Chapter-1 INTRODUCTION It is true fact that if you are satisfied you recommend to others. Word of mouth and customer satisfaction play a very important role in determining market perception about an automobile. It is the market perception that determines the success of a company and so it is very important for the car manufacturers to measure the “willingness of existing users of a product to recommend it to others”. The same is a lot of interest to customers as well for it helps them make the purchase decision. A car is one of the most significant purchases that an Indian household makes and this thesis addresses the most important question that perplexes car manufacturers: “What makes the perfect car and how to increase the sales of the Mahindra and Mahindra’s passenger car ?” The thesis highlights the factors that influence the buying decision of a consumer. The factor under consideration would be: Price Income of the consumer Features in the car Safety standard Warranty scheme Finance facility 1
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Transcript
Chapter-1
INTRODUCTION
It is true fact that if you are satisfied you recommend to others. Word of mouth and
customer satisfaction play a very important role in determining market perception
about an automobile. It is the market perception that determines the success of a
company and so it is very important for the car manufacturers to measure the
“willingness of existing users of a product to recommend it to others”. The same is a
lot of interest to customers as well for it helps them make the purchase decision. A
car is one of the most significant purchases that an Indian household makes and this
thesis addresses the most important question that perplexes car manufacturers:
“What makes the perfect car and how to increase the sales of the Mahindra and
Mahindra’s passenger car ?”
The thesis highlights the factors that influence the buying decision of a consumer.
The factor under consideration would be:
Price
Income of the consumer
Features in the car
Safety standard
Warranty scheme
Finance facility
Re-sale value
Sturdiness and Looks
Is an Indian consumer ready for more? Which is the driving motive behind the
effective demand of the car? How the coming of new models like Honda’s Jazz is
going to effect the buying decision of consumer and especially the Tata 1 lakh car. In
other words, from the spread of choices offered by various manufacturers under
various segments, of which one the customer will finally turn the ignition on and drive.
Customer satisfaction index: some of the most advance thinking in the business
world recognizes that customer relationships are best treated as assets, and that
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methodical analysis of these relationships can provide a road map for improving
them, as somebody has said if you cannot measure it, you cannot improve it.
As one of the measurements of the performance of the quality management system,
the organizations shall monitor information relating to customer perception as to
whether the organization has met customer requirements. The method for obtaining
and using this information shall be determined. The requirement has been there in
the QS9000 standard clause 4.1.6 which says:
“Trends in customer satisfaction and key indicators of customer dissatisfaction shall
be documented and supported by objective information. These trends shall be
compared to those of competitors, or appropriate benchmarks, and reviewed by
senior management.”
There is obviously a strong link between customer satisfaction and customer
retention. Customer’s perception of service and quality of product will determine the
success of the product or service in the market. With better understanding of
customer’s perceptions, companies can determine the actions required to meet the
customer’s needs. They can identify their own strengths and weaknesses, where
they stand in comparison to their competitors, chart out the path future progress and
improvement. Customer satisfaction measurement helps to promote an increased
focus on customer outcomes and stimulate improvements in the work practices and
processes used within the company. Customer expectations are the customer-
defined attributes of your product or service. We cannot create satisfaction just by
meeting customer’s requirements fully because these have to be met in any case.
However falling short is certain to create dissatisfaction. Major attributes of customer
satisfaction can be summarized as:
Product quality
Product packaging
Keeping delivery commitments
Price
Responsiveness and ability to resolve complaints and reject reports
Overall communication, accessibility and attitudes
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Figure-1: Major attributes of customer satisfaction
We cannot begin to address the customer satisfaction issue we define the
parameters and measures clearly. The customer satisfaction index represents the
overall satisfaction level of that customer as one number, usually as a percentage
The buying process involves the following steps:
Values
Benefits
Features - Attributes
+ -
3
Problem Recognition
Information search
Evaluation
Post Purchase Dissonance
BuyDecision
Satisfaction = Brand Acceptance
Dissatisfaction = Brand Rejection
Figure-2
“The fact that word of mouth sales are a big deal in this industry has also helped.
Industry players and market surveys reveal that 20-30 percent of sales are through
word of mouth”.
For knowing : How to increase passenger car sales ,it has undergone through
following:
Surveying the relevant consumer base through exhaustive questionnaire.
Understand the elements underplaying in each segment
Deducing an analytical overview through different statistical methods
Recommendation comes from satisfaction and satisfaction comes from
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Figure-3: Showing three core elements of satisfaction
OVERVIEW OF THE AUTO SEGMENT
Indians have emerged as an avid car enthusiasts sporting their prized possessions
as status symbols and speed machines. Foreign car companies have discovered the
Indian consumer as well as the R & D potential in the Indian technical fraternity and
are setting up manufacturing plants right and left across the country at lower costs.
The Indian automobile industry is currently experiencing an unprecedented boom in
demand for all types of vehicles. This boom has been triggered primarily by two
factors:
1. Increase in disposable incomes and standards of living of middle class Indian
families.
