Redesigning Supply Chain on the Technology Platform Essay Sample free essay sample

Indian Sur industry is at a hamlets due to the assorted challenges it is confronting after the liberalisation of the Indian economic system in 1991. It is a technology-driven industry and really much dependant on gum elastic as the major natural stuff input to the concluding merchandise. Firms that have their gum elastic plantations have a better control on costs and bringings. There are large participants in automotive Sur with engineering backup from the universe giants. The major participants are CEAT. MRF. Apollo. Bridgestone and JK. The industry is extremely competitory. Today. trade names like CEAT. JK. MRF and RP are really strong in OEM markets. However. Apollo captured the replacing market in the commercial vehicle-segment. On the engineering forepart everyone is seeking to convey in radial Surs to Indian markets. as they are being readily accepted by clients due to their advantages. After the liberalisation of the economic system. the attack to tyre pricing was driven by market forces alternatively of the cost-plus-profit expression earlier used by the makers. Due to cutthroat competition organisations were forced to offer a competitory monetary value irrespective of the merchandise cost. which. nevertheless. demands to be controlled through some internal mechanism. To stay competitory Surs fabrication houses started relooking at their concern procedure and costs associated with production and distribution of the merchandise. The major ground was the high cost of operations due to system inefficiencies. higher stock list degrees and low productiveness of assets. They started looking for ways to better their efficiencies. effectivity and productiveness in order to prolong growing. RP was a well younger participant in tyre fabrication but had its inefficiencies spilled over from the pre-liberalization epoch. when the concerns were under authorities controls. fabricating capacities were limited due licensing procedure and makers had authorities protection. RP being a comparatively new company had state-of-the-art fabrication installations and really small job on the fabrication forepart. The country of inefficiency was logistics on the distribution side. They felt that the demand of the hr is speed in making the client with efficiency and cost-effectiveness. RP decided to travel in for a system based on the latest information and communicating engineerings to heighten coordination across the supply concatenation so as to cut down cost and increase plus use. RP had taken a strategic determination in the mid-1990s to be a cost-based and client seihce based discriminator for staying competitory in the automotive Sur market. They undertook a complete redesign of the bing supply concatenation and made the coordination of the assorted activities and linkages of the concern procedure and independent maps. The company decided to travel in for the SCM enterprise through the alteration procedure to work on the unfastened civilization. Through SCM they farther decided to incorporate the procurance. fabrication and distribution activities of RP utilizing the latest information and communicating engineering tools for conveying velocity in information and stock list flow. As a consequence of aggressive SCM schemes. the company could tout the accomplishments mentioned in Table1. Table 1 SCM enterprise accomplishments On history of the SCM inaugural RP traders are now assured of supplies per their demands. ‘The stock list degree in the distribution channel has drastically reduced to 15/18 yearss as against 45/50 yearss earlier. The assets and financess blocked in stock list are now reduced to half. The occupation for the gross revenues forces in the field has become easier. Their attempts are now focused more on gross revenues coevals than trailing goods at the mill or terminals. ensuing in a decrease in clip spent on non-value-added activities. RP. which was earlier more disquieted about the client service degree in the competitory environment. now talks about the enhanced client satisfaction degree and the improved client value bringing system through its SCM enterprises. With the SCM enterprise RP reviewed its existing patterns and introduced drastic alterations to convey about efficiency. cost-effectiveness and productiveness in the system at the operating degree. The following were the alterations introduced: FROM PUSH TO PULL SYSTEM OF SUPPLY CHAIN RPL had the push system in pattern for distribution. This system required production to be planned on the aggregative gross revenues forecast based on the past tendencies. ensuing in a really high degree of stock list. With the alteration to the pull system. the production planning is now based on the existent gross revenues demand from the point of gross revenues. To back up the pull system RP has worked out stock list norms based on demand fluctuations. theodolite clip and burden frequence. The latest Information technology tools were introduced for information aggregation. analysis and airing. In this system the stock-keeping units ( SKUs ) gross revenues information was to be punched on a day-to-day footing and sent to the mill. which was the duty of the trader ; C A ; F agent and hubs. in order to guarantee easiness and velocity in the refilling activity. HUB-AND-SPOKE DISTRIBUTION From the earlier multiple stock point systems RP has gone in for the repositing hub system. The house has mother warehouses at their three mills bring forthing Surs for two-wheelers. commercial vehicles and four-wheeled rider autos. The four regional warehousing hubs ( at Mumbai. Delhi. Bangalore and Calcutta ) now receive supplies from the three mills and two contract makers in and around Mumbai. The hub warehouses are owned and managed by the 3PL service suppliers. The stuff from the mills is sent to the hubs through full-load trucks and besides through the rails containers. The ratio of route to inveigh despatchs is 75 to 25. The hub warehouses are equipped with mechanised material-handling systems for rapid stock list motions. The 3PL house has it own ego developed Warehouse Management System bundle that is linked with the company’s ERP system. The stuff from the warehouse hubs is straight sent to the 24 distribution Centres ( one in about every province ) that are managed by the C A ; F agents. The stuff from C A ; F agents reaches the traders within 24 hours. SPEEDY INFORMATION FLOW RP invested about Rs 120 million on an information processing and communicating system to guarantee that all subdivision offices. warehouse hubs. distribution Centres. traders and mills are connected online with one another. For stock taking the information updates are made twice a twenty-four hours. INTEGRATED LOGISTICS RP’s existent strength