Maruti Suzuki Change Over Mgt

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AMITY UNIVERSITY 

UTTAR PRADESH

ASSIGNMENT ON- “CHANGEOVER MANAGEMENT IN

MARUTI SUZUKI INDIA LTD.”.

Submitted to- Submitted by-

Mr. Pranshu Chomplay Rafiul Hassan Khan

Faculty, PL (OTM), ASH 1st

Semester, MBA-HM

Amity University, Uttar Pradesh. Enrolment no- A2701411002

Amity University, Uttar Pradesh. 

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Acknowledgement

I have taken efforts in this project. However, it would not have been

possible without the kind support and help of many individuals andorganizations. I would like to extend my sincere thanks to all of them.

I am highly indebted to Mr. Pranshu Chomplay sir his guidance and

constant supervision as well as for providing necessary information

regarding the project & also for his support in completing the project.

My thanks and appreciations also go to my colleague in developing the

project and people who have willingly helped me out with their abilities.

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Maruti Suzuki plant in Manesar

Maruti Suzuki is India and Nepal's number one leading automobile manufacturer

and the market leader in the car segment, both in terms of volume of vehicles

sold and revenue earned. Until recently, 18.28% of the company was owned by

the Indian government, and 54.2% by Suzuki of  Japan. The BJP-led government

held an initial public offering of 25% of the company in June 2003. As of 10 May

2007, the government of India sold its complete share to Indian financial

institutions and no longer has any stake in Maruti Udyog.

Maruti Udyog Limited (MUL)  was established in February 1981, though the actual

production commenced in 1983 with the Maruti 800, based on theSuzuki Alto kei

car which at the time was the only modern car available in India, its only

competitors- the Hindustan Ambassador and Premier Padmini were both around

25 years out of date at that point. Through 2004, Maruti Suzuki has produced

over 5 Million vehicles. Maruti Suzukis are sold in India and various several other

countries, depending upon export orders. Models similar to Maruti Suzukis (but

not manufactured by Maruti Udyog) are sold by Suzuki Motor Corporation and

manufactured in Pakistan and other South Asian countries.

The company exports more than 50,000 cars annually and has an extremely large

domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004,

was the India's largest selling compact car ever since it was launched in 1983.

More than a million units of this car have been sold worldwide so far. Currently,

Maruti Suzuki Alto tops the sales charts.[citation needed ]

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Due to the large number of Maruti 800s sold in the Indian market, the term

"Maruti" is commonly used to refer to this compact car model. Its manufacturing

facilities are located at two facilities Gurgaon and Manesar south of Delhi. Maruti

Suzuki’s Gurgaon facility has an installed capacity of 350,000 units per annum.

The Manesar facilities, launched in February 2007 comprise a vehicle assemblyplant with a capacity of 100,000 units per year and a Diesel Engine plant with an

annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon

facilities have a combined capability to produce over 700,000 units annually.

More than half the cars sold in India are Maruti Suzuki cars. The company is a

subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of 

Maruti Suzuki. The rest is owned by public and financial institutions. It is listed on

the Bombay Stock Exchange and National Stock Exchange in India.

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported.In all, over six million Maruti Suzuki cars are on Indian roads since the first car was

rolled out on 14 December 1983. Maruti Suzuki offers 14 models, Maruti 800, 

Alto,  WagonR,  Estilo,  A-star,  Ritz,  Swift,  Swift DZire,  SX4,  Omni,  Eeco,  Gypsy, 

Grand Vitara,  Kizashi. Swift, Swift DZire, A-star and SX4 are manufactured in

Manesar, Grand Vitara and Kizashi are imported from Japan as completely built

units(CBU), remaining all models are manufactured in Maruti Suzuki's Gurgaon

Plant.Suzuki Motor Corporation, the parent company, is a global leader in mini

and compact cars for three decades. Suzuki’s technical superiority lies in its ability

to pack power and performance into a compact, lightweight engine that is cleanand fuel efficient. Nearly 75,000 people are employed directly by Maruti Suzuki

and its partners. It has been rated first in customer satisfaction among all car

makers in India from 1999 to 2009 by J D Power Asia Pacific.

