About MSIL

Start

First Product

Maruti Suzuki India

Ltd., formerly Maruti
Udyog Limited, Indian
automobile
manufacturer

It started with the small

car Maruti 800 as its
sole product, later the
Maruti 1000 was added
to the product line

Short-Term
Plan

Parent
It is a subsidiary of
Japanese
automobile and
motorcycle
manufacturerSuzu
ki Motor
Corporation

Operations
It wasestablished in
February 1981, but
production
commenced in 1983

Group 8

MSIL

Early
Competitors
TheHindustan
Motors
AmbassadorandFia
t - Premier Padmini

2016 - Maruti has 14

models
1619 total sales outlets
20% Export growth
1,308,446 vehicles sold
till date

Long-Term
Plan

Market
Leadership
It currently has a
market share of 47% of
the Indian passenger
car market out of total
20 competitors

Maruti Suzuki

Upstream Supply Chain

Upstream developments

Upstream challenges

Started with the limited supply base in

India
Vendors used
to seek price hikes and
Short-Term
Maruti agreed
because of the
Plan
comfortable competitive scenario
Always kept contingency vendors
because of unpredictability of the
external environment
Competition increased and shifted to
target costing
Stiff resistance and walk-offs by
suppliers when strict conditions were
imposed
Maruti assembly line contributes only
20% value addition
Suppliers input on design to be
incorporated in the final design
concurrent engineering

Group 8

Aim to help the suppliers manufacture at

minimum cost / Upgrade
Coaching on JIT and pull manufacturing, and
others at MACE
Small Indian suppliers
lacked designing skills
Long-Term
Tool design whichPlan
is easier than product
design
Vertical backward integration
Zero defects remained the ultimate goal
Now, the defects have crashed from
thousands to a few hundred PPM
Result: Due to these steps, sometimes tier 2
vendors better than tier 1 vendors
Maruti Suzuki

Supplier Development
MACE and Supplier
training

MACE is a non-profit society created by Maruti

and its vendors to improve the supplier
performance at various tiers
Short-Term
Plan 400 suppliers joined by
25 of its initial

putting in the required corpus

This allowed suppliers to get Japanese knowhow and training and opened the gate for
new business opportunities
Initially created for the improvement of tier
one suppliers
MACE and the Maruti supply chain work in
Tandem
Group 8

Cluster
approach

This was formulated by MACE to aid the 2nd

tier suppliers and to improve the supply chains
of the tier 1 suppliers
Clusters of tier 2 suppliers were created with a
tier one supplier at the helm
Long-Term
Tier 2 suppliers were
Plan
trained in concepts like

lean manufacturing, value addition

The aim was to reduce errors in parts per
million for all suppliers to zero
120 cluster are now fully operational with 14 of
them having zero ppm

Maruti Suzuki

The Path to Localisation

Localisation of suppliers and components has been an important part of Maruti Suzukis supply chain
development over the past decade
Local had a different meaning earlier, even if a part was invoiced on Indian soil it was considered local,
according to this definition in 1996 Maruti had a localisation rate of 99%
Short-Term
The invoicing loophole
could not hide risks form foreign currency exposure and other supply chain costs
Plan
But Maruti has since then changed its definition for local suppliers, even if a child part comes from overseas
and is invoiced here it is not considered local, present localisation rate is around 80-85%
Long-Term
Plan
For reductions in weight strategy called 1-1-1 is employed, where every part is made 1 gm lighter and since
costing is based on weight, this results in savings of approx. Rs. 120 MN every year
Partnering with Suppliers
Maruti has implemented measures designed to help suppliers. It believes in a partnership rather than Buyer
seller relationship
Some measures are:
Indias Central bank gave Maruti permission to hedge currency on Indian suppliers behalf
They help buy raw materials in bulk for suppliers by arranging low cost funding
Shared savings programmes with suppliers called value analysis value engineering
Group 8

Maruti Suzuki

Global expertise for global products

Short-Term
Plan
Long-Term
Plan

Group 8

Maruti Suzuki

Improving Inventory Through The Tires

Maruti gave its supplier a months schedule of the material requirements
This meant that the suppliers delivered in 21 days all their quota and it took 9 days for Maruti to process their
payments
This meant that the suppliers produced beyond the amount required and the inventory rose to a months
Short-Term
level within 21 days, leaving the rest of the 9 days with excess inventories than required
Plan
Maruti lowered its material quota to 15 days and the inventory levels immediately fell by 70%
Long-Term
Tier-1 suppliers were advised to implement a similar system so as to make the whole
supply chain lean
Plan
More JIT processes were implemented for Tier-2 & 3 suppliers
Creating new routes of transporting imported materials; rather than using the congested Jawahar Lal Nehru
Port Trust in Mumbai, they are exploring the port of Pipavav in Gujarat; this port would eventually link up with
their new facility coming up in Gujarat
Shipping lines from Suzuki in Japan now dock once a week rather than doing it monthly

Group 8

Maruti Suzuki

Milk Run (3PL) vs VMI

Responsibility of delivery of
Move towards 3PL model for
materials from the supplier to theMixed system of 3PLs and VMI
inbound logistics
3PLs
Short-Term
VMI has provided
better
Plan

results to lower costs as

compared to 3PLs
The new 3PL system for
milk runs from Faridabad to
Gurgaon allows suppliers to
track movement on a
handset

