operational level strategy of maruti suzuki enclose production techniques and philosophy

1. Manjot
Chitvan
Udhai
Jatin
Sampreet

2. AGENDA
1. General Environmental Analysis
2. Industry Environment Analysis
3. Indian Automobile Industry
4. Competitor Analysis
5. Value Chain Analysis
6. Operations
7. Conclusion

3. GENERAL ENVIRONMENTAL ANALYSIS
PESTLE
• Government promoting foreign investment (FDI‟s)
• Stable political environment
Political
(Attractive)
• Good access of funds due to availability of cheap loans
• Persistent high growth rates for past few years
Economic
(Attractive)
• Rise of middle class leading to improved purchasing power
• Mass transportation due to increase environment consciousness
Social
(Moderate)
• Capital intensive
• Huge investment required to achieve economy of scales
Technology
(Unattractive)
• Need to comply with ever evolving emissions standards
• Need to comply various safety and technical standards
Legal
(Unattractive)

4. INDUSTRY ANALYSIS
PORTER‟S FIVE FORCES
• Not very high due to proprietary knowledge, patents and
government policies
• Huge investment required hence not easy to enter into
automobile market
Threat of New Entrants
(Low)
• Incentives to buyers in form of price discounts,
accessories, after-sales services
• Lot of options available because of lot of competition.
Bargaining Power of Buyers
(Moderate)
• Presence of many substitute inputs
• Cost of switching of suppliers high
Bargaining Power of Suppliers
(Moderate)
• High risk as there are many competitors offering similar
products
• Rapid Development of new technologies and hence
constant threat
Threat of Substitute Product
(High)
• High Industry concentration & fixed costs so competition
among existing players
• Low switching cost from different kind of automobiles after
initial investment by minor changes, facelift etc.
Rivalry Among Competitors
(High)

5. GROWTH TRAJECTORY OF INDIAN AUTO INDUSTRY

7. COMPETITOR ANALYSIS
 Debut in 1998 with
launch of Santro
 By 2004 had 5 models,
Santro, Accent, Sonata
and Elantra and Getz
 In 2007 launched i10
 Wide range along with
alternate fuel options
 2nd largest car
manufacturer in India
 3rd Largest in Passenger
Cars
 Launched Indica in 1998
 Acquired Jaguar and Land
Rover brands ( 2008)
 Launch of Nano in 2009
 High Market share in diesel
market
 Labor Cost -9% of profit
Through its subsidiaries,
machine tools and metal
producing plants
Hyundai Tata

8. COMPETITOR ANALYSIS
 Tagline- Das Auto meaning
„The Car‟ but luxury models for
the upper class in India
 Entered with Skoda Brand in
2001 with current range of
Fabia , Laura, Octavia etc.
 VW in India in 2007 with
Passat and Jetta
 Launched Polo in 2009
 120 dealerships across the
country today
 Focus on service and
Customer satisfaction
 Chevrolet :“For a Special
Journey Called Life.” with
Optra in 2003
 Launched Aveo, Optra SRV
and Aveo U-VA
 Chevrolet Spark in 2007
and Beat in 2010
 Innovative schemes like the
„Chevrolet Promise‟ -
Maintenance at a fixed cost
for three year period
 Affordability at every stage
Volkswagen Chevrolet

9. COMPETITOR ANALYSIS
Ford
 Started in 1995 : JV with M&M
 Launched Ikon in 1999
 Entered the hatchback with Figo in 2010
 Keen to take what they can from the positive market
conditions

10. VENDOR MARUTI SUZUKI DEALER CUSTOMER

11. FIRM
INFRASTRUCTURE
HUMAN
RESOURCE
MANAGEMENT
TECHNOLOGY
DEVELOPMENT
PROCUREMENT
INBOUND OPERATIONS OUTBOUND MARKETING SERVICES
LOGISTICS LOGISTICS & SALES
Production Management
System
MARGIN
Team building activities Variable- pay e-learning
Electronic Data Processing Data Management Software
Product Life Cycle Management Solution
Vendor quality system audits Maruti Center for Excellence Supplier Club
MARGIN
Partnership approach with
all stakeholders
JIT
Effective
Material
Handling
Presence in
500 cities
with 1500+
distributors
True Value
model
Maruti
Finance
Anytime
Maruti
Maruti on
road
Sales operating Standards
Motor training
Schools
Cashless
insurance
Lean
Manufact-
uring
Value
Added
Value
Engg.
(VAVE)
Focus on
Cost,
Quality &
Safety

