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Focus on
Value |
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Value
has been the corner stone of our offerings.
Customer needs have transformed over the years. Today, customers
demand the best in the world but at aggressive pricing. |
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To ensure that we continue
to produce relevant products we conducted certain cost reduction
experiments with some of our bestsellers like ALTO. |
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In
a scenario of increasing prices of essential commodities like steel,
rhodium and other manufacturing raw materials, we not only managed
to keep the price of cars lower but were also able to enhance them
by giving more features at lower costs. |
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The
following table gives the price comparison of three bestsellers
from Maruti's stable. |
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| Models |
Prices in 2001-02 |
Prices Today |
| Alto (Std) |
299,615/- |
224,318/- |
| M800 (Std) |
159,747/- |
162,415/- |
| Esteem LX |
375,630/- |
369,041/- |
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Prices excl. state and central
levies |
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Cars today are Euro III compliant,
with more features compared to 2001-02 |
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These are Ex-Showroom
(Indicative) prices as of October 2007 |
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Our
capability to reduce cost of our existing models while enhancing
their features and technology is perhaps one of the biggest strengths
of 'Manufacturing Excellence'.
Here's how we have done it:It was a three pronged approach
First, we looked at improving efficiencies under the programme Challenge
50 and adopted Maruti Production System
Until 2002, we had been achieving incremental improvements of 5-7
per cent annually in operation areas like productivity, cost and
quality. In the year 2002, we decided to give up incremental improvements
and strive for a quantum leap.
We decided to benchmark ourselves against Suzuki's best global plant,
located in Kosai in Japan. We found that we were 30 per cent below
this plant in terms of productivity, and also lagged behind in quality
and cost.
We calculated that we would match up to the standards of Kosai Plant
in three years. Assuming that Kosai too would improve over the next
three years by about 20 per cent, it was decided to target a 50
per cent improvement in productivity by 2005. This mission came
to be known as Challenge 50.
The key element in Challenge 50 was adopting the Maruti Production
System. |
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What is Maruti Production System
or MPS? |
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Maruti
Production System or MPS draws learning's from our parent company
Suzuki Motor Corporation's concepts on 'lean manufacturing' under
Suzuki Production System i.e. SPS.
Any production facility is essentially a mix of 4 M, which are Man,
Machine, Materials and Methods. The 3M's namely Muri, Muda and Mura
(Japanese term for Inconvenience, Wastage and Inconsistency) adversely
affect productivity.
MPS is a systematic approach to eliminate Muri's (inconveniences
if any for shop floor employees) Mudas (all forms of wastages) and
Muras (inconsistencies in quality) from the system so that cost,
quality, productivity and safety are under control.
Under the Maruti Production System (MPS), derived from the Suzuki
Production System, Maruti engineers captured all aspects of operation
on video and scrutinized each process to identify wastage. Together
with workers on the shop floor, layouts were altered, innovative
equipment and processes were introduced and operations relentlessly
made lean and efficient.
According to MPS, there are eight types of wastages in any process
namely, |
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Idle Time |
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Inventory, |
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Over Production, |
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Production Defects, |
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Un-necessary man movement, |
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Un-necessary material movement, |
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Un-necessary inspection and |
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Un-necessary processing. |
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However,
if every employee tries to do the job right the first time, wastages
due to un-necessary inspection and processing are eliminated from
the system and it is a cost effective approach.
A product of poor quality requires repeated inspections, entails
wastage in terms of repairs and replacements and causes loss of
time and morale. If we could 'do it right first time', wastage would
automatically come down.
In the Japanese manufacturing system, the central role is accorded,
not so much to Quality, Productivity or Cost, but to Safety. When
process flow, lay-out and systems are designed for maximum safety,
they automatically contribute to better quality and productivity.
Focus on safety enabled us to meet the objectives of Challenge 50.
In-house automation also played a major role in Challenge 50. We
devised robots and deployed them, especially where they reduced
worker fatigue and were critical in delivering consistent quality.
Currently, our entire facility in Gurgaon is equipped with more
than 150 robots, out of which 71 have been developed inhouse.
At the end of three years, we achieved 46 per cent increase in Productivity,
and a 30 per cent improvement in quality and cost --- a tribute
to the vision, courage and team work of our people. It is due to
improvements like these that in a plant with an installed capacity
of just 350,000 vehicles per year, we were able to manufacture over
600,000 vehicles in 2006-07.
Step two was to set up a training facility for our component suppliers-Maruti
Centre for Excellence (MACE).
Challenge 50 helped us improved Maruti's operations inhouse. The
next challenge was to bring cost effectiveness at our vendor's end
also so that his operations are as efficient as ours.
We decided to transfer our shop floor best practices to our vendor's
shop floor by training them regularly through Maruti Centre for
Excellence ( MACE).
Step three- Working with Suppliers on Cost Down, Value Analysis
- Value Engineering
Value Analysis & Value Engineering is the name of the scientific
method adopted to achieve focused cost down of existing models.
It involves scrutinizing the vehicle and every component closely,
and seeking substitute products or processes that cost less but
deliver the same performance to the customer. |
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Alto -
example of Cost Down |
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Alto
is a shining example where Maruti was able to cut down the prices
drastically through collaborative efforts. A cross-functional team
(CFT) was formed involving people from different business functions
like Supply Chain, Engineering and Marketing Divisions. |
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