Management Development Institute - Gurgaon

Supply Chain Management

Case-07

Maruti Suzuki: Supply

Chain Innovations
SCM
Case
Presentation

Presentation Date: 5/8/2015

ID

Name

14P095

Pulkit Jain

14P122

Abhijit Pradhan

14P135

Ashwini Jawale

14P136

Atul P Mishra

14P149

Mohit Maheshwari

14P150

Naman Singhal

14P160

Sachin Prasad

Post-Graduate Programme in Management

(PGPM: 2014-16 Batch)
Term: IV (Jun-Aug 2015)

Agenda
Introduction
Objectives
JIT
E-Nagare System
Supplier/ Vendor Relationship Management
Green Initiatives
Logistics & Visual Cargo tracking
Insights from The Maruti Story

Introduction
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

Objectives
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

Value Chain

PRIMARY
ACTIVITIES
INBOUND
LOGISTICS
Just-In-Time (pioneered
by Toyota)
Huge savings on
inventory management
costs
Sound demand
management system
Implementation of
Logistics improvement
systems

OUTBOUND
LOGISTICS

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

Presence in 500 cities

300+ distributors
1600+ service stations
16 warehouses
True value dealership
model
Decent margins to
dealers

MARKETING &
SALES
Anytime Maruti - 24*7 tollfree helpline to attend to
customer grievances
Maruti On roadMaintenance & 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 insuranceInception of two subsidiariesMaruti Insurance Distributors
Services Pvt. Ltd. & Maruti
Insurance Brokers Pvt. Ltd.

Innovation forms a core value & is highly

encouraged
Maruti Recruitment System (MARS)
Classroom training is reinforced through elearning modules
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
MACE
Shikhar
Junkai VA
Maruti Production System
Quality Circle Competition

E-Nagare
Visual Cargo Tracking

HUMAN
RESOURCE
MANAGEMENT
FIRM
INFRASTRUCTU
RE
PROCUREMENT
TECHNOLOGY
DEVELOPMENT

Insights from The Maruti Story Vendor

Selection
SECONDARY
ACTIVITIES

JIT at MSIL
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 inprocess 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

E-Nagare System
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

Green Initiatives

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
improvem
ent

Help
suppliers
get ISO
14000
certificati
on

Supplier & Vendor Relationship

Management
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 companys 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

MACE-SPIDER CHART
Audit Points

12TH & 13TH JAN 11

Audit Score
Achieved Max.
Achieved
Score
Score

1 Production Preparation

10

16

63%

2 Initial Supply Control

13

46%

3 Initial Control- Changed Parts

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

100%

9 Inspection standard & Process Control Standard

10

13

77%

10 Operation Standard

11

12

92%

11 Observance of Operation Standard

100%

12 Role of Manager/ Supervisor

100%

13 Quality improvement of process

100%

14 Control of Manufacturing machine/ jig

89%

15 Control of Inspection equipment and Jig

11

11

100%

16 Statistical method
Prevention of missing process/ wrong
17
assembling
18 Control of non conforming product

17%

100%

83%

19 Storage of product

100%

20 First-in , First-out

40%

21 History management of A (Safety) parts

100%

22 Implementation of inspection

33%

168

209

80%

Total Score

Achieved

Audit Score
22

100%
21

73%
46% 63% 100%
100%
40% 33%
20

63%

19

100%

83%
100%
18

100%

17%

17

16

100%
8

77%

100%
89%
92%
100% 100%
15

14

10

13

100%
12

WEAK AREAS

11

Logistics & Visual Cargo tracking

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

Insights from The Maruti Story

Competition in modern business is not between
organizations but rather within their supply chain

Maruti Indias most loved passenger car takes the lead

in this regard

Despite initial skepticism (Maruti was formed as PSU in

1981 when all major PSUs 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:

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)

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

Insights from The Maruti Story Vendor

Selection

Similarly vendors
have been selected
whose goals align with
Maruti.
Focus on punctuality,
quality
and
optimization