Maruti Value Chain Essay Example

a decrease of their inventory holding period from 30 to 19 days between the years 2002-03 and 2004. The "Maruti Production System" has been implemented by major vendors as an effort to enhance productivity through eliminating wasteful activities within the manufacturing process, lowering materials handling, reducing rejected components, improving yield from materials, and minimizing inventories. This ultimately leads to decreased production costs and reduced component costs. Raw materials and components for transportation are mainly domestically sourced with only a small amount being imported. Steel coils and paints are the primary manufacturing materials used with MUL aiming to localize steel coil purchases for cost reduction in recent years.

The process of converting inputs into finished products and services is known as Operations/Production. Maruti, Suzuki's largest passenger car manufacturing facilities outside Japan, are located at Gurgaon and Manesar, south of New Delhi. The Gurgaon facility can manufacture up to 350,000 units per annum while the Manesar facilities consist of a vehicle assembly plant that has the capacity to produce 100,000 units annually along with a Diesel Engine plant capable of producing 100,000 engines and transmissions every year. Together the production capability of both facilities exceeds 700,000 units per year.

Maruti continuously strives to enhance productivity and efficiency through various initiatives. One such initiative is the Maruti production system (MPS), based on the Suzuki production system, which focuses on eliminating wasteful activities during manufacturing processes. Other measures include in-house automation, increased utilization of production lines, outsourcing of low-value addition jobs, and reduced materials handling. Additionally, the "Challenge 50 initiative" launched in 2002 aimed to boost productivity by 50% and reduce costs by 30% by 2004-05.

Maruti initiated Challenge 50 wherein various

component suppliers were involved. The collaboration of key vendors and experts from Suzuki led to productivity improvement programs. Maruti implemented new manufacturing techniques along with various value analysis and value engineering initiatives. In outbound logistics, the warehousing, and distribution of finished goods involves all processes. Maruti has established a robust sales network of 600 outlets across 393 towns and cities to reach the customers.

Maruti has 2628 workshops distributed across 1200 towns and cities. They offer maintenance support to their customers. Their Marketing & Sales approach involves identifying customer needs and generating sales. Maruti aims to continuously provide new products and services that reduce customers' cost of car ownership and address their needs in all car ownership stages, providing a "360-degree customer experience." Maruti came up with innovative marketing solutions that increased sales, and they are actively seeking ways to increase dealer profits without impacting Maruti's business, such as entering the auto insurance industry.

Maruti has implemented several marketing tactics such as the use of Promotional Offers. The company aimed to reach two-wheeler owners and provided cash discounts of Rs 4,000 on popular models like the M800, Alto, Zen, WagonR, and Omni. Higher discounts of Rs 15,000 were offered on premium models such as Esteem, Baleno, and Versa. Customers could also benefit from an exchange bonus of Rs 5,000 on these vehicles. Additionally, Maruti introduced the '2599' offer in 2004 that allowed consumers to purchase an M-800 by paying an EMI of Rs 2,599 for a period of seven years with a fixed down payment of Rs 40,000.

Maruti Suzuki has introduced two new offers, namely "o`Do ka Chaar" and "Teacher Plus." "o`Do ka Chaar" allows existing two-wheeler

owners to use their motorcycle as the down payment to purchase a Maruti 800. On the other hand, with "Teacher Plus," Maruti Suzuki has partnered with State Bank of India to provide a lower rate of interest for teachers, who can avail a car loan at 8%.

Maruti has created several TV commercials in India that are relatable to their audience. In 2003, the company released an advertisement featuring a toy car and a child who responds to his father's scolding with "Kya karoon papa petrol khatam hi nahin hota" (What should I do? The petrol never finishes). This ad became popular for its straightforward message. Another successful commercial for Maruti Alto featured a young couple abruptly deciding to take a trip to Jaipur. Across all maturities, the interest rate is 5 per cent.

Maruti Udyog introduced a simplified version of the Alto in April 2004 after research revealed that residents of smaller towns did not resonate with the chic and modern vibe of the prior campaign. The subsequent advertisement portrayed a fashionable couple, but highlighted the girl's distress over her parents' departure. The man took her for a drive to lift her spirits, emphasizing the family aspect. Maruti Udyog provides its customers with the ‘True Value’ service.

This service is a marketplace in India that offers the ability to purchase, sell, or exchange pre-owned Maruti vehicles. Through the TrueValue program, Maruti-appointed engineers perform a 120-point quality check on each vehicle that is sold. Vehicles purchased through TrueValue outlets are restored at certified workshops using advanced equipment, and only authentic parts are utilized.

The MUL Warranty and Extended Warranty Program covers all vehicles sold with a

two-year warranty. Dealers must follow MUL's prescribed practices and procedures for handling customer claims under the warranty. The cost of warranty claims is either claimed from vendors for defective components or borne by MUL for manufacturing defects. Additionally, MUL offers an extended paid-warranty program called "Forever Yours" for the third and fourth year after purchase. This program aims to maintain dealer-customer relationships and increase revenue from sales of spares, accessories, and automobile-related services.

During the extended warranty period, Maruti puts forth an initiative to persuade customers to either trade in their current Maruti car for a new one or to upgrade to a new model. Service entails all the efforts made to assist customers after they have purchased products or services, and Maruti has introduced several new service programs aimed at meeting customers' unspoken needs. Maruti provides a variety of services, including round-the-clock customer service.

