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MATERIALS MANAGEMENT
PRESENTED BY-HARSHDEEP SINGH [2010C03]PRIYANKA HARJANI [2010C10]MANOJ JAJU [2010C13]KUNAL SINGH [2010C43]
Maruti’ s Materials Management Strategy
Strategic Materials Management
Tactical Materials Management
Operational Materials Management
Recommendation
AGENDA
• Local Vendor Development (Company’s domestic suppliers, around 86
percent of them, are located within a 100-km)
• 'Materials Division’ was rechristened 'Supply Chain Division’
• New Vendor Development
• Move to CKD from CBU
• Pairing its sourcing agreements with its suppliers
• Focus on cost reduction from vendors instead of price increase (3-5 %/ year)
• Consolidation of Suppliers
• Global suppliers are prepared
• Indigenisation of components
STRATEGIC MATERIALS MANAGEMENT
• Localization of component – Reduction in material
cost
• Local Vendors – Reduction in transportation cost
and lead time.
• Supply Chain Division - Worked jointly with
suppliers to lower the cost of components (5%).
• New Vendor Development – Control over cost,
quality & delivery.
• Pairing sourcing agreements – Sharing default loss
STRATEGIC MATERIALS MANAGEMENT: MERITS
• Relations strained with Suzuki Motor Corporation
due to the issue of localisation of gear boxes
• Vendor Consolidation – Reduction on bargaining
power
• Pairing sourcing agreements – Less room for
taking independent decisions.
STRATEGIC MATERIALS MANAGEMENT: DEMERITS
• Turning entrepreneurs into vendors, facilitating loans,
licenses, technical know-how
• Change of Material (plastic instead of a metal fuel tank
or light tinting of glass to keep the car cool)
• 'Maruti Production System' based on lean manufacturing
programme
• 'Shikhar' - ‘Poor' vendors were identified and even
eliminated.
• Raising the bar - 500 defective parts in a million, would
not make the grade
TACTICAL MATERIALS MANAGEMENT
• Smaller suppliers absorbed in Tier II vendor list
• ‘Full systems supply' from Tier I vendors.
• A shorter pipeline and effective logistical control
• Exports from Thailand, Germany increased due to
tax benefits(40%exmeption)
• Vendors connected to E-Nagare system
• Single main warehouse for components after sales
TACTICAL MATERIALS MANAGEMENT (CONT.)
• Turning entrepreneurs into vendors – Innovation & ideas
for efficient operations
• Change of Material - Reduction of cost
• Shorter pipeline - Relocation of vendors within a 100 km
radius of its plants.
• Weeding out of poor vendors - Improved efficiency and
processes
• E-nagare system - Better connectivity and planning for
vendors.
• Single main warehouse – Reduction in warehousing costs.
TACTICAL MATERIALS MANAGEMENT: MERITS
• New Vendor development - Higher Investment
requirement
• Single main warehouse - Increases transportation
costs the costs due to CST.
• Elimination of poor vendors - Develop sense of
insecurity and dissatisfaction among smaller
vendors
TACTICAL MATERIALS MANAGEMENT: DEMERITS
• Production plans from the vendor to Maruti's
shopfloor (Two hour cycle from 30 days in the past)
• Components to arrive in mobile trolleys and line up
outside factory sheds directly feeding multitasked
assembly lines. (e.g Multi-coloured bumpers)
• Just-in-time basis and Directly online
• An online system for replenishment of inventory on
an Electronic Card System
• Trucks and not Rail for transportation
OPERATIONAL MATERIALS MANAGEMENT
OPERATIONAL MATERIALS MANAGEMENT (CONT.)
• Company responsible for shipments to its own
factory (Shipping, Port Clearance, Customs Clearance and Inland
transportation.)
• Yearly, Half-yearly, Quarterly, Monthly and Daily
plans to suppliers
• Electronic Card System (Online system for
replenishment of inventory)
• The vendors keep up an unending supply of critical
components like body panels, bumpers etc.
• Systematic production plan for every stage - Reducing the cycle
time.
• Automation Incorporation (mobile trolleys) - make the operations
smooth.
• Just-In-Time - Efficient production Schedules and less working
capital requirement.
• Transportation by road - Better connectivity covering 202 cities.
• An online system - Right track of the inventory, minimising
errors and accurate forecast.
• Handling shipments to own factory - Better control and less
transportation cost.
OPERATIONAL MATERIALS MANAGEMENT: MERITS
• Road Transport - Increases the cost.
• JIT system – Highly efficient management
required and responsiveness of the process
decreases.
• Handling shipment to the factory – Overhead for
supply chain division.
OPERATIONAL MATERIALS MANAGEMENT: DEMERITS
RECOMMENDATIONS
• Knowledge transfer to be done with Suppliers.
• Multiple warehouses for low cost item to reduce
transportation cost.
• Elimination of poor vendors – a detailed parameters to
be specified to justify the decision
• Implementation of CPFR
• Collaborate with its vendors on Capacity & Investment
issues.
• Early supplier involvement in new product introduction
• Contractual Agreement with the suppliers with “Right
of first refusal” Clause
• Improve relations with big LSP players
THANK YOU