Posted at 11.22.2018
We can easily see remarkable amendments in the manner that organisations do business. Organisations are working in a highly changing and inexpensive environment. To work efficiently in virtually any business environment, organisations require to become much more involved in how their suppliers and customers conduct business. Due to expansion in global marketplaces and contests, organisations need to pay much more attention in what kind of products and services customers want for. To make that products and services available to their customer organisations have to absorb where materials result from, how their suppliers design their products and services, that they are transported and stored and what their direct consumers and end-product users are really looking for. Supply string management is "the look and management of seamless, value-added operations across organisational restrictions to meet the real needs of the end customer. " (The Institute for source management In Wisner, Tan and Leong, 2008, p. 8). Source chain management addresses whole treatment till final product get in to consumer's hands i. e. from providing recycleables till last product reaches to get rid of product consumers. The primary intension of supply string management is to how organisations use suppliers process, technology and capability to increase competitive gain.
In this record we are going to explain about source chain management of one of the primary Indian Car Industry. Indian vehicle sector keeps growing rapidly with conquering economic development rate of 8. 4% in the year 2005-06. Global automotive companies are constantly restructuring their business activities by freelancing their non-core activities to low cost countries. In view of current competitive environment vehicle manufacturers are anticipated to innovate new features in their products and process as well as to follow environmental standards along with inexpensive cost. For this reason organisations are obligated to source more components from low-cost countries.
Due to competitive environment vehicle companies are getting take part in mergers and acquisitions. They are really facing obstacles in bettering their quality, cost decrease and growing time to advertise. Because of this reason, the automobile industry has been handed through major structural and other changes in last decade. The relationship between automobile assembler and their suppliers is evolved due to current globalisation, implementation of lean creation and development of modularisation.
All this factors helps organisations towards product separation by lowering cost of Research and Development, impressive sales, marketing approaches, rising concentrate on enhancing performance in production and offer chain. Therefore through the days of e-business and outsourcing, resource chain management performs a vital part in car sector.
Figure 2: Typical model of Automobile Supply chain
Tata Motors (TML) is India's leading vehicle manufacturer, which is set up in 1945. It really is amongst the most notable 5 manufacturers of commercial vehicle on earth. TMS is largest Indian vehicle company with consolidate Income of Rs. 92519 crores (USD 20 billion) in 2009-10" (www. tatamotors. com). It has utilized around 24000 employees. Manufacturing bottom part of TML is propagate around various Indian states. TML isn't just limited up to Indian market, it has also started broadening its footsteps into international market. Today Tata Motors is a worldwide player having market segments in several countries about the world including Europe, Africa etc. In 2008 TMS has purchased English car companies Land Rover and Jaguar and in 2004 South Korean 2nd largest pick up truck making Daewoo Commercial Vehicle Company. TMS is the first company to be posted on New York Stock Exchange from Indian engineering sector. TMS has released Tata Nano which is lowest price car in the world. (www. tatamotors. com)
Tata Motors coping in wide selection of vehicles such as passenger cars, tool vehicles, Vehicles, Commercial traveler vehicles as well as defence vehicles.
The main opponents of car company such as Tata Motors will be the large producer of commercial and traveler vehicles in India who are, Ashok Leyland, Eicher Motors, Swaraj Mazda, Mahindra and Mahindra etc.
Valuable tools, models and ideas will give a detail understanding of issues dealing with supply chain management. Theory around the issues of operation management, supply chain management, porter's five forces, the four V's and value string will give a through perception of the worthiness added in the product and services. Therefore, an research of all above will follow, focusing on the Indian Car Industry.
Each organisation must make the merchandise or service available, that their end-
organisation, which produces products. Operation management always package with the primary purpose of the business which is, to produce products and services. Procedure management is "Planning, arranging and control of the activities that transform inputs into completed goods and services" (Bozarth and Handfield, 2008:7). The general change process model shows importance of operations, which can be seen as a change process that takes a set of inputs and transforms them into outputs (Cowe et al. , 2008; Bozarth and Handfield, 2008).
