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“Seeding strategy for new commercial passenger vehicle-Tata Venture in Call centers/ ITs/BPOs”
Astha Chawla (MM 10-12405)
Under the guidance of Mr. Parag Gohel (Area Manager,CVBU, Tata Motors Ltd.) & Mr. Pratik Mehta (Territory Sales Manager,, Tata Motors Ltd.) Submitted to Balaji Institute of Modern Management, Pune In partial fulfillment of the requirement for the award of Post graduate diploma in management (2010-2012)
The MBA programme is well structured and integrated course of business studies. In every professional course training is an important factor. The main objective of practical training is to develop skill in student by supplement to the theoretical study of business management in general. Industrial training helps to gain real life knowledge about the industrial environment and business practices. Professors give us theoretical knowledge of various subjects in the college but we practically exposed of such subjects when we get the training in the organisation. During the whole training we got a lot of experience and came to know about the management practices in real that how it differs from those of theoretical knowledge and the practically in the real life. In today’s globalize world, where cutthroat competition is prevailing in the market, theoretical knowledge is not sufficient. Beside this one need to have practical knowledge, which would help an individual in carrier activities and it is true that, “Experience is the Best Teacher”
With immense pleasure, I would like to present the project report for Tata Motors Limited (TML). It has been an enriching experience for me to undergo my summer training at TML which would not have possible without the goodwill and support of the people around. As students of Balaji Institute of Modern Management, Pune, I would like to express my sincere thanks to all those who helped me during my practical training programme. I sincerely feel that the credit of this project cannot narrow down to one individual. This work is an integrated effort of all those concerned, through whose cooperation and guidance I could achieve its completion. I greatly indebted to express profound gratitude to Mr. Milind Jadhav (Regional Sales Manager-West, SCV-Passenger, TML), Mr. Parag Gohel, (Area Manager, Pune, TML), and Mr. Pratik Mehta (Territory Sales Manager, , TML) for giving me the opportunity and reposing confidence in my abilities by giving me the freedom to work on the project independently at TML and helped me at every step whenever needed.. At last but not the least my grateful thanks to Prof, Col A. Balasubramanian, President, Sri Balaji Society and Directress Dr. Seema Singh Zokarkar, BIMM, who allowed me to do my project at TML. and to all our faculty members for the proper guidance and assistance extended by them. I also grateful to my parents and friends to encourage & giving me moral support. However, I accept the sole responsibility for any possible error of omission and would be extremely grateful to the readers of this project report if they bring such mistakes to my notices.
I hereby declare that the project work entitled “Seeding strategy for new commercial passenger vehicle- Tata Venture in Call Centres/ ITs/ BPO” submitted to Balaji Institute of Modern Management, is a record of an original work done by me under the guidance of Mr. Parag Gohel (Area Manager, Pune, Tata Motors Ltd.) & Mr. Pratik Mehta (Territory Sales Manager, , TML), and this project work has not performed the basis for the award of any other degree or diploma/associate ship/fellowship and similar projects if any.
The automobile sector is one of the sectors that are experiencing an exponential growth. With intense competition the profit margins are under pressure. This has lead to strategic changes in functioning of automobile companies. TML has been in a pioneer in this field by formulating & efficiently managing highly efficient strategies. The project that we got has the objective to formulate strategy for Tata venture and analyse their ability to provide transport solution to the companies for their staff transportation. The basic methodology of our project includes collecting data of Transport Vendors from Call centres/ITs/BPOs through internet, telecalling and personal visits, arranging this data in specific format and analysing on various aspects like location, employee strength, transport choices, outsourcing. Call centres/ITs/BPOs are generally medium and large scale companies and considered as strongest link in the transport decision making. Our project provides detailed view of these companies and also helps to identify their vendors which can be area of concern for TML in its seeding process. Through this project we also provided the input for Tata Business Enterprise Model (TBEM) audit and Dealer Retail Closing date (DRCD) meeting, which can help TML in capturing Data of Transport vendors and analyse it over long run, which can be critical tool for TML in fine tuning of Tata Venture. Also arranged a Promotional meet for Travel admins of various companies so that they may get detailed information about the product , first hand
The positive responses received made the event a great success. Company and product presentation. The meet was organised in Taj Vivanta in Pune on 9th July 2011 . open discussion followed by dinner. (TML) A Brief History of TML Background Of CVBU PAGE NO 7 9 11 6 . CONTENT Company profile Introduction to Tata Motors Ltd.from the company people.
MSIL’s Pantnagar Plant Organizational Structure Performance and Company Milestones TML Financials TML Culture Divisions in MSIL 13 14 15 18 21 22 23 24 25 28 28 28 29 41 52 53 The Commercial Vehicle Business Unit in TML TML’s Commercial vehicle business distribution Brief of the Commercial passenger vehicle Division New product Strategies Project Title Objective Importance Methodology Results & Findings Conclusion Biblography COMPANY PROFILE INTRODUCTION TO TML 7 .
7 million automotive vehicles were produced in India in 2010 (an increase of 33. Volkswagen. Land Rover. India emerged as Asia's fourth largest exporter of passenger cars.9%). India is home to 40 million passenger vehicles and more than 3.“My aim for Tata Motors is that we should have the capability of developing good automobiles in terms of reliability. By 2050. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world. Mercedes Benz. The Chakan corridor near Pune.Mahindra and Mahindra. and Thailand. the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. so we have to keep on developing components ourselves. Hyundai. with annual sales exceeding 8. We want to bring in world-class products and have been working hard to improve the build quality and reliability of our vehicles. In 2009.7 million units in 2010. which is very time consuming and is not our core business. Tata Motors. South Korea. in an interview to market research firm JD Power's report on Indian automobile industry The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. Maharashtra is another vehicular production hub with companies like General Motors. A chunk of India's car manufacturing industry is based in and around Chennai. behind Japan. finish and technology. India manufactures over 17. growing 16-18 per cent to sell around three million units in the course of 2011-12. Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. According to the Society of Indian Automobile Manufacturers. Skoda . Fiat and Force Motors having assembly plants in the 8 . As of 2010. with an annual production of more than 3. Gurgaon and Manesar in Haryana are hubs where all of the Maruti Suzuki in India are manufactured. India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2. making the country the second fastest growing automobile market in the world. Chennai accounts for 60 per cent of the country's automotive exports.Tata Group chief Ratan Tata.33 million every year. It is the world's second largest manufacturer of motorcycles. also known as the "Detroit of India" with the India operations of Ford.5 million in 2009. According to recent reports. annual car sales are projected to increase up to 5 million vehicles by 2015 and more than 9 million by 2020.
