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SUPPLY CHAIN MANAGEMENT AT MARUTI SUZUKI

Submitted by:

Enrollment no:

University

Year
2

ACKNOWLEDGEMENTS

There are a number of important people I want to thank, without whose support, guidance,
encouragement, and help this work would not have been possible. I would also like to give my
greatest thanks to God who deserves the ultimate praise and credit for all good things in my life.
First and foremost, I want to thank…………..(Guide Name), who has been my advisor and mentor
throughout my studies. Without sir’s patient criticism, continual support, effective teaching, and
constant challenge and encouragement to give my very best efforts to my undertakings, I would
not have learned what I needed to nor been prepared to complete this dissertation and future work.
Much of what I have learned about the craft of research has come from Sir, and I am forever
grateful for the opportunity to have studied under his guidance.
I would not have made it through this research without the support, encouragement, teaching,
and friendship of fellow students in the program
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DECLARATION
I hereby declare that this project titled “A study on Supply chain
management at Maruti Suzuki ” is bonafide and authentic record of work done
by me under supervision of Dr. ______________ during academic session 2017-18.

The work presented here is not duplicated from any other source & also
not submitted earlier for any other degree/diploma to university. I
understand that any such duplication is liable to be punished in accordance
with the university rules.

The source material, data used in this research study have been duly
acknowledged.

Date: _______________________
Place: Signature of Student
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TABLE OF CONTENT

SERIAL PARTICULARS PAGE

NO. NO.

Chapter-1 Introduction 6
 Objectives of the Study
 Scope of the Study
 Company Profile

Chapter-2 Literature Review 30

Chapter-3 Research Methodology 42

Chapter-4 Data Analysis & Findings 44

Chapter-5 Conclusions 62

suggestion 64

Bibliography 66

Annexure
68
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EXECUTIVE SUMMARY

Supply Chain Management (SCM) practices govern the selection of an appropriate mode for the
movement of goods and materials within a given industry or geographical area. SCM has
undergone an evolutionary pattern. The pattern has progressed from utilizing a single mode in a
single region following the movement of raw materials, through manufacturing facilities, to the
consumer; to multi-modal solutions across a global landscape.

A variety of industrial, manufacturing, warehousing, and transportation sectors. Many of these


are not single points but facilitate the supply chain for local, state, and national needs.
Understanding the needs of SCM, particular to the state’s participants, will assist in guiding
future planning for infrastructure or promotion of a particular mode.

Maruti Suzuki India Limited has been in car manufacturing business for over 30 years and is the
largest car manufacturer in India. Maruti Suzuki India Limited has a nationwide dealer sales and
service network. The study anylyzes various innovations implemented in supply chain and
logistics management and the benefits derived by Maruti Suzuki India Limited to gain
competitive edge in the Indian Automobile Industry. The study is based on secondary data
comprising of literature review. The findings suggest that Maruti Suzuki India Limited has been
constantly implementing many innovations in supply chain and logistics management which
have given them many positive results in terms of enhancement of operational efficiencies, cost
reductions and attaining customer satisfaction. Further study can be conducted on other car
manufacturers in the India Automobile Industry.
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Chapter 1
Introduction

Supply chain management (SCM) is the broad range of activities required to plan, control and
execute a product's flow, from acquiring raw materials and production through distribution to the
final customer, in the most streamlined and cost-effective way possible.
SCM encompasses the integrated planning and execution of processes required to optimize the
flow of materials, information and financial capital in the areas that broadly include demand
planning, sourcing, production, inventory management and storage, transportation --
or logistics -- and return for excess or defective products. Both business strategy and specialized
software are used in these endeavors to create a competitive advantage.
Supply chain management is an expansive, complex undertaking that relies on each partner --
from suppliers to manufacturers and beyond -- to run well. Because of this, effective supply
chain management also requires change management, collaboration and risk managementto
create alignment and communication between all the entities.
In addition, supply chain sustainability -- which covers environmental, social and legal issues, in
addition to sustainable procurement -- and the closely related concept of corporate social
responsibility -- which evaluates a company's effect on the environment and social well-being --
are areas of major concern for today's companies.
Logistics vs. supply chain management
The terms supply chain management and logistics are often confused or used synonymously.
However, logistics is a component of supply chain management. It focuses on moving a product
or material in the most efficient way so it arrives at the right place at the right time. It manages
activities such as packaging, transportation, distribution, warehousing and delivery.
In contrast, SCM involves a more expansive range of activities, such as strategic sourcing of raw
materials, procuring the best prices on goods and materials, and coordinating supply chain
visibility efforts across the supply chain network of partners, to name just a few.
Benefits of supply chain management
Supply chain management creates efficiencies, raises profits, lowers costs, boosts collaboration
and more. SCM enables companies to better manage demand, carry the right amount of
inventory, deal with disruptions, keep costs to a minimum and meet customer demand in the
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most effective way possible. These SCM benefits are achieved through the appropriate strategies
and software to help manage the growing complexity of today's supply chains.
Supply chain complexity
The most basic version of a supply chain includes a company, its suppliers and the customers of
that company. The chain could look like this: raw material producer, manufacturer, distributor,
retailer and retail customer.

A more complex, or extended, supply chain will likely include a number of suppliers and
suppliers' suppliers, a number of customers and customers' customers -- or final customers -- and
all the organizations that offer the services required to effectively get products to customers,
including third-party logistics providers, financial organizations, supply chain software vendors
and marketing research providers. These entities also use services from other providers.

The totality of these organizations, which evokes the metaphor of an interrelated web rather than
a linear chain, gives insight into why supply chain management is so complex. That complexity
also hints at the types of issues that can arise, from demand management issues, such as a release
of a new iPhone that chokes demand for old iPhone cases; to natural supply chain disruptions,
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such as the halt of transportation in the U.S. in 2015 due to extreme winter weather, or
California's drought and its effect on crops; to political upheaval, such as the strikes in India that
throttled movement at its largest container port.

The role of supply chain management software

Technology is critical in managing today's supply chains, and ERP vendors offer modules that
focus on relevant areas. There are also business software vendors that focus specifically on SCM.
A few important areas to note include:

 Supply chain planning software for activities such as demand management.

 Supply chain execution software for activities such as day-to-day manufacturing operations.

 Supply chain visibility software for tasks such as spotting and anticipating risks and
proactively managing them.

 Inventory management software for tasks such as tracking and optimizing inventory levels.

 Logistics management software and transportation management systems for activities such as
managing the transport of goods, especially across global supply chains.

 Warehouse management systems for activities related to warehouse operations.

Infor, JDA Software, Oracle and SAP are well-known vendors of supply chain software.

The increasingly global nature of today's supply chains and the rise of e-commerce, with its
focus on nearly instant small deliveries straight to consumers, are posing challenges, particularly
in the area of logistics and demand planning. A number of strategies -- such as lean -- and newer
approaches -- such as demand-driven material requirements planning -- may prove helpful.

Technology -- especially big data, predictive analytics, internet of things


(IoT) technology, supply chain analytics, robotics and autonomous vehicles -- is also being used
to help solve modern challenges, including in the areas of supply chain risk and disruption and
supply chain sustainability.
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“Supply Chain Management” (SCM) and “Logistics” are part of the same solution set, one filling
the gaps, and one closing them. Both are involved in integrated activity involving many
functions, divisions and organizations and are responsible for multiple flows of information,
physical goods and financial instruments. A supply chain is a partnership of organizations which
are involved in providing a product or service. Stakeholders of the supply chain act as partners
who are linked together through both physical and information flows. Effective integration of
suppliers into supply chains is a key factor for manufacturers in achieving the improvements
necessary to remain competitive. (Ragatz, Handfield et al., 1997)

SCM is the integration of key business processes from end user through original suppliers that
provides products, services, and information that add value for customers and other stakeholders
(Lambert, Cooper, 1998)2 . For supply chains to be effective, operational information about the
production process has to be shared between manufacturer and suppliers. The goal is to create
and coordinate the manufacturing process seamlessly across the supply chain in a way the
competition cannot easily match (Frohlich, Westbrook, 2001).The concept of supply chain
management is a form of process innovation and use of innovative tools and work designs which
form the basis for radical improvement of business process performance (Davenport, 1993).

Logistics has evolved with the overall responsibility for the movement, storage and handling of
both inbound material and outbound products. Logistics innovativeness and logistics service
differentiation both positively influence logistics performance (Ralston et al., 2013).

Maruti Suzuki India Limited (MSIL) is one of the most successful stories in supply chain and
logistics management in the Indian automobile market. Over the years it has worked to convert
obstacles into opportunities. MSIL was incorporated on February 24, 1981 with the name Maruti
Udyog Limited. The company was formed as a government company, with Suzuki as a minor
partner, to make a people's car for middle class India. Over the years, the company's product
range has widened, ownership has changed hands and the customer has evolved.

