Introduction

Ashok Leyland is a commercial vehicle manufacturing company based in Chennai, India.

Founded in 1948, the company is one of India's leading manufacturers of commercial vehicles,
such as trucks and buses, as well as emergency and military vehicles. Operating six plants,
Ashok Leyland also makes spare parts and engines for industrial and marine applications. It sells
about 60,000 vehicles and about 7,000 engines annually. It is the second largest commercial
vehicle company in India in the medium and heavy commercial vehicle (M&HCV) segment.
With passenger transportation options ranging from 19 seaters to 80 seaters, Ashok Leyland is a
market leader in the bus segment.

The origin of Ashok Leyland can be traced to the urge for self-reliance, felt by independent
India. Pandit Jawaharlal Nehru, Indias first Prime Minister, persuaded Mr Raghunandan Saran,
an industrialist, to enter automotive manufacture. The company was established in 1948 as
Ashok Motors, to assemble Austin cars. The companys destiny and name changed soon with
equity participation by British Leyland and Ashok Leyland commenced manufacture of
commercial vehicles in 1955. Today the company is the flagship of the Hinduja Group, a British-
based and Indian originated transnational conglomerate.

Through tie-ups with global technology leaders, supplemented by in-house R&D infrastructure
and capabilities, Ashok Leyland has maintained its technological leadership even as it offers the
most comprehensive range of model configurations in its class.

Ashok Leyland, one of the largest private companies in the country, had sales over Rs6,000 crore
in 2005-06. Ashok Leyland is a part of Hinduja Group. It is also one of the largest automobile
and auto component companies in India.

The company offers a world-class range of trucks, buses, special application vehicles and
engines, crossing millions more than 40 countries in the world. During 2005-06, the company
produced total 65,085 vehicles out of which it has exported 4,879 units. In the 9c domestic
market, the company has sold total 56,776 units. The company was facing the huge task of
integrating its entire supply chain and at the same time it had to reduce its costs, inventory, and
improve customer satisfaction. Rising raw material cost was a serious concern for the company.
There had been a steep rise in steel prices and copper prices. Therefore, Ashok Leyland decided
to streamline its supply chain process and the company started its SCM project Oscars to
optimise its supply chain and rationalise its sources.

Products and Services

1. Buses: They are a leader in Indian Bus market offering unique models such as CNG,
Double Decker and Vestibule Bus. The buses range from different applications:
a. City Application Buses
b. Sub Urban Application Buses
c. Intercity Application Buses
d. School/Staff/Tourist Application Buses
e. Special Application Buses
f. Electric Buses
2. Trucks: They are pioneers in multi axle trucks and tractor trailers. Different application
oriented vehicles manufactured are:
a. Long Haul
b. Mining and Construction
c. Distribution Trucks
3. Light Vehicles
4. Defence Vehicles: They are largest provider of logistic vehicles to the Indian army.
5. Power Solutions
 Product Lifecycle Mngt. Dealer Mngt. sy
Vendor Mngt. system

Ashok Leyland sources more than 70% of the segments for their diverse vehicles from their
suppliers. They have An committed Sourcing and supply chain work with develop sourcing
methodologies adjusted should our corporate vision, deal with An focused worldwide supply
build What's more set up inbound logistics for every last bit manufacturing areas On india.

The have isolated the capacities under domains dependent upon technology, in particular
Proprietary, sheet Metal, Non Metallic, Castings, Forgings, Fasteners & Bar-machining, steel
Furthermore corporate logistics. It works starting with its business settings clinched alongside
Chennai, Gurgaon, ras al-Khaimah Also shanghai.

Their key focus areas are:

Inculcating TQM culture and driving continuous improvement

Deciding share of business on the basis of performance

Partnering with best-in-class suppliers

Objective measurement and monitoring of supplier performance based on Quality, Cost,

Logistics, Development and Management (QCLDM)

Engagement with suppliers for capability improvement through various initiatives

Joint development of parts

Conducting rigorous evaluation

 Optimizing supplies in coordination with third party logistics (3PL) providers

Their Supplier management process involves engaging suppliers and exchanging real time
information with them. This is enabled through their web portals:

Supplier Performance Dashboard: Started On Feb15, those supplier execution

dashboard provides for the most recent information looking into distinct suppliers
execution around nature and conveyance parameters. Each supplier camwood see their
execution around An daily/monthly premise and take important measures to enhance the
execution.

Supplier Relationship Management (SRM): Propelled to might 11 the SRM portal

empowers bi-directional trade from claiming information, encouraging better material
arranging to suppliers Also Ashok Leyland. (Ashok Leyland Suppliers, 2017)

Strategic Sourcing at Ashok Leyland

Corporate Materials Department (CMD)

Merchant advancement What's more vital Sourcing would took care of by corporate Materials
division (CMD). CMD identifies the vendors, rates the vendors dependent upon sentiment gained
from supplier nature certification Cell, sends drawings / specifications, calls for Cites with nitty
gritty break-up for operation-wise costs, and negotiates the cost during which the parts will be
supplied.