2. The Indian government's liberalization measures such as relaxation of the
foreign exchange and equity regulations, reduction of tariffs on imports, and
banking liberalization that has fueled financing-driven purchases.
Industry observers predict that passenger vehicle sales will triple in five years to
about one million, and as the market grows and customer's purchasing abilities rise,
there will be greater demand for higher-end models which currently constitute only a
tiny fraction of the market. These trends have encouraged many multinational
automakers from Japan, U.S.A., and Europe to enter the Indian market mainly
through joint ventures with Indian firms.
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India is increasingly becoming a global automotive hub both for the vehicles and
component industry. India is fast integrating itself into the world economy and open to
international automotive companies, who are increasingly investing in India. The
Indian automotive and component industry is looking to increase the quality of
production from existing levels, to develop new products and to increase exports. In
the long run India is well set to become a key market for automotive and component
manufacturers in terms of local demand and as a base for export. Additionally,
companies such as GM, Daimler Chrysler, Toyota, Delphi and MICO/Bosch are
utilizing India’s well developed IT / software capabilities and have set up R&D hubs
here for their global operations.
INDUSTRY SIZE
The domestic Indian passenger car market (including utility vehicles)
totaled900,000 units (with a CAGR of 10 per cent over the past 4 years) while the
exports were 130,000 million units (with a registered CAGR of 68 per cent over
the past 4 years) during financial year 2004
The Indian two-wheeler Industry is one of the largest in the world, and is
expected to maintain robust growth in the future
At the back of this phenomenal automotive growth is the success of the Indian
auto component industry. Presently a US$ 6.7 billion industry, it is expected to
almost treble in less than eight years time to US$ 17 billion by 2012
India offers a distinct technological and cost-competitive advantage, which global
Original Equipment Manufacturers (OEMs) and automotive suppliers are
leveraging for both manufacturing and research facilities.The passenger car
market is projected to grow at a CAGR of 12.3 per cent over the next few years.
Growth in the mid-size and premium car segments is expected to outpace the
overall market growth.
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Figure-4: Indian Automobile Industry size
Figure-5: Indian Automobile Industry Products
Automobile Industry in India is still in its infancy but growing rapidly. The
opportunities in the automobile industry in India are attracting big names with the big
purse and they are investing vigorously in infrastructure, design and development,
and marketing. Automobile industry in India is today poised for the big leap.
India is the 2nd largest two wheeler manufacturer in the world
Second largest tractor manufacturer in the world
5th largest commercial manufacturer in the world
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3rd largest car market in Asia, surpassing China in the process
Automobile industry Contributes 17% of the total indirect taxes collected by the
exchequer & is a driver of product and process technologies, and has become a
excellent manufacturing base for global players, because of its
high machine tool capabilities
Extremely capable component industry
Most of the raw material locally produced
Low cost manufacturing base
Highly skilled manpower
Special capability in supplying large volumes
Domestic and Foreign Vehicle Manufacturers:
Figure-6: Indian Automobile Manufacturers in India and Plant Locations
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Passenger Vehicles
The main domestic manufacturers of passenger vehicles are as follows:
Maruti Udyog
Tata / Telco
Mahindra / Mahindra
Hindustan Motors
Foreign competitors manufacturing locally including Hyundai, Ford, General
Motors, Honda, and Toyota.
Car demand has seen a turnaround since mid 2001 thanks to heavy discounts and
cheaper finance. A large number of new models, both locally assembled and
imported, have also revitalized the market.
In terms of volumes:
The A/B segments are where India’s strength and future lies. The A/B
segment accounts for over 65% of the total passenger vehicles produced.
Competition in this segment is stiff with Maruti the market leader with around
55% market share. New models from Telco (Indica), Hyundai (Santro) and
Fiat (Palio) however are eroding Maruti’s long standing dominance in this
segment.
The mid / luxury range is developing with the introduction of Ford (Ikon),
Hyundai (Accent/Sonata) and Skoda (Octavia), although the volumes are not
significant.
The UV segment remains sluggish with growth at just over 1%. The clear
market leader, Mahindra (51.5% market share) posted increased sales of
16% in the first 3 quarters of 2007/08. Toyota and Telco domestic UV
business remains flat.
Commercial Vehicles
The main Indian companies in the Commercial Vehicle segment are:
TATA Engineering and Locomotive Company (TELCO)
Ashok Leyland
Bajaj Tempo Ltd
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Eicher Motors Ltd
Swaraj Mazda
An international company currently manufacturing CVs in India, such as Volvo but
again volumes are not large. Other global players are active, although in partnership
with one of the domestic manufacturers E.g.:- IVECO (manufacturing their range of
trucks in association with Ashok Leyland. There has been a significant turn around in
this segment over the last 18 months with over 30% growth being seen in terms of
both production and sales.
This sector has received a huge boost with India’s massive demand from the
infrastructure sector (particularly roads), cyclical fleet replacement by fleet owners
and an upturn in the cement and steel sectors.