In October 2, 1982, the company signed the license and joint venture agreement with Suzuki
Motor Corporation, Japan. In the year 1983, the company started their productions and launched
and rolled out the first Maruti 800 on 14th December, 1983. MSIL India Limited (formerly
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Maruti Udyog Limited) is India's largest passenger car company, accounting for over 39 per cent
of the domestic car market. The company is a subsidiary of Suzuki Motor Corporation of Japan.
The company is engaged in the business of manufacturing, purchase and sale of motor vehicles
and automobile spare parts. MSIL have six plants, three located at Gurgaon, Haryana and other
three located at Manesar Industrial Town, Haryana.

SCOPE OF STUDY
The company taken for the live study of the supply chain policies is the Maruti Suzuki India
Limited. Though the supply chain of the company is very big and intensive, we will be focusing
on the few aspects for the study of this project. The following points are being considered for the
scope of the study of the project:-
 To study the roles played by the various divisions in the company during the vendor
selection process and the vendor selection process. This will help us in correlate the
theoretical aspect studied as the different conflicts arising out of the different needs of
the different supply chain members.
 To study the e-nagare system of the company and how it does works to manage the
inventory and ordering of parts to the customers. This will help us understand how India’s
biggest passenger car manufacturing company is managing its supply chain operations
and inventory levels.

Based on these studies we will try to link the various theoretical aspects learned vis-à-vis how they
are actually being followed in the companies. Also we will try to find the potential shortcomings
and the ways how that system can be improved further.

OBJECTIVE OF STUDY
 To understand the implementations of innovations in supply chain and logistics
management at Maruti Suzuki India Limited.

 To analyze the exact segregation of the industry


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COMPANY PROFILE
Cars are what Maruti Suzuki builds. Experiences are what it creates.

Experiences fuelled by innovations, forward thinking, and a commitment to bring the very best
to Indian roads. From the day the iconic Maruti 800 was launched in 1983, the company has
been spearheading a revolution of change. Turning an entire country’s need for driving, into its
love for driving.
However, tastes and demands keep on evolving with each new generation of Indians. This has
not been looked at by Maruti Suzuki as a challenge, but as an inspiration to go beyond traditional
boundaries of car-making. Infusing design and technology is one such step it has taken to make
its cars meet new age expectations smoothly.
Today, Maruti Suzuki has its eyes set firmly on the possibilities of tomorrow. And everybody is
invited on this journey.

OUR VALUES

RESPONSIBLE
You can always rely on us and our network.

DYNAMISM
Always evolving with your needs

OPEN
All our actions are open and transparent.
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EFFICIENT
Expertise that ensures utmost efficiency.

RELIABLE
Your safety is our number one priority.
LEADERSHIP

MR. R. C. BHARGAVA MR. KENICHI AYUKAWA


Chairman Managing Director & CEO

MR. OSAMU SUZUKI MR. KAZUNARI YAMAGUCHI


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Director Director (Production)

MR. R.P. SINGH MS. RENU SUD KARNAD


Independent Director Independent Director

WIDEST NETWORK

Wherever you need us, just look around. We’ll be right there.

No matter where you go in India, you are never too far from a Maruti Suzuki Dealer or a Maruti
Suzuki Service Station. By taking care of over 46,000 cars a day and with an unbeatable first-
time right score, Maruti Suzuki has built a reputation of being one of the best automobile service
networks in the country.
 3602 Service Workshops
 3473 Sales Outlets
 1773 Cities Covered By Service Network
Maruti Suzuki Service has been No.1 in the J D Power Customer Satisfaction Award for 16 years
in a row

History of Maruti
Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an automobile
manufacturer in India. It is a subsidiary of Japanese automobile and motorcycle manufacturer
Suzuki. As of November 2012, it had a market share of 37% of the Indian passenger car markets.
Alto, Ritz, Celerio, Swift, WagonR, Zen, Ciaz, Kizashi, SX4, Eeco, Omni, Ertiga, SCross, D-
Zire.
The company's headquarters are at No 1, Nelson Mandela Road, New Delhi. In February 2012,
the company sold its ten millionth vehicle in India.
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Maruti Udyog Limited was established in February 1981, though the actual production
commenced only in 1983. It started with Maruti 800, based on the Suzuki Alto key car which at
the time was the only modern car available in India. Its only competitors were Hindustan
Ambassador and Premier Padmini. Originally, 74% of the company was owned by the Indian
government, and 26% by Suzuki of Japan. As of May 2007, the government of India sold its
complete share to Indian financial institutions and no longer has any stake in Maruti Udyog.
Chronology Beginnings
Maruti's history begins in 1970, when a private limited company named 'Maruti technical
services private limited' (MTSPL) was launched on November 16, 1970. The stated purpose of
this company was to provide technical know-how for the design, manufacture and assembly of "a
wholly indigenous motor car". In June 1971, a company called 'Maruti limited' was incorporated
under the Companies Act and Sanjay Gandhi became its first managing director. "Maruti
Limited" went into liquidation in 1977. On 23 June 1980 Sanjay Gandhi died when a private test
plane he was flying crashed. A year after his death, and at the behest of Indira Gandhi, the Indian
Central government salvaged Maruti Limited and started looking for an active collaborator for a
new company. Maruti Udyog Ltd was incorporated in the same year through the efforts of Dr. V.
Krishnamurthy.
Suzuki Enters
In 1982, a license & Joint Venture Agreement (JVA) was signed between Maruti Udyog Ltd. and
Suzuki of Japan. At first, Maruti Suzuki was mainly an importer of cars. In India's closed
market, Maruti received the right to import 40,000 fully built-up Suzuki in the first two years,
and even after that the early goal was to use only 33% indigenous parts. This upset the local
manufacturers considerably. There were also some concerns that the Indian market was too small
to absorb the comparatively large production planned by Maruti Suzuki, with the government
even considering adjusting the petrol tax and lowering the excise duty in order to boost sales.
Finally, in 1983, the Maruti 800 is released. This 796 cc hatchback is based on the SS80
Suzuki Alto and is India’s first affordable car. Initial product plan is 40% saloons, and 60%
Maruti Van. Local production commences in December 1983.In 1984, the Maruti Van with the
same three-cylinder engine as the 800 was released and the installed capacity of the plant in
Gurgaon reached 40,000 units.
In 1985, the Suzuki SJ410-based Gypsy, a 970 cc 4WD off-road vehicle, was launched. In
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1986, the original 800 was replaced by an all-new model of the 796 cc hatch back Suzuki
Alto and the 100,000th vehicle was produced by the company. In 1987, the company's started
exporting to the West, when a lot of 500 cars were sent to Hungary. By 1988, the capacity of the
Gurgaon plant was increased to 100,000 units per annum.

Manufacturing facilities
Maruti Suzuki has two manufacturing facilities in India. Both manufacturing facilities have a
combined production capacity of 14, 50,000 vehicles annually. The Gurgaon manufacturing
facility has three fully integrated manufacturing plants and is spread over 300 acres
(1.2 km2). The Gurgaon facilities also manufacture 240,000 K- Series engines annually.
The Gurgaon Facilities manufactures the 800, Alto, WagonR, Estilo, Omni, Gypsy, Ertiga,
Ritz, and Eeco. The Manesar manufacturing plant was inaugurated in February 2007 and is
spread over 600 acres (2.4 km2). Initially it had a production capacity of 100,000 vehicles
annually but this was increased to 300,000 vehicles annually in October 2008. The production
capacity was further increased by 250,000 vehicles taking total production capacity to 800,000
vehicles annually.

The Manesar Plant produces the A-star, Swift, Swift DZire, SX4, Ritz and Celerio. On 25 June
2012, Haryana State Industries and Infrastructure Development Corporation demanded Maruti
Suzuki to pay an additional Rs 235 corer for enhanced land acquisition for its Haryana plant
expansion. The agency reminded Maruti that failure to pay the amount would lead to further
proceedings and vacating the enhanced land acquisition. It plans to set up a plant in Gujarat and
has acquired 600 acres of land
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Products and services


Current models
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Sales and service network


As of 31 March 2014 Maruti Suzuki has 933 dealerships across 666 towns and cities in all states
and union territories of India. It has 3,060 service stations (inclusive of dealer workshops and
Maruti Authorized Service Stations) in 1,454 towns and cities throughout India. It has 30
Express Service Stations on 30 National Highways across 1,436 cities in India.
Service is a major revenue generator of the company. Most of the service stations are managed
on franchise basis, where Maruti Suzuki trains the local staff. Other automobile companies have
not been able to match this benchmark set by Maruti Suzuki. The Express Service stations help
many stranded vehicles on the highways by sending across their repair man to the vehicle.
In the year 2015 Maruti Suzuki launched a new premium sales channel called NEXA. Maruti
Suzuki India Limited’s Managing Director & CEO, Kenichi Ayukawa said: “NEXA provides a
new experience of hospitality from Maruti Suzuki. Indian market and Indian society are rapidly
changing and new segments of customers are emerging. We have to take new initiatives to meet
diversifying expectations from our customers”.
He added: “The mission of NEXA is to offer innovative value and direction so that we can
adequately respond to the new segments of Indian customers and offer them the experience
which they value. While we will of course continue to enhance customer satisfaction in our
current network, with NEXA, I am confident Maruti Suzuki will be able to cater to a broader
range of customers who value pampering, innovation and a personal touch in their car owning
experience”.
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S-Cross, India’s first premium crossover that debuts in August 2015 will be the first car to be
sold under NEXA. Several new models will be added to both channels as part of the Company’s
medium term goal of 2 million annual sales by 2020.

