Maruti Suzuki India Ltd.

(MSIL)
Introduction:
• Making a small beginning with the iconic Maruti 800 car, Maruti Suzuki portfolio History and Legacy:
today - 16 car models with over 150 variants
Maruti Suzuki India Limited (MSIL), a subsidiary of
• Product range extends from entry level small cars like Alto 800 to premium sedan Suzuki Motor Corporation, Japan, is India's largest
Ciaz passenger vehicle maker
• Inspired by needs of Indian customers, MSIL launched new retail sales channel India's first Company to manufacture and sell more
NEXA in 2015 than 1.5 million cars in India in a year, credited with
having ushered in automobile revolution in
• Pioneered in offering new and innovative technologies to customers: the country
First company to offer a range of CNG cars, launched Celerio (with contemporary
Auto Gear Shift technology) to meet changing lifestyle of customers Formerly known as Maruti Udyog Limited,
was incorporated as a joint venture between Govt of
• With Hybridisation in focus, MSIL successfully introduced mild-Hybrid technology India and Suzuki Motor Corporation, Japan in
(Smart Hybrid) in its popular Baleno, Ciaz and Ertiga vehicles February, 1981, Govt holding 74% stake and Suzuki
26%
• Exports cars to several countries in Europe, Asia, Latin America, Africa and
Oceania Presently, Suzuki Motor Corporation owns equity of
56.2 per cent
• During the financial year 2018-19 Maruti Suzuki's net sales stood at Rs 830,265
million and the Profit After Tax was Rs 75,006 million
Facilities In
India
Sales and
Service
Channels
Financial and
Manufactured
Capital
 • Fragmentation and segmentation of vehicle models (such as hatchbacks,
sedans, vans, SUVs etc.) is growing
• Complexity of customized models and variants is on the increase,
especially how individual vehicles variants are equipped

MSIL
Automobile manufacturers must schedule supply at few thousand sub-
assemblies and components in vehicle, with billions of possible
combinations to car outfit

Supply
• Maruti now produces 17 models and 1,480 variants. Including color
variations, that number exceeds 10,000 variants. Each car typically
contains more than 30,000 individual parts

Chain
• In automotive production - standardization of modules to common
platforms is a common goal for mass market OEM (Original Equipment
Manufacturer) like MSIL

