Focus on Value

Value has been the corner stone of our offerings.

 
Customer needs have transformed over the years. Today, customers demand the best in the world but at aggressive
pricing.
   
 
To ensure that we continue to produce relevant products we conducted certain cost
reduction experiments with some of our bestsellers like ALTO.
   
In a scenario of increasing prices of essential commodities like steel, rhodium and other manufacturing raw materials,
  we not only managed to keep the price of cars lower but were also able to enhance them by giving more features at
lower costs.
   
  The following table gives the price comparison of three bestsellers from Maruti's stable.
   
Models Prices in 2001-02 Prices Today
Alto (Std) 299,615/- 224,318/-
 
M800 (Std) 159,747/- 162,415/-
Esteem LX 375,630/- 369,041/-
   
Prices excl. state and central levies
  Cars today are Euro III compliant, with more features compared to 2001-02
These are Ex-Showroom (Indicative) prices as of October 2007
   
Our capability to reduce cost of our existing models while enhancing their features and technology is perhaps one of the
biggest strengths of 'Manufacturing Excellence'.

Here's how we have done it:It was a three pronged approach

First, we looked at improving efficiencies under the programme Challenge 50 and adopted Maruti Production System

Until 2002, we had been achieving incremental improvements of 5-7 per cent annually in operation areas like
productivity, cost and quality. In the year 2002, we decided to give up incremental improvements and strive for a
  quantum leap.

We decided to benchmark ourselves against Suzuki's best global plant, located in Kosai in Japan. We found that we
were 30 per cent below this plant in terms of productivity, and also lagged behind in quality and cost.

We calculated that we would match up to the standards of Kosai Plant in three years. Assuming that Kosai too would
improve over the next three years by about 20 per cent, it was decided to target a 50 per cent improvement in
productivity by 2005. This mission came to be known as Challenge 50.

The key element in Challenge 50 was adopting the Maruti Production System.
   
What is Maruti Production System or MPS?

  Maruti Production System or MPS draws learning's from our parent company Suzuki Motor Corporation's concepts on
'lean manufacturing' under Suzuki Production System i.e. SPS.

Any production facility is essentially a mix of 4 M, which are Man, Machine, Materials and Methods. The 3M's namely
Muri, Muda and Mura (Japanese term for Inconvenience, Wastage and Inconsistency) adversely affect productivity.

MPS is a systematic approach to eliminate Muri's (inconveniences if any for shop floor employees) Mudas (all forms of
wastages) and Muras (inconsistencies in quality) from the system so that cost, quality, productivity and safety are
under control.

Under the Maruti Production System (MPS), derived from the Suzuki Production System, Maruti engineers captured all
aspects of operation on video and scrutinized each process to identify wastage. Together with workers on the shop
 floor, layouts were altered, innovative equipment and processes were introduced and operations relentlessly made lean
and efficient.

According to MPS, there are eight types of wastages in any process namely,
   
Idle Time
Inventory,
Over Production,
Production Defects,
 
Un-necessary man movement,
Un-necessary material movement,
Un-necessary inspection and
Un-necessary processing.
   
However, if every employee tries to do the job right the first time, wastages due to un-necessary inspection and
processing are eliminated from the system and it is a cost effective approach.

A product of poor quality requires repeated inspections, entails wastage in terms of repairs and replacements and
causes loss of time and morale. If we could 'do it right first time', wastage would automatically come down.

In the Japanese manufacturing system, the central role is accorded, not so much to Quality, Productivity or Cost, but to
Safety. When process flow, lay-out and systems are designed for maximum safety, they automatically contribute to
better quality and productivity. Focus on safety enabled us to meet the objectives of Challenge 50.

In-house automation also played a major role in Challenge 50. We devised robots and deployed them, especially where
they reduced worker fatigue and were critical in delivering consistent quality. Currently, our entire facility in Gurgaon is
equipped with more than 150 robots, out of which 71 have been developed inhouse.

At the end of three years, we achieved 46 per cent increase in Productivity, and a 30 per cent improvement in quality
and cost --- a tribute to the vision, courage and team work of our people. It is due to improvements like these that in a
 
plant with an installed capacity of just 350,000 vehicles per year, we were able to manufacture over 600,000 vehicles in
2006-07.

Step two was to set up a training facility for our component suppliers-Maruti Centre for Excellence (MACE).

Challenge 50 helped us improved Maruti's operations inhouse. The next challenge was to bring cost effectiveness at our
vendor's end also so that his operations are as efficient as ours.

We decided to transfer our shop floor best practices to our vendor's shop floor by training them regularly through Maruti
Centre for Excellence ( MACE).

Step three- Working with Suppliers on Cost Down, Value Analysis - Value Engineering

Value Analysis & Value Engineering is the name of the scientific method adopted to achieve focused cost down of
existing models. It involves scrutinizing the vehicle and every component closely, and seeking substitute products or
processes that cost less but deliver the same performance to the customer.
   
Alto - example of Cost Down

Alto is a shining example where Maruti was able to cut down the prices drastically through collaborative efforts. A cross-
  functional team (CFT) was formed involving people from different business functions like Supply Chain, Engineering and
Marketing Divisions.