MATERIALS MANAGEMENT

Maruti s Materials Management Strategy

Presented byHarshdeep singh Priyanka harjani Manoj jaju Kunal singh

[2010c03] [2010c10] [2010c13] [2010c43]

agenda

Strategic Materials Management

Local Vendor Development (Companys domestic suppliers, around 86

percent of them, are located within a 100-km)

'Materials Division was rechristened 'Supply Chain Division New Vendor Development Move to CKD from CBU Pairing its sourcing agreements with its suppliers Focus on cost reduction from vendors instead of price increase
(3-5 %/ year)

Consolidation of Suppliers Global suppliers are prepared Indigenisation of components

Strategic Materials Management: MERITS

Localization of component Reduction in material cost Local Vendors Reduction in transportation cost and lead time. Supply Chain Division - Worked jointly with suppliers to lower the cost of components
(5%).

New Vendor Development Control over cost, quality & delivery. Pairing sourcing agreements Sharing default loss

Strategic Materials Management: DEMERITS

Relations strained with Suzuki Motor Corporation due to the issue of localisation of gear boxes Vendor Consolidation Reduction on bargaining power Pairing sourcing agreements Less room for taking independent decisions.

Tactical Materials Management

Turning entrepreneurs into vendors, facilitating loans, licenses, technical know-how Change of Material (plastic instead of a metal fuel tank or light tinting of glass to keep the car cool) 'Maruti Production System' based on lean manufacturing programme 'Shikhar' - Poor' vendors were identified and even eliminated. Raising the bar - 500 defective parts in a million, would not make the grade

Tactical Materials Management (Cont.)

Smaller suppliers absorbed in Tier II vendor list Full systems supply' from Tier I vendors. A shorter pipeline and effective logistical control Exports from Thailand, Germany increased due to tax benefits(40%exmeption) Vendors connected to E-Nagare system Single main warehouse for components after sales

Tactical Materials Management: MERITS

Turning entrepreneurs into vendors Innovation & ideas for efficient operations Change of Material - Reduction of cost Shorter pipeline - Relocation of vendors within a 100 km radius of its plants. Weeding out of poor vendors - Improved efficiency and processes E-nagare system - Better connectivity and planning for vendors.

Tactical Materials Management: DEMERITS

New Vendor development - Higher Investment requirement Single main warehouse - Increases transportation costs the costs due to CST. Elimination of poor vendors - Develop sense of insecurity and dissatisfaction among smaller vendors

Operational Materials Management

Production plans from the vendor to Maruti's shopfloor (Two hour cycle from 30 days in the past) Components to arrive in mobile trolleys and line up outside factory sheds directly feeding multitasked assembly lines. (e.g Multi-coloured bumpers) Just-in-time basis and Directly online An online system for replenishment of inventory on an Electronic Card System

Operational Materials Management (Cont.)

Co m p a n y re s p o n s ib le fo r s h ip m e n t s t o it s o wn fa c t o ry
(Shipping, Port Clearance, Customs Clearance and Inland transportation.) Yearly, Half-yearly, Quarterly, Monthly and Daily plans to suppliers Electronic Card System (Online system for replenishment of inventory) The vendors keep up an unending supply of critical components

like body panels, bumpers etc.

Operational Materials Management: MERITS

Systematic production plan for every stage - Reducing the cycle time. Automation Incorporation (mobile trolleys) - make the operations smooth. Just-In-Time - EfficientproductionSchedules and less working capital requirement. Transportation by road - Better connectivity covering 202 cities. An online system - Right track of the inventory, minimising errors and accurate forecast. Handling shipments to own factory - Better control and less transportation cost.

Operational Materials Management: DEMERITS

Road Transport - Increases the cost. JIT system Highly efficient management required and responsiveness of the process decreases. Handling shipment to the factory Overhead for supply chain division.

Recommendations

Kn o w le d g e t ra n s fe r t o b e d o n e w it h Su p p lie rs .

Mu lt ip le w a re h o u s e s fo r lo w c o s t it e m t o re d u c e t ra n s p o rt a t io n c o s t . Elim in a t io n o f p o o r v e n d o rs a d e t a ile d p a ra m e t e rs t o b e s p e c ifie d t o ju s t ify t h e d e c is io n Im p le m e n t a t io n o f CPFR

Co lla b o ra t e w it h it s v e n d o rs o n Ca p a c it y & In v e s t m e n t

is s u e s . Ea rly s u p p lie r in v o lve m e n t in n e w p ro d u c t in t ro d u c t io n Co n t ra c t u a l Ag re e m e n t w it h t h e s u p p lie rs w it h Rig h t o f firs t re fu s a l Cla u s e

THANK YOU