Figure 3: Typical Change process model
In the situation of Tata Motors inputs of company are raw materials such as seats, steering, clutch pads, etc. which can only help to produce or put together car, information such development process, People such as technical engineers, designers who will help design and put together car, facilities and equipment for the production and assemble different parts of the car. The transformation process includes manufacturing and service procedures which is must to improve inputs directly into outputs which will vary types of cars such as, car, bus, truck etc.
(seats, steering, clutch pads etc. )
People (Designers, Designers etc. )
Facilities and equipment/equipments
Cars, buses, vehicles, army vehicles etc.
Figure 4: Transformation process model for Tata Motors.
Even if above view point of the process might be use throughout the company, it isn't necessary that it should be follow very much the same all the time. There are versions in the techniques which need to be considered. Four characteristics of demand which can be known as 'four V's' techniques which affect the technique of techniques which required to be managed. The four V's are Quantity i. e. how many products produced via functions, Variety: just how many different types of products produced by businesses, Variance: amount of degree of demand changed as time passes and Visibility: amount of presence of its procedures to its customers. The procedure management process may need to be differentiate depending on aftereffect of above four V's. Four V's dimensions are important in supposing how easy it is for operation management to use at low cost.
Volume: In terms of Amount Tata Motors is high. Size stands for range of productions or services via functions. As a huge company in auto industry level of development of vehicles through functions is high.
Variety: In terms of Variety Tata Motors is medium to high. Variety means different kinds of products or services made by the operations. Being a largest Indian car company Tata motors is making wide range of vehicles except two wheelers and luxurious vehicles. These are mainly deals in different kinds of commercial vehicles, passenger vehicles, army vehicles etc.
Variation: In terms of Variance Tata Motors is Medium to low. Deviation means amount of degree of demand change over time. Demand for the Tata Motors vehicles are predictable. Therefore it is easy for the operations to produce the merchandise or services corresponding to demand however if there is any change popular over time Tata's operations have the ability to meet such change.
Visibility: In conditions of Presence Tata Motors is medium to low. Awareness means amount of presence to its customer. It is unlikely that whole process is obvious to its customer however up to certain level it's possible for e. g. Via internet or mobile 'keep tabs on and trace' service customer can have awareness of where their order is or they can check the availability of products. Thus awareness of operations is low to customers compare to retailers or realtors in Tata motors.
Above stated 4 V's can be researched in figure listed below.
Low repetition each staff member executes more of the job less systemization high unit costs
Match customer needs
High product cost
In touch with demand
High unit cost
Short waiting around tolerance. Satisfaction governed by customer conception. Customer needed received variety is high. High device cost
Time lag between creation and consumption
Low contact skills
High staff utilization
Low product costs
Low unit costs
High Variance Low
High Validity Low
Low product costs
Low Level High
High Variety Low
Low device costs
(Source: Cowe et. al, 2008:174)
Now we can look at the company through the use of porter's five forces. They are very important to measure advantages and weaknesses of any company deeply and they can even be very helpful for strategy development of any organisations. According to Porter, capacity of any company largely depends upon threat of new entry, bargaining electricity of potential buyers, bargaining ability of suppliers, risks of substitutes and rivalry between current or existing competition. The above mentioned five causes have a sizable effect on price, cost and required investment as it handles external factors which influence aspect of competition and internal factors which effect how organisations compete and there how five causes pertains to the profitability of any organisations.
Threats of new entry: The investment, technology and knowledge necessary to set up car industry like Tata Motors could be big hurdle to type in such field, which stop new access. However Indian economy is on climb. There is a lot of improvement in infrastructure mainly the better roads and highways, unexpected growth in financial sectors have expanded funding options to the people all around the country and especially to rural populations. Due to such available facilities Indian market is now more and more attractive; hence there are many possibilities of new entry. Thus, probably for the auto industry like Tata Motors risk of new access is high. Example: Tata Nano which is a small and cheapest car of Tata Motors. The risks of new entry for Nano can be Suzuki global car, Reva, Bajaj's Renault, Nissan's small car, Ajanta group's small car task etc.
The Bargaining electricity of potential buyers: Various local auto companies like Eicher, Swaraj Mazda, Mahindra and Mahindra as well as more than 20 overseas automobile manufacturers are available their products in Indian market that will provide range of choice for the Indian clients. Hence in Tata Motors bargaining ability of buyer is high as variety of preference available for the clients and services they get from the maker do not change from one company to another. Though you can find very least possibilities for the merchandise like Tata Nano which is low cost car on earth.