... 365 days.

Maruti has achieved 8 consecutive top ratings in customer satisfaction surveys and also offers a car pickup and delivery service specifically for female car owners, picking up vehicles from their doorstep.

Company has impressed its customers by introducing new concepts such as "Express Service Bays" and "2 - Technician Bays" to offer faster car service. These initiatives have improved customer interface, increased productivity, and capacity of existing workshops. The company also conducts 'Mega Camps' round the year throughout the country offering complimentary car wash, AC ; Pollution check up, oil and fuel top ups, wheel alignments etc.

Maruti Mobile Support is a unique initiative that offers doorstep oService to customers. It not only helps the company connect with customers in metro cities but also provides access to semi-urban and rural areas

where setting up new workshops may not be practical. To address the issue of car theft, Maruti devised an 'I-Cats' anti-theft immobilizer system for all its new cars. This effort, combined with the company's provision of comprehensive car-related services such as driving lessons, insurance, and exchanging older cars for newer ones at dealerships, helps enhance customer satisfaction. These primary activities are supported by infrastructure activities such as MUL's two advanced manufacturing facilities in India, one at Gurgaon sprawled over 300 acres and the other at Manesar encompassing 600 acres in North India.

The Gurgaon facility contains three fully integrated plants with a combined installed capacity of 350,000 cars per year; however, productivity improvements and shop floor Kaizens have allowed the company to manufacture almost 700,000 cars yearly. The facility also includes over 150 robots, 71 of which were developed in-house. The Manesar facility was specifically created to meet Suzuki Motor Corporation and Maruti Suzuki India Limited's global aspirations and began operating in February 2007. This plant currently produces the World Strategic Models Swift & SX4 and DZire, as well as the World Car derived from concept A-Star.

The manufacturing plant has various systems and mechanisms that ensure high precision and quality production. The press shop, weld shop, and paint shop all have automation and robotic control. With its flexible design, the facility can conveniently manufacture different car models by utilizing automatic tool changers, centralized weld control systems, and numerical control machines for optimal outcomes. This is the company's fourth car assembly plant. In addition to this plant, Maruti has a joint venture with Suzuki Powertrain India Limited (SPIL) called the Diesel Engine Plant at Manesar

which produces top-notch diesel engines and transmissions for cars with an initial capacity of 100,000 per year.

Maruti Udyog aims to increase engine production to 300,000 annually by 2010. The company values its workforce and prioritizes training, having trained over half of its shop floor employees in Japan. Maruti fosters a work culture of empowerment that encourages employee suggestions, teamwork, and quality. Additionally, the company implements a problem-solving approach.

Maruti Udyog Ltd., which is the largest automobile manufacturer in India and a division of Maruti Suzuki, produces half a million cars annually. The company employs various management practices such as participative management, teamwork, continuous improvement (kaizen), communication and information sharing, and an open office culture for easy accessibility. Quality Circles, consisting of 5-8 members, are also formed to identify and prioritize problems and find solutions.

During the late 1990s, Maruti Udyog faced several challenges, including rapid technological obsolescence, high IT and support costs, difficulties in recruiting skilled manpower, high turnover rates, non-standard IT service levels and an unstructured problem management approach. At the time, Maruti Udyog provided all IT support services in-house, which contributed to poor service levels and high costs. The company struggled to maintain resources for various IT areas such as hardware, software, networking, and systems software. However, outsourcing their IT support and management to Compaq Computer Corporation (now HP) proved to be a successful operation. This decision significantly reduced turnover rates and was the most cost-effective solution for managing these complex processes.

MUL's predominant IT applications are enterprise-wide, with key applications including the Dealer Management System (DMS). The DMS stems from MUL's partnership with Wipro Infotech, which aimed to empower dealers to improve their performance and

customer service. For the first time in India, the DMS implemented an innovative network system that enables Maruti dealerships nationwide to access real-time knowledge from the car manufacturer and a transparent view of their operational processes for better overall efficiencies. Customers also benefited from the streamlined user experience as they interacted with "a single face of Maruti" across all dealerships.

Implementing Citrix® MetaFrame XP™ Presentation Server Software in partnership with HP, a global Citrix Business Alliance™ Partner, has helped boost customer service levels and improve management quality at dealerships. Besides facilitating dealer integration with a central database, the system also acts as a knowledge repository, providing dealerships with access to customer scheme information, product features, and price lists. Additionally, the system alerts dealerships of performance shortcomings in areas like customer complaints, handling, and sales. As part of this initiative, MUL installed Citrix® MetaFrame XP™ Presentation Server and Microsoft® Windows® 2000 onto three load-balanced HP Proliant Servers DL80.

The recent addition of a server farm has significantly enhanced access to an array of applications including Microsoft Office, Mail Messaging, Outlook, i2 CRM, UNIX®-based applications, and MUL’s custom-developed ERP system. One major advantage for network users is the newfound capability to log in from any device and gain unimpeded entry into their individual desktop environments. This development also eliminates the requirement for IT support staff to visit each client desktop and create roaming profiles for each user. The benefits also extend to partners like Suzuki Motors and the 200 dealers under MUL, who can now establish connections to the network.