Breakdown
• Modules refer to groups of related components and systems serving for
same or connected tasks (Eg. front/rear axle, complete front-section of a
body or steering system)
Interrelated modules constitute the platforms, on which products for
different car brands are developed
• Vehicles can be adjusted to individual requirements of customers and
delivery schedules enable OEMs to produce multiple models (based on
varying platforms) at the same manufacturing facility in assembly plants
• This sharing of components is crucial for costs reduction
Upstream
1st  Tier suppliers 
- Globally located world producers of completed modules (Eg.
dashboard, seating, steering etc.) with own manufacturing and
assembly capacities established within 100 Km radius of automakers
plant
- Make their own engineering decisions and designing solutions with
establishing local engineering or development center
- Tier 1 suppliers are the biggest suppliers to the OEMs in terms of
volume as the quantity supplied by the Tier 2 and Tier 3 goes on to
make the components required by the Tier 1 supplier
Eg. Asahi India Glass Ltd, Amtek Auto Ltd., Motherson Sumi Systems
2nd Tier suppliers 
- Procured parts for the modules (assembly units Eg. welded Key Characteristics of Tier Structure
framework of seating) • Number of firms increase as we go down the Tier level
- Companies with own production or assembly plants establish near to Eg. basic component manufacturing units are more in
Tier-1 suppliers (global or regional players) number as compared to Tier-1 firms
• Buying power & influence decrease as we go upstream
3rd Tier suppliers i.e. from Tier-1 to Tier-3
- Raw material producers and companies of manufacturing capacities • Technology & Manufacturing capability of Tier firms
for small simple parts and individual components (Eg. plastic parts, decrease as we go upstream to down i.e. from Tier-1 to
metal parts, aluminium parts) Tier-3
- Fulfil mainly quality and volume conditions of 2-Tier suppliers, some • Tier-1s are direct suppliers to OEMs, similarly, Tier-2 is
delivers for 1-Tier suppliers (Eg. coiled sheet) direct supplier to Tier-1
Downstream
MSIL is delivering its
vehicles to dealers across
the length and breadth of
the country through logistics
partners directly from
factories or routed through
regional stockyards located
at Bangalore, Nagpur and
Siliguri
Supply Chain Success Strategies
• Going Local • E-Nagare System
MUL set about creating a supplier network Online platform that connects Maruti Suzuki’s production facility directly
Initially suppliers were skeptical and worried about losses if didn’t succeed with its vendor base
Also, at the time max foreign investment allowed was up to 40 percent - so Online adaptation of the Suzuki’s manual nagare (Japanese for “flow”)
question of Japanese part makers setting up their own subsidiary in India system, where each component is assigned a card (a Kanban) that circulates
didn’t arise between assembly line and vendor
Maruti management treated vendors as important partners jointly working Launched in 2004, e-Nagare took company’s entire supply chain onto an
and followed the policy of interdependence intranet, which provided detailed instructions to vendors on every order
Maruti decided to get even more involved with its vendors, forming joint
ventures to manufacture components that were critical to quality of • MACE (Maruti Centre for Excellence)
vehicles, or were bulky to transport, or reqd high tech and large investment With the advent of recalls & its exports to global markets, company reqd
stricter quality standards, in its plants & vendors
• Just In Time System Started Maruti Centre for Excellence (MACE) in 2004– involving 21 of its
JIT necessitates all suppliers to be competent enough to meet the demand component vendors -- to provide consultancy and training support to
of the manufacturer in time suppliers in Quality, Cost, Service and Technology Orientation
This required Maruti Suzuki to have its main suppliers to be located near
the assembly plant to allow frequent and on time delivery of components • Just in Sequence
Result of JIT application: inventory levels are never overstocked, material Approach to manufacturing where components arrive at assembly line in a
flows is perfectly synchronized, processes are leaner, and consumers enjoy specific order at precise moment they are needed, and not before
customized configurations. Each parts and sub-assemblies received in sequence to be delivered to
production stations in assembly line as they are needed, in the sequence
they will be consumed
Logistics
For automobile companies, Logistics plays an important role in keeping overall supply chain costs as low as possible, particularly in reducing inventory
Companies constantly innovate to achieve logistics improvements, including studying new routes and trade options

Examples of how efficient and innovative logistics can help enhance supply chain performance:
• MSIL outsourced 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
Logistic service providers (LSPs) operate as Tier 1 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 MSIL system
• In 2010-11, Tata Motors started encouraging its suppliers to supply material during the night shift, which helped in reducing traffic congestion and
pollution in and around their plant
A milk run system was also started in 2010-11 for suppliers
This initiative helped in reducing the number of trips per day by 30 per cent from these suppliers and improvement in the truck fill rate by over 25
per cent
• MSIL’s 80-plus vehicle carriers operate a combined fleet of around 9,000 trucks or trailers
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 trako Visual Cargo is software, as a service solution, that provides on-demand visibility from loading to delivery location of cargo vehicles using
Global Positioning System (GPS) devices
It is a single, common platform for supply chain stake holders, which include consigners, consignees, transporters and vehicle owners, to track and
manage the movement of goods in transit to enhance operational efficiency and improve customer service
Challenges and Way Forward in Auto Sector
Main supply chain challenges – visibility, cost containment, risk management, increasing customer demands and globalization
Generally, as an industry, automotive supply chains, globally, lag behind other supply chains (such as retail, pharmaceutical) in these five parameters clearly indicating
the need for and scope of considerable improvements to make them more resilient and responsive

Indian Market Peculiarities

Supply chains in the auto sector confront peculiarities special to Indian market which are distinctly different from other big automotive markets:
• Preference for small cars and two wheelers, lack of visibility at the customer end particularly in rural markets, packaging complexities due to language and cultural
diversity, quality challenges due to resource shortcomings, large number of fragmented suppliers which impede effective collaborations, complex tariffs and duties,
lack of infrastructure and multimodal transport are some of the significant supply chain challenges
• Low skill level of workers particularly in Tier II & Tier III suppliers add to the challenge. Only 50% of the workforce is of high quality with a high attrition rate
averaging 40%
• Infrastructure developments have not been in tandem with the growth witnessed by the auto industry
The quality of commercial vehicles has improved but auto companies have not been able to leverage the advancement in technology due to a poor road network
• Contrary to matured economies, road transport continues to be the preferred mode for the movement of finished vehicles in India, with the share of rail and water
transport negligible
In countries, like the US or Europe, a large number of cars, nearly 60-75%, are transported by rail
Waterways are another untapped area both inland and coastal which has not been developed
All the bottlenecks and challenges in the supply chain network leads to inefficiency in the industry which reflects in the cost and quality of the product both for
domestic as well as export market
Given India is such a price sensitive market, need of the hour is to pull our socks and resolve the long pending issues for overall growth of the industry
No wonder with one of the highest manufacturing contributor to the national GDP it is the need of the hour if India wants to become 5 trillion economy in near future
 • Tata Motors Group (Tata Motors) is a $34 billion organization.

