the ashok leyland way
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Revamping the
Supply Chain
The Ashok Leyland Way
Submitted by: Sec B,Group 9
Anup Kamath 13070
Dheeraj Govind Sasi 13080Lokesh Srivastava 13090Oindrila Roy 13100Shreyas H.N. 13110Vikas N 13120
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Background of the Case
Questions
Ashok Leyland, with an aim to reduce costs improvein-bound supply chain through several important strrevamping measures. Explain
The revamp of the outbound supply chain had the twobjectives of customer satisfaction and reducing finishgood inventories. Discuss how Ashok Leyland re-engineered its out-bound supply chain.
Discuss in brief the quantitative benefits in regard to measures of supply chain revamping exercise for AL
Contents
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Ashok Leyland is a commercial vehicle manufacturin
company based in Chennai, India
The companys major business is in logistics, i.e., movgoods and people. This area had seen a severe declinelate 1990s due to the recession
The recession forced the company into revamping thesupply chain to cut costs and improve their processes
Case Background
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Objectives of In-bound supply chain re-engineering
Reduced Material Costs Reduced Invisible Carrying costs
Steps taken Actively reducing the number of suppliers from 1400 to
750
Suppliers chosen if they had good quality systems Cost effective processes Assured process capacity
Continuous improvement via feedback, compliance tolegal/statutory/commercial requirements per AL
Suppliers need to be developed enough to come under ALself-certification and traceability system
Quest 1: Discuss AL in-bound supply chain
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Used the tiering model to consolidate suppliers
AL interacted with tier 1 suppliers who sourced componenttier 2 and tier 3 suppliers, assembled components and sent t
Engaged in Value engineering
All vendors needed to move to JIT for high value, high valucomponents
Components were split based on costs relative to total prod AL produced only that which was needed for the step, neve
Used a funnel planning system Split as 2-2-8 week plans
Quest 1: Discuss AL in-bound supply chain(Contd)
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Created a CFT (Strategic Sourcing + Corporate Qualit
Engineering) Used skills and knowledge to create a Single window system
interact with their clients
Advantage for AL Unit Material Functions from AL interacted with approved suppliers t
materials in line with their production plan
Advantage for Suppliers Share component drawings with AL
Easily Negotiate Prices
Understand plans for Long term volumes
Assistance from and consultancy for AL from quality to management
Quest 1: Discuss AL in-bound supply chain(Contd)
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Engaged vendors in Joint Improvement Plans (JIT)
Provided Technical assistance and financial support
Strategic Sourcing
Wanted process gains that were real, painless and sustainabthe suppliers
Conducted tear down studies and value engineering analys Aimed at reducing costs by substituting, Reducing or elimin
without reducing quality and performance
Shared with suppliers
Quest 1: Discuss AL in-bound supply chain(Contd)
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Objective of Out-bound supply chain
Improve Customer Satisfaction
Reducing Finished Good
Improve Service Levels with optimum pipeline inventory le
Plans focused on
Order To delivery time Reliability of delivery
Order status information
Quest 2: Discuss how Ashok Leyland re-engineered its out-bound supply chain
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Maintained a tight inventory model via three tiered m
Quest 2: Discuss how Ashok Leyland re-engineered its out-bound supply chain (Contd)
Plant Sales Yard- National pool
- Holding rare models
- Excess of regional needs
Five Regional Stock pools- Ensured JIT supplies to Supplies to Regional Offices
Regional Sales Offices
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Quest 3 Discuss the quantitative benefitsin regard to the revamping exercise of AL
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Profit changes
Quest 3 Discuss the quantitative benefitsin regard to the revamping exercise of AL
98-99Loss of 36.7 crores
99-2000
Profit of 1.9 Crores
Total sales of Rs 1092.8 Crores
Change
Increase of 38.6 Crores in Profits
Result of strategic raw material sourc
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Raw Materials
Costs down by 1-2%
Inventories
Reduction in inventories amounting up to 300 Crores This resulted from tightening supply chain and invent
Quest 3 Discuss the quantitative benefitsin regard to the revamping exercise of AL
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Can make use modified goods wagons for transporta
trucks.
Invest more in R&D.
Collaborate with other companies for technical suppo
Recommendations for further improvement
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Thank Y
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