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EMM 505

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Full-Time 2014.


Module Code

EMM 505

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<Supply Chain Management>

Signature of Reviewer and date


In a competitive world, organization are constantly looking for opportunities
to produce and deliver products as the most cheapest price with a sufficient
profit margin and in the process of dealing with these issues, the
organizations are required to master the good practices of the supply chain
management. Organizations are realizing that it is very important to follow
good supply chain management practices to achieve the company’s goal
and to meet customer requirements. It is a successful supply chain which
will win the confidence of the stake holders and deliver efficiency and
effectiveness in all phases of the organizations process. So, SCM tools and
techniques are of great importance in the present manufacturing scenario.
The assignment consists of three parts in part A the stance is taking
whether the vertical integration is important or outsourcing practice is
important in business scenario with appropriate reference the case studies
of the vertical integration is important in business scenario is written.
Part B the illustration of supply chain flow of Bajaj Auto Ltd is written and
analysis of supply practices with respect to vertical integration and
outsourcing is briefed and remarks on the benefits of Bajaj Auto Ltd is
Part C a manufacturing company called Devaki Engineering Enterprises is
visited and study of supplier selection process is done and identifying the
risk management practices in the company selected, the benchmarking of
the risk mitigations process with the good practice is briefed and action
plan of improvement in the process of the company with appropriate
reference and citation is done.

<Supply Chain Management>


....1 Introduction:10 1..............................................................................................2: Vertical integration and Outsourcing trends: 10 1...................1 Debate with suitable examples/case studies:11 1...........................Contents ____________________________________________________________________________ Declaration Sheet.................................................. ii Abstract.................... vii PART-A CHAPTER 110 VERTICAL INTEGRATION10 1................................................4 Conclusion:12 PART-B CHAPTER 213 Bajaj Auto Ltd13 2......................................................................................0 Introduction:13 <Supply Chain Management> 4 ................. v List of Figures.................................................................... vi List of Symbols.................. iv List of Tables........................... iii Contents.................................................................................................................................

6 learning outcomes:34 Bibliography33 <Supply Chain Management> 5 .0 Introduction:28 3.2 Supplier risk management practices: 29 3.2.3 Conclusion:25 PART-C CHAPTER 328 Devaki Engineering Entriprices28 3.3 benchmarking of risk mitigation practices:30 3.4 Action plan for improvement of process:32 3.5 Refference and citation of refference: 33 3.1 Illustration of supply chain flow in BAL:13 2.2 Analysis of supply chain practices of Bajaj Auto Limited :18 2.1 Supplier selection process:28 3.

1 Figure Manufacture flow 2.2 Figure Supply chain practices 2.N o.2.1.3 the use of SAP Pg.2.1.2. 14 15 19 22 23 <Supply Chain Management> 6 .1 Figure Monitoring 2.List of Figures ____________________________________________________________________________ Figure Title of the figure No. Figure BAL supply chain flow 2.2 Figure 2.

<Supply Chain Management> 7 .

reduce transaction costs and secure supplies or distribution channels.” (Jurevicius. whether the company should participate in one activity (one industry) or many activities (many industries) along the industry value chain . 2013) The fixed asset technologies and frequency of transactions would dictate a market structure of tightly bound pairs of buyers and sellers that would need to negotiate an almost continuous stream of transactions.PART-A CHAPTER 1 VERTICAL INTEGRATION AND OUTSOURCING 1. It is a strategy used by a company to gain control over its suppliers or distributors in order to increase the firm’s power in the marketplace.” And “Backward integration is a strategy where a firm gains ownership or increased control over its previous suppliers.1 Introduction: Vertical integration is a strategy that many companies use to gain control over their industry’s value chain. and lower risk to combine these two stages under common ownership. The important question in corporate strategy is. Transaction costs and the risk of exploitation would be high. It has two stages forward and backward integrations “Forward integration is a strategy where a firm gains ownership or increased control over its previous customers (distributors or retailers). 1993) Therefore “Vertical integration is needed in current business scenario” . (White. lower cost. It is more effective. This strategy is one of the major considerations when developing corporate level strategy.

which strengthens its position in the knowledge service industry. and being held accountable and responsible for actions.2 Vertical integration and Outsourcing trends: Vertical integration trends: Vertical integration trends in many ways the oil industry. By centralizing manufacturing operations. Research Analysts.. and. In technology. apple and agriculture industry have using the vertical integration strategy to improve QCD. reliance. not only increasing efficiency. Vertical integration is not only smart for company. which also designed its own processors for the devices.3 Debate with suitable examples/case studies with respect to QCD: . Vertical integration of the broiler industry allows producers to combine different biosecurity and sanitation practices. (outsource2india. higher-touch functions. etc. This integration has allowed Apple to set the pace for mobile computing. 2013) 1. Doctors. media industry. Lawyers. (hsu. and by all measures. This structure allows greater governance over each aspect of food safety from the breeder farm to the hatchery through the processing plant. the iPhone and iPad have hardware and software designed by Apple. (Asta. environment. with outsourcing being the top business trend. vertical integration internalizes the value chain. which features an integrated hardware and software approach. our customers. According to IAOP survey 80% of customers today have been Outsourcing for more than 10 years.1. backward integration secures the acquisition of raw materials and components. the economies of both developed and emerging nations. 2012) Vertical integration dictates that one company controls the end product as well as its component parts. Entire economies have been built on the outsourcing wave. the growth of Indian outsourcing industry has been phenomenal. Apple for 35 years has championed a vertical model. in turn. Knowledge Process Outsourcing may soon be the biggest revenue grosser in India. forward integration secures sales and controls the profit of the later stages of the value chain. India has a large pool of skilled manpower– Chartered Accountants. For instance. the quality and efficiency of such services have greatly improved. Efficiencies found in early applications of outsourcing have also transferred to lower-volume. local and regional economy. in all its forms. 2014) Outsourcing. India has evolved to become the most preferred destination for knowledge services. housing technologies and feeding regimens to improve food safety. 2014) Outsourcing trends: Today. is rapidly reshaping work as we know it. but for community. and at the same time. (usda. MBAs. As markets worldwide are becoming knowledgeintensive.

