Description
This is a presentation explaining about the vendor selection process at Maruti Suzuki ltd. It also discusses in detail the E-Nagare system implemented in MSIL.
Vendor Selection Process and E-Nagare System at MSIL
About MSIL
MUL established in February 1981. Subsidiary of Suzuki Motor Corporation of Japan.
• Suzuki 54% • Public & financial institution-46%
2007-Maruti Udyog was renamed to Maruti Suzuki India Limited.
Leading four-wheeler automobile manufacturer in South Asia.
Global leader in mini and compact cars.
About MSIL contd….
Two manufacturing facilities- Gurgaon and Manesar. 1st company to produce and sell 1million units. Market share- around 54% Employee strength- 75000
MSIL Supply Chain Division
MT 1 to MT 6 Shipping and Transport Department Consumables Department WWP (World Wide Procurement) VVD (Vendor Development Department) • 6 departments • Logistics and Insurance of the imported components. • Paints, thinner, oils
• Global procurement • Sole supplier
• Technology to vendors
Roles of the Supply Chain division
PCD (Periodic cost down):
• Sets targets for cost reduction • Shares the benefits of reduction. • Done on basis of tool amortization and increase in volumes.
MPS (Maruti Production System):
• Derived from Suzuki Production System • Identify and eliminate waste in operations • Works with vendors for improving their productivity, reducing rejected components
Roles of the Supply Chain division contd..
Inner Part Localization
• Tier 1 supplier imported some parts. • Focus on increased the proportion of locally sourced, lower cost components in their models.
Regular VA/VE targets
• Reduce cost • Increasing the value of the component
MSIL Suppliers
Vendor selection Process
Primary role
• Engineering division • Supply Chain Division
Secondary role
• Parts Inspection Division • Quality Assurance Division • Production Division
Limited number of suppliers
• Maintain good relationship • Contingent situations.
Steps in Selection Process
Role of Various divisions
Engineering Division • Issue RRFQ • Evaluate quote in terms of design and cost • Getting the component developed as per desired specifications • To look after any possible VA/VE possible at development stage. Supply Chain Division • Issue RFQ to suppliers. • Cost Negotiations. • Meeting the cost targets. Parts Inspection Division • Role starts just before the start of regular supplies. • Needs to be extra cautious at this stage.
Quality Assurance Division • Opinion taken into account. • Maintain Assured level of quality at suppliers end • Takes the work from engineering division.
Production Division • To make the vehicle in required volumes and to specifications. • Needs support from all other divisions of the company. • Maximum conflicts with other divisions.
Development responsibilities and cycle time for activities
• Receiving of drawings from SMC by engineering. • Classification of parts as in-house or outsourcing by engineering. Cycle time 15 days. • Release of RRFQ. Cycle time 10 days. • Release of RFQ to suppliers. Cycle time 7 days. • Time for suppliers for submission of quotes 14 days, along with tentative development schedule
• Technical review meeting, pre negotiation, supplier selection. Main responsibility engineering and supply chain. Cycle time 14 days. • Selection of supplier and issuance of letter of contract. Cycle time 7 days. • Supply chain to keep tab on development schedule as the ongoing process.
Conflicts among various divisions
Engineering and supply chain Engineering and Parts Inspection Division Engineering and Quality control division
• Engineering division wants to be extra cautious at this stage. • Supply chain has the pressure of costs and to reduce costs.
• Parts inspection wants more improvements on line as far as the mass production is concerned.
• Quality Assurance wants the supplier to have good track record. • Engineering has to develop the capacity at the suppliers end also.
Production and supply chain division
• Production has concerns with irregular and misplaced supplies.
Production and engineering division
• Engineering people wants new technologies to be introduced. • Production reluctant to use that as they has to train the workers for that.
E-Nagare system
• Online system built in house based on oracle technology. • System is to manage the Just-in-time inventory. • System linked with VTS, another system for efficient working.
