Supply Chain Management – GR3

Group Assignment
On
“Supply Chain of Maruti Suzuki India Ltd”

(TERM-IV; Batch 2019-21)

Submitted By:
Submitted To:
Ankush Birla – PGFA1910
Dr. Keshav Kr Sharma
Ravina Singh – PGFA1941
Surbhi Sabharwal – PGFA1958
Utkarsh Padiyar – PGFA1959
Yash Batra – PGFA1960

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 ACKNOWLEDGEMENT 

We would like to express our deepest appreciation to all those who provided me the
possibility to complete this report

Furthermore, we would also like to acknowledge with much appreciation the crucial role of
Prof. Keshav Sharma, who gave the permission to use all required equipment and the
necessary materials to complete the Project on “Supply Chain of Maruti Suzuki ltd”.  A
special thanks goes to all our team mates, who helped us in doing all the study related to the
project. We have to appreciate the guidance given by other supervisor as well as the panels
especially in our Guest lectures that has improved our presentation skills thanks to their
comment and advices.

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 LIST OF TABLES

S.NO PAGE NO.

Supply Chain Drivers & strategic fit 11- 14

LIST OF FIGURES

FIG NO.& TITLE PAGE NO.

1) Competitive strategy 8
2) Supply chain network 9
3) Mapping Sc of Maruti 10
4) Roe 15
5) Roa 16
6) Rofl 16
7) Ap turnover 17
8) Ar turnover 17
9) Inventory turnover 18
10) Ppe turnover 19

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Introduction of the study

The business atmosphere is becoming ever more dynamic. Together with accelerated rates of
change, the breakdown of innovation and technology lifecycles, the emergence of digital
technologies, the fueling of a global consumer and supply base, and increased demand for
variety are all raising the burden on businesses and stimulating a shift in the position of the
supply chain. Although the basic market principles of consumer purchasing, selling and
handling, suppliers and capital remain valid, the environment in which they need to be
handled is becoming more dynamic, unpredictable and volatile; a situation exacerbated by the
growing rate of change.

Prof Michael Porter pointed out that two key strategies for business success are:
differentiation and cost advantage. Differentiation is done by providing customers with an
offering they consider to be of having higher value while achieving cost advantage is done by
doing it more economically than competitors. The emphasis for securing uniqueness has
traditionally been on product differentiation. The possibilities to secure sustained profit
through product differentiation are declining with life cycles now measured in months, often
weeks, instead of years. To ensure price advantage, more and more businesses are turning to
service-based differentiation. Even though the time to optimize profit prevails for a product-
based approach, it is becoming shorter and harder to reach.   Therefore, the supply chain has
become either the catalyst or the essential differentiating enabler.

The function of the supply chain as a major cost driver has long been acknowledged. The
supply chain has been estimated to account for up to 70 percent of the cost of a commodity.
Therefore, the supply chain presents a significant opportunity to have a cost advantage. The
position of the supply chain has taken on two more dimensions, in addition to ensuring
differentiation and cost advantage, resulting from the need to ensure “resilience,
responsiveness and flexibility in an increasingly dynamic and unpredictable world”.

When it comes to supply chains, organization face more problems since they align
themselves with a large number of objectives which in turn leads to more complexity. They
are unable to decide one single objective, such as:

 Decrease the level of inventory?

 Initiate on-time deliveries?

 Increase fill rates?

 Decrease the cost of supply chain operations?

 Increase the flow of goods through the chain?

 Increase flexibility to meet changing demand?

Thus, the fundamental task of senior supply chain management is to match the supply chain
strategy with the company strategy and ensure it produces improved financial results.

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Objective of the Study

The overall study objective is to study in detail about the supply chain of Maruti Suzuki India
Ltd., and the basic principles, methods, tools & techniques utilized by them for achieving
supply chain management.

The following issues have been addressed in the project report:

 Competitive strategy of Maruti Suzuki India Pvt Ltd.

 Supply chain network structure
 Strategic Decision taken by Maruti Suzuki in relation to the supply chain drivers.
 Competitive strategy & Supply Chain strategy aligned to achieve the strategic fit
 Impact of supply chain strategic decisions on supply chain and overall business
performance in last three financial years i.e. 2018-19, 2017-18, 2016-17.
 Recommendations in relation to the supply chain strategic decision, planning and
operations decisions which can increase the supply chain surplus.

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 Introduction of Maruti Suzuki

 India’s Largest passenger car company which was founded in 1981 in Delhi.
 Initially the company was owned by the Indian Government.
 Involved in the business of production of motor vehicles and spare parts for them.
 Later, joint ventured with Suzuki Motor Company and then called as MARUTI
SUZUKI.