What's more with CMD at Ennore, and the two Units toward Hosur, there would Materials
oversaw economy divisions (MMDs) to planning In view of unit preparation want..

Vendor Development of Strategic Sources

Vital Sourcing will be national of the coordinated Materials oversaw economy work. Ashok
Leyland's approach will be should create a merchant base conferred should nonstop change to
meet quality, cosset and conveyance measures.
Ashok Leyland recognizes its vendors as accomplices in advancement Also puts stock to
Building commonly useful connections. Ashok Leyland gives essential specialized foul aid in the
type about task What's more creation Engineering, to keep up nature levels. For addition, the
place required, Ashok Leyland also serves vendors Monetarily. Some of the salient points of

Ashok Leyland Sourcing strategy are:

Ashok Leyland's Purchasing Philosophy is to maximize bought-out parts. Over 90% of

the parts are bought-out.
Ashok Leyland believes in global sourcing. Consistent with its operational needs, AL
would consider both domestic (Indian) as well as international vendors. Global sourcing
is normally resorted to overcome local constraints - in the form of technology, quality,
capacity or cost effectiveness.
Ashok Leyland would consider new suppliers for required components, based on
Vendors' ability to meet our specification, price and delivery schedules.
Vendors are required to have a strong manufacturing base with adequate engineering
support for their own product development activities, as needed by the category of
product, viz Proprietary, Bought Out Finished (BOF), Bought Out Rough (BOR) and
Sheet Metal items. Castings and forgings are to be received in fully finished/machined
condition, progressively. Ashok Leyland could make available to the vendors necessary
technical expertise, wherever possible and needed, particularly with regard to developing
the manufacturing process.
As QS 9000 certified company, Ashok Leyland's Vendors are expected to have a good
quality system, meeting ISO 9000 requirements. Ashok Leyland would be willing to help
Vendors in the preparation for ISO certification by offering necessary technical guidance.
Vendors' quality system should encompass, at the minimum Cost effective process,
Assured process capability; Continuous improvements based on customer feedback,
Compliance of all statutory /legal/ commercial requirements of Ashok Leyland.
A stage of development where the Vendor can come under Ashok Leyland's self-
certification system tractability - first-in first-out basis and Ashok Leyland has
established a transparent periodically audited Vendor Rating System. Ashok Leyland
places emphasis on optimizing the inventory and Vendors are required to progressively
 meet "Just-in-Time" requirements. Delivery modes as well as packaging are required to
minimize the handling/loading and unloading time.
Though not a must, Ashok Leyland would prefer a manufacturing / assembly / support
base at close proximity to the production units. Ashok Leyland encourages its vendors to
participate in their e-servicing project starting fiscal year 2004-05.

Optimizing Supply Chain and Rationalizing Resources (OSCAR)

SCM Project
Ashok Leyland might have been confronting the colossal errand from claiming coordination its
whole supply chain Furthermore during those same the long haul it required to decrease its costs,
stock and move forward client fulfillment.

Climbing crude material cosset might have been An not kidding concern to the organization. This
might have been basically triggered Toward An soak Ascent Previously, steel Furthermore
copper costs. Therefore, Ashok Leyland concluded to streamline its supply chain methodology
and the particular organization began its SCM one task OSCARS with improve its supply chain
Furthermore justify it. Henceforth those principle objective might have been on enhance its
supply chain transform & make it an expense successful particular case i. E. , make an effective
supply chain model such-and-such it Might deal with with make a Zone about key fit to cook
with its supply chains low with moderate intimated interest questionable matter.

Ashok Leyland didn't appear to be will succumb of the 'uncertainty gloom' that might have been
playing devastation to its business surroundings. It chose to meet the test Toward re-gearing its
systems, make it material order, procurement, material handling, stock control or handling.

Ashok Leyland conducted exhaustive brainstorming sessions inviting ideas on

cost cutting.

Quality Circle teams were formed for this purpose.

Ashok Leyland took every employee's ideas into account and figured out a way to
keep things going and reduce production without inflicting pain.

The recession saw Ashok Leyland waging a war on wastage and inefficiency.
To decrease costs Also should move forward the in-bound supply chain Ashok Leyland
acquainted those venture "OSCARS (optimising supply chain and rationalising sourcing),
which incorporates supplier partnership, merchant build rationalisation, supply tiers, stock
optimisation through JIT, downright expense management, logistics initiatives-sourcing What's
more worldwide sourcing. Those OSCARS project distinguished two principle systems about
diminishing costs in the inbound supply chain lessen material costs and through ideal stock
level, diminish the unobservable stock carrying fetches.