Difference between Kanban and e-nagare
• In e-nagare ordering of parts takes place while in Kanban there is no such ordering of parts
Development of E-Nagare
• Developed and implemented by Maruti in January 2003. • Implemented by Suzuki in July 2003 and by Toyota by the name of Jumbiki in October 2003. • Implemented to overcome problems like:
– Material accumulation due to Multiple sourcing – Losses of Procurement Information – Sub Model variations.
Monthly Scheduling System
• Was followed before e-nagare till 2001. • Supplier given the information like: • Vendor code • Part Number • Quantity of the component.
Delivery Instruction System
• Information of monthly scheduling system in addition to: • When and where the material is to be supplied • Indent by marketing people and schedule by PPC to suppliers
Fortnightly Production System
20th of the previous month Firm schedule for the first fortnight of next month Tentative schedule for the second fortnight of the next month
5th of the month
Firm schedule for the second fortnight of the month
Tentative schedule for the first fortnight of the next month
E-Nagare and the present system
• 6 months plan given in advance – First two months- Firm Plan – Month 3 and Month 4- Tentative Plan – Month 5 and Month 6- Very tentative plan • A fortnightly plan is given. • Firm schedule is given a day before • Firm schedule can have 10-15% variation from the fortnightly schedule
Role of E-nagare in managing inventory
• Linked to another system called VTS • Material supplied DOL. • Calculation of inventory done with the help of VTS and the incoming inventory through enagare. • Helps in generating the firm plan for next day.
E-Nagare and DOL
• E-Nagare specifies exact time, place, and quantity of material. • Entry allowed only 59 minutes before scheduled time. • Supply has to be at exact location. • Supplier can not club the supplies of two plants. • Responsibility is of supplier to supply parts in correct sequence.
Shortcomings and ways to improve
• Order quantity for suppliers defined which sometimes lead to LTL supplies. • Due to many supplies during the day. There is congestion at the gate during peak hours.
doc_437598139.pptx
This is a presentation explaining about the vendor selection process at Maruti Suzuki ltd. It also discusses in detail the E-Nagare system implemented in MSIL.
Vendor Selection Process and E-Nagare System at MSIL
About MSIL
MUL established in February 1981. Subsidiary of Suzuki Motor Corporation of Japan.
• Suzuki 54% • Public & financial institution-46%
2007-Maruti Udyog was renamed to Maruti Suzuki India Limited.
Leading four-wheeler automobile manufacturer in South Asia.
Global leader in mini and compact cars.
About MSIL contd….
Two manufacturing facilities- Gurgaon and Manesar. 1st company to produce and sell 1million units. Market share- around 54% Employee strength- 75000
MSIL Supply Chain Division
MT 1 to MT 6 Shipping and Transport Department Consumables Department WWP (World Wide Procurement) VVD (Vendor Development Department) • 6 departments • Logistics and Insurance of the imported components. • Paints, thinner, oils
• Global procurement • Sole supplier
• Technology to vendors
Roles of the Supply Chain division
PCD (Periodic cost down):
• Sets targets for cost reduction • Shares the benefits of reduction. • Done on basis of tool amortization and increase in volumes.
MPS (Maruti Production System):
• Derived from Suzuki Production System • Identify and eliminate waste in operations • Works with vendors for improving their productivity, reducing rejected components
Roles of the Supply Chain division contd..
Inner Part Localization
• Tier 1 supplier imported some parts. • Focus on increased the proportion of locally sourced, lower cost components in their models.
Regular VA/VE targets
• Reduce cost • Increasing the value of the component
MSIL Suppliers
Vendor selection Process
Primary role
• Engineering division • Supply Chain Division
Secondary role
• Parts Inspection Division • Quality Assurance Division • Production Division
Limited number of suppliers
• Maintain good relationship • Contingent situations.
