operations management group3

8/2/2019 Operations Management Group3

1/41

Operations Management

@Maruti Suzuki India Ltd.


2/41

Market share : 47%

Sales network : 802 centres in 555 towns and cities

Service network : 2740 workshops in over 1355 towns and cities

Manufacturing centres : 2, Manesar and Gurgaon

Manufacturing Capacity : 1.2 million

14 brands and over 150 variants

Employee Strength : 7600

Fact Sheet 2010


3/41

Indias most trusted brand 2010 by Economic Times

2001-2010 JD Power Customer Service Index Award

Hatchback of the year 2010 Ritz (Autocar)

Best car of the year 2010- Ritz (Business Motoring)

First automobile company in the world to be honored with an ISO9000:2000 certificate

Fact Sheet 2010


4/41

Segment Models In December Till DecemberApril'09 -

March'10

2010 2009%

Change2010-11 2009-10 % Change

A1 M800 1798 2574 -30% 18982 24594 -23% 33028

A2

Alto, Wagon-

R, Estilo,

Swift, A-Star,

Ritz

64492 52236 24% 585523 459507 27% 633190

A3 SX4, D'zire 9362 7843 19% 92418 69613 33% 99315A: Total

Passenger

Cars

75652 62653 21% 696923 553714 26% 765533

B: MUVGypsy, Grand

Vitara270 259 4% 4698 2835 66% 3932

C: Van TypeOmni, Versa,

Eeco13547 8088 68% 118729 68859 72% 101325

Domestic 89469 71000 26% 820350 625408 31% 870790

Export 9756 13804 -29% 107315 105535 2% 147575

Total Sales 99225 84804 17% 927665 730943 27% 1018365

* Eeco was launched in January2010.


5/41

Source: MSIL Website


6/41



7/41



8/41



9/41

February 24, 1981 - Maruti Suzuki India Ltd incorporated

October 2, 1982 - joint venture agreement with Suzuki Motor Corporation,Japan.

1983 - launched Maruti 800.

1984 - introduced Maruti Omni 1985 - launched Maruti Gypsy

1987 - Entered foreign market by exporting first lot of 500 cars toHungary.

1990 - launched India's first three-box car, Sedan

1992 - Suzuki Motor Corporation, Japan increased their stake in thecompany to 50%.

1993 - introduced the Maruti Zen

1994 - launched Maruti Esteem


10/41

1997 - started Maruti Service Master.

1999 - the third plant with new press, paint and assembly shopsbecame operational.

2000 - launched Maruti Alto

2002 - Suzuki Motor Corporation increased their stake in the companyto 54.2%.

2002 - Maruti True Value launched.

2005 - the company launched the first world strategic model fromSuzuki Motor Corporation 'the SWIFT' in India.

2006 - launched WaganR Duo with LPG and also the New Zen Estillo.


11/41

2006-07 - commenced operations in the new car plant and thediesel engine facility at Manesar, Haryana.

2006 - inaugurated a new institute of Driving Training and Research(IDTR), set up as a collaborative project with Delhi Government atSarai Kale Khan in South Delhi.

2007 - launched Swift Diesel and SX4- Luxury Sedan with Tag line'MEN ARE BACK' during the year.

2007 - launched the new Grand Vitara

September 17, 2007 - changed their name from Maruti Udyog Ltd toMaruti Suzuki India Ltd

2007 - joint venture agreement with Magneti Marelli Powertrain SpAfor manufacturing Electric Control Units.


12/41

2007 - joint venture agreement with Futaba Industrial Co Ltd formanufacturing Exhaust Systems Components.

2007 - pact with Shriram City Union Finance Ltd

2008-09 - launched A-star in India and in Europe as the new Alto.

2008-09 - raised their production capacity to a landmark 1 million cars.

In June 2008 - the company launched Maruti 800 Duo, which is a dualfuel (LPG-cum- petrol) model car.

In March 2009 - the company launched A-star or Suzuki Alto at GenevaMotor Show, sales begin at EU

In April 2009 - revealed new Ritz K12M engine at Gurgaon plant.


13/41

Manufacturing Process

Blanking and Forming

Welding

Painting

Assembly

Machine and Engine Shops


14/41

Product Layout


15/41

Installed Capacity

20,000

2,00,000

3,50,000

7,50,00010,00,000

1984

1995

1999

2006

2009

* Units per annum


16/41

Improving Operational Efficiency

Improvement in Quality and Productivity, both in-house and at thevendors end.

Challenge 50 Initiative started in 2002 to improve productivity by 50%

and reduce costs by 30% by 2004-05

Replication of several best practices from Suzukis production system

Participative ManagementTeam Work

Communication and InformationSharingOpen Office System

Kaizen (Continuous Improvement)Multi Skilling of Operators, Flat

structure5SConcept of Quality Circles


17/41

Implementation of Kaizen

Emphasis on making incremental improvements in the processand products

Suggestion Schemes launched among employees to contribute

ideas for improvement and cutting costs

Annual savings of ` 1920 million in 2002

An 81% increase in Employee productivity (730 cars perday/4800 employees in 1995 to 1700 cars per day in 2003)

Per Capita Output of over 100 cars in 2003 as compared to 140of Suzuki despite using far fewer robots and automation invarious processes

As of 2010, Per capita output had reached 131 cars


18/41

PDCA

PLAN DO CHECK ACT

Planning by setting a target and time line and Dividing into Actionplan with value to each factor/element

Doing the standardized operation as decided

Checking through gap analysis whether the operation wasyielding the desired results

Acting to Freeze if effective or Correct


19/41

Improving Operations-contd..

