%
100%
100%
100%
77%
92%
100%
100%
100%
89%100%
17%100%
83%
100%
40%
100%
33%
Audit Score AchievedAudit PointsAudit Score
Achieved Score
Max. Score
Achieved
1 Production Preparation 10 16 63%
2 Initial Supply Control 6 13 46%
3 Initial Control- Changed Parts 8 11 73%
4 Preventive Measures for defects 12 19 63%
5 Education and Training 16 16 100%
6 Quality audit 15 15 100%
7 Supplier control 10 10 100%
8 Control of drawings and Engg Changes 4 4 100%
9 Inspection standard & Process Control Standard 10 13 77%
10 Operation Standard 11 12 92%
11 Observance of Operation Standard 5 5 100%
12 Role of Manager/ Supervisor 5 5 100%
13 Quality improvement of process 6 6 100%
14 Control of Manufacturing machine/ jig 8 9 89%
15 Control of Inspection equipment and Jig 11 11 100%
16 Statistical method 1 6 17%
17Prevention of missing process/ wrong assembling
8 8 100%
18 Control of non conforming product 5 6 83%
19 Storage of product 4 4 100%
20 First-in , First-out 2 5 40%
21 History management of A (Safety) parts 9 9 100%
22 Implementation of inspection 2 6 33%
Total Score 168 209 80%
WEAK AREAS
MACE-SPIDER CHART
Road Transport: 90% of dispatches
Rail Transport: A-Star
Sea Transport:• Via Mundra Port for
domestic supplies• Via JNPT for import
•Hub & Spoke model for distribution of vehicle & spare parts
•Focus: Inventory Management & Delivery to dealer
•The Visual Cargo tracking solution provided better visibility into the transport
logistics to streamline business operations
•The Visual Cargo dashboard allows the logistics manager to easily monitor,
track & manage operations of GPS enabled devices
•It is a single, common platform used by all supply chain stakeholders
•Enabled efficient fleet management as the volumes went up
Logistics & Visual Cargo tracking
“Competition in modern business is not between organizations but rather within their supply chain”
Maruti – India’s most loved passenger car takes the lead in this regard
Despite initial skepticism (Maruti was formed as PSU in 1981 when all major PSU’s were bleeding) it has formed one of the most efficient supply chain
As per Mr. R.C Bharagava , Maruti was the first PSU to have categorically stated that the PSU would work towards profit earning and not just for people welfare
Insights from “The Maruti Story”
One example stated by Mr. R.C Bharagava in his book “ the Maruti Story”
So high was the focus on customers that once due to sweltering summer in Delhi cars started facing the issue of vapour locks on fuel tank which made them come to halt due to overheating.
To rectify the issue , Maruti got 30000 pumps from Japan and replaced them free of cost. This was first case of recall in India.
Notable thing was that all pumps were flown which threw the foreign exchange budget out of gear due to airfare paid in foreign currency but priority was customer focus
Maruti has always given high priority
to customer service
It has the largest dealer network in
India
Its service station network is also largest in India
High focus on adherence to
schedules (when there was waiting for car booking)
Insights from “The Maruti Story”: Customer Focus
Several big names like Renault were
overruled and finally Suzuki was selected as their
goals were aligned
Even before Maruti
Suzuki was formed , Maruti
management spent
tremendous effort in
finalizing it JV partner
• Similarly vendors have been selected whose goals align with Maruti.
• Focus on punctuality, quality and optimization
Insights from “The Maruti Story” Vendor Selection
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