Partner for the joint venture

Sanjay Gandhi owned the Maruti Technical Services Limited, which ran into

trouble and was liquidated. After the death of Sanjay Gandhi, the Indira Gandhi

government assigned a delegation of Indian technocrats to hunt for a collaboratorfor the project. Initial rounds of discussion were held with the giants of the

automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor

Corporation was at that time a small player in the four wheeler automobile sector

and had major share in the two wheeler segment. Suzuki's bid was considered

negligible.While the major companies were personally represented in the initial

rounds of discussion, Osamu Suzuki, Chairman and CEO of the company ensured

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that he was present in all the rounds of discussion. Osamu in an article writes that

it subtly massaged their (Indian delegation's) egos and also convinced them about

the sincerity of Suzuki's bid. Suzuki in return received a lot of help from the

government in such matters as import clearances for manufacturing equipment

(against the wishes of the Indian machine tool industry then and its ownsocialistic ideology), land purchase at government prices for setting up the factory

Gurgaon and reduced or removal of excise tariffs. This ensured that Suzuki

conscientiously nursed Maruti Suzuki through its infancy to become one of its

flagship ventures.

PRODUCTION MILESTONES

1st vehicle produced, December 1983

1,00,000 vehicles produced by August, 1986

5,00,000 vehicles produced by June, 1990

10,00,000 vehicles produced by March, 1994

15,00,000 vehicles produced by April, 1996

20,00,000 vehicles produced by October, 1997

25,00,000 vehicles produced by March, 1999

30,00,000 vehicles produced by June, 2000

35,00,000 vehicles produced by December 2001

40,00,000 vehicles produced by April, 2003

45,00,000 vehicles produced by April, 2004

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CHANGEOVER MANAGEMENT MARUTI SUZUKI INDIA LIMITED 

MUL to change gear on performance appraisal -- 100% link

between pay, productivity

RENEWING its efforts at cutting costs and improving productivity, MarutiUdyog Ltd (MUL) has drawn up a new human resources policy, which for the

first time, entirely links performance to pay packets for all its executives and

managers.

MUL has traditionally had a performance-based component of about 30 per cent

in its compensation package for its executives. But now it has gone the whole hog

and decided that in addition to the hike in individual perquisites,

increments to even the basic salary will now depend on the employees'

performance during the year.

The new performance appraisal and compensation system is likely to affect

over 1,000 employees -- executives and senior and middle level managers.

Company officials said the changeover to a completely performance-based

compensation system has been under discussion amongst MUL's senior

management and directors for quite sometime now.

So, the new appraisal process has not come as a surprise for most of the

employees and has been accepted by them, the official said. ``Over the pastweek, the principle underlying the new system has been communicated at

length throughout the company and feedback has been obtained,'' the

official said.

In the run-up to the new remuneration system, the company has also

developed a new performance measurement and development method along

with the noted consultant, Mr. M.B. Athreya. The performance measurement

process will complement the new remuneration s ystem.

MUL sources said rather than appraise employees through confidential

reports, the new performance measurement system involves an interactive

process of goal setting, review and counselling by managers throughout the

year. It incorporates qualitative aspects, along with quantitative targets.

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The employees are being put through workshops to train them on the

various aspects of the system developed with Mr. Athreya. The new system

will take effect from this year.

The new system is expected to help enhance managerial performance andskills, while making the organisation more capable of assessing its costs and

returns. The move is also indicative of the company's renewed stress on

increasing per employee productivity.

MUL, which has been beleaguered by low margins and a falling bottom line,

has also been forced to take a hard look at its costs this year. For the first

time, MUL has slipped into the red and recorded a loss during the year 2000-

01.

MUL has also drawn up a voluntary retirement scheme (VRS) for its

employees. The VRS programme received in-principle approval from the board

last month. While the VRS proposal is yet to be formally notified and offered to

the company's employees, it is expected to apply equally to all the staff members,

including the shop floor workers, company sources said.

Maruti adopts `360 degree' appraisal system ( February '5,2007,

HBL)

Maruti has introduced a unique 360-degree feedback system, starting with itssenior leadership. The new system has been co-developed with Ernst & Young

and has been put in place recently.

Under the 360-degree feedback system, the employee is rated not just by

his superiors, but also by his peers and subordinates.

"We are starting the 360-degree feedback process with employees in the top

management such as chief general managers and general managers, whose

performance will now be assessed based on feedback from their peers and  junior management employees within the same department. Till last year,

their performance was being appraised only by the Directors and the

Managing Director," says Maruti's Chief General Manager (HR), Mr. S.Y.

Siddiqui.

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Ernst & Young, in consultation with Maruti, has listed a set of leadership

competencies that are expected in a general manager. Based on that, it has

prepared a questionnaire to which peers and subordinates can respond

online.