Awards and recognition

The Brand Trust Report published by Trust Research Advisory, a brand analytics company, has
ranked Maruti Suzuki in the thirty seventh position in 2013 and eleventh position in 2014 among
the most trusted brands of India.
Blue bytes News, a news research agency, rated Maruti Suzuki as India's Most Reputed Car
Company in their Reputation Benchmark Study conducted for the Auto (Cars) Sector which
launched in April 2015

SWOT Analysis

1. Maruti is the largest passenger car company in India, accounting for


around 45% market share
2. Over 6,000 people are employed with Maruti
3. Good advertising, product portfolio, self-competing brands
4. Largest distribution network of dealers and after sales service centers
5. Strong brand value and strong presence in the second hand car market
6. Having different revenue streams like Maruti finance, Maruti Insurance
Strength 7. Over 700,000 units sold in India annually including 50,000 exports

1.Inability to penetrate into the international market


Weakness 2.Employee management, strikes, worker wage problems

1. Developing hybrid cars and fuel efficient cars for the future
2. Tapping emerging markets across the world and building a global brand
Opportunity 3.Fast growing automobile market and increased purchasing power
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1. Government policies for the automobile sector across the world


2.Ever increasing fuel prices
3. Intense competition from global automobile brands and cheaper
brands
4. Substitute modes of public transport like buses, metro trains etc

Threats

Competition

1.Honda
2.Toyota
3.Nissan
4.Hyundai
5.Fiat
6.Mitsubishi
7.Chevrolet
8.TataMotors
9.Skoda
10.Toyota
11.MarutiSuzuki
Competitors 12. Ford
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Maruti Suzuki on raising the Indian supply chain


Sudam Maitra has worked to develop the Indian supply base for much of his career. Maruti
Suzuki and its top supply chain executive are spreading expertise and efficiency across the sub-
tier chain

Competition can do wonders for a business. When rivals outdo a


company, it is often forced to explore possibilities that were
previously unknown to it. This is something Sudam Maitra, senior
managing executive officer for supply chain at Maruti Suzuki,
realised early in a purchasing career that has spanned three
decades.
Had there been no competition, the soft spoken, meticulous
mechanical engineer would have possibly moved slowly on
creating new paradigms in procurement and supply chain at India’s
largest carmaker. Instead, he has been at the centre of a
transformation that has not only allowed Maruti to prosper by
working with efficient, reliable material suppliers and logistics providers, but his work has also
contributed to the development of the entire country’s automotive supply base.
From monopoly to competitive supply chains
Until Suzuki entered India in the early 1980s – then in partnership with the Indian government as
Maruti Udyog – the motor industry’s supply base in India was extremely limited, serving only
Hindustan Motors and Premier Automobiles. Maitra recalls how the carmaker had to learn many
lessons to arrive at the generally well functioning, lean and thriving supply chain we find today
in India.
During its first decade, Maruti faced limited competition and hence paid less attention to the
vendor base it had created to cater to its needs, or to rising costs. “Vendors used to come to us at
the end of the year and seek price hikes for their supplies, citing increases in input cost,” Maitra
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says. “We invariably bowed to their demands because we enjoyed a monopoly situation and
managed to hike our
That situation changed dramatically once competition increased and more carmakers entered the
market. Quality products had to hit the dealers at prices lower than those of the competition, and
achieving this cost began in purchasing, says Maitra. Maruti switched its procurement approach
to ‘target costing’.
“It is sort of a reverse calculation,” says Maitra. “Once we arrived at the vehicle’s market price,
we fixed material costs. Vendors were shocked initially. We told them, ‘enough of this upward
price revision every year. Now you need to look at downward price revision every year’.”

While early in its history Maruti Suzuki could operate as a monopoly, its purchasing focus has
shifted strongly towards collaboration with suppliers

Suppliers met this change with stiff resistance, including walkouts. Sensing the challenge, Maruti
Suzuki’s executives eventually realised that to achieve deep cost reduction year on year, the
company would need to work together more with suppliers. “Unless this is carried out, we
cannot bargain with them to reduce the cost when their final product is ready for delivery,”
Maitra says. “It was then that we in purchasing truly realised that it is a chain. So we also
changed the name from ‘purchasing and vendor development’ to ‘supply chain’.”
Global expertise for global products
This shift would become even more important as Maruti Suzuki built more global vehicles, the
production and launch of which coincided with those in other markets. Supply chain complexity
and coordination became even more complex. “Before 2005, [managers] would go to Japan
where all Suzuki models would be lined up and they would identify one or two models that may
suit Indian conditions and then bring them here,” he says. “Since Suzuki had taken a majority
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control in Maruti Suzuki around that time, it was decided that henceforth all launches from its
stable would be global ones. For instance, Swift was launched simultaneously in Japan, Hungary,
China and India.”
That shift has had huge implications for the supply chain. “Earlier, we used to bring designs from
Japan and pass them on to vendors to copycat them,” Maitra explains. “Since 2005, things have
changed due to this simultaneous global launch phenomena. Here, the challenge was to ensure
Indian suppliers’ input on design should also be incorporated in the final design. This led to the
concept of ‘concurrent engineering’. In a way, we were moving towards collaborative modules
with our suppliers, which again was a paradigm change. Many vendors were unable to rise up to
that level.”
It was around this time that supplier development started to become even more important for the
supply chain team at Maruti, both in establishing global suppliers in India, as well as nurturing
smaller, local suppliers.
Generally, Maruti Suzuki defines three categories of suppliers: fully owned, global suppliers
(such as Visteon and Delphi, as well as logistics providers like NYK/Yusen); the second is large
Indian companies that went in for joint ventures with foreign companies (such as Sona Koyo,
Krishna Maruti, etc.); the third lot is small Indian suppliers, such as for sheet metal or plastic
components, that operate with no foreign equity or technological collaboration.
When Maruti switched to global launches, it was the third category that was largely unable to
participate in the ‘concurrent engineering’ route, according to Maitra. He says that they were
good at reading drawings and manufacturing them, but many lacked design skills.
To remedy this situation, Maruti set up a separate division within Maitra’s supply chain wing to
identify foreign technology firms and match them with Indian suppliers. Maruti advised the third
category of suppliers to get into tool design with these companies, which is generally considered
easier than product design. This matchmaking exercise began in 2006 and has so far led to 18
collaborations.
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Maitra encouraged Indian suppliers to develop partnerships with global suppliers to help
improve their design and engineering capabilities

Not all of them have lasted. Some foreign partners, having tasted the Indian automotive market
through collaboration with local companies, wanted to then set up wholly owned subsidiaries.
“There is some amount of heartburn from the Indian companies but the positive factor is that
they have already imbibed or learned design capabilities,” says Maitra.
Today, the supply base in India has blossomed. Maitra works with more than 400 vendors,
including global, Indian and joint venture suppliers. He says that such a variety of choice is
important because of uncertainties in logistics, labour and infrastructure in India. For example,
Maruti Suzuki will often have three suppliers for some parts. “We just cannot afford to depend
on one or two,” he says. “In India you are not sure of many things: work stoppages at factories,
highway and transportation challenges or port challenges, for example. The availability or access
to more suppliers is a blessing.”
Maitra and his team remain highly focused on supplier development today, including helping
vendors to improve lean manufacturing and just-in-time logistics. “Our aim is to help them to
achieve manufacturing at absolutely minimum cost. Productivity at its highest and the best
quality.”
Suppliers are grouped into clusters and taught ‘pull’ and ‘just-in-time’ manufacturing in
classrooms for a fortnight. Following this, projects at vendor locations are taken up for
identifying where there is maximum pain: high inventory, low productivity and high manpower,
for example. Maruti experts then work with suppliers for six months to help them improve
further.
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The company has even set up a special unit to work closely with suppliers. The Maruti Centre for
Excellence (MACE) is made up of a group of engineers that focus on supplier quality, including
periodic audits and consulting on project implementation.