Kolkatta with Hindustan Motors. Despite the success of its commercial vehicles. India's first fully 9 . he decided that building a small car would be the most practical new venture. So in 1998 it launched Tata Indica. Skoda and Volkswagen.area. Halol again with General Motors. Tata realized his company had to diversify and he began to look at other products. Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country. Aurangabad with Audi. Ahmedabad with the Tata Nano plant. A BRIEF HISTORY OF TML Tata Motors is a part of the Tata Group manages its share-holding through Tata Sons. Based on consumer demand. The company was established in 1950 as a locomotive manufacturing unit and later expanded its operations to commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz AG of Germany.
Jamshedpur. Lucknow. but done so while making quality and cost the two touchstones of its research and development activities.co. Spain and the UK where it has centres. the Engineering Research Centre of Tata Motors has played a crucial role in the creation and development of the company’s products. And rightly so. INNOVATION ON WHEELS Technology and imagination come together at Tata Motors to create vehicles that drive the dream for millions of Indians Tata Motors is widely considered a pioneer in the Indian automobile sector. The company has. ideas that came to fruition thanks to the determined efforts of the company’s research and development team. South Korea. Today.indigenous passenger car. over the last decade. With three buses and three trucks . Established in 1966. And what has led the company to achieving remarkable results within these parameters is its spirit of constant innovation. It is the teams at these research centres that 10 . Tata Motors has spread its R&D efforts to Pune. the Indica became a hit in the Indian market. consistently created vehicles that not just fulfil the aspirations of millions of Indians. especially the UK and Italy. It was also exported to Europe. with over 2. link nbstc. The oldest Indian state transport under taking is "North Bengal State Transport Corporation" founded by the Raj Durbar regime in the year 1945. The story of Tata Motors is dotted with examples of innovative ideas. the 1 April.Is still vibrant and running providing service to hundreds of commuters of North Bengal region of West Bengal. Designed to be inexpensive and simple to build and maintain.000 engineers and scientists and an ever-growing focus on the next big idea.
Over the years. the Ace and the Nano. with a predicted range of up to 11 . the company has built on the Indica platform with the Indica V2. Developed by Tata Motors European Technical Centre. drive quality. India’s first indigenously manufactured mini-truck – the Ace. allow customers to achieve their varied aspirations. a subsidiary of Tata Motors. the world’s cheapest car – the Nano. the EV is expected to hit European roads this year. the year of its launch. safety features and (notably) status. through quality. The latest innovation is the Indica EV. a number of firsts: India’s first indigenously manufactured car – the Indica. Each model sports enhancements in style. the electric version of the best seller and Tata Motors’ answer to the global energy crisis. The ones that best exemplify the company’s innovative streak are the Indica. The car will carry four people and have adequate luggage space. Three vehicles that. and the Indian auto industry. Indica Xeta and the latest Indica Vista (launched in 2008). and its latest effort – the Indica EV – an electric version of the best-selling small car for European markets. Three vehicles that broke the mould and are landmarks in the Indian auto industry. its first sports utility vehicle – the Sumo. More car per car: Indica India’s first indigenously designed car — that was what the Indica set out to be back in 1998. the Indica embodies much more – a vehicle that is not only affordable.have earned for the company. performance and features providing customers with an increasingly world-class driving experience. a decade since it first hit Indian roads. Now. but also one that can compete with international players in terms of mileage. utility and price.
with the country’s improved road connectivity and infrastructure. low-maintenance design. 12 . The variants have improved fuel efficiency. and high loading capacity. The small carrier revolutionised the transportation industry with its high-performance. Tata Motors rolled out its 100. the company added on to the Ace platform with the unveiling of the Tata Super Ace and Tata Ace EX. and the capability of a higher number of trips in a day thus providing better earnings and faster growth. The sturdy four-wheeler offered the small trader/farmer a cost-efficient. In September. much-needed safety and comfort features were built into the design along with high-ground clearance (a must for Indian roads). and their business needs. fuel-efficient transport solution that served his business needs and did so comfortably. Up until that point. Also. The big small package: Ace India’s first indigenously developed mini-truck — the Ace — took the country’s light commercial vehicle industry by storm when it was launched in May 2005.000th Ace within just 20 months of its launch. Expectedly. a vehicle that combined strength and utility with optimal loading capacity was the need of the hour.200km and acceleration of 0-60kmph in under 10 seconds. loading capacities and style. the Ace was a runaway success. India’s commercial transport offerings comprised three-wheelers and trucks – both segments that left a lot to be desired when it came to addressing the small trader and farmer. a fuel-efficient engine. So when the Tata Motors’ team set to work on the Ace.
Innovation in technology. Available in three variants – the Nano Standard. The assembly and distribution model of the Nano is one such example. it has also made sure that its business model moves with the times. And to make that idea a reality is where Tata Motors needed to innovate. power windows. The next big idea While the company spends considerable effort in identifying the next avenue for growth in the automotive space and making it a reality. Amid speculation about materials being used. safety features. the Nano was the cynosure of not just the global media but the global auto industry. Unveiled in January 2008. The idea was to create a low-cost car without compromising on safety or comfort or quality.03 lakh fully paid bookings following its commercial launch in March 2009.The people’s car: Nano “One thing we were clear about: this was never going to be a half-car. emissions and fittings.” said Chairman Ratan Tata speaking about the Nano. The 13 . low-cost car that offered more internal space that its closest competitor in the small car market and international safety features. Everyone wanted a glimpse of the Rs 1lakh car. Nano CX and Nano LX – each offers customers add-ons such as air-conditioning. It was a car complete in every way. materials and design came together over six years to create a low-emission. the Nano exceeded expectations on all parameters. It was this unveiling that prompted the whopping 2. central locking and other aesthetic and comfort features. just with a substantially smaller price tag.
