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Maruti Udyog ready for Next Leap

By Suveen K Sinha in New Delhi
September 20, 2005 09:36 IST

Maruti Udyog Ltd has embarked upon 'The Next Leap,' an all-new campaign to cut costs and increase productivity over the next three years that will also apply to the operations of the company's component suppliers.

All the wings of the company have been alerted and they are working to crystallise the campaign.

The Next Leap comes on the back of 'Challenge 50,' Maruti's three-year programme to cut costs by 30 per cent and increase productivity by 50 per cent that ended in 2004-05.

"The details of the Next Leap will be out in about a month," said Maruti's Managing Director Jagdish Khattar.

"The Next Leap" will, just like its predecessor programme, focus on the cost and productivity but mark a step ahead by seeking to replicate the processes at vendor companies. It will be rolled out in phases.

"This time, the gains will be for the suppliers too," said a company insider.

"Challenge 50's" successful implementation – it increased productivity by 46 per cent over three years – is considered a key factor in increasing Maruti's profit before tax by a massive 69.5 per cent to Rs 1,304 crore (Rs 13.04 billion) in 2004-05, compared with the previous year, even as its gross sales revenue (net of excise) rose 19.7 per cent to Rs 11,353 crore (Rs 113.53 billion). That was achieved in spite of a rise in the cost of key inputs such as steel.

The programme to cut costs and increase productivity is an implementation of the Maruti Production System, which has been derived from the Suzuki Production System, and follows the practices at the Japanese company's Kosai plant.

Improving the quality is a key element. The goal is to get it right the first time since inspection and repairs take time and cost money, as well.

Suveen K Sinha in New Delhi
Source: source