BAJAJ AUTO Bajaj Auto Ltd is one of the leading two & three wheeler manufacturers in India.

The company is well known for their R&D, product development, process engineering and lowcost manufacturing skills. The company is the largest exported of two and three-wheelers in the country with exports forming 18% of its total sales. The company has two subsidiaries, namely Bajaj Auto International Holdings BV and PT Bajaj Indonesia. The company was incorporated on April 30, 2007 as a wholly owned subsidiary of erstwhile Bajaj Auto Ltd (the holding company) with the name Bajaj Investment & Holding Ltd. The company received the certificate of commencement of business on May 7, 2007. The holding company operated in the segments, such as automotive, insurance and investment, and others. Considering the growth opportunities in the auto, wind-energy, insurance and finance sectors, and the holding company de-merged their activities into three separate entities, each of which can focus on their core businesses and strengthen competencies. The auto business of the holding company along with all assets and liabilities pertaining thereto including investments in PT Bajaj Auto Indonesia and in a few vendor companies transferred to Bajaj Investment & Holding Ltd. In addition a total of Rs 15,000 million in cash and cash equivalents also transferred to Bajaj Investment & Holding Ltd. As the part of the scheme, Bajaj Holdings and Investment Ltd were renamed as Bajaj Auto Ltd. The appointed date of this de-merger was closing hours of business on March 31, 2007. In April 9, 2007, the company inaugurated their green field plant at Pantnagar in Uttarakhand. In the first year of operations, the plant produced over 275,000 vehicles. The company's vehicle assembly plant at Akurdi was shut down from September 3, 2007 due to higher cost of production. In November 2007, Bajaj Auto International Holdings BV, a wholly owned subsidiary company acquired 14.51% equity stake in KTM Power Sports AG of Austria, Europe's second largest sport motorcycle manufacturer for Rs 345 crore. During the year 2007-08, the company launched XCD 125 DTS-Si and the Three-wheeler Direct Injected auto rickshaw. The Chakan plant completed the cumulative production of over 2 million Pulsar. During the year 2009-10, the company expanded the production capacity of Motorised Two & Three Wheelers by 300,000 Nos to 4,260,000 Nos. The company launched Pulsar 220 F, Pulsar 180 UG, Pulsar 150 UG, Pulsar 135 LS and Discover DTS-si in the market. During the year 2010-11, the company expanded the production capacity of

Motorised Two & Three Wheelers by 780,000 Nos to 5,040,000 Nos. The company launched Avenger 220 DTS-i, KTM Duke 125, Discover 150 and Discover 125 in the market. The company plans to maintain the capacity of two and three-wheelers at the current level of 5,040,000 numbers per annum during the year ending 31 March 2012. The 4 wheel vehicle development work is under progress and commercial launch of the first product from this platform is scheduled for 2012.

SUPPLY CHAIN AT BAJAJ AUTO MANAGEMENT OF GLOBAL SUPPLY CHAIN With operations spanning to such vast geographies, managing a supply chain globally becomes more and more complex. In countries where Bajaj perceives a strong market potential, they establish a tie up with one major industrial establishment eager to invest in the project. This investment may include setting up strategic manufacturing or assembly units, apart from a well-established nation-wide network for marketing, distribution and after sales services. These investors who form alliances with Bajaj Auto are termed as Business Partners. Bajaj Auto offers a number of services to its business partners. They include: Training in sales, service and spare parts management based on the Bajaj distribution system Active support for setting up manufacturing facilities overseas including transfer of technical know-how Assistance in setting up an assembly plant for assembly of vehicles from complete knocked down (CKD) kits Selecting of machinery and equipment and training of technical personnel, all in a phased manner as required by the regulations in the recipient country SPARE PARTS Automobiles need periodic replacement of parts. Not surprisingly therefore, spare parts comprise a profitable business for major automobile manufacturers. The objectives of the spare parts business of Bajaj Auto are to perform an effective role in supporting new vehicle sales, maintain vehicle goodwill across different geographies, makes and consumer

