Benchmarking can be defined as a process for improving performance by constantly identifying, understanding and adapting best practices and processes followed inside and outside the company and implementing the results. The main emphasis of benchmarking is on improving a given business operation or a process by exploiting 'best practices,' not on 'best performance.' Simply put, benchmarking means comparing one's organization or a part of it with that of the other companies. Bajaj need to implement internal and competitive and strategic benchmarking so that Company fulfills customer requirement on time so results in customer satisfaction & in turn increase in sales.

1. BBeenncchhmmaarrkkiinngg aatt BBaajjaajj AAuuttoo
By
Mr. Pramod Patil
Roll No. 8
PGDM Executive 2013-14

2. CCoommppaannyy PPrrooffiillee
 Bajaj Auto is the world's third-largest manufacturer of motorcycles and
the second-largest in India.
 It was founded by Jamnalal Bajaj in the 1945.
 It is based in Pune, Mumbai, with plants in Chakan (Pune), Waluj
and Pantnagar in Uttarakhand.
 Bajaj Auto has a consolidated base of 180 vendors supplying components
to all Bajaj Auto’s plants.
• The company has a network of 498 dealers and over 1,500 authorized
service centers and 162 exclusive three-wheeler dealers spread across the
country.

3. KKeeyy PPrroodduuccttss:: 22 WWhheeeelleerrss
aanndd 33 wwhheeeelleerrss

4. MMaaiinn BBuussiinneessss pprroocceesssseess
Strategy development
Manufacturing
Product development
Customer support
Order fulfillment
Logistics

5. Value Chain ooff AAuuttoo MMoobbiillee IInndduussttrryy

6. SSuupppplliieerrss
Bajaj selects those suppliers who provides
majority of the required raw materials
together.
 Bajaj Auto has 198 key suppliers for their
raw materials . Some key Suppliers are:
Suppliers Materials
JBM Frames
MRF & Dunlop Tires
Minda Locks and Ignition Systems
Reinder Headlamps and Lights
Endurance Brakes ,clutch and Cast vehicles
Varroc Digital Meter and Plastic parts
Max Auto Components Ignition system and switches
Silico Cable Wires and cables
Makino Industry Brake shoes, Brake lining and Clutch Centre

7. PPrroocceessss ooff oorrddeerriinngg::
 Bajaj follows a systematic process in
selecting suppliers and deal with them.
 Production manager of
the company study the application
received by the suppliers and select
proper suppliers as per their
requirement.
 The selected suppliers invite for
general meeting with the
production manager and
purchase manager of the
company.
 In this meeting they decide
conditions and time period of
supplying raw materials to the
company.

8. PPrroocceessss ooff oorrddeerriinngg::
• Once the contract is signed by both
the
parties routine work continues.
• Whenever the company required
raw material they send e-mail or
call the suppliers just three days
before
requirement in advance.
• Within two days company gets raw
materials.
• The payment done after getting the
raw
materials on the basis of the cash or
cheque.
If the suppliers are unable to provide
raw materials then Bajaj immediately
inform
them and getting solution.

9. IInnvveennttoorryy ppoolliiccyy--
 Bajaj auto maintains seven days inventory . Demand
Estimations are based on Panel Regression, which takes
into account both time series and cross section variation in
data .
 All the Mediators are connected with each other through IT
linkage to know exact status of delivery of goods.

10. MMaannuuffaaccttuurriinngg::
• With operations spanning to such vast
geographies, managing a value chain globally
becomes more and more complex.
• Strategic alliance with industrial establishment
in different countries in setting up strategic
manufacturing or assembly units.
• These investors who form alliances with Bajaj
Auto are termed as “Business Partners”. Bajaj
Auto offers a number of services to its
business partners

12. PPllaanntt ccaappaacciittyy

13. MMaannuuffaaccttuurriinngg PPrroocceessss

14. DDiissttrriibbuuttiioonn CChhaannnneell::
Channel Design is dependent on the segmentation that Bajaj have
done in the geographic and product category segments.
Various players involved in the channel design are:
Manufacturing Plants
• Depots
• Carrying & Forward Agent
• Dealers
• Sub Dealers

16. DDeeppoottss::
• Setting up depots is a geographical strategy
adopted by Bajaj Auto.
• But this does not mean that the company has
gone all out to open a large number of depots.
• It has chosen strategic locations.
• The key role played by depots is that they are
meant to cater to any sudden rise in demand of
vehicles, and to cover the existing geographic
span of India.

