Vendor Selection Process and

E-Nagare System at MSIL

 About MSIL
MUL established in February 1981.

Subsidiary of Suzuki Motor Corporation of Japan.

• Suzuki 54%
• Public & financial institution-46%

2007-Maruti Udyog was renamed to Maruti Suzuki India Limited.

Leading four-wheeler automobile manufacturer in South Asia.

Global leader in mini and compact cars.

 About MSIL contd….

Two manufacturing facilities- Gurgaon and Manesar.

1st company to produce and sell 1million units.

Market share- around 54%

Employee strength- 75000

 MSIL Supply Chain Division
MT 1 to MT 6 • 6 departments

Shipping and Transport • Logistics and Insurance of the

Department imported components.

Consumables
• Paints, thinner, oils
Department

WWP (World Wide • Global procurement

Procurement) • Sole supplier
VVD (Vendor
Development • Technology to vendors
Department)
 Roles of the Supply Chain division

PCD (Periodic cost down):

• Sets targets for cost reduction
• Shares the benefits of reduction.
• Done on basis of tool amortization and increase in volumes.

MPS (Maruti Production System):

• Derived from Suzuki Production System
• Identify and eliminate waste in operations
• Works with vendors for improving their productivity,
reducing rejected components
Roles of the Supply Chain division contd..

Inner Part Localization

• Tier 1 supplier imported some parts.
• Focus on increased the proportion of locally
sourced, lower cost components in their models.

Regular VA/VE targets

• Reduce cost
• Increasing the value of the component
MSIL Suppliers
 Vendor selection Process
Primary role
• Engineering division
• Supply Chain Division
Secondary role
• Parts Inspection Division
• Quality Assurance Division
• Production Division
Limited number of suppliers
• Maintain good relationship
• Contingent situations.
Steps in Selection Process
 Role of Various divisions
Parts Inspection
Engineering Division Supply Chain Division
Division
• Issue RRFQ • Issue RFQ to • Role starts just
• Evaluate quote in suppliers. before the start of
terms of design and • Cost Negotiations. regular supplies.
cost • Meeting the cost • Needs to be extra
• Getting the targets. cautious at this
component stage.
developed as per
desired
specifications
• To look after any
possible VA/VE
possible at
development stage.
 Quality Assurance
Production Division
Division
• Opinion taken into • To make the vehicle
account. in required volumes
• Maintain Assured and to specifications.
level of quality at • Needs support from
suppliers end all other divisions of
• Takes the work from the company.
engineering division. • Maximum conflicts
with other divisions.
Development responsibilities and cycle
time for activities
• Receiving of drawings from SMC by
engineering.
• Classification of parts as in-house or
outsourcing by engineering. Cycle time 15
days.
• Release of RRFQ. Cycle time 10 days.
• Release of RFQ to suppliers. Cycle time 7 days.
• Time for suppliers for submission of quotes 14
days, along with tentative development
schedule
• Technical review meeting, pre negotiation,
supplier selection. Main responsibility
engineering and supply chain. Cycle time 14
days.
• Selection of supplier and issuance of letter of
contract. Cycle time 7 days.
• Supply chain to keep tab on development
schedule as the ongoing process.
Conflicts among various divisions
• Engineering division wants to be extra
cautious at this stage.
Engineering and • Supply chain has the pressure of costs and
supply chain to reduce costs.

• Parts inspection wants more improvements

Engineering and on line as far as the mass production is
Parts Inspection concerned.

Division
• Quality Assurance wants the supplier to
Engineering and have good track record.
Quality control • Engineering has to develop the capacity at
the suppliers end also.
division
 • Production has concerns with irregular
and misplaced supplies.
Production and
supply chain
division

• Engineering people wants new

technologies to be introduced.
Production and • Production reluctant to use that as they
engineering has to train the workers for that.
division
E-Nagare system
• Online system built in house based on oracle
technology.
• System is to manage the Just-in-time inventory.
• System linked with VTS, another system for
efficient working.
Difference between Kanban and e-nagare
• In e-nagare ordering of parts takes place while in Kanban
there is no such ordering of parts
Development of E-Nagare
• Developed and implemented by Maruti in
January 2003.
• Implemented by Suzuki in July 2003 and by
Toyota by the name of Jumbiki in October
2003.
• Implemented to overcome problems like:
– Material accumulation due to Multiple sourcing
– Losses of Procurement Information
– Sub Model variations.
Monthly Scheduling System
• Was followed before e-nagare till 2001.
• Supplier given the information like:
• Vendor code
• Part Number
• Quantity of the component.

Delivery Instruction System

• Information of monthly scheduling system in addition
to:
• When and where the material is to be supplied
• Indent by marketing people and schedule by PPC to
suppliers
 Fortnightly Production System

Firm schedule for the first Tentative schedule for the

20th of the previous
fortnight of next month second fortnight of the
month
next month

Firm schedule for the Tentative schedule for the

5th of the second fortnight of the first fortnight of the next
month month month
 E-Nagare and the present system
• 6 months plan given in advance
– First two months- Firm Plan
– Month 3 and Month 4- Tentative Plan
– Month 5 and Month 6- Very tentative plan
• A fortnightly plan is given.
• Firm schedule is given a day before
• Firm schedule can have 10-15% variation from the
fortnightly schedule
Role of E-nagare in managing inventory

• Linked to another system called VTS

• Material supplied DOL.
• Calculation of inventory done with the help of
VTS and the incoming inventory through e-
nagare.
• Helps in generating the firm plan for next day.
 E-Nagare and DOL
• E-Nagare specifies exact time, place, and
quantity of material.
• Entry allowed only 59 minutes before
scheduled time.
• Supply has to be at exact location.
• Supplier can not club the supplies of two
plants.
• Responsibility is of supplier to supply parts in
correct sequence.
Shortcomings and ways to improve
• Order quantity for suppliers defined which
sometimes lead to LTL supplies.
• Due to many supplies during the day. There is
congestion at the gate during peak hours.