flavourful chicken products at a price that is very kind to your budget. this has always been their business model. feed is frequently heat-treated to prevent the spread of any bacteria between the feed and the birds.National chicken council’s vertical integration: The American chicken industry has undergone dramatic change in the early days of the broiler business. right in Downtown LA. At the grow out house. equipment and a much smaller environmental impact and Being able to go to the market at any time of the year and buy tender. the major production staging of producing broiler meat were all separate businesses. (usda. it has become the norm amongst the majority of US apparel companies to move the manufacturing operations abroad to third party vendors. A reduced growing period to produce a market broiler chicken. American Apparel has kept it local. Vertically integrated companies in a supply chain are united through a common owner. and the products combine to satisfy a common need – in this case. 2012) American apparel: In the past decades. is often cited as a model of the organization which may characterize U.S. vaccination programs and testing for bacteria such as Salmonella at breeder farms and hatcheries.” The integrators reduced costs by coordinating the production capacity of each stage of production. pest management control and the “all in all out” concept controls the spread of disease between the birds. farms and processors who each sold their product in a separate market In the 1940s. due to continual discoveries in genetics and nutrition. and operate the largest apparel manufacturing facility in North America. In the feed mill. There were independent feed mills. The shirt starts as spools of yarn that are knit into rolls of fabric in one of our three . labour. Usually each member of the supply chain produces a different product or service. Though it's not the easy road to travel. The chicken industry has grown to the magnitude that it is today by combining production stages into large vertically integrated firms able to take advantage of rapidly changing technology. hatcheries. in particular. The broiler industry. Vertical integration allows the industry to maintain strict biosecurity measures. The efficiency of this system has helped foster lower real prices for chicken products. The company is vertically integrated. the different stages of production were beginning to be combined by “integrators. strict biosecurity measures. the production of broiler chicken. meaning reduced space. agriculture in the future A reduction in the amount of feed required to produce a pound of broiler meat. houses and flocks.

as the materials are not shipped back and forth internationally. These lots of fabric are then cut. the main advantage that get into vertical integration is more control over the value chain. The manufacturer could sell through an Internet website and use online advertising techniques to improve the business. a smaller portion of the margins goes towards fuel. higher-quality materials for our garments. Vertical integration by definition shrinks a company's carbon footprint. models. trans-ocean container ships. 2012) 1. across thousands of miles. and graphic designers. either within the same facility. By selling directly to end buyers. distribution resources and process and retail channels.0 Introduction: . manufacturers can eliminate the middle man. in the production process. sewn and packed into a box under the same roof at one of our three factories in Southern California. Ability to control costs throughout the distribution process. middlemen. Our shipping and retail departments handle the distribution of these products that we sell ourselves in more than 280 stores Not only is this an efficient method for our company. including photographers. at most 30 miles away. but also for the environment. At the same time these garments are being made. PART-B CHAPTER 2 ________________________________________________________________________________ BAJAJ AUTO LIMITED 2. our creative department. and investing in the future of our company.4 Conclusion: Vertical integration practices increase advantages over competition and to block competitors from gaining access to scarce resources or important markets. Instead we're able to spend that money on paying living wages to our workers. (American apparel. or in another one of our dye houses. A retailer can more quickly adapt to changing customer needs if it owns the manufacturing or production firm that makes its products. it gives companies access to more production inputs. boxes. When you buy a t-shirt from American Apparel. is creating the marketing campaign for our brand without the help of an outside PR firm or celebrity spokespeople. pallets and entropy.knitting facilities in Southern California. These rolls are then dyed.

Around 1. The company acquired a license from the government in 1959 to manufacture these vehicles and went public the next year. took charge of the business in 1965. Bajaj Auto could produce 500. Rahul Bajaj. Major portion of the parts are outsourced from various suppliers depending on which supplier produces the best of the component in the industry.400 rural outlets have been created in towns with populations of 25. Bajaj auto practices a systematic process in selecting suppliers and deal with them. . The current dealer network of Baja is servicing all these outlets. the company saw its plant rolling out 100. Jamnalal Bajaj had formed M/s Bachraj Trading Corporation Private Limited. the flagship company. The Bajaj Company has a network of 498 dealers and over 1. In another nine years. called 'Rural Dealerships'.000 vehicles in a year.The Bajaj Auto Group was founded in 1926 by Jamnalal Bajaj and now consists of 27 companies. Bajaj Auto has defined specialist dealerships for rural markets. Bajaj Auto is convinced that the real impetus of future two-wheeler growth will come from upcountry rural India. twenty new rural dealers became operational 2. Bajaj Auto’s decision whether to Make or Buy is based on the Fine and Whitney Framework for Make or Buy Decision.000 and below. The present Chairman of the Bajaj Auto group. The selected suppliers invited for general meeting with the production manager and purchase manager of the company. Production manager of the company study the application received by the suppliers and select proper suppliers as per their requirement.1 Illustration of supply chain flow in BAL: The supply chain flow in Bajaj Auto Limited:       Suppliers(raw material) Inbound logistics Manufacturing Outbound logistics Marketing and Distribution management End customer Bajaj Auto Limited does not manufacture all the parts required for its all models of motorcycles. During the year 2008-09. In 1945. to sell imported two-wheelers and threewheelers.500 authorized service centers and 162 exclusive three-wheeler dealers spread across the country.000 vehicles in a single year. By 1977. He was the first licensee of the Indian make of the Italian Vespa scooter.