This way the car can be shipped in kits to assembly sites. R&D activities have already begun on low-carbon vehicle technologies including pure electric vehicles (the Indica EV expected later this year). since the best equipment alone cannot guarantee high quality and productivity. What is the next innovative leap Tata Motors has planned? We can only wait and watch. From the beginning it was a conscious decision to send people to Suzuki Motor Corporation for onthe-job training for line technicians. Great stress is laid on training and motivating the people who man and maintain the equipment. The company has. This helps them to imbibe the culture in a way that merely transferring technology through documents can never replicate. On the product side of things. The innovation challenge is one that the Tata Motors team has taken head on.company employed a modular design to not just keep costs down but allow the car to be tailored to the needs of customers. supervisors and engineers. the company is now looking at ‘green’ products. 14 . TRANSFER OF TECHNOLOGY Every minute two vehicles roll out of the Maruti Plant. over the years. put together according to customer specifications (with quality assurance by Tata Motors' staff) and sold. hybrid drive trains and advanced fuels. set near insurmountable challenges for itself and has achieved them with enviable success. It is therefore imperative that the transfer of contemporary technology from our partner Suzuki is a smooth process.At present 20% of our workforce have been trained under this program.
It is an articulation of a destination towards which the organization is moving. fuel-efficient cars. thinking and actions have all to be consistent with the vision. One year later the company’s name was changed to SUZUKI MOTOR COMPANY LIMITED. A mission defines what the organization has been established to accomplish. 15 . We must not only maintain leadership in India but should aspire to be amongst the global players. continuously and in a focused manner towards the desired state. It started manufacturing motorcycles in 1952 and has since become a world leader in the manufacture of two wheelers. quality. If the vision is a goal. SUZUKI started producing cars in 1955. Company Vision “To become an internationally competitive company in terms of production volume. If the vision is the destination. The culture. the mission is the tool for achieving the vision. At present the company’s name is SUZUKI MOTOR CORPORATION.BACKGROUND OF SMC Suzuki was founded in 1909 as Suzuki Loom Manufacturing Company. the mission is the means by which the company is moving towards it. A future that is substantially better than the current state. cost and profits. credible and attractive future that the company visualizes for its organization and all its employees. It determines the purpose of its operations. Today it is Japan’s largest manufacturer of small. The vision helps the company in moving consciously.” The vision is a realistic.
dealers.e. so that a common set of norms of business behaviour can grow throughout the company. and suppliers and with each other.. Following are the important points: Integrity Trust Image Consumer Orientation Ethics Positive Attitude 16 .Maruti Code Of Conduct A code has been developed to assist all the employees in their dealings with those with whom the company does business i. customers. The code contains advice for making decisions in situations where there are no precedents. which will continue to apply. The code is not a substitute for the judgment and discretion of individual employee in day-to-day work. Neither is it a replacement for company policies.
water and effluent treatment plant. The whole production facility has been divided into 3 plants: 1.000 units per annum. Plant I (M800. The total area of the plant is 12.256 m2 with a total covered area of 2.00. Plant III ( Wagon R MINOR/LPG MODEL. located about 25-km south of New Delhi in Gurgaon. compressor house. Gypsy. Versa) 2. Baleno) The other activities include research & development and utilities (captive power plant. has an installed capacity of 5. Esteem. boiler house. The average daily production is around 2500 vehicles a day. air washers and incinerator facilities) 17 .02.95.MSIL’S GURGAON PLANT The manufacturing plant. Omni. Zen ESTILO) 3. Plant II ( Alto.293 m2.
An aerial view of the Gurgaon Facility ORGANIZATIONAL STRUCTURE:The following chart represents the organizational structure in MSIL: 18 .
Manager Executive Supervisor PERFORMANCE AND COMPANY MILESTONES 19 .Managing Director MEO/EO Divisional Manager (DVM) Deputy Divisional Manager (DDVM) Departmental Manager (DPM) Manager Dy. Manager Asst.
00. 2000 2000 2000 MSIL sold more than 4 lakhs vehicles during year 1999-2000 Wagon R and Baleno-Altura launched in Sep00. MILESTONES REACHED BY MSIL 1981 1982 1983 1984 1985 1986 1987 Incorporation of MUL Agreements signed with SMC First Maruti Car rolled out. The company has expanded its wings in the recent past.000th Maruti 800 produced & Maruti Zen launched 10.000 vehicles rolled out Launch of new model car and gypsy 1.000th Maruti 800 Produced Launch of 1000 cc car. Esteem automatic launched. MSIL exported 100. Maruti Alto launched in 2000 20 . Ax.000th vehicle produced in March 99 & other versions of Zen were launched.000th vehicle rolled out 1993 1994 1995 5.000th Maruti 800 produced 1996 New models of Zen (Vx.000 Vehicles 10. 40. 5.00.00.00. The company is proposing a major expansion program to augment the capacity to over 20 lakh vehicles per year. D). Baleno launched in Nov99. Omni (Omni & Omni-E) launched 1999 25.000 vehicles rolled out First lot of 500 cars shipped to Hungary Achieved 60% indigenisation &1. Here is some data showing its Performance.00. Plant 2 starts operation.00.000th vehicle rolled out.00.00.000 vehicles per year.MSIL is the largest manufacturer of cars in India with a production of over 10.
2003 2004 2005 2006 2007 Grand Vitara launched Versa launched Maruti swift Zen estilo launched. MARUTI HAS INTRODUCED THE FOLLOWING MODELS IN THE LAST 22 YEARS 21 . Maruti Suzuki SX4 launched in May 2007.
