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.

Elements of

Organizational

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 is

dispersed throughout the organization

Decentralization

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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

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MARUTI SUZUKIS 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 employees 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 companys goals. Respect of law, ethics and human beings

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Development at Vendors end

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

Vendors Development = Marutis Success

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

condition at vendors end. Moreover the Best Practices at Maruti has been applied

to vendors through MPS & Lean Projects.

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 Marutis 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, Testing

3. Management of company with respect to professionalism, Clarity in Org Structure.

4. Financial health

5. Tool making capability

6. Quality system in the Org

7. Proximity to enable JIT deliveries

8. Loyalty

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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.

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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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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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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.

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(MARUTIS 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 Everyone participates

Employees make their work atmosphere better

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

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

Rapid

Changeover

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 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.

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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.

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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

Freedom of Association and Collective

Bargaining

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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.

Whistle Blower Policy

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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.

Shared Leadership

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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. Employees Family Picnic

9. Rewards for Employees Children for Meritorious Achievement

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