Prinicples of OSCAR
a) Supplier partnership

Supplier organization blankets building Also specialized foul support, worldwide

accessibility about spares, trying capability, progressed field performance, framework
supplier, JIT suppliers and universe class engineering.
Organization additions incorporate merchant consolidation, constant innovative dependent
upon gradation about items without done house investment, shorter improvement lead-time,
quality building Also cosset reduction, progressed field performance, stock field
performance, stock effectiveness through JIT suppliers Also human energy defense.
 Supplier organization will be likewise necessary with empower forms for example, such that
cross docking an viable lifestyle will keep costs low. Anyway execution issues need aid vast.
An enormous rate of suppliers still utilized email Concerning illustration their essential
method for request related communication, with phone Furthermore fax nearing Similarly as
different method for correspondence. Cross docking obliges development shipment
Notifications (ASNs) Furthermore barcoded shipping labels.
Ashok Leyland through its supplier organization system might have been equipped to
accomplish the sum these possibility reductions.

b) Vendor base rationalisation

Additions starting with hotspot diminishment incorporates estimating looking into volumes,
change done personal satisfaction and reliability, merchant change programme to nonstop
improvement, tiering for simplicity of fitment- framework purchasing What's more decrease
Previously, paper worth of effort. Merchant build defense & group structuring brought about
5S adherence-mistake proofing, methodology upgrades At last prompting self - affirmation.

c) Single Window System

The key Sourcing Also corporate personal satisfaction building (CQE) groups mutually
structured the single window framework bringing with them particular business and
specialized foul information. For the suppliers this needed made a helpful single-point
contact for AL, for imparting drawings, for negotiating costs and in length term benefits of
the business volumes and consultancy looking into personal satisfaction will management

issues.

d) Supplier Tiering
 AL pruned its board of regulate suppliers through tiering Furthermore framework purchasing.
Under this al managed straightforwardly for level one suppliers who, over turn, were
underpinned via level two and level three suppliers. Merchant tierisation project aided On
accomplishing economies about scale, framework purchasing & making defense for supplier
base.
The profits of framework purchasing Might make illustrated with those case of the devices
kits that went with each vehicle. Tear pipe investigations and esteem building broke down
those constitution Also creation of a piece should prune expense through substitution,
decrease or disposal of materials/ sub-assemblies without influencing nature Also execution.

e) Just In time(JIT)

AL concentrated around JIT methodology to secondary value/high volume things

Furthermore low expense logistics to low worth secondary volume things. Task OSCARS
achieved a couple essential transforms. Those push framework which methods give us settle
on every one we camwood in the event that something goes wrong we require. This
framework provided for an approach will draw framework which methods make the thing
that the client needs, The point when he needs it every phase prepared main to the extent
that the next phase necessary. This brought about reserve funds from claiming Rs 8. 50 crore
a quite a while What's more a incline supply chain.

f) Total cost management

Total cost management included various cost management initiatives, such as daily
management process, control, design, technology and capacity. Total savings was 3% of total
operating cost.

g) Logistics initiative
 These initiatives included transport based rationalisation, enhancement of truckload, space
and route optimisation, which has benefited the company by saving its transportation cost.
Transporter-
based
Rationalisatio
n
Truckload &
Transport
Space
Mode
Optimization

Reduction in Enhancement
Transportatio of Truck
n Cost turnaround

Transport Route
Route Optimization

h) E-sourcing

E-sourcing included global benchmarking gain through bidding, identification of cost

competitive sources, introducing best sourcing practices, increasing efficiencies and
minimising costs, improving bottom line of the value chain. All these activities have saved
11.5% of total material cost.

A client overview Also An investigation about benchmarks required turn out for three significant
parameters for administration level focuses which need aid request should conveyance time,
unwavering quality from claiming conveyances Also accessibility from claiming request status
majority of the data. The clients Might anticipate conveyance On 5 days from the date from
claiming installment to standard models to multi-axled vehicles those guaranteed time might
have been two -four weeks. The second guarantee might have been that those period of the
vehicle The point when conveyed might make greatest for 90 days. Tight pipeline stock
standards were situated for diverse models Furthermore businesses Furthermore were met
through another three level circulation system.

Plant bargains yards acted Likewise national pools will hold uncommon models What's more
abundance for territorial prerequisites. Those next level might have been constructed dependent
upon of the five territorial stock pools, which guaranteed just-in-time supplies should at
territorial bargains business settings. On see client needs What's more osmose the knowledge, al
embraced 4P Programme. Probe, Prioritize, arrange What's more Position. This functioned for
coupled for manufacturing as and only cross-functional group (CFT).

Modified Supply chain