Professional Documents
Culture Documents
REPORT ON
SUPPLY CHAIN MANAGEMENT IN MARUTI SUZUKI
UDYOG LIMITED
MASTER OF FOREIGN
(2014-2016)
SUBMITTED BY:AVINASH SINGH
1
MFT 2 ND SEMESTER
ENROLLEMENT No-364011
PREFACE
In the partial fulfillment of Master of Foreign Trade from Banaras
Hindu University, Varanasi. I completed my Summer Internship report
based on my dissertation topic
SUPPLY CHAIN MANAGEMENT IN MARUTI SUZUKI UDYOG
LIMITED.
ACKNOWLEDGEMENT
A project is a field of study that cant be completed in a free
space, Rather it is a job that has to be accomplished with a
judicious blend of Cooperation and relentless self labour.
Really it was a tough task for me but I got back up from my all
well wishers. So I want to avail this opportunity to express my
sense of gratitude to all those persons who have helped with
their suggestions and guidance in successful completion of this
period.
Avinash
Singh
CONTENTS
Page no.
Chapter
1.
Introduction
1-7
1.1
2-7
1.2
1.3
9-10
1.4
10-12
2.1
2.2
16-17
2.3
18-21
3.
3.1
3.2
4.
5.
7-8
13-14
15
22-27
51-52
53-55
56-79
80-82
CHAPTER-1
1- Introduction
Supply chain management (SCM) is the management of the flow of
goods. It includes the movement and storage of raw materials, work-inprocess inventory, and finished goods from point of origin to point of
consumption. Interconnected or interlinked networks, channels and
node businesses are
involved
in
the
provision
of products and services required by end customers in a supply chain. Supply
chain management has been defined as the "design, planning, execution,
control, and monitoring of supply chain activities with the objective of
creating net value, building a competitive infrastructure, leveraging
worldwide logistics, synchronizing supply with demand and measuring
performance globally.
SCM
draws
heavily
from
the
areas
of operations
management, logistics, procurement, and information
technology, and
strives for an integrated approach.
across businesses within the supply chain, for the purposes of improving
the long-term performance of the individual companies and the supply
chain as a whole
The integration of key business processes across the supply chain for
the purpose of creating value for customers and stakeholders (Lambert,
2008)
According
to
the Council
of
Supply
Chain
Management
Professionals (CSCMP), supply chain management encompasses the
planning
and
management
of
all
activities
involved
in sourcing, procurement, conversion, and logistics management. It also
includes coordination and collaboration with channel partners, which may
be suppliers, intermediaries, third-party service providers, or customers.
Supply chain management integrates supply and demand management
within and across companies. More recently, the loosely coupled, selforganizing network of businesses that cooperate to provide product and
service offerings has been called the Extended Enterprise.
Supply chain event management (SCEM) considers all possible events and
factors that can disrupt a supply chain. With SCEM, possible scenarios can be
created and solutions devised.
In many cases the supply chain includes the collection of goods after
consumer use for recycling. Including third-party logistics or other gathering
agencies as part of the RM re-partitions process is a way of illustrating the
new endgame strategy.
F
igure 1-1 Linear representation of a supply line
In truth, supply chains require a multiplicity of relationships and numerous
paths through which products and information travel. This is better reflected
by the conceptual diagram of a supply chain in Figure 1-2, in which the
supply chain is a web or network of participants and resources. To gain
maximum benefit from the supply chain, a company must dynamically draw
upon its available internal capabilities and the external resources of its
supply chain network to fulfill customer requirements. This network of
organizations, their facilities, and transportation linkages facilitate the
procurement of materials, transformation of materials into desired products,
and distribution of the products to customers.
10
Logistics Management
Logistics is a fundamental set of supply chain processes that facilitates
fulfillment of demand. The goal is to supply the right product or service, at
the right place, at the right time. The Council of Supply Chain Management
defines logistics management as that part of supply chain management
that plans, implements, and controls the efficient, effective forward and
reverses flow and storage of goods, services and related information
between the point of origin and the point of consumption in order to meet
customers requirements. Whether provided internally, by a supplier, by the
customer, or by an external logistics services provider, these capabilities are
essential for achieving supply chain success.
Supply Management
Supply management focuses on the identification, acquisition, access,
positioning, management of resources, and related capabilities the
organization needs or potentially needs in the attainment of its strategic
objectives (Institute for Supply Management, 2010). For most organizations,
logistics controls the distribution of products; whereas supply management
controls the strategic sourcing of direct materials, finished goods, services,
capital equipment, and indirect materials. Both are needed to ensure optimal
performance of the supply chain.
Value Chain
The concept of a value chain was developed as a tool for competitive
analysis and strategy. It is composed of primary activities (inbound logistics,
operations, outbound logistics, marketing and sales, and service) and
support activities (infrastructure, human resource management, technology
development, and procurement) that work together to provide value to
11
customers and generate profits for the organization (Porter, 1985). A value
chain and a supply chain are complementary views of an extended
enterprise, with integrated supply chain processes enabling the flows of
products and services in one direction, and the value chain generating
demand and cash flows from customers (Ramsey, 2005).
Distribution Channel
Distribution channels support the flow of goods and services from the
manufacturer to the final user or consumer (Council of Supply Chain
Management Professionals, 2010). An organization can establish direct
channels to consumers or rely upon traditional intermediaries such as
wholesalers and retailers to facilitate transactions with final users. The rapid
expansion of the Internet as a key selling platform is forcing manufacturers
and retailers to develop innovative and flexible omni channel capabilities in
their supply chains to fulfill customer demand from stores, distribution
centers, and production locations.
12
13
Logistics
Purchasing
14
CHAPTER-2
2. Automobile Industry
The automotive industry in India is one of the larger markets in the world.
It had previously been one of the fastest growing markets globally, but is
currently experiencing flat or negative growth rates. India's passenger car
and commercial vehicle manufacturing industry is the sixth largest in the
17
world, with an annual production of more than 3.9 million units in 2011.
According to recent reports, India overtook Brazil and became the
sixth largest passenger vehicle producer in the world (beating such old and
new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico, Russia,
Spain, France, and Brazil), grew 16 to 18 percent to sell around three million
units in the course of 2011 and 2012. In 2009, India emerged as Asia's fourth
largest exporter of passenger cars, behind Japan, South Korea, and Thailand.
In 2010, India beat Thailand to become Asia's third largest exporter of
passenger cars.
