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The extended enterprise

Sneha Jha | April 22, 2010
By its very nature, the auto industry cannot work in isolation. It needs to perform in conjunction with two parties like cogs in a wheel. These are suppliers or component manufacturers on the supply side, and dealers on the distribution side.

BANGALORE, 19 APRIL 2010 - By its very nature, the auto industry cannot work in isolation. It needs to perform in conjunction with two parties like cogs in a wheel. These are suppliers or component manufacturers on the supply side, and dealers on the distribution side. That's why it makes sound business sense to take them into our fold. Extending our enterprise to them is the best way of aligning their efforts with ours and improving the company's level of operational efficiency.

We realized this early on and since 1983 (the company's inception) Maruti has embarked on extended enterprise initiatives. Back then the concept of an extended enterprise did not exist in the Indian automotive industry, so we were heralding a revolution.

Challenging Start: When we included suppliers and dealers into our fold, we affected significant cultural changes in the way they conducted their operations. We introduced them to a host of Japanese manufacturing practices like Kaizen, lean, cost reduction system, quality circle and a suggestion scheme. We gave them technological support to produce components that are cost effective and have consistent quality. On the distribution side, we helped dealers design showrooms, interact with customers, and meet servicing requirements.Back then, this was a phenomenal challenge. Technology was not as advanced and the cost of training and providing support to dealers and suppliers was prohibitive.

Win-Win: But extending our enterprise to suppliers and dealers has spelt many benefits for everyone. The level of inventory is a measure of success in any manufacturing company. High levels of inventory are a waste that a supply chain can ill-afford to have. By extending our enterprise, we have steered clear of this problem. All our suppliers log into our systems at 7AM and receive orders for the day. They get clear instructions on the type and number of components they need to supply from 4 PM of a particular day to 4 PM of the next day.

Today, we run our plant with a 0.7-0.8 day inventory. This would not have been possible if our supplier's production planning was not aligned with our production planning. It also allows both parties to run lean organizations.

One the dealer side, extending our enterprise has raised the bar of all our dealers because when a dealer comes up with a smart idea that can improve business, we incorporate it in our dealer applications. A dealer in Bangalore once told us how to track a vehicle within the workshop. Potentially, it could save a lot of time and improve the efficiency in delivering vehicles by as high as 20-30 percent. We integrated the idea in our application then rolled it out to all the dealers. It helped us improve the service efficiency of all our dealers.

 

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