TATA It is a leading global automobile manufacturing company. Its

diverse portfolio includes an extensive range of cars, sports
utility vehicles, trucks, buses and defense vehicles. Tata
Motors Motors is one of India's largest OEMs offering an extensive
range of integrated, smart and e-mobility solutions.
• Six key mobility drivers Tata Motors focus on to lead in future
– modular architecture, complexity reduction in
manufacturing, connected & autonomous vehicles, clean
drivelines, shared mobility, and low total cost of ownership.
Environment of Supply chain – Tata Motors Ltd
Inbound Logistic
 Long-term contract with service provider’s – transporters and
agents.
 Transparency and monitoring through deployment of IT – all
transactions through SAP.
 DTL (daily transport logistics) supplies for critical high value
items.
 Efficient storage facilities – easy storage and retrieval.
Operations
 Capital Equipment Manufacturing division – tooling
development capabilities of global standard.
 Kaizen & TPM (total productive management) team –
continuous drive to improve efficiencies.
 Automated manufacturing processes.
 Capacity Utilization – Mercedes Benz cars make use of Tata
Motors paint shop facilities.
Outbound Logistic
 Stockyards, across the country.
 Long-term contracts with transporters – higher volume of
business to transporters ensures competitive price.
 Regional Sales Office and Vehicle Dispatch Section linked
through SAP.
 Efficient security system for prevention of any kind of pilferage.
Marketing & Sales
 Structured approach to understanding the requirements of
individual customers – QFD’s conducted at regular intervals.
 Clear identification of product requirements, leading to
development of innovative products – Tata 207 DI, Tata Ace
 Helping to augment the scarce resources – Fiat selling vehicles
through Tata dealerships, in return Tata has access to Fiat’s
technology and unutilized capacity.
 Large network of dealers – use of technology (CRM-DMS).
Service
 Easy availability of spare parts.
 Efficient collection of data from field and communication to
the respective plants.
 Pan India presence, as well as global presence.
 Large network of workshops – Dealer workshops and TASS.
Procurement
 E procurement initiative.
 Global Sourcing Team – China, a key destination for
sourcing essential items like tires, power steering units etc.,
Steel procured from Belarus
 Long-term relationships with a stable and loyal pool of
suppliers.
 Technology driven procurement – SAP and VCM.
 Strategic subsidiaries & JV’s – TACO group of companies,
Tata Cummins
 Localized supplier base at mfg. locations – low inventory
levels.
Mahindra and Mahindra

The US $6.7 billion Mahindra Group is among the top 10 industrial houses in India. Mahindra & Mahindra is
the only Indian company among the top three tractor manufacturers in the world. Mahindra's Farm
Equipment Sector has recently won the Japan Quality Medal, the only tractor company worldwide to be
bestowed this honor. It also holds the distinction of being the only tractor company worldwide to win the
Deming Prize.
Mahindra is the market leader in multiutility vehicles in India. It made a milestone entry into the passenger
car segment with the Logan. The Group has a leading presence in key sectors of the Indian economy,
including the financial services (Mahindra & Mahindra Financial Services Ltd, Mahindra Insurance Brokers
Ltd., Mahindra Rural Housing Ltd.), trade and logistics (Mahindra Inter-trade Lid., Mahindra Steel Service
Ltd., Mahindra Middle east Electrical Steel Service Centre FZE, Mahindra Logistics) automotive
components, information technology (Tech Mahindra, Bristlecone), and infrastructure devebpment
(Mahindra Life spaces, Mahindra Holidays & Resorts India Ltd., Mahindra World City).
With over 62 years of manufacturing experience, the Mahindra Group has built a strong base in technology,
engineering, marketing and distribution which are key to its evolution as a customercentric organization.
The Group enpbys over 50,000 people and has several state-of-the-art facilities in India and overseas.
Mahindra and Mahindra Supply Chain Pune Plant