17. DDeeaalleerrss::
 Like mentioned above, the company has a network of 498
dealers and over 1,500authorised service centers and 162
exclusive three-wheeler dealers spread across the country.
 Around 1,400 rural outlets have been created in towns with
population of 25,000 and below.
 The current dealer network is servicing these outlets.
Dealers can be classified under 3 heads.

18. DDeeaalleerrss::
• COCO
These are Company Owned & Company Operated showrooms.
These concepts exists only for Pro-Biking showrooms.
Bajaj Auto has tried showcasing their muscle power in high end
biking segment.
The concept has evolved very fast and now there are 52 Pro-Biking
showrooms in the country.
The company itself does not take any order from the customer in
these showrooms.
The giant dealer of the region who is acting as a logistics partner for
the pro-biking concept takes the order on behalf of the company and
fulfils the customer requirement.

19. DDeeaalleerrss::
CODO
Codo
 These are Company Owned & Dealer Operated showrooms.
 In case of this concept ,showrooms are owned by the
company but the operations in the showroom are
managed by the dealer.
 This is generally the case where Bajaj wants to provide the
dealer financial benefits considering the high working
capital requirement of the company.

20. DDeeaalleerrss::
• DODO
These are Dealer Owned & Dealer Operated.
These dealers are fewer in number because they
are generally the giant dealers who are the financial
muscle for the company.
In our talks, the management indicated that the top
management wants to do away with this concept.
The reason behind this is that the bargaining power
increases in the hands of the dealer, which puts the
company in a knotty situation.

21. TTrraannssppoorrtt && LLooggiissttiiccss::
This function of distribution is not owned by the
company in any form.
This is outsourced to the third party vendors.
 The third party here is Transport Corporation of India
(TCI) and a few other private vendors. There are
twenty vendors all across India
The fleet to be transported is custom-designed for
Bajaj Auto by the vendor.

22. TTrraannssppoorrtt && LLooggiissttiiccss::
Services provided by Bajaj Auto to the
dealer Workshop Training
In a month:
30-40 Mechanics can be trained per
dealer
15-20 Sales personnel can be trained per
dealer

23. KKeeyy RRoollee && DDeelliivveerraabblleess

24. OOrrddeerr TTrraacckkiinngg::
• Taking a daily account of the order received from
various dealers and Regional Offices (RO).
• Orders from dealers are punched in by dealer
themselves.
• Orders are followed up in the system only if the
credit limit is not crossed.
• This credit limit is preset into the system depending
upon the dealer and his/her track record.

25. PPaacckkaaggiinngg::
Packaging in factory is outsourced to third
party vendor. These vendors are generally
from the Transport & Logistics partners

26. DDiissppaattcchhiinngg GGooooddss::
Goods need to be dispatched via third
party vendor TCI. State corporations and
other private players are also part of the
vendor list

27. GGeenneerraattiinngg IInnvvooiiccee && WWaayybbiillll::
These documents need to be generated
and dispatched to the respective dealer.

28. CCUUSSTTOOMMEERR DDEETTAAIILLSS
Types of Customers:
• Bajaj Auto ltd. produces goods by considering the different
types of customers. They distribute products in small
towns of the country and all over the world. The bikes
lights produce as per the current trend of the customers.
• After sales Service:
Bajaj Auto ltd. is one of the most accepted products
by the customers. With best quality products
Bajaj Auto ltd. can survive customers
after selling products.

29. CCUUSSTTOOMMEERR DDEETTAAIILLSS
Customer relation management:
Bajaj Auto ltd. believes in
customer satisfaction.
They try to earn consumers trust
by providing good quality products
and after sales services.
Every two months Bajaj Auto ltd.
researches the market and tries to
implement the problems.
They also believe in innovation
and produce different variety of
products with minimum price.

