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June 29, 2001
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Money > Business Headlines > Report June 29, 2001 |
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Bajaj Auto to halve number of vendors
Bajaj Auto is planning to further rationalise its vendor network, by cutting down the number of suppliers by 50 per cent. The company is planning to reduce the number of vendors to 400 by December, 2001, from the current 800. The move, which will increase Bajaj Auto's volume of business with a few leading suppliers, is intended to improve the efficiency of its supply-chain management. Eventually, the company is hopeful of doing business with only about 300-350 vendors. It has already cut down the number of suppliers by 600 over the past three years. "The vendors will enjoy the benefits of larger orders, better capacity utilisation and have an incentive to invest in better technologies, systems and processes (due to the vendor rationalisation). It would also enable closer interaction between the company and its vendors, thus catalysing the product development and the response to quality and delivery needs," the company has said in its latest annual report. Auto analysts said Bajaj Auto's move is aimed at increasing the volume of business with fewer, but more reliable vendors. "The company's initiative is in line with the trend in the global auto industry. The move will allow Bajaj Auto to get a better bargain in the form of reduced costs as the company will be in a position to dictate terms to the reduced number of vendors," an analyst at a local brokerage said. Following its poor performance during fiscal 2000-01, when the company's operating margins declined by 18.2 per cent to 9.8 per cent, Bajaj Auto is planning to increase the margins to double-digits through "concerted cost cutting, value engineering, gains from total productive maintenance and VRS, as well as growth in volumes in motorcycles and scooters", Rahul Bajaj, the group chairman and managing director says in the annual report. Powered by YOU MAY ALSO WANT TO READ:
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