IILM INSTITUTE FOR HIGHER EDUCATION

“Supply Chain Management”

Of
Bajaj Auto- Ltd

Submitted To Submitted By
Ms. Priyadarshni Bakshi

Mohan Mahato
pg20095822

INDEX

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ORGANISATION DETAIL

TITLE PAGE NO.

ORGANIZATION DETAIL 3
 NAME
 INCEPTION,GROWTH
 BRACHES/PLANT LOCATION
 PRODUCT/SERVICE LINE
 ORGANIZATION STRRUCTURE
 COMPETITOR
SUPPLIER DETAIL 9
 RAW MATERIAL REQUIRED
 SUPPLIER INFORMATION
 SUPPLIER LOCATION
 PROCESS OF ORDERING/FULLFILMENT
 RELATION WITH FIRM
OPERATIONAL DETAIL 12
 PRODUCT USE AND CHARACTERISTICS
 MANUFACTURING PROCESS
 INFRASTRUCTURE FACILITIES (PLANT, MACHINERY,
TECHNOLOGY, HUMAN RESOURCE, ETC.)
 CONCEPTS LIKE JIT, SIX SIGMA (INVENTORY
MANAGEMENT)
 SUBSTITUTES AND COMPLEMENTARY
PRODUCT/SERVICE
DISTRIBUTION DETAIL 16
 MARKETING/PROMOTION
 TRANSPORTATION/LOGISTICS
 WAREHOUSING
 CHANNEL STRUCTURE
 CHANNEL MANAGEMENT
 TARGET MARKET (LOCATION)
CUSTOMER DETAIL 20
 TYPE OF CUSTOMERS
 TARGET MARKET (DEPENDING UPON CUSTOMER
CHARACTERISTICS)
 AFTER SALES SERVICE
 CUSTOMER RELATION MANAGEMENT
SUPPLY CHAIN DIAGRAM AND EXPLANATION 23
NAME OF COMPANY:

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“Bajaj Auto Ltd.”

INCEPTION, GROWTH OF THE COMPANY:

The Bajaj Group was founded in 1926 by Jamnalal Bajaj and now consists of 27 companies.
In 1945, Jamnalal Bajaj had formed M/s Bachraj Trading Corporation Private Limited, the flagship
company, to sell imported two-wheelers and three-wheelers. The company acquired a license from
the government in 1959 to manufacture these vehicles and went public the next year. By 1977, the
company saw its plant rolling out 100,000 vehicles in a single year. In another nine years, Bajaj
Auto could produce 500,000 vehicles in a year. The present Chairman of the Bajaj group, Rahul
Bajaj, took charge of the business in 1965. He was the first licensee of the Indian make of the Italian
Vespa scooter. Japanese and Italian scooter companies began entering the Indian market in the early
1980s.

Although some boasted superior technology and flashier brands, Bajaj Auto had built up
several advantages in the previous decades. Its customers liked the durability of the product and the
ready availability of maintenance; the company's distributors permeated the country. By 1994-95,
Bajaj was racing to beat Honda, Suzuki and Kawasaki in the two-wheeler segment internationally.
By 1997, Bajaj faced tough competition in the domestic market and its market share stood at 40.5%.
Under the leadership of Rahul Bajaj, the turnover of Bajaj Auto has gone up from Rs.72 million to
Rs.46.16 billion (USD 936 million), its product portfolio has expanded from one to many and the
brand has found a global market. Bajaj as a brand is well-known across several countries in Latin
America, Africa, Middle East, South and South East Asia.

The company has a network of 498 dealers and over 1,500 authorised service centers and
162 exclusive three-wheeler dealers spread across the country. Around 1,400 rural outlets have been
created in towns with populations of 25,000 and below.

The current dealer network of Baja is servicing all these outlets. Bajaj is convinced that the
real impetus of future two-wheeler growth will come from upcountry rural India. Bajaj Auto has
defined specialist dealerships for rural markets, called 'Rural Dealerships'. During the year 2008-09,
twenty new rural dealers became operational. Bajaj has identified a segment of customers called
'Probikers', who are knowledgeable about motorbikes and appreciative of contemporary technology.
They are trendsetters and very choosy about what they ride. Hence, Probikers need to be addressed
in a meaningful way that goes beyond the product.

