Maruti Suzuki aspires to create a sustainable value chain. The basic principles of reducing wastage, inconveniences and inconsistencies across the value chain have been imbibed from the parent company, SMC, Japan.
The Company shares its best practices with its business partners, such as Just-in-Time (JIT), Kaizen (continuous improvement), waste elimination, energy conservation, Pika-Pika (fool proof operations), Environment Management System (EMS), HR practices and quality systems. Attempts are made to replicate these in their business processes to make their operations lean, error free and environment friendly.
Maruti Suzuki has laid down structured, two-way communication tools like Annual Vendor Conferences, Monthly HR meetings, Shikhar visits, MACE for interaction with its suppliers. In order to communicate the views of the Company's top management to the suppliers and to prepare them for the challenges of scaling up production, the Company organised a conference of its smaller suppliers for the first time in 2010-11.
The suppliers are given an opportunity to participate in QC competitions and other activities during the Quality Month observed at MSIL. Activities such as friendly cricket matches and Supplier Tech Day are organised and these performanceact as strong tools for exchange of views and relationship development with the suppliers.
Environment Consciousness among Suppliers
Maruti Suzuki sensitises its suppliers about environmental issues and encourages them to take proactive measures to minimise their environmental impact. Periodic briefings and training programmes are organised for them on topics such as EMS, environmental laws and regulations and hazardous waste management. The activities carried out during Environment Month also involve suppliers amongst other stakeholders.
Encouraging Local Suppliers to Reduce Air Pollution
The Just-in-Time (JIT) and e-nagare inventory management systems, introduced in 2003, have helped in reducing inventory levels to less than a day. In 2010-11, the Company encouraged its suppliers to supply material during the night shift. Now 26% of suppliers deliver material during the night shift. This has helped in reducing traffic congestion and pollution in and around Gurgaon city.
A milk run system was also started in 2010-11 for 30 suppliers based in Faridabad. The logistics for these companies are now managed by one logistic supplier. This initiative helped in reducing the number of trips per day to Maruti Suzuki by 30% from these suppliers and improvement in the truck fill rate by over 25%.
Maruti Suzuki encourages suppliers to shift their production facilities near its manufacturing facilities to reduce the pollution caused due to transportation. Both the Gurgaon and Manesar facilities have a dedicated Suppliers' Park. Of the 19 joint venture companies, 11 are located in the Suppliers' Park adjacent to the Maruti Suzuki Gurgaon and Manesar plants.
The Company has been able to source 86% of its supplies by value from suppliers situated within a 100 km radius from its manufacturing facilities. Only trucks carrying a valid Pollution Under Control (PUC) certificate are allowed to enter the Company premises.
The Company also supplies water and uninterrupted power produced from natural gas based captive power plants to its suppliers located in the Suppliers' Park.
Environment Management System Facilitation
The Company is facilitating its suppliers in implementing EMS and ISO 14001 certification in a phased manner. As on 31st March, 2011, 60% suppliers were ISO 14001 certified, up from 58.4% in 2009-10. The Company has also restricted the use of hazardous material such as lead, cadmium, mercury and hexavalent chromium in components. Maruti Suzuki has approved many plating suppliers across India to facilitate the change process.
Suppliers are encouraged to use recyclable and reusable packing material for component supplies. The Company has made packing material an integral part of the new component approval procedure to ensure non usage of polythene and cardboard.
Yield improvement in sheet metal components is a major activity. In recent years the Company has increased the spread of yield improvement activities to non conventional areas like plastics, casting, forging and propriety parts. In 2010-11, 2000 T raw material was saved through this activity. The scrap generated in the Maruti Suzuki press shop is also sold to suppliers to make components for Maruti Suzuki. In 2010-11, 1500 T of material was recycled and sent to suppliers.
Driving Business Excellence Through People at Suppliers
A Maruti Suzuki vendor HR initiative - Driving Business Excellence Through People - was started in 2009-10. In 2010-11, five HR sensitisation workshops were conducted for senior management of suppliers. The one-on-one working included diagnoses of existing HR processes, action planning and implementation was initiated for 25 suppliers. To facilitate the process, Maruti Suzuki engaged five HR knowledge partners. In addition, six HR meetings were conducted with JV's and key vendors.
As part of this project, senior management teams from Maruti Suzuki visit the shop floor of suppliers followed by a detailed audit covering 5S, visual control, process change management, people practices and Work-In-Progress (WIP) material handling. In 2010-11, under project Shikhar, 83 assessments were carried out at 39 vendors and 36 reviews were carried out by MSIL officials.
Energy Saving Initiative
Maruti Suzuki initiated energy audits for its dealer workshops through an external agency, TUV India, to identify areas of improvement to reduce electricity consumption at their workshops. So far 18 workshops have been audited across India and the findings shared with other workshops.