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[Company address]
SUPPLY CHAIN
MANAGEMENT AT
Arun Maithani
HERO
MOTOCORP 11A
Nitesh Singh
[Document subtitle]
29A
MANUFACTURING
Hero MotoCorp two wheelers are manufactured across 3 globally
benchmarked manufacturing facilities. Two of these are based at Gurgaon
and Dharuhera which are located in the state of Haryana in northern India.
The third and the latest manufacturing plant is based at Haridwar, in the
hill state of Uttrakhand.
DISTRIBUTION
The Company's growth in the two wheeler market in India is the result of
an intrinsic ability to increase reach in new geographies and growth
markets. Hero MotoCorps extensive sales and service network now spans
over to 6000 customer touch points. These comprise a mix of authorized
dealerships, service & spare parts outlets, and dealer-appointed outlets
across the country.
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Hero MotoCorp has presence across more than 30 countries across the
world. Africa has recently emerged as a major export partner.
i. Number of Plants Haridwar, Gurgaon, Dharuhera (upcoming plants Neemrana* and Halol*)
ii. Product Portfolio Karizma, Karizma ZMR, Passion (Plus and Pro),
Splendor (Plus and Pro), Pleasure, Ignitor, Maestro, CD Deluxe, Glamour,
Achiever, CBZ, Hunk, Impulse etc. The product line of Hero Motocrop is
quite impressive.
2. Location Strategy and Production System
Location Strategy for Plants:
The decision for a new plant is taken by a core committee at Hero Motocorp
comprising of Group
Executive council and representative of the boards. The location for plant
depends on a number
of factors:
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Production System:
At Hero Motocorp, we have adopted product (assembly line layout). This is
an optimum layout for Hero Motocorp due to high volumes and limited
variety. Additionally, this is the most suitable layout for mass production.
Characteristics of Product Layouts
Special-purpose equipment are used Changeover is expensive and
lengthy Material flow is continuous Material handling equipment is
fixed Little direct supervision is required Planning, scheduling and
controlling functions are relatively straight-forward Production time for a
unit is relatively short
Advantages
1. The flow of product will be smooth and logical in flow lines.
2. Throughput time is less.
3. Simplified production planning and control systems are possible.
4. Less space is occupied by work transit and for temporary storage.
5. Reduced material handling cost due to mechanized handling systems
and straight flow.
6. Perfect line balancing which eliminates bottlenecks and idle capacity.
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This diagram shows the process flow of vehicle manufacturing in the Hero
Motocorp Plants.
Figure 1: Supply chain overview for Hero Motocorp Ltd.
The above figure shows a brief overview of the entire supply chain of Hero
Motocorp Ltd for the manufacture of two- wheelers. In this model it can
easily be seen that the company sources many parts from its suppliers.
These are parts and materials such as Steel and other metals, rubber,
electronics, plastics, glass, textiles etc. After the sourcing of these
materials, they are processed further by operations such as stamping,
pressing, painting, welding, forging, casting etc.
The following report details the above mentioned supply chain further.
4. Supply Chain Strategy at Hero Motocorp
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Hero Motocorp uses the following five step strategy to plan the supply
chain. These factors have been carefully developed over the past two
decades to ensure long term sustainability while ensuring superior
performance:
i. Risk Recognition:
While initially the entire focus was on the Tier one suppliers, gradually the
focus is being extended to the Tier 2 and Tier 3 suppliers as well. The
company gauges the criticality of the Tier 2 and Tier 3 suppliers to the
supply chain. The risk is estimated by calculating the impact on the entire
production if the lower tier suppliers fail to honour commitments. The
factories and locations of those lower tier suppliers are also studied to find
out the potential impact of calamities like earthquake, civil unrest,
flooding fire or financial collapse. Other issues could be accusations
against the lower tier manufactures for the use of child labor or labor
exploitation.
ii. Creating Visibility of lower tier suppliers
It is difficult to identify the risks associated with the lower tier suppliers as
they mostly deal with Tier 1 suppliers and their activities are not easily
visible in the supply chain. It is seen that many companies have no
information about their Tier 2 suppliers. Mitigating supplier risk and being
able to respond quickly when disaster strikes is dependent upon having
visibility of the supply base across all tiers. Hero Motocorp is attempting to
create a coordinated global supplier database to increase visibility and
enable efficient management. Even though Hero Motocorp relies on Tier 1
suppliers to manage compliances at the lower tier suppliers, they
regularly monitor compliances themselves to evaluate the risks
independently.
iii. Supply Chain Mapping
Hero Motocorp uses a standardised approach to the management of
supplier information. With an accurate database, buyers can request
information from everyone involved in their supply chain. In this system,
cascading invitations are sent down the supply chain. The buyer
instigates the action by inviting its Tier 1 suppliers to join the mapping
process. Tier 1 suppliers pass the invite on to Tier 2s, and so on right
down through the tiers. The key to success is automation ensuring that
the person in the middle can link what they sell to whom; and that details
of what they buy link to the next person in the chain.
iv. Collaboration
Hero Motocorp realizes that managing the entire supply chain in isolation
is a very time consuming and tiresome process. Hero Motocorp leverages
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Techinical and
Logistical
aspects
Supply
Management
Integration
Strategic
Importance of
parts
Supply
Manageme
nt
Relationship
Management
Supplier Pool
Rationalizatio
n
ii.
Supplier Relationships
One of the main consequences of this new configuration of the supply
chain in HMCLs model is the dramatic reduction in the number of first-tier
suppliers that HMCL directly works with. Our interaction with HMCL
operations manager reveals that since collaborative relationships with
their suppliers were initiated, the number of suppliers has reduced
considerably.
iii. Supply Management Integration
Hero Motocorp has faced challenges due to rapidly declining product life
cycles in the automobile industry. To counter this challenge, it has
attempted to integrate its supply chain to increase the responsiveness of
its supply chain. This has improved its ability to design products faster,
with higher qualities and lower costs as compared to a single company.
External collaboration among supply chain partners leads to reduction of
costs, stock-outs and lead-time. Costs can be minimized through
establishing consistent and predictable demand/supply pattern. External
(supply chain) integration leads to enhanced effectiveness and efficiency.
iv. Strategic importance of Parts
This is done by plotting the parts on the Kraljic Matrix.
Figure 3: Karljic Matrix
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scenarios can be generated to select the most optimal inputs for supply
chain.
Tools Used by Hero Motocorp
i. Enterprise Resource Planning (ERP)
inspection
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business dynamic changes. These systems deal with strategic and tactical
planning issues that generally have long time spans.
Software System: Manugistics
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