EXECUTIVE SUMMARY

The concept of Supply Chain Management is based on two core ideas. The first is that practically
every product that reaches an end user represents the cumulative effort of multiple organizations.
These organizations are referred to collectively as the supply chain.

The second idea is that while supply chains have existed for a long time, most organizations have
only paid attention to what was happening within their four walls. Few businesses understood,
much less managed, the entire chain of activities that ultimately delivered products to the final
customer. The result was disjointed and often ineffective supply chains.

Supply chain management, then, is the active management of supply chain activities to maximize
customer value and achieve a sustainable competitive advantage. It represents a conscious effort
by the supply chain firms to develop and run supply chains in the most effective & efficient ways
possible. Supply chain activities cover everything from product development, sourcing,
production, and logistics, as well as the information systems needed to coordinate these
activities.

The organizations that make up the supply chain are linked together through physical flows
and information flows. Physical flows involve the transformation, movement, and storage of
goods and materials. They are the most visible piece of the supply chain. But just as important
are information flows. Information flows allow the various supply chain partners to coordinate
their long-term plans, and to control the day-to-day flow of goods and material up and down the
supply chain.

The present report attempts to capture the innovative supply chain practices of Hipolite Piston
India Ltd., Mohali, identify key challenges involved in integration and implementation of supply
chain, and suggests strategies to overcome the challenges for optimum leverage. The study is
about the supply chain management of Hipolite Piston India Ltd..

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 CHAPTER - I

INTRODUCTION

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 The best companies around the world are discovering a powerful new source of
competitive advantage. It's called supply-chain management and it encompasses all of those
integrated activities that bring product to market and create satisfied customers.
The Supply Chain Management Program integrates topics from manufacturing
operations, purchasing, transportation, and physical distribution into a unified program.
Successful supply-chain management, then, coordinates and integrates all of these activities into
a seamless process. It embraces and links all of the partners in the chain. In addition to the
departments within the organization, these partners include vendors, carriers, third-party
companies, and information systems providers.
Within the organisation, the supply chain refers to a wide range of functional areas. These
include Supply Chain Management-related activities such as inbound and outbound
transportation, warehousing, and inventory control. Sourcing, procurement, and supply
management fall under the supply-chain umbrella, too. Forecasting, production planning and
scheduling, order processing, and customer service all are part of the process as well.
Importantly, it also embodies the information systems so necessary to monitor all of these
activities.
Simply stated, "the supply chain encompasses all of those activities associated with
moving goods from the raw-materials stage through to the end user." Advocates for this business
process realised that significant productivity increases could only come from managing
relationships, information, and material flow across enterprise borders. One of the best
definitions of supply-chain management offered to date comes from Bernard J. (Bud) LaLonde,
professor emeritus of Supply Chain Management at Ohio State University. LaLonde defines
supply-chain management as follows: 'The delivery of enhanced customer and economic value
through synchronised management of the flow ofphysical goods and associated information from
sourcing to consumption. "As the 'from sourcing to consumption' part of our last definition
suggests, though, achieving the real potential of supply-chain management requires integration
not only of these entities within the organisation, but also of the external partners. The latter
include the suppliers, distributors, carriers, customers, and even the ultimate consumers. All are
central players in what James E. Morehouse of A.T. Kearney calls the extended supply chain.
"The goal of the extended enterprise is to do a better job of serving the ultimate consumer,".
Superior service, he continues, leads to increased market share. Increased share, in turn, brings
with it competitive advantages such as lower warehousing and transportation costs, reduced

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inventory levels, less waste, and lower transaction costs. The customer is the key to both
quantifying and communicating the supply chain's value, confirms Shrawan Singh, vice
president of integrated supply-chain management at Xerox. "If you can start measuring customer
satisfaction associated with what a supply chain can do for a customer and also link customer
satisfaction in terms of profit or revenue growth," Singh explains, "then you can attach customer
values to profit & loss and to the balance sheet."

1.1 IMPORTANCE OF SUPPLY CHAIN MANAGEMENT

In the ancient Greek fable about the tortoise and the hare, the speedy and overconfident
rabbit fell asleep on the job, while the "slow and steady" turtle won the race. That may have been
true in Aesop's time, but in today's demanding business environment, "slow and steady" won't
get you out of the starting gate, let alone win any races. Managers these days recognise that
getting products to customers faster than the competition will improve a company's competitive
position. To remain competitive, companies must seek new solutions to important Supply Chain
Management issues such as modal analysis, supply chain management, load planning, route
planning and distribution network design. Companies must face corporate challenges that impact
Supply Chain Management such as reengineering globalisation and outsourcing.
1.2 OBJECTIVES OF SUPPLY CHAIN MANAGEMENT
The fundamental objective is to "add value".
That brings us to the example of the fish fingers. During the Supply Chain Management '98
conference in the United Kingdom this fall, a participant in a supply chain management seminar
said that total time from fishing dock through manufacturing, distribution, and final sale of
frozen fish fingers for his European grocery-products company was 150 days. Manufacturing
took a mere 43 minutes. That suggests an enormous target for supply chain managers. During all
that time, company capital is-almost literally in this case--frozen. What is true for fish fingers is
true of most products. Examine any extended supply chain, and it is likely to be a long one.
James Morehouse, a vice president of consulting firm A.T. Kearney, reports that the total cycle
time for corn flakes, for example, is close to a year and that the cycle times in the pharmaceutical
industry average 465 days. In fact, Morehouse argues that if the supply chain, of what he calls an
"extended enterprise," is encompassing everything from initial supplier to final customer
fulfilment, could be cut to 30 days, that would provide not only more inventory turns, but fresher

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product, an ability to customise better, and improved customer responsiveness. "All that add
value," he says. And it provides a clear competitive advantage.
Supply Chain Management becomes a tool to help accomplish corporate strategic objectives:
reducing working capital,
taking assets off the balance sheet,
accelerating cash-to-cash cycles,
increasing inventory turns, and so on.

1.3 SUPPLY-CHAIN PRINCIPLES/ METHODOLOGY & SOLUTIONS

If supply-chain management has become top management's new "religion," then it needs
a doctrine. Andersen Consulting has stepped forward to provide the needed guidance, espousing
what it calls the "Seven Principles" of supply-chain management. When consistently and
comprehensively followed, the consulting firm says, these seven principles bring a host of
competitive advantages.

The seven principles as articulated by Andersen Consulting are as follows:

1. Segment customers based on service needs. Companies traditionally have grouped
customers by industry, product, or trade channel and then provided the same level of
service to everyone within a segment. Effective supply-chain management, by contrast,
groups customers by distinct service needs--regardless of industry--and then tailors services
to those particular segments.
2. Customise the Supply Chain Management network. In designing their Supply Chain
Management network, companies need to focus intensely on the service requirements and
profitability of the customer segments identified. The conventional approach of creating a
"monolithic" Supply Chain Management network runs counter to successful supply-chain
management.
3. Listen to signals of market demand and plan accordingly. Sales and operations
planning must span the entire chain to detect early warning signals of changing demand in
ordering patterns, customer promotions, and so forth. This demand-intensive approach
leads to more consistent forecasts and optimal resource allocation.
4. Differentiate product closer to the customer. Companies today no longer can afford
to stockpile inventory to compensate for possible forecasting errors. Instead, they need to

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 postpone product differentiation in the manufacturing process closer to actual consumer
demand.
5. Strategically manage the sources of supply. By working closely with their key
suppliers to reduce the overall costs of owning materials and services, supply-chain
management leaders enhance margins both for themselves and their suppliers. Beating
multiple suppliers over the head for the lowest price is out, Andersen advises. "Gain
sharing" is in.
6. Develop a supply-chain-wide technology strategy. As one of the cornerstones of
successful supply-chain management, information technology must support multiple levels
of decision making. It also should afford a clear view of the flow of products, services, and
information.
7. Adopt channel-spanning performance measures. Excellent supply-chain
measurement systems do more than just monitor internal functions. They adopt measures
that apply to every link in the supply chain. Importantly, these measurement systems
embrace both service and financial metrics, such as each account's true profitability.
The principles are not easy to implement, the Andersen consultants say, because they run
counter to ingrained functionally oriented thinking about how companies organise, operate, and
serve customers. The organisations that do persevere and build a successful supply chain have
proved convincingly that you can please customers and enjoy growth by doing so.