Medak. Noida and Nashik. Company located at Faridabad. Pondicherry.In this meeting they decided conditions and time period of supplying raw materials to the company. And within two days company gets raw materials. Figure 2.1 BAL supply chain flow chart Suppliers: Bajaj auto has approximately 198 vendors for their raw materials and parts. Hyderabad. Bangalore. Company located at Pantnagar. and Kottayam. Company located at Haryana. Pune. Tiruvottiyur. • Endurance – Brakes and Suspension. Company located at Aurangabad. • Varroc – Plastic parts & Digital Meter. • Minda – Handle Bar Assembly & ignition system. Mumbai.1. Some of the key vendors are:• JBM – Frames. Whenever the company required raw material they send e-mail or call the suppliers just before three days. If the suppliers are unable to provide raw materials than Bajaj immediately informs and search for alternative vendors. • MRF–Tires. Arakonam. and Pantnagar. Once the contract signed by both the routine work continue. and Chennai. Company located at Goa. Pune. • Max auto components –ignition system and switches .

The vendor locations (mentioned above) also come in and around these states and so procurement of parts and raw materials is not a time taking process and also the cost of logistics is reduced thus providing an efficient supply chain. Surface treatment processes electroplating are carried out in the factory. Brake lining. The manufacturing activity consists of manufacturing motorized 2-wheelers.• Silco cable –wires and cables • Makino industry –Brake shoes. like heat treatment. (RAO. The manufacturing process for 2-wheelers and 3-wheelers as well as machine building is basically metal cutting and metal forming. The scooter plant was started in 1985 and other plants were started subsequently. clutch center. 2012) Manufacturing: The industrial complex of Bajaj Auto Limited-Waluj is spread over an area of 906acres.. painting and . Bajaj auto maintains seven (7) days inventory. 3wheelers & parts thereof and also machine tools required for captive consumption. The basic raw materials are steel and aluminum. Aurangabad and Uttarakhand. All the Mediators are connected with each other through IT linkage to know exact status of delivery of goods. Bajaj Auto Limited manufacturing plants are situated in the states of Maharashtra.

Bajaj Auto maintains seven days (7) inventories.1. Chakan 3. The inbound logistics are managed by third party logistic (3PL) operators as suppliers of Bajaj Auto spread across different states. Pantnagar During the first half of 2009-10. These are 1. Inbound logistics: The raw materials and required components and spares are sourced from selected suppliers/vendors. Waluj 2. Bajaj Auto could produce 32% higher volume of output without any significant investments.2 manufacture flow The Bajaj Auto have three state of the art Manufacturing Plants. a number of improvement activities were initiated at the shop floor level across all plants of the Company.Figure 2. In manufacturing process. the final assembly unit will get all the assembled components from different assembly lines and assembles these components to body chassis of the motor cycle. this sourced raw material will be stored in raw material ware houses in concerned plant. . Below Table gives the plant-wise capacities and product (Models) produced in respective plants in the last two years.

In case of high profile dealers. Sub Dealer & its own branch .The assembled motor cycle has to pass through two levels of quality inspection to maintain Zero Defects in final product. Global Level Markets The national and Global level segments are further divided into sub-segments for smooth logistic and physical distribution operations. the dealer can himself take the physical delivery of goods directly from the manufacturing plant. Distribution management: The physical flow of goods takes place from the factory warehouse to either the depot or to the carrying and forwarding agent. After inspection process these motor cycles will sent to Factory warehouse for distribution. Due to extensive distance from manufacturing plant from west Bengal to north-east India. Distribution Channel Design is dependent on the segmentation that Bajaj have done in the geographic and product category segments. caters Authorized Service Center (ASO). The geographical segmentation of Bajaj can be divided into two broad categories. Outbound logistics: The outbound logistic operations depend upon Bajaj Auto market segments. Various players involved in the distribution channel network are:     Depots Carrying & Forward Agent Dealers Sub Dealers. there exists a depot in Kharagpur with capacity of housing 800 vehicles. depending upon the geographic distance and the location of the Depot. This is completely dependent on the distance of manufacturing location from dealer point. . they flow from Depot or the C&F agent to the dealer and their network. The dealer. Bajaj Auto market is segmented by geographical wise. The transport & logistics for this is outsourced to third party vendors which are under Transport Corporation of India (TCI). at the last juncture. Depending upon the demand these goods have. Rural Service Outlet (RSO). 1. National Level Markets 2. DEPOT For distribution Bajaj auto uses mix of depots and C&F agents.

