Management Control Study MARUTI SUZUKI LTD.
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A PROJECT REPORT ON MARUTI SUZUKI Team Members: Manu Rajput Sushmita Paul Abhishek Periwal Divya Bonagiri Anju Maurya Amarnath Kalyanram 2
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.
Departmentalization
Span of Control
Elements of Organizational Structure Formalization 3
Centralization
Span of Control
Number of people directly reporting to the next level
Assumes coordination through direct supervision
Wider span of control possible when:
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Other coordinating mechanisms present Routine tasks Low employee interdependence
Centralization and Decentralization
Centralization Formal decision making authority is held by a few people, usually at the top
Decision making authority is dispersed throughout the organization
Decentralization 5
Organizational Structure of Maruti Udyog
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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 8
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 11
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Development at Vendor’s end 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 assessment As per Maruti’s laid down criteria produced below After MD approval, SC issues Letter of Intent to Vendor.
CRITERIA FOR VENDOR SELECTION
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1. Vendor's Past Problem on Quality, Cost & Delivery. 2. Vendor technological Capability in Designing, Manufacturing, Testing 3. Management of company with respect to professionalism, Clarity in Org Structu 4. Financial health 5. Tool making capability 6. Quality system in the Org 7. Proximity to enable JIT deliveries 8. Loyalty
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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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. 16
System for evaluation of vendors.
Based on the objective data compiled about the vendor.
Used for defining the -
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Future Business Dealings
Share of Business
Vendor awards
Improvements
Zero Based Budgeting system is followed, which is a top down budgeting system.
Resource allocation decisions are made through a function-byfunction 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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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. 19
(MARUTI’S PRODUCTION SYSTEM)- LEAN MANUFACTURING-MPS
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 20
Why Lean? Add Value for the Customer
Faster Speed = Lower Cost Empower employees – Everyone participates Employees make their work atmosphere better BIG changes can be made easily and the culture of continuous improvement is cultivated 21
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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 22
5S is the Foundation for Improvement Standardized Work
Quality
Multi-Process Operations
Visual Controls Pull Production/ Kanban
5S
Flexible Employees
Jidoka Leveling
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Total Productive Maintenance
Rapid Changeover
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 modification Mantra 2 : Modifying the bead design Mantra 3 : Residual flat parts (scrap) utilization Mantra 4 : Reducing the blank size by guage adjustments Mantra 5 : Changing the blank shape Mantra 6 : Modification of the punch profile Mantra 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. 27
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Since 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. 29
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.
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Communication of the Company Vision, Core Values and Policies 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.
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The Company's policies are also available on the internal portal.
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. 32
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. 33
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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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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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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