1.4 EXPECTED RESULTS / BENEFITS

1.4.1 Supply Chain Creates Value
Supply chain management's ability to affect profitability and shareholder value should
come as no surprise. As Richard Thompson, a partner in Ernst & Young's supply chain practice,
points out, supply chain management affects virtually every aspect of a company's business.
"Everything is involved," he says. "Supply chain management [influences] plan-buy-make-move-
and-sell."
Enhanced revenues, tighter cost control, more effective asset utilisation, and better customer
service are just the beginning.
Thompson and his colleagues have identified five areas in which supply chain management can
have a direct effect on corporate value. They include:

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* Profitable growth. Supply chain management contributes to profitable growth by allowing
assembly of "perfect orders," supporting after-sales service, and getting involved in new product
development. The bottom-line numbers give the answer. According to A.T. Kearney's research,
inefficiencies in the supply chain can waste up to 25 percent of a company's operating costs.
With profit margins of only 3 to 4 percent, the consultants point out, even a 5-percent reduction
in supply-chain waste can double a company's profitability.
Working-capital reductions. Increasing inventory turns, managing receivables and payables,
minimising days of supply in inventory, and accelerating the cash-to-cash cycle all are affected
by supply chain execution. Thompson cites the case of a consumer-products company that took
20 minutes to make a product and five and a half months to collect payment for it. "If you can
cut the cash cycle down, there are millions of dollars there," he says.
Fixed-capital efficiency. This refers to network optimisationfor instance, assuring that the
company has the right number of warehouses in the right places, or outsourcing functions where
it makes more economic sense.
Global tax minimisation. "There's a ton of money here," Thompson says, if companies look at
assets and sales locations, transfer pricing, customs duties, and taxes.
Cost minimisation. This largely focuses on day-to-day operations, but it also may involve
making strategic choices about such issues as outsourcing and process design.
Based on experience with companies participating in MIT's Integrated Supply Chain
Management Program, there has been found that the most commonly reported bottom-line
benefits are centred on reduced costs in such areas as inventory management, transportation and
warehousing, and packaging; improved service through techniques like time-based delivery and
make-to-order; and enhanced revenues, which result from such supply-chain-related
achievements as higher product availability and more customised products.
The companies studied by Metz have recorded a number of impressive supply-chain
accomplishments, including:
a 50-percent inventory reduction.
a 40-percent increase in on-time deliveries.
a 27-percent decrease in cumulative cycle time.
a doubling of inventory turns coupled with a nine-fold reduction in out-of-stock rates.
a 17-percent revenue increase.
1.4.2 Opportunity Areas (examples)

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These are some of the big-picture numbers. Most companies, though, find it more meaningful to
focus on the payback potential of specific activities within the total supply-chain process. The
following examples illustrate the kinds of benefits that can be realised. Individually, these
improvements can bring important cost savings and service enhancements. Collectively, they can
lead to dramatic breakthroughs in profitability and market share.
Distribution network optimisation. Optimising the distribution networkthat is determining
the best location for each facility, setting the proper system configuration, and selecting the right
carriers--brings immediate cost advantages of 20 to 30 percent. That's the figure determined by
IBM's Wholesale Distribution Industry Segment, based on consulting engagements in a wide
range of industries. "This typically breaks down into transportation savings of 15 to 25 percent
and improvements in inventory-carrying costs of 10 to 15 percent," says Mark Wheeler, national
solutions manager for the IBM consulting unit.
Shipment consolidation. A proven, though often overlooked, supply-chain lever lies in
shipment consolidation. Nabisco offers an instructive example. For one retail customer, the
company had been delivering product from multiple plants via six different LTL deliveries.
Through the use of a third-party SCM provider, it was able to consolidate these multi-vendor
loads into two truckloads. By strategically consolidating the shipments, reports Rick D. Blasgen,
senior director of product supply, Nabisco cut its transportation costs by half. On top of that, it
reduced inventory levels, increased inventory turns, cut lead-times, improved on-time delivery,
and enhanced case-fill rates.
Cross docking. Another supply-chain technique with proven payback potential is cross docking.
This is the practice of receiving and processing goods for reshipping in the shortest time possible
and with minimum handling and no storage. According to Maurice Trebuchon of Coopers &
Lybrand's SysteCon Division, cross docking can yield savings of 25 percent or more over
conventional warehousing. Speaking at this year's annual CLM meeting, Trebuchon cited one
manufacturer that used cross docking to achieve a net savings of $0.84 per ton of freight
processed. The savings came from the elimination of costs related to putaway and picking and
storage.
Supplier management. Research from McKinsey & Co. demonstrates the substantial
improvements possible through aggressive supply management. An article by McKinsey
consultants in the Winter 1998 issue of SCM Review mentions a client in the IT industry that
had successfully integrated vendors into its product-development process. On one particular

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team, the integration paid dividends in triplicate: the parts count dropped by 30 percent, the
number of assembly steps and material specifications was reduced by half, and development time
shrank from years to months.
Supplier integration. The abundant advantages of supplier integration were again evident in a
two-year study conducted by the Global Procurement and Supply Chain Initiative at Michigan
State University. Drawing on responses received from around the globe, the study showed that
companies that involved suppliers earlier on in the product-design and -development process
consistently outperformed those that did not. This was true across a range of supply-management
metrics. The comparative improvement in purchased material costs alone was 15 percent.
Industry experts say most of those barriers fall into one of three broad categories:
information sharing,
integration,
or the people themselves.
1.5 LOGISTICS, INVENTORY CONTROL, AND SUPPLY CHAIN
MANAGEMENT
In 1992, some food manufacturers and grocers formed Efficient Consumer Response to
shift their focus from controlling logistical costs to examining supply chains (King & Phumpiu,
1996). Customer service also became a key competitive differentiation point for companies
focused on value creation for end consumers. In such an environment, firms hold inventory for
two main reasons, to reduce costs and to improve customer service. The motivation for each
differs as firms balance the problem of having too much inventory (which can lead to high costs)
versus having too little inventory (which can lead to lost sales). A common perception and
experience is that supply chain management leads to cost savings, largely through reductions in inventory.
Inventory costs have fallen by about 60% since 1982, while transportation costs have fallen by 20%
(Wilson, 2004). Such cost savings have led many to pursue inventory-reduction strategies in the supply
chain. To develop the most effective logistical strategy, a firm must understand the nature of product
demand, inventory costs, and supply chain capabilities.
Firms use one of three general approaches to manage inventory. First, most retailers use an
inventory control approach, monitoring inventory levels by item. Second, manufacturers are
typically more concerned with production scheduling and use flow management to manage
inventories. Third, a number of firms (for the most part those processing raw materials or in
extractive industries) do not actively manage inventory. Many agribusiness firms do not actively

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manage inventory. This does not mean that they ignore inventory. Rather, they hold large
inventories because any potential savings from inventory reductions are far outweighed by the
inventory-induced reductions in production, procurement, or transportation costs. Often
economies of size cause long productions runs which lead to inventory accumulation.
Simultaneously, seasonality leads to inventory buildups of key inputs like seed as well as outputs
like corn. Economies in procurement such as forward buying in the food industry and quantity
discounts increase inventories. Similarly, unit trains and other forms of bulk shipping discounts
contribute to inventory buildups.

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 CHAPTER II

COMPANY PROFILE

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Hipolite Group which is one the largest Automotive Component manufacturers is situated in
Patiala have been the original Equipment suppliers of the most critical engine components like
Aluminium Alloy Pistons, Piston Rings, Bimetallic Bearings, Bushes, Thrust Washers and large
CoHPLex Cast Iron Components like Cylinder Block and Cylinder Heads to major Automotive,
Industrial Power Generation Engine/Vehicle manufacturers. Established in the early 70's today,
eHPLoys a work force of more than 1200 in 6 of their manufacturing Units with an annual
turnover of US $ 70 Million with business activities spread over 24 Countries round the Globe.
Hipolite Pistons Ltd (HPL) manufactures aluminium alloy Pistons, Piston Pins and Piston Rings
for Passenger Cars, Heavy and Light Commercial Vehicles, Heavy Duty Diesel Engines for
Power Generation and Earth movers, Compressors, etc. HPL is the first Company in India to
develop Austenitic Ring Carrier (Alfin) Pistons. With the three manufacturing Plants located in
and around Kolhapur, the Company manufactures 2.4 Million Pistons per Annum. Today HPL
is an ISO-TS-16949 accredited Company certified by TUV (Sud). HPL has also been awarded
"Ship To Use" (STU) Status by Cummins India and B.E.M.L. HPL has the technical capability
to design and manufacture Pistons of contemporary designs and Pistons for New Generation
Engines. Major OE Customers of HPL include Tata Motors, Cummins India, Escorts Farm Trac.
Maruti - Suzuki, Kirloskar, Eicher Tractor, BEML Komatsu, SAME, New Holland, Greaves
and Ford to name a few. HPL is OE supplier to world majors like MACK Trucks, Cummins and
ARROW engines, USA and Lister Petter-UK and has been awarded Status of "Preferred
Supplier" from MACK Trucks, USA. HPL exports about 25% of its produce to 24 countries in
all parts of the world including countries like the USA, LATIN America, UK, Germany, France,
Turkey, Israel, Singapore, Dubai, Sri Lanka, Bangladesh etc.