The key role played by depots is that they are meant to cater to any sudden rise in demand of vehicles. it is the “Giant dealer” of a particular region who acts a carrying and forwarding agent for Bajaj Auto. This is almost always the case for most Indian States. 2. showrooms are owned by the company but the operations in the showroom are managed by the dealer. or has strong financial muscle in the region in comparison to the other dealers. A giant dealer is one who secures an A+ rating from the company. This is generally the case where Bajaj wants to provide .400 rural outlets have been created in towns with population of 25. Here Bajaj Auto has tried showcasing their muscle power in high end biking segment. The concept has evolved very fast and now there are 52 Pro-Biking showrooms in the country. Their key deliverables will be dealt in detail when we talk about dealers. In case of this concept. In most cases. Dealers can be classified under 3 heads. it is just a semantic difference in the case of Bajaj Auto. DEALERS The Bajaj Auto Limited has an extensive network of 498 dealers and over 1.There are similar depots in Punjab. and to cover the existing geographic span of India.500 authorized service centers and 162 exclusive three-wheeler dealers spread across the country. But this does not mean that the company has gone all out to open a large number of depots. CODO-These are Company Owned & Dealer Operated showrooms. COCO-These are Company Owned & Company Operated showrooms. Rajasthan and southern India. The giant dealer of the region who is acting as a logistics partner for the probiking concept takes the order on behalf of the company and fulfils the customer requirement. The reasons behind having a depot in different regions in India are as follows:   Catering to a sudden shooting up of demand Reaching the states of the North-East and other remote and poor transport facility areas. The company itself does not take any order from the customer in these showrooms. Setting up depots is a geographical strategy adopted by Bajaj Auto. The current dealer network is servicing these outlets.000 and below. This generally happens in states or regions which are near to the manufacturing unit. They are as follows: 1. These concepts exist only for Pro-Biking showrooms. CARRYING & FORWARDING (C&F) AGENTS Though the agent has a separate set of roles and responsibilities. It has chosen strategic locations. Around 1.

The bikes lights produces as per the current trend of the customers. In turn they get flexible terms from the dealer and trade on smaller volumes.the dealer financial benefits considering the high working capital requirement of the company. Every two months Bajaj Auto ltd. is one of the most accepted products by the customers. These dealers are fewer in number because they are generally the giant dealers who are the financial muscle for the company.  After sales Service: Bajaj Auto ltd. 3. These channel members exist in the design because of the company’s objective of increasing the reach to the end consumer. They try to earn consumers trust by providing good quality products and after sales services. researches the market and tries to implement the problems.2 Analysis of supply chain practices of Bajaj Auto Limited: . can survive customers after selling products. With best quality products Bajaj Auto ltd. Day wise Summary of Customer Satisfaction Feedback. They also believe in innovation and produce different variety of products with minimum price. AUTHORISED SERVICE CENTER (ASC) & RURAL SALES OUTLETS (RSO) SUB DEALERS Generally this are the small players in the market who helps breaking the bulk at the dealers end and providing the dealer necessary rotation of working capital. They distribute products in small towns of the country and all over the world. SUB DEALERS. This is a method to record customer feedback 2. believes in customer satisfaction.  Customer relation management: Bajaj Auto ltd.. 2012) End customer:  Types of Customers: Bajaj Auto ltd. produces goods by considering the different types of customers. DODO-These are Dealer Owned & Dealer Operated. (RAO.

This has yielded excellent results in quality management of design and validation process. computing. Such enhancement efforts have enabled R&D to develop durable and refined products. but in all categories of  automobiles.1 supply chain practices Research and Development: R&D has been working on improving its operations in a number of areas as listed below. The TPM approach has also been effective in the lead time reduction on the various critical processes in R&D by elimination of waste. A number of new test facilities were put in to validate the durability and performance of the forthcoming 4 wheelers. The prototyping facilities were also upgraded to enable building of the prototypes of  these vehicles. Technology: This year. proto-typing and validation facilities. Facilities: R&D continued to enhance its design. analysis and validation in order to keep up with the rapidly expanding aspirations of the  Company. This technology went on to win the “Automotive technology of the year” award competing in the category of not just 2 wheelers. 2013) INBOUND LOGISTICS . R&D launched the Triple Spark technology for the Pulsar family. (Bajaj Auto Limited. It gives best in class fuel efficiency and performance on a sports bike.2.Figure 2. This technology takes the DTS-I performance to the next higher level.  Manpower: R&D has been expanding its team size in areas of design. Total Productive Maintenance (TPM): R&D continues to vigorously pursue the TPM way of thinking and working.

this sourced raw material will be stored in raw material ware houses in concerned plant. The geographical segmentation of Bajaj can be divided into two broad categories. the final assembly unit will get all the assembled components from different assembly lines and assembles these components to body chassis of the motor cycle. The third party here is Transport Corporation of India (TCI) and a few other private vendors. Freight charge is built-in in the product price. This function is outsourced completely to the third party vendors (3PL Operators). National Level Markets 2. National level outbound logistics: Transport & Logistics This function of distribution is not owned by the company in any form. OUTBOUND LOGISTICS The outbound logistic operations depend upon Bajaj Auto market segments. In manufacturing process. Bikes are driven from the dealer’s warehouse to the showroom by employees of sub-dealer or have it transported to him. The fleet to be transported is custom-designed for Bajaj Auto by the vendor. 2012) . The assembled motor cycle has to pass through two levels of quality inspection to maintain Zero Defects in final product.The raw materials and required components and spares are sourced from selected suppliers/vendors. The major 3PL operators of Bajaj Auto are: Transport Corporation of India (TCI) OSL Jamuna Transport Sumit Transport Last mile logistics is decided most of the time by sub-dealers. There are twenty vendors (3PL Operators) across India to cater the logistic requirements in vast geographical segments of Bajaj. (RAO. 1. Global Level Markets The national and Global level segments are further divided into sub-segments for smooth logistic and physical distribution operations. Bajaj Auto maintains seven days (7) inventories.. A Transit Insurance Compliance Letter (TICL) is signed between the two parties. Logistics of the vendor is decided by the Bajaj Company. After inspection process these motor cycles will sent to Factory warehouse for distribution. Bajaj Auto market is segmented by geographical wise. The inbound logistics are managed by third party logistic (3PL) operators as suppliers of Bajaj Auto spread across different states.