Suzuki again increases

stake from 40% to 50%
JV with Suzuki its sake
was 26%
Presently Suzuki has
56.21% stake

1981

1982 1987 1992 2002 2007 2013 2015

Incorporate - Maruti
Udyog Limited Suzuki stake in JV – 54.2%

Suzuki stake from 26% Maruti Udyog Ltd. To

to 40%. Maruti Suzuki India Ltd.

NEXA platform was introduced were the company would launch premium cars
with the help of this channel.

 It makes almost a million cars in a every year and has been the market leader in India,
which brought revolution in automobile industry in India.
 It is also the first Indian company to export half-million cars.

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Maruti Suzuki has been always ahead in the automobile segment and is leader in Indian
market it is also been a leader in using its supply chain design to stay ahead of others in this
segment and from the starting company invested in a good infrastructure to have a good and
efficient flow of goods and information.

Deliverables

Competitive strategy of Maruti Suzuki India Ltd.

 In the beginning Maruti came up with the cars that were affordable by the Indians
and they also had a huge support from the government which helped them in
gaining the market share since the very start.

 In 1990s Indian government allowed International automobiles to enter into

market and to that every competition comes up with strategies which in this
segment mostly includes introducing new models/variants, giving discounts or
some tech advancements and getting sales when Hyundai and Renault started
coming up with budget friendly cars for middle class Maruti Suzuki came up with
different variants so that its distributor can show more options and varieties.

“Better Manufacturing Facilities”

Maruti Suzuki India Ltd. concentrated on regular capacity expansion and also upgrading the
production facilities to sustain the market leadership they already have and they set the target
of getting better productivity by 50% and also to decrease the cost of vehicles by 30% and it
was successful in increasing the capacity in one of the plants to million cars per year.

“Great Portfolio and Expanding Business”

There is a huge competition in the Indian automobile industry and looking to that Maruti
Suzuki decided to bring in cars for every segment and bring them to the Indian Market.
Therefore, the company has a huge range of products in almost every segment to carter needs
of every type of individual. The company also recently started its own driving school and
providing finance and insurance.

 Maruti Suzuki through its competitive strategies has been able to maintain the
household name in the country with keeping in mind what Indian customers need i.e.
excellent mileage and good experience of after sale service and the company fits this
space.

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  Maruti Suzuki from the initial has been very strongly associated themselves with
small cars and at less cost and helped the company to sustain even in the premium
segment i.e. launching of Nexa stores which was launched to get market share in this
segment as well.

 Maruti Suzuki utilizes the capacity of production efficiently and due to this they were
able to decrease the manufacturing cost/ unit and altogether with increase in profits as
well.

 Maruti focuses on rural areas since they have less priced cars business from Tier II
and III. (FIG 1)

Strength and Weakness Opportunities and Threats

 Good Infrastructure  Less presence in higher

 Large Inventory end segment
 On-Road assistance with  High Competition
test drive services  Cannibalization
 Large Distribution System  Less re-sale value
 Value for Money  Slow processing of orders

Factors Internal to Factors External to

company company

Competitive

Strategy

Values Societal Expectations

 Customer Obsession  Fulfilment of CSR i.e.

 First mover and flexible Corporate Social
 Creative and brings in Responsibility
innovation with quality  Taking initiatives for
 Networking and society and aiming8
collaborating towards sustainability
 Adapted from
PORTER’s
2) Supply Chain Network Competitive
Strategy

SupplyCasting
from and assembling of engines and
Manufacturing
Industries and
transmissions components Assembling these
storing of parts Bodies
parts and painting
Metal and
Steel

Glass/ Mirror

Components
Electricals
Manufacturing other components electrical and as
well as machinal i.e. wheels, tires, seats, Final
Plastic and
windshield, exhaust etc.… Assembly
Rubber

Transmission/Engines
Fabric
Consumer
Market

FIG 2

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 FIG 3

Key Facts:

