Operations Management at Bajaj

Markets Motorcycles: Overall Two-wheeler sales of Indian players is dominated by the domestic market and, within it, by motorcycles. After growing at a sharp clip from the late 1990s, motorcycle sales witnessed a 7. 8% drop in volume in 2007-08, due to falling domestic demand as a result of rising interest rates and many private sector banks reducing their retail lending exposures. 2008-09 saw a modest increase in motorcycle sales of 4%, driven largely by growth in cash sales. Even so, sales of motorcycles (both domestic and exports) in 2008-09 has been lower than what it was in 2006-07, before the slowdown hit this sector. ABOUT BAJAJ:- The group comprises of 34 companies and was founded in the year 1926. The group's flagship company, Bajaj Auto, is ranked as the world's fourth largest two- and three- wheeler manufacturer and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. Founded in 1926, at the height of India's movement for independence from the British, the group has an illustrious history. The integrity, dedication, resourcefulness and determination to succeed which are characteristic of the group today, are often traced back to its birth during those days of relentless devotion to a common cause. Motorcycles : Domestic Sales for Bajaj Auto The company classifies motorcycles into three segments, based on consumer categories and approximate price points. These are: a) Entry segment. These are typically 100 cc motorcycles at a price point in the neighbourhood of Rs. 35,000. Bajaj AutoDespite the slight uptick in the industry’s sales volume, Bajaj Auto did not maintain volume growth, for reasons that will be discussed below. From 1. 66 million motorcycles in 2007-08, the company’s domestic sales fell by 23% to 1. 28 million units in 2008-09. Some of this was compensated by a 31% increase in exports to 631,383 units. But it was not enough. Consequently, Bajaj Auto’s market share(domestic and exports, combined) fell from 32. 7% in 2007-08 to 28% in 2008-09. b) Executive segment. This largely comprises 100 cc to 135 cc motorcycles, priced between Rs. 40,000 to Rs. 50,000. We arein this segment with two brands: XCD and Discover. c) Performance segment. These are sleek, high performance, with price points in excess of Rs. 50,000. We are present here with our flagship brand, the Pulsar, and our cruiser, the Avenger. We dominate this space, with a domestic market share in excess of 47%. Using the three-fold classification described above, Chart plots Bajaj Auto’s domestic sales of motorcycles over 2008-09. [pic] Products Avenger Avenger 200 DTS-i Pulsar Pulsar 135 DTS-i Pulsar 220 DTS-i Pulsar 180 DTS-i Pulsar 150 DTS-i Discover Discover 135 DTS-i Discover DTS-i Platina Platina 125 Platina 100 cc NINJA Ninja 250 R Operations Plants Bajaj Auto’s vehicle manufacturing capacity stands at 3. 96 million units — comprising 3. 6 million two-wheelers and 360,000 three-wheelers. The newest plant at Pantnagar (Uttarakhand) has a capacity to produce 900,000 two-wheelers. Table gives the capacity data. [pic] Pantnagar Bajaj Auto’s production at its state-of-the-art Pantnagar plant (Uttarakhand) has been on the rise. In 2007-08, the plant produced 276,925 motorcycles. This increased by 15% to 318,321 vehicles in 2008-09. By end-2008-09, Pantnagar was producing some 40,000 motorcycles per month. To maximise the tax benefits available at Uttarakhand, the company is shifting some of its more profitable products to the Pantnagar plant. After the shift of these products, the plant is expected to produce around 60,000 vehicles by the third quarter of 2009-10. Table gives the data on which products are manufactured in what plant. pic] MAJOR SUPPIERS |SUPPLIERS |PARTS | |USHA |PISTONS,RINGS | |ROLON |CHAIN,CHAIN SPROCKET | |ENDURANCE |FORKS,SHOCKERS,RIMS,ALLOY-WHEELS | |PRICOL |METER CONSOLE |MINDA |LOCKS ,HORNS,SWITCHES | |LUMAX |LAMPS | |SUNDARAM |FASTENERS | |KBX |DISK BRAKE PADS | |BOSCH |SPARK PLUGS | |EXIDE |BATTERIES | |MRF |TYRES | Supply Chain Bajaj Auto’s supply chai n encompasses the process from vendors to the final customers via manufacturing. Therefore, the Company’s supply chain involves as much the vendors and the procurement-to-payment logistics, as it does the manufacturing to selling process, or the order to cash system. Given below are some of the key supply chain initiatives of Bajaj Auto. Vendors Most of the Company’s vendor initiatives, including the Pantnagar operations and TPM have been discussed earlier. What needs to be emphasised is that the 16 vendors clustered within the campus of Bajaj Auto’s Pantnagar plant were a part of a planned process of project development – where the vendors were fully integrated with the plant, starting with basic raw materials, automated paint, plating and powder coating plants. This has ensured that the maximum possible value addition is done within Uttarakhand, so as to maximise the tax advantage and make Bajaj Auto’s motorcycles even more cost competitive. Initial facilities created by vendors at Pantnagar at an aggregate investment of Rs. 5 billion (Rs. 500 crore) are for half million motorcycles per year, which will be increased with balancing investments to roduce one million motorcycles per year to synchronise with the Company’s plans. Dealers Bajaj Auto has adopted a channel policy approach which is unique in the automobile industry. This policy and its linked initiatives are guided by the requirements of specific se ts of the Company’s final customers. 1. The Primary Channel : This comprises 408 exclusive two-wheeler dealers, 75 exclusive three-wheeler dealers, and 98 dealers who deal in both product categories. Bajaj Auto has followed a policy of systematic network consolidation, in which the primary dealerships have been given a larger scale and scope to operate based on their strengths. 2. The Secondary Channel : Much of Bajaj Auto’s recent success can be attributed to policy of rapidly adding to the number of secondary outlets, which provide sales, service and spares support in the vast hinterland of India. These are in the form of 1,500 Authorised Service Centres (ASC), 4,500 Rural Service Outlets (RSO), and 750 Young Engineer Service (YES) centres in the towns and cities. 3. The Rural India Foray : The Company has been aggressively pursuing initiatives to increase two-wheeler penetration in rural India. A large number of rural outlets were added to the network during the year, which not only increased hinterland sales but also gave additional employment in the rural sector. 4. Pro-biking : This initiative sits far away from the rural India play but is no less important. Bajaj Auto believes that young India doesn’t pay to buy motorcycles; it pays to buy excitement and exhilaration. The Pro-biking initiative, which was kicked off with the inauguration of first store in Pune in August 2005, aims precisely at creating this thrill. Owned and operated by Bajaj Auto, Pro-biking showrooms are now operational in Mumbai, Kolkata, Chennai, Hyderabad and Ahmedabad. ———————– AUTOMOBILE – BAJAJ Assignment on Operations Management Prasad T. P. FN-105 Mahesh R. FK-1895 Jijo Lukose FN-77 Deepu P. FK-1905 Abinash Nanda FK-2010 Anoop B. FK-2005 Manu Korah Mathew Athul Raj Vyshakh P. R. FK-1919 Balaji Vinay Singh FK-1883 PRasad