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SCHOOL
OPERATIONS MANAGEMENT
Project Report on Supply Chain
Management of Ashok Leyland
Submitted by:
Submitted to:
Chetan Chauhan (14609019)
Gupta
Deepak Chauhan (14609020)
E. Ruthvik Yadav (14609024)
Dr.
Hima
A study or project of this volume can never be an outcome of singe person. We indebted to our
subject teacher Dr. HIMA GUPTA for being the epitome of guidance during the entire project.
We are also thankful to our parents for their encouragement. Without their help this project
would not have seen the light of the day.
We are happy to present a vote of thanks to them for their sincere advice and co-operation that
they have lent us unconditionally.
CONTENTS
S.NO
1.
CONTENTS
Page no.
INTRODUCTION
2.
3.
4.
5.
6.
7.
8.
10
9.
12
10
.
OSCARS-I
13
11.
OSCARS-II
17
12
.
PRODUCT LINE
19
13
.
21
14
.
CONCLUSION
22
15
.
REFERENCES
23
Page | 1
Page | 2
Components machined
Rough
Milling
Drilling
Finish
Washing
Boring
Milling
End Milling
Assembly of
Milling
Bearing caps
Engine Assembly
Fixing of Camshaft
Fixing of
Flywheel Housing
Assembly of
Fitting of
Compressor
Oil Pump
Stainer
Fitting
Fitting of
Oil Coolant
Fitting of
Belt
Page | 3
Final Product
Page | 4
Collecting information about the parts of truck and buses, which Ashok Leyland is
going to produce.
Production system of Ashok Leyland.
Production Strategy of Ashok Leyland (Strategy for HCV and LCV is different.)
PROCESS PLANNING:
Page | 5
Stage 2
Mounting of front spring
Rear,rear spring middle.
Stage 3
Fitting of engine
Mounting.
Passing stage
Checking and Tilting
Stages 4
Side members fastening
To torque limit.
Stage 5
Fitment of FES rear
brackets
Stage
8
Stage
7
Stage
9
Stage
10
Stage
6
Stage
11
Stage
5
Stage
4
Stage
12
Stage
13
Stage
3
Stage
2
Stage 1
FES DRESSING:-FITTING OF
SEATS,
ELECTRICAL WIRING, FLINK
Page | 6
VALVE FITTING.
STAGE 1: Radiator mounting brackets, Air tank mounting, and Air cleaner mounting
Bracket, battery mounting bracket, grease nipple fitment, Bellcom lever mounting.
STAGE 2: DC valve mounting, Oil piping, Clutch oil piping, quick release valve
Mounting.
STAGE 3: Spring fitment, frame punching
STAGE 4: Silencer fitment, first axle mounting.
STAGE 5: Second axle mounting, slack adjustment
STAGE 6: Fuel piping, Air piping, Air filter mounting, Diesel filter mounting,
Steering box mounting.
STAGE 7: Engine mounting, fuel tank mounting, Diesel filter mounting,
Steering box mounting.
STAGE 8: Radiator fitment, Radiator supports tightening, Rear lamps
Fitting, Turbocharger outlet pipe connection and Radiator hose connections.
STAGE 9: Exhaust piping, Shock absorber fitment (front and rear), Battery
mounting and connection of circuits, battery casing fitment and second
Propeller shaft mounting.
STAGE 10: Tyre mounting, Maxcut checking.
STAGE 11: FES mounting, Electric fitments (male-female connecting process).
STAGE 12: Bumper fitment, FES wiring, and Universal joint (UJ) fitment with
steering handle, ABC fitment and connecting.
STAGE 13: Greasing of joints, nuts, etc., off track arrangements.
It is known that Ashok Leyland has implemented one of the most successful supply chain models
in the industry. It had introduced the Supplier development Program as part of its World-Class
Supply Chain Management. Mission Statement of the Company clearly confirms the fact that the
fulcrum of their strategy is to maintain good relations with the vendors. "Our Vendors are our
valued partners in our business development and we shall work with them in a spirit of mutual
co-operation to meet our business objectives."
Page | 7
are bought-out.
- Ashok Leyland believes in global sourcing. Consistent with its operational needs, AL would
consider both domestic (Indian) as well as international vendors. Global sourcing is normally
resorted to overcome local constraints - in the form of technology, quality, capacity or cost
effectiveness.
- Ashok Leyland would consider new suppliers for required components, based on Vendors'
ability to meet our specification, price and delivery schedules.
