Increasing productivity by Operations management: Maruti Suzuki
Maruti Suzuki India Ltd is engaged in the business of
manufacture, purchase and sale of motor vehicles, automobile components and
spare parts. Maruti has consistently
improved since 1997 and is leading in the overall customer satisfaction Index.
It caters to the large customer base of India where every middle class family
wants to buy a Maruti, because of its affordability and reliability. Maruti
brand of cars are pretty successful in making customers happy. One wonders how
a car manufacturer can deliver an affordable car and its services so
effectively.
In 1999 when Maruti was facing stiff challenge from
competitors like Hyudai’s Santro, Daewoo’s Matiz and Tata Motor’s Indica, was
due to delayed introduction of new models. But various restructuring exercises
were carried out to strengthen Maruti’s overall market share. But still there
was a huge loss of Rs 2690 million in 2001. This is when the company realised
that profile of Indian car market has changed. Baleno, Wagon R and Versa was
launched thereafter, but the competition intensified further. Maruti decided to
launch various initiatives to improve customer service. Thus, it established a
strong network and better reach to its customers in a better way as compared to
its rivals.
In 2003 Maruti Udyog Ltd (Maruti) joined hands with Suzuki
motors of Japan and Indian Government, Automobile market had 54% market share.
Maruti had widest product ranges, with 10 basic models and 50 variants. The top
selling cars were Maruti 800, Zen and Omni, all belonged to Maruti. In 2003
Maruti produced 359,960 vehicles, operating at a capacity utilization of 103%
against industry average of 57.8%. Maruti 800 was ranked No. 1 in the “Economy”
segment, ZEN and Esteem also were leading cars in the market. But Maruti did
not underestimate the competition. The executives wanted something more to be
done to improve operational efficiency, cut costs and launch new products.
The Process:
Maruti had three integrated manufacturing plants with 17
manufacturing shops and flexible assembly lines at Gurgaon. The initial
installed plant had a capacity of 20,000 vehicles per annum. This was augmented
to 130, 000 by 1991. In 1995 second plant came up increasing the capacity to
200,000 vehicles per year. In 1996
capacity further increased to 250,000. With the third plant capacity became
350,000 vehicles per year, making Maruti the largest passenger car
manufacturer.
Stages of Car manufacturing:
> Blanking and Forming
> Welding
> Painting
> Assembly
In the last stage of Assembly process Maruti uses certain
processes and practices. Practices like the Work Instruction Chart (WIN chart)
provided clear instructions to operators both for doing work and handling the
parts. This made easy allocation of tasks and resources.
In 2002 a challenge called “Challenge 50 initiative” was
adopted by Maruti. This would improve productivity by 50% and reduce cost by
30% by 2004-05. All the key vendors, employees and managers in collaboration
undertook productivity improvement programs with experts from Suzuki. Maruti
attempted to reduce costs by introducing new models and reducing cost of raw
materials such as a flexible welding line could be used for multiple models,
sourcing of dies through local vendors, buying upgraded versions of existing
models in much lesser cost. It practised several best practices like stringent
quality control, in-line quality assurance processes, immaculate housekeeping,
multi skilling operators, open office systems, Kaizen (continuous improvement),
participative work, team work and information sharing. In house automation,
optimum utilization of production lines, and significant reduction in material
handling improved productivity and made operations efficient. Maruti was
scoring high in productivity, the ratio of inventory costs to total income was
just 2.5%, much lower than industry average.
In the late 1990, Maruti adopted the Japanese technique of
Plan, Do, Check, and Action.
Maruti pursued various strategies like:
1.
Low cost automation
2.
Reduce operator fatigue
3.
Avoid heavy expenditure
4.
In house designed multi-spot automatic welding
5.
Payback of investment in just one year
6.
Automated trolleys
7.
Reduce waste
8.
Two axis and four axis robots
9.
Material handling devices
10.
Cut on energy consumption
11.
Follow “reduce, reuse and recycle”
12.
Use of natural lights instead of normal ones
13.
Reduce consumption of water and increase recycle
14.
Photoelectric switch
15.
Pre-
programed timer for area lightening
Maruti also used many Quality control measures like tracking
surveys, direct customer contacts, quality gates, fool-proofing or Pokayoke in
Japanese, real-time feedback system, Pica- Pica system and many more.
Thus Maruti’s glorious years still
continue and it still rules the market. Many operations optimization processes
make a company efficient and last longer.
References
http://articles.economictimes.indiatimes.com/2003-05-25/news/27562276_1_maruti-engineers-maruti-udyog-challenge-50
http://www.quantri.vn/uploads/images/deming-cycle.png
http://www.icmrindia.org/casestudies/catalogue/Operations/OPEA001.htm