Although acknowledged as an effective tool for leadership development in the

West, Indian companies have been shy of introducing such a feedback system for

fear of disturbing traditional hierarchical structures.

HR consultants feel that the critical issues in implementing such a system

include assuring respondents that their feedback will remain confidential and

convincing the person receiving the feedback that this is a development tool

and not an appraisal tool. Maruti has handled this by getting E&Y and other

consultants to make detailed presentations to the senior management

personnel before the process got under way. The company has a committee

of general managers, called Human Resource Inter Divisional Committee

(HRIDC), which is consulted on all major HR issues.

The initiative has been unveiled with an e-mail by Maruti's Managing

Director, Mr. Jagdish Khattar, asking people to support the online

questionnaire process. The 360-degree feedback system will alsoinclude a self-appraisal by the general manager. At the end of the process,

he can compare his self-appraisal with the assessment of his subordinates

and peers.

One of the benefits that Maruti is hoping to get out of the 360-degree feedback

process is the sense of empowerment and importance felt by subordinates, when

they are asked to offer their feedback about their superiors. Maruti currently has

over 4,000 employees on its rolls.

EMPLOYEE QUALITY MEASURES

Kaizen is based on the concept of making incremental improvements in

our products. It incorporates a series of continuous small and simple

improvements, which aim at involving employees at all levels.

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The Suggestion Scheme is based on the same principle. Under this scheme,

employees are encouraged to make suggestions for improvement in any

area of our operation. Over 50,000 suggestions are received from employees

every year. Ma r u t i h as w o n t h e F i r s t p l a ce in "Exce llence in

Suggestion Scheme Contest2003", which is the 6th consecutive award won inas many years. This contest is organized by Indian National Suggestion Schemes

Association (INSSAN). Since1998 Maruti has won this award 10 times."Quality

Circles" are groups of five to eight members from a particular work area

who work as a team to identify priorities and solve work related problems in the

area. They believe that it is this unwavering commitment to quality that will lead

to the further growth of the organization as competition increases.

ISO 9001:2000 

At Maruti, their approach to quality is in keeping with the Japanese practice--

"build it into the product". Technicians themselves inspect the quality of work.

Supervisors educate and instruct technicians to continually improve productivity

and quality. Th e mov eme nt of qua l it y ind ica tors is re vie we d in

we ek ly me et in gs by th e to p management.

In 2001, Marut i Udyog L td became one of the f i rs t automobi le

companies anywhere in the world to get an ISO 9000:2000 certification.

AV Belgium, global auditors for International Organization for Standardisation

(ISO), certified Maruti after a four day long audit, covering varied parameters like

Customer Focussed organisation, Leadership, Involvement of people, Process

approach,System approach to Management, Continual improvement, etc. 

In May 1995, Marut i got ISO 9002 cert i f i cat ion.

The audit for this coveredquality assurance in production,

installation, marketing and sales as well as after sales services. We

were also one of the first companies in the world to pioneer ISO9000

certification for our dealers.

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In October 1993, MUL passed the Conformity Of Production (COP)  

Audit,which is based on a European Union Directive.  

This authenticated our quality systems and testing facilities for export to Europe.

Their emphasis on total quality has meant that today they are in a position to

guide vendors and dealers in establishing and consolidating their individualquality systems. This commitment to quality has ensured a consistently

satisfying product and world-class sales and after-sales services.

TS16949:2002 -A new feather was added recently in Maruti’s cap in the

field of quality when the Quality Management System of its Press Shop &

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assoc iated funct ions (co l lect ive ly termed as Press Funct ion) got

ce rt i f i cat ion for conformance to the requirements of TS16949:2002

standard. The nee d fo r T S ce rt i f ica tio n of Pre ss Fu nct ion had its

ge ne si s in th e pr es ti gio us project that Maruti earned for the supplyof stamped panels to General Motors India for one of its forthcoming

models. A s a p a r t o f Q u a l i t y s y s t e m r e q u i r e m e n t s , G M

r e q u i r e s a l l i t s s u p p l i e r s t o b e certified to either ISO TS 16949 or QS

9000.These standards address Qual i ty System requirements ,

which are particularly specific to the automotive industry and

requires an organization to be in compliance with ISO 9000 systems as a

basic requirement. However, whereas QS 9000 would become defunct

and cease to ex i s t a f ter Dec 2006, TS 16949 i s go ing to be the

standard of the future. The TS 16949 standard, brought out by ISO in theyear 1999, is an extension of the ISO 9001:2000 standard that

prescribes Quality management system requirements that are specifically

applicable to the automotive industry. TS 16949 has gained high popularity and

almost all major automobile players across the globe including GM, Ford,

Daimler Chrysler, Nissan, Honda are embracing & promoting it.