To further BAVA initiatives.Sourcing: In 2007. 130 out of total 211 vendor groups are part of BAVA. As of 31 March 2013. Extending services of BAL employed Industry/Process Experts for Non-Proprietary category. BAL has worked with BAVA to develop a road map for green procurement BAL supports its vendors for continuous improvements on quality. The policy declares BAL’s commitment to conservation of energy. It is the first-of-its-kind in the automobile manufacturing industry in India. The other objective of forming the BAVA is enabling vendor improvement activities steered through BAVA management and executive committees. Direct assistance by deploying BAL engineers at vendor plants to identify gaps. cost and delivery performance in the following ways: 1. BAVA forums to provide guidance on preventing interface losses and promote improvement culture among small cluster groups. carry out improvement and monitor the same till sustenance is achieved and transferred to vendor. BAL adopted a Green Purchasing Policy endorsed by the Head of Purchase. Assisting Automation Projects in Non-Proprietary category. (Bajaj Auto Limited. water and environment across its supply chain and states that the Company will endeavor to source its parts from vendors that adopt environment friendly technologies. Following the policy. 2013) Governance: Bajaj Group’s commitment to good corporate governance practices predates SEBI and clause . 2. BAL formed its vendor association Bajaj Auto Vendor Association (BAVA) with an objective to facilitate prevention of interface losses between vendors and BAL. 3. Specific training programs on Total Productive Maintenance (TPM) implementation for vendor plant managers at BAL plant and to vendor front line workers for skill and knowledge improvement at BAL Technology Centre. which also has reduced their dependency on skilled manpower. 4. 5.

000 per meeting for every meeting of the Board and its committees attended by them. Bajaj Auto Ltd. fairness. in addition to the sitting fee of ` 20.000 as additional commission for the year 2012-13 in consideration of the extra services rendered by him at the request of the management during the year 2012-13. The principles of division of labor and specialization are fundamental to many of these organization. In terms of the approvals given by the Board of Directors and shareholders. In keeping with the commitment of the management for the principle of integrity and transparency in business operations for good corporate governance. disclosure and accountability are the main thrust to the working of the Bajaj Group. (Bajaj Auto Limited. subject to the overall ceiling of one percent of net profits. commission at the rate of ` 100. Bajaj Auto’s corporate governance practices and disclosures have gone well beyond complying with the statutory and regulatory requirements in accordance with the provisions of clause 49 of the listing agreement. Monitoring the progress of activities: . non-executive directors of the Company are being paid. and to separate the Board functions of governance and management. the Company’s policy is to have an appropriate blend of executive and independent directors to maintain the independence of the Board. Transparency.500. As will be seen. Nanoo Pamnani will be paid ` 1. As per the current directors’ remuneration policy.000 per meeting of the Board and its committees attended by them. both required the coordinated work of many people in order to be accomplished. (‘BAL’ or ‘the Company’ or ‘Bajaj Auto’) maintains the same tradition and commitment.49 of the listing agreements. 2013) Organization: Organization designed to produce goods and services.

Bajaj Auto. and payment details. gets invoicing information from suppliers for its automated material receipt system. The company can track service levels from order right through to delivery for both the domestic and export markets. The my SAP ERP system enabled Bajaj auto to track the competence of its suppliers who must comply with various performance standards on quality. vendor management system and the performance management system. optimizing inventories and reducing non-value-adding activities at both ends. Bajaj Auto successfully implemented SAP’s my SAP Enterprise Portal simultaneously with the current SAP R/3 ERP implementation. 2013) Technology: Bajaj Auto restructured its products. The supplier gets up-to-date information on purchase orders and contracts. This helps in streamlining the supply chain.2.2 monitoring (UK essays. The company can also check inventory to ensure that it have the right stocking levels to support orders .Figure 2. Bajaj has linked 165 out of a total of 200 suppliers through this system. material schedules. channels. in turn. delivery and cost for different categories of the business.

and production. Some of the key vendors are:• JBM – Frames. and Pantnagar. new product releases. Bangalore. Hyderabad. Medak. and Kottayam. Mumbai. Company located at Pantnagar. Figure 2. 2013) KEY SUPPLIERS Bajaj auto has approximately 198 vendors for their raw materials and parts. • MRF–Tires.2. Company located at Aurangabad.3 the use of SAP (slideshare. • Max auto components –ignition system and switches . Company located at Faridabad. Company located at Goa. Tiruvottiyur. new product introduction. Pondicherry. • Varroc – Plastic parts & Digital Meter. Noida and Nashik. and Chennai. provides access to unstructured information like news items. dealer discussion groups and internal marketplace. Pune. • Minda – Handle Bar Assembly & ignition system. Bajaj Auto use analytics to create a composite index around the figures and track it through the vendor portal. Arakonam. Pune. Company located at Haryana. rewarding vendors with profit sharing. In addition to operating information. • Endurance – Brakes and Suspension. With this information Bajaj Auto can incentivize vendors to reach higher levels of competency by offering them more business and it can also encourage price reductions through innovations.