12. INBOUND
LOGISTICS
• Just-In-Time (pioneered by
Toyota)
• Huge savings on inventory
management costs
• Sound demand
management system
• Implementation of Logistics
improvement systems
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
• Manufacturing supremacy
rests on ideals of
Cost – each employee works
as Costs Manager
Quality - „Do it right first time‟
Safety- „Home or Work place:
Safety takes first place‟
OUTBOUND
LOGISTICS
• Presence in 500 cities
• 300+ distributors
• 1600+ service stations
• 16 warehouses
• True value dealership
model
• Decent margins to
dealers

13. MARKETING & SALES
• Anytime Maruti - 24*7 toll-free
helpline to attend to customer
grievances
• Maruti On road- Maintenance &
Repair services
• Maruti Finance – Car finance in 166
cities in partnership with SBI
• Free test drive to customers
SERVICE
• Sales Operation Standards (SOS) -
Requirements in terms of
infrastructure and workflow
processes to be met at dealership
• Excellent after-sales service-
1600+ centers with detailed
information on website
• Motor training schools
• Cashless insurance- Inception of
two subsidiaries- Maruti Insurance
Distributors Services Pvt. Ltd. &
Maruti Insurance Brokers Pvt. Ltd.

14. • IT network links vendors across the country & keeps
track of order and delivery status.
• Electronic Data Processing (EDP) Dep't. manages
post-sales process & sales analysis.
• Styling & Engineering functions done in UGS‟ NX
solutions
• Data Management Software maintains record of all
enquiries & provides timely reports on demand.
TECHNOLOGY
DEVELOPMENT
• Reduced no. of vendors from 370 (2000) to 100 (2005)
• Quality maintained by periodic quality system audits
• Maruti Centre for Excellence (MACE) to share best
practices & increase competitiveness among suppliers
• Guidance to suppliers on financial matters pertaining
to fund management, Basel III norms etc.
• Supplier Club used as platform to discuss operational
& social issues between suppliers and top
management
PROCUREMENT

15. • Plants at Manesar & Gurgaon; 7600 employees
• Partnership approach with all stakeholders
• Annual General Meetings
• IR Cell
• Production Management System aimed at achieving
manufacturing supremacy through Japanese principles of
5S, 3G & 3K
FIRM
INFRASTRUCTURE
• Major component of variable pay ensures alignment of
employees with organization
• Innovation forms a core value & is highly encouraged
• Company is treated as family with events like Parivar Milan &
Family Day
• Maruti Recruitment System (MARS) comprising technical
aptitude test followed by technical & HR interview.
• Classroom training is reinforced through e-learning modules
• MSPIN issued to all employees
HUMAN
RESOURCE
MANAGEMENT

16. CAPABILITIES OF MSIL
 Manufacturing and production technology
 Understanding customer‟s needs
 Developing new designs and models of cars which are fuel-
efficient
 Quality focus
 Prompt service and customer satisfaction

17. CORE COMPETENCIES
• Pioneer in latest
technology
• Lean Mfg
• PMS
• Quality Control
MANUFACTURIN
G EXCELLENCE
• Most extensive
network in India
• Greater customer
satisfaction
STRONG
DISTRIBUTOR
NETWORK
• Alliances with
suppliers
• Alliances with
dealers
FORWARD AND
BACKWARD
INTEGRATION• True Value
• Anytime Maruti
• Authorized service
centers
• Insurance
OTHER CRM
INITIATIVES

18. GURGAON FACILITY
 The Gurgaon facility spread over 300 acres is located around 25 kms south
of Delhi. This facility houses three fully integrated plants. Together the three
plants churn out around 9 lakh units annually.
 K- series Plant
The Gurgaon premises also houses the 'K Engine' Plant. Commissioned in
2008, the K-series engine plant has an installed capacity of over 7.7 lakh
units per annum. Since the launch of the engine cumulatively, over 10 lakh K-
series engines have been rolled out.
K-series engines are available in 1 litre, 1.2 litre and 1.4 litre capacities. The
highly fuel efficient, technologically advanced K-series engines have been
very well appreciated by our customers for their performance.
Several Maruti Suzuki cars such as the Alto K10, A-star, Estilo, WagonR,
Swift, Swift Dzire, Ritz and Ertiga are powered by the K-series engines.

19. MANESAR FACILITY
 The 600 acre Manesar facility located around 25 kms south of
Gurgaon facility was inaugurated in February 2007. The Manesar
facility houses two fully integrated plants with a capacity of 5.5 lakh
units annually. The third assembly line is in advanced stage of
completion and is expected to be completed in the year 2013.
 Both manufacturing facilities are highly automated with advanced
robotics, contemporary paint, weld and machining infrastructure.
While the different models can be assembled on same lines, inter
plant flexibility helps to increase productivity. On a single line diverse
car models can be made conveniently. Automatic tool
changers, centralized weld control systems and advance numerical
control machines help for quick change over between models.

