Bajaj Auto, the two-wheeler major, has embarked on component procurement and product development process restructuring through a project code-named `Scorpio'.
The exercise is expected to help reduce the company's inventory levels and cut vendor base by half. The US-based consultancy firm A T Kearney has been given the mandate to conduct the restructuring which will revamp the existing in-bound supply chain and create a group of capable vendors conforming to rigorous product development, quality, cost and delivery standards.
"With the focus towards developing a chain of new products meeting international standards in features and quality, Bajaj felt the need to update its in-house product development and manufacturing processes as well as that of its vendors," said Sanjiv Bajaj, general manager, corporate finance, of the company.
The main aim of Scorpio is to put together a dedicated supply base of quality products and technology. It will enable vendors to keep pace with Bajaj's development of vehicles and give components of right quality and the right time.
Once this project is implemented, Bajaj will move away from inputs-based audit to quality audit. It will provide only input procedures to vendors. The first phase of restructuring exercise is expected to be completed after six months.
Project Scorpio, which is already under implementation at Bajaj's manufacturing facilities at Akurdi in Pune and Waluj near Aurangabad in Maharashtra, will be completed in two years and is being implemented in two phases.
Although the company does not plan to apply any standard rule while reducing its 1,000-odd vendors' base, it hopes that this number will be whittled down to less than 500. A reduced vendors base will allow Bajaj to have one-to-one contact with the component suppliers, it is felt.
On the benefits of Scorpio, Sanjiv Bajaj said: "It will result in savings in the cost of procurement, ensure lower rejection rate of components and customers will have less problems as regards quality."
Bajaj said that the present exercise will not affect the company's capacity in any way directly as the total capacity will move in line with Bajaj's business plans.
The exercise is expected to result in both quantifiable savings in terms of total cost, quicker product development, better quality, lower inventory as well as non-quantifiable savings such as improved transparency between the company and its vendors, strong vendor base and better efficiency to inbound supplies through better logistics. to have on-line courses along with formal training centres," Natarajan said.
In this connection, Aptech has struck in India a strategic alliance for computer education and developing global communities on the Internet with Rediff on the Net. Natarajan said that the Rediff course will take off in July.
As part of its initiatives to expand its presence and take a "leadership status by the year 2002," Aptech is focussing on countries such as China, Middle East, Africa, Singapore, Canada and the Saarc nations.
