Monday, January 16, 2012

Aston Martin and Supply Chain Strategy

imageWhere will you find an Aston Martin and a book on Supply Chain Strategy together? Well, these are two of the things Pankaj Munjal considers as essentials. Pankaj is the managing director of Hero Motors Corporation in India, the largest two-wheeler company in the world.

In “My stuff: Hero Motors Pankaj Munjal's favourite things”, Business Today reports on Pankaj Munjal, Hero Motors managing director and a business titan in India. Of course, I was pleasantly surprised to find my book on supply chain strategy in this list, because Pankaj leads a 4 billion dollar business manufacturing two wheelers. Hero Motors became the world no. 1 two wheeler manufacturer in terms of volume in 2001 and has since maintained that position with impressive financial growth and professional management. A summary of Hero Motors 2012 performance says more:

  • 5.4 million two-wheelers sold (a growth of over 17% over 2011)
  • Revenues of 194 billion INR (approx. 3.8 billion USD) (a growth of over 22% over 2011)
  • Growth in operating income of 22.32%, at 19.4 billion INR

imageEven more impressive is the company’s cash-to-cash cycle time. The company maintains a Dell-like cycle of negative 20 days, which means that the company operates on negative working capital! This has to be a result of their impeccable focus on superior manufacturing and supply chain processes. Supply chain appears prominently in one of their corporate beliefs: “Delivering value through seamless and efficient supply chain”. The 2012 annual report states: There was a strong focus on supply chain
integration, process efficiency and accurate and prompt decision making.

In 2011, the company made substantial investments in supply chain IT integrating their partners supply chains to their own. The dealer portal integration provides a direct view into the product demand trends. The integration with the suppliers forms the basis of building flexibilities into the supply chain operations, so that the vendors could easily adjust their production during company’s routine business cycles. Analytics and cost modeling solutions are routinely used in decision-making.

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Want to know more about supply chain processes and supply chain strategy? Check out my books on Supply Chain Management at Amazon.

© Vivek Sehgal, 2012, All Rights Reserved.

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