The Bargaining ability of suppliers: Supplier power is largely rely upon amount of suppliers open to any automobile maker. If a specific provider provides very essential part to make any product then they are able to impose more prices to earn much more revenue, where we can say the bargaining vitality of dealer is high. Most probably it is believe that suppliers have significant bargaining power as they are not dependent on a single producer. However in case of Tata motors we can suppose that the bargaining electricity of provider is low as Tata motors is working its joint ventures in various countries across the world. They have got experience and resources available from all the parts they are functioning in therefore when any affordable variable changes they can collect information from different countries to find out subjected subject. If the price tag on one supplier rises they have option to get that product from the several dealer from another region or country. Recent example: Tata motors took completely new approach to their supplier. They have got just provided expected result with their suppliers and allowed them to obtain creativity with their design, materials and prices, that may probably decrease the bargaining ability of dealer.
(http://www. supplyexcellence. com/blog/2008/08/25/tata-motors-leveraging-their-suppliers-for-innovation/)
Threat of Substitutes: As India is famous for the two-wheelers threat of substitutes is high to automotive manufacturers. The another important known reasons for high threat of substitutes is, various competitors such as maruti, swaraj mazda, Eicher etc. are constantly striving to improve their market show, which increase pressure on Tata motors to innovate and compete with these substitutes. Example: If the price tag on Nano goes up, the person who is switching from bicycle to car won't move to car and can think to remain in bike.
Rivalry among existing organizations: Rivalry among existing organizations is high as there are several competitors of Tata Motors in India that are, Maruti, Swaraj Mazda, Eicher as well as overseas automobile makers that are constantly seeking the ways to be much better than others. Example: Currently Tata Motors has released cheapest car on the planet, now Many other companies (such as Ajanta group small electric car with proposed price of INR 85000) have prepared to introduce autos in the same section therefore price competition begins. Thus for the Tata Motors rivalry among existing firms is high.
Threat of New Entrants
Bargaining power of Buyers
Threat of Alternative Products or Services
Bargaining Power of Suppliers
Figure 6: Five forces of Porter.
Supply chain management is one of the key and necessary function of the company. It concerns with circulation of information as well as the movement of products and services. It really is a management of romantic relationship between operations and processes. The idea of supply chain pertains to the internal marriage between functions as well as the exterior relationship between functions. Overall it is just a management of activities and relationship which intends to attain maximum customer value and lasting competitive advantages. (Cowe, 2008).
Purchasing and offer management
Physical circulation management
Supply string management
The supply string management normally worried about the stream of information as well as the stream of products and services.
In a resource area normally organisation send the information to the first tier dealer about their needs such as quality of material required, time limit, amount, cost etc. Predicated on this first tier dealer send the comparative information to second tier customer and depending on this the second tier supplier provides the products required to the organisation via first tier company.
To manage the demand side well, organisation obtain the information from the finish customer of the product straight or via second tier customer and first tier customer and send it to its suppliers. So we can see that the information from end customer requirement grows to up to last dealer via different channels such as, second and first tier customer, organisation, first tier distributor etc and is determined by this end customer obtains required products.
To manage whole process of supply chain, management must consider all its stages such as resource side, product production and demand side.
Supply aspect in Supply chain: The potential of any process or procedure is largely depended on the receivable inputs. Therefore supply management is a necessary for effective businesses management. You will find three main activities involved in supply side, which can be:
Selecting appropriate supplier
Planning and handling the ongoing resource activity
Developing and improving suppliers' capacities.
For a clean process or operations it's important to pass through all above mention activities.
Selection of company: Among the important activities of the resource aspect management is selection of proper supplier. To choose the supplier first of all they need to understand the requirement of all processes within their procedures as well as to understand the capabilities of the provider, because they're going to provide products and services necessary for the operations. To select the right company most of the company mainly take up company scoring or analysis procedure making them able to evaluate different suppliers considering the relative need for factors like, selection of products provided, quality of products or services, consciousness, delivery and size flexibility, cost, capacity to supply the required variety as well as their prospect of innovation, willingness to talk about link, long-term commitment to provide etc.