Hipolite Pistons Ltd. ventured into manufacture of Pistons in 1971 without any collaboration or
technical assistance of any Piston manufacturer. Manufacturing plant was setup at the industrial
estate in Patiala, a small industrial city, near Chandigarh & delivered the First Ring Carrier
piston to the Indian Diesel Engine Industry in 1971.

In the year 1985 a second unit was started in Nabha, yet again a small town 60 kms away from
Patiala to manufacture Gudgeon Pins & Pistons for stationary & industrial applications.In the
year 1996 a third unit was added in Rajpura industrial estate exclusively for the manufacture of

12
small pistons to industrial applications & passenger cars. Currently this plant concentrates on the
manufacturing of Pistons for passenger car as an Exclusive & Single source supplier to
Maruti Suzuki Ltd, for their prize vehicle SWIFT

The company has kept pace with the growing trends by virtue of streamlining quality systems,
development of quality culture, adoption of latest technology & equipment. All the three plants
of Hipolite Pistons Ltd are certified for TS 16949 : 2002. Products of Hipolite Pistons enjoy a
high degree of customer satisfaction & value for the money & has been the choice of discerning
customers as most cost effective supplier.

VISION
To be the world`s leading provider of auto component manufacturing & total engineering
solutions to automobile manufacturers across the world
MISSION
To provide innovative products of world class quality at reasonable prices.

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Plant I

The Fist Plant is located in Patiala, Industrial Area. This facility

primarily concentrates on the manufacture of Alfin Pistons for Heavy
Duty Diesel Engines for Power-Generation, Light and Medium
Commercial vehicles and Pistons for Passenger Car Diesel Engines This Plant produces annually
around 800,000 Pistons.

This Plant 1 at Patiala, houses a modern Aluminium Foundry Plant for manufacture of the
Aluminium Alloy Castings which are produced on dedicated Die Casting Machines tailor made
to suit the different varieties and sizes of the Pistons.

The Piston Foundry is supplemented by a well equipped Laboratory with Spectrometer and
image analyzer apart from other essential Checking/Qualifying Instruments and Equipment to
provide clean and good Quality metal for producing World class Aluminium Castings which
satisfy the Chemical/Mechanical and other metallurgical properties essential for the Piston to
withstand the high temperature and pressure during its operational tenure in the Engine. The
machining facility includes special Purpose Machines and CNC Machines to provide the desired
OD Profile and Combustion Bowl Geometries which are essential features for the satisfactory
performance of the New generation eco-friendly engines.

The manufacturing facility is co HPL emented by sophisticated Quality Control Systems and
Equipment to ensure consistently high Quality Pistons.

Plant II

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In 1985, HPL set up its Second Plant in Rajpura which is around 25 Kilometers from Patiala and
manufactures around 200,000 Pistons annually primarily for catering to the Diesel Engines for
Industrial purposes, irrigation/Agricultural and Small Diesel Generator Sets.

Apart from the manufacture of Pistons, this Plant is fully equipped to manufacture Gudgeon Pins
in the diameter range of 16 mm to 80 mm with well supported Laboratory and sophisticated
manufacturing and measuring equipment to heat treat/Machine/Grind/Superfinish Gudgeon Pins
guaranteeing the Geometrical accuracies and mechanical strength/hardness for long and trouble
free operation on the Engine.

Plant III

The Third Plant was established 1993 and is located at Nabha and produces around 2 Million
Pistons annually (8 Lacs) primarily for Passenger Car Gasoline applications and about 1.2
Million Pistons annually for Refrigeration Air compressor application

Heavy Duty Diesel Engines for Power

Generation / Off Highway Vehicles/Gas Engines

1 MW Piston

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For Heavy Duty Diesel Engines for Power Generation/Off Highway Vehicle applications, HPL
develop and produce Pistons with diameters ranging from 130 mm to 190 mm featuring Single
Alfin and Dual Alfin Gravity Die Cast Pistons.

HPL manufacture these Pistons on a dedicated manufacturing facility with special purpose CNC
Machines to produce coHPLex OD Profiles, and Pin bores with Oval Bore, trumpet bore or
relief's as per the requirement.

140 mm dia BEML Piston

The coHPLicated Core Profiles featuring on these Pistons are generated applying 3D Modeling
facilities using Pro-E Wildfire-2 foundation package for surface modeling, advanced
modeling extension and Tool Design Package for manufacturing to achieve targeted sections
and effective control on the weight of the Piston for optimum balance of reciprocating masses.

Articulated Piston

Some of the special features which are provided in the design of these bigger size Pistons
(Diameters of 110 mm to 170 mm range)

Hard Anodizing of the Crown for Thermal Crack Protection

Dual Ring Carrier for enhanced life
Oval Gudgeon Pin Bore
Pistons with as cast side drain for effective Oil drain

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Two pieces constructions of Pistons (ARTICULATED PISTONS) with forged Chrome Moly
Steel Crown coupled with Aluminium Alloy Skirt held together by a Piston Pin where the
guidance and sealing function are separated from one another. Because of this design, the skirt is
better shielded from hot Piston crown and ring Zone and can, therefore, be installed with smaller
clearances than the one-piece Piston, which has a positive effect on Quiet running.

Heavy/Medium/Light Commercial Vehicles with Diesel Engines.

In view of the ensuing legislations and the keenness of the Government to provide
environmentally friendly ambience, the modern Internal Combustion Engines need to
introduce New Technologies for coHPLying with the emission legislations.

Cooled Gallery Cut Section

The new Technologies call for design of Pistons to withstand increased specific power output,
increased injection pressures, high pressure turbo charging with after coolers, to coHPLy with
stringent emission regulations while satisfying the requirements of low fuel and lube oil
consumption.

TATA 4SP Euro III Piston

HPL manufactures wide range of Pistons in diameter range of 75 mm to 130 mm with and
without Cooled Gallery features. The design and manufacturing facilities available with HPL
enables them to design, produce and optimize the features such as, as cast Oil drain Pockets,
Autothermic/Autothermatic Piston with control expansion, Steel struts to provide lesser fitting

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clearances for reduced noise levels, Gudgeon Pin Bore offset for effective load balancing/noise
control, & Cooled Gallery Pistons

Passenger Car (Diesel & Gasoline) Engines

HPL designs and produces Pistons in the diameter range of 70 mm 90 mm for Passenger Car
Diesels and Gasoline Engines applications.

75 mm Piston
While the Pistons for Passenger Car Diesels which feature Ring Carriers with/without Cooled
Galley and are made from Hyper Eutectic Aluminium Alloy which provide lesser fitting
clearance between Piston and Cylinder Bore, the Pistons for Gasoline Engines are made from
Eutectic Aluminium Alloy with as Cast Valve Pockets, light weight and environmentally
friendly features.

Zen/Maruti SWIFT/Estem Vehicle

The most cost effective and proven quality of HPL Pistons have earned the Single Source
Status for the Pistons for Maruti Suzuki for their Prize models of SWIFT/ZEN & Esteem
Vehicles.
Bi-wheeler (4 Stroke) / Small Engine Applications

A wide range of Pistons for 2 Stroke and 4 Stroke Engines in the diameter range of 40 to 60 mm
for powering the Scooters, Motor Cycles and Refrigeration Air Compressors are made from

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Eutectic and Hypereutectic Aluminium Alloy which are very cost effective and provide value for
the money.

TVS Victor/Boxer /Caliber/Hero Hond

These Pistons are offered in attractively packed containers as assemblies consisting of Pistons,
Gudgeon Pin, Piston Rings and Circlips.

Copeland Pistons
HPL produces about 1.3 million pistons annually of 41mm diameter for Refrigeration Air
compressor sealed units. These are manufactured on special purpose machines with close
tolerance and extremely good surface finish to provide 'Quite' running of the compressors.

2.1 STUDY ON SUPPLY CHAIN PRACTICES WITH REFERENCE TO

INDIAN INDUSTRY
The changing business conditions of the 21st century has led to companies facing issues
ranging from globalisation, economic uncertainty to new technologies and increasing consumer

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demands. In the IT industry, as manufacturers design and build vehicles globally, their supply
chains become increasingly complex with challenges that often stand in the way of profitability
and higher shareholder value such as long order-to-delivery lead times, unreliable production
schedules, excess inventory across the supply chain, lengthy demand planning cycles and lack of
visibility of suppliers. The effect of the global economic meltdown increased the pressure on IT
executives to make right decisions about their supply chain for better performance. In a highly
challenging and competitive environment such as today, where supply chain is a popular tool for
improving the organisational competitiveness, an efficient and effective supply chain strategy is
a must for IT manufacturers and their component manufacturers so as to meet changing
consumer demands.

