PPT on Maruti Suzuki

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Management Control Study

MARUTI SUZUKI LTD.

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A PROJECT REPORT ON

MARUTI SUZUKI

Team Members:Manu RajputSushmita PaulAbhishek PeriwalDivya BonagiriAnju MauryaAmarnath Kalyanram

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Organizational Structure/Design

An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims.

Elements ofOrganizational

Structure

Span of Control

Centralization

Department-alization

Formalization

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Span of Control

Number of people directly reporting to the next level

Assumes coordination through direct supervision

Wider span of control possible when:

Other coordinating mechanisms present

Routine tasks Low employee

interdependence

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Centralization and Decentralization

Formal decision making authority is held by a few people, usually at the top

Centralization

Decision making authority isdispersed throughout the organization

Decentralization

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Organizational Structure of Maruti Udyog

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MANAGEMENT STYLE

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What is Management Style?Management style is the method of leadership that

an organization employs when running its business. There are a variety of management style types that

exist.Some of them are as follows: Autocratic style of management Paternalistic style of management Laissez – faire style of management Democratic style of management Informal style of management Participatory style of management Supervisory style of management

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MARUTI SUZUKI’S STYLE OF MANAGEMENT

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Maruti Suzuki follows a balanced mix of both Indian and Japanese styles of management.

Following are the features of the Japanese and the Indian style of management:

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Maruti follows “ A path to success ” strategy , which is as follows:

Emphasis on teamwork and recognition.Linking employee’s growth and prosperity to that of the company.Increase in quality.Strict work discipline.Constant efforts to increase the productivity of labor as well as capital.Reduction of costs.Customer orientation.Formation of long term objectives and policies for the attainment of company’s goals.Respect of law, ethics and human beings

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CONTROL PROCESS

Development at Vendor’s end

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The top Management at Maruti have always known the Secret that :

Vendor’s Development = Maruti’s Success

Therefore, Right from the inception, Maruti has always tried to improve the

condition at vendor’s end. Moreover the Best Practices at Maruti has been applied

to vendor’s through MPS & Lean Projects.

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VENDOR SELECTION PROCEDURE

Based on the Vendor Performance ,Supply Chain/ Engineering selects the Vendor for New Part development/ Second source

A team of Supply Chain/ Engineering then visits & performs an assessmentAs per Maruti’s laid down criteria produced below

After MD approval, SC issues Letter of Intent to Vendor.

CRITERIA FOR VENDOR SELECTION

1. Vendor's Past Problem on Quality, Cost & Delivery.2. Vendor technological Capability in Designing, Manufacturing, Testing3. Management of company with respect to professionalism, Clarity in Org Structure.4. Financial health5. Tool making capability6. Quality system in the Org7. Proximity to enable JIT deliveries8. Loyalty

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VENDOR’S QUALITY CONTROL

In order to improve quality and generate economies of scale-MUL has reduced the number of vendors of components in India from 370 to 175.

In order to reduce time and cost involved in dealing with more vendors- Increase in supply chain efficiencies.

For example: Inbound Logistics i.e. the receiving and warehousing of raw materials, and their distribution to manufacturing.

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VENDOR’S QUALITY CONTROL

Vendors are linked to the MUL through the Internet-based information network.

This maintains online information regarding order status and delivery instructions in order to ensure quality standards.

Vendor Quality Control Management System such as ISO 9000/ QS 9000 forms the basis for producing a quality product.

Train and assist them in quality management and in obtaining these certificates.

System for evaluation of vendors.

Based on the objective data compiled about the vendor.

Used for defining the -

Future Business Dealings

Share of Business

Vendor awards

Improvements

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VENDOR RATING

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BUDGETRY CONTROL PROCESS

Zero Based Budgeting system is followed, which is a top down budgeting system.

Resource allocation decisions are made through a function-by-function assessment.

The process mainly focuses on proper utilization of funds.

Monitoring done on monthly basis by budgeting department, in which actual expenses are compared to projected expenses.

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BUDGETRY CONTROL PROCESS

Budget controlling is done on quarterly basis.

For effective control of funds, all the expenses are divided into three categories according to their relative importance.

A category expenses are very tightly controlled and monitored because of their relative high degree of controllability. For example- Consultancy fees, Gifts etc.

B category expenses are less closely monitored and controlled, because of their low degree of controllability, but they can be controlled to an extent only. For example Travel, Stationary etc.

No control is exercised over C category. Their payment is not stopped even if they shoot over their budget.

(MARUTI’S PRODUCTION SYSTEM)- LEAN MANUFACTURING-MPS

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Lean is both:

• A business operating philosophy• A set of proven tools and solutions

Lean focuses on the customer• Value is defined by the customer, and all activity is

aligned to provide maximum value to the customer• The Value Stream:• Whenever there is a product for a customer, there is a

Value Stream.• How do Maruti use the Value Stream?

• See Value• Differentiate Value from Waste• Eliminate the Waste

Why Lean?

