The Ashok Leyland Way

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    Revamping the

    Supply Chain

    The Ashok Leyland Way

    Submitted by: Sec B,Group 9

    Anup Kamath 13070

    Dheeraj Govind Sasi 13080Lokesh Srivastava 13090Oindrila Roy 13100Shreyas H.N. 13110Vikas N 13120

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    Background of the Case

    Questions

    Ashok Leyland, with an aim to reduce costs improvein-bound supply chain through several important strrevamping measures. Explain

    The revamp of the outbound supply chain had the twobjectives of customer satisfaction and reducing finishgood inventories. Discuss how Ashok Leyland re-engineered its out-bound supply chain.

    Discuss in brief the quantitative benefits in regard to measures of supply chain revamping exercise for AL

    Contents

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    Ashok Leyland is a commercial vehicle manufacturin

    company based in Chennai, India

    The companys major business is in logistics, i.e., movgoods and people. This area had seen a severe declinelate 1990s due to the recession

    The recession forced the company into revamping thesupply chain to cut costs and improve their processes

    Case Background

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    Objectives of In-bound supply chain re-engineering

    Reduced Material Costs Reduced Invisible Carrying costs

    Steps taken Actively reducing the number of suppliers from 1400 to

    750

    Suppliers chosen if they had good quality systems Cost effective processes Assured process capacity

    Continuous improvement via feedback, compliance tolegal/statutory/commercial requirements per AL

    Suppliers need to be developed enough to come under ALself-certification and traceability system

    Quest 1: Discuss AL in-bound supply chain

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    Used the tiering model to consolidate suppliers

    AL interacted with tier 1 suppliers who sourced componenttier 2 and tier 3 suppliers, assembled components and sent t

    Engaged in Value engineering

    All vendors needed to move to JIT for high value, high valucomponents

    Components were split based on costs relative to total prod AL produced only that which was needed for the step, neve

    Used a funnel planning system Split as 2-2-8 week plans

    Quest 1: Discuss AL in-bound supply chain(Contd)

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    Created a CFT (Strategic Sourcing + Corporate Qualit

    Engineering) Used skills and knowledge to create a Single window system

    interact with their clients

    Advantage for AL Unit Material Functions from AL interacted with approved suppliers t

    materials in line with their production plan

    Advantage for Suppliers Share component drawings with AL

    Easily Negotiate Prices

    Understand plans for Long term volumes

    Assistance from and consultancy for AL from quality to management

    Quest 1: Discuss AL in-bound supply chain(Contd)

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    Engaged vendors in Joint Improvement Plans (JIT)

    Provided Technical assistance and financial support

    Strategic Sourcing

    Wanted process gains that were real, painless and sustainabthe suppliers

    Conducted tear down studies and value engineering analys Aimed at reducing costs by substituting, Reducing or elimin

    without reducing quality and performance

    Shared with suppliers

    Quest 1: Discuss AL in-bound supply chain(Contd)

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    Objective of Out-bound supply chain

    Improve Customer Satisfaction

    Reducing Finished Good

    Improve Service Levels with optimum pipeline inventory le

    Plans focused on

    Order To delivery time Reliability of delivery

    Order status information

    Quest 2: Discuss how Ashok Leyland re-engineered its out-bound supply chain

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    Maintained a tight inventory model via three tiered m

    Quest 2: Discuss how Ashok Leyland re-engineered its out-bound supply chain (Contd)

    Plant Sales Yard- National pool

    - Holding rare models

    - Excess of regional needs

    Five Regional Stock pools- Ensured JIT supplies to Supplies to Regional Offices

    Regional Sales Offices

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    Quest 3 Discuss the quantitative benefitsin regard to the revamping exercise of AL

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    Profit changes

    Quest 3 Discuss the quantitative benefitsin regard to the revamping exercise of AL

    98-99Loss of 36.7 crores

    99-2000

    Profit of 1.9 Crores

    Total sales of Rs 1092.8 Crores

    Change

    Increase of 38.6 Crores in Profits

    Result of strategic raw material sourc

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    Raw Materials

    Costs down by 1-2%

    Inventories

    Reduction in inventories amounting up to 300 Crores This resulted from tightening supply chain and invent

    Quest 3 Discuss the quantitative benefitsin regard to the revamping exercise of AL

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    Can make use modified goods wagons for transporta

    trucks.

    Invest more in R&D.

    Collaborate with other companies for technical suppo

    Recommendations for further improvement

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    Thank Y