Group 8

Ceva Logistics, one of the

biggest 3PLs working with
Maruti

Risk Management of
suppliers a bigger issue
Long-Term
Japans
earthquake leading
Plan

Currently, application of
3PLs completely to Gurgaon
and Manesar plants will
increase the costs

Maruti Suzuki

to Indian paint suppliers

default
Thailand floods causing
disruption of supply of
Panasonic audio sets

From Manufacturing Plant to JNPT Port

Short-Term
Plan
Long-Term
Plan

54 MT Steel coils

5 Cars
Group 8

Maruti Suzuki

Marutis Milk Run System for inbound logistics

Short-Term
Plan
Long-Term
Plan

Other Consideration
Benefits Achieved
Maruti spends 2.5% on inbound logistics as it relies
No of trucks coming to MSIL reduced by 20%
Decongestion in MSIL & Timely Supplies
mainly on Vendor Managed Inventory(VMI)
Reduced follow-up and Real Time Tracking of Trucks Trying a mix of 3PL and VMI to find which one is
better
Group 8

Maruti Suzuki

Vendor Management

Quality Circle
Competition
Short-Term
Plan

Yield improvement activities

The Company has been working
on
conservation
of
critical
resources like traditional metal
sheets, plastics, electrical and
casting etc.
The
Company
encourages
vendors to participate in yield
Improvement activities and does
hand holding to achieve desired
results.
Group 8

The Environment Management

System of the Company is ISO
14001:2004
certified.
The
Company is also working with
its
Tier-I
suppliers
for
implementation of ISO 14001
at their end
It has also issued Green
Procurement Guidelines to all
its suppliers.
Maruti Suzuki

Long-Term
Plan
Fifty four of the top eighty component
Suppliers of MSIL India compete
against each other.
The top three get a chance to
present their cases in Suzuki's
Japan facility alongside other
global vendors

10

Koiltainer

Outbound Logistics

Short-Term
Plan
Long-Term
Plan
Benefits
It has optimum rake utilisation and reduces truck load in
MSIL
Resource optimisation as empty run from port to plant
has been

Group 8

optimised by designing the container to hold the steel

coils

Maruti Suzuki

11

What's Next?
Visual Cargo Solution

Future is Hub and Spoke Model

MSILs 80-plus vehicle carriers operate a combined fleet of around 9,000

trucks or trailers

Short-Term
Plan

MSIL has deployed the Trako Visual Cargo solution in outbound logistics
trucks that transport new cars from the factory to MSIL dealers across India.
The solution provides transport companies associated with MSIL Ondemand visibility from loading to delivery location of cargo vehicles using
Global Positioning System (GPS) devices\As

Consignment tracking module was configured for use by MSIL

Fleet management module for use by MSIL's transport
vendors
Logistics managers able to easily monitor, track and manage
operations.
Group 8

The company is moving towards hub-and-spoke

distribution models for vehicle and spare parts through
regional vehicle and parts distribution centres (VDCs
and PDCs). MSIL Integrated the supply chain to meet
customer requirements and fulfil demand in the market.
MSILs 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
Long-Term
transport
only for A-star, which according
Plan
to them
is the most efficient.
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.
One train can carry 240
vehicles in two levels in
specially
designed
containers.

Maruti Suzuki

12

Disruptions & Innovations

Fire at Suppliers Plant, New Delhi

Nexa Downstream Innovation

Fire incident at MS supplier, Subros Limited, on Sunday

(May 29)
Supplies of electrical components from that plant were
disrupted

High end dealerships

Exclusively handle the upper segment
offerings like Baleno, S Scross

MSIL had toShort-Term

temporarily suspend manufacturing of
cars at its facilities
Plan in Manesar and Gurgaon
It did affect the financials, mentioned in quarterly
report
Possible negative consequence of JIT ?

Long-Term
Plan

Labour Unrest
Maruti has recalled 282,875 units in the past
four years.

Train Transport
of vehicles

Group 8

Maruti Suzuki

13

New Plant at Hansalpur, Gujarat

New Plant

Set up as a separate subsidiary of Suzuki Motor Corporation, Suzuki Motor Gujarat, that
will supply vehicles exclusively to Maruti Suzuki
Capacity initially will be 150,000 cars a year, growing to 250,000
To ease pending demand for Baleno, Brezza
Strict for suppliers
PPM is no longer acceptable. Zero-defect is what we want for
Short-Term
supplying to Plan
new plant avoiding recalls
Plant will also cater to overseas markets, which demand very high standards
What will happen is instead of a company having five or six prominent suppliers, it will
prefer to have two who will meet such quality performance. This will also put pressure on
the bottom line and margins of suppliers. PWC
Onus for vehicle recall is on suppliers:
Faulty component - vehicle recalled -> the supplier is supposed to bear the expenses
Tier-III vendor supplies tier-II, who in turn supplies the tier-I vendor, and then the component reaches
an OEM
Chances of defects passing undetected are high. In India
the situation is worse as tier-II and tier-III vendors are often financially weak
unable to invest sufficiently in people, technology and machinery.
http://www.business-standard.com/article/companies/gujarat-plant-to-ease-pending-demand-for-baleno-brezza-116080600375_1.html
Group 8http://www.livemint.com/Companies/ENDu7ngdUSL0yd60xtC8yM/Maruti-Suzuki-cracks-down-on-suppliers-over-quality.html
Maruti Suzuki

14