A single car has more than 7000 parts, alone the engine has more than 300 parts. These parts are supplied from all over the world to
maintain the quality and the cost of parts 
Mahindra prepares body of car and engine in house the assembly apart from these they have their own logistics company to manage
thousands of part in sub assembly. For few parts like cockpit they have developed their suppliers inside the plant in line with JIT
They have 6-7 sub assembly (Engine, transaxle, door etc..)
The supply chain strategy of mahindra is reponsive, they make to order/assemble to order plus keep small buffer to keep delivery
chain efficient. 
They have 350 suppliers out of which 100 are in Pune. They have plan to reduce supplier base 10% year to year. As per the need of
different parts they follow multi vendor and single vendor strategy 
Lear is the seat supplier for mahindra, Lear supply to many OEMs but tool development is done by the individual OEMs
Transportation cost is reduced as supplier plant is near to mahindra plant which also reduces inventory holding cost by allowing to
follow JIT
Seats are then transferred to assembly line by sequencing of material process 
Mahindra follows multi vendor strategy for tires (Bridgestone, apollo, JK Tyre). These suppliers have their warehouses in Pune to
reduce leap time and avoid demand fluctuation for mahindra. Mahindra has a different logistics company to manage the
transportation 
After the vehicle is made it is stored in the logistics yard and then handed over to mahindra logistics.
Ashok Leyland

Ashok Leyland is an Indian multinational automotive manufacturer,

headquartered in Chennai. It is owned by the Hinduja Group. It was
founded in 1948 as Ashok Motors and became Ashok Leyland in the
year 1955. Ashok Leyland is the second-largest manufacturer of
commercial vehicles in India, the third-largest manufacturer of buses
in the world, and the tenth-largest manufacturers of trucks.
With the corporate office located in Chennai, its manufacturing
facilities are in Ennore (Tamil Nadu), Bhandara (Maharashtra), two in
Hosur (Tamil Nadu), Alwar (Rajasthan) and Pantnagar (Uttarakhand).
Ashok Leyland Supply chain
* Vendor Development and Strategic Sourcing are handled by Corporate Materials Department (CMD). 
- CMD identifies the vendors, rates the vendors based on feedback received from Supplier Quality Assurance Cell, sends drawings / specifications, calls for quotes with
detailed break-up of operationwise costs, and negotiates the price at which the parts will be supplied. 
- In addition to CMD at Ennore, and the two Units at Hosur, there are Materials Management Departments (MMDs) for scheduling based on unit production plan.  
* Vendor Development of Strategic Sources 
- Strategic Sourcing is central to the integrated Materials Management function. Ashok Leyland's policy is to develop a vendor base committed to continuous improvement to
meet quality, cost and delivery standards. 
- Ashok Leyland considers its vendors as partners in progress and believes in establishing mutually beneficial relationships. Ashok Leyland provides necessary technical
assistance in the form of Project and Production Engineering, to maintain quality levels. In addition, where required, Ashok Leyland also helps vendors financially.  
* Becoming a Vendor to Ashok Leyland is easy, involving just four steps 
- Fill the Questionnaire. As this provides the basic inputs required for preliminary study, applicants need to provide as much information as possible.  
- If Ashok Leyland needs the item you would like to supply, CMD will inform Ashok Leyland's Supplier Quality Assurance Cell (SQA) for an on-site assessment. Otherwise, the
Vendor information is stored for future reference. 
- If SQA approves the vendor, then CMD will send the drawings for SQA cleared components to the Vendor for obtaining a quotation. If, instead of approving the vendor, SQA
recommends improvements to facilities, the Vendor is given adequate feedback and a re-survey is undertaken at a mutually agreed future date.  
- If the Vendor matches Ashok Leyland's expectations in terms of price, quality and delivery, then CMD places a trial order with the Vendor. Both on-line and off-line
inspection may be carried out at the time of processing the trial order. Based on the outcome of the trial order, CMD may place the Vendor in the Approved Vendor List.  
* Some of the relevant points to note - Ashok Leyland's Purchasing Philosophy is to maximize bought-out parts. Over 90% of the parts are bought-out.  
- Ashok Leyland believes in global sourcing. Consistent with its operational needs, AL would consider both domestic (Indian) as well as international vendors. Global sourcing
is normally resorted to overcome local constraints 
- in the form of technology, quality, capacity or cost effectiveness.
• https://www.icmrindia.org/casestudies/catalogue/Operations/Supply%20Chain-Ashok
%20Leyland%20Way-Operations%20Case%20Study.htm
• in 1999, AL launched Project OSCARS (Optimising Supply Chain and Rationalising
Sourcing). OSCARS identified two methods to reduce costs in the inbound supply
chain: reduce material costs and through optimum inventory levels reduce the
invisible inventory carrying costs
• teams jointly formed the single window vendor management agency, bringing with
them specialised commercial and technical knowledge. Within the centrally
negotiated price and share of business, unit material functions interacted with the
approved panel of vendors to "pull" materials in line with their production plans.
• AL dealt directly with tier-one suppliers who, in turn, were supported by tier-
two and tier-three suppliers. The benefits of system buying could be illustrated with
the example of the tool kits that accompanied every vehicle
• The revamp of the out-bound supply chain (code named OSCARS II) had the twin
objectives of improving customer satisfaction and reducing finished goods inventories,
and reaching improved service levels with optimum pipeline inventory levels
• In the first half of 1999-2000, AL recorded a net profit of Rs 1.9 crore on sales of Rs
1,092.8 crore, against a Rs 36.7 crore loss for the corresponding period in 1998-99
Supply Chain Management at Volvo Eicher
• In the automobile sector availability of every part is important to
deliver the product on time, which makes inventory management one
of the most important part of supply chain management.