Alto LX (796cc. VX. hatchback car) 2. The 1998 Esteem (1298cc. Maruti 800(796cc. hatchback car ) Jan'99 21. hatchback ca 5. MUV. Alto Vxi (1061cc. 3 Box car) Sep'00 28. Esteem 1. 3 box car) 8. Zen Vxi (993cc. Baleno (1590cc. AX) 16. hatchback car) Oct'99 22. MUV) 3. Swift May’05 33. hatchback car) Aug'98 19. 3 box car) Nov'99 25. Grand Vitara (4wd SUV) Apr'03 32. High roof) Oct'99 24. Zen classic (993cc. Gypsy (970cc. hatchback car) 11. Zen-D (1527cc diesel. Wagon R MAV-1061cc. New Maruti 800(796cc. hatchback car) (std. Maruti 800(new model-796cc. 3ar) VX 9. Swift (diesel) Jan’07 36. 8 seater) 13. off road vehicle) 14. Esteem 1. & DX) 15. Multi activity vehicle (Lxi.3L (1298cc.'84 Dec'85 Jun'86 Oct'90 Oct'93 Nov'94 Nov'95 Jun'96 Oct'96 Nov'96 Dec'96 Sep'97 Sep'97 Oct'97 Feb'98 17. hatchback car) Jan'99 20.3L (1298cc. Omni (E) (796cc. Gypsy 1298cc. Zen VX & Zen AT Jul'98 18. three box car) 6. MUV) Dec'83 Nov. Maruti 1000(970cc. Omni (796cc. ZEN ESTILO DEC’06 35. Zen automati3cc. hatchback car) 7. Zen LX (993cc. AX) Dec'99 26. MUV. hatchback car) Sep'01 29. 4 WD. hatchback car with power steering) Oct'99 23.3L (129 box car) AX 10. 2010 22 . 3 box car) (LX. Zen (993cc. Versa Mar'01 31. 4 WD off road vehicle) 12. Esteem 1. VX. Vxi) Sep'00 27. Maruti 800 EX (796cc. Omni XL (796cc. 4wd off road drive) 4. WagonR MINOR/LPG MODEL July’06 34. New (Omni & Omni (E) (796cc.1. Baleno Altura (1590cc. Gypsy (E)(796cc. Wagon R MAV-1061cc. Multi activity vehicle (LX. hatchback car) Sep'00 30.Maruti Suzuki SX4 May 2007 MSIL FINANCIALS:- AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31st March.
220 50.966 378 .242 56 . 408) 2.051 b c Income from Services (net) Other Operating Income Total Income from Operations (a+b+c) 2 Expenditure : [a] Decrease/(Increase) in stock in trade and work in progress [b] Consumption of Raw Materials and Components [c] Purchase of Traded Goods [d] Employees Cost [e] Depreciation [f] Other Expenditure [g.128 73.794 274.770 2.053 84 .Rs In Lacs Particulars Consolidated Year Ended 31st March 2010 Audited 31st March 2009 Audited 2. 1 a.692 .871 53 .930 .205 2.890 115. 117.450 175.138 281 .760 287 .097 002. Interest and Exceptional Items (1-2) (a) Other Income (b) Share of Profit in respect of Investment in Associates 5 6 Profit before Interest and Exceptional Items (3+4) Interest 23 .231 540. Income from Operations Gross Sales Less: Excise Duty on Sales Net Sales 3.251 (19.099 3.062 320 .832 91 .123 240.189 50 .429 055.218 . 330.101 1.012 .198 .742 5.681 2.395 3 .561 (426) 60.281 28 .966 2. 10. 71.649 48.]Total Expenditure (a+b+c+d+e+f) 3 4 Profit from Operations before Other Income.333 28.997 2.240 7 .
97 billion. its suppliers and business associates worked on a 24 . a growth of 105% over FY'09.2% over the year 2009-10. Since the previous year was exceptional on account of the global economic crisis.5 billion. it may be relevant to look at the financial performance over two years.366 170.111 The Company registered Net Sales of Rs. 289.464 262 . 24. the Net Sales grew 62%.464 122.653 374 .189 262 .745 47. growing at 42. This was a first for any automobile company in India. Capex for the year stood at Rs. demand recovered faster than anticipated. After the slowdown of 2008-09.7 8 9 10 11 12 13 Profit after Interest but before Exceptional Items (5-6) Exceptional Items Net Profit before Tax from Ordinary Activities (78) Tax Expense Net Profit from Ordinary Activities after Tax for the period (9-10) Extraordinary Item Net Profit for the Period (11-12) 374 . In the two year period ending 31 March 2010. implying a CAGR of 27% and the Net Profit grew 44% implying a CAGR of 20%.653 112 . The Company. 14. Net Profit after Tax stood at Rs.7 billion.111 170. Maruti Suzuki could make and sell over a million vehicles.745 122. EVENTFUL YEAR In 2009-10.
MARUTI CULTURE “To work towards sustaining the Distinctive Organization Culture which have been build over the years based on the ‘Path to Success’. many times over. While the Company duly celebrated the one million landmark. the focus was quickly back to the challenge at hand. During the year.stretch to meet demand and keep the promise of a million vehicles. Supported by a network that is proximate. refreshed two existing models.e. more caring and more efficient than now. All the actions and behavioral patterns of all the members in the organization should be guided by its organizational culture” 25 . clearly laid out ahead. more comfortable and endowed with more features than today. Better than she receives today. Maruti’s culture. emphasized sustainability and people development and strengthened its focus on customer satisfaction and new markets. Deliver technology that provides more driving pleasure and better fuel efficiency. The challenge is to provide the Indian customer best value over the period of vehicle ownership. i. worked on cost down initiatives. launched a new model. the Company expanded its network as planned. The challenge is also to offer products that are more stylish. The challenge for us is to better Maruti Suzuki. A market leader does not have the benefit of known paths. achieved highest ever exports overall and in Europe. took the first steps in setting up a world class R&D centre.
PRODUCT RANGE OF MSIL:- DIVISION IN MSIL The Various divisions in Maruti Suzuki India Limited are Marketing & Sales Spares 26 .Maruti Suzuki India Limited. MSIL has revolutionized the Indian Automobile and Component Industry and has set standards in quality of products and service. including most advanced Western European markets. a socially conscious and a responsible corporate citizen. is the market leader in the domestic car market and does India proud by exporting cars to over 100 countries around the world.
Engineering Quality Assurance Services Supply chain Production Production Engineering Materials Information Services Finance Personnel and Administration THE SUPPLY CHAIN DIVISION IN MARUTI THE SUPPLY CHAIN DIVISION IN MARUTI The Battle ground for the next decade would be “SUPPLY CHAIN Vs SUPPLY CHAIN” – Warren Haussman. Mgt Science Department. 27 . Stanford University.