The path to localisation


Maitra’s mantra for purchasing is simple: localise and keep the cost as low as possible. Do
anything and everything legally possible to achieve that goal. As well as dealing directly with
suppliers, Maitra has also done hedging in foreign currency for Maruti, as well as for
commodities such as copper, aluminium, platinum and palladium – a first in the Indian
automotive industry.
Localisation of suppliers and components has been an important part of Maruti Suzuki’s supply
chain development over the past decade or more, not least to avoid exposure to currency shifts
and higher logistics costs. This process started with a redefinition of what ‘local’ meant. In the
past, the carmaker followed criteria for supplier localisation from India’s Directorate General of
Trade and Development (DGTD). These rules state that if a part is invoiced on Indian soil, it is
considered ‘local’, even if most production happened abroad and the product was sequenced and
packaged in an Indian warehouse. This was the case with much of Maruti Suzuki’s own
production, as well as those of the suppliers that came over from Japan and other locations.
The result was a distorted picture for localisation of the Indian supply base. According to the
DGTD definition, Maruti Suzuki already had a localisation rate of 99% in 1996. However, the
invoicing loophole could not hide risks from foreign currency exposure and other supply chain
costs, which were taking their toll on the carmaker’s global procurement bill.
“Our understanding was that if there were any foreign exchange variations, Maruti Suzuki would
compensate for them,” says Maitra. “But as the Japanese yen got stronger, leading to higher
outgoings for imports, it caused a big dent in our profitability.”
Maruti has since changed its definition for local suppliers. “Even if a ‘child’ part comes from
overseas, it will not be considered as ‘local’. As per our present definition, localisation is around
80-85%.”
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Trying a pint or two of milkruns

Maruti Suzuki has started to experiment with milkruns near some of its plants

Maruti Suzuki spends about 2.5% of net sales on inbound logistics, as it relies mainly on vendor-
managed inventory. Maitra admits that milkrun processes had previously been indigestible for
him. However, the company has moved more towards using 3PLs to manage parts of inbound
logistics. “Toyota has gone in for the total 3PL route. We decided to get into these modern
concepts too,” he says. “But our experience has been that when the vendor manages his supply,
the cost is lowest when compared to the 3PL route.”
The carmaker has experimented with milkruns from Faridabad, close to Gurgaon, with Ceva.
Maitra says all suppliers can track supplier movement on a handset. Now he is deliberating
whether to introduce milkruns at other locations, including Bawal, Rohtak and Manesar.

Components used to be considered local if they were invoiced in India, but today Maruti looks
more carefully at suppliers’ production origins
28

For operations and design, Maitra and his team have also targeted reductions in weight. “We
have a strategy called 1-1-1 on the raw material side, which is the brainchild of our chairman,
Osamu Suzuki,” he says. “The goal is to reduce the weight of every component by one gram.
Costing is based on weight, so every single gram of weight reduction is a positive.” According to
Maitra this has led to Rs120m ($1.9m) in savings each year.
Partnering with suppliers
A relentless focus on cost masks Maitra’s commitment to partnership in the supply chain. While
he wants to keep costs low, he is not looking to beat up on suppliers. “If we keep squeezing
suppliers in protecting our interest only, then in the long run we cannot sustain,” he says.
Maitra has implemented measures designed to help suppliers. Recently, India’s central bank gave
Maruti permission to hedge currency on behalf of Indian suppliers. The carmaker also buys raw
material for suppliers in bulk to help companies get a better price; it arranges low-cost funding
for suppliers. For a small fee, payments are also fast-tracked, with just a nine-day cycle from the
date of invoice submission.
Maitra admits that suppliers unable to meet cost targets will struggle. However, he recognises
that it cannot be all pain and no gain. Maruti has introduced shared savings programmes with
suppliers, called ‘value analysis value engineering’. “If suppliers are going for localisation of
child parts instead of importing, for example, we will share the savings,” says Maitra.
Maitra is proud of Maruti’s vendor relationships, something his tier suppliers have backed up.
Anand Swaroop, president and group chief financial officer of Indian tier supplier JBM Group
Limited, which has a joint venture with Maruti Suzuki, says that “it is not a buyer-seller
relationship, but a partnership”.
"These guys are different" – Anand Swaroop, JBM Group
JBM Group is an Indian tier supplier that has seen turnover rise to Rs1,200 crore ($192m),
including a large joint venture with Maruti Suzuki. Anand Swaroop, president and group CFO,
has been with the company from the beginning.

"Maruti Suzuki is a vendor-friendly company. Ours is not a saas-bahu [mother-in-law and


daughter in-law] relationship. They work with vendors and don’t thrust and impose their dictats.
They treat you like partners and bring you up. They are there at every single step giving you
29

support in terms of quality, production facility and logistics. Without this relationship, we would
have remained just a supplier of seat components. Today we are a systems supplier.

Localisation is the focus. It is not just a cost reduction approach, but an excellent learning
opportunity. Waste reduction is achieved through joint efforts and benefits realised thanks to a
transparent and collaborative relationship. Regular meetings at every level – right from CEOs to
the shopfloor level – give you confidence and better future prospects.

Maruti is working with clusters of tier one and two suppliers to improve their production and
delivery quality

Maruti Suzuki’s vendor upgradation programme, scripted by MACE, is a wonderful experience.


Normally, you don’t find OEMs willing to deal with tier two vendors. These guys are different.
Today, based on MACE training, we are able to service other auto OEMs as well. However,
although we have no restrictive clauses, JBM caters almost 90% of its capacity to meet Maruti
Suzuki’s needs. We have even set up separate companies for other OEMs to focus our resources
on Maruti.

We no longer talk of ‘rejections’ at JBM. Terms such as lean manufacturing, supply chain and
zero defect are very common and familiar to us. At one point, we had 2,000 PPM. Today, it is 5-
10 PPM. We are trying to replicate what we have learned with our 40-odd vendors via clusters.
We can claim that we noticed a 60% improvement in the performance of our vendors after
MACE conducted training and upgradation of skills.
30

Chapter 2
Literature Review

SCM has been interpreted by various researchers. Based on the relatively recent development of
the supply chain literature, it is not surprising that there has been much debateas to a specific
SCM definition. Ganeshan and Harrison (1995) has defined SCM as a network of facilities and
distribution options that performs the functions of procurement of materials, transformation of
these materials into intermediate and finished products, and the distribution of these finished
products to customers.
Lee & Corey (1995) stated that SCM consists of the integration activities taking place among a
network of facilities that procure raw material, transform them into intermediate goods and then
final products, & deliver products to customers through a distribution system. Christopher (1998)
defined the supply chain as the network of organizations that are involved, through upstream and
downstream linkages, in the different processes and activities that produce value in the form of
products and services in the hands of the ultimate customer. SCM is the " strategic and
systematic coordination of the traditional business functions and the tactics across these business
functions within a particular firm and across businesses within a supply chain, for the purposes
of improving the long-term performance of the individual companies and the supply chain as a
whole" (Mentzer et al. 2001). various connotations of supply chain management given by other
researchers are given in Table
31
32

The competition in modern business management is no longer between organizations but within
supply chains (Lambert, Cooper, 2000)3 . The ultimate success of businesses depends on the
ability to integrate the organization’s intricate network of business relationships. The term supply
chain management refers to cooperative management of materials and information flows
between supply chain partners, to reach goals that cannot be achieved acting individually (Sucky,
2005)4 . The purpose of supply chain management is to improve trust and collaboration among
supply chain partners, thus improving inventory visibility and the turnaround time of inventory
movement (Choi, Hong, 2002)

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.

MSIL recognizing the increasing competition from the global OEM (Original Equipment
Manufacturers) and increasing customer expectations had shown unparallel dedication towards
R&D (Research and Development) to retain the market superiority. The organization achieved
the capability for carrying out full body change and is working on various new projects for new
model design and development. Systematic efforts are being put in to enhance the efforts through
establishment of world class test and track and proving ground facility, which will help in
validating various vehicle systems and models along with full in-house designing, development
and evaluation of entire vehicle, extensive training, development of prototype build capability
and many advanced engineering projects.

The company has 246 local suppliers and 20 global ones which function in a seamless manner.
The company strictly receives their supplies ordered the previous night in a two hour slot the
next day.

Over years, MSIL has been redefining supply chain strategies and operations and designing their
operations to maximize throughput and lower cost. To improve profitability and efficiency,
MSIL has been innovating to achieve operational excellence, reduce operating cost and enhance
customer service through efficient supply chain and logistics management. MSIL understand that
sustainable logistic operations positively affect the supply chain (Grant et al., 2013)1 . Lean
33

supply chain and logistics management are critical success factors and just-in-time (JIT) in
supply chain and logistics are powerful strategies (Myerson, 2012)
Many of Suzuki Motor Corporation’s global vendors set up joint ventures in the northern region.
While setting up the plant the government had approved of manufacturing only on condition of
localization of components. Maruti used this by scouting for entrepreneurs and turning them into
vendors, facilitating loans, licenses, technical know-how and even location in a phased manner.
Of the 246 suppliers, Maruti has joint ventures with 19 of them and hold strategic equity stake to
have a say in production and quality issues. Maruti however was not satisfied with the delays in
production due to the lag time in supplies. The organization had adopted the Japanese system;
Just in Time (JIT) to achieve higher operational efficiencies and reduce inventory carrying cost.
MSIL adopted the E-Nagare system of electronic flow which has completely transformed its
supplier chain.
From 385 suppliers at one time, Maruti's local Tier I looks much leaner now at 246. As some of
the bad performers were weeded out, smaller suppliers were absorbed in the car major's Tier II
vendor list. Also, Maruti started insisting on 'full systems supply' from its Tier I vendors instead
of supplying each component separately. Maruti has a total of 800 suppliers including Tier II and
Tier III suppliers. Maruti sources 10 percent of its components directly from foreign markets and
10 to 15 per cent of components are imported by its vendors, which MSIL intend to reduce this
to half over the next 2 to 3 years to reduce its exposure to the foreign exchange fluctuations. The
inventory levels maintained for the imported components is up to three months, which mean a
huge capital lock up in the inventory. By localization, the per cent of capital lock up will be
reduced in addition to exposure to the foreign exchange fluctuations
Now from author’s point of view the definition of supply chain and supply chain management
can be depicted as “supply chain is the stream of processes of moving goods from the customer
order through the raw materials stage, supply, production, and distribution of products to the
customer. All firms have supply chains of varying degrees, depending upon the size of the
organization and the type of product manufactured. These networks obtain supplies and
components, change these materials into finished products and then distribute them to the
customer. Managing the chain of events in this process is what is known as supply chain
management. Effective management must take into account coordinating all the different pieces
34