• Every Company has its own set of practices to ensure the track of
every part in a way that it does not take a lot of space, does not
increase the handling cost and  is available in the amount needed.    
Inventory Management at Volvo Eicher
A combination of following two practices is used for inventory management at the company:-
1. ABC Analysis
•        Division of the parts based on their price 
•        A -  > Rs 1000
•        B -   Rs 500- 1000
•        C -   < Rs 500
2. Division based on frequency of requirement
•        Three Categories are made under this  -
•         Runner - 70% on wheels come every day - high value parts
•         Repeater - 20% (once in a month)
•         Stranger - 10% (as per vehicle order received 
Enterprise Resource Planning at Volvo Eicher
• SAP was used to keep track of all the parts 
• Unique ID – A fert code is generated corresponding to every unique
type of product (family of product) and if any modification is done
the fert code changes. If there is any problem in product of a
particular fert code, it can be changed in all the products with same
id.
• Chassis No.  - This is unique to every complete product. 

These Ids were used to see status on SAP

Bottlenecks
• Boilers
The boilers used in automobile sectors take days to come at the
required temperature. So, these cannot be turned of otherwise it will
waste productivity of many shifts to again start working.
Even on national holidays workers are paid three times to take care of
working of boilers they cannot be shut down.   
Quantitative Metrics
• REVENUE FROM OPERATIONS [GROSS]

MSIL:
MAR'21 – 66,562    MAR'20 – 71,690

TATA MOTORS:  
MAR'21 – 46559    MAR'20 – 43,485

MAHINDRA & MAHINDRA:  

MAR'21 – 44,296    MAR'20 – 44897

ASHOK LEYLAND:  
MAR'21 – 15,301    MAR'20 – 17267

VOLVO EICHER:  
MAR'21 –     MAR'20 –

 
Inventory turnover ratio
• MSIL: 23.06
• Tata Motors: 10.33
• Mahindra & Mahindra: 7.72
• Ashok Leyland: 7.79
• Volvo Eicher: 9.97
Cash Conversion Cycle
 It equals Days Sales Outstanding + Days Inventory - Days Payable.
• MSIL: -10.09 days (4)
• Tata Motors: -12 days (5)
• Mahindra & Mahindra: -9.25 days (3)
• Ashok Leyland: -7.51 (2)
• Volvo Eicher: -5.60 (1)
Production Capacity
• MSIL: -20,76,000
• Tata Motors: -4,80,000
• Mahindra & Mahindra: -15,00,000
• Ashok Leyland: -1,50,000
• Volvo Eicher: -2,15,000