It has a regular 2 hourly delivery schedule. Schedules of delivery: In case of vendors located in and around the Maruti complex. Delhi and other nearby areas the schedules are given every 6 hours or every 12 hours. In case of items coming from down south. while about 15 % are from the south and upto 10 % from the west.Maruti’s Vendor distribution: It was Maruti’s entry into the automobile industry of India that setup a trend of joint ventures for auto components. Being the largest player in the Indian automobile market would mean that the Supply chain division at Maruti holds that bit more importance. It was one of the first companies to setup 12 joint venturer for sourcing some of the most critical components. One of the distinct advantages that Maruti has over its competitors is that upto 75 % of its vendors are from the Northern region. the schedules are sent on a daily basis with a 4 day lead time. The vendor companies have tie ups with 3PL (Third Party Logistics provider) who sources 28 . For the other items which come from NOIDA.
the components and stores them in his warehouse. Even today upto 20 % of the items coming onto the line need the approval of the PI (Parts Inspection) division. Material –4 Department: Deals with the procurement of suspension. Material –2 Department: Deals with the procurement of Electrical & Transmission Parts. Supply Chain –2 Division: Shipping and Transport Department: Deals in Custom Clearance and inland transportation of CKD and import orders as well as insurance. A BRIEF OF THE SC DIVISION: Supply Chain –1 Division: Material –1 Department: Deals with the procurement of Engine & Air conditioning parts. Material –5 Department: Deals with the procurement of Body & Sheet Metal parts. The main functions of the supply chain division can be said to get materials at the: Right quantity at the 29 . This is then sent to MSIL as per MSIL’s requirements through a secondary transportation. Though Maruti has an in house developed IT system. Material –6 Department: Deals with the procurement of Interior Accessories & Glass. The supply chain division is responsible for sending the schedules of delivery to the vendors through the extranet through the e nagare system. liaison between SMC &Government Agencies and Steel procurement. Material –3 Department: Deals with the procurement of Plastics & Rubber Parts. Imports Department: Deals in ordering of imports. steering and brakes. it is however still not yet on a completely lean manufacturing system. Consumables Department: Deals in procurement of consumable and ARC for general items.
BULK PURCHSE OF RAW MATERIAL: This is accomplished with MSIL aggregating the raw material requirements of its suppliers and placing a bulk order with the raw material vendor. Vendor Development. Procurement Efficiencies. SHARING INFORMATION WITH SUPPLIERS: The production plan is prepared normally from the expected sales. MSIL has been using this strategy where instead of its individual vendors purchasing aluminium in the open market. The benefits of the cost reductions are generally shared with the vendor. Financial Conditions Operational efficiencies. MSIL sources the entire aluminum requirements from NALCO and INDAL. It negotiates for prices and pushes for the implementations of best practices at the vendor ends. Therefore the 30 . A similar project is currently underway to purchase steel in bulk and source it to the different vendors through MSIL by building a steel center. It works with the vendors in identifying items where the vendor experiences difficulties in cutting costs. Since MSIL has the maximum variants even the best of the sales forecast for each model would give errors. Apart from procuring items the other functions that the supply chain division at MSIL performs include. It looks into areas where prices may be reduced by streamlining the vendor processes & improving their operational efficiencies. it is therefore necessary that the whole chain be flexible enough to accommodate the change in their production plan. Right time at the Right quality and at the Right Price. sometimes in a staggerred fashion with MSIL appropriating a larger share. Some of the strategies that MSIL use to implement supplier cost reductions are: Supplier Cost Reduction Strategies : VALUE ENGINEERING: MSIL engages in value engineering of components with their suppliers which involves brainstorming sessions on ways to cut costs of individual components. Tierisation:The SC division has a collaborative approach and a problem solving attitude.
It has gone in for the tierisation of suppliers where the smaller sub assembly manufacturer supplies the same to a larger sub assembly manufacturer. Apart from this Maruti has been carrying out a vendor consolidation and tierisation exercise wherein it has brought down its huge vendor base of approximately 400 vendors at the tier 1 to a supplier base of approximately 220 suppliers in the tier 1 category. This would thereby lead to lesser traffic requirement at MSIL’s end. The manufacturer assembles all the child parts and supplies the larger sub assemblies to Maruti. 31 .difference in the actual product mix and the forecast product mix has to be communicated as early as possible to the suppliers.
PROJECT PROJECT TITLE: Understand and Analyse Tier-2 suppliers of Maruti Suzuki India Limited. OBJECTIVES:- 32 .
to sustain the kind of growth Indian automotive industry is witnessing in current market scenario. which can ensure that its supplier partners are able to identify the potential risk in all the areas like capacity. Automobile sector of India is growing at the rate of approx 30%. Tier-2 Suppliers are generally small suppliers and MSIL don’t have data of who are its Tier-2 suppliers. and take suitable measures to tackle the challenge and also to work collaboratively with suppliers in various areas to ensure a strong supply chain. per year. But the problem lies with suppliers of MSIL. In this rapidly growing market Maruti is experiencing leadership position over last few decades and captured more than 50% share. To answer this question this project has been undertaken. delivery etc. To serve this rapidly increasing market. METHODOLOGY:Whole project can be divided into following stages- 33 . and will these Tier-2 suppliers become bottleneck in the growth of MSIL. ut . finance. MSIL is expanding its capacities and also training its supplier(Tier-1) to grow with the speed of MSIL. IMPORTANCE:Indian economy is one of the fastest growing economies in the world. quality. Hence it is difficult to say that whether Tier-2 suppliers are moving in same speed ahead or not. capacity and delivery management etc.Objective is to understand who are Tier-2 suppliers of MSIL and analyse them on the various aspects like quality systems. financial robustness. to remain competitive and to sustain its leadership position.
Data collection 2. require for analysis and sent to the Tier-1 Suppliers. Srivastava and he developed the sheet which includes all the field. DATA COLLECTIONS:- Before our joining project was already initiated by our guide Mr. Development of framework of database 3. so that they can get filled data from their suppliers (Tier-2).1. The format of this excel sheet is as follows:- 34 . Data analysis 1.