of this chain as quickly as possible without losing any of the quality or customer satisfaction,
while still keeping costs down”.
The supply chain not only includes the manufacturer and suppliers, but also transporters,
warehouses, retailers, and customers themselves. It is clear that supply chain management has a
significant role to play and needs critical attention in the corporate setting.
To achieve JIT material supplies, the company has given preference to locally based suppliers. It
also wanted a shorter pipeline and effective logistical control, which facilitated relocation of
vendors within a 100 km radius of its plants. Over 76 per cent of the company's 246 suppliers are
located within 100 kilometers of radius, who supply 86 per cent of the components by value to
Maruti. MSIL 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. Maruti supports it’s vendors in all possible ways. This includes finding
technology partners, giving financial, technical and management support and bringing
transparency in its dealings
The Literature, Theory and Practice of SCM

Numerous articles dealing with the theory and practice of SCM have been published over the
reviewed period of last 18 years, but the topic is still under considerable development and
debate. Richard Lamming (1996) has given a general review on lean supply chain in which Lean
supply has been characterized as “beyond partnership”. Lean supply is the system of purchasing
and supply chain management required to underpin lean production. . Ben-Daya et al. (2008)
explored the topic in a particular context, i.e. The industrial district (ID), that constitutes a
specific production model where complex SC networks can be identified. SC cooperation may
take on several forms in IDs and may produce several benefits (e. g. Upgrading quality and
reducing costs).
Vaart and Pieter (2003) drawn conclusions on the need for an inter-disciplinary approach,
combining the technical and relational aspects from the respective fields of system dynamics and
collaboration in order to deliver superior order replenishment performance. Gunasekaran and
Ngai (2005) indicated that E-Business, product, and service-quality, all have a significant direct
effect on customer behavioral intentions to purchase again. Balakrishnan and Cheng (2005)
reviewed and update the methodology based on spreadsheet that provided enhanced solutions in
complex environments with multiple products and bottleneck situations. Nagarajan and Sosic
35

(2004) reviewed literature dealing with buyer vendor coordination models that have used
quantity discount as coordination mechanism under deterministic environment and classified the
various models.
Based on this conceptualization of SCM, the existing literature was examined, in an effort to
identify the extent to which these underlying elements were present in SCM academic research
to date. A review of previous literature studies, as highlighted in Table 3 (Appendix A), provides
the basis for how this review extends our understanding of SCM research.
Burgess et.al. (2006) reviewed 100 randomly selected articles from 614 usable articles found in
the ABI/Inform Database across a 19 year (1985 to 2003) period.. Their sample addressed
manufacturing and consumer goods industries, and the research articles reviewed by them
focused on a more narrowly defined operations management approach to Supply Chain
Management. They classified the articles into four groups, namely (1) Descriptive features of
SCM, (2) Definition issues, (3) Theoretical concerns and (4) Research methodological issues.
They found SCM to be a relatively young field with exponential growth in interest from
researchers in the recent past. The importance of this research in contrast to Burgess et al.
(2006) is that instead of sampling 100 articles from a pool of 614 over a 5-year period, we
examined 588 articles over 18 years. This not only makes for a more in-depth review, but
provides a larger base from which to chart the maturation of the SCM field. It also helps to
assess gaps in the literature and project future trends, thereby underscoring the importance and
robustness of this study. Finally, Burgess et al., include books, manuscripts and conference
proceedings while this research focuses solely on published articles in peer reviewed SCM
journals.
Carter and Ellram (2003) surveyed the articles published in the Journal of Supply Chain
Management for the total period of 35 years since its launching i.e. for 1965 to 1999. Their
objective was to offer a greater understanding of the evolution of purchasing and supply research
over the first 35 years of the Journal of Supply Chain’s existence, and to provide guidance and
prescriptions for future supply management research. They observed that nearly 90% of the
journal articles under study consisted of normative literature, methodology reviews, and
exploratory studies. They further noted that the use of hypothesis testing had increased
significantly over the past 10 years of their review (1989- 1999), yet they consider that a greater
use of hypothesis testing and the scientific method is recommended as the Supply Management
36

discipline continued to mature. Carter & Ellram (2003) further recommended more literature
reviews leading to the introduction of theoretical frameworks of supply management, and the use
of more sophisticated research modeling techniques such as MANOVA/ discriminant analysis
and inferential statistical techniques. They classified the articles based on a modification of the
categories used by ISM, and proposed 32 categories for clear and unambiguous classification,
which has proved to be a milestone and has been used in subsequent literature reviews by several
researchers. The authors conclude that purchasing and supply management, as a scientific
discipline, is maturing. It is interesting to note that the authors have consistently used the terms
‘purchasing’ and ‘supply’ management, which speaks a lot about the stage of development of the
discipline of ‘Supply Chain Management’ till 1999.
Croom et al. (2000) analyze 84 studies on SCM in terms of level of analysis and research
methodologies, but the time period for their data collection is ambiguous. Their study represents
an early attempt to categorize the SCM literature. Significant growth has taken place both in the
practice and theory of Supply chain Management since this attempt, making it necessary for
reviews of current knowledge and literature. Finally they describe and categorize the research
methods into two dimensions: theoretical and empirical and do not provide the number of articles
associated with each level of analysis.
Rungtusanatham et.al. (2003) carried out a comprehensive review of 285 SCM articles published
in 6 operations management journals during a period of 21 years from 1980- 2000. They noticed
the occurrence of major changes in the last 5 years of their sampling period, and that two topics
stood out as showing fastest ascendancy to prominence- operations strategy and supply chain
management. They observed that the SCM related articles increased significantly after the first
half of 1990s, thereby implying the increased interest of researchers in this field and accelerated
growth of this discipline. It shows that SCM is a booming and growing field, and offers plenty
opportunities in research.

Giunipero et.al. (2008) in a recent literature review of a decade of SCM literature note that the
literature, in reality, is still very fragmented and although several studies purport to discuss
supply chain issues, most of the existing research only examines one link of the chain, or more
importantly only focuses on one ingredient in the supply chain performance mix. They pointed
out that the SCM literature reviewed by them revealed several gaps identified by them as
37

(1) Small sample sizes (2) One-tier investigations (3) Limited methodological analysis (4)Lack
of longitudinal studies, and
Limited global supply chain analysis.
In view of this discussion, the authors conclude that a broader view of SCM is needed in order to
develop a wider consensus and resolve the present conceptual and research methodological
confusion. In contrast to single journal review, or limited random review, this research surveys
thirteen academic journals and reviews 588 research-based articles published during an 18-year
period from 1991 to mid 2008, thereby covering the entire significant period of SCM emergence
to its evolution as a strong discipline. The authors these articles in terms of research method, and
data analysis techniques to discover the extent of research trend.
In summary, this research extends the previous literature reviews by:
Specifically focusing on multi facet SCM work in scholarly journals,
Reviewing the current 18 years period during which SCM grew as a discipline and academic
research in this field gained importance and increased significantly.
Providing an investigation of the research methods and data analysis, using an established
subject categorization scheme and reviewing publication and providing insight in to the research
methods and data analysis method used in current literature.
Fifty four of the top eighty component suppliers of MSIL India compete against each other in
what has been called 'Quality Circle Competition', and the top three get a chance to present their
cases in Suzuki's Japan facility alongside other global vendors. The idea behind the Quality
Circle Competition was for the teams from different vendors to identify, discuss and resolve any
one core business issue that will add value to the overall functioning of the company, thereby
increasing overall efficiency.

Simultaneously, the need arose to upgrade Maruti's vendor network. From Suzuki, Maruti
adopted the 'Maruti Production System' based on lean manufacturing program, wherein the
vendors are called for classroom training and several waste elimination methods are identified
and executed jointly. The focus on quality also added further strength to the company's supply
chain.
38

An initiative called 'Shikhar' was introduced along with the suppliers' quality teams where 'poor '
vendors were identified and even eliminated. They have a moving monthly average of 500
defective parts in a million and any vendor found supplying more than that benchmark, would
not make the grade.

