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Automotive Sector Building an Agile & Responsive Supply Chain S.K. Krishnan Vice President Demand Chain Management Mahindra & Mahindra Ltd. 25 th January.

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Presentation on theme: "Automotive Sector Building an Agile & Responsive Supply Chain S.K. Krishnan Vice President Demand Chain Management Mahindra & Mahindra Ltd. 25 th January."— Presentation transcript:

1 Automotive Sector Building an Agile & Responsive Supply Chain S.K. Krishnan Vice President Demand Chain Management Mahindra & Mahindra Ltd. 25 th January 2013

2 Automotive Sector Mahindra Group - A Brief  A diversified conglomerate with $15.4-billion revenue.  Presence in 18 industries across 100 countries.  Among Top 10 Industrial Houses in India.  Largest Tractor manufacturer in the world.  India’s biggest SUV maker, Leading UV player in India.  Employs over 144,000 people across the globe.

3 Automotive Sector Mahindra & Mahindra Ltd- Automotive Sector Multi Plant Locations- 6 Plants across India

4 Automotive Sector Organization Structure CEO Marketing Sales DCM Manufacturing Planning &Strategy Inbound Logistics Outbound Logistics CoE Packaging eDCM CKD Logistics Spares SCM Plant SCM Plant heads

5 Automotive Sector Supply Chain Complexity  Multiple Products with high number of variants – About 3000 variants (with colour & trim combinations)  Large number of SKUs – 25,000  Large number of SKUs for Spares – 50,000  Scattered Supplier base – 500  Dealer spread across smaller cities & remote locations - 300  Aggregates movements between Plants - 15

6 Automotive Sector 6 Haridwar Kandivli Chakan Nasik Zaheerabad RSO Distribution Network Plant  300+ dealerships  19 Regional Stock yards  5 veh assembly Plants  1 Engine Plant  Direct billing to Dealers  RSO billing to Dealers  Primary/secondary  Road and Train modes

7 Automotive Sector Inter Unit Transfers of aggregates

8 Automotive Sector Business Challenges – Competition – New launches, Schemes – Seasonality – Interest rates, GDP, Fuel prices – Shorter Product Life Cycle

9 Automotive Sector How Complexities are managed?  Increased focus on Supply Chain planning.  Driving customer centricity.  Collaboration with Supply Chain Partners.  Use IT as a decision making tool.

10 Automotive Sector Demand and Supply Planning  Planning process : – Strategic volume planning:5 years – Long term Planning:3 years – Mid term planning :6 months on rolling basis – Short tem planning :Monthly, Weekly & Daily  Review: – Demand forecast – Manufacturing capacity/Strategy (multi plant production) – Supplier capacity – Logistics preparedness

11 Automotive Sector Aligning people, processes & business strategy through S & OP Represented by Head of Sales, Mfg, Finance, Sourcing and DCM. Planning horizon of 6 months on rolling basis. Demand and Supply scenario planning. Growth, Market share and Profitability. Constraints identification and action plan. Weekly review to capture the market dynamics and supply.

12 Automotive Sector S & OP Framework Month Plan Planning Cycle Alignment of weekly and Monthly plan (In terms of Volume & Mix) Process Integration of sales forecast to supplier schedules Variant Rationalization Part Standardization Manufacturing Flexibility Assessment of capacity constraints Mfg Strategy in terms of Plant- Product combination Stocking of peculiar parts Supplier Capacity Review capacity for all critical parts Schedule to high impact suppliers Measurement of supplier schedule adherence Stocking of strategic parts Planning Horizon Rolling Plans – Review Annual Half-yearly Quarterly IT Enabled

13 Automotive Sector IT integration of End To End process Customer Dealer Sales Planning Daily Manufacturing Planning Supplier Scheduling Receipts & Production Communication of vehicle availability to dealers for fund planning Billing & Dispatch with transport details Billing & Dispatch with transport details eDCM (Order Placement) eDCM SRM eDCM eDCM / TMS SAP / IPMS SRM (ASN ) DMS

14 Automotive Sector eDCM Philosophy Whenever a Customer walks in to any dealership, the Dealer must be in a position to offer him / her the vehicle of their choice or Give them the Date of delivery and honor the same.