Product/Service line:

Bajaj Auto is in the process of setting up a chain of retail stores across the country
exclusively for high-end, performance bikes. These stores are called “Bajaj Probiking". Fifty two
such stores have been opened across the India. Catering to demand in this sector requires a strong
and effective distribution network as consumers are more demanding and expect delivery on time.
Early delivery is a cause of delight for customers. With such vast global and Indian rural presence,

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designing an efficient distribution system becomes a complex task even for a company like Bajaj
Auto. Lot of time and effort goes into designing a strategy based efficient distribution system.

Key products- two wheeler

Premium segment Executive segment Entry segment

Pulsar 220 dtsi Xcd 135 Discover 100 dts-si

Pulsar 180 dtsi Discover 135 Platina
Pulsar 150 dtsi Pulsar 135 Kristal
Avenger dtsi Platina 125

Key products – three wheeler

Passenger carrier Goods carrier

Re CNG GC diesel
Re diesel GC CNG
Re petrol Re 600
Mega Max

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Product Segmentation

The company classifies motorcycles into three segments, based on consumer categories and
approximate price points. These are:

 Entry Segment: These are typically 100 cc motorcycles at a price point in the neighbourhood of
Rs.35000. Bajaj Auto has a presence in this segment through the Platina. Here, Bajaj Auto has been
a major player and despite an overall market de-growth, it accounted for 34% of this segment in
India in 2008-09.

 Executive segment: This largely comprises 100 cc to 135 cc motorcycles, priced between
Rs.40000 to Rs.50000. Bajaj Auto has two brands in this segment, namely XCD and Discover.

These are sleek, high performance bikes with price points in excess of Rs.50000. They are
present here with their flagship brand, the Pulsar and cruiser, the Avenger. They dominate this
space with a domestic market share of more than 47%.

Competitors

Key competitors (3 wheeler)

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Bajaj manufactures commercial vehicles for passenger carrier as well as goods carrier other players
in the three-wheeler segment in India are Mahindra and Mahindra , Piaggio and atul auto. Bajaj is
Facing tough competition by aggressively launched Mahindra gio

Organization Structure

Branches/Plant location

Manufacturing Plant

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Bajaj Auto’s vehicle manufacturing capacity currently stands at 3.96 million units — comprising
3.6 million two-wheelers and 360,000 three-wheelers. The newest plant at Pantnagar (Uttarakhand)
has a capacity to produce 900,000 two-wheelers.

Supplier Detail

Key suppliers:

Bajaj auto has approximately 198 suppliers for their raw materials.

Some of the key suppliers are:-

JBM - Frames
MRF & Dunlop – tires
Minda - locks & ignition system
Reinder – headlamps & lights
Endurance – brakes, clutch & Cast wheel
Varroc – Plastic parts & Digital Meter
Max auto components – ignition system and switches
Silco cable – wires and cables
Makino industry – Brake shoes . Brake lining, clutch center

Inventory policy-

Bajaj auto maintains seven days inventory . Demand Estimations were based on Panel
Regression, which takes into account both time series and cross section variation in data .All the
Mediators are connected with each other through IT linkage to know exact status of delivery of
goods

With operations spanning to such vast geographies, managing a supply chain globally
becomes more and more complex. In countries where Bajaj perceives a strong market potential,

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they establish a tie up with one major industrial establishment eager to invest in the project. This
investment may include setting up strategic manufacturing or assembly units, apart from a well-
established nation-wide network for marketing, distribution and after sales services. These investors
who form alliances with Bajaj Auto are termed as “Business Partners”. Bajaj Auto offers a number
of services to its business partners. They include:
 Training in sales, service and spare parts management based on the Bajaj distribution system

 Active support for setting up manufacturing facilities overseas including transfer of technical
know-how

 Assistance in setting up an assembly plant for assembly of vehicles from complete knocked
down (CKD) kits

 Selecting of machinery and equipment and training of technical personnel, all in a phased
manner as required by the regulations in the recipient country

 Active support in setting nation-wide dealer network, also involving identification and
recommending suitable partner who would assist the distributor in Business growth

Operation Details

Manufacturing locations

Akurdi, Pune 411035

This is one of the oldest plant of bajaj auto ltd with production capacity of 0.6 million
vehicles/ year. The plant has been closed in order to equip for four wheeler production

Bajaj Nagar, Waluj Aurangabad 431136

This is second plant with production capacity of 0.86 million/ year.products manufactured
here are Kristal, XCD and platina andcommerial GC series

Chakan Industrial Area, Chakan , Pune 411501

This is the biggest plant of bajaj auto Production Capacity of 1.2 million/ year , Product
manufactured here are pulsar and avenger and commercial Ge series
Pantnagar , Uttarakhand
The most advanced plant of bajaj auto .It has Capacity of 0.9 million vehicles per year .
product manufactured here are platina and XCD.