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Passenger Cars LCV
0.604 Mn0.083 Mn
Figure-7: Automobile Manufacturers Market Share
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Maruti (JV of Suzuki), leading the market,
Tata and M&M are the key players
a) Followed by Hyundai and Tata, together hold close to 75% of market
b) Daewoo stopped production, mainly due to financial issues
The following Table-1, explains the growth of India Car Sale during the
aforementioned period.
Passengers Vehicles (PVS)
From April-November
04-05
From April-November 05-
06
Total Market
Share (in %)
The Net Change between the period (in %)
Total number of exports in April 05-06
Maruti Udyog 2,69360 2,91,182 52.2 8.1 23,043
Hyundai Motors India Ltd.
89,075 1,07, 066 19.2 20.2 68,374
Tata Motors 95,402 24,348 16.6 -2.7 12,105
HondaSiel cars India Ltd.
23,186 24,348 4.4 5.1 31
Ford India Pvt. Ltd 15,026 10,512 1.9 -30% 9,928
Utility Vehicles
Mahindra and Mahindra Ltd.
49,897 51,540 42.7 3.3 1,878
Toyota KirloskarMotorPvt Ltd.
24,404 24,983 20.7 2.4 0
Tata Motors Ltd 19,967 21,610 17.9 8.2 905
General Motors India Pvt Ltd.
7,008 12,027 10 71.6 0
Maruti Udyog Ltd . 2682 2472 2 -7.8 54
Hyundai Motor India Ltd.
255 1,042 0.9 308.2 0
Multi-Purpose Vehicles
Maruti Udyog Ltd. 42,388 43,858 100 3.5 731
Mahindra & Mahindra Ltd
13 0 0 0 0
Medium and Heavy Commercial Vehicles
Tata Motors 79,614 73,538 61.1 -7.6 4,807
Ashok Leyland 27,577 33,406 27.7 21.1 2825
Eicher Motors 8,043 8,700 7.2 8.2 318
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Swaraj Mazda 3,573 4,080 3.4 14.2 115
Light Commercial Vehicles
Passenger Carriers
Tata Motors 5,835 6,811 46.8 16.7 1,096
Mahindra and Mahindra
2,305 1,960 13.5 -15 115
Swaraj Mazda 1,178 1,315 9 11.6 12
Force motors Ltd. 2,059 2,877 19.8 39.7 59
Goods Carriers
Tata Motors 30,955 44,380 58.9 43.4 12,461
Mahindra and Mahindra
23,563 23,731 31.5 0.7 1,600
Swaraj Mazda 2,671 2,299 3 -13.9 204
Eicher Motors 3,019 2,954 3.9 -2.1 451
Figure-8: Domestic Sale of Cars
Chapter-2
COMPANY PROFILE
M&M AUTOMOBILELTD
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Mahindra & Mahindra Limited (M&M) is a major automaker in India. It is the
flagship company of the Mahindra Group. The company was set up in 1945 as
Mahindra & Mohammed .It traded steel with suppliers in England and the United
States. M&M began by assembling complete knock down (CKD) Jeeps in 1949.It
expanded to indigenous manufacture of Jeep vehicles with a high level of local
content under license from Kaiser Jeep and later American Motors (AMC).
M&M soon branched out into manufacturing agricultural tractors and light commercial
vehicles (LCVs). It later expanded its operations to secure a significant presence in
many more important sectors. The company has now transformed itself into a group
that caters to the Indian and overseas markets with a presence in vehicles, farm
equipment, information technology, trade and finance related services, as well as
infrastructure development.
By 2005, M&M had become the largest producer of SUVs in India. The company has
recently started a separate sector, the Mahindra Systems and Automotive
Technologies (MSAT), to focus on developing components and offering engineering
services
In this thesis I have tried to describe how M&M has modified the structure of the
organization in order to implement a successful supply chain. The different processes
and initiatives taken across the supply chain of M&M have been described below.
M&M has obtained operational efficiency by keeping a constant watchful eye on the
developments on the supply chain. The endeavor of the company to reduce its costs
in order to increase the profit margins has been described.
M&M is the leader for Utility Vehicles in India today. The company has been in
existence since 1994. The company also has presence in the Light Commercial
Vehicle market. The company’s commercial three wheeler “Champion” does brisk
sales in the country. The company has six plants across the country. These plants
are in the following cities
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Mumbai
Nasik
Igatpuri
Haridwar
Zahirabad
Chennai
The plant at Mumbai specializes in the manufacturing of pick-up trucks. Kandivali,
a suburb of Mumbai has a Mahindra plant devoted to the production of MAXX
pick-ups and soft tops .This plant enjoys the great infrastructure that the city of
Mumbai offers. It has also been recommended for the TPM Excellence Award
apart from ISO/TS 16949 certification. Here forth I will put light into the various
aspects of material management with regards to M&M plant kandivli.