continual improvement of our environmental performance and compliance with all applicable environment legislation and regulation. Brake lining. This investment may include setting up strategic manufacturing units.. pledge ourselves towards creating and preserving a cleaner environment (Bajaj Auto Limited. They include: . We.All the Mediators are connected with each other through IT linkage to know exact status of delivery of goods With operations spanning to such vast geographies. Demand Estimations were based on Panel Regression. at Bajaj Auto. These investors who form alliances with Bajaj Auto are termed as “Business Partners”. 2013) Inventory management: Bajaj auto maintains seven days inventory. 2012) Environment policy: Bajaj Auto Ltd. Aurangabad and Uttarakhand. clutch center. we shall strive to create a proactive environment management system that addresses all environmentally significant aspect related to our products and processes.• Silco cable –wires and cables • Makino industry –Brake shoes. which takes into account both time series and cross section variation in data . The vendor locations (mentioned above) also come in and around these states and so procurement of parts and raw materials is not a time taking process and also the cost of logistics is reduced thus providing an efficient supply chain. manufacturer of two and three wheeler vehicles is committed to prevention of pollution. they establish a tie up with one major industrial establishment eager to invest in the project. distribution and after sales services. managing a supply chain globally becomes more and more complex. Bajaj Auto offers a number of services to its business partners. Towards this. Bajaj auto maintains seven (7) days inventory. apart from a well-established nationwide network for marketing . (RAO. Bajaj Auto Limited manufacturing plants are situated in the states of Maharashtra. All the Mediators are connected with each other through IT linkage to know exact status of delivery of goods. In countries where Bajaj perceives a strong market potential.. Minimise the generation of waste and conserve resources through better technology and practices. and Promote environmental awareness amongst our employees and motivate them tofu fill our commitments.

partner who also involving would assist the distributor in Business growth (channel bajaj. Exports are then effected at such price and hence it is desirable for the Company to shield itself from adverse movements in forex rates at a future date. all in a phased manner as required by the regulations in the  recipient country Active support in identification setting nation-wide and recommending suitable dealer network. The table below summarizes the notional amounts (amounts of contracts booked and outstanding) of foreign currency . the Company may wish to secure its procurement prices in terms of INR to be able to forecast its pricing and profitability. The forward exchange contracts mature between one to twelve months. The details in respect of the outstanding foreign exchange forward contracts including range forward and par forward contracts are given below. the value of such imports is not material as compared to the value of exports. The Company also imports raw materials and components for its Motorcycles etc. such as foreign exchange forward and option contracts. future and current. Training in sales. presently constituting substantial portion of the turnover. are at prices predetermined for each product in each region. to achieve the aforesaid objective. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent periods and may continue to fluctuate substantially in the future. (Budgeted rate of realization). service and spare parts management based on the Bajaj  distribution system Active support for  including transfer of technical know-how Assistance in setting up an assembly plant for assembly of vehicles  from complete knocked down (CKD) kits Selecting of machinery and equipment and training of technical setting up manufacturing facilities overseas personnel. the Company uses derivative financial instruments. However. to mitigate the risk of changes in foreign currency exchange rates in respect of its forecasted cash flows and trade receivables. Nevertheless. 2010) Risk management: The exports of the Company. Consequently. These prices are fixed in USD based on an assumed USD/INR rate. Consequently the Company may wish to hedge such exposures.

the two wheelers companies not exception to this.3 Conclusion: The supply chain management in automobile industry is always challenging in vast country like India. . Bajaj Auto Company are making innovative ways to reach rural India with their supply chains. vendor’s management. In today’s competition is extremely high planning and manufacturing according plays a crucial role in survival of the company.forward contracts into relevant maturity groupings based on the remaining period as at the 31 March 2013: 2. which are prominent supply chain practices in the world. the better as the logistics cost reduces there by reducing the overall costs. the closer vendor location. still the company can innovate their supply chains to reach all segments of Indian customers. Bajaj Auto Ltd efficiently and effectively manages these activities and that is the reason why Bajaj Auto Ltd remains competitive as one of the best two wheeler brands in the country. selection of suitable vendors also plays crucial role. and JIT system and out sourcing of logistic operations. The company are practicing Lean manufacturing.


”  It follows the determine supplier selection constraints like the decisions to do business with only one supplier. easy to maintain. Our focus has been always our customer satisfaction.” “Quality & Safety.  The hierarchy of constraints and criteria is done like list of supplier selection constraints and criteria is done. Automatic grid casting machines. requirements to select the low bidder. Now. we have wide products range used in this industry. This helps the sourcing team recognize the likelihood of tradeoffs between competing supplier options and determine what . semi-automatic and pressure die casting machines in India. pressure die casting machines. Its in-house cad-aided design facility. offering value products with operator friendly. Continued innovations & adapting modern technologies to improve the efficiency& reliability of the machines have helped our customers to improve their operations& profitability. assembly lines including intercell welding & heat sealing machines. pasting machines with flash drying ovens & cone feeders. semi-automatic grid casting machines. tubular spine filling vibrators. which is that sorts them in order from most important to least important.0 Introduction: The company have been supplying quality Battery Making Equipment to Battery industry for the last 3 decades. Supplier selection criteria are attributes that a procurement department values in its arrangements with suppliers as “Cost & Value. easy to operate features. and a specific maximum amount of time in which delivery must take place.PART-C CHAPTER 3 ________________________________________________________________________________ Devaki Engineering Enterprises 3.” and “Agility. dedicated & experienced engineers have attributed to our leadership in Battery equipment’s for all these years. The first to launch automatic grid casting machines.1 Supplier selection process: The company Devaki engineering enterprises supplier selection process as follows:  Identifies the supplier selection criteria. state of the art manufacturing centre. Many of our Equipment’s have also been exported to various countries. oxide mixers. 3.