At MSIL, India's largest carmaker, E-Nagare or 'electronic flow' is a religion. Simply put, this
electronic flow is actually the 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. E. Nagare has completely
transformed the supply chain at Maruti over the last few years. Across Maruti's twin sprawling
plants in Gurgaon and Manesar, multi colored bumpers arrive in mobile trolleys and components
line up outside factory sheds directly feeding the ever-hungry, multitasked assembly lines.
Within the factory premises, the inventory hold up is just two hours.

MSIL used to give one month schedule of their material requirement, which lead to the suppliers
producing more and the inventory levels at MSIL started to go up. In view to reduce inventory
levels, MSIL lowered its material quota from a month to 15 days and the inventory levels inside
the plant fell by an impressive 70 per cent. MSIL initiated the same process with the tier one
suppliers to implement a similar system with their own suppliers to make the supply chain lean at
all levels.
Today, Maruti vendors are reaping the benefits of efficiencies unleashed by the original
equipment manufacturer (OEM). The vendors have been supplying to Maruti on a just-in-time
basis and directly on line, which means the part is approved and Maruti does not have to inspect
them at all making it a 100 per cent fool proof process.

E-Nagare has increased clarity on an hourly basis resulting in better capacity utilization at the
vendor’s end. At Maruti, while inventories have come down drastically, any inefficiency in the
system is now glaringly visible. As for the suppliers, any reduction in cost by Maruti brings
down their overheads substantially.
Maruti has halved man hours spent on each car in five years. Maruti manages this through a host
of initiatives that involve workers and up to Tier II vendors, as much as the management. For
instance, by debottlenecking its production lines year after year, it has reduced the number of
39

hours every worker spends in producing a vehicle by half of what it was five years ago.
Mechanization and optimal utilization of manpower has raised service bay productivity of its
dealer service centers by 20 per cent, saving them a few hundred crore in setting up new service
bays.

MSIL have taken many initiatives on time and cost reduction to improve their productivity. In
the press shop, earlier they used to take two hours to change the molds used for stamping the
doors of their models, which now takes just five minutes by simply getting the dies close to the
line. MSIL have made their Gurgaon plant linear, wherein the vehicles enter from one end and
goes out from the other end in a straight line. To cope up with the more efficient production
systems and constant price reduction drives, MSIL had also introduced the “one component one
gram” drive which would reduce the weight of each Maruti car by a 2.5 kg. MSIL embraced
RFID technology which offered a solution for tracking pallets and managing manufactured
inventory and rejects. The technology efficiently tracks pallets and also keeps track of rejected
panels.

On the inventory front, they assist the dealers in inventory management by reducing the
inventories, which means lesser working capital financing cost for the dealers. MSIL analyzes
the market, and everyday inventory, inquiry, orders and sales, and the dealers are informed of
vintage stocks, which are 3 to 4 months old, which is hard currency stuck in old stock which
needs to be mobilized immediately.
Manufacturing efficiency begins at the vendor end. Lean delivery is about vendor efficiency.
Vendors are pushed for timely delivery (including transportation and packaging) and appropriate
quality and cost. For vendor efficiency, Maruti has a separate organization called Maruti Centre
for Excellence (MACE) to give vendors advice.

MACE was formed in April, 2004 by MSIL in collaboration with 21 of its suppliers, with a
corpus fund of Rs.150 million. The activities of MACE include providing training, support and
consultancy to the suppliers (Tier-1 & Tier-2) and its sales network to help them achieve world
class standards in quality, cost, and service and technology orientation
40

MACE uses a collaborative approach to help suppliers and dealers know the world’s best
practices and to assimilate these practices in their day to day operations. The various training
programs conducted by MACE for the capacity building of suppliers and dealers also include
training on health, safety and environment management systems. The entire approach adopted by
MACE aims at building a total quality culture at suppliers and dealers.

The Just-in-Time (JIT) and e-nagare inventory management systems, introduced in 2003, have
helped in reducing inventory levels to less than a day. In 2010- 11, the organization started
encouraging its suppliers to supply material during the night shift, which helped in reducing
traffic congestion and pollution in and around their plant in Gurgaon city. A milk run system was
also started in 2010-11 for 30 suppliers based in Faridabad. The logistics for these companies is
managed by one logistic supplier. This initiative helped in reducing the number of trips per day
to MSIL by 30 per cent from these suppliers and improvement in the truck fill rate by over 25
per cent.

For MSIL, Logistics has played an important role in keeping overall supply chain costs as low as
possible, particularly in reducing inventory. MSIL constantly innovate to achieve logistics
improvements, including studying new routes and trade options.

MSIL has outsourced the management of spare parts and components in terms of warehouse
management and transportation. The outsourced logistics service partner gets an access to the e-
nagare system of MSIL, through which MSIL can download the production schedule and
coordinate with suppliers for the components and the quantity. Logistic service providers (LSPs)
actually operate as Tier I suppliers to MSIL and maintain an inventory of 3 days in the
warehouse and 2 days of in-transit inventory. The spare parts are directly dispatched to the
dealers after receiving the indents through the MSIL system.

MSIL is increasing its infrastructure for outbound vehicles and for spare parts distribution. The
company is moving towards ‘hub-and-spoke’ distribution models for vehicle and spare parts
through regional vehicle and parts distribution centers (VDCs and PDCs). MSIL Integrated the
41

supply chain to meet customer requirements and fulfill demand in the market. MSIL’s purpose of
building hubs is to reduce lead times for spare part and vehicle deliveries from days to hours.
MSIL use road transport for 90 per cent of their dispatches of vehicles. MSIL use rail transport
only for A-star, which according to them is the most efficien
One train can carry 240 vehicles in two levels in specially designed containers. For some
domestic supplies of some of their models, MSIL even use sea transport through their yard at
Mundra port to send to Kerala, Goa or Cochin as sea transport is cost effective, time is
predictable and damages are minimal.

Approximately 80 per cent of imported material arrives through the congested Jawaharlal Nehru
Port Trust (JNPT) in Mumbai and the rest, including steel coils imported from Japan and South
Korea, arrive via Kandla and Mundra in Gujarat. MSIL is exploring the port of Pipavav on the
Gujarat coast, which could eventually tie up with the proposed Maruti Suzuki plant in the state.
42

Chapter 3

Research Methodology

RESEARCH DESIGN:

A research design is the arrangement of condition for collection and analysis of data in a manner
which may result in an economy in procedure. It stands for advance planning for collection of
the relevant data and the techniques to be used in analysis, keeping in view the objective of the
research availability of time.
There are three types of research designs. They are,
 Exploratory research design.
 Conclusive research design.
1. Descriptive research design.
2. Causal research design.
 Performance monitoring research.

The Research design used in this study was descriptive research design. It includes surveys and
fact-finding enquiries of different kinds. The main characteristic of this method is that the
researcher has no control over the variables; he can report only what has happened or what is
happening.

SIGNIFICANCE OF THE STUDY


Maruti Suzuki India Limited has been a market leader in the India Automobile Industry. The
study attempts to study the changes implemented in their supply chain and logistics management
process.
Research Design:
A two stage Research was conducted:
1. Secondary Research:
Data was collected from websites and catalogues to understand the product of the different
players
2. Primary Research:
43

A Primary Research was conducted:


The questionnaire was prepared for the companies and following areas covered:
 competing retail stores
 Features offered by different stores
 Consumer profile
 Satisfaction level
 Reasons for their purchase.
Desirable features of the product and service

Sampling Plan: Elements: The target population of the study included the general population of
every age who enters to the Maruti suzuki
Sample size: 100 people.

LIMITATION OF STUDY
 This study throws light on supply chain management process commenced at the Maruti suzuki.
 The SCM studied in this report focuses on the retail industry and it may differ from firm to firm.
 The disadvantage of study SCM is investment of time, money and resources needed to implement
and overlook supply chain.
 Convenience sampling used here has its own limitations.
 There have been some inaccuracies due to non – cooperative and rude behavior of the respondents.
44

Chapter 4

Data Analysis

Operating with other logistical provides and reasons for decisions

45

40

35

30

25

20

15

10

0
operational stability cost effectiveness customer needs other

Decision Respondent

Operational satiability 25

Cast effectiveness 39

Customer needs 25

Other 11

Interpretation:

The pie chart above shows the operational decisions and reasons for operations with other
logistical providers. The chart shows that 11 of the respondents operate with other service
providers for different reasons like coordination, clearance, bulk operations etc. almost 36% have
operations with other providers as per customer needs. Only 25 and 39 were providing service
45

along with other providers for the purpose of operational stability and cost effectiveness
respectively. It is stated that 11% of organizations operate with other logistical providers and
remaining 4% as stand aloe’s what is the made of decisions regarding the operations.

best activity
35
Service Respondent
30
Freight 18
Warehousing 23
25 Cross docking 10
Networking design 20
20 Value adding 29

15

10

0
freight warehousing cross docking network design value adding

Interpretation:

The pie chart above shows the best activity, which organizations feel in their operations. The pie
chart shows 18 of organizations have freight in the predominant area, followed by 23 of
warehousing. Another significant area is cross docking with 10 as best activity. There is only a
minor activity based on network design with 20 in pie graph. Most of the organizations have a
mixture of all the activities in their day to day and 29 of organization says other activities bring in
more revenue and the best of their activities, which includes packaging, labeling etc.