 Plants – Gurgaon i.e. Manesar Industrial Town

 Capacity – 8,80,000 units per annum
 1082 authorized dealers in India

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  More than 3000 service stations
 56 days in 1993 to 19 days in 2004 the Lead time was reduced.
 Automated Receipts and Handheld devices with connectivity
Supply Chain Ecosystem
Benefits
Partnerships and
Supply Chain Capability
Collaborations
Location and Infra
FIG 4
Strategic decision taken by Maruti Suzuki India ltd vis-à-vis Supply chain driver &
Strategic fit between the competitive strategy and the supply chain strategy ( TABLE 1)
SC Driver Maruti Suzuki India ltd. strategies
INVENTORY The company has been paying special attention
to its inventory management because its raw
material consumption cost was 75-83% of its net
sales and around 70% of its firm’s components
are outsourced. The company has taken various
steps to improve its inventory management due
to which there has been a significant rise in the
average inventory turnover ratio over the years.
To improve the inventory management of Maruti
Suzuki, they adopted the Japanese system of
JIT, i.e. Just-in-time- a strategy which
increases the efficiency and reduce the waste by
receiving the goods only when they are required
for the production., which reduces the inventory
carrying cost. It helps in improving the ROI, by
reducing in-process inventory and the cost
associated with it.
The key initiatives taken by Maruti Suzuki were:
Outcome
Lead Time reduced with
reduced risk and at lower
cost
Strategic Fit
Maruti Suzuki has used the JIT
techniques which further helps
in improving the efficiency in
production as the wastage has
been reduced and the
production is only being done
when it is required. As the
centralization or aggregation of
inventory reduces the required
inventory level which affects
the responsiveness of the firm.
Thus, reduction in the
responsiveness lower down the
cost.
Since all the suppliers of the
firm are within the radius of
100 kms so this also help the
firm in reducing the material
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  Vendor management: 80% of the flow time in the supply chain
company’s suppliers are located within Bar codes and Kanban system
the 100 kms radius. The supplier for the are also being used by the firm
bulky components like bumpers, seat, to increase the supply chain
fuel tanks are near to the manufacturing capability and this further helps
facilities of Maruti which helps in better the firm in aligning with the
operational efficiency & economies of competitive strategy of being
scale. able to serve its target
 Bar Codes: The use barcodes do make customers by serving the need
the makes the supply chain more of customer of being able to
efficient by reducing the process time, deliver a low-cost affordable
more accurate data, & speed of vehicle
operation.
 Delivery Instruction system: With the
more advanced delivery system being
installed by Maruti Suzuki, they get more
aware about the materials as and when
required, which reduces the buffer stock
and also the lead time. The promotion
cost is also reduced by the online buying
of the inventory.
 Kanban production system: It’s a tool
which is used to reduce the idle time in
the production process. Delivering what
the process needs exactly when required.
The forecasting of the delivery days is
done in every 15 days to plan supply.
 Localization: To increase and develop
the vendor capacity and to reduce the
geographical distance between the
manufacturing and the supplier, the
localization limit has been set 70-90%

Therefore, Maruti Suzuki India Ltd. is both

highly responsive and efficient.

FACILITIES Maruti Suzuki India Ltd. got two manufacturing
facilities in India,
1. Gurugram
2. Manesar
Gurugram facility got three fully integrated
manufacturing plant. They manufacture Alto
800, WagonR, Ertiga, XL6, S-Cross, Vitara
Brezza, Ignis and Eeco.
Manesar facility plant production capacity is of 8
lakh annually and manufactures
Alto, Swift, Ciaz, Baleno and Celerio.
There is third facility which is located in
As there are only three
manufacturing facilities of
Maruti Suzuki in India. So, this
has helped the company in
increasing Efficiency and there
it would also decrease the
facility cost of the company and
the inventory cost and would
also help the company in
gaining economies of scale
through production.
As every facility is a dedicated
and the centralise one so there it