SCOPE OF MATERIAL MANAGEMENT IN M&M
The flow that has been shown below is the “flow of information”. The “flow of
materials” will be in a direction that is opposite to that of the flow of information.
Hence the flow of materials will start with the suppliers and the final product, after
assembling, will reach the dealers.
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Figure-9: Information of Flow of supply chain
M&M uses SAP to keep track of the events that happen across the supply chain.
According to the design it is imperative for every dealer to record the sales that have
been achieved on a particular day on to the system. M&M hence is taking a major
initiative to make all of its dealers SAP enabled. For the dealers who do not have the
access to SAP it is mandatory to report the sales of the previous day to the marketing
office every morning. In such a manner all the regional offices get the figures from
the dealers everyday. All the regional offices will then send these figures to the
Marketing Head Office at Worli. Here firstly, the dealers stocks are replenished.
Proper delivery of the products to every corner of the country where demand exists
has to be seen by the marketing department. Marketing also has to indulge in
“demand forecasting” so that the production planning can be carried out effectively.
This data is available for a number of years. The marketing department has to track
all the data over the years, considering sales achieved in the past for the particular
month for which forecasting is being done. Then by tracking the data and then
incrementing the sales which are expected considering the growth rate the marketing
department comes to a figure. This is the figure that is forecasted and passed along.
Then based on the demand and the expected growth the expected sales are
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calculated. Also based on the figure obtained from the marketing department the
production planning and the further processes are carried out. This is one of the most
important functions of the marketing department. From the supply chain point of view
this is a very essential and an indispensable function. It is the marketing department
that will give the figures for production to the production department. Why is
Demand Forecasting an Important Element in the Supply Chain ?
Figure-10: Showing the demand forecasting
Every organization wants to maximize its revenue and minimize cost to achieve
optimum profitability. Revenue can be increased by increasing the per unit price of
the vehicle and selling at the existing quantity or by selling more vehicles at the same
price.
However if the production of the vehicles happens at a rate that is faster than the rate
of sales then the finished good inventory will keep on increasing and the money
invested in the production of the vehicles will not get its returns in the form of sales. If
the rate of production of the vehicles happens at a rate that is lower than the demand
in the market then it might result in the loss of a sale as the customer might buy a
competitors product as the product that he wants is not available. Also apart from the
customer himself the distribution network of the company would start losing faith in
the company and this would lead to dilution of the companies brand image internally
and externally too (due to bad publicity by the customers lost).
Also an important fact to be seen here is that the manufacturing costs of a vehicle
are very high. So in turn the inventory holding costs will also go up considerably
However automobiles are not a low involvement product. A person will not buy an
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automobile everyday For companies who have products which have low cost of
production it makes sense for them to stock their products in to the market as the
inventory holding cost per unit would be low.
PRODUCTION PLANNING AND CONTROL
The marketing department at M&M passes the expected sales figure to the Central
Production and Planning Control (CPPC). The function of the CPPC is to take the
projected figure from marketing and then break it up in to aggregates.
Figure-11: Central Production and Planning Control
CPPC: The CPPC will take the individual figures for each of the vehicles and break
them up in to numbers for various parts required for production. These break ups are
released by the CPPC on a monthly basis. The monthly plans are released to the
departmental PPC’s.
PPC: The departmental PPC’s play a very vital role as they are the one’s who will
carry out the further break up and pass it along to the procurement team. Thus the
figure received from the CPPC is then further broken up by the PPC according to the
requirement of the individual departments. The CPPC will always release the plans
according to the monthly requirement while the PPC has to break them down and
proceed with the weekly or the fortnightly requirements for the parts. The PPC’s will
then inform the procurement team as well as the logistics team about the scheduled
quantities.
The role of the departmental PPC is very important as he has to interact with
CPPC
Procurement team
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Production (Shop floor)
The role of the PPC is to inform the CPPC about the product availability and the
available of production capacity. It will also communicate those particular
components which require further production. Based on this the numbers given by
the CPPC and hence the exact numbers required for production will alter. The PPC
will then take inputs from the CPPC and release weekly or fortnightly plans. The PPC
releases the plans based on the responsiveness or efficiency required from the
particular vehicles.
PROCUREMENT TEAM: Once the figures and the production plans have been
made the details then have to be passed on to the procurement team. They then
have to ensure the smooth procuring of materials and also the efficient delivery so
that the inventory levels are maintained.
PRODUCTION SHOP FLOOR: The production department plans production based
on the figure given by the marketing team.
Actual production of the vehicles is handled by production. The production
department has to consider a lot of factors when the production planning is done. At
every stage the costs are minimized by introducing various methods. The production
department has to regularly track the inventory levels, reduce the defects, increase
productivity and also ensure proper output of vehicles according to the demand in the
market.
SCM of M&M Kandivli
The four drivers of SCM in Kandivali are:
1. Procurement cell
2. logistics cell
3. Material disposal cell
4. PPC
Thus SCM is divided on basis of functions i.e:
1. Procurement cell
The departmental PPCs break up the quantity depending upon whether it is required
for a week or a fortnight and communicate it to the procurement team. The PPC will
give in a firm schedule and a tentative one. The firm schedule will not be altered in
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any case and the tentative schedule might change a little. This is done in order to
give the suppliers the information about what stock might be needed at which
particular point in time.