multiply those raw scores by weightings to calculate weighted scores for each criterion. their leading indicators and the internal business owner for each risk area. If not. If so. For each criterion. based on the supplier’s proposal. populate supplier scorecards for the remaining suppliers with their raw scores that were determined in accordance with scoring scheme. Developing a scoring scheme. quantify the relative importance of constraints and criteria. days of inventory stock  and revenues and expenses. Keep a watch on these risk measurements such as receivables. Use the professional judgment to determine if the supplier scorecard truly led to the optimal supplier selection. they disqualify any suppliers who were not able to comply with any constraint.2 Supplier risk management practices: The Devaki engineering enterprises supplier’s risk management practices:  They create a complete view of supplier information. Developing an early warning system of supplier health and alert the right business owners. First. add all of those weighted scores to calculate total scores for each of the suppliers. .negative characteristic of a supplier is worth overlooking in order to benefit  from a positive characteristic of that supplier. The methods of calculating raw scores will differ for each criterion. These weights are an important component of weighted  average supplier scorecards. they award the business to the best scoring supplier. Then. Next. A complete profile means that the buyer can compile  information from internal stakeholders Identifying the risk measurements that are most important to the buyer. they need to determine a way of awarding a supplier a “raw score” of 0 to 100 on the supplier scorecards. expressed as percentages.  Analyzing Proposals. with 0 being the worst and 100 being the best. While the supplier with the highest total score should be the most attractive supplier. including data on the supplier’s suppliers. Enable the collaboration on mitigation and business continuity planning from alternate supplier sourcing to contract renegotiation.  Applying Common Sense. Finally. make the right supplier selection as long as they override of the scorecard approach is done in strict compliance with ethical and organizational standards. they don’t treat supplier selection solely as a mathematical exercise. 3. Weights.

even if you have been dealing with them for many years. including legal. C-TPAT. 2011) . reporting requirements and any  financial “penalties” for poor performance on the part of one or more vendors Supplier certification Recognized international standard: ISO 2859. The additional peace of mind associated with knowing that up to 90 per cent of the insured debts will be covered in case of insolvency or non-payment will far outweigh the costs and anxiety associated with collecting bad debts. the contract executive would interact with the vendor manager and vendor’s account executive periodically  to review contract status and issues. catalogue and  monitor a contract’s financial requirements and commitments. A full time vendor manager under the direction of contract executive. This is extremely beneficial if you don't have the resources to collect debts or you are unfamiliar with the legislation and 'business culture' when dealing with customers in foreign countries.3 Benchmarking of risk mitigation practices:  Review the credit Management Procedures: Making sure of having a good Credit Management Procedures' Manual in place and that it is being followed. The contract executive is member of senior management who would be responsible for the executive oversight of the vendor contract and would be ultimately responsible for the program’s success.  Know who you are dealing with: Revise the financial situation of the major buyers. The cost of a credit report will be significantly lower compared to the money which may potentially lose if you make the wrong credit decision. Performance analyst monitors and analyzes vendor performances in order to assure compliance with service level agreements and continuous improvement of the service. Will then pursue the debt on your behalf and cover all costs. SA 8000. The performance standards.  Protect the business: Insure payments through trade credit insurance to cover the business from insolvency and payment default. Some providers offer insured clients the ability to hand the collection process over to the Underwriter for a small fee. BSCI. and more 3. works closely with the vendor having day to day responsibility for quality and cost  effectiveness of the vendor’s services Financial analyst provides financial analysis and audit work in support of one or more service contract. ISO 9000. (Muñiz. The financial analyst would identify.

KPIs only provide insight into past performance. and they should integrate this knowledge into their daily practices. Notifying immediately if something goes off track  Providing a foundation for employees to collaborate and share knowledge to resolve risks: Combined human knowledge always provides greater insight than systems alone can provide. and the tanker that just went down with your shipments on board. By the time the KPIs are reported. Smart alerting technologies constantly seek out and monitor unplanned events anywhere in your supply chain (late deliveries. Managers should be conscious of sources of risk and how to detect it. gathering information and improving transparency into and across the supply chain. Overly bureaucratic and complex processes tend to submerge risk management. the data are usually a month old and no one can uncover the source of the original problem.  Detect unplanned disruptions to the supply chain in real time: The use key performance indicators (KPIs) at the corporate level as a way to identify supply chain disruption and take appropriate action. a larger-than-expected sales order demand will have an impact on planned stocks and production. but if coordinated with warehousing and logistics. the likelihood of market price increases. similar to trying to drive a car by looking in the rear view mirror. Combining collaboration with alerting technologies allows companies to act immediately and improve the chances of detecting the source of the problem and eliminate the underlying source. inconsistent or missing data. Collaborative technologies reach out to the internal employees and external business partners. Making every employee a risk manager: Enterprising companies in the industry are empowering their employees to proactively manage risk.  Proactively measure performance and mitigate risk through continuous business process optimization: Risk management is a dynamic business process. Employees should also view unexpected events as opportunities as well as risks. this kind of event provides a great opportunity for increased revenues and enhanced customer satisfaction. bigger than expected orders. However. stock right-offs).  Scenario planning: What changes would like to make in supply chain network if you had a crystal ball and knew the price of fuel in six months’ time? The level . Managers need the flexibility to use techniques that make sense for them and their operation. For example. Individuals know about the big orders due next week. competitor promotions and their impact.