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 Ahemdabad, which is wholly owned by Suzuki
motors corporation, and this plant supply Maruti
without any additional cost.
There is a small number of facilities owned by
Maruti, which makes it efficient.
INFORMATION Information being the biggest drivers for the
supply chain as it affects the other drivers too.
Consisting of all the information in regards to
the facility, inventory, transportation, cost prices.
Maruti Suzuki has installed barcodes, which
reduces the transition time, and process time and
increase the speed of the operations.
Maruti Suzuki has installed ERP systems which
integrates all the divisions and functions of the
organisation into a single software programme.
Maruti has implemented EBS suite – Oracle E,
across all the department of the organisation.
This system consists of ERP, SCM, CRM
applications.
Overall, Maruti Suzuki got a good information
set which is not that complexed since every
department is integrated through one system
known as Oracle E, which help them to be both
efficient and responsive.
SOURCING Maruti Suzuki, most of the components have
been outsourced from the top suppliers like JK
industries, Lucas, TVS & Kalyani breaks. The
firm has been outsourcing in order to increase
the supply chain surplus.
In fact, last year, Maruti has outsourced the
production of its SUV Vitara to the Toyota plant
in Karnataka which helped them freeing the
capacity from its facilities in Manesar &
Gurugram.
would also increase the supply
chain efficiency of the
company. Thus, there are also
certain macro-economic factor
like good infrastructure and
better road connectivity and
good quality of labours at low
cost that were kept in mind
related to the facility decisions,
and capacity has also helped the
company to align withs is
competitive strategy of being
able to deliver a low-cost
affordable vehicle.
Information being the biggest
driver of the supply chain
performance as other drivers are
directly related to it and is also
properly aligned with the
competitive strategy of the firm.
Thus, to improve the efficiency
and responsiveness as well the
efficiency the company has
installed barcodes, ERP, EBS
suit. This enable in improving
the visibility of each and every
transaction and also improving
the supply chain coordination.
The best part about these
systems are that it records data
and further interprets in simple
form.
Most of the parts of Maruti
Suzuki are being outsourced
and this able enable the firm to
focus of the key aspect that is
design and the engine. While all
the suppliers of Maruti are also
being located within the 100 km
radius.
The component manufacturers
are basically the domain experts
and this strategy is able to help
the firm in lowering down the
overall cost by keeping it
aligned with its competitive
strategy.
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PRICING “Value for the money”- is the key driver for the
volume of sales for Maruti Suzuki. They have
been proving the light weight yet safe vehicles,
they have been able to cut the cost and prices of
the cars comparatively to it competitors.
Low cost of ownership, long service intervals,
affordable components helps in making the low
cost strategy being implemented even after sale
service.
The firm is able offer different pricing for its
different products and service.
Therefore, it is highly responsive for the
customers who value it.
TRANSPORTATIO Maruti Suzuki have started transporting via
N waterways, which has helped the country’s
largest car maker to reduce its transportation
cost.
The Suppliers are located nearby the facilities so
as to reduce the transportation cost of
components.
As transportation always has
the huge impact in the
efficiency and responsiveness
and help in moving inventory
from point to point, the
company therefore uses the
slower mode of transportation
which enable the firm in
increasing the efficiency of the
firm and reduces the cost.
While Just in time technique
has been used by the firm that
helps the firms in maintaining
the inventory level.
GPS enable system helps in
tracking of the carriers and
other Internet systems has also
helped Maruti Suzuki in
designing a proper logistics
network which has helped in
reduction of the transportation
cost
Thus, this transportation
capability is also properly
aligned with the competitive
strategy of the firm
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“Impact of Supply Chain Strategic decisions on Supply Chain and overall business
performance of Maruti Suzuki during FY 2017,2018,2019”

1. “Return on Equity” Analysis

ROE
25

20.25
20
18.51
16.24
15

10

0
2016-17 2017-18 2018-19

FIG 5

 It is a measure to check how effectively the company is using assets to create profit.
 Since it measures the return on investment made by company’s shareholders, the impact
of strategic supply chain decisions on ROE in past 3 financial years is not desirable.
 According to the financials of Maruti Suzuki it can be seen the ROE has declined which
means that the organization has reduced the efficiency.
 This further means that the lead time for the organization has increased, and the
inventory management is slow. This also shows that the changeover cost or setup cost
for Maruti has increased.

2.Return on Assets
ROA
16
14.45
14 13.07
12 11.95
10
8 15
6
4
2
0
2016-17 2017-18 2018-19
 



FIG 6
 Since ROA depicts the capability to earn returns from investment and assets, the
supply chain strategic decisions over past 3 financial years indicates downward
profit trend, which is not desirable.
 Higher value of ROA is desirable.
 Inventory is both an asset on balance sheet and an expense on income statement.
Now, the return on asset for Maruti is declining, which means that the Maruti is
increasing its inventory level which is impacting both assets and expenses.
 Both Transportation and warehousing costs also has an impact on the rate of assets.
Maruti has its own warehouses and transportation fleets this means that the they
have a fixed cost associated with it. Thereby the ROA is declining.

3. Return on Financial Leverage Analysis

Return on Financial Leverage

7
5.8
6 5.44
5 4.29
4
3
2
1
0
2016-17 2017-18 2018-19

FIG 7
 Since ROFL indicates risk level a company is taking for earning the returns, i.e. the
amount of ROE that can be attributed to financial leverage. As per past three
financial year the supply chain strategic decisions show undesirable returns on
financial leverage.