How successful do you think is your company in managing its supply chain in general?

Not successful at all 5%


46

Not successful 15%

Somewhat successful 45%

Successful 35%

5%
15%
35% Not successful at all
Not successful
Somewhat successful
Successful

45%

INTERPRETATION:

From the above table it is clear that 35% of the respondents believe that their company has been
successful in managing its supply chain in general 45% of the respondents believe that their
company has been somewhat successful in managing its supply chain in general 15% of the
respondents believe that their company has not been successful in managing its supply chain in
general and only 5% of the respondents believe that their company has not been successful at all
in managing its supply chain.
47

Is the supply chain management department is having sufficient transportation?

YES 80%

NOT SUFFICIENT 20%

20%

YES
NOT SUFFICIENT

80%

INTERPRETATION:

From the above table it is clear that 80% of the respondents believe that the supply chain
management of their company have sufficient transportation and 20% of the respondents are
against this statement.
48

Does your company have a separate logistics department?

YES 65%

NO 35%

35%
YES
NOT

65%

INTERPRETATION:

From the above table it clear that 65% of the respondents say that their company has a separate
logistics department and 35% of the respondents say their company do not have a separate
logistics department.
49

Is supply chain management having all the address of the developer branches of the
company?

YES 57%

NO 43%

43% YES
NO
57%

INTERPRETATION:

From the above table it is clear that 43% of the respondents believe that their supply chain
management have all the address of the developer branches of the company whereas 57% of the
respondents say that the supply chain management do not have all the address of the developer
branches of the company.

What types of systems are currently in use in your company to support Supply Chain
Management?
50

System Used

Subcontracting 32%

3PL 15%

Supply chain benchmarking 29%

vertical Integration 24%

24%
32% SUCONTRACTING
3PL
SUPPLY CHAIN BENCHMARKING
VERTICAL INTEGRATION

29% 15%

Interpretation
The above table shows that according to 32% of respondents subcontracting system is currently
being used in their company to support supply chain. According to 15% of the respondents 3PL
System is currently being used by their company, According to 29% supply chain benchmarking
system and 24% of the respondents say vertical integration is being used by their company.
What types of systems do you plan to implement in the near future (within the next 2 years)?
51

TYPE OF SYSTEM

E-Procurement 28%

FDI 18%

Outsourcing 32%

Subcontracting 15%

plan Strategically 7%

7%

15% 28% E-Procurement


FDI
Outsourcing
Subcontracting
Plan strategically
32% 18%

Interpretation
The above table shows that 28% respondent are interested in implementing e-procurement
system in the near future,18% prefer FDI, 32% of respondent are interested in implementing
outsourcing in their system, 15% respondent plan for subcontracting and 7% of respondent want
to plan strategically to improve the supply chain management.
How satisfied are you with the current public policy regarding SCM and IT?
52

percentage

satisfied 36%

very satisfied 29%

somewhat satisfied 20%

not satisfied 15%

15%
satisfiied
36%
very satisfied
20% somewhat satisfied
not satisfied

29%

Interpretation
The above table shows that, 65% of the respondents are satisfied with the current public policy
regarding SCM and IT.20% of respondent are somewhat satisfied and 15% of respondent are not
satisfied.

Rate the working strategies of supply chain management department on the basis of the
current programs?
working strategies percentage
outstanding 45%
53

excellent 25%
good 17%
average 13%

13%

outstanding
17% 45% excellent
good
average

25%

Interpretation
The above table shows that 45% of respondents believe that the working strategies of supply
chain management department on the current programs are outstanding, 25% of respondents
believe that the strategies are excellent, 17% of respondents believe that strategies are good, and
13% believe that the strategies are average.

According to the current growth process of the organization, which of the following needs
much attention and progress to boost the production?
percentage

operational activities 39%

Tactical Activities 42%


54

current programming strategies 19%

19%

39% operational activities


tactical activities
current programming strategies

42%

Interpretation
The above table shows that 39% of respondents believe that operational activities need much
attention and progress to boost the production, 42 % respondents believe that in improving the
tactical activities and 19% believe in improving the current programming strategies.

Choose the right option, where the supply chain department is facing problem in taking
care of the raw material?
facing problem percentage

during storage 26%

packaging 35%

testing of product 17%

evaluation of defective raw material 22%


55

22% 26%
during storage
packaging
testing of product
17%
evaluation of defective raw material

35%

Interpretation
The above table shows that, 26% of respondents believe that the supply chain department is
facing problem in taking care of the raw material during storage, 35% believes that the supply
chain department is facing problem in taking care of the raw material at packaging, 17% believes
that the supply chain department is facing problem in taking care of the raw material while
testing of product and 22% respondent believes that the supply chain department is facing
problem in taking care of the raw material at evaluation of defective raw material.

How do you rate the delivery activity of the department?

delivery activity percentage

excellent 52%

very effective 19%

Good 21%
56

Average 8%

8%

21% excellent
very effective
52% good
average

19%

Interpretation

The above table shows that 52% of respondents have rated the delivery activity of department to
be excellent, 19% of respondent believes that delivery activity is effective, 21% of respondent
that the delivery activity is good and only 8% believes that the delivery activity is average.

Who receives the invoices for purchased inventory?

Purchased Inventory received Percentage


Operational Manager 40%
Production Manager 32%
Marketing Manager 2%
57

Invoices of purchase entry

2%

40% Operational Manager


Production Manager

58% Marketing Manager

Interpretation:
From the above table it can be seen that 40% of the respondents say the invoices for the
purchase inventory is received by operational manager. 58% of the respondents say the
invoices for the purchase inventory is received by operational manager and only 2% of the
respondents say that the invoices for the purchase inventory is received by marketing
manager.
Is there any case recorded by the supply chain department in which the production
department complained late?

Late complaint by SCM Percentage


Yes 44%
No 56%
58

Late complaint by SCM

44% Yes

56% No

Interpretation:
From the above table it is clear that 44% of the respondents say there has been some cases
recorded by the supply chain department in which the production department complained late.
56% of the respondents say there has been no such case.

Does your organisation frequently interacts with customers to set its reliability,
responsiveness, and other standards

Interaction with customers Percentage


Extremely disagree 2%
Disagree 13%
Moderate 7%
Agree 34%
Extremely agree 44%
59

Interaction with customers


50
45
40
35
30
25
20
15
10
5
0
Extremely disagree Disagree Moderate Agree Extremely agree

Interaction with customers

Interpretation:
From the table above it can be seen that 44% of the respondents extremely agree that there
organisation frequently interacts with customers to set their reliability, responsive and other
standards. 34% of the respondents agree that there organisation frequently interacts with
customers to set their reliability, responsive and other standards. 7% of the respondents are
moderate that there organisation frequently interacts with customers to set their reliability,
responsive and other standards. 13% of the respondents disagree that there organisation
frequently interacts with customers to set their reliability, responsive and other standards. 2% of
the respondents extremely disagree that there organisation frequently interacts with customers to
set their reliability, responsive and other standards
Does your organisation strives to reduce time wastage in operations?

Strive to reduce time wastage Percentage


Extremely disagree 3%
Disagree 11%
Moderate 5%
Agree 37%
Extremely agree 44%
60

Strive to reduce time wastage


50
45
40
35
30
25
20
15
10
5
0
Extremely disagree Disagree Moderate Agree extremely agree

Strive to reduce time wastage

Interpretation:
From the above table it can be seen that 44% of the respondents extremely agree that their
organisation strives to reduce time wastage in operation. 37% of the respondents agree that their
organisation strives to reduce time wastage in operation. 5% of the respondents moderate that
their organisation strives to reduce time wastage in operation. 11% of the respondents disagree
that their organisation strives to reduce time wastage in operation. 3% of the respondents
extremely disagree that their organisation strives to reduce time wastage in operation.

Organisation consider quality as number one criterion in selecting suppliers.

Selecting suppliers Percentage


Extremely disagree 4%
Disagree 13%
Moderate 6%
Agree 28%
Extremely agree 50%
61

Selecting suppliers
60

50

40

30

20

10

0
Extremely disagree Disagree Moderate Agree Extremely agree

Selecting suppliers

Interpretation:
From the above table it can be seen that 50% of the respondents extremely agree that their
company consider quality as number one criteria in selecting suppliers. 28% of the respondents
agree that their company consider quality as number one criteria in selecting suppliers.
6% of the respondents moderate that their company consider quality as number one criteria in
selecting suppliers. 12% of the respondents disagree that their company consider quality as
number one criteria in selecting suppliers. 4% of the respondents extremely disagree that their
company consider quality as number one criteria in selecting suppliers.
62

Conclusion
We hope this study contributes to a better understanding of the direction in SCM
research. Regarding the methodologies used by researchers, the Exploratory reviews
has been the most used, followed by the Normative study, Methodological reviews,
Literature review and Hypothesis testing. This literature review finds that exploratory
type of research is mostly preferred it is expected that with the maturity of SCM the
hypothesis testing method will pick up. Content wise categorization revealed that
paper on supply chain strategy dominates over others so the papers in the field of
supplier development and management and environmental and social responsible
categories should also be promoted.