SUPPLY CHAIN INTEGRATION: The supply chain integration strategy to corporate

competitiveness is increasingly becoming relevant. It is critical to realize, however, that those
firms which seek to lead the race to integrate the supply chain must become exhaustively
conscious of their own power and effectively manage this power to support their integration
strategy.

POTENTIAL BENEFITS OF INTEGRATED BUYER-SUPPLIER

RELATIONSHIPS

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LEAGILE SUPPLY CHAIN
Leagile supply chain is coned by combining the concepts of lean and agile supply chain-
Lean means series of activities or solutions to eliminate waste, reduce non-value added
(NVA) operations and improve the value added, while agility seeks to adapt to the changing
requirements of customers in time, and make organisations and facilities to become more flexible
and responsive to customers needs. Leagility is a system in which the advantages of leanness
and agility are combined by positioning the decoupling point so as to best suit the need for
responding to a volatile demand downstream yet providing level schedule upstream from the
decoupling.
THE FRAMEWORK OF LEAGILE SUPPLY CHAIN IS DEPICTED IN THE
FOLLOWING PICTURE:

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CASE STUDY- FORD
Fords suppliers are critical allies in helping the Company to achieve success in the
marketplace and meet sustainability goals. They promote long-term relationships with suppliers
and seek alignment with them on sustainability-related issues such as greenhouse gas emissions
management and human rights. Within Ford's Purchasing organization, the Supply Chain
Sustainability Department develops and implements strategy for engaging with suppliers on
sustainability issues. The group also helps build capability within the Purchasing function to
address sustainability issues through routine business processes. Since 2005, Ford has been
taking steps to rationalize and streamline its supply base through a strategic supplier strategy
called the Aligned Business Framework (ABF). The strategy is designed to create a sustainable
business model to increase mutual profitability, improve quality and drive innovation. What it
means in practice is that they are working more closely and collaboratively with a smaller

22
number of global strategic suppliers. Ford has approved a total of 102 ABF suppliers, 12 of
which are owned by minorities or women.

THE SUPPLY CHAIN OF TOMORROW

In a highly competitive environment, an effective and efficient global supply chain is a
must for IT manufacturers and their suppliers. The industry landscape is exposed to a set of
critical challenges and trends that are leading, if not accelerating, the need to fine-tune supply
chain strategies and operations even further. The increasing requirement for real-time
information and effective communication across the supply network is critical for managing
and optimizing the supply chain on a flexible basis, while keeping costs under control. In regard
to the green challenge, the focus on the environment might reshape this supply chain scenario
even more radically. Rising energy costs, regulation concerns, and the demands of conscientious
customers require suppliers to reduce the carbon footprint of their entire operationsincluding
supply networks.

SUPPLY CHAIN AND LOGISTICS STUDY AT HIPOLITE PISTON INDIA

LTD..
This project is about the study conducted at Hipolite Piston India Ltd.. on the logistics
and supply chain management. The aim of this study is-:
The Right Parts
In Right Quantity
In the Right Place
At the Right Time

Supply Chain Management (SCM) is a system that used by an organization to organize

the process of planning, implementing and controlling the operations of supply chain as
efficiently as possible. Supply chain management spans all movements and storage raw
materials, work-in-process inventory and finished goods from point-of origin to point-of-
consumption. In order to reduce the number of defective parts, cut labor costs and improve
efficiency, SCM is the tool that is used.

23
 Normally, SCM will achieve one of the goals which are adding value chain. Value chain
means the function within a company that add value to the products or service that the
organization sells to customer and for which it receives payment.
Project Background
Supply Chain Management is an important system that needs to apply in industry. In
order to practice the knowledge practically, case study need to be done to let theory can be
applied. Nowadays, many companies collaborated through a network of production units, so as
to provide customer with the desired products. SCM, which are more precisely addressed in this
thesis generally refer to a set of networked organizations working together to source, produce
and distribute products and service to the customer.
This collaboration applied SCM for the purpose of producing IT to the maximum
efficiency. There are several departments in the plant. Each department does their own job to
achieve one objective which is produce good ITs. Each department needs to contact efficiently
and uses SCM as the contact medium. Good contact between departments in a good manner lets
the plant work smoothly.

Drivers of supply chain in the company

Logistic Department at Hipolite Piston India Ltd.. is responsible to manage receiving raw
material, storage and do delivery in the manner that is asked by the two departments which is
Body Shop and Production Line.
Body Shop is the department that is responsible to assemble each part of product body part to
make a complete framework.
Production Line does the job to produce a complete product. Their responsible is to receive
product framework from Body Shop and trim part from Logistic Department. After Production
Line finishes the job, product is ready to be sent to the market.

MANUFACTURING
The flow of process and person In charge of Logistic Department responsible of
unpacking trim section and body section of Hipolite Piston India Ltd.. is as in Table

24
Process Flow and Person in Charge of Unpacking Trim

25
Process Flow and Person in Charge of Body Parts

Few Findings of the Study

In order to fulfill the demand that is asked by the Production Line, analysis of the
strength of Logistic dept. needs to be done. The findings show that-:
1. Logistic Department cant guarantee to supply the demand that is asked by the Production
Line if the demand is increasing suddenly in any number.
2. Logistic Department does not have its capability data on supply trim part to Production Line.
3. Logistic Department have problem to identify the correct number of man and machine needed
by that department.
Hipolite Piston India Ltd.. is a system that implements Just in Time (JIT). JIT is a concept that
focuses on utilizing SCM.

ASSEMBLY LINES
There are approximately 1900 components and sub assemblies in each product. About 250
components are varied to produce the 11 different product combinations.
All the components that might be required at a particular work station are positioned behind
the assembly workers.
There are different sections on the assembly lines for engine assembly, engine mounting,
chassis dropping, internal fitting, fuelling etc.

26
Typical Supply Chain-:

The typical benefits of an excellent supply chain are

Reduction in total logistics costs as a percentage of revenue (material acquisition, order
management, inventory costs and finance/IT support)
Reductions in order-fulfillment lead time.
Reduction in inventory.
Improvement in meeting commitment dates.

Transportation Decisions
Customer service levels and geographic location play vital roles in such decisions. Since
transportation is more than 30 percent of the logistics costs, operating efficiently makes good
economic sense.
Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of
equipment are key in effective management of the firm's transport strategy.

27
Supply Chain at Hipolite Piston India Ltd..

Demand is generated in Hipolite Piston India Ltd.. in two ways. Firstly, the annual
business planning of Hipolite Piston India Ltd.. conducts a market survey studying the
trend of market and the requirement of the customers.
Also, they look for their competitors latest launches and prices. If a new product is launched by
the competitor, the marketing department sends its details to the R&D department for
consideration of the possibilities of design and development of a similar kind of product to be
launched in competition. On the basis of this rigorous study they create their annual production
target of all the vehicles. This annual plan also incorporates their annual growth rate target.
This whole planning is done by the top management to provide a long term growth for
the company. Secondly, the order from the dealers to Hipolite Piston India Ltd.. is also added in
the production schedule as it arrives.
This production target is forwarded to PPC (Production Planning & Control) department
which divides it into monthly, weekly and then daily production plan. This plans information is
then provided to the Production department and the Materials department. Now, as the material
department has the responsibility to manage regular purchases, costing, material control and

28
supply for spares, so it manages inventory of all materials. For this, Materials department send
production plans to the vendors and tells them how much they should produce and maintain as
inventory. Now, the vendor supplies the raw material (as machined parts, castings, etc.) to the
stores where it undergoes quality check and then kept as inventory. The production department
utilizes this inventory for production. In doing so, they maintain continuous interaction with the
materials department in case they felt short of any material and have to change the daily plan and
need some other material. The material department then consults the vendors and look for the
available options. The finished product then stored in the warehouse and then distributed by the
distribution department to the dealers.

Inbound Logistics
Long term contract with service providers transporters and agents.
Personnel at regional offices for overseeing the smooth transit of goods.
Transparency and monitoring through deployment of IT all transactions through SAP.
DTL supplies for critical high value items.
Efficient storage facilities easy storage and retrieval.

Outbound Logistics
Stockyards, all across the country.
Long term contracts with transporters higher volume of business to transporters ensures
competitive price.
Regional Sales Office and Vehicle Dispatch Section linked through SAP.
Efficient security system for prevention of any kind of pilferage.