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4. Accounts Payable Turnover Analysis

Accounts Payable Turnover

8.5
8.06
8

7.41
7.5

7 6.81

6.5

6
2016-17 2017-18 2018-19

FIG 8

 APT during 2017,2018,2019 was 7.41,6.81,8.06, which means Maruti Suzuki

financed its suppliers using its own money for 7.01,7.63,6.45 weeks, respectively.
 Since lower value is desirable, from 2017-2018 the impact of supply chain strategic
decisions on APT were desirable but from 2018-2019, the impact got reversed.
 Lower value is desirable.
 Since the accounts payable ratio for Maruti Suzuki is increasing this means that the
company is making late payments thereby resulting in order delays. Further, this also
means that the firm is paying penalties on payments.

5. Accounts Receivable Turnover Analysis

Accounts Receivable Turonver

7
6.42
6 6
5
4
3.67
3
2
1
0
2016-17 2017-18 2018-19

FIG 9

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  APT helps in measuring the effectiveness of the organization company’s
effectiveness for collecting the receivables for the money which is owed by
customers.
 ART for the year 2017,2018,2019 was 6.42.6.3.67 respectively which means Maruti
collected money from sales in 8.09, 8.66, 14.16 weeks, respectively.
 In past 3 financial years, the decline in ART ratio shows the impact of supply chain
strategic decisions results to be highly undesirable.
 The account receivable ratio is decreasing which means that the company is facing
bad debts and is unable to fulfill shipments due to non-payments.

6. Inventory Turnover Ratio

Inventory Turnover Ratio

21
20.9
20.86
20.8

20.6

20.4
20.25
20.2

20

19.8
2016-17 2017-18 2018-19

FIG 10
 Excess staking of inventory leads to low inventory turnover because of weak sales
and vice versa.
 INVT for the year 2017,2018,2019 were20.86,20.25,20.9 respectively which means
average time to sell inventory in Maruti Suzuki during the period was 2.49, 2.56, 2.48
weeks, respectively.
 In past 3 financial years, the upward trend in Inventory Turnover Ratio shows the
impact of supply chain strategic decisions is desirable.

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7. “Property, Plant and Equipment” turnover

PPE Turnover
1.85
1.82
1.8
1.75
1.7 1.7
1.65
1.6 1.59
1.55
1.5
1.45
2016-17 2017-18 2018-19

FIG 11
 PPE ratio shows, how efficiently company is using their fixed assets like plant,
property and equipment’s for generating sales.
 From 2017 to 2018, the impact of supply chain strategic decisions was not desirable
due to downward trend but from 2018 to 2019, showing upward trend, the impact of
supply chain strategic decision shows desirable results.

SUPPLY CHAIN STRATEGIC PLANNING & OPERATIONS DECISION WHICH CAN

INCREASE SUPPLY CHAIN SURPLUS

Maruti Suzuki India Ltd. should outsource more often to grow the supply chain surplus in large with
small increase in risk.

Third party helps increasing supply chain surplus by increasing the value for the customers or by
decreasing the supply chain cost for the firm relative to them performing the functions in-house.

The following mechanism can be used to grow the surplus:

1. CAPACITY AGGREGATION: Third party can help in increasing the Supply chain surplus
by aggregating demand across different firms & increasing the production, achieving the
economies of scale.
Maruti Suzuki has earlier given the manufacturing of its Car breeza to Toyota, giving
leverage to its facilities to produce other cars, creating Supply chain surplus for Maruti.

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2. INVENTORY AGGREGATION: By aggregating inventories across different and large
number of customers, which lower the uncertainties and improve the economies of scale for
purchasing & transportation.

3. TRANSPORTATION AGGREGATION: The transportation aggregation can be help in

increasing the supply chain surplus by aggregating transportation functions to a higher level
than any shipper can do on its own.

4. WAREHOUSE AGGREGATION: Supply chain surplus is increased by aggregating

warehouse needs over several others stores. This reduces the real estate cost and processing
cost.

5. RELATIONSHIP AGGREGATION: Supply chain surplus can be achieved by decreasing

the number of relationships between multiple buyers and sellers. There should be direct
relationships with the buyer, as intermediaries lower the number of relationships which needs
to be maintained.

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REFERENCES
1. Maruti Suzuki India Ltd. Website.
https://www.marutisuzuki.com/
2. Maruti Suzuki Annual reports
https://www.marutisuzuki.com/corporate/investors/company-reports
3. Financial Analysis through Money Control.
https://www.moneycontrol.com/india/stockpricequote/auto-
carsjeeps/marutisuzukiindia/MS24
4. Supply chain Articles
https://www.automotivelogistics.media/oems/maruti-suzuki-on-raising-the-indian-
supply-chain/9798.article#:~:text=Localisation%20of%20suppliers%20and
%20components,of%20what%20'local'%20meant.

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