/ Proprietorship / Partnership Group Company / Sister concern / Independent General Information Year of Establishment Start of supply to Tier 1(Supplier of MSIL) Product Portfolio Major Customers Details: Customer Turnover % of Turnover % Dependency on Tier 1 ( MSIL Supplier) Top Management Contact Details Details of Person dealing with Tier 1 ( Supplier of MSIL) Certifications ( Tick) ISO 9001 / 14001 / ISO 14000 / TS 16949 Product & Capacity Utilization * What are the capacity utilization of various product? Major Processes Capacity eg :-Pressing eg:.Rs lacs) Capacity Increase % Major M/c or Equipments * Installation dt. Ltd.Tier 2 data entry sheet Name of Supplier Supplier Code ( if any) Type of Company ( Tick) Relation with Tier 1(Supplier of MSIL) Limited company / Pvt. 35 ..Welding eg:.Machining Unit % Capacity utilization Major Expansion * Major Expansion in last one year Future expansion planned in Year 1 Future expansion planned in Year 2 Area Capacity ( Amt.
36 .1/2 Plant Details: Address Phone Website State City Pin Fax Employee Information Employees Staff category ( How many) Average annual salary ( in thousand) Union exist Affiliated to Wage settlement duration Labour Unrest Reported: From : Reason: Contractual Regular Yes / No Yes / No to: Financial details Net Sales: Other Income Total expenses Operating Profit Depreciation Interest Profit Before Tax Profit After Tax Dividend ( in lacs) FY09-10 FY08-09 FY07-08 Net Worth ( Total Equity + R & S) Short term debt raised Long term debt raised Gross Fixed Asset Collaboration Details ( If applicable) Collaborators's Name Country Technical/ Financial Tech (Design/ Drawing) Valid Upto (Date) Products Covered U / collab.
what is the current level? Handling/ Packaging rejection is being monitored or not If yes. Is there any Kaizen board available ? Is Kaizen board being monitored and controlled? Yes / No Yes / No Yes Yes Yes Yes / / / / No No No No Details of Tier 2 upgradation Cluster and System Audit 37 .Name of Supplier Supplier Code ( if any) Quality Rejections Details ( kindly Tick.wherever applicable) Availability of Operating Standard Rejections are being monitored in What is the current rejection level in a) In-house b) At customer ( Tier 1) Rework % Process Rejection is being monitored or not If yes. what is the current level? Yes / No Yes / No Percentage / PPM Yes / No Yes / No Details on Process control Details of Red Bin Analysis Availability of process defect data capturing Analysis of same to set priorities for improvement Investigate root cause(s) and implement effective countermeasure Reduction of process defects in % Yes / No Yes / No Yes / No QC Circle & Kaizen Is Suggestion scheme available? Is it applicable to all level of employee ? What was the total no of suggestion last yr. what is the current level? Set-up Rejection is being monitored or not If yes. Is there any reward & recognition scheme ? Are Kaizen activity being captured ? If yes.
of Times Corrective & Preventive action and analysis report to customer ( annexure) What is the average inventory days at Tier 1 What is the average inventory days at Tier 2 Cost Reduction Participation in cost reduction Cost Reduction Amount Cost Reduction % VA/VE Participation in VA/VE activities VA/VE nos.Whether included in Tier 2 cluster If yes. Other Improvement areas 38 .annexure Delivery and inventory status at Tier 1 from Tier 2 Delivery Status is being monitored Yes / No What is the ordering frequency? How many defaults in a month? Delivery failure analysis. No. methodology (Help of 7 QC tools) Records of Failed parts & Dates. VA/VE Amount Design & Development Design and Development Capability ( What Type) Total buying Reduction in last two yrs. No. when did the last audit done What kind of upgradation activity being carried out by Tier 1supplier Progress summary. of VA/VE proposals Implement.
then entered on the extranet. For that ITD made provisions based on sheet of information as shown above. The snapshots of extranet are as follows:- 39 .Data of Tier-2 collected by Tier-1 supplier.
Even if every Tier-1 vendor have access to extranet. 2. 40 . because of technical error or lack of knowledge. some vendors were sending information of tier-2 vendors via e-mail. DEVELOPMENT OF FRAMEWORK OF DATABASE:It was difficult to analyse data received directly from ITD or from suppliers. So it was our responsibility to collect direct data from concern buyer and use it for analysis purpose. So we have developed formats of three sheets.
One page sheet:One page sheet is developed to capture various data required for analysis. Basically the reason behind development of this sheet is capturing data of various Tier-2 suppliers of single Tier-1 supplier in one A3 size page. Tier-2 suppliers and other information like address. Code of Tier-1 suppliers. MSIL even did not have list of its Tier-2 suppliers. Name of suppliers of Tier-1 suppliers i. One page sheet a. Hence this sheet is named as ‘one page sheet’. General information sheet b.e.These sheets area. Percentage dependency. Hence to capture basic information of Tier-2 suppliers we developed this format. This format includes information like Name if Tier-1 supplier. Format of this sheet is as follows- Tier-1 Supplier Tier-2 Suppliers Percenta ge Dependa ncy on T1 supplier Supplier Name Supplier Code Tier 2 Supplier Name Type of Company Address Contact No.e. i. Website Relationshi p with Tier 1 Product Portfolio Major Customers b. General information sheet:There was no previous data of Tier-2 suppliers was available. major customers etc. so that understanding of tier-2 suppliers with respect tier-1 supplier will become easier. This sheet has framework as follows:- 41 .
Data analysis:- 42 .Page for sheet-3 3.
