Ashok Leyland, an Indian automobile company, revamped its supply chain to address issues from the economic recession. It reduced costs through two projects - OSCARS-1 optimized the inbound supply chain, and OSCARS-2 focused on customer satisfaction and lowering finished goods inventory. Ashok Leyland streamlined supplier relationships, implemented just-in-time delivery, and saw significant quantitative benefits like reduced materials costs and higher sales. The supply chain revamping was a success in improving operations and profitability for Ashok Leyland.

1. Revamping the supply chain
The Ashok Leyland way

2. Brief Introduction
by Raghunandan Saran,
automobile manufacturing company based
largest manufacturer of buses and
respectively.
turnover of the company was
2013-14

4. Case Intro…
• Reverse auction
• Recession - Reduction in profit
year Sales (Rs.) Profit (Rs.)
1996-97 2482.5 Cr. 124.9 Cr.
1997-98 2014.3 Cr. 18.4 Cr.
chain builds up inventory leads to revenue

5. Together we can – Beat The Recession
• Re-gearing the system
• Brainstorming sessions
• Corporate Material Department and Material Management Department
• Maximize bought-out parts
• AL considered both domestic and international vendor.
• Vendor as partners.

6. Revamping the Supply Chain
would work only if the supply chain was smooth.
two phase:
Supply chain
OSCARS – 2
project
OSCARS – 1
Project
Supplier to AL AL to regional sales office

7. OSCARS -1
the cost in inbound supply chain.
Reduced material cost
Optimum inventory levels reduce

8. Single window system
Quality Engineering (CQM) form.
database of 22000 plus parts of vehicles.
Total 1400 suppliers.
few suppliers and vice-versa.
92.5% business and 61% account for 1.9% business

9. Supplier Tiering
• Tire-1 supplier is supported by tire-2 and tire-3 suppliers.
• Reduced the number of suppliers.
accompanied every vehicle. In the late 1990s,
over Punjab , Faridabad Bangalore and Chennai
items, which were assembled in house. A short
screwdrivers meant 1000 numbers of the remaining
Inventories. To overcome this problem, AL aimed
supplier base from 1400 to 750.

10. Just in time (JIT)
• The ‘Push’ system.
• The ‘Pull’ system
Benefited AL by Rs.8.5 crore.
divided the main components in 3 category.

11. Conti…
delivery system for each category.
card to the supplier.
details regarding the parts and location of delivery.
devised a funnel-planning system.

12. OSCARS-2
Project consist of 2 main objectives:
satisfaction and reducing finished goods inventory
level
Survey drawn 3 main parameters :
I. Order to delivery time
II. Reliability of deliveries
III. Availability of order status info.

13. Conti…
out with a new TQM process and it was a success.

14. Conti…
customer needs AL adopted ‘4p’ program
Prioritize, Plan and Position.
marketing information system (MIS).

15. The comeback
crore on sales of 1092.8 in 1st half of 1999-2000.
raw material cost reduced by 1-2% and
reduced by Rs.300 crore
Year Sales (No.) Income (Rs.)
1998-99 29811 2089.13 crore
1999-2000 37859 2611.41 crore

16. Questions:
to reduce costs improved the in-bound
several important strategic revamping measures.
bound supply chain had the twin objectives
and reducing finished goods inventories”
re-engineered its out-bound supply chain.
quantitative benefits in regard to various
revamping exercise for AL.