MARUTI CULTURE

Their employees are their greatest strength and asset. It is this underlyingphilosophy that has molded their workforce into a team with common goals and

objectives. Their Employee-Management relationship is therefore characterized

by:

•Participative Management. 

•Team work & Kaizen. 

•Communication and information sharing. 

•Open office culture for easy accessibility To implement this philosophy, they

have taken several measures like a flat organizational structure. There are only

three levels of responsibilities ranging from the Board Of Directors, Division Headsto Department Heads. Other visible features of this philosophy are an open office,

common uniforms (at all levels), and a common canteen for all. This structure

ensures better communication and speedy decision making processes. It also

creates an environment that builds trust, transparency and a sense of belonging

amongst employees.

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For Investors:

Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, has

been the leader of the Indian car market for about two decades. Its

manufacturing plant, located some 25 km south of New Delhi in Gurgaon, has an

installed capacity of 3,50,000 units per annum, with a capability to produce abouthalf a million vehicles. The company has a portfolio of 11 brands, including Maruti

800, Omni, premium small car Zen, international brands Alto and WagonR, off-

roader Gypsy, mid size Esteem, luxury car Baleno, the MPV, Versa, Swift and

Luxury SUV Grand VitaraXL7.In recent years, Maruti has made major strides

towards its goal of becoming Suzuki Motor Corporation's R and D hub for Asia. It

has introduced upgraded versions of WagonR Zen and Esteem, completely

designed and styled in-house.

Maruti's contribution as the engine of growth of the Indian auto industry, indeedits impact on the lifestyle and psyche of an entire generation of Indian middle

class, is widely acknowledged. Its emotional connect with the customer

continues. Maruti tops customer satisfaction again for sixth year in a row

according to the J.D.Power Asia Pacific 2005 India Customer Satisfaction Index

(CSI) Study. The company has also ranked highest in India Sales Satisfaction Study.

The company's quality systems and practices have been rated as a "benchmark

for the automotive industry world-wide" by A V Belgium, global auditors

for International Organisation for Standardisation. In keeping with its leadership

position, Maruti supports safe driving and traffic management through massmedia messages and a state-of-the art driving training and research institute that

it manages for the Delhi Government. The company's service businesses including

sale and purchase of pre owned cars(True Value), lease and fleet management

service for corporates (N2N), Maruti Insurance and Maruti Finance are now fully

operational.. These initiatives, besides providing total mobility solutions to

customers in a convenient and transparent manner, have helped improve

economic viability of The company's dealerships.

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BUSINESS STRATEGY

They intend to continue to focus on the small car segment, while

offering products in most segments of the Indian passenger car market. They aim

to achieve their principal objectives by pursuing the following business strategies:

Maintain and enhance their product range:

They intend to utilize Suzuki’s expertise in small car technology to produce new

variants of their existing models and to upgrade their products with

contemporary technology and features.

Increase reach and penetration:

They plan to continue to utilize their extensive sales and service network to

increase the reach, in terms of   geographical spread, and penetration, in terms of 

sales volumes, of their products across India.

Increased availability of automobile finance:

They continue to seek opportunities to expand the size of the Indian passenger

car market, especially in the small car segment, through facilitating easy

availability of automobile finance. To that end, they have recently entered into an

agreement with the State Bank of India.

Secure repeat purchases by offering a “360 degree customer experience” 

:On the basis of their belief that securing repeat purchases from an existing

customer requires less expenditure than acquiring a new customer, they aim 

to provide customers with a “one-stop shop” for automobiles and automobile-

related products and services.

Continue to benchmark their manufacturing capabilities: 

They plan to continue to benchmark our manufacturing capabilities with the most

efficient car manufacturing facilities of Suzuki and its subsidiaries.