Steps in Selection Process
Role of Various divisions
Engineering Division • Issue RRFQ • Evaluate quote in terms of design and cost • Getting the component developed as per desired specifications • To look after any possible VA/VE possible at development stage. Supply Chain Division • Issue RFQ to suppliers. • Cost Negotiations. • Meeting the cost targets. Parts Inspection Division • Role starts just before the start of regular supplies. • Needs to be extra cautious at this stage.
Quality Assurance Division • Opinion taken into account. • Maintain Assured level of quality at suppliers end • Takes the work from engineering division.
Production Division • To make the vehicle in required volumes and to specifications. • Needs support from all other divisions of the company. • Maximum conflicts with other divisions.
Development responsibilities and cycle time for activities
• Receiving of drawings from SMC by engineering. • Classification of parts as in-house or outsourcing by engineering. Cycle time 15 days. • Release of RRFQ. Cycle time 10 days. • Release of RFQ to suppliers. Cycle time 7 days. • Time for suppliers for submission of quotes 14 days, along with tentative development schedule
• Technical review meeting, pre negotiation, supplier selection. Main responsibility engineering and supply chain. Cycle time 14 days. • Selection of supplier and issuance of letter of contract. Cycle time 7 days. • Supply chain to keep tab on development schedule as the ongoing process.
Conflicts among various divisions
Engineering and supply chain Engineering and Parts Inspection Division Engineering and Quality control division
• Engineering division wants to be extra cautious at this stage. • Supply chain has the pressure of costs and to reduce costs.
• Parts inspection wants more improvements on line as far as the mass production is concerned.
• Quality Assurance wants the supplier to have good track record. • Engineering has to develop the capacity at the suppliers end also.
Production and supply chain division
• Production has concerns with irregular and misplaced supplies.
Production and engineering division
• Engineering people wants new technologies to be introduced. • Production reluctant to use that as they has to train the workers for that.
E-Nagare system
• Online system built in house based on oracle technology. • System is to manage the Just-in-time inventory. • System linked with VTS, another system for efficient working.
Difference between Kanban and e-nagare
• In e-nagare ordering of parts takes place while in Kanban there is no such ordering of parts
Development of E-Nagare
• Developed and implemented by Maruti in January 2003. • Implemented by Suzuki in July 2003 and by Toyota by the name of Jumbiki in October 2003. • Implemented to overcome problems like:
– Material accumulation due to Multiple sourcing – Losses of Procurement Information – Sub Model variations.
Monthly Scheduling System
• Was followed before e-nagare till 2001. • Supplier given the information like: • Vendor code • Part Number • Quantity of the component.
Delivery Instruction System
• Information of monthly scheduling system in addition to: • When and where the material is to be supplied • Indent by marketing people and schedule by PPC to suppliers
Fortnightly Production System
20th of the previous month Firm schedule for the first fortnight of next month Tentative schedule for the second fortnight of the next month
5th of the month
Firm schedule for the second fortnight of the month
Tentative schedule for the first fortnight of the next month
E-Nagare and the present system
• 6 months plan given in advance – First two months- Firm Plan – Month 3 and Month 4- Tentative Plan – Month 5 and Month 6- Very tentative plan • A fortnightly plan is given. • Firm schedule is given a day before • Firm schedule can have 10-15% variation from the fortnightly schedule
Role of E-nagare in managing inventory
• Linked to another system called VTS • Material supplied DOL. • Calculation of inventory done with the help of VTS and the incoming inventory through enagare. • Helps in generating the firm plan for next day.
E-Nagare and DOL
• E-Nagare specifies exact time, place, and quantity of material. • Entry allowed only 59 minutes before scheduled time. • Supply has to be at exact location. • Supplier can not club the supplies of two plants. • Responsibility is of supplier to supply parts in correct sequence.
Shortcomings and ways to improve
• Order quantity for suppliers defined which sometimes lead to LTL supplies. • Due to many supplies during the day. There is congestion at the gate during peak hours.
doc_437598139.pptx