There is an increased interest in SCM and Internet by academicians and practitioners.


Some directions for further research that we have identified are: to conduct empirical
studies about the impact of Internet on several e-SCM processes, as for example the
reverse and demand management processes which, so far, have only been considered
by a couple of authors. Another important area of research is the application of decision
models and technologies on Internet. As more and more firms have high quality and
real-time information available, the use of these decision technologies will increase,
since they add significant value to the members of a supply chain.

The Indian Automobile Industry has been very competitive and will further get more
competitive. Continuous innovations in supply chain and logistics management will contribute
positively to the overall efficiency of the entire value chain and will offer many benefits to all
the partners in the value chain. MSIL has been responsive to the dynamic market and has been
innovating their supply chain and logistic management process. The changes implemented have
benefited all the partners in terms of lean operations, integration of partners in the value chain,
lowering of cost, inventory reduction, lesser transit time of finished vehicles and spare parts to
their dealers, and fulfillment of ever changing customer expectations. The future will present
further challenges, MSIL will be required to be flexible and responsive towards their supply
chain and logistics management process and consistently introduce innovations in order to
63

further improve operational efficiency, quality and cost effectiveness. The study has been
restricted to only Maruti Suzuki India limited and it is recommended that further study may be
conducted on other players in the Indian Automobile Industry to understand the innovations in
their respective supply chain and logistics management process and the benefits which have
been derived.
64

RECOMMENDATION

On the basis of the above the following recommendations are made: -


 Era Beier needs to investigate ways of improving and establishing relationship along the
entire value chain. There are competitive advantages.

 The organisation must focus on empowering designated groups. As such special training
and development initiatives should be investigated which focus on providing respondents
with the tools for effective decision making. Era Beier should pursue empowerment by
encouraging employees to develop their own abilities through company sponsored
training and development and to accept as mush responsibility within their capability.

 A highly important element of this strategy is EDI, an electronic datainterchange system


that directly connects customers to the overall Era Beier distribution system. Point-of -
sale information from Era Beier major accounts provides the ability to generate
instantaneous data relevant to reorders, invoices and shipments. This distribution system,
while costly, would enable major customers of its products, to avoid having to place
orders and coordinate logistical arrangements. It would also help sales to maintain the
appropriate product inventory at any given time

 Low inventory levels can contribute vastly to a firm’s efficiency and cost. Inbound
logistics revolve around supplier relationship. Greater collaboration needs to be
established with suppliers to support a JIT system of manufacturing. With overseas
suppliers a local warehouse could be established as an intermediate supply.

 Effort is required to reduce work in progress before normal production resumes. If work
in progress goes over a pre-determined value, all production needs to stop. The situation
needs to be analysed for the reason for the build up and corrective action implemented.
65

Trials need to be conducted for increase in machine speed so as to reduce production


time. If the physical properties do not change then the new machine speed to be specified
in the specification.

 ‘First off’ is important to ensure the process capability of the production lines. The ‘first
off’ is the first sample from the production line that is inspected against the specification.
If it conforms then only is the production line allowed to continue. If the product does not
conform, then adjustments are made to the process or the machine and another sample is
tested. At key points in the production process, quality inspectors need to monitor every
metre of the process. Extra personnel need not be employed. The current line operators
could be multiskilled so that they become aware of the requirements of the product. They
will be performing dual functions. Important tests can be performed on the line instead of
this sample being tested in the laboratory. The instant feedback to the line can save
hundreds of metres of defective product being produced. Therefore the relevant
equipment needs to be purchased and line personnel trained for effective utilisation and
feedback.
66

BIBLIOGRAPHY

[1] D.B. Grant, A. Trautrim and C.Y. Wong, “Sustainable Logistics and Supply Chain
Management: Principles and Practices for Sustainable Operations and Management” Kogan
Page: UK, 2013.

[2] D.M. Lambert, M.C. Cooper et al., “Supply Chain Management: Implementation Issues and
Research Opportunities” The International Journal of Logistics Management, vol. 9, no. 2, pp.
1-19, 1998.

[3] D.M. Lambert and M.C. Cooper, “Issues in supply chain management” Industrial marketing
management, vol. 29, no. 1, pp. 65-83, 2000.

[4] Eric Sucky, “Inventory problem in supply chains: A bargaining problem” International
Journal of Production Economics, vol. 93-94, pp .253-262, 2005.

[5] G.L. Ragatz, R.B. Handfield et al., “Success factors for integrating suppliers into new
product development” Journal of Product Innovation Management, vol. 14, no.3 , pp.190-202,
1997.

[6] Paul Myerson, “Lean Supply Chain and Logistics Management” McGraw-Hill Professional:
USA, 2012.

[7] Peter M. Ralston, Scott J. Grawe and Patricia J. Daugherty, "Logistics salience impact on
logistics capabilities and performance" International Journal of Logistics Management, vol. 24,
no. 2, pp.136 – 152, 2013.

[8] T.H. Davenport, “Process Innovation: Reengineering Work through Information


Technology” Harvard Business School Press: New York, 1993.
[9] T.M. Frohlich and R. Westbrook, “Arcs of integration: an international study of supply
chain strategies” Journal of Operations Management, vol. 19, no. 2, pp. 185-200, 2001.
67

[10]T.Y. Choi and Y. Hong, “Unveiling the structure of supply network: Case studies in
Honda, Acura, and Daimler Chrysler” Journal of Operations Management, vol. 20, pp. 469-
493, 2002.

[11]www.marutisuzuki.com

[12]www.automotivelogistics.com

[13]Robbins, Stephen P. (2004), Organizational Behavior OW Edition),


Prentice-Hall India
68

QUESTIONNAIRE

Name : ……………………………………………………………….

Name of Company :……………………………………………………………….

Address :……………………………………………………………….

……………………………………………………………….

Country :………………… Tel.: ……………………….


Contact Person :……………………………………

E-Mail :……………………………………

Sector Types : Manufacturing Service Both


Industry : Retail Automotive Other (define)

No of Employees : Turnover 2017 :

Q.1) How successful do you think is your company in managing its supply chain in general?

Not successful at all ( )


Not successful ( )
Somewhat successful ( )
Successful ( )
Very successful ( )

Q.2) Does your company have a separate logistics department?


YES ( ) NO ( )

Q.3) Does your company have a clear logistics strategic plan?


YES ( ) NO ( )

Q.4) What types of systems are currently in use in your company to support Supply Chain
Management?
Subcontracting ( )
69

3PL ( )
Supply Chain Benchmarking ( )
Vertical integration ( )

Q.5) What types of systems do you plan to implement in the near future (within the next 2
years)?

E-procurement ( )
EDI ( )
Outsourcing ( )
Subcontracting ( )
Plan strategically ( )

Q.6) How satisfied are you with the current public policy regarding SCM and IT?
Satisfied ( )
Very satisfied ( )
Same what satisfied ( )
Not satisfied ( )
Q.7) Is supply chain management having all the address of the developer branches of the
company?
Yes ( ) No ( )

Q.8) Rate the working strategies of supply chain management department on the basis of the
current programs?
Outstanding ( )
Excellent ( )
Good ( )
Average ( )
70

Q.9) Is the supply chain management department is having sufficient transportation?

1. Yes ( )
2. Not sufficient ( )

Q.10) According to the current growth process of the organization, which of the following needs
much attention and progress to boost the production?

1. Operational activities ( )
2. Tactical activities ( )
3. Current programming strategies ( )

Q.11) Choose the right option, where the supply chain department is facing problem in taking
care of the raw material?
During storage ( )
Packaging ( )
Testing of packaging ( )
Evaluation of defective raw material ( )

Q.12) How do you rate the delivery activity of the department?

Excellent ( )
Very effective ( )
Good ( )
Average ( )

Q 13) Is there any case recorded by the supply chain department in which the production
department complained late?
a. yes ( ) b. No ( )
71

Q14) Organisation strives to reduce time wastage in operations


Extremely disagree ( )
Disagree ( )
Moderate ( )
Agree ( )
Extremely disagree ( )

Q15) Is there any case recorded by the supply chain department in which the production
department complained late delivery of raw materials?
Yes ( ) No ( )

Q16) Who receives the invoices for purchased inventory?


A. Operational manger ( ) b. production manager. ( ) marketing manager ( )

Q17) How do you rate the delivery activity of the department?


a. Excellent ( ). B. very effective ( ) c. good ( ) d. Average ( )

Q 18) Organisation consider quality as number one criterion in selecting suppliers.

Extremely disagree ( )
Disagree ( )
Moderate ( )
Agree ( )
Extremely disagree ( )