Continue to reduce costs to offer more competitive products:

Cost competitiveness has been, and continues to be, central to their strategy as

the leading manufacturer in the small car segment to expand the size of the

market by offering competitively priced, high quality products. The components

of this strategy are:

•Higher levels of localization 

•Vendor participation in cost reduction

•Cost reduction on warranties 

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•Reduction in initial investment cost 

•Reduction in number of vehicle platforms 

•Achieve further cost reduction through higher productivity 

Lower cost of ownership:Through their business strategies, they seek to reduce the consumer’s cost

of ownership of their cars, which comprises the cost of purchase, the cost of fuel

and maintenance, including spare parts and repairs, during the life of the vehicle,

insurance, and resale value.

NEW BUSINESS INITIATIVES

As the largest manufacturer and leader in the small car segment, they

continually seek new ways to utilize their vast car parc, range of products and extensive sales and service network to expand the size of 

the passenger car market in India. They have recently launched new

initiatives to develop the market for automobile insurance, automobile

finance, leasing and f leet management, and pre -owned cars. They aim to

provide customers with a “one-stop shop” for automobiles and automobile-

related products and services, and build on their wide customer base

and e x t e n s i v e s a l e s a n d s e r v i c e n e t w o r k t o m a k e a v a i l a b l e t o

their customers a wide range of Maruti-branded services at

different stages of ownership, which they refer to as the “360 degree 

customer experience”. 

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Atithi Devo Bhava:

One-stop shop Inspired by the spirit of India. Atithi Devo Bhava, in

Sanskirit, means “a guest is   like God”. It captures the Indian tradition of 

honoring guests. It's also the inspiration for the welcome you’ll receive ata Maruti Suzuki dealership, and the caring relationship they share with

those who drive their cars. At Maruti Suzuki, you will find all your car related

needs met under one roof. Whether it is easy finance, insurance, fleet

management. se rvices, exchang e Maruti Suzuki is set to provi de a single

window solution for all your car related needs. That's why they have Maruti True

Value, the best place to buy and sell reliable used cars. Maruti Finance an

agglomeration of the biggest finance companies in India brought together by

Maruti Suzuki to ensure that the dream car is within everyone's reach. Similarly,Maruti Insurance brings together some of the biggest names in the car insurance

industry to provide insurance solutions to every type of car consumer. Then,

finally, there is N2N,which offers fleet related solutions.

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Production Management System (PMS) is the next step towards moving ahead tosustain the momentum. It is a strategy to achieve Manufacturing Excellence

evolved through participative approach. The system is people driven and ensures

involvement of all levels (Managers, Executives, and Supervisors).

The concept ensures participation and error free communication. The result is

clarity of content, better understanding and openness towards feedback. These

values make PMS a sustainable system. Having achieved the target of selling a

million cars in the financial year 2009 - 2010, PMS has lead the production team

towards greater enhanced productivity with perfection.

PMS is derived from the basic Japanese principles of 5S, 3G and 3K

In order to bring an improvement in overall processes and systems in Production

Division through involvement of all levels, PMS was launched in Maruti Suzuki.

Through various phases of PMS the company embarked on its journey of bring in

a) Clarity of Role, Non-duplication of work, Ownership, Commitment and

Standardization in all our process and systems across the production division.

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FLEET MANAGEMENT SYSYTEM IN MARUTI SUZUKI INDIA LTD

The Background

To facilitate the corporate sales of MUL cars using the relationship management

approach through Leasing and Fleet Management as two products, MUL launcheda service named N2N Fleet Management Solution.

Through tie ups with other service providers like insurance company, replacement

car service provider, and manpower service provider MUL presented a common

face to the end client with a whole gamut of services.

End-to-end backups/solutions across the vehicle's life like: Leasing, Maintenance,

Convenience services and Remarketing are some of the key services being offered

by MUL. MUL choose Binary Semantics to provide necessary IT support for their

N2N Fleet Management solution.

The Challenges

MUL needed a complete B-2-B solution, in the form of a common platform, for all

the partners, clients and respective MUL departments. And because this service

included interaction and data exchange between multiple organizations, safety

and security of data became vital - not only with regards to MUL, but also for

partners and customers. Furthermore, stringent performance criteria and

deadlines were the other challenges involved in the project.

The Solution

After a rigorous requirement and business process analysis, Binary's Automobile

Fleet Management System came into shape.

The system was based on a modular architecture so that different users

[customers, partners, vendors and MUL] can use the modules as per their

requirements. Scalability, security and flexibility were the key issues kept in mind

while designing and developing of the system.

The Benefits

Binary's Fleet Management system has provided the company with

comprehensive monitoring capabilities for its fleet of vehicles, including

acquisition, maintenance, insurance, accident, rescue, and remarketing.