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Manufacturing process

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Usage of IT at all Levels

For decades, Bajaj Auto was riding high. The company was enjoying market share the only
way it knew to: by building basic, durable scooters on the platform of ‘value for money.’ But when
the marketplace changed, Bajaj was late to respond. It became clear that the company could no
longer derive big market shares from limited brands and products. Then started the restructuring—
of products, channels and the performance management system. Along with that, the company
realised that it had to redesign its IT structure. Bajaj Auto announced the successful “Go Live” of
their External Portal Initiative for their sales and service employees, dealers and suppliers. SAP’s
mySAP Enterprise Portal was implemented simultaneously with the current SAP R/3 ERP
implementation. Business information is available to the company’s external community in real
time. This assists in improved decision-making, whether it is to meet customer requirements or to
maintain efficiency in supply chain management. The company’s field sales teams get full visibility
on all dealer activities while the dealers get real-time access to relevant information on operational
activities.

The dealers and sales employees get information relevant to their respective region and
territory by aggregation from the underlying SAP R/3 ERP database. Bajaj has linked 380 out of its
483 dealers through this system. Also connected are 165 out of a total of 200 suppliers. The dealer
portal, in addition to operating information, provides access to unstructured information like news
items, new product releases, new product introduction, dealer discussion groups and internal
marketplace. The supplier gets up-to-date information on purchase orders and contracts, material
schedules, and payment details. Bajaj Auto, in turn, gets invoicing information from suppliers for its
automated material receipt system. This helps in streamlining the supply chain, optimising
inventories and reducing non-value-adding activities at both ends.
Every PC has a hardware lock so that the correct terminal is established and does not travel
out of the dealer’s premises. Bajaj is also planning to extend the IT system even as it plans to launch
a major marketing initiative in rural areas. “As this project gets implemented, we have to see how
IT can support it. There is an issue of Internet connectivity. But the infrastructure is changing with
telecom majors expanding their network. We are looking at connectivity through WLL,” said Mr
Bajaj. 11 Before understanding the channel design, we need to know the components that are
involved in the channel network. Various players involved in the channel design are:
 Manufacturing Plants
 Depots
 Carrying & Forward Agent

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 Dealers
 Sub Dealers
 Logistics

Each of these players and their key role and deliverable will be dealt in detail later. Channel Design
is dependent on the segmentation that Bajaj have done in the geographic and product category
segments.

Infrastructure facilities:

Bajaj Auto Ltd. has well designed infrastructure facilities. They highly care of clarity and
arrangement. The whole plant has divisional area like, offices, operation house, godown, and
packing department.Bajaj Auto Ltd. l has modern technological machines, from this it can produce
products.These machinery arranged in operation department systematically. The production process
is step by step so as per this the machinery also arrangeBajaj provide all the best facilities to their
employees, like parking, canteen, rest room, and also proper working conditions. They greatly care
of their employees. They pay on monthly basis and also give bonus on special occasions. In this
way Philips can compete with best plant, machinery, technology and human relationship

Distribution Detail
For distribution bajaj auto uses mix of depots and Cnf agents. This is completely dependent
on the distance of manufacturing location from dealer point .For example due to extensive distance
from manufacturing plant from west Bengal to north-east India ,there exist a depot in Khadakpur
with capacity of housing 800vehicles. There are similar depots in Punjab , Rajasthan and southern
India.