22. SAFETY:

23. SAFETY KPI(S):
 Safety Index-
Safety is of the paramount importance in a workshop. To
meet the desired safety standards various training programs
are started so as to give proper knowledge to workers
regarding safety precautions. Safety Index represents the
overall percentage of number of points received by an
assembly shop to improve safety to number of points
available for improving the safety of the department.

24. SAFETY AUDITS:
 PMS audit: Each area is assigned with a safety area co-
ordinator, who suggests measure for improving the safety of
an area and each suggested measures carries some points.
The safety area co-ordinator assigns points based on number
of suggestions implemented in the area.
 Sunday audit: under this an official conducts the audit of all
the plants on a Sunday and award points.
 External audit: under this an external agency visits the
facility and suggests measures to improve the safety. Each
measure is given some points. A facility is then given points
based on the implementation of the suggestions.

25. QUALITY:

26. QUALITY AND COST:
Quality is of utmost importance to the company. Quality
lapses have a huge impact on the company’s image besides
the financial loss. Therefore, the company tries its best to
foolproof its processes against the operators’ faults.
However, still some defects are passed on by the operators
during the manufacturing processes. These defects, when
found later during the process need to be removed which
causes some cost to the company.
Therefore, the company monitors the quality levels and the
costs involved by defining KPI(s) listed in the next slide.

27. KPI(S) RELATED TO QUALITY AND COST:
 GCA score
 ABOK Line off Average per day
 Direct Pass
 Rejection Cost
 Warranty cost
 Cost of Repair
 Cost Savings

28. PRODUCTIVITY:
Productivity is a measure of output from a production
process, per unit of input. Productivity may be conceived of
as a metric of the technical or engineering efficiency of
production. Assembly shop has numerous KPIs to monitor
its productivity.
Various KPIs related to productivity are:
 Indexed CPV
 HPV
 Line Efficiency
 HPV and Non-HPV manpower

29. LINE EFFICIENCY
Line Efficiency
= Total time available in a shift – Time duration of the stoppages
Total working time available in a shift
It can be observed that lesser stoppages in the assembly line means
higher line efficiency and increased production capacity.

30. PACK ADHERENCE LOGIC
The different models which are manufactured at Maruti-
Suzuki can be broadly categorized into the following two
types:
1. Heavy work-models: SX4, Swift Dzire.
2. Light work-models: Alto, Zen.
Heavy work models need more work to be done on them as
compared to the Light work models. Therefore, the
operators at the station need more time to complete the
heavy work models than the light work models.

31. It is desirable that no two heavy models come
consecutively on the line so as to avoid operator
overloading which might cause the line to stop. This
means that Assembly line requires models in a
specific sequence called ‘Pack’.
A Pack consists of a certain number of vehicles
arranged in a specific sequence. All the cars in a pack
are arranged such that no two heavy work models
come together and the pack remains balanced. This
leads to maximization of efficiency of the Assembly
line.

32. BENEFITS
Ensuring adherence to the packs defined will lead to
 Reduced Operator Overloading
 Maximization of line efficiency
 Increased production capacity of the assembly shop.

33. SCENARIO- WORK AREA
Therefore, to reduce the data acquisition and report
generation time, we have centralize and partially
automate the monitoring the productivity related
parameters, which help us in not only in saving time
but also generate 100% accurate data to analyze and
compare.

34. PROJECT FLOW CHART

35. PRIME BENEFITS
 Partial automation of Data Capturing.
 Optimum Utilization of Resources.
 Analytics
 Forecasting and Pre-Planning of Resources.
Initial Scope of implementation:
Assembly shops

36. STANDARDIZATION
Standardization of
Control rules

37. STANDARDIZATION OF CONTROL RULES IN
ASSEMBLY SHOP:
Maruti Suzuki India Ltd (MSIL) has four assembly plants
in India. Three of the assembly plants operate in Gurgaon
area and one assembly plant is located in Gurgaon. Each of
these assembly plants have certain set of processes which
are carried out during the course of the production cycle.
The Operators, Supervisors and Inspectors working on the
assembly line have to follow certain set of standards called
as ‘Maruti Operating Standards’. To aid the work of the
employees certain systems have been implemented in each
of these plants.

