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Maruti Suzuki Case Study 2011 Ram


Maruti Suzuki India Limited (MSIL), a subsidiary of Suzuki Motor Corporation of Japan, is India’s largest passenger car company. Producing 1.2 million cars every year, Maruti Suzuki accounts for around 43 percent of the car market in India. The company offers 14 brands and more than 150 variants of these brands. Its product line extends from practical to powerful, and from hatchback to SUV. Maruti maintains its corporate office in New Delhi and 16 regional offices across India, employs more than 12,500 employees, and operates production facilities in Gurgaon and Manesar.

For more than three decades, the company has won the hearts of customers through high-quality products and services. Customers vouch for the quality and low cost of ownership of its products, as evidenced in independent studies like the J. D. Power Asia Pacific Customer Satisfaction Index, which has ranked Maruti Suzuki as No. 1 for the last fifteen years in a row. This unique achievement is unparalleled, across industries, as nowhere else in the world is the market leader also the leader in customer satisfaction.

To sustain its leadership in India, Maruti has introduced new models at a rapid pace, requiring expansion of its manufacturing facilities. The company planned a new plant at Manesar alongside its other two plants there. The key challenge facing the company was to design and build the plant in time for the schedule given by management for startup of the new facility.

Maruti Suzuki is a long-term, successful customer of product lifecycle management (PLM) specialist Siemens PLM Software. The company had already adopted Siemens PLM Software’s NX™ software, Solid Edge® software, Teamcenter® software and the Tecnomatix® portfolio. These solutions are used for product design, tool design, digital mockup, layout planning, manufacturing process planning and validation.

Improving factory design

The engineers wanted to use the knowledge gained from previous plant design and installation experience to take a step forward in their factory design methodology. On a previous factory project, the company had encountered a number of unforeseen issues at the time of construction that required considerable rework. Several modifications were needed to accommodate actual conditions on the site, and these significantly increased the cost and lead time of the project.

Maruti Suzuki had previously used FactoryCAD™ software in the Tecnomatix portfolio for 3D design of plant structures, but not for utilities. The problems that surfaced during construction could be attributed to the 2D process used in the utility planning for the plant. All of the ducting, piping, cabling, lighting and structural design for previous plants were accomplished using 2D layouts, which made it difficult or impossible to resolve issues or to optimize the building’s utilities prior to installation. To shorten the lead time for the new factory and meet the project schedule, the company had decided to utilize FactoryCAD, and take advantage of virtual factory models to visualize the interferences among structural and utility elements.

“We wanted to prevent the issues we faced at installation time on previous factory projects,” says Sudeep Raj, senior manager of production engineering, Maruti Suzuki. “Virtual validation with a 3D plant model would enable us to identify structural and utility interferences with plant facilities, like conveyors, at an earlier stage. We had to make certain that the problems were resolved before we made the final construction drawings.”

Maruti Suzuki’s engineers used FactoryCAD to develop virtual 3D models of the new plant, including the press, welding, painting and assembly shops. They used the software’s built-in library of intelligent models of factory equipment and resources to accelerate creation of the factory model. “Working from 2D layouts of the building structure, equipment and utilities, our team quickly built a virtual model using the FactoryCAD tools,” says Dinesh Babu M, assistant manager. ”We were then able to readily visualize and validate the plant in 3D.”

The plant design tools of FactoryCAD enabled quick modification of library objects to build the model to full scale. In addition to the extensive collection of predefined factory equipment models in the library, FactoryCAD also enables modeling of custom objects that can be saved to the library for future use. These tools enabled Maruti Suzuki to complete the plant model in significantly less time and with less effort than by drawing the equipment with traditional 2D CAD tools.

With an accurate 3D plant model, the company had much more information than was available in the 2D drawings, enabling the company’s project specialists to better communicate and collaborate on the full factory design. Visualization in 3D assisted in identifying opportunities for improvements. Because FactoryCAD can be used with non-CAD viewers, they were able to share and collaborate with additional team members using the visualization capabilities of Teamcenter.

Throughout the design, the team used clearance checking to validate that the new plant was free of interferences. The plant model could also be engaged directly for material flow analysis using FactoryFlow™ software in the Tecnomatix portfolio.

Optimizing factory layout

The use of Tecnomatix for a 3D model-based factory design and planning process helped notably reduce project lead time and costs. “We not only avoided the costs and delays of on-site modifications during the plant’s installation, but also optimized the utility layouts for additional benefits,” says Siddharth Garg, assistant manager, Maruti Suzuki.

One example is the design of air ducts for the factory. Maruti engineers identified better locations for the ducts, considerably reducing the number of bends as well as the total air duct length. This resulted in substantial cost savings. The optimized design of the ducts also increased natural lighting in the factory, enabling more energy-efficient operation.



Case Details:

Price:

Case Code:HROB160For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges

Themes

Industrial Relations/ Collective Bargaining/ Ethics
Case Length:17 Pages
Period:2011-2012
Organization:Maruti Suzuki India Limited
Pub Date:2013
Teaching Note:Available
Countries:India
Industry:Automotive

Abstract:

This case is about the labor unrest that occurred at the Manesar plant of India's largest car manufacturer, Maruti Suzuki India Limited (MSIL), the Indian subsidiary of the Japanese automobile maker, Suzuki Motor Corporation (SMC). The Manesar plant witnessed three labor strikes in 2011 and a lockout in July 2012 after the brutal murder of a General Manager (HR) at the company. The three strikes resulted in a revenue loss of Rs.25 billion to MSIL. The case details the events leading up to the gory incident in July 2012 which left one manager dead and more than 100 injured.


The main points of contention between MSIL's management and its workers related to the formation of an independent union by the Manesar plant workers; contract workers being paid one-third the salaries as permanent workers despite both the groups performing similar tasks; and, the exacting rules at work such as half the salaries of workers being deducted if they were late to work by a few minutes. Though the primary responsibility for the July 2012 murder lay with the perpetrators, i.e. the workers, the case discusses the circumstances that led to the incident and questions whether it could have been averted. One of the thorny issues was the alleged buying out of the fledgling workers' union's leaders by the company. This case is meant for MBA students as part of the Industrial Relations curriculum. It can also be used in a Business Ethics curriculum.

Issues:

» Understand the issues and challenges confronting organizations faced with labor unrest (strike action, etc.), collective bargaining, and relations with the union and workers.
» Understand the dark side of contemporary capitalism and contemporary labor force.
» Understand the reasons that compel workers to form unions and analyze whether companies, through their policies, can eliminate the workers’ need to constitute unions.
» Discuss whether paying off unions helps the cause of the companies and workers in the long run.
» Analyze how companies can really be competitive in the long run through better labor relations instead of engaging in labor cost arbitrage.
» Assess the steps that companies’ managements can take to maintain harmonious industrial relations.

Contents:

Key Words:

Labor relations; Labor unrest; Strike; Lockouts; Organizing unions; Capitalism; Dark side; collective bargaining; Marxist theory; Moral Validity; Kant; Industrial relations strategy; Labor cost arbitrage; Wage Discrimination; Maruti-Suzuki

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