Revamping the Supply Chain - The Ashok Leyland Way
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Case Details:
Case Code : OPER004
Case Length : 08 Pages
Period : 1992-1998
Organization : Ashok Leyland
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Automobiles
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Revamping the Supply Chain
AL seemed to realize that cost cutting would work only if the supply chain was smooth. Thus, in 1999, AL launched Project OSCARS (Optimising Supply Chain and Rationalising Sourcing). OSCARS identified two methods to reduce costs in the inbound supply chain: reduce material costs and through optimum inventory levels reduce the invisible inventory carrying costs...
Single Window System
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The Strategic Sourcing and Corporate Quality Engineering (CQE) teams jointly
formed the single window vendor management agency, bringing with them
specialised commercial and technical knowledge. Within the centrally negotiated
price and share of business, unit material functions interacted with the
approved panel of vendors to "pull" materials in line with their production
plans.
For the suppliers, this had created a convenient single-point contact with AL,
for sharing drawings, for negotiating prices and long-term business volumes, and
for assistance and consultancy on quality to management issues...
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Supplier Tiering
AL pruned its panel of direct suppliers through tiering and system buying. Under tiering, AL dealt directly with tier-one suppliers who, in turn, were supported by tier-two and tier-three suppliers. The benefits of system buying could be illustrated with the example of the tool kits that accompanied every vehicle...
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Oscars IIAfter revamping the inbound supply
chain, AL went out to revamp the out-bound supply chain. The revamp of
the out-bound supply chain (code named OSCARS II) had the twin
objectives of improving customer satisfaction and reducing finished
goods inventories, and reaching improved service levels with optimum
pipeline inventory levels...
The Comeback
In the first half of 1999-2000, AL recorded a net profit of Rs 1.9 crore
on sales of Rs 1,092.8 crore, against a Rs 36.7 crore loss for the
corresponding period in 1998-99... |
Exhibits
Exhibit I: Revamping the Supply Chain
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