As of 2010, India is home to 40 million passenger vehicles. More than 3.7
million automotive vehicles were produced in India in 2010 (an increase of
33.9%), making the country the second (after China) fastest growing
automobile market in the world in that year. According to the Society of
Indian Automobile Manufacturers, annual vehicle sales are projected to
increase to 4 million by 2015, no longer 5 million as previously projected.[1]
The majority of India's car manufacturing industry is based around three
clusters in the south, west and north. The southern cluster consisting
of Chennai is the biggest with 35% of the revenue share. The western hub
near Mumbai and Pune contributes to 33% of the market and the northern
cluster around the National Capital Region contributes 32%. Chennai, houses
the
India
operations
of Ford,
Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan
Motors, Daimler, Caparo, Mini, and Datsun. Chennai accounts for 60% of the
country's automotive exports. Gurgaon and Manesar in Haryana form the
northern cluster where the country's largest car manufacturer, Maruti, is
based. The Chakan corridor near Pune, Maharashtra is the western cluster
with
companies
like Motors,
Volkswagen, Skoda, Mahindra
and
Mahindra, Tata
Motors, Mercedes
Benz, Land
Rover, Jaguar
[11][12]
Cars, Fiat and Force
Motors
having
assembly
plants
in
the
area. Nashik has a major base of Mahindra and Mahindra with a SUV
assembly
unit
and
an
Engine
assembly
unit.
Aurangabad with Audi, Skoda and Volkswagen also forms part of the western
cluster. Another emerging cluster is in the state of Gujaratwith
manufacturing facility of General Motors in Halol and further planned for Tata
Nano at their plant in Sanand. Ford, Maruti Suzuki and Peugeot-Citroen plants
are
also
set
to
come
up
in
Gujarat. Kolkata with Hindustan
Motors, Noida with Honda and Bangalore with Toyota are some of the other
automotive manufacturing regions around the country.
18
19
Company Overview
Finally, our inspiration comes from one place Indias hopes, dreams and
aspirations. The Maruti Suzuki journey has been nothing less than
spectacular. But to be honest, weve only just begun.
We have chosen a road and that drives us extra miles to achieve every
endeavour. Here is what we at Maruti Suzuki believe in:
Customer Obsession
OUR STRENGTH
Technology
21
36 new and refreshed Maruti Suzuki models launched in India in the last
six years
Created a superior Maruti Suzuki Swift, already one of India's most loved
cars. The new avatar of Maruti Suzuki Swift was mounted on a new platform
with new features and offering superior fuel efficiency.
Some of the most fuel efficient petrol cars in India come with the Maruti
Suzuki badge. Even better, their efficiency seems to further improve with a
face-lift every few years
Breathtaking concepts like the Concept A-Star, Concept r III and the latest,
Concept XA Alpha and many more upcoming Maruti Suzuki models
Launch of factory-fitted CNG variants for five models. These Maruti Suzuki
cars use the state-of-the-art i-GPi technology.
Almost all of Maruti Suzukis small cars, sedans, and hatchback comply
with ELV norms of Europe, which means they are free from any hazardous
material, and can be fully recycled.
But all this is already done. We're looking at the road ahead. With a view to
enhance our capabilities, we are setting up a state-of-the-art R&D centre in
Rohtak, Haryana at an investment of Rs. 2000 crore. Spread over an area of
600 acres, this R&D center will be equipped to churn out not just high
mileage petrol cars, but test tracks and labs among many other advanced
facilities that will be operational by 2015.
22
Cost of Ownership
Buy it, run it or sell it, a Maruti Suzuki car gives you an unmatched
value.
The price of high mileage petrol cars in India is just a third of what you will
pay for over its lifetime. The balance two-thirds include, maintenance, cost of
spares and service, and resale. Together, they make up what is called the
cost of ownership. It's where nothing can beat a Maruti Suzuki car.
India, we know, is driven by a deep value consciousness. Every year on an
average, our manufacturing units churn out around 1.2 million petrol cars
and diesel cars. Economies of scale help us in keeping our manufacturing
cost low. The continued VA-VE initiatives (Value Analysis & Value Engineering)
pursued aggressively in partnership with vendors also helps reduce the cost
of making Maruti Suzuki cars without compromising on quality
Maruti Suzuki models are designed with superior specifications to last longer.
This gives you a high resale value and demands less service over its lifetime.
At the heart of Maruti Suzuki cars are the advanced K-series petrol and DDiS
engines, built on the Suzuki belief of delivering 'more for less'. You get more
power and more driving, for lesser fuel consumption and lower CO 2 emission.
This is how we make the most fuel efficient petrol car in India and get a
mileage-obsessed nation to ask, "Kitna deti hai?"
Service and spares are other critical components of the cost of ownership
story. The widest network of Maruti Suzuki service centres, known for an
unmatched 'first-time right' score, also ensures maintenance costs are the
lowest. Add to this readily available spares, with a high degree of
indigenization. It's what has won us the No.1 in Customer Satisfaction in the J
D Power Asia Pacific Survey for 14 years in a row.
That's why you don't just buy a Maruti Suzuki. You invest in it.
Range of Cars
India comes home in a Maruti Suzuki and we're not surprised! It's
been our mission to provide a car for every individual, family, need,
budget and way of life.
23
That's why we offer 14 brands and over 150 variants ranging from Alto 800
to the latest Life Utility Vehicle, Ertiga. Our portfolio includes the Alto 800,
Alto K10, WagonR, Celerio, StingRay, Ritz, Swift, Swift DZire, SX4, Ertiga,
Omni, Eeco, Gypsy and Grand Vitara.
Widest Network
Yes, you can get lost in India, but chances are, that there will be a
Maruti Suzuki Dealer or a Maruti Suzuki Service Station close at
hand. Wherever you go, across the length and breadth of this vast
nation, our service network follows.
It's the widest service network. It's the deepest service network. And, when
you service 40,000 diesel and petrol cars a day with an unmatched 'first-time
right' score, we can say that you won't find a better, more committed service
network anywhere in the world.
24
We've even got an award for it. Maruti Suzuki Service has been No.1 in the J
D Power Customer Satisfaction Award for 14 years in a row. It's a survey that
rates the after-sales service experience, one that no other global car market
leader has won even once.
How do we pull this feat off? That's because across our over 3047 nationwide
service outlets, the only thing our 33000 strong trained service professional
have on their mind is your delight. Complete with vehicle finance, believe us
when we say that Maruti Suzukis wide range of cars is a one-stopinvestment to happiness!
Marutians
Innovation. Dedication. Responsibility. Ownership.
These are the virtues that connect a Marutian to the organization. Maruti
Suzuki offers a unique opportunity for professional and personal growth as
part of a multi-faceted organization where all work as one. To most
Marutians, their colleagues have been part of an extended family.
With a cross cultural and trans- national mix of generations working together
as one team, we maintain and provide the perfect balance of energy,
experience and exposure. At Maruti Suzuki, while excellence is an integral
part of our work culture, we are steadfast in an ethical approach across
dimensions.
Marutians across the country are all united by a common bond. It's not a
workforce, but people power at work, an empowered team that is quite
unlike any other.