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Add Value for the Customer

Faster Speed = Lower Cost

Empower employees – Everyoneparticipates

Employees make their workatmosphere better

BIG changes can be made easily and the culture of continuous improvement is cultivated

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QUALITY POLICY : TOOLS

5 S: SEIRI- PROPER SELECTION SEITION- ARRANGEMENT SEISO-CLEANING SEIKETSO-CLEANLINESS SHITSUKE-DISCIPLINE 3 M: MURI – INCONVENIENCE MUDA – WASTAGE MURA – INCONSISTENCY 4 M: MAN MACHINE MATERIAL METHODS

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5S is the Foundation for Improvement

5S

Visual Controls

Quality

Leveling

Pull Production/

Kanban

Total Productive

Maintenance

Standardized Work

Jidoka

RapidChangeover

Flexible Employees

Multi-Process Operations

MARUTI SUZUKI: Eight Wastes Overproduction Transport Motion Waiting Inventory Over-Processing Defects/Correction Underutilized People

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Yield improvement

SEVEN Mantras of Yield Improvement followed by Maruti Suzuki are:Mantra 1 : Die Face modificationMantra 2 : Modifying the bead designMantra 3 : Residual flat parts (scrap) utilizationMantra 4 : Reducing the blank size by guage adjustmentsMantra 5 : Changing the blank shapeMantra 6 : Modification of the punch profileMantra 7 : Open draw technique

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WORK CULTURE AT MARUTI SUZUKI

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Strictly follows the norm of all employees being in the same uniform.

All employees eat in the same canteen and commute in the same bus.

Punctuality is stressed. Attendance of around 94 to 95% is mandatory. Practices such as on the job training, quality

circles, kaizen activities, team work and job rotation are keenly practiced.

Alot of emphasis is laid on transparency in decision making process.

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COMMUNICATION&

CO-ORDINATION

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CO-ORDINATIONSince inception, Maruti Suzuki has instituted common practices for all its employees.

The open office system of the Company ensures transparency, aids faster communication and creates the physical structure for a boundary-less organization besides strengthening the feeling of oneness and team-work.

The Japanese work place basics such as Kaizen, cleanliness (5S), on the spot root-cause analysis (3G) and strict adherence to systems (3K) are the backbone of the Company's culture.

These are regularly reinforced through training sessions and visual displays.

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There is a robust and well structured suggestion scheme. The Company allows stoppage of work for 30 minutes every month to conduct Quality Circle meetings.

The Company observes two maintenance shutdowns during the year and these coincide with the school holidays to facilitate work-life balance for the employees.

Sensitization about the Company vision, its core values and

various policies is a part of the induction programme.

This information is reinforced through visual displays on the shop

floor, in offices and meeting places.

The Company's policies are also available on the internal portal.

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Communication of the Company Vision, Core Values and Policies

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Freedom of Association and Collective Bargaining

The Company has a mature and non-affiliated internal labor union.

All regular associates are covered under the process of collective

bargaining.

All major policy changes impacting workmen are discussed with the

union representatives and their opinions are incorporated after

examining their feasibility, and statutory requirements.

All such changes are communicated to workmen directly and through

union representatives.

The certified standing order with regard to the minimum notice period

for operational changes is followed.

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Whistle Blower Policy

The Company has in place a Whistle Blower Policy, which can be

used by employees across all levels.

The policy safeguards employees by helping them raise concerns

about serious irregularities, unethical behaviour and actual or suspected

fraud within the Company.

Amal Ganguli, Chairman, Audit Committee, is the ombudsperson

under the policy. The policy has been widely communicated to all the

employees who have been provided the e-mail id, postal address and

telephone numbers of the ombudsperson for reporting any matter

directly.

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Shared Leadership

The Company has five business verticals viz. Administration, Production, Engineering, Supply Chain and Marketing & Sales.

The Indian managers at the top management level of these verticals are designated as Managing Executive Officer (MEO).

The board meetings of the Company mark the compulsory presence of all the MEO's, as they act as a channel between the board and the employees.

This structure allows easy and quick flow of information to the board.

It also gives an opportunity to these verticals for making Member recommendations relevant to their business operations to the board.

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REWARDS

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REWARDS

Maruti has a pre-dominantly task focused work culture. In such a high target focused culture, there is a need to have a strong Reward and recognition policy. However, in Maruti the performance management system is the only way to recognize good performers. The Feedback for need to change has come in various communication forums including the exit interview feedback. To address these issues, a reward and recognition

policy was proposed.

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CATEGORY OF REWARDS

1. No cost : Pat on the back, Appreciation/ Recognition for the good work.

2. Low cost : Thank you cards, Birthday celebrations, Quaterly Appreciation Award(Sodexo coupons, movie tickets)

3. High cost : Annual Appreciation Award

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OTHER BENEFITS AND INCENTIVES

1. Suggestion Scheme

2. Long Service Award

3. Domestic/Foreign Travel Policy

4. Field Allowance

5. Group Insurance Scheme

6. Employee Family Benefit Scheme

7. Medical Treatment Coverage for Retired Directors

8. Employee’s Family Picnic

9. Rewards for Employee’s Children for Meritorious Achievement

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