The country’s largest car maker, Maruti Suzuki India is expanding its basket of raw materials sourced jointly with vendors in addition to hedging forex to avoid rapid currency rate fluctuation in the times of volatile market conditions. S Maitra, Managing Executive Officer (Supply Chain), Maruti Suzuki India told on that about 5 years back, the company had started sourcing steel together with their vendors from suppliers. The company has also done the same for aluminium about two years back. Now it intends to do the same with plastics.
The company which has already hedged close to 40% of total exposure of 100 billion yen (Rs. 6530 crore) together with vendors for this fiscal, is now planning on sourcing plastics together in order to reduce the input costs. Mr. Maitra said that when the raw materials are sourced independently, the suppliers quote different rates to the vendors and OEMs which is why the company is planning to source it together.
The company has already experienced about 5 to 10% savings with such combined sourcing. Talks are on with Reliance Industries, which is the largest supplier of plastics to the company for joint sourcing. Maitra also said the company has asked its vendors to take up other cost efficiency measures in order to bring down costs like improving efficiency, optimizing manpower and other such measures.
