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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Please note:

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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Excerpts Contd...

Vendor Management

Vendor management became an important area as Maruti attempted to improve operational efficiency. Maruti procured components worth about Rs.5,000 crores every year. The company's top 10 vendors accounted for about 34 % of its aggregate purchases of components from vendors in India.

Maruti was working on a 3.5% per annum reduction in vendor prices by 2004-2005. Maruti streamlined the sourcing and stocking of materials and components through its Delivery Instruction system , one of Suzuki's best practices. This system provided details of Maruti's component requirements for every 15 days, across the different variants of the various models, to its vendors. Web initiatives helped Maruti to bring down procurement time and costs...

Leveraging Information Technology

When Maruti decided to automate its operations in the early 1990s, there was no ERP vendor support available in the country. So, the company decided to do it all by itself. A team of 45 engineers, using a combination of software from Oracle and Computer Associates, built a variety of applications covering inventory management, receipts, excise, consumption, production, sales, invoicing, exports, financial accounting, payroll, and bank reconciliation. The applications were developed and upgraded on a regular basis, while the maintenance and administration were outsourced...

Looking Ahead

Maruti had plans to raise its operating efficiency to that of Suzuki's premier plant at Kosai in Japan by 2005. This program had the personal backing of O. Suzuki, worldwide chairman of Suzuki. Suzuki planned to bring in new technology from Japan making Maruti capable of full model-development by 2007. Maruti had plans to export to the Middle East and Far-East Asian Countries in a big way.

Maruti had set itself the target of wresting a 60% market share of the country's car market during the period 2003-2006...

Exhibits

Exhibit I: Maruti Udyog: Major Brands
Exhibit II: Maruti: Manufacturing Process
Exhibit III : Maruti: Raw Materials Expenses
Exhibit IV: Maruti: Employee Productivity
Exhibit V: Maruti: Inventory Management
Exhibit VI: Comparison of Total Inventories

 

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