lies in logistics. which is wholly outsourced to TCI who has dedicated container trucks to transport the merchandises from mills to the regional warehouse hubs. TCI’s local offices are responsible for forming the trucks. LCVs or smaller capacity vehicles for transporting the Surs from hubs to the C A ; F agents. The traders pay the secondary transit charges. nevertheless. the C A ; F agents are to the full responsible for forming the secondary transit. TCI has provided RP with the hint and path system to happen out the whereabouts of stuff dispatched to hubs and C A ; F agents. The contract is based on the wages and punishment system. As a consequence. theodolite holds have come down to within 5 per cent as against 30 per cent before. Further attempts are on to cut down this further to within 3 per cent. LEAN INVENTORY With the SCM enterprise. the myth of higher client satisfaction with higher stock list. which RP before believed in. has been wholly destroyed. The WMS across all the three female parent warehouses and four hub warehouses is integrated to logistics operations and C A ; F agents to be after and carry through the demands at dealers’ terminal. with the consequence that RP’s finished goods stock list has drastically come down to 20 yearss from 55 yearss earlier. Due to information flow. the stock list flow has increased manifold. ensuing in stock list bends of 15 from a figure of 6 earlier. Today RP is able to present the right merchandise mix at the right topographic point and at the right clip with lower stock list degrees DISTRIBUTION Planning The supplies are made from three mills and two contract makers in and around Mumbai. RP’s HO is responsible for run intoing the demands of Surs for the two-wheeler ; commercial vehicle and rider auto sections. HO at Mumbai runs a system to guarantee that all the demands of the three sections are met. Mother warehouses at mills and contract makers send their stuffs to regional hubs based in four locations across the state. These hubs supply the merchandise to C A ; F agents at 24 locations. from where it is supplied to a trader web of3200 to serve the replacing markets. All OEM clients and exports are straight handled by HO. The supplies to OEMs straight go to the customers’ workss from the mills. In exports. the merchandise goes to the port from the mills and eventually to the client via transporting lines. following with authorities ordinances. The merchandise allotments for OEMs. exports and replacing done by the HO. which has on-line entree to information on product- demands and stock list at all despatch points across the state. CUSTOM ER SERVICE In the Sur industry the quality of service is more of import than merchandise quality. The latter is a hapless merchandise discriminator. In the Indian context. all tyre makers produce first goods with proficient know-how from world-renowned makers. Hence. the merchandise quality being about the same. the other major discriminator is quality of service. This means. the client. demands of â€Å"what he wants and when he wants† should be met through service. The client makes his pick based on who provides him with the most effectual service in footings of cost A ; clip. In the replacing market. the trader is an of import client. who in bend services the terminal client. The trader will minimise his investing hazard through minimal stock list. If assured by the maker the trader will stock lesser measure of the merchandise. Through the SCM enterprise. RP has developed a system that triggers a response non merely at the warehouse hub but besides at the workss. CUSTOMER FOCUS RPL supplies the merchandises to three major market sections.1. Replacement markets2. OEM3. Exports In the replacing markets. the merchandise is supplied to 3200 traders across the state. ensuing in complexness in distribution. In efficient and cost-efficient distribution. information and communicating engineering plays a major function by manner of supplying customized package solution for warehousing direction. production planning. stock list controls and distribution planning. and can be integrated to the firm’s ERP system. In the instance of OEM clients like Mahindras and Maruti who follow the JIT system. the merchandise should get at the assembly line merely in clip so they do non hold to transport any stock list. For exports. the demands are choice and on-time bringing. taking into consideration the fusss of imposts clearance. certifications. and multi-modal transit. With the ERP in topographic point the merchandise demands of both OEM clients and exports are expeditiously handled by RP PERFORMANCE MEASUREMENT AND CONTROLS For keeping the system public presentation. RP has devised a public presentation measuring system for placing causes and taking disciplinary action thenceforth. The factors responsible for client satisfaction are the on-time bringing. order fill rate and minimal mistakes in despatchs. which are measured against the marks for wagess and punishments. As these services are outsourced. the choice of the right 3PL spouses becomes important. The other factor that is hard to measure is the lost gross revenues or chance at point of gross revenues for the period of say. a month. RP designed a measuring system that relates lost gross revenues to the gross revenues affected and the minimal stock list held over the period of a month. RP has established that for holding gross revenues of 24 Surs a hebdomad. the minimal stock at the point of selling should be 4 Surs per twenty-four hours. RP is taking at holding the gross revenues lost figure brought down to within five per cent from the present degree of 25 per cent. Similarly. for the stock list level the control figure is 20 yearss. The factor applicable at warehouse was the stock list bend ratio. which RPL improved to 15 from a degree of 6 and farther wants to increase to 18. In a nutshell. with the SCM enterprise on the engineering platform. RP could cut down its finished goods stock list to a au naturel lower limit of 20 yearss. Factory conformity to the market demand improved to 80 per cent with a pronounced accomplishment in fabricating flexibleness. The other accomplishment was dependability in bringing with 95 per cent consistence through confederation with 3 PL spouses. Review Questions 1. Discourse how RP channeled its resources for maximising the benefits. 2. RP wants the stock list to be reduced to 12 yearss from the bing degree of 20 yearss. Harmonizing to you. what should be RP’s program of action to accomplish this? 3. Discourse the importance of the public presentation measuring system in the context of RP. 4. What are the critical linkages of SCM for integrating in this instance? 5. Discourse the tactical solutions RP has implemented to acquire over the altering market state of affairs.