groups, and contribute to the bottom-line. Challenge: To make the companys spare parts available in not just the authorised service centres but also the private garages and spare part shops that dot the country. This is a high volume, credit intensive business that requires mastery over the supply of heterogeneous products. Solution: In 2004-05, Bajaj Auto created a separate channel exclusively for distribution of spare parts. Today, the channel has 73 distributors, who cater directly to over 15,000 retail shops across the country. This channel now accounts for sales of over 70% of total spare parts of Bajaj Auto Ltd. Other 30% is distributed via the distribution channel of the bike itself. SAP IMPLEMENTATION Bajaj Auto ltd. is Indias largest manufacturer of two- and three-wheeler vehicles. Spare parts distribution, critical to the servicing of the vehicles, is handled through a network of 400 dealers and 15 distributors. Spare parts are distributed from four warehouses that are strategically located across the country. The process that Bajaj Auto was using to manage the supply of spare parts across the distribution network was inefficient, did not produce accurate results, and was unsuitable for the increasing complexities of distribution. To keep track of its safety stock, amounting to over 14,000 different items, the company was using a cumbersome manual process that was neither timely nor accurate. And lack of visibility of order status resulted in inventory problems at sales outlets because needed items didnt always get priority during packing and shipping. This combination of problems affected service level in the marketplace, leading to customer dissatisfaction. At the same time, high inventory levels at the warehouses meant increased amounts of non moving stock, which had an impact on the dealers working capital. So Bajaj Auto implemented Go Live of their External Portal Initiative for their sales and service employees, dealers and suppliers. SAPs my SAP Enterprise Portal was implemented simultaneously with the current SAP R/3 ERP implementation. Business information is available to the companys external community in real time. This assists in improved decision-making, whether it is to meet customer requirements or to maintain efficiency in supply chain management. The companys field sales teams get full visibility on all dealer activities while the dealers get real-time access to relevant information on operational activities. The dealers and sales employees get information relevant to their respective region and territory by aggregation from the underlying SAP R/3 ERP database.

Bajaj has linked 380 out of its 483 dealers through this system. Also connected are 165 out of a total of 200 suppliers. The dealer portal, in addition to operating information, provides access to unstructured information like news items, new product releases, new product introduction, dealer discussion groups and internal marketplace. The supplier gets up-to-date information on purchase orders and contracts, material schedules, and payment details. Bajaj Auto, in turn, gets invoicing information from suppliers for its automated material receipt system. This helps in streamlining the supply chain, optimising inventories and reducing non-value-adding activities at both ends. Following were advantages realized from SAP implementation Operational Benefts of SAP implementation to spare parts logistics at Bajaj Auto Key Performance Spare parts availability Forecasting accuracy in domestic market Productivity of production planning controllers Service level to export market Inventory obsolescence rate Indicator Impact +35% to 40% 40% 80% +45% to 70% greatly reduced

Figure 1: Impact of sap implementation on spare parts logistics in bajaj auto GLOBAL LEVEL PARTNERSHIPS In order to cater to a widespread network of dealers, distribution is a challenge for Bajaj Auto. Here the concept of business partners comes in. Bajaj has tried leveraging the existing distribution network of the business partner in the country where the partner is present. Bajaj Auto has also set up assembling units in few of the continental hubs. These continental hubs act as goods receivers from the manufacturing units of Bajaj in India. The logistics for this is outsourced to third party vendors like Maersk Sealand, P&O Nedloyd and APL.

Figure 2: Distribution network of Bajaj Auto NATIONAL LEVEL PARTNERSHIPS There is an exisisting generic channel which is used for segmentation of this category of two-wheelers and three wheelers. GENERIC CHANNEL

Figure 3: Generic distribution channel of Bajaj Auto The physical flow of goods takes place from the factory to either the depot or to the carrying

and forwarding agent, depending upon the geographic distance and the location of the Depot. The transport & logistics for this is outsourced to third party vendors which are under Transport Corporation of India (TCI). Depending upon the demand these goods have, they flow from Depot or the C&F agent to the dealer and their network. In case of high profile dealers, the dealer can himself take the physical delivery of goods directly from the manufacturing plant. The dealer, at the last juncture, caters ASC, RSO, Sub Dealer & its own branch TRANSPORT & LOGISTICS This function of distribution is not owned by the company in any form. This is outsourced in toto to the third party vendors. The third party here is Transport Corporation of India (TCI) and a few other private vendors. The fleet to be transported is custom-designed for Bajaj Auto by the vendor. Key Facts There are twenty vendors all across India 1. OSL 2. Jamuna Transport 3. Sumit Transport A Transit Insurance Compliance Letter(TICL) is signed between the two parties The local level sub-dealer sometimes gets to decide the last mile logistics, as he can decide to pick up the vehicles himself or have it transported to him Logistics of the vendor is decided by the company Freight charge is built-in in the product price

EXAMPLE

Figure 4: Retail distribution channel of Bajaj Auto TCI looks after the packaging of the bike from the manufacturing unit to its delivery upto the warehouse of the dealer or to the depot, as required. In the above example, one truck or a single factory load can carry either 43 premium bikes or 53 general bikes. Depending upon the product mix ordered by the dealer, the truck is loaded. It can then either go to the dealers warehouse directly or to the depot, as depicted in the generic channel. From the depot, these bikes are loaded in smaller fleet and distributed to the respective dealer. In this case, the fleet size is 28 premium bikes or 35 general bikes. This load is termed as Depot Load.