- Vendors are required to have a strong manufacturing base with adequate engineering support
for their own product development activities, as needed by the category of product, viz
Proprietary, Bought Out Finished (BOF), Bought Out Rough (BOR) and Sheet Metal items.
Castings and forgings are to be received in fully finished/machined condition, progressively.
Ashok Leyland could make available to the vendors necessary technical expertise, wherever
possible and needed, particularly with regard to developing the manufacturing process.
- As QS 9000 certified company, Ashok Leyland's Vendors are expected to have a good quality
system, meeting ISO 9000 requirements. Ashok Leyland would be willing to help Vendors in the
preparation for ISO certification by offering necessary technical guidance.
- Vendors' quality system should encompass, at the minimum Cost effective process, Assured
process capability; Continuous improvements based on customer feedback, Compliance of all
statutory /legal/ commercial requirements of Ashok Leyland.
- A stage of development where the Vendor can come under Ashok Leyland's self-certification
system tractability - first-in first-out basis and Ashok Leyland has established a transparent
periodically audited Vendor Rating System. Ashok Leyland places emphasis on optimizing the
inventory and Vendors are required to progressively meet "Just-in-Time" requirements. Delivery
modes as well as packaging are required to minimize the handling/loading and unloading time.
- Though not a must, Ashok Leyland would prefer a manufacturing / assembly / support base at
close proximity to the production units. Ashok Leyland encourages its vendors to participate in
their e-servicing project starting fiscal year 2004-05
Page | 9
Page | 10
Ashok Leyland's supply chain had gone haywire under the recession which had eaten
away 17.62% of its revenues in one year forcing the company to helplessly allow
inventories to build up.
The results were showing on working capital. It had climbed from 33.34% of sales in
2007-2008 to 58.81% of sales in 2011-2013.
2500
2482.5
2014.3
2000
1500
2007-2008
2011-2013
1000
124.9
18.4
500
0
Sales
PAT
Page | 11
Ashok Leyland was facing the huge task of integrating its entire supply chain and at the same
time it had to reduce its costs, inventory and improve customer satisfaction.
Rising raw material cost was a serious concern for the company. This was mainly triggered by a
steep rise in steel and copper prices. Therefore, Ashok Leyland decided to streamline its supply
chain process and the company started its SCM project OSCARS to optimise its supply chain
and rationalise its sources. Hence the main objective was to improve its supply chain process &
make it a cost effective one i.e., create an Efficient Supply Chain model such that it could
manage to create a Zone of Strategic Fit to cater to its supply chains low to moderate Implied
Demand Uncertainty.
IN-BOUND SUPPLY CHAIN
Ashok Leyland did not seem to succumb to the 'uncertainty gloom' that was playing havoc to its
business environment. It decided to meet the challenge by re-gearing its systems, be it material
order, procurement, material handling, inventory control or production.
Ashok Leyland conducted exhaustive brainstorming sessions inviting ideas on
cost cutting.
Quality Circle teams were formed for this purpose.
Ashok Leyland took every employee's ideas into account and figured out a way to
keep things going and reduce production without inflicting pain.
The recession saw Ashok Leyland waging a war on wastage and inefficiency.
To reduce costs and to improve the in-bound supply chain Ashok Leyland introduced The Project
"OSCARS (optimising supply chain and rationalising sourcing), which includes supplier
partnership, vendor base rationalisation, supply tiers, inventory optimisation through JIT, total
cost management, logistics initiatives-sourcing and global sourcing. The OSCARS project
identified two main methods of reducing costs in the inbound supply chain reduce material
costs and through optimum inventory level, reduce the invisible inventory carrying costs.
Page | 12
Statu
s
9697
97
98
98
99
99
00
00-01
Vendor
Base
101
7
95
0
73
8
61
2
400
ISO/QS
certifie
d
245
28
1
36
4
38
2
400
Self
certifie
d
vendor
s
210
24
0
26
0
29
0
350
The figure shows how Ashok Leyland through its project Oscar Inbound went about
rationalising its vendor base.
c) Single Window System
The Strategic Sourcing and Corporate Quality Engineering (CQE) teams jointly formed the
single window system bringing with them specialized commercial and technical knowledge.
For the suppliers this had created a convenient single-point contact with AL, for sharing
drawings, for negotiating prices and long term business volumes and consultancy on quality
to management issues.