30. IInntteerrnnaall bbeenncchhmmaarrkkiinngg

31. SSppeecciiffiicc eenneerrggyy ccoonnssuummppttiioonn
bbeenncchhmmaarrkk::--
No Standard Benchmarks are available for Automobile sector ,
However, Bajaj are setting our own internal targets as:
Min 5 % Reduction in specific energy consumption wrt last year

32. EEnneerrggyy CCoonnsseerrvvaattiioonn MMeetthhooddoollooggyy

33. CCoommppeettiittiivvee bbeenncchhmmaarrkkiinngg

34. PPhhaassee--II PPllaannnniinngg
From the market study Hero and Bajaj are
in first and third position respectively.
So Hero and Bajaj are identified as
comparative organizations and Bajaj is
Benchmarked with Hero.
A few factors which are relevant and
critical are identified and considered to
Benchmark against toughest
competitors in motorcycle
segment.

35. PPhhaassee--IIII:: AAnnaallyyssiiss
 Initially up to 2011 due to joint venture of Hero cycles of India and
Honda Company of Japan, Hero got advantage to became world no. 1
Two -wheeler Company. Hero group has largest distribution network
in India.
 Bajaj has a good brand equity, had a good distribution network but
still, not been able to do much in the last few years. The share of
geared scooters had fallen and it has become a major loss for Bajaj.
The reason for the downfall of the company has been its inability to
identify the demand trend.
 The resale value of Hero motorcycles is high compared to Bajaj.
Hero gives 6 free
services to all its bikes.
 Hero has excellent marketing techniques compared to Bajaj.
 Bajaj is extensively focused on the motorcycle segment and
discontinued from scooter segment. Bajaj also focusing on export , R
& D capability, supply chain and manufacturing processes.

36. Comparison bbeettwweeeenn BBaajjaajj AAuuttoo && HHeerroo
Bajaj Hero
Products Boxer AT, Boxer CT, Boxer AR,
Caliber, Caliber
Croma,Pulsar150CC,Pulsar 180
& 200CC and Eliminator.
CD 100, CD 100 SS, Joy,
Splendor, Passion, CBZ,
Dawn, and Ambition
Price range Rs. 30,000/- to Rs. 85,000/- Rs. 37,000/- to Rs.
120,000/
Sales 20727 27,155.82
Market shares 20% 42%
Supply chain
10 days 11 days
length
Inventory cost/
Sales
3.09 2.47
Distribution
network
60 countries 31 countries
Financing Bajaj Auto Financing Ltd. Tie up with ICICI

37. TToottaall LLeennggtthh ooff SSuuppppllyy CChhaaiinn
The firm with the minimum length of chain can be
said to have the best performance.
Longer supply chain means more time for conversion
of raw materials into finished goods.
Total length of Supply Chain in days =
DRM+DWIP+ DFG

38. SSuuppppllyy cchhaaiinn lleennggtthh
Hero Motocorp has supply chain length of
11 days.
Bajaj has 10 days. Bajaj Auto has the
most efficient supply chain.
TVS has supply chain length of 24 days
which is significantly higher than industry
average.
Royal Enfield has 20 day of supply chain
length.

39. Inventory cost to sales rraattiioo iinn ttwwoo wwhheeeelleerr
iinndduussttrryy
(All fig. in
Rs crs)
Bajaj
Auto Hero TVS
Royal
Enfield
Sales 20727 27,155.82 7992 1917.76
Inventory
cost 639.72 669.55 548.15 143.84
Inventory
cost/ Sales 3.09% 2.47% 6.86% 7.50%

40. CCnnttdd....
It found that Hero have least(2.47%)
inventory cost to sales ratio as compared
other companies and royal Enfield have
highest(7.5%).
In this case benchmark for inventory cost
to sales ratio should be 2.47%.
There is need to reduce inventory cost and
increase sales for Bajaj Auto.

41. PPhhaassee--IIIIII:: IInntteeggrraattiioonn
The following goals may be projected for Bajaj Auto:
 Enlarging the dealership network,
 Introduction of right products at right time in the
market,
 Use of brand ambassadors for advertising,
 Sponsorship to major sports events and tournaments,
 Manufacture of environmental friendly bikes,
 Production of reliable and quality products at minimum
cost,
 Use of IT system and assessment of market trends
properly,
 Provide more free service to bikes,
 Make suitable model to knock the Hero products i.e. new
product development.

