Suppliers will be judged based on certain parameters such as R&D, balance sheet stability, product quality and product rejection rate, the report stated
To ensure domestic market leadership and meet its production target of up to five million vehicles by 2030, Maruti Suzuki India has launched a performance audit of vendors and introduced a ‘purple band’ for the most efficient suppliers, sources told Mint.
The company expects to help improve product quality and sustainability of its vendors through this exercise, the report said, adding that this audit will span its entire vendor base including Tier II and III suppliers.
The exercise will help boost synergy between vendors and Maruti and is aimed at making vendors boost their R&D spend to enable the company to design and develop more cars in India, sources told the paper.
Suppliers will be judged based on certain parameters such as R&D, balance sheet stability, product quality and product rejection rate, it stated.
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“Maruti already has an established mechanism for judging its vendors and this purple band was introduced as it wants to encourage its vendors to invest more in line with the company’s expectations. There are almost 11 parameters and companies that are able to meet 85-90 percent of the parameters will be put in the purple band,” a source told the paper.
Currently, Maruti groups its vendors in three bands based on performance: green, yellow and red. Vendors who meet 70 percent of the parameters are placed in the green band while the vendors with the worst performance are accorded the green band.
A Maruti spokesperson told the paper, “With customer expectations moving up and the management making efforts to reach out to new categories of customers in higher segments, it is imperative to enhance quality of products besides ensuring high levels of customer experience.”
As per the report, investment appetite from vendors has been a cause of worry for Maruti as only a fourth of its suppliers have set up facilities close to its newest facility in Gujarat.
“The senior management has understood that the suppliers need to invest in expanding their operations, R&D and design for Maruti to successfully design and develop more vehicles like Vitara Brezza in India. This activity will not only assess the financial health of the suppliers but will go much beyond that,” a source told the paper.
In India, Maruti Suzuki will be the first automaker to carry out such an exercise. Globally, such initiatives have already been taken up by companies like Honda Motor Corporation and Toyota Motor Corporation.