Distribution and Supply Chain Management

CIA 3

The 7 R's of supply chain management and its application to

Maruti Suzuki India Ltd..

Submitted by Group 2,
Arpit - 1421005
Sauraj - 1421008
Naveen - 1421020
Nitish - 141021
Saurabh - 1421026
Virender - 1421032
Ankit - 1421205

7 RS OF LOGISTICS( R means Rights):

Logistics is the process of strategically managing the flow of materials and information.
The 7 Rs of logistics are:i.
ii.
iii.
iv.
v.
vi.
vii.

Right product
Right customer
Right time
Right place
Right condition
Right quantity
Right cost

DEFINITION: Delivering the Right product to the Right customer at the Right time and at the
Right place in the Right condition and in the Right quantity at the Right cost leads to customer
fulfillment and reduces waste and improves cost efficiency.
i.

Right Product: Manufacturer has to make sure that product which is in demand in

ii.

the market is in available with them and also through its channel member.
Right Customer: Manufacturer should segment the market in a way that the targeted

iii.

customers get the products through best supply chain available with them.
Right Time: The needs of the customers are changing from time to time, so
manufacturers have to make sure the timely availability of their products with their

iv.

channel members to fill the customers demand for the product.

Right Place: Manufacturer has to make sure that their products are available at the
right place( with each channel member) without any mismatch of delivery location of

v.

their products.
Right Condition: The products available at different channel have to be in good
working condition without any damage to avoid the return of the product to previous
channel member which may result in delay/shortage of products for the next channel

vi.

member or the customer.

Right Quantity: Availability of right quantity to avoid the shortage at any stage
which may result in losing an end customer. Quantity of products in transit is to be

vii.

efficient enough to fulfill the current product demand in the market.

Right Cost: Manufacturer should analyze the market well enough to make sure that
the products are available at best price for the end customers considering the best

margins for the channel member so that they will push the products faster as
compared to the competitors.

Application of 7 Rs in Maruti Suzuki India supply chain

i.

Right Product: Many of Suzuki Motor Corporations global vendors has set up the
joint ventures in the northern region of India. While setting up the plant the
government had approved of manufacturing only on the condition of localization of
components. Maruti used this opportunity by scouting for entrepreneurs and turning
them into vendors, facilitating loans, licenses, technical know-how and even location

ii.

in a phased manner that is currently demanded by the customers.

Right Customer: Maruti is engaged in the business of manufacturing, purchase and
sale of motor vehicles and automobile spare parts. MSIL have six plants, three located
at Gurgaon, Haryana and other three located at Manesar Industrial Town, Haryana.
Maruti has a strong dealer and distributor network across India and through the
forecasting they estimate the demand. They have 246+ suppliers in Tier I and more
than 800+ distributors in Tier II and III cities. Maruti's value proposition to its
customers is to provide low cost, low maintenance and durable vehicles that can
survive the demands of the Indian roads. Lean supply chain and logistics management
are critical success factors and just-in-time (JIT) in supply chain and logistics are
powerful strategies that have helped Maruti provide the right products to the right

iii.

customer.
Right Time: Maruti started its operations in India with the Maruti 800 model and
today it is the largest car manufacturer in India by providing the largest variety of
brands in the same category, the hatch back segment. The company has 246 vendors,
out of these, they have joint ventures with 19 of them and hold strategic equity stake
to have a say in production and quality issues. In order to reduce delays in production
due to the lag time in supplies, Maruti adopted the Just-in-Time system of inventory
management and E-Nagare system of electronic flow. These two systems of supply
chain management have helped Maruti reduce the lead time of key components from
suppliers from 30 days to 2 hours. Over 76 per cent of the company's 246 suppliers
are located within 100 kilometers of radius, who supply 86 per cent of the
components by value to Maruti.

iv.

Right Place: In order to ensure that the vehicles and spares reach the distributors on
time and without any mismatch. Maruti has integrated the E-Nagare system of MSIL
throughout the outbound logistics. The management of spare parts and components in
terms of warehouse management and transportation was outsourced. Through the ENagare system, MSIL can download the production schedule and coordinate with

v.

channel members for the components and the quantity.

Right Condition: MSIL has deployed the trako Visual Cargo solution in outbound
logistics trucks that transport new cars from the factory to MSIL dealers across India.
The solution provides transport companies associated with MSIL better visibility into
the transport logistics to streamline business operations, improve efficiencies and
safety, control costs and meet delivery timelines. The trako Visual Cargo is software,
as a service solution, that provides on-demand visibility from loading to delivery
location of cargo vehicles using Global Positioning System (GPS) devices. It is a
single, common platform for supply chain stake holders, which include consigners,
consignees, transporters and vehicle owners, to track and manage the movement of

vi.

goods in transit to enhance operational efficiency and improve customer service.

Right Quantity: With the help of the E-Nagare system, Maruti ensures that the right
quantity reaches the channel members at the right time. The vehicles and spare parts

vii.

stock is continuously monitors by the manufacturer, component vendors and dealers.

Right Cost: Maruti focuses on two areas: inventory and delivery to dealer, as
reducing working capital is very important because it reduces the dealers costs, for
which proper and timely delivery is essential. The vehicles leave the plant for
delivery to the dealers only on receipt of the payment. Earlier the delivery time was 6
weeks, which has been reduced to 4 weeks, which means reduction in the cost of the
finance paid in advance for the inventory in transit by 2 weeks.