Accolades
Maruti Suzuki is the leading car and car-products manufacturer in India. So
it's no surprise that the company has been showered with awards ever since
its inception! It would be impossible to list all the awards won by the
company. So a few have been picked and shown below.
25
2.1-History
The first car ran on India's roads in 1897. Until the 1930s, cars were imported
directly, but in very small numbers.
An
embryonic
automotive
industry
emerged
in
India
in
the
1940s. Hindustan was launched in 1942, long time competitor Premier in
1944.
They
built GM and Fiat products
respectively. Mahindra
&
Mahindra was established by two brothers in 1945, and began assembly
of Jeep CJ-3A utility vehicles. Following the independence, in 1947, the
Government of India and the private sector launched efforts to create an
automotive component manufacturing industry to supply to the automobile
industry. In 1953 an import substitution program was launched, and the
import of fully built-up cars began to be impeded.
However, the growth was relatively slow in the 1950s and 1960s due to
nationalization and the license raj which hampered the Indian private sector.
Total restrictions for import of vehicles were set and after 1970 the
automotive industry started to grow, but the growth was mainly driven by
tractors, commercial vehicles and scooters. Cars were still a major luxury
item. In the 1970s price controls were finally lifted, inserting a competitive
element into the automobile market. By the 1980s, the automobile market
was still dominated by Hindustan and Premier, who sold superannuated
products in fairly limited numbers. During the eighties, a few competitors
began to arrive on the scene.
To promote the auto industry the government started the Delhi Auto
Expo which was had its debut showcasing in 1986. The Auto Expo of 1986
26
was a window for technology transfers showing how the Indian Automotive
Industry was absorbing new technologies and promoting indigenous research
and development for adapting these technologies for the rugged Indian
conditions. The 9 day show was marked by then Prime Minister Rajiv Gandhi.
plant with a capacity of 550,000 units per year and a Diesel Engine plant
with an annual capacity of 100,000 engines and transmissions. Manesar and
Gurgaon facilities have a combined capability to produce over 14, 50,000
units annually.
About 35% of name="market share" all cars sold in India are made by
Maruti.
The
company
is
currently
56.21%
owned
by
the
Japanese multinational Suzuki Motor Corporation per cent of Maruti Suzuki.
The rest is owned by public and financial institutions. It is listed on
the Bombay Stock Exchange and National Stock Exchange of India.
During 2007 and 2008, Maruti Suzuki sold 764,842 cars, of which 53,024
were exported. In all, over six million Maruti Suzuki cars are on Indian roads
since the first car was rolled out on 14 December 1983.
The Suzuki Motor Corporation, Maruti's main stakeholder, has been a global
leader in mini and compact cars for three decades. Suzukis strategy is to
utilize light-weight, compact engines with stronger power, fuel-efficiency and
performance capabilities. Nearly 75,000 people are employed directly by
Maruti Suzuki and its partners. It has been rated first in customer satisfaction
among all car makers in India from 1999 to 2009 by J D Power Asia
Pacific. Maruti Suzuki will be introducing new 800 cc model by Diwali in
2012.The model is supposed to be fuel efficient, and therefore more
expensive. With increasing market competition in the small car segment, a
new model along with the upcoming WagonR Stingray will be the key fresh
products for Maruti Suzuki India (MSI) to defend its market share amid the
ever increasing competition.
Beginnings
Maruti's history begins in 1970, when a private limited company named
'Maruti technical services private limited' (MTSPL) is 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.[16] After a series of scandals, "Maruti Limited" goes into liquidation in
1977. This is followed by a commission of inquiry headed by Justice A. C.
Gupta, which submits its report in 1978. On 23 June 1980 Sanjay Gandhi dies
when a private test plane he was flying crashes. A year after his death, and
28
Suzuki Enters
In 1982, a license and Joint Venture Agreement (JVA) is 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 Suzukis 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 Indias first affordable car. Initial product plan is 40%
saloons, and 60% Maruti Van.[18] Local production commences in December
1983. In 1984 the Maruti Van, with the same three-cylinder engine as the
800, is released. Installed capacity of the plant in Gurgaon, reaches 40,000
units.
In 1985 the Suzuki SJ410-based Gypsy, a 970 cc 4WD off-road vehicle, is
launched. In 1986 the original 800 is replaced by an all-new model of the
796 cc hatchback Suzuki Alto/Fronte. This is also when the 100,000th vehicle
is produced by the company. In 1987 follows the company's first export to
the West, when a lot of 500 cars were sent to Hungary. Maruti products had
been exported to certain neighboring countries already. By 1988, the
capacity of the Gurgaon plant is increased to 100,000 units per annum.
29
30
Honda:
31
Indian automotive industry is one of the largest auto markets in the world. It
has grown up very fast in last one decade due to rising family income,
changing lifestyle, low vehicle penetration, easy finance availability, rapid
urbanization and poor public transport system. But current year auto market
growth is in flat to negative due to slowdown in economy growth. However
market is expected to recover from next financial year 2014-15.
Indias passenger car and commercial vehicle manufacturing
industry is 6th largest in the world after China, US, Japan, Brazil and
Germany.
32
The long term demand seems to be very strong due to growing demand,
policy support and increasing investment.
According to IHS Automotive, India will become the 3rd largest automotive
market in the world by 2016.
Now, this article will present the information about top players in automotive
industry in each segment.
Indian automobile industry is clearly dominated by 2 to 3 players in every
vehicle category. Given below is the market share of automobile companies
in India 2013. The market share is mainly for top players in each segment
based on vehicle production for the period Apr13 to Nov13.
33
India has produced more than 3.2 Million Cars & Utility vehicles in FY 12-13.
Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors and Toyota
companies stands in top 5 In terms of market share, followed by Nissan,
Ford, Honda, General Motors, Volkswagen, Renault, Skoda, Fiat, etc.
LCV, M&HCV
34
India has produced more than 8.3 Lakh LCV, M&HCV vehicles in FY 12-13.
Tata, Mahindra & Mahindra, Ashok Leyland, Eicher and Force companies
stands in top 5 In terms of market share, followed by Swaraj Mazda, Piaggio,
and AMW etc.
3 Wheelers
Tractors
35
36
37
SALES VOLUME:-
38
Director Report:-
The directors have pleasure in presenting the 32nd annual report together
with the audited accounts for the year ended 31st March 2013.
FINANCIAL RESULTS
(Rs. in millions)
Years
2012-13
2011-12
Total revenue
444,003
364,139
29,910
21,462
Tax expense
5,989
5,110
39
23,921
16,352
130,777
118,578
Addition on amalgamation
3,565
158,263
134,930
Appropriations:
General reserve
2,392
1,635
Proposed dividend
2,417
2,167
411
351
130,777
40
FINANCIAL HIGHLIGHTS
The total revenue (net of excise) was Rs. 444,003 million as against Rs
364,139 million in the previous year showing an increase of 22 percent. Sale
of vehicles in the domestic market was 1,051,046 units as compared to
1,006,316 units in the previous year showing an increase of
4 per cent. Total number of vehicles exported was 120,388 units as
compared to 127, 379 units in the previous year.
