Mahindra & Mahindra is to reduce its supplier base by 10% a year over the next five years, cutting numbers from 650 to 450, as part of its one sourcing strategy across the group.
Following the integration of its two-wheeler and truck business into the parent company over the past 18 months, M&M has centralised purchasing of parts across two-wheelers, commercial vehicles, passenger vehicles and agricultural tractors.
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Chief purchasing officer Hemant Sikka, said the new strategy will help the company reduce purchasing cost by at least 2-3% and make its supply chain more efficient. M&M will deal with one supplier for various product categories, while suppliers get scale and a better visibility on the business with the single-window mechanism of dealing with a centralised purchasing department.
The move will help the fledgling commercial vehicle and two-wheeler businesses, gaining to advantage of the economies of scale offered by M&M’s high volume utility vehicle business.
M&M sold 68,651 two-wheelers in the five months to August, up 37% from a year ago, according to the Society of Indian Automobile Manufacturers. It purchased Navistar group’s stake in Mahindra Navistar Automotive and Mahindra Navistar Engines in February 2013.
Sikka said what with no other automobile firm having such a diversified presence across all the segments of the auto market, the sourcing model adopted by M&M makes it unique.