Logistic Partners for Dispatch are

Blue Dart
Professional
Gati

Procurement
E procurement initiative.

29
 Global Sourcing Team China , a key destination for sourcing essential items like tires,
power steering units etc., Steel procured from Belarus
Long term relationships with a stable and loyal pool of suppliers.
Technology driven procurement SAP and VCM.
Strategic Sourcing for key components FIPs, Steel etc.
Localized supplier base at mfg. locations low inventory levels

SUPPLY CHAIN-:
DISTRIBUTORS OF HIPOLITE PISTON INDIA LTD..
Hipolite Piston India Ltd.. serves the domestic market through 76 regional distributors. Each
regional distributor handles the needs of the retailers in its geographic region.
The distributors provide the factory with forecasts of dealer requirements based on
experience, discussions and season.
The regional distributors in the areas of high demand often order more no. of products to the
factory than what is actually forecasted by the dealers. This is done by them to prevent any
stock outs and to be prepared for any adverse situation.
In this case there are high risks at the distributors and dealers end if the ordered product
units are not sold. Though less risk is faced by the company as for them the product units are
already been sold. But at the same time the standing inventory at the distributors end and
dealers end do bring bad name to the company which tarnishes the goodwill of the company
in the market.
The forecasted pre purchased orders can be cancelled by the distributors at any time before
the actual delivery has been done from the factory, at that point the pre purchased orders
automatically became firm purchase orders that the distributors were obliged to sell.

MODE OF TANSPORTATION
Products are shipped by truckload & trains to the warehouses nationwide once a week.
Deliveries normally take one to two days.
During peak seasons, additional mid week deliveries were made in response to urgent orders
from retailer warehouses.

30
WAREHOUSE & STORE OPERATION
The dealers mostly maintain their own regional warehouses.
Shipments are timed to arrive at the stores at the start of the weekend
It takes a day or two for the dealer warehouse to pick and move the products to the stores.
The individual dealers dont have much space so they stock only what they expect to sell
over a period of time, plus a safety margin. Therefore the stores rely on rapid order
fulfillment from their regional warehouses.

BULL-WHIP EFFECT IN THE SUPPLY CHAIN

The demand at all ends be it dealers, distributors, manufacturers keeps on fluctuating due to
various external and internal factors. The bullwhip effect is evident in a supply chain when
demand increases and decreases.
The effect is that these increases and decreases are exaggerated up the supply chain. The
observation here is that retailers orders to the distributors varied far more than the preceding
customer demand and in return the distributors order to the factory varied even more than
the preceding retailers demand.
In order to tackle more demand Hipolite Piston India Ltd.. orders more to their vendors.

FEW OF THE POTENTIAL CAUSES OF THE BULL WHIP EFFECT

Demand forecast updating
The main reason for this problem is that the data are usually based on forecast orders and not
actual customer demand. As most companies are untrusting, this leads to companies not
wanting to share information about demand, which leads to information distortion throughout
the supply chain.
Various methods of forecasting such as exponential smoothing or moving average
forecasting have been employed by the company to find the truest demand. Unfortunately,
any type of forecasting can cause the bullwhip effect

Order batching
Order batching refers to a company ordering a large quantity of a product in one week and
not ordering any for many weeks. The main reason for a company ordering in batches is that
it may prove to be less costly because of transportation costs or the company will receive a
discount if a large quantity is ordered in one period.

31
Price variations/sales promotions
If the price of products changes dramatically, customers will purchase the product when it is
cheapest. This may cause customers to buy in bulk, which also adds to the order-batching
problem.
Manufacturers and distributors occasionally have special promotions like price discounts,
quantity discounts, coupons, rebates, etc. All these price promotions result in price
fluctuations, and the customers ordering patterns will not reflect the true demand pattern.
One method of avoiding price fluctuations is by stabilizing prices.

RECOMMENDATIONS TO REDUCE THE BULL WHIP EFFECT

Step 1
Improve the flow of information along the supply chain. Improving communication and
forecasting end-user needs greatly assists in reducing the bullwhip effect. In addition, look to
day-to-day operations along the supply chain to observe trends and better predict customer
demands. Supply chain managers should develop a forecasting system consisting of customer
demands and supplier inventory, in concert with market fluctuations.
Step 2
Reduce delays in the supply chain. Cutting order to delivery time also greatly decreases
fluctuations along with Lessing inventory levels and operating costs.
Step 3
Pay closer attention to point of sale purchases made by customers. Using your point of sale
system to create reports that track customer preferences and ordering behavior. This helps to
identify future trends as well as bettering communication along the supply chain.
Step 4
Reduce your order sizes. In the retail industry, this refers to the economic order quantity.
Step 5
Maintain price consistency. Another useful method for reducing the bullwhip effect is to
maintain prices during market fluctuations to have an immediate impact on customer purchases.
Step 6
Centralized information : one of the most frequent suggestions for reducing the bullwhip effect
is to centralized demand information within a supply chain that is to provide each stage of supply
chain with complete information on the actual customer demand. If the demand information is

32
centralized, each stage of supply chain can use the actual customer demand data to create more
accurate forecasts, rather than relying on the orders received from the previous which can vary
significantly more than the actual customer demand
Step 6
All the functions of placing a demand at each level or stages of the supply chain should be given
to one common person or group. This will reduce any discrepancies.
VENDORS
Development at Vendors end -WHY?
Before Going Further we shall now discuss the Secret behind the Standard Corporations
excellent response to the challenges it face from the Present Competitive Market by just
improving the conditions at the vendors end.
The top Management at Hipolite Piston India Ltd.. has always known the Secret that
Vendors Development = Standard Corporations Success
Therefore, Right from the inception, Hipolite Piston India Ltd.. has always tried to improve the
condition at vendors end. Moreover the Best Practices at Hipolite Piston India Ltd.. has been
applied to vendors through MPS & Lean Projects.

To maintain quality Best In-House Practices are implemented at Vendors End.

At Hipolite Piston India Ltd.. most of the products are produced in house except the plastic
components, seats etc. So they have a relatively less no. of vendors
VENDOR SELECTION PROCEDURE

33
CRITERIA FOR VENDOR SELECTION
Vendors Past Problem on Quality, Cost & Delivery.
Vendor technological Capability in Designing, Manufacturing, Testing
Management of company wrt to professionalism, Clarity in Org structure.
Financial health
Tool making capability
Quality system in the Org.
Proximity to enable JIT deliveries
Loyalty
The vender has an effective quality system and improvement program such as ISO/QS9000
As per the demand of the products from the distributors, MRP sheets are made and the
subsequent demands for the components are placed to the vendors through e-mails. The
inventory is filled up on the principal of JIT.

SAP-SCM
Hipolite Piston India Ltd.. employs a SAP-ERP system for consolidation of systems and strategic
transformation across the company's diversified operational landscape. To effectively manage the entire
supply chain and to meet and exceed customer expectations.
To transform the linear supply chain into a responsive supply network and quickly adapt
to ever changing markets. It helps them to synchronies their planning, distribution,
transportations and logistic

34
 It also helps them maintain relationship with their vendors, customers and suppliers.
Faster responsiveness to changes in supply and demand
Optimized inventory with greater forecast accuracy and market visibility
Increased perfect order fulfillment with integrated planning and logistics
Reduced operational expenses and transportation spend
Improved warehouse efficiency with automated processes and tighter controls

SAP SCM COMPONENTS

These components of SAP Supply Chain Management are designed to support supply chain
processes throughout the company and its supply chain network.

SAP Advanced Planning and Optimization (SAP APO)

APO offers a fully integrated palette of functions for planning and executing supply chain
processes.
SAP APO is composed of Demand Planning, Supply Network Planning, Multi-level Supply and
Demand Matching, Production Planning and Detailed Scheduling, Transportation Management,
and Global Available-to-Promise
SAP Forecasting and Replenishment (SAP F&R)
F&R optimizes the internal logistics of retail companies by improving the replenishment
processes.
SAP Event Management (SAP EM)
EM enables the coordination of planning and activities within the business and with partners by
exchanging information across systems and monitoring critical situations.
Supply Network Collaboration (SNC) - formerly SAP ICH
SNC optimizes collaboration with suppliers and customers by providing a common platform for
controlling and monitoring the replenishment process for products.
SAP Extended Warehouse Management (SAP EWM)
EWM offers flexible, automated support for processing various goods movements and for
managing stocks in a warehouse complex. The system supports scheduled and efficient
processing of all logistics processes within a warehouse.

35
INFORMATION FLOW IN THE SCM

On the basis of forecasted demand the factory

places order at the Vendors end.