At this point the vendor response cycles will start. The procurement team will
continuously communicate with the suppliers and keep the flow of materials smooth.
Any breakdowns or irregularities in the material flow will be managed by the
procurement team.
It is also the responsibility of the procurement team to set inventory targets for each
type of part. Daily the reports are tracked and the inventory levels monitored so that
production time is not lost due to the non availability of materials.
The procurement team will also communicate with the suppliers on behalf of the
individual departments so that only they interact with the suppliers. The
communication channel of the procurement team is shown in the diagram. The
procurement team is always on the lookout for new suppliers and also the optimum
size to be given to each supplier to maintain a proper balance of inventory supplier
scheduling and supplier capacity.
A few years ago each of the production units at M&M was a business unit and hence
the procurement of materials would be handled by each department individually. This
meant that if a supplier was common to two or more units then there would be
multiple people interacting with him for the material. Also it meant that the costs
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would rise up as each unit would have their own logistics and ordering costs. The
inventory management was also done by the individual units.
The structure has changed and today the SCM team has a representative from each
of the production unit. One person will keep track of parts of similar type. He will
communicate with all the suppliers who provide that part. There is one person who
coordinates between all the buyers (employees) and he is the one responsible of
keeping track of the inventory and generating reports. Inventories are being greatly
reduced in M&M and this has ensured profitability by reducing the inventory carrying
costs.
2. Logistics
The logistics for M&M is handled by a dedicated company called “Mahindra
Logistics”. The function of the logistics department is to negotiate terms with the
contractors and co-ordinate with the transporters as to where the materials are and
when will they arrive at the factory premises.
Allocating the vehicles to particular parts and products has to be done by the logistics
department.
Free delivery
In a free delivery format the supplier will bear the transportation and the logistics
costs. The company does not have to pay for the delivery from its own pockets and
hence the onus will be on the supplier to reduce his costs.
Ex-works
Here the costs of transportation of the goods are taken up by the company. The
company will arrange for the transporter and keep track of the materials in transit.
The logistics was earlier looked upon by the Transport and Solutions Group (TSG).
This group has been made in to a separate company called Mahindra Logistics.
Milk Runs
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Milk run deliveries are deliveries that bring products from multiple originating
locations to a single receiving location. Scheduling milk run deliveries is a much more
complex task than scheduling direct deliveries. Decisions must be made about
delivery quantities of different products, about the frequency of deliveries, and most
importantly about the routing and sequencing of pickups and deliveries.
Outbound logistics
Outbound logistics deal with the finished vehicles reaching the dealers. There are
three ways by which a vehicle can reach the dealer
By road (Convoy)
By car carriers
By rail
3. Material disposal cell
Currently responsible for scrap contract finalization for 3 plants (Kandivli,Nashik and
Igatpuri).
Compared to last year there was 42% increase in revenue generation of scrap (773
lacs for the period of Apr-06 to Dec-06 against 543 lacs in the same period last year)
4. PPC – it has been explained above in the planning stage.
Vendor development
Vendors are considered the best intangible assets of any manufacturing
organization. Hence both new and established vendors are subjected to a crucial
evaluation to review their plant capacity, financial conditions, performance, etc
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Mahindra and Mahindra is an automobile industry manufacturing utility vehicles
requiring 4500 parts to be assembled. These parts are procured from a large pool of
suppliers scattered all over the country. So it is needless to say about the importance
of vendor in this organization.
Vendor selection
Just as in any manufacturing organization vendor development starts from vendor
selection. As Mahindra and Mahindra being a 62 year old company, it has a large
supplier base. This supplier base has been gathered over these years by the
purchase personnel identifying the potential supply sources.
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Key supplier
In M & M every raw material/part/component that they purchase has two key
suppliers. The supplier offering the best quality at lowest price and adhering to the
delivery schedules is selected as the key suppliers. The first key supplier supplies
approximately 60% of the material requirements and the other key supplier provides
for the remaining 40% of the materials. They have two key suppliers because 1
supplier does not have the production capacity to meet the requirements of the
company. As also in case of shortfalls, emergency it is essential to have two key
suppliers instead of one.
Vendor evaluation
It is essential to evaluate the vendors on various grounds as the qualityof the finished
product-(in this case vehicles) will finally depend on the quality of raw material.
Vendors are evaluated on the following basis:
Delivery schedules- in case of Mahindra and Mahindra they maintain inventory
according to the rolling plans i.e weekly plans. So vendors need to supply materials
at fixedand predetermined schedules. So vendors are evaluated on the basis of how
efficient they are in adhering to the delivery schedules.
