Operations Management at Maruti Udyog

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Case Details:

Case Code : OPEA001
Case Length : 18 Pages
Period : 2003
Organization : Maruti Udyog Limited
Pub Date : 2004
Teaching Note :Not Available
Countries : India
Industry : Automobile

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Manufacturing Process

Maruti had three integrated manufacturing plants with 17 manufacturing shops and flexible assembly lines at Gurgaon, about 25 Kms from New Delhi, the capital of India. In 1984, the first plant was set up with an initial installed capacity of 20,000 vehicles per annum. This was augmented to 130,000 by 1991.

In 1995, the second plant was installed, which increased Maruti's capacity to 200,000 vehicles per year. In 1996, Maruti's installed capacity was increased to 250,000. With a third plant becoming operational in March 1999, the installed capacity became 350,000 vehicles per year, making Maruti one of the largest passenger car manufacturing facilities of Suzuki outside Japan...

Improving Operational Efficiency

Maruti turned around from a loss of Rs.2690 million in 2001 to a net profit of Rs.1045 million, in 2002. This turnaround had been facilitated by sharp improvements in quality and productivity, both in-house and at the vendors' end.

In 2002, Maruti started a program "Challenge 50 initiative" to improve productivity by 50 % and reduce cost by 30 % by 2004-05. Maruti involved various component suppliers in Challenge 50. Productivity improvement programs were undertaken by key vendors in collaboration with experts from Suzuki. Maruti started implementing new manufacturing techniques and various value analysis and value engineering initiatives. Product development in the automobile industry was a very capital-intensive process...

Improving Quality

Maruti measured the relative quality of dispatched vehicles on a random, daily basis through a quality index audit. To improve quality, Maruti had introduced various measures:

• Tracking surveys and direct customer contact in order to understand the problems faced by customers.

• Full-time task forces for improvement in initial quality study problems and departmental cross-functional teams to work on defined problems with challenging targets...

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