The factory has the information i.e. communicated

to it by the

Distributors regarding the demand. It also has info

about vendors

The distributors have the data that the retailer passes

on to him. It is

Connected to both the factory and the retailer.

The retailer has the data that the consumer passes

on to him

Real demand data is obtained

FIRST FILL
It calculates the service level between 2 parties.
It is usually a measure of shipping performance expressed as a percentage of the total order.

FILL RATES
On the visit we learned a very important concept about the fill rate. Fill Rate calculates
the service level between 2 parties. It is usually a measure of shipping performance expressed as
a percentage of the total order.

36
1. LINE COUNT FILL RATE
The amount of order lines shipped on the initial shipment versus the amount of lines
ordered. This measure may or may not take into consideration the requested delivery date
Illustration ABC Company orders 10 products (one order line each) on its Purchase Order
#1234. The manufacturer ships out 7 line items on March 1 and the remaining 3 items on March
10. The Fill Rate for this Purchase Order is 70%. It is calculated once the initial shipment takes
place.
Calculation: Number of Order Lines Shipped on the Initial Order* / Total Number of
Order Lines Ordered (7/10 = 70%)
2. SKU FILL RATE
The number of SKU's (Stock Keeping Units) ordered and shipped is taken into consideration.
Above, we consider each Order Line to have an equal value (1 ). Here, we count the SKU's per
Order Line.
3. CASE FILL RATE
The amount of cases shipped on the initial shipment versus the amount of cases ordered.

37
 CHAPTER III

NEED AND SCOPE OF

THE STUDY

38
3.1 NEED OF THE STUDY
This study is aimed at some exposure to Logistics & Supply Chain Management practices
taking place in the industry and developing our knowledge and skills in the area of operation
research. This study is directed at different levels of supply chain i.e. vendor level,
manufacturing level, dealer/distributor level. It also gives us a chance to understand how the
companies implement computer integrated manufacturing systems(SAP-ERP etc) to achieve a
competitive edge.

3.2 SCOPE OF STUDY

Relationships with suppliers and clients.
Functions important to efficient supply chain management.
Factors considered when forming a supply chain relationship.
Principal objectives in developing supply chain collaboration.
Key success factors in supply chain management development.
Barriers to implementation of construction supply chain relationships.

39
CHAPTER - IV

OBJECTIVES OF

THE STUDY

40
Main objectives of the study are:
1. To study the importance of integral organizational functions and building relationships with
suppliers/clients.
2. To study the importance and objectives of supply chain management and supply chain
practices with reference to Indian Piston industry.
4. To study the supply chain and logistics study of Hipolite Piston India Ltd..
5. To study the principle objectives in developing supply chain management and its effective key
factors.
6. To study the major barriers to implementation of supply chain management relationships and
working strategies on the basis of current programs.
7. To study the current growth process of the organization and problems faced by supply chain
management.

41
 CHAPTER - V

LIMITATIONS OF

THE STUDY

42
1. The study was restricted to single company only.
2. The size of the sample is limited to time and resources.
3. The information collected is valid until there is no any technical change or any
innovation is released in the market regarding Supply Chain Management to dealers.
4. The result is assuming that respondents have given accurate information.

43
CHAPTER - VI

REVIEW OF

LITERATURE

44
 Eric Sucky, 2005 described that the term supply chain management refers to cooperative
management of materials and information flows between supply chain partners, to reach goals
that cannot be achieved acting individually.
Choi and Hong, 2002 explained that the purpose of supply chain management is to
improve trust and collaboration among supply chain partners, thus improving inventory visibility
and the velocity of inventory movement.
Drucker, 1998 pointed towards the emergence of new technologies and the ever-
increasing intensity of competition are forcing organizations, firms and industries to reexamine
how they do business, meet new customer-driven challenges, companies are re-thinking,
restructuring and re-investing their supply chains in order to survive, succeed, excel and even in
some specific cases targeting to spearheading competitiveness. Indian Piston industry has been
facing major challenges due to fierce competition, increasing operational complexity, technology
changes, shortened product lifecycle and frequently changing customer needs. Despite high
stocks, the performance of the supply chain has failed to meet customer expectations in terms of
delivering the exact specification desired within an acceptable timescale. Today Indian Piston
industry is completely capable of producing various kinds of vehicles and can be divided into
three broad categories: two-wheelers, cars and heavy vehicles. Vast scope exists for Indian
Piston and auto component manufacturers to reduce their logistics costs with the implementation
of SCM solutions. As India is a developing country, and fascinatingly, there has been an upward
trend of realization of supply chain optimization.
Kamala and Doreswamy, 2007 pointed towards SCM solution market has been making
inroads in India and it is being established widely by many IT industries in the country,
particularly manufacturing ones where inventory carrying cost is very high. Several IT
manufacturers in India have taken positive actions to manage their logistics cost and get better
customer services and measures have been undertaken by Indian companies to develop their
supply chain. Auto manufacturers in India and all tiers of the supply chain have immense
opportunities to enhance their entire supply chain process with the successful implementation of
SCM solution. At present there are 15 manufacturers of passenger cars & multi utility vehicles, 9
manufacturers of commercial vehicles, 16 of 2/3 wheelers and 14 of tractors besides 5
manufacturers of engines. Total turnover of the Indian Piston industry is expected to grow from
USD 34 Billion in 2006 to USD 122 Billion in 2016 (Ministry of heavy industries and public
enterprises Government of India, 2006).

45
 Srinivas and Shekhar, 1997 revealed that the IT industry is today a key sector of the
Indian economy and a major foreign exchange earner for the country. Today, India is the 2nd
largest tractor and 5th largest commercial vehicle manufacturer in the world. Hero Honda with
3.9 million motorcycles a year is now the largest motorcycle manufacturer in the world. With the
growth of transportation system the IT industry of India is also growing at rapid speed,
occupying a vital place on the canvases of Indian economy. By exploring Indian Piston sector, it
has been found that uncertainties like demand and lead-time have direct impact on managing
inventories and managers are facing great difficulties while controlling these parameters.
Customer satisfaction and cost reduction are again the key issues to be handled effectively and
efficiently. To improve profitability and efficiency, IT players are seeking ways to achieve
operational excellence, reduce operating cost and enhance customer service through efficient
supply chain management. The IT industry is changing its business model with innovative
supply chain to reduce cost, create customer buying experience and quality. Hipolite Piston India
Ltd.. has implemented one of the most efficient supply chain systems in use by Dealers today,
though it still stands room for improvement.
Austin, 1990 find out that many dominant factors affect decisions made in the IT world.
Consumer preferences decide the current styles, consistency, and presentation standards of
vehicles. Government trade, safety, and environmental regulations found incentives and
requirements for upgrading and change in design or production. Competitive rivalries and
corporate strategies provide equally important momentum for research, design innovations, and
changes in the manufacturing process. All automakers are continually under pressure to
recognize consumer preferences, national biases, and new market segments where they can sell
vehicles and gain market share. Their capability to be stretchy enough to quickly react to all
these pressures is determining their prospect in the industry. The implications of these factors are
enormous and propagate along the supply chain of the automakers in India. The Indian Piston
industry is growing with pace domestically as well as internationally with remarkable
milestones. Below figure shows the growth of an Indian Piston Sector.

46
CHAPTER - VII

RESEARCH

METHODOLOGY

47
Type of research:

(1) Descriptive research:

Has been used to describe what existed in the market/field outside where the project study was
conduct.

(2) Classificatory research:

Has been used to classify, categorize and compare similarities and differences observed in the
various samples studied.

(3) Explanatory research:

Has been used to explain the various phenomena in terms of similarities and differences.

Sampling plan:

Researcher has adopted the probability, random sampling method to conduct survey.

Sampling method:

The various type of sampling can be grouped under two broad heads: probability sampling
and non-probability sampling.

Sample size:
A total of 40 respondents ( D e al er ) were surveyed to gather information to
accomplish objectives.

Sources of data:

48
Keeping in view the objectives of the study, a conventional and stratified marketing research
programs was adopted and the procedure for the study consists of following elements.

Primary data

The information, which was collected using questionnaire method from the customer, is the
primary source of data gathered specifically for the project study. It includes direct contact
with dealer, regarding their response towards the Supply Chain Management.

Secondary data

Secondary source of data includes the findings or the basic research already done by outside
organization departments. Besides, it also includes the appropriate material from newspapers,
magazines, standard textbooks and information from the internet.

Data collection instrument:

Research instrument used for obtaining primary data is questionnaire.