Another important decision of resource part management is sourcing decision which means whether to make or design component in-house (insourcing) or even to have them from the suppliers (outsourcing). Another activity of supply side management is to decide source each individual service or product from single distributor or even to use more than one supplier. Both sole and multi-sourcing have their benefits and drawbacks.
Planning and managing ongoing resource: After the collection of suppliers is performed the next activity of supply management is to plan and control the ongoing supply. Planning and control of ongoing supply is about ensure that the suppliers are given right information and encouragement to maintain smooth resource as well as to be sure that any internal discrepancy will not have an impact on the suppliers potential to provide. Therefore maintenance of ongoing process requires relative method or system set up to ensure two-way stream of information between customer and company.
To maintain this technique well some organisations bring a amount of formality to supplier connections by stimulating all suppliers to agree service-level contracts (SLAs) (Cowe, 2008, p. 60). Such kind of arrangement covers types of issues which can disturb the ongoing resource that happen to be, response times, selection of services, dependability of service supply etc.
Developing and improving supplier's capacities: Developing and improving distributor capabilities is an important issue in supply part management. To greatly help supplier to improve not only increases the service from the dealer but it could also about lead to better supplier devotion and long-term determination as it helps to enhance productivity, competitive edge as well concerning build a long term supply string competitiveness which is essential for success of any process or procedures. To increase the suppliers capabilities company may use cross sourcing. Company can use single distributor for the certain sectors and another distributor with same functions for similar part of the business. Then it can provide business to each supplier predicated on their performance which can motivate the supplier to boost its capacities and performance. By this way company can likewise have back up if one supplier is not able to meet its necessity it can proceed to another easily.
For the Automotive company, the key products provided by their suppliers are different auto parts such as radiators, high temperature exchangers, seats system, gear boxes etc. , raw materials like steel, iron, plastic necessary for produce some parts, design, technology etc. TML mainly divide its part into two different kinds: proprietary design and Tata Motors design. For proprietary design sector, TML use founded suppliers such as Bosch who provides engine management system whereas for in-house parts and system design TML choose supplier with strong process capabilities who can give valuable ideas as well as improve the designs. TML use multiple source for his or her supply part as they have got started work with 600 suppliers and total 1800 company part combinations that have been dropped down to 100 suppliers. TML prefers to go for permanent contract rather than annual agreement which helps those to low down their cost. About 75% of these components are from single source whereas about 90% of total cars are being outsourced.
(http://tatacars. blogspot. com/2008/01/tata-nano-oem-supplier-relationship. html)
In 2001 TML have comprehended that dropping cost was only the option for their presence. To drop cost they have got adopted completely new approach to their supplier romance. Instead of following typical model of supply chain they may have simply given the outputs they expected and allowed their distributor to get creative with the design, materials and prices. Thus TML has been innovative to their supplier relationship to obtain goals.
Manufacturing section can be separate in two parts. Like the operations which produce products, is tangible whereas operations which produce services their outcome is intangible. However almost all of the businesses produce mix of tangible and intangible (Cowe et al. , 2008). For auto company like Tata Motors produce tangible end result such as commercial vehicles, passenger vehicles, certain parts of cars etc. along with intangible output such as information for safe drive, energy save, end of life vehicle process and also other services provided by the company with their stakeholders.
In car sector launching new model usually takes 3-5 years from initiation to assemblage. First of all manufacturer make an effort to assume what would people prefer to drive after few years, then after they design vehicle which suits to people's choice. Afterwards artist prepare the basic drawings which really helps to see appearance of proposed vehicle. Predicated on this they make the clay model which can be studied by the styling experts and engineer. Once its been go through all the stages for review and approval & tool artist gives the permission to make tools that will produce the parts of the new model.
Figure 7: manufacturing facility of Tata Motors.
The manufacturing process of Tata Motors based on 5 shops such as,
Machine shop (Transaxle) where Exhaust manifold, Intake manifold, gear package casting, gear are stated in machine shop. Heat therapy is also done for gears and other areas. This plant is equipped with latest CNC machines.
Engine shop: Engine motor works as a heart for any car. Here five important C's (necessary parts) of engine are received from machine shop and set up with other components. Prior to the assemble engine is preparing to dispatch to last assembly line, they test the engine unit on engine unit test beds where RPM, vitality and torque is inspected.