Dealers

Like mentioned above, the company has a network of 498 dealers and over 1,500 authorised
service centres and 162 exclusive three-wheeler dealers spread across the country. Around 1,400
rural outlets have been created in towns with population of 25,000 and below. The current dealer
network is servicing these outlets. Dealers can be classified under 3 heads. They are as follows:

 COCO-
These are Company Owned & Company Operated showrooms. These concepts exist only for Pro-
Biking showrooms. Here Bajaj Auto has tried showcasing their muscle power in high end biking
segment. The concept has evolved very fast and now there are 52 Pro-Biking showrooms in the
country. The company itself does not take any order from the customer in these showrooms. The

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giant dealer of the region who is acting as a logistics partner for the pro-biking concept takes the
order on behalf of the company and fulfils the customer requirement.
 CODO-
These are Company Owned & Dealer Operated showrooms. In case of this concept, showrooms are
owned by the company but the operations in the showroom are managed by the dealer. This is
generally the case where Bajaj wants to provide the dealer financial benefits considering the high
working capital requirement of the company.

 DODO-
These are Dealer Owned & Dealer Operated. These dealers are fewer in number because they are
generally the giant dealers who are the financial muscle for the company. In our talks, the
management indicated that the top management wants to do away with this concept. The reason
behind this is that the bargaining power increases in the hands of the dealer, which puts the
company in an knotty situation.

National Level Partnerships

There is an exisisting generic channel which is used for segmentation of this category of two-
wheelers and three wheelers.

Transport & Logistics

This function of distribution is not owned by the company in any form. This is outsourced in
toto to the third party vendors. The third party here is Transport Corporation of India (TCI) and a
few other private vendors. The fleet to be transported is custom-designed for Bajaj Auto by the
vendor. Key Facts
 There are twenty vendors all across India
 OSL
 Jamuna Transport
 Sumit Transport
 A Transit Insurance Compliance Letter(TICL) is signed between the two parties
 The local level sub-dealer sometimes gets to decide the last mile logistics, as he can decide to
pick up the vehicles himself or have it transported to him
 Logistics of the vendor is decided by the company
 Freight charge is built-in in the product price

Bajaj selects those suppliers who provides majority of the required raw materials together.
The company believes in situation so if any suppliers do not keep their requirement so at that time
bajaj left the contract.

Process of ordering :

Bajaj lighting refers a systematic process in selecting suppliers and deal with them.
Production manager of the company study the application received by the suppliers and select
proper suppliers as per their requirement. The selected suppliers invite for general meeting with the

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production manager and purchase manager of the company. In this meeting they decided conditions
and time period of supplying raw materials to the company.

Once the contract signed by both the routine work continue. Whenever the company
required raw material they send e-mail or call the suppliers just before three days. And within two
days company gets raw materials. The payment done after getting the raw materials on the basis of
the cash or chaque. If the suppliers are unable to provide raw materials than Bajaj immediately
inform them and getting solution.

Relation with the supplier firm :

Bajaj auto lt believes in good relationship with its suppliers and customers. The suppliers
who supply raw material to the company, Bajaj auto pay them regularly. If any when advanced
payment required Bajaj also pay advance for bulky consumption. During annual day of the
company, Philips rewarded those suppliers who contracted with company for whole year and
survive company without any problems.

Services provided by Bajaj Auto to the dealer

 Workshop Training
 In a month:
 30-40 Mechanics can be trained per dealer
 15-20 Sales personnel can be trained per dealer
 New Product Launch
 Information is percolated around a month before the product is to be launched
 The date of launch can be rescheduled in case the current stocks of the dealer are not getting
cleared.
 Promotional Activities
 The cost of sending the staff to the Pune branch for training is borne by the dealer.

Key Role & Deliverables

The most important loop that is the outcome of the dealer management is the feedback loop.
Using this loop company designs its strategy for different segments. Dealer need to fill in the
required form provided by the company and update it to company on monthly basis. The three
heads under which the feedback is filled are:
 Monitoring Sheet
 Daywise Summary of Customer Satisfaction Feedback

Bajaj has total of 509 dealers 1500 authorized service stations and 1400 rural outlets for
population of below 25000

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This function is not owned by bajaj auto in any form . This is outsourced to third party
vendor . The third party here is TCI along with some others like OSL , Jamuna trasport and Sumit
transport -Logistics to the vendor is decided by the company -A Transit insurance compliance is
signed between the two parties -Freight charges are included in product price.
Bajaj rides the SAP advantage. In year 2000 ‘Project 110 percent’ was launched to
spearhead Bajaj’s growth in the future. Bajaj auto has linked 386 dealers out of 498 and 165
suppliers out of 198 Business information is available to company external community in real time.
The dealers can get real time information ,unstructured information like news items, new
product releases, dealer discussion group and internal market place. On operational activities and
also the company can monitor the external members The suppliers gets up-to date information on
purchase order, contracts and material schedule