42. PPhhaassee--IIVV:: AAccttiioonn
To compete with the Hero or overcome it, the following
actions can be taken.
 Bajaj by reducing franchise amount for dealers can
increase dealership network to interior and small towns so
as to increase the sales.
 As a part of the advertisement strategy, Bajaj must
sponsor major sports events and tournaments to enhance
the sales. Brand ambassador’s concept can also be
used, as it became a popular advertising strategy for
marketing.
 Market is interested in environmental friendly bikes. Bajaj,
by product research and development, must maintain the
emission levels as low as possible and manufacture
environmental friendly bikes.

43. CCnnttdd....
 Some of the Bajaj models are expensive. Cost must be
reduced by value engineering methods and more of
economy class should be manufactured.
 From the past data, it is clear that Bajaj did not gauge the
market properly. They focused on scooters when market
was clearly shifting to motorcycles and they focused on two
stroke bikes when market was interested in four stroke
bikes.
 So Bajaj must keep track on product market, market
trend and change ahead of its competitors.

44. Bajaj should also ffooccuuss oonn tthhee rreedduuccttiioonn ooff
iinnvveennttoorryy ccoosstt wwhheerree HHeerroo hhaass ccoommppeettiittiivvee
aaddvvaannttaaggee..
In this case benchmark for inventory cost
to sales ratio should be 2.47%.
Bajaj needs to reduce inventory cost and
increase sales.
Bajaj has to reduce raw material
inventory, WIP and finished goods
inventory.

45. Inventory cost to sales ratio of Bajaj Auto in last four years are
as below:
year 2011 2012 2013 2014
Sales 16830 19827 20618 20727
Inventory cost 547.28 678.53 636.28 639.72
Inventory cost/
Sales 3.25% 3.42% 3.09% 3.09%

46. IInnvveennttoorryy aatt BBaajjaajj AAuuttoo

47. RReedduuccttiioonn ooff iinnvveennttoorryy ccoosstt
There should be common inventory
sharing platform especially at
COCO,CODO dealers .
Implementation of JIT for auto
components through collaboration with
vendors to reduce inventory cost.
The date of new product launch can be
rescheduled in case the current stocks of
the dealer are not getting cleared.

48. SSttrraatteeggiicc
iimmpplleemmeennttaattiioonn ooff II..TT.. iinn
BBaajjaajj AAuuttoo
But when the market place changed, Bajaj
was late to respond. It became clear that
the company could no longer derive big
market shares from limited brands and
products.
There is need of re-structuring of
products, channels and the performance
management system

49. Integrated OOrrddeerr ttrraacckkiinngg ssyysstteemm

50. DDeeaalleerr mmaannaaggeemmeenntt ssyysstteemm
• Bajaj auto can link 498 dealers and 198
suppliers through SAP.
• The outcome of the dealer management is the
feedback loop.
• Using this loop company designs its strategy for
different segments.
• Dealer need to fill in the required form provided
by the company and update it to the company
on monthly basis.

51. CCnnttdd....
The three heads under which the feedback is filled
are:
• Monitoring Sheet
• Day wise Summary of Customer Satisfaction
Feedback
• Health Card for Monitoring Workshops

52. Advantages ooff DDeeaalleerr mmaannaaggeemmeenntt
ssyysstteemm
 The dealers can get real time information, unstructured
information like news items, new product releases, dealer
discussion group and internal market place.
 This assists in improved decision-making, whether it is to meet
customer requirements or to maintain efficiency in supply chain
management.
 The supplier gets up-to-date information on purchase orders and
contracts, material schedules, and payment details.
 This helps in streamlining the supply chain, optimizing inventories
and reducing non-value-adding activities at both ends.

53. BBeenneeffiittss ooff bbeenncchhmmaarrkkiinngg
Company fulfills customer requirement on
time so results in customer satisfaction & in
turn increase in sales.
Company can reduce 10% inventory cost.
Improve supply chain efficiency and will able
to reduce supply chain length to 9 days.
Easy accessibility of business information to
dealers leads to increase morale of dealer.
Online integrated order tracking system leads
to accurate input from vendors, dealers.