Press shop: Within this shop they make different body sections required to make the body of cars. Some skin panels are made in this shop whereas other sections are created by vendors. Here get and place robots are being used to go part in one station to some other station.
Figure 8: Processing Plan Layout
Weld Shop: To help make the body of the car skin sections from press shop and other sections from suppliers are welded in this shop. Generally area welding procedures is completed in weld shop. To move the jobs from one station to another they normally use hoist and tackle or by lift and carry design.
Paint shop: Here they take away the dust and essential oil deposition from surface of the car body which is transferred from weld shop. Once this is performed they go car body through Cathode Electrode Deposition (CED) bathroom and after they apply final colour to the automobile body relating to development plan.
Trim cum Chasis fitting: Final assembling of the car is carried out in this section. Transmission setup from engine motor shop and coated car body from color shop are received here for assembling as well as other accessories such as seat, wheels, screen wine glass etc. are also fitted in this shop. Once all this done totally produced car comes out out of this shop which is ready for ensure that you inspection.
(http://www. indiastudychannel. com/projects/4754-Tata-motors. aspx)
(http://www. tatamotors. com/our_world/manufacturing. php?ViewID=2)
All the organisations or provider has to deal with two types of needs, one is dependent and another is indie demand. The management is highly depended on certainty of demand. If the demand is assumable it is named as reliant demand. This sort of demand is assumable because it is depended on the particular factors which can be predictable as well, that allows suppliers to make intend to meet demand in a organized manner. Thus, in dependent demand distributor can believe the demand and work accordingly. However 3rd party demand is unpredictable because such kind of demand is not reliant on noticeable factors. Therefore suppliers are often required to source demand without having any visibility of customers order.
Logistic management is "that part of source chain management which projects, implements and manages the efficient frontward and reverse circulation and storage space of goods, services and related information between the point of source and the point of consumption in order to meet customers' requirements" (Bozarth and Handfield, 2008, p. 363). Logistic means moving products to the customers. It includes vehicles, material handling, presentation, inventory management, warehousing, information system etc. Any company seriously depended on all above as organisation's cost, overall flexibility, delivery performance greatly will depend on its logistics. (Bozarth and Handfield, 2008, p. 363)
In a global market, organisations are seriously depended on the logistic management in order to gain competitive benefits as well concerning stand frontward than rivals. Number of organisations feels to outsource their logistics to alternative party providers, which vary in conditions of range and integration of these services. In recent season logistics becomes more globalise and information-intensive. Because of development in technology, information can flow quicker via internet which facilitates customers, transfer companies, suppliers to keep tabs on where products or goods are in the supply string as well as where they are going next. Automatic recognition technologies have also added in logistic management. Use of barcode provide presence to the suppliers by allowing them to keep an eye on just how many products are stored at particular location. This enables procedure within the string to co-ordinate their activities more conveniently as well as provides prospect of cost saving(Cowe, 2008).
As Tata Motors interacting in commercial vehicles, passenger vehicles and defence vehicles, Tata Motors vehicle mainly sold to seller, agent, businesses, army etc. They also sale their autos directly to the customers such as households and smaller businesses through company owned or operated show rooms.
First traveler vehicle of Tata Motors was Tata India that was launched in 1998. To manage its demand area Tata motors has truly gone the whole hog while conditioning its dealership multiply. TML was constantly aiming to increase traders as well as establishing easily accessible service points across the country to provide quality service after-sales. The business's research centre has added lots of new features to the car through regular customer interaction. They may have set up four parts warehouses at suited locations to make the genuine spare parts available throughout the united states at reasonable rate. TML in addition has arranged service program at Pune city in India for those service executives of retailers and outlet stores as well as four regional training centres. TML in addition has setup toll free contact number accessed from 51 cities as well as they have set up customer help lines, supplier help lines and mobile service vans in more than 50% of dealerships. To meet the demand of most tire customers they have gone a long way in providing customer support in very small amount of time. .
TML is also using infotech and internet to control the customer also to raise its brand image. It includes a special website with customer connections facilities. The process of linking its traders and service network is going on, which will improve the customer service level. This network will also help them to keep track of orders from right to the shop floor as well as greatly help in part management and delivery. They have also developed 'knowledge management system where products complains is stored for the future good thing about service network.