Key Deliverables in terms of Sales & Distribution Management

 Order Tracking-Taking a daily account of the order received from various dealers and Regional
Offices (RO). Orders from dealers are punched in by dealer themselves. Orders are followed up in
the system only if the credit limit is not crossed. This credit limit is preset into the system depending
upon the dealer and his/her track record.
 Packaging-Packaging in factory is outsourced to third party vendor. These vendors are generally
from the Transport & Logistics partners
 Despatching Goods-Goods need to be despatched via third party vendor TCI. State corporations
and other private players are also part of the vendor list.
 Generating Invoice & Waybill-These documents need to be generated and despatched to the
respective dealer

Key Role & Deliverables of Depots

Setting up depots is a geographical strategy adopted by Bajaj Auto. But this does not mean
that the company has gone all out to open a large number of depots. It has chosen strategic
locations. The key role played by depots is that they are meant to cater to any sudden rise in demand
of vehicles, and to cover the existing geographic span of India. When we spoke to the management,
they explained to us the reasons behind having a depot in Kharagpur. There are two reasons for
which Kharagpur was chosen to hold a depot for Bajaj Auto. They are as follows:
 Catering to a sudden shooting up of demand- In Bengal itself, it is common knowledge that
during the festive season which spans from September to November, there is a huge demand as
people spend more on festival extravaganza, and it is considered an auspicious time to buy
household gadgetry. There is a conspicuous rise in the sales of white goods, motor vehicles and
jewellery.

 Reaching the states of the North-East- As per the people at Bajaj, “We take 15 days to reach the
North-East if we go via the carrying and forwarding agent concept. Generally bikes reach West
Bengal in 7-8 days. The bottleneck is the Darjeeling route. Hence, came in the concept of a depot
whereby we can reach the North-East in the same time, instead of experiencing a lag of almost a
week.”

Dimensions for Choosing Depot or Factory Approach

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A dealer needs to consider his order requirements and then come up with an order to place to
the regional office. If the demand is immediate, he may approach a Depot for the load. Else, he has
to try to stick to factory load. Both of these loads have their own sets of pros and cons. We have
listed them in the following table

Depending upon the criteria that are more important to the dealer, he places his order to
either the factory or the Depot. Generally, orders are placed to the factory but in case of urgent
requirement, due to which the lead time reduces considerably, the order is procured from the depot.

Customers Detail
 CUSTOMER DETAILS:

• Types of Customers:

Bajaj Auto ltd. produces goods by considering the different types of customers. They distribute
products in small towns of the country and all over the world. The bykes lights produces as per the
cerrent trend of the customers.

• After sales Service:

Bajaj Auto ltd. is one of the most accepted products by the customers. With best quality
products Bajaj Auto ltd. can survive customers after selling products.

• Customer relation management:

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Bajaj Auto ltd. believes in customer satisfaction. They try to earn consumers trust by
providing good quality products and after sales services. Every two months Bajaj Auto ltd.
researches the market and tries to implement the problems. They also believe in innovation and
produce different variety of products with minimum price.

Supply chain diagram and explanation

The physical flow of goods takes place from the factory to either the depot or to the carrying
and forwarding agent, depending upon the geographic distance and the location of the Depot. The
transport & logistics for this is outsourced to third party vendors which are under Transport
Corporation of India (TCI). Depending upon the demand these goods have, they flow from Depot or
the C&F agent to the dealer and their network. In case of high profile dealers, the dealer can himself
take the physical delivery of goods directly from the manufacturing plant. The dealer, at the last
juncture, caters ASC, RSO, Sub Dealer & its own branch. The channel members and the key roles
for each of these channel members is detailed below.

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Bibliography

http://www.channelbajaj.com

http://www.scribd.com

http://www.bajajauto.com/

http://www.bajajauto.com/bajaj_dealer_locator.asp

http://www.bajajauto.com/services_troubleshooting.asp

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