assessing current preparedness and mapping continuity strategies directly to critical business activities. 2013) 3.4 Action plan for improvement in practices: ▪ The procurement organizations must pick the most important suppliers to focus on. one which evaluates those services based on value as well. supplier power. dividing suppliers into different risk categories based on predetermined criteria such as financial health. The company need to add more “strictness” to the risk assessment process. saving on manufacturing costs but at much increased transportation expenses? Obviously. The company need to assess both the probability of a supply disturbances and ▪ the level of financial impact the disturbance that might cause. The elimination or reduction of risk increases the organization’s potential for financial success. supplier value-add.  (Kinder.” so ▪ proper care should be taken. perhaps even reverse the conventional wisdom of outsourcing to the Far East. how many would revisit the very design of their supply chain network. source materials from different countries. ▪ The Company must understand the risks of the entire supply chain. 2008) Some companies evaluate risk mitigation services solely on the basis of cost rather than taking a more comprehensive view.  With every organization at risk of business-disrupting events. clear and tested business continuity and disaster recovery plans are vital to preserving the wellbeing of the enterprise. not just of individual suppliers. and do a better job collecting cross-functional data that might help identify an emerging supplier problem earlier. The experts can guide the organization in identifying key processes and assets. time to switch and industry outlook. but too often this is done. supply of critical components. yet few can single-handedly take on the substantial cost of managing risk across the board. “Best-in-class companies take a more formal approach. by simulating the supply chain can evaluate the sensitivity to such eventualities and help to establish contingency plans. Forewarned is forearmed in supply chain strategic thinking.of "green" taxation that might be applied to your products? The crop yield of your key ingredient at the end of the season? The price of energy next year in all your plants around the globe? Knowing this. (Yesko. .

Concepts. and others. Springer Publishers. so the company must have complex tools that can track the potential impact of a single event in one location ▪ Understanding the company's model. 3. Screening and monitoring of suppliers can provide input into the teleconferences and a method to track effectiveness of tactics implementation. Container Security Initiative. can help your company stay ahead of potential supplier problems ▪ SAP or ERP software’s are needed in the company to improve the quality. ▪ Test and implement technologies to track containers in distribution channels to enhance global pipeline inventory visibility ▪ Gather supply chain intelligence and monitor critical supply base locations to allow real-time sense and response against material flow disruptions. Sunil Sharma (2010) . suppliers and manufactures to improve more in QCD of the company and expansion of the company ▪ The company should conduct weekly teleconferences with critical suppliers to identify current issues that may disrupt daily operations. . ▪ Seek security enhancements that comply with new initiatives in Customs Trade Partnership against Terrorism. and expressed dissatisfaction with current programs company training programs on the subject. Supply Chain Management. Practices and Implementation 4th Edition. (2010) The dynamics of supply chain and process management. based on the source of competitive advantage and degree of supply chain complexity. Supplier risk management is essential. and tactics to reduce them. reveals critical best practices. 2nd Edition. ▪ Technology support tools are equally lacking in the company. but as seen the senior leaders and category managers are not managing the risk quite well ▪ The company failed to provide even one full day of risk management training.▪ The company must actively collaborate with suppliers to manage risk. cost and delivery of the company and tracking the material and improvement in the inventory ▪ Proper communication skills should be improved with the clients. the oxford university press.5 Reference and citation of reference:   Avraham Shtub.

Retrieved from knowledge@wharton: http://knowledge.nationalchickencouncil. D. The course module EMM 505 supply chain management helped us understanding the almost major portion of the supply chain management techniques and methods to design an efficient supply chain to help in the growth of a business understood and UK essays. Retrieved from procurement and supply: Jurevicius. ( Muñiz. kelly OCG.ukessays.procurementandsupply. (2010). Retrieved from http://www. 5th Edition http://bookboon. Retrieved from bajaj auto ltd history: http://www. Dr. july 8).org/industry-issues/vertical-integration/ White. strategic management insight. Retrieved from https://www. open windows. d. (2013). (2013).                may 30).com/html/seven-step_supplier_selection.kellyocg. J.  American apparel. Yesko. 5).strategicmanagementinsight. INTERNATIONAL JOURNAL OF RESEARCH IN COMMERCE..sdcexec.slideshare. (2013).asp RAO. national chicken Asta. march 14). wharton university of pennsylvania.veda.6 Learning outcomes: Traditional manufacturing knowledge will never help to grow or permit him to take part in the growth of the business. IT & MANAGEMENT . veda applied inteligence. (2012).html Kinder. (2013. outsource2india. S. SUPPLY CHAIN MANAGEMENT IN TWO WHEELER INDUSTRY. (2013).cfm hsu. supply demand (1993. Dawei Lu (2007) Fundamentals of Supply Chain Management. Retrieved from mitigation risks through best practices: http://www. .americanapparel. Retrieved from vertical integration: http://www. 51. When and when not to vertically integrate. (2012).in/webhp?sourceid=chromeinstant&ion=1&espv=2&ie=UTF-8#q=channelbajaj dominick. slideshare. (2014). Retrieved from Vertical Integration: http://www. channel 4th February 2015 at 10. T. The one who practices the supply chain management techniques will help in the growth and sustainability of the business. 8. so engineer students will not able to learn these practices so the MSRUAS are providing proper knowledge of SCM which is useful for the future while joining a Retrieved from value chain of bajaj auto: http://www. Retrieved from six key trends in outsourcing: http://www. 07 23). (2011). ( 04 13). J. ( Retrieved from risk mitigation practice: http://www. (2014.VNOWXjGUewE Bajaj Auto Limited. RISK MITIGATION SERVICES. August). R.php usda. (2013. S. Retrieved from future of outsourcing: http://www.

In short the module Supply Chain Management and the assignment involved have provided sufficient knowledge like     Run a successful supply chain Importance of vertical integration and outsourcing Supply chain flow of automobile industry Risk management practises in a company .