General analysis II. Delivery analysis V.e. partnership. Net sales Total debt to equity ratio Long term debt to equity ratio Internal accrual Gross margin Net margin 43 . Quality analysis IV. Financial analysis:To understand financial health of Tier-2 suppliers we have done financial analysis on the following parameters. Financial analysis III.Depending on data received we have done analysis of Tier-2 vendors on various aspects. which includes information like Type of company i. These I. General analysis:General analysis is done to understand Tier-2 suppliers on broad general aspects. Personnel analysis I. Ltd. proprietorship company Location wise spread of Tier-2 suppliers Relationship with tier-1 suppliers i. Pvt. Group company or independent company Part of Tier-2 cluster II.e. limited. Capacity analysis VI.
e.III. VI. This includes factors like Quality certifications Inhouse rejections in ppm Rejections at customer end in ppm Total rejections in ppm IV. V. capacity utilization more than 90%).e. Quality analysis:Quality of MSIL is directly or indirectly depends on quality of Tier-1 suppliers and quality of Tier-1 suppliers depends on quality of supplies from Tier-2. Capacity analysis:In capacity analysis we analysed various processes carried out at Tier-2. Delivery analysis:- Delivery analysis deals with total delivery defaults by Tier-2 per month and inventory of material available between Tier-1 and Tier-2 i. Hence understanding of quality of Tier-2 suppliers is one of the most crucial factors. in days. Personnel analysis:The primary motto behind this analysis is to understand dependency of Tier-2 suppliers on contractual workforce and understanding availability of skilled workers at Tier-2. at both ends. 44 . on the basis of capacity utilization of each process we identified bottleneck processes ( i. which can become headache in future expansion of MSIL.
Region wise spread:- 45 .RESULTS & FINDINGS:1. Hence we can say that majority of Tier-2 suppliers are well structured. Limited and Limited companies are registered under companies act and also audit is mandatory whereas companies belongs to other categories are unstructured. Pvt. GENERAL ANALYSIS :- Type of company:- TYPE OF COMPANY LIMITED COMPANY 17% PROPRIETORSHIP 21% PARTNERSHIP 9% PVT. LTD. 53% 70% of Tier-2 suppliers belong to Private limited and Limited company.
46 . 7 1% 3 As per the graph above. 7 GOP R U C MA Y 1. DP NE T 16 8% 1. This implies majority of tier-2 suppliers are situated nearby to the MSIL and Tier-1 suppliers. O P N. This implies that overall inbound logistics cost of MSIL is at lower side. Relationship with Tier-1 Suppliers:R L T N H W HT R S P L R E A IO S IP IT IE -1 U P IE (T R S P L R ) IE -2 U P IE S IN E E D N . only 13% of companies belongs to Group Company. Rest others are independent from the influence from the Tier 1 companies.R EGION ISE CLA W SSIFICA TION NR C 69% O H RN R H TE O T 9% W ST E 4% E T AS 1% SO T UH 17% Majority of Tier2 suppliers ( 78% ) are located near to Northern region and out of this 69% of total base are situated inside NCR region.
If we compare this trend with turnover of tier-1 suppliers where more than 80% having turnover above 50 crores.e. that implies that majority of Tier-2 suppliers follow conservative approach and only 11% are in the high risk category ( more than 2 DE ratio). 47 . CS) 15 % 1% 8 PERCENTAGE 3% 4 3 3% Above graph shows that majority of tier-2 suppliers are having turnover less than 50 crores i. then we say that tier-2 suppliers are belongs to small and medium scale industries. 82% tier-2 suppliers.2. Debt to equity Ratio:L T D/E RATIO FOR YEAR 2009-10 (TIER-2 SUPPLIERS) PERCENTAGE OF SUPPLIERS 80% 60% 40% 20% 0% 0-1 1--2 D/E RATIO >2 16% 11% 73% Graph of Debt to Equity indicates that nearly 70% of sample Tier-2 suppliers lie in the category of ‘0-1’. FINANCIAL ANALYSIS: Turnover:N SA ET LES FO Y R EAR 2 0 -1 09 0 ( TIER-2SUPPLIERS) OF SUPPLIERS 40 % 30 % 20 % 10 % 0 % 0-50 0 50 0 0 -10 0 1 00 00 0 -50 > 00 5 0 N SA ET LES ( R LA IN S.
e. i. Internal accrual:(PAT + Depreciation – Dividend – Dividend Tax) INTERNAL ACCRUALS FOR YEAR 2009-10 (TIER-2 SUPPLIERS) PERCENTAGE OF SUPPLIERS 60% 45% 30% 15% 0% < 0 0-100 100-500 500-1000 > 1000 1% 3% 8% 56% 32% INTERNAL ACCRUAL IN RS. not very much capable of doing sudden large capacity expansion which can be area of concern 48 .TOTAL DEBT/EQUITY RATIO FOR YEAR 2009-10 (TIER-2 SUPPLIERS) 60% PERCENTAGE OF SUPPLIERS 40% 22.LACS From above we can say that out of total sample Tier-2 suppliers nearly 60% are having internal accrual below 1 Cr. a rapid shift of graph towards right side is seen.22% 56% If we compare total debt to equity ratio with long term debt to equity ratio. This implies that dependency of Tier-2 suppliers on short term loan is more.22% 20% 0% 0-1 1--2 D/E RATIO >2 22.
• Net Margin:- N M RG FO Y R 2 0 -1 ET A IN R EA 0 9 0 (I T ER-2SU P P LIERS) OF SUPPLIERS PERCENTAGE 8% 0 6% 0 4% 0 2% 0 0 % < 0 0 % -5 P T E SA S ( ) A /N T LE % 5 0 -1 % >0 1% 3 % 1% 4 6 % 7% 7 In general net margin of tier-2 suppliers is good but still some suppliers (3%) needs special attention. Profitability Ratio:Gross margin:GROSS MARGIN FOR YEAR 2009-10 (TIER-2 SUPPLIERS) PERCENTAGE OF SUPPLIERS 50% 40% 30% 20% 10% 0% < 0 0--5% 5-10% > 10% EBDIT/NET SALES RATIO 1% 16% 44% 39% Graph shows that nearly 17% tier-2 suppliers of sample populations are earning less than 5% gross margin i. 49 .e. which are having net margin ratio below zero. To make them competitive tier-1 suppliers should provide some support to these suppliers. these 17% tier-2 suppliers are struggling to earn enough gross margins.
8% TS 16949 44% 98% of Tier-2 suppliers of given sample are having at least one quality certification.OF TIER-2 SUPPLIER NOT PART OF TIER-2 CLUSTER 61% 50 .OF TIER-2 SUPPLIER PART OF TIER-2 CLUSTER 39% NOS. 6. QUALITY ANALYSIS: Quality Certifications:CERTIFICATIONS ISO 9001 40% NO CERIFICATES 2% ISO 14000 1% ISO 14000 & TS 16949.3. Member of Tier-2 cluster:MEMBER OF TIER-2 CLUSTER NOS. which implies nearly all Tier-2 suppliers are following international quality standards.
