Strategic decision taken by Maruti Suzuki India ltd vis-à-vis Supply chain driver:
Supply chain driver Maruti Suzuki India ltd. strategies
INVENTORY The company has been paying special attention to its inventory
management because its raw material consumption cost was 75-
83% of its net sales and around 70% of its firm’s components
are outsourced. The company has taken various steps to improve
its inventory management due to which there has been a
significant rise in the average inventory turnover ratio over the
years.
To improve the inventory management of Maruti Suzuki, they
adopted the Japanese system of JIT, i.e. Just-in-time- a strategy
which increases the efficiency and reduce the waste by receiving
the goods only when they are required for the production., which
reduces the inventory carrying cost. It helps in improving the
ROI, by reducing in-process inventory and the cost associated
with it.
The key initiatives taken by Maruti Suzuki were:
Vendor management: 80% of the company’s suppliers
are located within the 100 kms radius. The supplier for
the bulky components like bumpers, seat, fuel tanks are
near to the manufacturing facilities of Maruti which
helps in better operational efficiency & economies of
scale.
Bar Codes: The use barcodes do make the makes the
supply chain more efficient by reducing the process time,
more accurate data, & speed of operation.
Delivery Instruction system: With the more advanced
delivery system being installed by Maruti Suzuki, they
get more aware about the materials as and when required,
which reduces the buffer stock and also the lead time.
The promotion cost is also reduced by the online buying
of the inventory.
Kanban production system: It’s a tool which is used to
reduce the idle time in the production process. Delivering
what the process needs exactly when required. The
forecasting of the delivery days is done in every 15 days
to plan supply.
Localization: To increase and develop the vendor
capacity and to reduce the geographical distance between
the manufacturing and the supplier, the localization limit
has been set 70-90%
Therefore, Maruti Suzuki India Ltd. is both highly responsive
and efficient.
FACILITIES Maruti Suzuki India Ltd. got two manufacturing facilities in
India,
1. Gurugram
2. Manesar
Gurugram facility got three fully integrated manufacturing plant.
They manufacture Alto 800, WagonR, Ertiga, XL6, S-
Cross, Vitara Brezza, Ignis and Eeco.
Manesar facility plant production capacity is of 8 lakh annually
and manufactures Alto, Swift, Ciaz, Baleno and Celerio.
There is third facility which is located in Ahemdabad, which is
wholly owned by Suzuki motors corporation, and this plant
supply Maruti without any additional cost.
There is a small number of facilities owned by Maruti, which
makes it efficient.
INFORMATION Information being the biggest drivers for the supply chain as it
affects the other drivers too. Consisting of all the information in
regards to the facility, inventory, transportation, cost prices.
Maruti Suzuki has installed barcodes, which reduces the
transition time, and process time and increase the speed of the
operations.
Maruti Suzuki has installed ERP systems which integrates all the
divisions and functions of the organisation into a single software
programme. Maruti has implemented EBS suite – Oracle E,
across all the department of the organisation.
This system consists of ERP, SCM, CRM applications.
Overall, Maruti Suzuki got a good information set which is not
that complexed since every department is integrated through one
system known as Oracle E, which help them to be both efficient
and responsive.
SOURCING Maruti Suzuki, most of the components have been outsourced
from the top suppliers like JK industries, Lucas, TVS & Kalyani
breaks. The firm has been outsourcing in order to increase the
supply chain surplus.
In fact, last year, Maruti has outsourced the production of its
SUV Vitara to the Toyota plant in Karnataka which helped them
freeing the capacity from its facilities in Manesar & Gurugram.
PRICING “Value for the money”- is the key driver for the volume of sales
for Maruti Suzuki. They have been proving the light weight yet
safe vehicles, they have been able to cut the cost and prices of
the cars comparatively to it competitors.
Low cost of ownership, long service intervals, affordable
components helps in making the low cost strategy being
implemented even after sale service.
The firm is able offer different pricing for its different products
and service.
Therefore, it is highly responsive for the customers who value it.
TRANSPORTATION