49
 CHAPTER - VIII

DATA ANALYSIS &

INTERPRETATION

50
4. DATA INTERPRETATION AND ANALYSIS
1. Importance of Integral Organizational Functions
Table: 1

Functions Very Quite Somewhat Not

Important Important Important Important
Production 32 / 80 % 5 / 12.5% 3 / 7.5% 0 / 0%
Procurement 25 / 62.5% 9 / 22.5% 6 / 15 % 0 / 0%
Operation 16 / 40% 8 / 20% 10 / 25% 6 / 15 %
Storage 10 / 25% 8 / 20% 8 / 20% 14 / 35%
Inventory 12 / 30% 2 / 5% 4 / 10% 22 / 55%
Graph: 1

Very Important Quite Important Somewhat Important Not Important

0 0
3
6 6
5
14
9 10 22

8
8
32 4
8 2
25
16
10 12

Production Procurement Operation Storage Inventory

INTERPRETATION: The emphasis remained on production / procurement whereas

operations, storage and inventory clearly came out as losers despite of having great significance
in the supply chain.

51
2. Precedence for Building Relationships with Suppliers
Table:2
Functions Very Quite Somewhat Not
Important Important Important Important
Quality 32 / 80 % 0 / 0% 8 / 20% 0 / 0%
Cost 35 / 87.5% 1 / 2.5% 4 / 10% 0 / 0%
Logistics 25 / 62.5% 9 / 22.5% 6 / 15 % 0 / 0%
Processes 35 / 87.5% 2 / 5% 1 / 2.5% 3 / 7.5%

Graph: 2

Quality Cost Logistics Processes

1
2
35
6

25
4 3
9
35

8
32
1
0 0

Very Important Quite Important Somewhat Not Important

Important

INTERPRETATION: Great importance was attached to quality / cost while neglecting the fact
that these two are achieved by value addition through logistics and processes.

52
3. Precedence for Building Relationships with Clients
Table: 3
Functions Very Quite Somewhat Not
Important Important Important Important
Construction 25 / 62.5% 4 / 10% 2 / 5% 9 / 22.5%
Design
Cost 35 / 87.5% 5 / 12.5% 0 / 0% 0 / 0%
Tendering 38 / 95% 0 / 0% 1 / 2.5% 1 / 2.5%
Process
Contract 26 / 65% 4 / 10% 10 / 25% 0 / 0%

Graph: 3

Construction Design Cost Tendering Process Contract

0
1
26 0
4

0
38 10
5
9
35

1
4 0
25 2

Very Important Quite Important Somewhat Not Important

Important

INTERPRETATION: The most important factor that a contractor considers when forming a
supply chain relationship with a client, is the cost benefits to be derived from such relationships,
followed by creating the standardization of the process, then the simplification of tendering and
construction process.

53
4. Principal Objectives in Developing Supply Chain Management in the Company
Table: 4
Functions Very Important Quite Somewhat Not Important
Important Important
Benefit to client / 10 / 25% 10 / 25% 20 / 50% 0 / 0%
supplier
Improvement in 30 / 75% 10 / 25% 0 / 0% 0 / 0%
customer service
Improvement in 4 / 10% 6 / 15 % 10 / 25% 20 / 50 %
information flow
Increase in 38 / 95% 1 / 2.5% 1 / 2.5% 0 / 0%
profitability
Cost reduction of 10 / 25% 10 / 25% 0 / 0% 20 / 50%
processes in the
company
Increase market 4 / 10% 35 / 87.5% 0 / 0% 1 / 2.5%
competitiveness
Integration of 20 / 50 % 10 / 25% 5 / 12.5% 5 / 12.5%
processes
Graph: 4

Very Important Quite Important

Somewhat Important Not Important
0 0 10 1
0 5
10 5
20 20 20
10
38 0 35
10 30 10 10
6 20
10 4 10 4

INTERPRETATION: Profitability and improvement in customer service were the area of

emphasis

54
5. Key Factors in Effective Supply Chain Management Relationships with Suppliers /
Clients
Table: 5
Functions Very Quite Somewhat Not
Important Important Important Important
Trust 30 / 75% 3 / 7.5% 3 / 7.5% 4 / 10%
Reliability of supply 40 / 100% 0 / 0% 0 / 0% 0 / 0%
Cultural compatibility 4 / 10% 6 / 15 % 10 / 25% 20 / 50 %
Mutual Interest 28 / 70% 5 / 12.5% 3 / 7.5% 4 / 10%
Free flow of information 4 / 10% 6 / 15 % 10 / 25% 20 / 50 %
Joint business planning 4 / 10% 3 / 7.5% 6 / 15 % 27 / 67.5%
Closer links between demand and 38 / 95% 1 / 2.5% 1 / 2.5% 0 / 0%
supply
Common platform for project 4 / 10% 5 / 12.5% 3 / 7.5% 28 / 70%
assessment
Human resource development 4 / 10% 6 / 15 % 10 / 25% 20 / 50 %
Graph: 5

Very Important Quite Important Somewhat Important Not Important

4 0 4 0
1
1
3 3
3 20 5 20 20
27 28
40 38
30 10 28 10 10
6 3
6 6 3 5 6
4 4 4 4 4

INTERPRETATION: The most important factor identified by the contractors is reliability of

supply followed by closer links between demand / supply and trust. The key manufacturers in the
industry operate through cartels thereby influencing the execution of work done by contractors
through price monopolies and disrupting supplies whenever one members interest is at stake.

55
6. Major Barriers to Implementation of Supply Chain Management Relationships
Table: 6
Functions Very Quite Somewhat Not
Important Important Important Important
Poor understanding of the concept 4 / 10% 3 / 7.5% 6 / 15 % 27 / 67.5%
Inappropriate organizational structure 38 / 95% 1 / 2.5% 1 / 2.5% 0 / 0%
Low commitment from partners 40 / 100% 0 / 0% 0 / 0% 0 / 0%
Lack of strategic focus 4 / 10% 6 / 15 % 10 / 25% 20 / 50 %
Information flow 4 / 10% 3 / 7.5% 6 / 15 % 27 / 67.5%
Graph: 6

Very Important Quite Important Somewhat Important Not Important

0 0
1
1 0

6 20
27

38 40
3
10
6
4 6 3
4 4

Poor Inappropriate Low Lack of strategic Information

understanding organizational commitment focus flow
of the concept structure from partners

INTERPRETATION: The biggest barrier to implementing a successful supply chain

partnership was the low commitment of the partners, followed by inappropriate organizational
structure and surprisingly flow information was considered to be least desirable as sensitive
information regarding the company may be siphoned to competitors.

56
7. Rate the working strategies of supply chain management department on the basis of the
current programs?
Table: 7
Functions
Outstanding 21/52%
Excellent 15/38%
Good 4/10%
Average 0/0%

Graph: 7

outstanding excellent good average

0%
10%

52%
38%

INTERPRETATION: The biggest outstanding working strategies of supply chain management

department on the basis of the programs, more over good working strategies are also supply and
managed by department on the basis of the programs.

57
8. Is the supply chain management department is having sufficient transportation?
Table: 8

Frequency

Yes 37/92%

Not Sufficient 3/ 8%
Graph: 8

Yes Not Sufficient

8%

92%

INTERPRETATION: Yes the working strategies of supply chain management department is

having sufficient transportation.

58
9. According to the current growth process of the organization, which of the following
needs much attention and progress to boost the production?
Table: 9
Operational Activities 16
activities 11
Current programming Strategies 13
Graph: 9

Operational Activities activities Current programming Strategies

33%
40%

27%

INTERPRETATION: The more emphasis on the operational activities as current growth

process of the organization needs much attention and progress to boost the production.

59
10. Choose the right option, where the supply chain department is facing problem in taking
care of the raw material?
Table:10
During Storage 33
Packaging 25
Testing of Packaging 31
Evaluation of defective raw materials 27

Graph: 10

33 25 31 27

During Storage Packaging Testing of Evaluation of

Packaging defective raw
materials

INTERPRETATION: The most occurs during storage and testing of packaging the supply
chain department is facing problem in taking care of the raw material

60
11. How do you rate the delivery activity of the department?
Table: 11
Excellent 21/52%
Very Effective 17/43%
Good 2/5%
Average 0/0%

Graph:11

Excellent Very Effective Good Average

0%
5%

43% 52%

INTERPRETATION: The average rate tit excellent during delivery activity of the department

61
CHAPTER - IX

FINDINGS

62
Company Size and Strength of Workforce
The construction industry consists overwhelmingly of small and medium-sized enterprises.
The structure of the industry continues to fragment with consolidation of the larger firms and
an ever-increasing number of small firms.
The focus remains on hiring of skilled / unskilled labor on temporary basis instead of building
an organizational structure with permanent workforce and retention of employees.
Area of Strength / Expertise
The expertise is more concentrated towards conventional construction projects.
The lack of orientation towards industrial / technology projects suggests a preference for
lower spectrum technology techniques and avoidance of challenging construction
environments.
The margins for earning hefty dividends on residential / transportation works against
investment made are the major source of attraction to contractors.