Thus TML has considered various steps to control demand of all car tire customers such as retailers, realtors, end products customer etc and therefore of all above company has been successful in offering 100000 cars considerably faster than its competitors Maruti 100 and Zen & also they have prevailed in defeat its shortcomings in two times quick time along with customer satisfaction.
(http://www. tata. com/aboutus/articles/inside. aspx?artid=BsJg0t0IaCc=)
Value chain examination is much important for every organisation as its divide organization directly into various distinctive activities perform by the company such as, creating, manufacturing, marketing etc. The idea of value chain is developed from accounting methods which really helps to analyse the value added to company at every stage of creation or services or marketing. (Cowe, 2008).
The value chain requires two types of activities: Principal activities & Support activities. Main activities change inputs (Inbound logistics, procedure, outbound logistics, marketing and sales, service) into outputs and bring them to customer. All of this primary activities are completed by use of support activities which are firm infrastructure, People tool management, technology development and procurement.
Every one activity in value string 'can contribute to firms comparative cost position and build a basis for differentiation' (Porter, 1985 In Cowe, 2008, p. 178). Value chain analysis allows for the company or management to find out activities which adding value to the company and activities which may destroy the worthiness rather than creating and in that way helps to identify the source of competitive advantage.
It is now important to give attention to the activities carried out by the TML which add value in TML products and services and thereby create the organisation's competitive gain. In conditions of businesses infrastructure, TML is India's most significant automobile company. Manufacturing bottom part of TML is spread across the various cities in India along with joint endeavors in various countries. Company's sales, service, extra parts network consist of over 3500 touch items in the united states. Their main power is top notch in-house research and development centres and laboratories. (http://www. tatacarsworldwide. com/company/innovation. asp)
As per TML, company's 24, 000 employees are led by the perspective to be "best in the manner in which we operate, best in the merchandise we deliver, and best in our value system and ethics. " TML considers adding value process which can help improve work improvement and generally supply string. TML concentrate on development of, technological functions via training centres and association with specialized institutes & management capabilities via training programmes at premier business schools. They also carry out a better job techniques. Along with all of this HR Management carry out various activities for his or her personnel which results in increased efficiency, performance, engagement, superior performance, successful and cordial marriage and thus increase organisational capabilities (See Appendix 1) in carrying out various most important activities such as operations, marketing, sales etc.
TML is heavily depends upon technology for providing products. Technology adds value to the business in every process linked with R&D, planning and making.
In conditions of inbound logistics TML buys recycleables and spare parts from many suppliers based on the specific specifications which guarantees that high quality products are being sent to it.
In terms of outbound logistics as stated above TML will try to fortify its dealership to secure its product by increasing amount of traders as well as creating service details to provide quality service after sales and thus gives value to its products and services.
Operations are the important aspect for car company like TML. TML has excellent production base and techniques (as discussed above) which add value and quality to its products.
In conditions of marketing and sales, TML has used different strategies such as, creating brand image, packaging, innovations, quality control etc. Along with each one of these pricing strategy, place of dealership, maintenance and support, after sales services provided by TML plays very critical part in marketing and sales.
In conditions of providing good services as stated above TML has setup customer support help line, seller helpline, service programmes for traders etc. They have also set up spare parts warehouses to provide genuine extra parts to the customer at economical prices.
Thus, by using businesses infrastructure, technology, individual source management TML has added value to complete organisational process to manufacture products, supply chain, marketing and sales & services provided by the organisation and in so doing increased organisation features to get competitive advantage.
Procurement: Dealing relationship with suppliers
Firm Infrastructure: India's largest automobile company, In-house R & Development facilities, Laboratories, expanded production facilities
Technology Development: Move forward technology, engineering brilliance with high level of excellence
HRM: High certified and skilled workforce, training employees, development of specialized as well as management capabilities
Marketing and Sales:
Brand image, presentation, places of dealership, price, maintenance and support etc.
High degree of suppliers chosen by specific standards to ensure quality of products
Flexible and beneficial plant life, cost reduction
Tightly controlled circulation network
Sale services, help
lines for traders and customers etc.