Profit before tax (PBT) was Rs. 29,910 million against Rs. 21,462million
showing an increase of 39 per cent and profit after tax (PAT) stood at Rs.
23,921 million against Rs. 16,352 million in the previous year showing an
increase of 46 per cent.
DIVIDEND
The board recommends a dividend of Rs. 8 (eight) per equity share of Rs. 5
each for the year ended 31st March 2013 amounting to Rs. 2,417million.
OPERATIONAL HIGHLIGHTS
41
CRISIL RATINGS
The Company was awarded the highest financial credit rating of AAA/stable
(long term) and A1 (short term) on its bank facilities by CRISIL. The rating
underscores the financial strength of the Company in terms of the highest
safety with regard to timely fulfillment of its financial obligations.
QUALITY
AWARDS/RECOGNITION/ RANKINGS
42
J. D. Power Asia Pacific 2012 Customer Satisfaction Index (CSI) Study ranked
the Company highest for the 13th time in a row.
Golden Peacock Award - 2012 for occupational health and safety in
automobile sector.
- MPV of the year by ET Zig wheels, Auto car India and BS Motoring 2013
43
- Entry Hatchback Car of the Year 2012 by NDTV CNBC Awards 2013
Entry-level Hatchback Car of the Year by ET Zig wheels Awards 2012
- Best Value for Money Car of the year by Auto car Awards2013
141.75 million including a dividend income of Rs. 8.93 million and long term
capital gain of Rs. 132.82 million through mutual funds. The
Company''ssubsidiary ''True Value Solutions Limited'' has contributed
towards smooth operations of business processes and supported the
dealerships in enhancing the sale of pre-owned cars under the brand Maruti
True Value. It has contributed significantly to the efforts of customer
retention by facilitating sale and re-purchase of new cars through exchange
and has made significant contribution towards enhancing dealers''
profitability.
In terms of the general circular dated 8th February 2011 issued by the
Government of India, Ministry of Corporate Affairs, the balance sheets, profit
& loss accounts, reports of the board of directors and auditors of the
subsidiary companies have not been attached with the balance sheet of the
Company. Annual accounts of the subsidiary companies and the related
detailed information shall be made available to shareholders of the Company
and subsidiary companies seeking such information at any point of time. The
annual accounts of the subsidiary companies shall also be available for
inspection by any shareholder at the head office of the Company and of the
subsidiary companies. Hardcopy of details of accounts of subsidiaries shall
be furnished to any shareholder on demand. Further, pursuant to Accounting
Standard - 21issued by the Institute of Chartered Accountants of India,
consolidated financial statements presented by the Company include the
financial information of its subsidiaries.
AMALGAMATION
During the year under review, Suzuki Power train India Limited (SPIL)was
amalgamated with and into the Company vide the order of the Hon''ble High
Court of Delhi dated 29th January 2013. The order was filed with the
Registrar of Companies, Ministry of Corporate Affairs on17th March 2013.
The appointed date of amalgamation was 1st April 2012.Pursuant to the
scheme of amalgamation, 1,3170,000 equity shares of Rs.5/- each were
allotted to Suzuki Motor Corporation on 29th March 2013and the paid up
equity capital stands increased to Rs. 1,510 million.
45
46
balance,
team
working,
competency
based
The Company also provided higher education schemes for its employees. It
helped not only to groom and retain the high potential young managers but
also enabled employees to fulfill their career enhancement aspirations, while
still working in the organization. The scheme included programs like executive MBA (full time and part time) at select campuses. The scheme
was available for employees at levels of assistant managers to managers.
DIRECTORS
Mr. Amal Ganguli, Mr. Keiichi Asai and Mr. D. S. Brar, Directors of the
Company, retire by rotation at the ensuing annual general meeting and
being eligible, offer themselves for re-appointment. Mr. M. S.
Banga,
Independent Director resigned from the board of the Company with effect
from close of business hours of 26th October 2012. Mr. R. P. Singh was
appointed as an Independent Director in the casual vacancy caused by the
resignation of Mr. M.S. Banga. Mr. Shinzo Nakanishi retired from the post of
MD & CEO of the Company with effect from close of business hours of 31st
March 2013. Mr. Kenichi Ayukawa was appointed as the MD& CEO of the
Company with effect from 1st April 2013.
47
c) having taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act,
1956, for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; and
PERSONNEL
As required by the provisions of section 217(2A) of the Companies Act,1956,
read with the Companies (Particulars of Employees) Rules, 1975,as amended,
the names and other particulars of the employees are set out in Annexure B
to the Directors'' Report. However, as per the provisions of section 219(l)(b)
(iv) of the Companies Act, 1956, the Annual Report is being sent to all the
shareholders of the Company excluding the aforesaid information. Any
shareholder
interested
in obtaining such particulars may write to the
Company Secretary at the registered office of the Company.
CORPORATE GOVERNANCE
AUDITORS
The auditors, M/s Price Waterhouse, Firm Registration NumberFRN301112E,
Chartered Accountants, hold office until the conclusion of the ensuing annual
general meeting and are recommended for re-appointment. A certificate
from the auditors has been received to the effect that their re-appointment,
if made, would be in accordance with section 224 (IB) of the Companies Act,
1956.
49
COST AUDITORS
In conformity with the directives of the Central Government, the Company
has appointed M/s R. J. Goel & Co., cost accountants, as the cost auditors
under section 233B of the Companies Act, 1956 for the audit of the cost
accounts for the motor vehicles business for the year ending on 31st March
2014. The extended due date of filing the cost audit report for the financial
year 2011-12 in ''Extended Business Reporting Language'' (XBRL) format
with the Ministry of Corporate Affairs was 28th February 2013. This report
was filed within the stipulated time on 18th January 2013.
ACKNOWLEDGMENT
The board of directors would like to express its sincere thanks for thecaoperation and advice received from the Government of India and the
Haryana Government. Your directors also take this opportunity to place on
record their gratitude for timely and valuable assistance and support
received from Suzuki Motor Corporation, Japan. The board also places on
record its appreciation for the enthusiastic co-operation, hard work and
dedication of all the employees of the Company including the Japanese staff,
dealers, vendors, customers, business associates, auto finance companies,
state government authorities and all concerned without which it would not
have been possible to achieve all round progress and growth of the
Company. The directors are thankful to the shareholders for their continued
patronage.
KENICHI AYUKAWA
R.C. BHARGAVA
50
Managing Director
Chairman
& CEO
New Delhi
26th April 2013
CHAPTER-3
Supply Chain Management in Maruti Suzuki:Maruti Suzuki on raising the Indian supply chain
51
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, realized 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 Indias 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 countrys automotive supply base.