Quality – in an automobile industry if the quality of the raw materials like the grade of
sheet-metals, fabric,plastic, etc is not as prescribedthe final producti.e. the quality of
the vehicle produced will be hampered. So assuring that the quality of raw materials
is as per the requirement it is absolutely essential to evaluate vendors on this ground.
One way what M&M follows is a six sigma quality check analysis on the bought out
parts and evaluate the vendor based on defects inparts per million.
Lead time- According to the classification of raw materials different categories
require different lead times. For example a product classified under ‘AX’ category
should have the least lead time and a product under ‘BX’ category would have a
relatively higher lead time. The vendors have to comply with the specified lead times
given to them by M&M. So a vendor is evaluated on the basis of the lowest lead time
offered and how efficiently does he adhere to the lead time agreed upon by both the
parties.
Flexibility- The vendor is evaluated on the basis of his flexibility to adjust with any
changes in the quantity, delivery schedule and or product/service design.
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Vendor rating
In M&M they do not have a vendor rating method as such provided that they have
such a large supplier base it is difficult to rate them and they believe it to be an added
cost to their balance sheet.
Vendor motivation
M& M tire to motivates it’s vendors by arranging for vendor meets wherein an official
from M&M visits the vendors factory and appreciates them if satisfactory and tries to
resolve issues with vendors if any. It also arranges for rewards and recognition
wherein the top 10 suppliers are awarded. As also shares are given to the suppliers
as a token of appreciation. This helps a lot in developing good supplier-buyer
relationship.
INVENTORY MANAGEMENT
Managing inventories is absolutely essential for any company. Improper ordering can
eat in to the profits by increasing the inventory carrying costs. But if there are not
sufficient inventories it might result in to the loss of production for a firm. Hence
inventory management is given so much importance.
Figure-12: Inventory management
Each upstream element in the supply chain not only aggregates the inflated demand
changes of all the elements fed by it but also overreacts to these demand changes
and adds its own safety margins to take care of perceived fluctuations in future
demand from downstream elements.
This helps the company in maintaining the right levels of inventory and hence
prevents excessive investment of money in the raw materials. Apart from reducing
the carrying costs this also means that the company has more money to invest and
more liquid cash at their disposal.
Total Productive Management:
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A few years ago M&M was experiencing a lot of production loss due to non-
availability of materials. While some of the material was not available other materials
were being excessively stocked. This resulted in very high inventories of materials. It
was also observed that the costs of buying the materials were very high and that in
most of the modules the company was overstaffed.
Hence it was decided by the company to implement TPM. TPM was introduced all
around the organization and all the employees were given guidelines which they had
to follow in order for the implementation of TPM to be successful.
In the initial phases the TPM activities were meant to focus on the following activities
Inventory reduction: Inventories were reduced by continuously measuring,
monitoring and reducing inventory levels. Techniques like Just In Time (JIT) were
introduced to maintain optimum levels of inventory and also to reduce the inventory
costs dramatically.
The following two methods were used in order to manage inventory levels better
Two Bin system
Kanban system
1) Material Cost Reduction:
Figure-13: Showing the cost management
There are two types of costs associated with materials these are
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Cost of materials (cost of ordering): Costs of materials include basic price,
packing costs, taxes and freight.
Cost on materials (cost of carrying): Costs on materials include Procurement
costs, inventory costs and material handling costs
1. Manpower reduction
Manpower reduction was achieved through job clubbing, job elimination and layout
changes
This is a way to ease out excess people from the organization. Jobs can be modified
so that one person can take more responsibilities. Unnecessary processes can be
eliminated so that no employees are employed for carrying those out.
M&M has done precisely that when they stopped inspecting the quality of the
material coming in by putting more importance on the suppliers by making him
accountable for his products.
Economic Order Quantity:
EOQ for them is on full truck load basis. They see to it that no transportation vehicle
comes half empty and it is utilized to its full capacity. But while determining the EOQ
the inventory levels in the stores are also considered.
Material Requirement/Resource Planning (MRP-1):
It is a computer based information system designed in M&M to handle ordering and
scheduling of dependent demand inventories. Raw materials, components, parts,
tools required for the production of one particular part of the vehicle say engine or
axle is termed as dependent demand inventories. A production plan for a month of
finished products in the form of master production schedule is translated into
requirements of components parts and raw materials working backward from the due
date using lead times and other information hence, requirements of end items
generate the requirements for lower level components which are broken down by
weeks so that ordering production and assembly can be scheduled accordingly.
Basis and input on which MRP runs:
Schedules: M&M's area offices update the demand plan on a weekly basis. SAP-
SCM can take into account regional demand variation, using its optimizer capabilities
to decide which plants will make what and synchronizing the procurement schedules.
M&M runs supply planning capability based on the changing demand pattern, with
27
results transmitted to MRP and posted to the private vendor Web sites. This way the
suppliers can keep up-to-date on likely plant consumption. Vendors don't supply
based on this information – the rolling plan only alerts them to what they should be
prepared for. All material flow from the suppliers is pull based, triggered by actual
consumption at the plant end.
