In an attempt to reduce costs of components, Maruti has begun an exercise to reach out to Tier II vendors to scale up their productivity and quality. The exercise is similar to an effort last three years with its key Tier I suppliers.
Asahi, Amtek Auto, Sona Steering, Subros, Jay Bharat Maruti were among the major Tier I suppliers that were assisted by Maruti in the cost reduction of components. Several initiatives were taken involving Maruti and its suppliers, including localisation of manufacture and finance cost reduction. All these generated a 29 percent reduction in costs over three years, company officials say.
This year, the exercise will cover 50 Tier I and 150 Tier II vendors under this scheme. Among the Tier II vendors identified are Hi-Tech Gears, SDL India, Samtech, Sumi Motherson , S.I. Interpack and Sarvpriya Industry.
“The decision to reach out to Tier II suppliers is a very significant move by Maruti since these vendors normally do not supply components to the car manufacturer. Rather they work as vendors to Tier I suppliers”, says an automobile expert.
Maruti has set up a nodal platform, Maruti Centre for Excellence (MACE) and partnered with vendors and address the critical task of building competencies in a rapidly growing car market in the country. Through MACE, a non-profit organisation, Maruti works closely with vendor partners to implement world class practices like TQM (total quality management), TPM (total productive maintenance) and TOPS (Team Oriented Problem Solving techniques).
The effort has shown considerable results over the past year. “The component rejection level at Maruti has gone down significantly for Tier I vendors. It remains relatively high for Tier II suppliers. The target is to achieve 15 per cent improvement year on year”, said a Maruti official.
MACE will provide consultancy and training support to Tier II vendors, helping them achieve world-class standards in quality, cost and technology orientation.