52
53
imbibed
or
learned
design
capabilities,
says
Maitra.
56
57
Swaroop points to areas such as help with raw material procurement and
assitance with bank financing as important support mechanisms from
Maruti. Having learnt this proactive approach, we try to replicate this with
our vendors too, he says.
We told Suzuki that the relationship between Suzuki Pakistan and Suzuki
India is excellent and there is no need for segregation at Singapore. Now the
practice has been stopped and we saved at least four days in voyage time,
he says. The ship from Japan stops at JNPT and then goes to Karachi One
important improvement came when Maitra convinced Suzuki in Japan and its
shipping lines to dock at Indian ports once a week instead of monthly. Earlier,
the same ship carried materials for Suzuki in India and in Pakistan..
"Toyota has gone in for the total 3PL route. We decided to get into
these modern concepts too" Sudam Maitra, Maruti Suzuki
The company is also tackling waste reduction. Steel coils arrive in trucks
from the port, which had always returned empty. Similarly, containers carry
cars by rail to Mundra for export and return empty. Now, Maitra and his team
have arranged that the containers carrying cars can bring back coils to the
plant. Its such a successful change that Maruti workers have rechristened
the containers as coil-trainers.
59
3.1- OVERVIEW
MANAGEMENT
OF
MARUTI
SUZUKI
SUPPLY
CHAIN
Supply Chain
PROCUREME
NT
-suppliers
PROCUREMEN
T
DISTRIBUTION
Transportatio
ASSEMBLY
n
CUSTOMERS
AFTER SALES
Spare Parts
60
First tier suppliers - mainly global world players - with own production
or assembly capacities establish near to OEM (operating processes in
condition of JIT delivery specifications) - are incorporated into the
production development projects and innovation process; this means
that they make their own engineering and designing decisions with
establishing local engineering or development centre.
Tier 1 suppliers have their own 2nd tier suppliers who procured parts
for these modules (assembly units) they are the companies with own
production or assembly plants establish Tier 3 suppliers are local home
companies (manufacturing capacities for small simple
Tier suppliers near to 1-Tier suppliers (global or regional players).
Tier 3 suppliers are local home companies (manufacturing capacities
for small simple automotive parts, components - e.g. plastic parts,
metal parts, aluminium parts, raw material suppliers), which fulfill
mainly quality and volume conditions of 2-Tier suppliers, some supplies
for 1-Tier suppliers.
61
Explanatory
Ability to manufacture a product in different valuecreation systems on
Reconfigurable production base.
62
Product flexibility
Variant flexibility
Volume flexibility
Location
flexibility/mobility
(6)
In this context can be refer to example R&D project, funded in part by the
European Commission, My Car - Flexible assembly processes for the car of
the third millennium. The overall objective of the project is to increase the
competitiveness of European vehicle manufacturers by improving flexibility
in assembly plants. The goal is also to network assembly plant through
enhanced supply chain communication flows to enable real time decisions.
Solutions inclusive (5):
demand visible to the all areas of the organization for planning and execution
of downstream operational activities, including manufacturing planning,
vendor scheduling, production, shipping, and warehousing. The build-toorder system has made automotive business more profitable by giving to
OEMs the flexibility and agility to produce and ship components in the right
quality at the right time and in the right sequence from a distant low cost
location.
CHAPTER-4
Problems of Supply Chain Management in Maruti Suzuki:The automobile industry is a major contributor to Indias economy. The Indian
automobile manufacturers face stiff international competition in the wake of
65
all major US and European car manufacturers entering the Indian market. In
the contemporary scenario, supply chain management practices can be
adopted to improve operational efficiency and profits. This paper presents
the current status of Indian automotive supply chains. For this, data was
collected by conducting a nationwide survey. The paper highlights some
major problems plaguing the Indian automotive supply chains and finally,
presents some recommendations that are potentially useful to bring Indian
automotive supply chains at par with global industry leaders.
Indian automobile industry has in recent years, flourished and displayed
extra-ordinary growth capabilities. This has become possible mainly because
of improvement in living standards of Indian middle class and increase in
their disposable income. The liberalization steps initiated by the Government
of India, such as reduction of tariffs on imports, and refining the banking
policies, have played an equally important role in bringing the Indian
Automotive industry to greater heights. According to Automotive
Components Manufacturers Association (ACMA), today, India is forth largest
and fastest growing passenger car market in Asia, second largest twowheeler market and the largest three-wheeler market in the world.
The export boom in automobile sector has largely been possible due to
improved performance of auto components segment. In the component
industry, the top rung manufacturers made desperate attempt to overcome
depressed domestic market of late 90s by tapping the export market and
making efforts to improve quality and competitive potential. Exports also
earned them higher margins. ACMA reports that the component exports
crossed US 1.8 billion dollar mark in 2005. It is expected to touch US 6 billion
dollar mark by 2010 and 25 billion by 2015. Some companies are also
vigorously trying to build global supplier capabilities through acquisitions as
shown in Table 1. Such acquisitions protect the companies from fluctuations
in the demand in various geographical regions.
Implications on Supply Chain Management
Recent emphasis on global climate change is increasing pressure on
automotive executives
to make the right decisions in many areas, including R&D and
manufacturing. In fact, emission-level targets, currently in question, threaten
to alter the entire structure of the auto industry.
66
These challenges hit an industry already plagued with high costs, low profit
margins, and accelerating competition. New entrants from China (such as
Chery Automobile)and India (such as Tata Motors) are working aggressively
to capture their share of the global market, following the path taken by the
Japanese in the 1980s and the Koreans in the 1990sboth of whom went
beyond their domestic markets by focusing on the United States first, and on
Europe later.
Only a handful of established players are consistently delivering satisfactory
profits, such as Toyota, Honda, Porsche, and BMW; leading tier-1 suppliers
such as Bosch and
Denso; and some specialized tier-2 and tier-3 companies such as
ElringKlinger and
Borg Warner. Meanwhile, many others are undergoing some form of
restructuring.
General macroeconomic and financial circumstances are not necessarily
favorable,
either. The cost of energy and raw materials continues to increase due to
rising global
demand. Strong fluctuations in exchange and interest rates pose another
challenge
and are difficult and costly against which to hedge.
In this dynamic business environment, a superior supply chain is one critical
element
to helping automakers differentiate themselves from the competition. In fact,
many of
trends in the auto industry are reinforcing the need to redefine supply chain
strategies,
layouts, and operations. This paper summarizes the current challenges in the
automotive world and analyzes their implications on supply chains.