Target to avoid 3Ms

Muri for inconvenience

Muda for wastage

Mura for inconsistency

Strategy of low cost automation to improve productivity and reduceoperator fatigue

Examples include multispot automatic welding design and automatedtrolleys

Resulted in a 30% fall in HPV* in 2001-02

* Hours Per Vehicle


20/41

Reducing Costs

Reduce Reuse Recycle

Major focus areas were Energy, Water and Lighting

Use of Skylights to improve natural light in shops

Diesel driven forklifts converted to CNG

Reduction in Steam consumption by shortening of pipeline and bypressure and temperature optimization

Reduction in consumption of water by 66% through recycling ofwastewater


21/41

Improving Quality

Measuring Quality through a Quality Index Audit

Quality Gates at various stages in order to raise alarms for correctionand immediate action on defects

Fool-Proofing to prevent defects arising from human errors during the

manufacturing process

Real time feedback system, cross linked with overall targets

Drastic reduction in Defects per vehicle from 1999 through 2001-02

Helping Suppliers to improve quality by deputing its engineers

Vendors were grouped together, trained in quality management andassisted in obtaining ISO 9000 certification (cluster approach)


22/41

Implementation of TPM

TPM or Total Productivity Management

5S system as a prerequisite for achieving TPM

Seistri (Sorting)

Seiton (Systemizing) Sharing of ideas between cluster companies for continuous

improvement

The point of TPM is not to reduce breakdowns for the sake of it. Instead the focusat all times should be on how by reducing breakdowns, you can reduce cost and

increase productivity --- Yamaguchi


23/41

Production Management System

Strategy to achieve Manufacturing Excellence through participativeapproach

People driven and ensures involvement of all levels (Managers,Executives, and Supervisors)

Derived from the basic Japanese principles of 5S, 3G and 3K

Results :

Clarity of content

Better understanding

Openness towards feedback

Non-duplication of work, ownership, commitment and Standardization in allour process and systems across the production division.


24/41


25/41

Vendor Management

Vendor Management forms the fundamental of ensuring operationalefficiency.

Yearly procurementworth Rs 5000 Cr

Top Vendor accountedfor about 34% of itsaggregate purchasesof components fromIndia

Maruti was working on a3.5% per annumreduction in vendorprices

Delivery InstructionSystem


26/41

Delivery instruction System

One of the Suzukis best practices

Provided details of Marutis component requirements for every 15days across all its variants to its vendor

Web Initiatives helped Maruti to bring down procurement timeand cost

Maruti connected to its vendor through an Internet basedinformation network


27/41

Inventory Timings before JIT

Maruti average inventory was 1.5 days for domesticallysourced components.

For imported components the 1 months inventory wasfollowed


28/41

Steps to implement JIT

Frequency of supply was increased from nearby vendors

Far away vendors were encouraged to set up assembly plantsnear Maruti.

Encourage far off vendors to setup warehouses in Gurgoan. Vendors received details instructions from Maruti two weeks in

advance

Implementation of online system for replenishment of inventory.

Vendor only produce only what is indented and made suppliesonly after receipt of indent card.

Extension of electronic card system to 26 vendors from 10vendors.


29/41

JIT Implementation- Contd

Reduction of number of Vendor to 100(earlier they had 299)

Buy from one big tier 1 supplier who assembled parts supplied bysmaller vendors

Join hands with vendors for common sourcing Materials were pooled from different vendors so that a trucks

carrying capacity was fully utilized

Ensure exclusive agreements with vendors

Integrate vendors to World Wide purchase (WPP) program

Ensure payment to vendors within 10 days


30/41

Results of implementation of JIT


31/41

Leveraging Information Technology

In early 1990s there was no ERP vendor support available in thecountry. So company itself came out with the ERP solution.

Variety of applications were made covering areas like

Inventory Management

Receipt

Excise

Consumption

ProductionSales

Invoicing

Exports

Payroll

Auditing

Bank Reconciliation


32/41

The Home made system was expanded to its sales and dealernetwork through an email based ordering system with about 250outlets

Later on implemented an in-house supply chain application thatextended ERP on the extranet and linked both dealers and vendors

To increase the flexibility vehicle tracking system were put in placealong with technology enabled vehicle build sequence system

Warehousing reengineering using bar coding

Leveraging IT Contd


33/41

Results


34/41



35/41



36/41



37/41



38/41

Future Plans

Maruti has set itself a target of getting 60 % of market share.

Launch new car models catering to all the sections of society.

Plans to export to Middle East and Far-East Asian.

Expand Capacity beyond 1.2 million vehicles/annum

Setting up R&D facility in Rohtak, Haryana which will be a hub forSuzukis Asias operations

Plans to launch Kizashi, a premium segment sedan in India


39/41

Operational Strategy of MSIL

Challenge 50 initiative

Value analysis and Value Reengineering initiatives

Reduced Cost development by localised sourcing and

flexible Welding lines. Use of best practices like Kaizen, Plan Do Check and

Action(PDCA)

Use of production management systems(5-S, 3G, 3K)

Use strategy to implement low cost automation.


40/41

Key Learnings from the Case

Establish long term partnerships and strategic alliances withvendors to improve quality levels and supply chain efficiency.

Focus on enhancing labor productivity to reduce ratio ofaggregate costs to total income.

Emphasis on reducing the productivity cost by assimilating theadvantages of Information technology. This includes electronicvendor managed inventory system.


41/41

Thank you !!

The Black Swan

Abhinav Varshney (03)

Kishan Kunal (25)

Mohit Jhurani (28)

Dr. Prashast Jain (36)

operations management group3

Documents