Process of indigenization: Case of Maruti Suzuki

Suzuki experts have visited several component suppliers along with Maruti’s own, engineers to assist them in overcoming quality problem and in making suggestions for improved production processes so that these problems could be overcome on a permanent basis. Because of all this, today Maruti has achieved an indigenization level of 62.13 per cent for the car, 66.16 per cent for the van and 44.94 percent for the Gypsy. However, in this effort also Maruti has received unstinted support from Suzuki Motor Co.

To speed up this process of indigenization, Maruti decided to set up joint venture companies with Indian partners for certain critical components requiring high investments. In this also, Suzuki has provided support by contributing to the equity capital of these joint ventures and also by assisting in locating suitable partners in Japan for technical collaboration by these companies.

Maruti’s collaborative efforts with Suzuki have not been limited to transfer of technology alone. It has sought to learn and understand from Suzuki the, different managerial practices adopted by them and how it can adapt them to the Indian context. Once again, the Japanese personnel working at Maruti at Maruti Udyog have assisted in establishing various work practices. These include the popularization of voluntary activities such as the quality circles among shop floor workers. Maruti’s efforts in this direction, which were started about two years ago, are now yielding good results. The workers form groups and meet to discuss and find solutions to common problems. These solutions often result in significant savings to the company and in addition improve the morale and motivation of the workers who are suitably rewarded financially based on the benefits derived from their suggestions. Similarly an individual suggestion scheme is also in operation for the last two years and the company with employee strength of 3,500 receives on an average 1,500 suggestions every month.

Further, the Japanese emphasis on quality, cleanliness and orderliness in the factory, has succeeded in creating a consciousness among the Indian workers also towards these factors. The different shop employees in the factory take pride in keeping their work place clean and in creating an invigorating and exciting work, environment. Catchy slogans regarding quality, safety and cleanliness are suggested by the workers themselves and put up in different shops in the form of posters to reinforce among all people the company’s emphasis on these issues:

Evidence of a successful collaborative venture can be seen in some of the following yardsticks:
1) Manufacturing facilities have been set up in the scheduled time and well within the original, cost estimates
2) Peak production levels of over 8000 vehicles a month have been reached in record time and two years earlier than originally planned.
3) Employee productivity in terms of number of vehicles, manufactured per employee per year was 28 in 1986 – 87, already, exceeding the norm of 25, originally set as a target.
4) Attendance at the plant is over 93 per cent which is higher than what most plants in India have ever achieved, even though our own target is to reach attendance levels of at least 95 per cent.
5) Productive working time at the plant is seven hours and 45 minutes out of a working shift of eight hours, which is again much higher than an average productive time achieved by most manufacturing plants in India.
6) Despite the adverse impact of the Yen appreciation, the company has been able to maintain a reasonable level of profitability through concerted cost reduction measures and attainment of higher productivity.