15 Automotive Sector eDCM Process Flow Manufacturing and Supply Constraints Vehicle not available in plant Supplier Schedules based on DBM Supplier Schedules based on DBM Customer Order entry Aggregate Supply Planning Commitment dates Vehicle available in plant Body In Supply Planning JIT Supply Planning Commitment date MTA MTO e-DCM Portal Daily Planning using SAPSCM Day wise Production planning and Scheduling Dealers Plant Warehouse SRM ECC & SCM DMS SUPPLIERSSUPPLIERS CUSTOMERSCUSTOMERS SAP TMS Integration of IT systems

16 Automotive Sector Undesirable Effects in Supply Chain Committed Dates are often not met Production plan changes frequently Face shortages of RM Cross shipment of FG SKUs produced do not match exactly with the market demand What is the major cause for their existence? The cause is: UNCERTAINTY…. In Demand, Vendor Performance, Processes The cause is: UNCERTAINTY…. In Demand, Vendor Performance, Processes The cause is: THE MODE OF MANAGING OPERATIONS The cause is: THE MODE OF MANAGING OPERATIONS 1 st Approach 2 nd Approach Comprehensive efforts to reduce uncertainty everywhere Significant results cannot be expected ImplicationsImplications Paradigm Shift or change the mode of managing operations A real jump in performance in a very short time ImplicationsImplications

17 Automotive Sector Supply Chain Strategy implementation 1.Monthly Planning cycle for Resource planning Subgroup level forecast. Planning horizon 6 months. 2. Daily Production planning cycle to reduce Order planning time, 3. Drum Buffer Rope: Synchronisation of Aggregate planning with Body planning 4. Production Strategy – Make to Availability (MTA) & Make to Order (MTO) Demand < Supply ----MTA Demand > Supply ----MTO 5. Procurement and Inventory Control Strategy (PULL based) Dynamic Buffer Management IT enabled visibility of entire pipeline stock. Procurement as per the buffer penetration

18 Automotive Sector Dynamic Buffer Management-Single Priority mechanism OK Expedite Should be in pipeline (WIP) Color Code Inference 1/3rd Target Level = Stock in transit + plant stock +VMI Excess Emergency Level = 1/3 rd Target size Objective: 85% of the RM/Bought-out parts should be in Green/Yellow band in DBM.

19 Automotive Sector Customer connect 1 st of its kind in Automotive Industry…

20 Automotive Sector MoST Customer will receive SMS E-mails on following events 1. Order creation. 2. Confirmation of delivery date. 3. Vehicle billed from the plant. 4. vehicle reached to dealership. 5. Final delivery.

21 Automotive Sector Major KPIs  Supply Chain Response time : (Daily Planning Cycle) – Order to Receipt time in days.  Supply Chain Reliability : – % Ready for Despatch against commitment. – % Billing against commitment. – % Delivery against commitment.  Supply Chain Flexibility : (MTO and MTA production Strategy) – % Production growth without significant increase in inventory turns & Premium freight.

22 Automotive Sector  Supply Chain Cost : – Inventory. – Logistics and packaging cost.  Supply Chain Predictability : (Capacity Mapping Tool) – Firming the Production plan. – Monitor and review Critical parts availability. – Plan Vs Actual production at Sub group level.  Supply Chain Visibility : – Transit details visibility along with exceptions. – DBM. Major KPIs

23 Automotive Sector Results achieved In last three years, 1. Supported YoY growth of 27% in Volume. 2.Offered flexibility to Mfg for Plant-Product combination. 3.Receipt against committed date has improved by 30%. 4.Order to Receipt time improved by 25%. 5. Manufacturing Schedule Adherence against customer committed date has reached over 95% from 80%. 6.Achieved net savings of 21% of logistics spend through innovations in transportation and packaging.

24 Automotive Sector Company Awards YearAwards Aug-08 ‘SAP – ACE Award’ Award given for implementation of eDCM, which was considered as “Best In Class Extended Supply Chain Application”. This award was given across all SAP users in India. Sept-09 Sept-10 Sept-12 ‘Automotive Supply Chain Excellence’ M & M has been declared winners in this category, in the Express Logistics & Supply Chain Conclave, for 3 out of the last 4 years. Jan-13 ‘Manufacturing Supply Chain Operational Excellence – Automobiles’ M & M has been declared winner in this category, in the 2 nd Asia Manufacturing Supply Chain Summit. Jan-13 ‘End to End Customer Solution Excellence’ M&M has been declared winner in this category, in 2 nd Asia Manufacturing Supply Chain Summit the competition includes Manufacturing Companies across Industries

25 Automotive Sector Awards - Individual 15151515 YearAwards Mar-12 Supply Chain Manager of the Year Given by Hamburg Media during Logistics Week Award. Sept-12 Supply Chain Visionary of the Year Award Given in the 6 th Express, Logistics & Supply Chain Awards.

26 Automotive Sector Recognition Issue of Jan-March 2010Issue of Sept 2012

27 Automotive Sector

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