October 05, 2011

Best Practices In Automobile Companies

Automobile market in India is booming. Growth for the next five years is forecasted to be around 12-15% every year. Almost all the big automotive giants are in India or are planning to enter India very soon. This has increased competition in India like anything and is pressurizing the existing players on each prospects of market, be it cost, distribution, after sales service, features, mileage etc. Increased complex and technical products, narrow product launch window, shortened product life cycle and presence of global players adds to the cut throat competition today. Sustainability is the biggest challenge automotive companies are facing today.
Maruti Suzuki who is market leader in passenger car segment is losing its market share due to high competition but at the same time market is also growing. Hyundai and Tata Motors, being second and third position respectively in terms of market share are working hard to gain more market share every day. Indian market is very price sensitive and after sales service, mileage, resale value, and brand are the most important factors in decision making.
Manufacturers do their best to reduce cost of the car by Cost Reduction, Value Addition and Value Engineering ideas. Here few examples are given how manufacturers implement such ideas.

Daimler India Commercial Vehicle
Project Managers in Daimler are leaders and continuously inspire employees to think out of the box and reward them for the same. Daimler has many processes for such motivational activities which encourage employees to think out of the box and which are related to their day to day activities. One example is explained here :-

Mahindra and Mahindra
M&M encourages each employee at all levels to give their ideas which are not restricted to cost reduction but to improve safety, reduce energy consumption, improve 5S etc. They have implemented a process called “I” or ideas under engineer’s drive. Each employee is asked to submit twenty ideas a year. They are given the theme for the ideas and he/she is awarded based on the number of ideas implemented. This motivates employees to think about everything in the plant and even their working condition. M&M has implemented many such big ideas which have improved the efficiency in very significant manner.
Maruti Suzuki
Maruti is the market leader in passenger cars in India with approximately 50% market share. Maruti in strategic partnership with its suppliers continuously works hard to reduce its inventory and improve product design with lower cost. Maruti gives suppliers a target every year to reduce cost by implementing value added and value engineering ideas. It maintains one day of inventory in its plant through VMI (vendor managed inventory), which gives Maruti a competitive edge over others.
Through above examples, we saw how excellence is achieved by companies by involving their employees and suppliers in order to achieve high operational efficiency by implementing value added, value engineering ideas, inventory management etc. This helps them to sustain in such a highly competitive market.
I would like to thank Mr. Niranjan Deshamane from M&M and Mr. Satyendra Kumar from DICV for their valuable support 
 Ranjit Ram has done his B.Tech in Mechanical Engineering from IIT Madras. Before joining Indian Institute of Management, Raipur, he had a combined experience of 51 months in Renault Nissan and Sterlite Optical Technology. 

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