67
External
Customers
Legislation (environment,
Stagnating demand
safety, others)
Established markets
Competitions
Industry
Global overcapacity
segment
Complex alliances,
Moving targetseveryone
partnerships, M&As
69
Trends in Demand
Uneven Growth
The demand for cars is growing, stemming in large part from China, India,
and Eastern
Europe. Established automotive markets in the United States, Western
Europe, andJapan, however, are flat to declining. This uneven growth raises
implications for the supply chain. For one, OEMs and theirtier-1 suppliers
must establish a local presence to benefit from these new growth
opportunities in emerging economies. They must also tap into the local
70
supply base to take advantage of cost levels and to fulfill local content
requirements. At the same time,
they must integrate local operations into their global supply chain
management systems
and programs. For example, sourcing processes from local suppliers must be
aligned with global quality-assurance guidelines and procedures
Fragmentation
Traditional car segments such as sedans, vans, hatchbacks, and pick-up
trucks are fragmenting more and more into niches. Derivative car segments,
on the other handsuch as coupes, roadsters, minivans, and two-seaters, as
well as cross-over vehicles such as four-door coupes, SUV coupes, soft1
SUVs, and sport vansare growing. A combination of customer demand for
personalizationthe right product for their specific use at the right time
and manufacturers conquering new customer segments is causing
automakers to grow their product offerings. The environmental or green
movement is encouraging fragmentation even further, by shifting demand
away from large and/or high-consumption vehicles to smaller and/or more
fuel-efficient cars, giving birth to even newer segments, such as city or
microcars2, and new propulsion technologies, such as hybrids, clean diesels,
and diesel hybrids. Despite measures to control incremental costs resulting
from fragmentationsuch as platform, module, and component sharing
across models and brandssegmentation results in a more complex supply
chain that needs to be managed. Hence, the supply
chain requires integrated capabilities and flexible tools based on real-time
information to address this increasing complexity. For example, using an
identical gearbox in two different car models does not prevent the
manufacturer and its supplier from having to manage the supply chain
process on a transparent basis to ensure on-time delivery of the specific
gearbox to the specific assembly line in the specific location.
Accelerated Volatility
71
In the past, forecasting new product demand was easy. Today, new cars that
initially sell well may lose ground within as little as two years. Shifts in
customer demandfrom product to product, from brand to brand, and from
segment to segmentare accelerating. Customers have more choices than
before, want more personalization, and, in general, enter the showroom
better informed. As a consequence, customer loyalty is decreasingacross
all segments and across all manufacturers. The supply chain, therefore, must
cater to these shifts through quicker responsiveness and overall flexibility.
Yesterday, it was enough merely to set up the supply chain when launching
new product and then make a few changes to it over the products lifecycle.
Today, a higher degree of flexibility and responsiveness must be built in up
front so that
Suppliers can react quickly when overall product volumes are not in line with
plan, or when the mix within the product differs from original forecasts.
Aftermarket
72
Trends in Supply
Differentiated Outsourcing
Low-Cost-Country Sourcing
The auto industry will continue to source from low-cost countries as
manufacturers and suppliers continue to complement their commodities with
more complex products and services. The lowest price, however, isnt
everythingautomakers and suppliers must look at the total cost of
sourcing, including logistics, quality of work, and management. This
approach is referred to as best-cost-country sourcing, and for supply chain
management providers represents another opportunity to encourage,
enable, manage, and optimize sourcing.
73
Risk Management
Most manufacturers agree that their supply chain risk has increased in recent
years. Natural disasters, terrorism, workforce issues, and level of
dependence on partners and suppliers are just some areas that require
strong capabilities in risk management. Manufacturers and their suppliers
must account for supply chain alternatives in their overall supply chain
strategy. Increased transparency based on real-time information (see
Transparency and Accountability section) allows them to identify risks early
on and, ultimately, to manage them. This represents an opportunity for
supply chain management providers to expand their value-added services.
They have the opportunity to become risk-mitigation agents by ensuring the
required transparency and by offering, for example, fall-back solutions or
performance guarantees.
Business operations are becoming more complex and global. Supply chains
are turning into complex supply networks. As a consequence, auto
manufacturers and suppliers need transparency and accountability across
the entire supply network. For example, near-real-time information flow
based on a sensor-driven supply chain across the extended enterprise is in
high demand. Information should, ideally, flow in two directions to help
ensure better and faster interactions within enterprises and among OEMs,
suppliers, and supply chain management providers. At the same time, there
is a focus on security across these complex information networks, led by the
need to manage risks. The supply network has become very complex
globally and is optimized to the penny. Because of this, automakers and
suppliers cannot afford to go after breakdowns in the supply chain. Providers
must deliver performance and output in a transparent mannerthey are now
held accountable much more stringently than in the past, and are at risk
when it comes to paying high penalties in case of nonperformance
74
In particular, for the past several years, there have been six significant
challenges in the competitive world market that have affected supply chain
design for many multinational corporations (MNCs). These changes include:
1. globalization that produces longer and longer lead times in production;
75
76
In a mature industry, major players in the value chain may work together in a
collaborative fashion with long-term objectives and engage in the win-win strategy
(integral architecture). On the other hand, in an immature industry, the processes
and product technologies are not very well established, such as Silicon Valley, the
biotech for energy (e.g. algae, corn, ethanol, wood) or other renewable energy (e.g.
sun, wave, water, and wind). It will be difficult to establish long-term trust-based
relationships; therefore, most major players compete in the race following the zerosum mentality (modular architecture). Moreover, besides these two, the open
innovation approach uses the world as the lab and tries to create mechanisms to
find innovations, ideas, and new products anywhere and then, tries to use
marketing and the product development channels to distribute that product in the
millions, or billions of units to the world. Using this approach, major players may use
supply chains and different models of supply chain design to create value
collectively in the value chain. It is important to know that agility and absorption
allow organizations to weather through dangerous threats, seize opportunities, and
thrive in turbulent markets.
It is clear that the auto industry fits the mature industry overall because its
products, process architectures, and standards are stable, relatively
speaking. However, due to global warming, the energy for the auto industry
(in terms of type, form, source as well as storage and supply of green and
renewable energy) becomes the center stage and a dominant challenge in
the near future. Green energy is in the immature stage of the life cycle.
Therefore, the auto industry straddles both mature and immature industries
and requires a new, innovative, and creative design for the supply chain
management.
There are several major lessons here. First, executives need to identify the
most appropriate situation to use integral, modular, or open innovation
strategies. Second, the key issue is that innovation, technology, demands,
and markets do change quickly, therefore, all advantage is temporary.
Whatever is good right now for the supply chain may not be good years later.
In other words, besides our understanding of what, how, and why, we must
consider who, where, and when. Therefore, executives must evaluate these
strategies periodically.
The key ingredients for success in this race are speed and flexibility. In the
management literature, most scholars and executives agree that the win-win
strategy is better than the zero-sum strategy. However, the winners of
the immature stage are the guys who are the fastest, but they
often can't transition to become the winners in the mature stage.