Physical stock- it is the stock that is being seen on the system and which should
tally with the physical stock in the stores of all the unused components, parts, tools,
etc.
Bill of materials- for the production of any one part of the vehicle (engine, wheel,
axle) the number of raw materials used for its production will be reduced
automatically from the systems according to the number of units produced. The bill of
materials is the number of raw materials required for the production of 1 part of the
vehicle. If for example manufacturing an engine requires 450 parts but bill of
materials accounts for only 440 parts then the system stock and the actual stock
would not tally leading to shortfall in inventory.
Safety stock- it shows the number of raw materials which are more than the
requirement and available in case of emergency.
STORES MANAGEMENT
The store in M&M is decentralized with each production unit having their own stores.
All the stores in each of the units are next to the road so that loading and unloading
becomes easier. Also the materials can be protected from damage in this case.All
the bought out parts and work in progress inventories are kept in the stores.
The stores are divided into 3 sections depending upon its functions-
1. Receiving stores: the receiving stores is where the goods are received from
the vendors by trucks. The truck unload the contents at this area which is also
called as ‘dock’. The trucks directly unload the contents into palates.
2. Main stores: main stores is where the raw materials are stored. The COMB
type layout is followed in the main stores.
3. Finished goods stores: finishedgoods stored in this case are the processed
parts which are manufactured in the respective production units. They are
then taken to the main assembly line for assembly.
Features of stores:
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Stores are properly ventilated with tube lights and fans.
They use an instrument that measures luminosity in the evening. Accordingly
more lights are provided.
The materials are kept in racks.
Stock verification
Stock verification is done once a year on 31st January. On this day the production is
stalled, the entire SAP system is closed, material procurement and dispatch is halted.
All the employees from all the departments then engage themselves in stock
verification. Thus they follow fixed or periodic inventory method.
Stock valuation
They follow actual price method of stock valuation for raw materials wherein oldest
stock is issued first. In this method materials are issued at actual cost and are valued
also at the same cost by keeping an account of the receipt of all the raw materials.
Material handling
Material Handling Equipment in M&M traditionally consisted of trolleys, conveyors,
forklifts, overhead travelling cranes etc. These were primarily devices of
Mechanisation; a lot of manual intervention was involved. These had limitations like
low speed, handling problems like scratches, chipping, breaking, difficulty to monitor
material flow etc.
However, they were adequate in mass production with limited variety or low volume
production. Customers were tolerant of defects like scratches, dents etc. With
transformation of manufacturing systems to be lean, agile and highly automated,
things are changing. Increased competition increases variety of components (for
product customisation ), reduces lot size, varies product mix continuously ( pull type
manufacturing ).
Since the logistics now become complex, there is a tendency to INTEGRATE
material handling systems so that they can communicate with each other - as well as
with processing machines, inspection devices, assembly stations.
In M& M they have these aisles i.e roads constructed inside the plant for identification
of safe and danger zones
Red aisle: it is put for personnel/goods movement
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Green aisle:it is put where machines/production/assembly takes place
Yellow: it is usually used as borders to distinguish clearly between red and green
aisles
Features of material handling
In M&M plant a mezzanine floor has been put up all over the stores and it is
fire resistant. It also helps in optimum usage of the floor space.
The concept of unit load is being depicted by keeping boxes of same
materials under palates and them systematically arranging them one above
the other. Thus the number of items or bulk material is so arranged that mass
can be picked up and moved as a single object. It helps in quick and easy
movement of a lot of items than individual items.
For glass equipments they a separate storage space.
According to them material handling equipment should be such that it helps in
reducing the manufacturing cycle time and minimum fatigue is required.
Moreover they have a stores department in each production unit which helps
to reduce the material handling costs.
Lastly for all the material handling equipments they give proper training to
their personnel to avoid any mishaps and to carry out safe operations.
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MAHINDRA XYLO
Making the Mahindra Xylo meant challenging the limitations of every car before it. It
meant determining the needs of our consumers. And pioneering technologies to meet
those needs. The Mahindra Xylo was meant to be built around you, out of your
needs.
And it took 160 engineers to do just that. Engineers that were handpicked from
across the country. Each of them regarded as an expert in their own field of
automobile development. These engineers spent time with customers across the
country, observing their interaction with vehicles. They identified need gaps and
invented solutions to fill in these gaps. And the result was India's first car to be built
inside out. Every need was catered to, every requirement met. And once the interiors
were done, the exteriors began.
A lot of research and development has gone into bringing the Mahindra Xylo from the
drawing board to 'on road'. And every manufacturing process has been optimised to
handle this special car's special requirements. Like the body assembly procedures
that are fully automated to ensure incredible levels of accuracy. So you can be sure
that extra thought and effort have gone into making the Mahindra Xylo perfect in
every way
E2
Exterior
Ski rack – (N/A)
Body coloured electric Outside rear view mirrors –BLACK (stalk)
The project entitled “CONSUMER PERCEPTION STUDY WITH RESPECT TO
“MAHINDRA & MAHINDRA” is Hereby approved as a bona fide work carried out and
presented by PRIYAVART SHARMA in a manner satisfactory a warrant it
acceptance to the degree after which it has been submitted. It is understood that by
this the undersigned do endorse or approve any statement made, opinion expressed
or conclusion drawn therein, but approve the project work only for which it has been
submitted.