It is found that approximately 40% Tier-2 suppliers are belong to MACE cluster and having total average rejection 13307 ppm and 60% suppliers who are not part of MACE cluster are having average total rejections 13666. 51 . That means tier-2 suppliers which are part of MACE cluster are not implementing their learning from MACE in effective manner.
Rejections:- REJECTIONS CUSTOMER END PERCENTAGE OF SUPPLIERS 50% 40% 30% 20% 10% 0% 0--100 100-500 500-5000 >5000 REJECTIONS IN PPM 19% 18% 17% 46% 52 .
which can be area of concern. TOTAL REJECTION IN PPM (INHOUSE+TIER-1 END) ( TIER-2 SUPPLIERS) 48% 42% PERCENTAGE OF TIER-2 SUPPLIERS 36% 34% 24% 12% 12% 12% 0% 0-200 200-1000 1000-10000 >10000 REJECTION IN PPM There are as many as 75% of T2 suppliers where total cumulative rejections are more than 1000 PPM .REJECTIONS INHOUSE PERCENTAGE OF SUPPLIERS 60% 50% 40% 30% 20% 10% 0% 0--100 100-500 500-5000 >5000 REJECTIONS IN PPM 9% 9% 28% 54% The above graphs shows that inhouse rejections for Tier-2 suppliers are more than rejections at customer end which indicates the various defect filtration process which is being used vigorously at T2 Suppliers for arresting of defects to pass on to the customers. 53 .
but MSIL receive delivery related problems from Tier-1 suppliers. 54 .4. DELIVERY ANALYSIS: Delivery Defaults:DELIVARY DEFAULTS FOR YEAR 2009-10 (TIER-2 SUPPLIERS) PERCENTAGE OF SUPPLIERS 80% 60% 40% 20% 0% NIL 1--5 5--10 >10 DELIVARY DEFAULTS PER MONTH 24% 8% 3% 64% As per the data received for T2 Suppliers from Tier1 ( MSIL suppliers) . there is no much delivery related issue from Tier2 to Tier1. which can be area of concern.
total inventory days ( including both at T1 and T2) for any T2 supplier . PERSONNEL ANALYSIS:- PERSONNEL (TIER-2 SUPPLIERS) 45% PERCENTAGE OF SUPPLIERS 30% 15% 0% NIL UPTO 1:1 1:1 TO 3:1 MORE THAN 3:1 38% 20% 24% 18% CONTRACTUAL/REGULAR EMPLOYEE Analyzed data of Tier 2 companies shows that these suppliers are dependent more on the contractual work force. 55 . The trend shows the no. This also indicates that these companies don’t require high skill people either for manufacturing or any other developmental activities. Inventory:INVENTORY IN DAYS FOR YEAR 2009-10 (TIER-2 SUPPLIERS) PERCENTAGE OF SUPPLIERS 50% 40% 30% 20% 10% 0% 0-5 5--10 10--20 >20 7% 41% 31% 21% AVERAGE INVENTORY IN DAYS As per the data received for T2 Suppliers from Tier1 ( MSIL suppliers) . indicating the increasing awareness of cost of inventory among the T2 suppliers . 5. of suppliers with higher inventory days goes on decreasing .
6. CAPACITY ANALYSIS:- TIER-2 SUPPLIERS WITH BOTTLENECK 80% T-2 SUPPLIERS HAVING ATLEAST ONE BOTTLENECK PROCESS:T-2 SUPPLIERS WITHOUT ANY BOTTLENECK PROCESS:- 20% 56 .
PERCENTAGE OF T-2 SUPPLIERS CAPACITY UTILIZATION (TIER-2 SUPPLIERS) 100% 91% 89% 80% 80% 80% 80% 58% 42% 67% 80% 79% 75% 50% 33% 20% 21% 25% 9% PRESSING 11% WELDING 20% 20% 20% 20% 0% MOULDING MACHINING CHEMICAL TREATMENT CASTING SURFACE TREATMENT BLENDING FORGING OTHERS PROCESSES ONE VENDOR MAY HAVE SEVERAL PROCESSES BOTTLENECK PROCESSES NON BOTTLENECK PROCESSES There are many processes where number of vendors having bottleneck is lower than no bottleneck.Surface treatment . But alarming fact is that there are some processes where number of vendors with bottleneck processes are more than those where no bottleneck. Majority of Tier-2 suppliers are utilizing less than 90% capacity. From our project we conclude that.Chemical Treatment . In the Supply chain of MSIL it is observed that Tier-2 suppliers are the weakest link. These processes are . Tier-2 suppliers are small and medium scale suppliers and are less conscious about quality.Blending and mixing These processes can become headache for MSIL expansion CONCLUSION:The strength of any chain is always decided by its weakest link. which can serve increasing needs of Tier-1 suppliers but still some suppliers needs to be more focus. 57 .
mangopeople.scribd. It is observed that Tier-2 suppliers are largely depends on Contractual labours.com www.Operating margin and net margin of Tier-2 suppliers seems reasonably good but due to small turnover actual realised amount is considerably low.msil. this need to be focused. which is good for cost saving but less skilled worker may affect quality of product. still some tier-1 is making delivery defaults in sending materials to the MSIL. BIBLIOGRAPHY:Websites 12345- www. tier-1 and ultimately MSIL bearing this inventory carrying cost.7 days inventory between Tier-2 and Tier-1 end. Majority of tier-2 suppliers are delivering materials to Tier-1 on time ( very less or no delivery default) and also there is quite good inventory available between tier-1 and tier-2 suppliers.co.in www. There is on an average 7. which is good for on-time delivery but not in line with Just In Time concept and tier-2.com (Bloomberg India) Books 58 .google. It is seen that tier-2 suppliers are using good amount short term loan and ultimately paying higher interest which is affecting their overall net profit.wikipedia.com www.com www.utvmoney.
MSIL Annual Report-2009-10 2.Bhargava The Machine that change the world Secondary sources 1.C.123- Supply chain Management by Peter Mendle The Maruti Story by R. MSIL Files 59 .
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