77
Challenges:The North American auto industry faces tremendous challenges from four
different perspectives. These challenges are:
1. volatile economy;
2. uncertain gasoline prices;
3. green energy; and
4. Social and ethical responsibility.
We briefly discuss these four major issues below.
79
1- Volatile economy
In volatile markets, organizations need to focus on agility and absorption so
that they can be flexible in making changes and meeting the needs and
demands of the customers quickly. The deep US economic downturn in 2008
has remarkably influenced consumers' purchasing power as well as their
purchasing confidence. In fact, in December 2008, five of the Big Six
automakers, General Motors, Ford, Toyota, Nissan, and Honda, saw a 30
percent sales slide from November; while Chrysler plummeted 53 percent.
For the full year of 2008, all of the Big Six automakers reported sales
declines. In total, the industry sold 13.2 million vehicles, an 18 percent drop
from 2007s 16.1 million, closing the books on the industry's worst year since
1992 (Edmund Auto Observer, 2009). The new car market across North
America suffered the full force of recession in 2009, with some worrying
trends revealed in the latest figures supplied by world's leading provider of
automotive data and intelligence, JATO Dynamics. The North America vehicle
sales were down by 0.20.6 percent in 2009, with 3,271,321 fewer new cars
bought than in 2008, even with US government's cash for clunkers
incentives that boosted sales sharply in July and August of 2009 (JATO,
2010). A True Car analyst expected 2009s US auto sales to be the worst since
1970, or 1950 on a population-adjusted basis. Sales to corporate fleets or car
rental companies remained a wild card and could push the total higher.
Although many people anticipate real improvement in the underlying
demand for US autos, which bodes well for 2010, the industry expects
another few years of hard time. We posit that organizations with agility,
absorption, and quick action will survive in the volital environment (Mishra et
al., 2009; Sull, 2009).
the US is more than five weeks. The automakers have no time to react to the
market. As mentioned, agility and absorption allow organizations to weather
through dangerous threats, seize opportunities, and thrive in turbulent
markets (Mishraet al., 2009; Sull, 2009). However, the supply chain loses its
agility due to the long outsourcing pipeline and becomes much more
vulnerable to gasoline price changes and other risks.
3- Green energy
Due to recent oil spills in the Gulf of Mexico, one of the worst ones in the
history, the demand for green energy fuels the energy-hungry fire. With the
rising market demand for green energy, a vast amount of investment in
research and development is unavoidable. Alternative energy could revive
the auto industry. However, many technology hurdles need to be conquered
before new technologies can be industrialized. Furthermore, whether the new
dominant energy resources will be solar, electric, ethanol, or diesel for the
auto industry in the future is still not clear at this point. Therefore, the auto
industry has to invest its research and development (R&D) in different
directions. According to Clayton M. Christensen, 93 percent of all innovations
that have ultimately become successful started off in the wrong direction
(Mangelsdorf, 2009). Not investing in all valuable research directions or
constantly switching among research directions can cost an automaker the
opportunities to thrive in the future. Many people believe that one of the
biggest mistakes that GM made was switching the direction of research on
power among different technologies (Taylor, 2008). It is inevitable to focus on
the big picture and the overall structural changes of the automobile
transportation system and new renewable energy resources. Executives in
the auto industries also have ethical responsibilities to the development of
green technologies around the world (Conley and McLaren, 2009).
3- Ethical responsibility
Finally, the auto industry employs about 10 percent of total workforce in the
USA, directly and indirectly. The struggle of the industry has caused a vast
amount of job losses in many states and impacted community stability and
family lives of many Americans. The industry has received extremely strong
support from our nation's federal government. As of November 2009,
American public had already spent $400 billion in bailing out the industry.
The number is still growing (Kiel, 2009). To boost auto sales, the US
Government conducted a national-wide Cash for Clunkers program. The
81
North American auto industry is not only just an industry, but also a symbol
of the nation. The industry holds the ultimate responsibility to the American
society. American society has invested tremendously in this industry at this
critical time and most people in the USA have very high expectations for the
auto industry to keep jobs in local communities and to generate a quick
turnaround in profits (Roth, 2008). The population anticipates rapid financial
and moral paybacks as well.
can severely hurt the stability of the supply chain (Hopkins, 2010). This adds
onto the uncertainty of the demand, causes severe bullwhip effect in the
supply chain channel, and therefore wastes a huge amount of financial
resources in inventory management. Many opportunities to adjust product
preference changes in the market and production schedules are lost due the
long supply chain pipeline.
According to Jim Rose, Section Manager, Domestic Logistics for Nissan North
Americas, the just-in-time production strategy is an important link in the
supply chain management. However, the just-in-time part of the supply chain
management only applies to the last mile of whole supply chain pipeline. In
fact, automakers need to have all the parts stored in these huge near-by
warehouses within one mile of the auto assembly plant so that trucks can
deliver parts from the warehouse to the plant. As mentioned, in order to cut
prices and save money for parts, automakers apply the economics of scales
by ordering and shipping large quantities of produces from suppliers and
store parts in huge warehouses (Hopkins, 2010). The huge amount of
inventory may reduce the costs for products, but cost more for storage and
reduce flexibility. These facts may illustrate the dangerous myth about
outsourcing and just-in-time production related to the auto industry supply
chain management (Xia and Tang, 2008). The loss of time, flexibility, and
market is directly related to the loss of money. The wastes are much larger
than the savings in purchasing cost (Stanko et al., 2009). In some special
occasions, products had to be delivered from Asia, for example, using Boeing
747 cargo airplanes rather than boats to save time, which costs large
amounts of money.
83
support through the supply channel suffer. Even worse, the strategy will
consequently cause more job losses in North America. In a situation like this,
it holds no moral stand if the auto industry continues to cut the labor force
and to hurt the people in the communities, especially right after billions of
dollars in bankruptcy bailout paid by American people and the national-wide
Cash for Clunkers programs.
automakers can follow. The whole idea is to focus on style, quality, fuel
efficiency, and new technology, in other words, strengthening and focusing
on R&D.
87
supply chains are not just fast and cost-effective. They are also agile and
adaptable. They ensure that all their companies' interests stay aligned. To
achieve this goal, the automakers need to seize strong control over their
suppliers (Yue et al., 2010). Automobile assembly needs hundreds or even
thousands of parts, depending on how we define parts. Automakers cannot
afford to spending time shopping around with many suppliers for cost saving.
Instead, they should build up a core supplier group to lower management
cost and achieve suppliers' loyalty, cooperation, and support. They need to
assure members of this group their business and build long-term partnership.
By doing that, they can cooperate with the suppliers well in response to the
changing market, keep quality level high, and gather efforts and supports in
technology innovation and development.
89
public
support
and
restore
of
auto
industry
supply
chain
1. sustainable development;
2. less dependence on gas;
3. green energy reform; and
4. high moral standard.