SIGNATURE OF THE TEACHER
ACKNOWLEDGEMENT
88
I wish to extend my deep sense of gratitude to my guide Mrs. ANJALI
SHARMA for providing me with valuable guidance and motivation to
make the project work as a highly useful and knowledge based
experience.
Last but not least I would like to thank all the faculty members of JIMS,
VASANT KUNJ and friends who in one way or other helped me in
bringing out this project work as a successful one.
PRIYAVART SHARMA
ENROLLMENT NO.0931421708
89
ABSTRACT
The automobile industry today is one of the most lucrative industry. Due to the
increase in disposable income in both rural and urban sector and easy finance being
provided by all the financial institutes, the passenger car sales have increased at the
rate of 25% per annum in June 2005-06 and at the rate of 37% per annum in june
2006-07 . Further competition is heating up in the sector with a host of new players
coming in and other like Porsche, Bentley, Audi, and BMW all set to venture in the
Indian markets. One factor that could help the companies in the marketing of their
product is by knowing and creating a personality for their brands. An attempt could
be taken to answer some of the questions regarding brand personality of selected
cars in India by conducting the market research. This comprehensive study is
categorized into parts, deals with introduction to brand personality, companies
selected, product and the industry.
One factor that could help the companies in the marketing of their products is buying
behavior of the consumers. The Buying Behavior of the customers can be studied by
knowing their perceptions about the cars in the market and about the possible
entrants in the market. One such technique is by knowing and creating a personality
for the brands. This personality sketching will help in knowing what a customer (or a
potential customer) thinks about a given brand of car and what are the possible
factors guiding a possible purchase. Similarly, the idea of measuring the customer
satisfaction will serve the same purpose of determining the customer perception.
Thus, by measuring the” willingness of existing users of a car to recommend it to
others” will help the car manufacturers to chalk out the entire Customer Buying
Behavior.
The thesis shall attempt to answer some of the questions regarding “how to increase
passenger car sales”, specially talking about our own Indian automobile company
Mahindra and Mahindra. By conducting a survey we could know the brand
personality of selected cars in India and many more factors which could increase the
passenger car sales. The market research will be helpful for the new car entrant
companies in India as well to find out the possible gaps between the customer
expectations and the present market offerings. This way Mahindra and Mahindra
automobile Ltd will be able to increase their share in the ever-expanding Indian
market pie.
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The research will track the customer satisfaction in the following two layers:
Product related Parameters &Dealers related parameters
The customer satisfaction index will be calculated for the car brands taken into
consideration.It will be mainly a primary research and the information will be gathered
from both primary and secondary research. The study will analyze the applicability of
existing research concepts, theories, and tools for evaluating consumer satisfaction.
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TABLE OF CONTENTS
1 Abstract 2-3
2 Signatory Page 4-7
2 Acknowledgements 8
3 Table Of Contents 9
4 List Of Figures 10-11
5 List Of tables 11
5 Thesis Synopsis 12-13
6 Introduction 14-18
7 Overview of Auto Segment 19
8 Size And Share Of The Automobile Market 20-28
9 Company Profile & Logistics 29-48
10 Brand Personality 49-58
11 Objectives of Study & Objectives of Research 59-62
12 Research Methodology 62-63
13 Findings & Analysis 64-89
14 Recommendations 90-92
15 Conclusion 93-94
16 References 95-102
92
LIST OF FIGURES
Serial No. Figures Page No.1 Major attributes of customer satisfaction 162 The buying Process 173 Three core elements of satisfaction 18
4-5 Indian Automobile Industry size& Indian Automobile Industry product
21
6 Indian Automobile Manufacturers in India and Plant Locations
23
7 Automobile Manufacturers Market Share 258 Domestic Sales of Cars 289 Information of Flow of supply chain 31
10 Showing the demand forecasting 3211 Central Production and Planning Control 3412 Inventory management 4213 Showing the cost management 4314 Research Project Steps 6215 Motives of buying a car 6416 Product specific reasons for buying a car 6617 Liking for the interiors of the segment B cars 6818 Cars interior’s parameters 69
19-20 Safety parameters of different cars 71-7221-22 Car fuel efficiency parameters 73-74
23 Top speed of family car 7524 Availability of parts of family car 7725 Dealer related parameters for different
manufacturers80
26-27 Brand image of the cars & perception of different cars
81-82
28 Customer action :recommending car to friends 8329 Segment wise customer perception 8430 Demographic: Age wise perception 8531 Monthly family income 8632 Respondents objective buying a car brand 8733 Recommending a car to your friends 8834 Respondents ranking of brand and company image 89