Experience in the Construction Industry.

The spread indicates the evolution of the construction industry with emergence of new firms,
amalgamation between existing ones and consolidation of those already in the business for more
than 10 years.
Importance of Supply Chain Management.
The fragmentation within the industry is clearly evident from the fact that majority does not
assign great importance to the concept of supply chain management.
Importance of Integral Organizational Functions.
The emphasis remained on production / procurement whereas operations, storage and
inventory clearly came out as losers despite of having great significance in the supply chain.
Precedence for Building Relationships with Suppliers.
Great importance was attached to quality / cost while neglecting the fact that these two are
achieved by value addition through logistics and processes.
Precedence for Building Relationships with Clients.
The most important factor that a contractor considers when forming a supply chain relationship
with a client, is the cost benefits to be derived from such relationships, followed by creating the
standardization of the process, then the simplification of tendering and construction process.
Principal Objectives in Developing Supply Chain Management in the Company.

63
CHAPTER - X

CONCLUSION

64
Key to much of the current lack of best practice within the construction industry is the need for
the culture to be developed and raised to be more collaborative, innovative, embrace change
(when for the good) and non-adversarial in nature to from its current levels. Key issues include
the following:-
(1) Decisions should be made on a cost and not a price basis (developing a more
holistic understanding of the Supply Chain).
(2) Where possible, products / materials should be modularized in order to
standardize and simplify the Supply Chain.
(3) All process activity should be evaluated and where possible simplified /
improved.
Improvements to the supply chain must be planned and must form part of an overall strategy.
The change processes must start at the very top of organizations and must be carried out
internally within the organization first. As progress is made within the organization, change must
then be extended to all parties external to the organization (but within the supply chain).
The company has faced stiff competition after the countrys economic reform in 1990s. The
company was facing a major challenge in its supply chain of products across the country as well
as overseas market. The company has set up its assembly/manufacturing facilities at multiple
locations, which has increased the complexity of the entire supply and operations. Hence, the
company needed an integrated solution, which could link all plants to optimise total costs,
operational efficiency, and respond quickly to customer requirements.
The company, therefore, implemented SCM solution in the year 2000 to streamline its business
process.
For M&M, cost reduction was very important. In view of global competitiveness, the company
has to develop new products and varieties in existing products to compete with world-class
offerings. The company has to spend more money on raw materials but cannot increase the
prices due to high competition. Thus, SCM was the only solution to keep its margin healthy
minimising costs by reducing the cost of production, logistics, working capital (inventory), and
the cost of lost sales. Thus, SCM solution has enabled a pull-based replenishment, which helped
in optimising the logistics and manufacturing operations to improve margin and minimised costs
by enabling quick customer requirements. Successful implementation of SCM has helped M&M
by reducing its inventory by more than 50% and the company expects to maintain similar
inventory level. Replenishment lead times, which cover planning and execution lead times, were

65
CHAPTER - XI

SUGGESTIONS

66
Current supply chain performance shouldnt only be measured and understood given that it is
evaluated by the criteria is the overall product on time and to budget? This broad -brush
evaluation quite obviously does not provide any mechanism to fully understand where process
can be improved, wastage can be reduced and additional value can be added.
A reflective approach must be adopted towards activities where the knowledge gained is stored,
shared and applied to the next activity. Currently, all efforts are focused on looking forward to
the next project rather than attempting to learn from previous activities and applying the lessons
learnt to a general raising of value adding activities.
All parties involved in the supply chain must look to drive change through all areas by:-
Education process.
Cultural change.
An understanding that all parties will benefit / profit.
Open and shared approach to the dissection of the associated benefits of improved supply
chain performance.
An attitude of if your in, you win with regard to enhanced approach to Supply Chain
participation.

67
BIBLIOGRAPHY

68
BIBLIOGRAPHY
BOOKS AND JOURNALS
Austin, J.E., 1990. Managing in developing countries. Free Press, New York, NY.
IT- Indian Piston Supply Chain- A Discussion Paper by KPMG; 2006
Ballou, R. (2004). Business logistics/supply chain management, 5th ed. Upper Saddle River,
NJ: Prentice Hall.
Choi, T.Y., Hong, Y., 2002. Unveiling the structure of supply network: Case studies in
Honda, Acura, and DaimlerChrysler. Journal of Operations Management 20, 469-493.
Drucker, P.F., 1998. Managements new paradigms. Forbes, 152-177.
Eva Ponce-Cueto et al, A Conceptual Model For Integrating Strategic Supply Management
Into The Supply Chain; Int. J. Manufacturing Technology And Management, Vol. 19, Nos.
1/2, 2010
Gupta, A., Maranas, C. D., 2003. Managing demand uncertainty in supply chain planning.
Computer and Chemical Engineering 27, 1219-1227.
I. M. Ambe et al, Strategic Supply Chain Framework For The IT Industry; African Journal of
Business Management Vol. 4(10), pp. 2110-2120, 18 August, 2010
Matthias Holweg, Growing The E Supply Chain Road Forward; 2010,
www.ITcouncil.co.uk
Michael Maloni And W.C. Benton, Power Influences In The Supply Chain, June 10, 1999
Michael Schwarz, Trends In The IT Industry Implications On Supply Chain Management;
Cisco White Paper; 2008
Ministry of Heavy Industries & Public Enterprises Government of India, (2006). Draft IT
mission plan. dhi.nic.in. http://www.dhi.nic.in/ draft IT_ mission_plan.pdf (retrieved
26.11.2009).
Srinivas, V., Shekhar, B., 1997. Applications of uncertainties based mental models in
organizational learning: A case study in the Indian Piston industry. Accounting Management
and Information Technology 7 (2), 87-112.
Tsiakis, P., Shah, N., Pantelides, C. C., 2001. Design of multi-echelon supply chain networks
under demand uncertainty. Industrial Engineering in Chemical Research 40, 3585.
Various editions of The Hindu, HT (Hindustan Times) & The Tribune News Papers

69
 Koh, S.C.L., Tan, K.H., 2006. Operational intelligence discovery and knowledge- mapping
approach in a supply network with uncertainty. Journal of Manufacturing Technology
Management, 17 (6), pp.687 699.
Sachan, A., Datta, S., 2005.Review of supply chain management and logistics research
International Journal of Physical Distribution & Logistics Management, 35 (9), pp. 664
705.
INTERNET RESOURCES
www.gsk-india.com/
www.supplychainmanagement.in/
www.urenio.org/tools/en/supply_chain_management.pdf
www.gofrugal.com/supply-chain-management.html

70
ANNEXURE

71
QUESTIONNAIRE
Name:
Q1. Importance of Integral Organizational Functions
Very Quite Somewhat Not Important
Important Important Important
Production
Procurement
Operation
Storage
Inventory

Q2. Precedence for Building Relationships with Suppliers

Very Quite Somewhat Not Important
Important Important Important
Quality
Cost
Logistics
Processes

Q3. Precedence for Building Relationships with Clients

Very Quite Somewhat Not
Important Important Important Important
Construction Design
Cost
Tendering Process
Contract

72
Q4. Principal Objectives in Developing Supply Chain Management in the Company
Very Quite Somewhat Not
Important Important Important Important
Benefit to client / supplier
Improvement in customer service
Improvement in information flow
Increase in profitability
Cost reduction of processes in the
company
Increase market competitiveness
Integration of processes

Q5. Key Factors in Effective Supply Chain Management Relationships with Suppliers /
Clients
Very Quite Somewhat Not
Important Important Important Important
Trust
Reliability of supply
Cultural compatibility
Mutual Interest
Free flow of information
Joint business planning
Closer links between
demand and supply
Common platform for
project assessment
Human resource
development

73
Q6. Major Barriers to Implementation of Supply Chain Management Relationships
Very Quite Somewhat Not
Important Important Important Important
Poor understanding of the concept

Inappropriate organizational structure

Low commitment from partners

Lack of strategic focus
Information flow

Q7. Rate the working strategies of supply chain management department on the basis of
the current programs?
Outstanding Excellent good average
Q8. Is the supply chain management department is having sufficient transportation?
Yes Not Sufficient
Q9. According to the current growth process of the organization, which of the following
needs much attention and progress to boost the production?
Operational Activities activities Current programming Strategies
Q10. Choose the right option, where the supply chain department is facing problem in
taking?
During Storage Packaging Testing of Packaging
Evaluation of defective raw materials
Q11. How do you rate the delivery activity of the department?
Excellent Very Effective Good Average

74