38. BENEFITS:
 Availability of uniform control rules across each of the
assembly plants of MSIL
 Ease of Auditing process
 Better control of the assembly operations

39. MARUTI‟S GREEN PHILOSOPHY STEMS FROM
ITS USE OF “THREE R‟S
Reduce
Recycle
Reuse policy

40. REDUCE
 Reducing water usage in its air-conditioning plant: Water use is eliminated by
introducing air-cooled air-conditioners and closed cycle cooling towers.
 Reducing consumption of raw paints: Company has started using automation in paint
shop, increasing efficiency and thus reducing raw paint consumption. This has also
reduced paint-sludge (industrial waste) generated from the plant.
 Rightsizing of equipments: In its new facility, Maruti has ensured to use right sizes of
equipments, saving a lot on energy front.
 Three-coat-one-bake painting system: This state of art system uses only one baking
step as compared to conventional system of having two baking steps, thus reducing the
consumption of energy levels and increase efficiency.
 Use of solar energy in form of solar lamps and heaters helps in reducing power
consumptions.
Use of natural ventilators: These ventilators use wind energy as against electrical energy
to keep the rooms cool, thereby saving on power consumption.
 Reducing noise pollution: Company has installed many noise curtains in its
facilities, creating enclosure for high noise generation equipments and hence providing a
safer working condition to its employees.

41. REUSE
 Waste Heat Recovery: Company is reusing the waste gases,
generated during power generation, in its manufacturing process,
resulting in a saving of almost 4225 MWH per year.
 Sheet metal crap utilization: Parts of unused steel sheets during
manufacturing process i.e. scrap, is reused within the value chain
(like making smaller components). This results in lower industrial
waste generation and better returns for the company.
 Reuse of sewage treatment plant sludge: This waste is used in
horticulture, resulting in a significant reduction in landfill wastes.
 Reuse of packaging material: Maruti ensures almost 100 % of
domestic components come in collapsible boxes, making them easy
to reuse and in turn reducing wood and cardboard wastes.

42. RECYCLE
 Recycling groundwater: Maruti uses techniques like
soak pits, recharging shafts, rain-water harvesting
and water lagoons that help in recharging ground
water from the rainfalls.
 Recycling Water, 100% recycling: Through
technologies like “Reverse osmosis” and “tertiary
treatment” used in its Effluent Treatment Plant, Maruti
recycles almost 100 % of its waste water, bringing
down the need for fresh water by almost 28%.

43. 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 in-
process 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.

44. CONT……..
 The JIT system has evolved over the last 25 years in
the company from monthly scheduling to daily
scheduling of parts orders and finally, in 2003, to e-
nagare system i.e. the release of schedules on hourly
systems, a practice that aids in maintaining less than
two hours inventory of components within the
company.
 The e-nagare system is successfully running today at
the company and helps in maintaining the right
material inventory, at the right time, at the right place
and in the exact amount without the safety net of
excess inventory, thus reducing high inventory
carrying cost.

45. MARUTI – SUSTAINABLE OPERATIONS
THROUGH INTERNAL EFFICIENCY
 Maruti in recent years, owing to several innovative
measures like investing in green equipments, its
employee-driven campaigns
 Kaizens (shop floor improvements), has drastically
reduced the consumption of power and water and the
waste generation in its facilities.
 Company also credits this decrease in utility
consumption to its adoption of “just-in-time”
approach towards operations. Some of the facts and
figures supporting Maruti‟s claims are (figures
available for year 2007):

46. COST SAVINGS
 Total energy consumption per vehicle is down by 26 %
over the last six years.
 Power Consumption has come down by 31 % over the
last six years.
 Water Consumption per vehicle has dropped by 63%
over the last six years.
 Landfill waste has come down by 67 % over the last six
years.
 Carbon Dioxide emissions per vehicle (produced during
manufacturing) are down by over 39% in last five years.

47.  Maruti Suzuki is governed by the manufacturing excellence principles of
reducing wastages, inconvenience and inconsistency, which are imbibed
from its parentcompany SMC, Japan.
 Maruti Suzuki using best practices such as Just in Time (JIT), Kaizen
(continuous improvements), Pika Pika and Poka Yoke (mistake proof
operations). The best practices are replicated in the business process of
business partners to make their operations lean and error free.
 The company is efficiently interfaced with the dealers through Dealer
Management System (DMS), annual dealer interactions and reviews which
help the dealers in cost savings and customer convenience.
 Optimum levels of inventory are maintained to reduce the burden of inventory
carrying cost. Higher inventory levels are corrected whenever required to
them financially viable. This results in multiplicity of efficiency across the
value chain

48. Environmental best practices
Maruti is not only working towards implementing
environmental best practices in its facilities,
but also takes active part working in collaboration with its
suppliers to implement best practices in their facilities through
its
Environment Management System (EMS)
bringing benefit to the entire value chain.

49. CONCLUSION
• MSIL, through its cost leadership approach –
market leader for 3 decades , 50% market
share.
• Constant innovation to its processes, hence
helping it achieve efficiency.
• Cost advantage by maintaining long term
contracts with its suppliers - reliable supply of
materials
• Moving towards Integrated cost
leadership/differentiation strategy to cater to
changing demands of customers and changing
environment
• Sustainability of this strategy in the long run