Page | 14
d) Supplier Tiering
AL pruned its panel of direct suppliers through tiering and system buying. Under this AL
dealt directly with tier one suppliers who, in turn, were supported by tier two and tier three
suppliers. Vendor tierisation program helped in achieving economies of scale, system buying
& creating rationalization of supplier base.
The benefits of system buying could be illustrated with the example of the tools kits that
accompanied every vehicle. Tear down studies and value engineering analyzed the
constitution and composition of a part to prune cost through substitution, reduction or
elimination of materials/ sub-assemblies without affecting quality and performance.
e) Just In time(JIT)
AL focused on JIT approach for high value/high volume items and low cost logistics for low
value high volume items. Project OSCARS brought about a few fundamental changes. The
push system which means let us make all we can just in case we need. This system given a
way to pull system which means make what the customer needs, when he needs it Each
stage produced only as much as the next stage needed. This resulted in savings of Rs 8.50
crore a year and a lean supply chain.
f) Total cost management
Total cost management included various cost management initiatives, such as daily
management process, control, design, technology and capacity. Total savings was 3% of total
operating cost.
g) Logistics initiative
Page | 15
Truckload &
Space
Optimization
Enhancement
of Truck
turnaround
Transport
Route
Route
Optimization
h) E-sourcing
E-sourcing included global benchmarking gain through bidding, identification of cost
competitive sources, introducing best sourcing practices, increasing efficiencies and
minimising costs, improving bottom line of the value chain. All these activities have saved
11.5% of total material cost.
OUTBOUND SUPPLY CHAIN
A customer survey and a study of benchmarks had come out with three major parameters for
service level targets which are Order to delivery time, Reliability of deliveries and Availability of
order status information. The customers could expect delivery in 5 days from the date of
payment for regular models for multi-axled vehicles the promised period was two -four weeks.
The second promise was that the age of the vehicle when delivered would be maximum of 90
days. Tight pipeline inventory norms were set for different models and markets and were met
through a new three tier distribution network.
Plant sales yards acted as national pools to hold rare models and excess of regional requirements.
The next tier was made up of the five regional stock pools, which ensured just-in-time supplies
to all regional sales offices. To understand customer needs and assimilate the knowledge, AL
adopted 4P Programme. Probe, Prioritize, Plan and Position. This worked in tandem with
manufacturing as part of cross-functional team (CFT). The CFTs worked towards continuous
improvement in the products and marketing. AL also built a marketing information system
(MIS) to monitor the trends and forecast demand from the input dealers and field executives.
Page | 16
Ashok Leylands Supply Chain Finance - Ashok Leyland general practice: Own dealership for
Spares and Original Equipment Vehicles. It follows Just in Time Process, where in Ashok
Leyland does not hold any inventory. Its suppliers held the Raw Material inventory and end
dealers held Finished Goods stock, thereby reducing their profitability and financial health. But
to improve the value chain of Ashok Leyland there needs to be an overall improvement of the
whole value chain of Ashok Leyland. So Ashok Leyland provides bank credit to dealers and
suppliers to manage their liquidity and financial condition.
Page | 17
Leaders in the Indian bus market, offering unique models such as CNG, Double Decker and
Vestibule bus.
2. Trucks
Pioneers in multi axle trucks and tractor-trailers.
3. Engines
Diesel engines for Industrial, Genset and Marine applications, in collaboration with technology
leaders.
Page | 19
Ashok Leyland is Brand name under the flagship of hinduja group. To sell is to know your
customers. Ashok Leyland has built-up a data base of 130,000 customers. The information
captures the business nuances of the customers and shows Ashok Leyland precisely where and
how the customer would use trucks. The company today knows much more about its customers
today than earlier.
Ashok Leyland has a large customer base for public transport buses, commercial vehicles,
defense and special vehicles for special purpose.it caters to different class of society which
includes individual buyer, industrial buyer, government buyer and defense also.
Industrial user
Defense user
Public user
Government user
INDUSTRIAL USER-Industrial user includes transporters, Logistics Company, coal and mining
industry and other industries etc.
PUBLIC USER-Public user includes individual or passenger transport.
GOVERNMENT USER-Government user include state and central transport like DTC, UPSRTC
and other.
DEFENSE USER-Defense user include Indian army trucks, tanks and transport buses.
CONCLUSION
Ashok Leyland has got the world class engineering and to offer worldclass technology that is relevant and affordable to the Indian customer is the
philosophy that drives R&D at Ashok Leyland. The role of Ashok Leyland is
Page | 21
REFERENCES
Page | 22
Page | 23