The successful development of the 100 percent electric Nissan Leaf shows
how a Combine-Cease-Control supply chain management strategy supports
the above elements. The Nissan Leaf is the first 100 percent electric, no gas,
no tailpipe vehicle. It uses technology called an inverter, which works similar
to a fuel pump and pumps electricity stored in a battery to power the
vehicle. The vehicle runs 60 miles for every recharge. The manufacturer
suggested retail price (MSRP) for the Leaf SV and the Leaf SL start at
$32,780 and $33,720, respectively, which is more than 65 percent higher
than the traditional Nissan Altima Sedan (MSRP=$19,900). Nissan started the
drive electric tour on October 1, 2010, and by October 15, 20,000 people
have already reserved a Nissan Leaf. This high number of reservations has
exceeded everyone's expectations (Nissan, 2010).The Nissan Leaf is the
90
result of the Renault-Nissan Alliance that dates back to 2002 (Yshino and
Fagan, 2003). The two companies combined their research resources, which
facilitated the development of the high technology in the Leaf. The alliance
lowered their purchasing costs by joint purchasing, ceased some long logistic
pipelines by combining their supply networks and closely coordinating with
their suppliers. Furthermore, the Renault-Nissan Alliance ceased their
research, development and production of hybrid engines. Instead, they
installed Toyota engines in Nissan's Hybrid vehicles. With the saved
resources and the leaner supply system, Renault-Nissan was able to hold
strong control of their supply chain, maintain high quality production and
gather sturdy support in developing and producing the innovative Leaf. The
Leaf electric car shows a module of sustainable development in auto supply
chain management. Furthermore, its success clearly exhibits customers'
demand for less dependence on gas and green energy. The introduction of
the first 100 percent electric car also boosts the company's image and
demonstrates a high moral standard, as stated in Nissan's motto, Nissan,
shift the way you move.
9. Conclusion
In this article, we investigate the supply chain management strategy of
Maruti Suzuki India ltd, identify some of the biggest challenges of the
industry, analyze the issues of the current strategy, and propose a new,
cease-control-combine remedy. The proposed triple-C strategy will save the
auto industry big money in R&D investment, reduce quality cost and
inventory waste, help the industry go through the volatile economy, and
achieve sustainable development. Furthermore, with a close relationship and
strong support from the suppliers, the industry can speedup technology
development, introduce new gas efficiency models quicker and become less
dependent on gas price than before. R&D's innovations in green energy will
be incorporated into transportation system to meet market demand. The
industry will continue to lead in green energy reform. Finally, the triple-C
strategy will help the industry keep jobs and generate new jobs in the USA.
These activities lead to public support and restored corporate image.
Executives' ethical responsibility to the industry and the society signals a
higher moral standard than before.
In conclusion, the new triple-C cease-control-combine strategy is sustainable,
strategic, and ethical. The auto industry must satisfy all stakeholders in the
society: customers, local community, suppliers, employees, different interest
91
Figure
1Auto
industry
supply
chain
management:
triple-C
strategy
Table I Challenges of the auto industry and the current strategy's problems
93
CHAPTER-5
Summary of Findings and Suggestions:New Delhi, August 22, 2012: All India Management Association organized
the second day of its most sought after annual Global Summit on Supply
Chain & Logistics Management here in the capital today. The theme of this
years summit is Developing Supply Chain Competitiveness - Agenda for the
Future.
With the evolving world economy, organizations are faced with challenges in
the new world. These very challenges offer opportunities for companies to
strengthen their position by creating greater value for customers as
compared to competition. Effective management of supply chains can result
in significant value creation. Developing global SCM competitiveness requires
understanding the enabling role of infrastructure; investing in developing the
right pool of skilled manpower; leveraging the advantages of superior
technology; and effective management of supply chain change. AIMAs SCM
Summit emphasized this year on these critical issues for achieving global
competitiveness
through
supply
chain
management.
Day two of the Summit witnessed a panel of esteemed experts and Supply
Chain heads of various Corporate discuss on topics ranging from Industrys
best practices to the key agenda for Supply Chain in the future.
The opening session on Managing Supply Chain Change Industy Best
practices was chaired by Dr. Nallan C Suresh, Head (Supply Chain),
94
ACC
Ltd.
Mr. Vikas Singhal, Vice President (Mfg. & SCM Whirlpool,
emphasized on the need for incorporating Supply Chain Management in the
Organizational Strategy. He said, It is extremely essential that Supply Chain
is an integral part of the Corporate strategy and business model. Supply
Chain Management Group should be one of the key stakeholders and part of
decision making and business plan. It is also important to deal with external
environment be in vendors, consumers or regulators. Also, SCM, sales,
Finance functions should actively collaborate in the planning cycle.
The last session of Day two saw a power packed panel debate and deliberate
the Supply Chain Agenda for the future and the key issues related to the
95
same. The panelists included Mr. Winnie P John, Planning & Logistics
Director (Indian Sub Continent) GlaxoSmithKline Consumer Health
Care Ltd.; Mr. Jayant K Ambast, Director, Supply Chain South Asia,
Perfetti Van Melle India Pvt. Ltd; Mr. Kalpesh Pathak, Asst Vice
President (Corporate SCM), Fiat India Automobiles Ltd and Mr. Ajay
Rao, President (Business Development and Strategy, Warehousing
and 3PL), Allcargo Logistics Ltd. The Session was chaired by Mr. S
Sandilya,
Chairman,
Eicher
Group.
Mr. Winnie P John, Planning & Logistics Director (Indian Sub
Continent) GlaxoSmithKline Consumer Health Care Ltd. focussed on
the need to create a demand driven supply chain and working with the sales
team to create a standard process. The need to be agile and responsive and
collaborate within the organization with sales and other functions was also
emphasized
upon.
Dr. G Raghuram, Vice Chancellor, Indian Maritime University &
Summit Director summed up the proceedings of the summit giving the key
takeaways.
The unique feature of AIMA Summit is to provide a platform in an experiencesharing interactive mode, thereby encouraging high level of active
participation by delegates. Over 150 professionals across India are
participating in the two-day summit.
CONCLUSION
Supply chains in the automotive industry become increasingly complex. The
modern automotive manufacturing methods aim to pull components
through production based on demand requirements. OEMs typically rates
suppliers according to price, quality, delivery reliability, and operational
performance. The goal for best-in-class suppliers is to produce the right
parts in the right quantity at the right price, delivered to the right place at
the right time. Effective management of relationships between OEMs and
supply chain companies becomes more and more important. Suppliers must
either pre-build the parts and keep the inventory on their shelves, or move to
flexible and sequenced manufacturing so they can produce and deliver the
production parts as they are needed. The automotive manufacturers - OEMs
and Tier 1 suppliers have adopting many of new manufacturing practices,
e.g. lean production, Just-In-Time (JIT) inventory. These practices are being
96
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97
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98