‘It is in Maruti Suzuki’s DNA not to have overcapacity’

The Indian automotive industry is facing a technological churn which requires it to adapt to fast changing market trends. What works for the country’s largest carmaker Maruti Suzuki—which began with small cars—is the company’s ability to expand its portfolio to mid-sized sedans and even sports utility vehicles (SUVs). Fortune India’s cover story for October 2018 reveals how Maruti Suzuki plans to fend off competition—with efficiency and precision being at the core of its production process. Maruti Suzuki sold more than 20 million cars in India over the past three decades. Rajiv Gandhi, senior executive director (production), Maruti Suzuki, talks to Fortune India about how the company is preparing its shop floor at its factories to meet the rising demand. Edited excerpts from an interview:

With the demand so high for most of Maruti Suzuki’s cars, how do you calibrate the production?

I think it’s in Maruti Suzuki’s DNA to not have overcapacity at any point of time. Always plan optimum capacity and improve upon it. It can be a very serious problem for a company to have a capacity of hundred and a demand of 80. Therefore, we always plan optimum capacity and see how we can improve productivity and efficiency to cater to that additional demand. It’s in our blood now how to get that extra productivity. When we started, we used to have one line for one model. That constrained us a lot from a flexibility point of view. But, over the years what we have done from a production standpoint is that we have gone for 100% flexibility at our assembly shops, paint shops, etc. There are assembly lines today that make five different models.

The Vitara Brezza and Baleno have a long waiting period. How do you intend to reduce this waiting period?

You know what was the Vitara Brezza projection? 80,000. How much are we making this year? 1,75,000. Yet, we have to improve the productivity levels. So, we not only improve the productivity of the manpower working, with we improve the productivity of robots also. Software is tweaked which makes the path of each robot more efficient, even if it is a half a second improvement. So we have to see how to utilise these robots 100%. Based on half second of one robot and half second of another robot, we adjust the spot and improve efficiency. With a little bit of an investment but we are able to do increase the efficiency in the same production line with no problem. These are some of the measures we take.

Product cycles have reduced because of changing customer tastes. Can you explain the pressure that this puts on you?

Earlier, we used to have a new model every third year or fourth year. Now, every year one or two new models are required. There is a very interesting concept—there is a designer who is making the car on the design board and we actually manufacture it on the floor. How good is that design for manufacturability—that is where the gaps come. The best way out is to use a lot of front-loading techniques, in the sense that pre-empt all these things through various advanced simulation tools. We simulate each and every part fitted in the assembly process to see whether there is any issue that is likely to come up. My attempt is to see that all these manufacturability issues are corrected on the design board itself even before the drawings are released. I am not saying that we have to be perfect on it yet. As you know we have capacity constraints, so we cannot afford to have issues. So it's very important for design and production teams to work together.

There is this constant fear that automation will replace people and they will be redundant after automation comes in. What is your perspective?

As far as we are concerned, we have three-four basic areas where we always go for automation. Number one is quality. So, if quality requires any automation for example weld spots—which is important for the overall fit of the final vehicle. Now 100% weld spots are automated. If the company is growing, there is no manpower reduction. We make close to 1,500 variants of 17 models. Another major area is what we call the 3D—dirty, dangerous and difficult jobs. For example the vehicle is moving and the guy has to put the spare wheel in the dickey 400 times in a shift. So imagine him taking the upper tyre and putting it in a dickey space 400 times in eight hours. This is a difficult job. This is an area which requires automation. Our focus is always that the operator working on the station is having a very pleasant time with no great difficulty in doing any particular job or fitment because if that is ensured, my quality is ensured. If he is facing difficulties, definitely he will make a mistake one day and I will be responsible for that mistake.

Could you tell us about the e-nagare platform?

I was in supply chain my first 17 years. So many times those days I used to go to railway stations to get consignments myself. Things are much more stabilised, much more mature now. But there were times when we used to keep 15-20 day inventories. Before the e-nagare started, we had a system of daily schedule to vendors for the next day. So the basic concept of e-nagare was to further improve on the inventories. We have to give them a little longer apprisal. What is required, when it’s required, where it’s required and how much is required. That is our basic idea. So, this entire work is done in this e-nagare system. In the e-nagare system, every morning at 4 o'clock, every vendor gets to know details about what is to be supplied the next day. We have inventories for much less than a day. We plan according to the sales plan and automatically each vendor, each part and the quantity gets calculated and it is sent to the extranet.

What are the key benefits of moving to the zero inventory system?

The benefit is straight away cost. Because whatever we have bought from vendors and paid to them, depends on how fast we can realise it from a car customer who is buying the vehicle from us. This turnaround has to be low as possible. The lower that is, the most profitable the company would be. There is no point in vendors keeping huge stocks, and we keeping low stocks. Because the cost of vendor will also get built in the part supplied to us and ultimately we will have to pay for the inventory cost. So, the whole value chain has to be lean. If the value chain is lean can we derive the best benefit of this. From a cost point of view or a profit point of view, keeping high inventory is a very bad proposition. Nevertheless, we know that Chennai floods will come... or when we get to know that Jat agitation is likely to come up in Rohtak, we do increase inventories for those parts when we pre-empt it. We know that some of these situations might happen so we might as well plan for that.