Impact of Supply Chain Strategies on the Performance of Indian Tyre Manufactures

Introduction

The concept of Supply Chain Management (SCM), introduced to address the issue of integration of organizational functions ranging from the ordering and receipt of raw materials through the manufacturing processes to the distribution and delivery of products to customers with a view to enable organizations to achieve higher quality in products and customer service and to lower inventory cost, has attracted considerable managerial attention in recent times mainly because of its huge potential competitive impact (Stevens, 1989). Experience, however, demonstrates that managers adopt a variety of disparate approaches to SCM implementation. In this context, design of an effective supply chain network has become a crucial issue for any company to survive in a fiercely competitive market. The SCM concerns with issues and characteristic features of several interrelated factors and activities of an organization, such as demand forecasting, procurement, manufacturing, distribution, inventory, transportation, and customer service, and the resulting integrated approach is extended to customers and suppliers (Christopher, 1992). Considering the implications of all these aspects, a number of issues in SCM have assumed importance in the context of prevailing industrial scenario in India in order to make SCM more effective.

Numerous papers have been published in the literature advocating the principles and the benefits of SCM [Beesley (1997), Lurquin (1996), Mason-Jones and Towill (1998), and Towill (1996)]. Many case studies have also been published evidencing the benefits of SCM [Arntzen, et al., (1995), Calza and Passaro (1997), and Lee and Billington (1995)]. There are several studies on SCM practices in different countries reported in the literature [Gilmour et al. (1995), Handfield and Withers (1993), Cilliers and Nagel (1994), McMullan (1996), Cox (1999)], and it is felt that an effort on design and development of SCM practices including issues, such as IT application, performance measures used, and barriers of SCM implementation is very much needed in India.

On reviewing the existing SCM literature, several major weaknesses in the conceptualization and modeling of SCM are found. In particular, the SCM construct is perceived as an extension of integrated purchasing and supply management, or integrated logistics and transportation management. It appears that a coherent view on SCM concept has yet to develop in the existing literature, and it makes a prerequisite to conduct a survey on the important issues of SCM before a comprehensive methodology for supply chain performance measurement and evaluation system for the Indian Tyre manufacturing industries is prescribed. This paper reports the details of a questionnaire-based survey to study the status and scope of SCM practices in Indian Tyre manufacturing companies and also provides a brief overview of the similar surveys on SCM already undertaken in different industries.

Objectives of the Survey

The primary objective of the survey is to explore and understand, in quantitative terms wherever possible, the issues in SCM practices and concerns of the Tyre manufacturing industries in India.

In specific terms, the objectives are related to the following aspects:

• Present status and scope of SCM practices;

• Role of Information Technology (IT) in SCM;

• Performance measures used in SCM,

• Benefits of employing SCM practices; and

• Specific issues hindering SCM practices.

It is assumed that addressing the above-mentioned issues, as all of them are related to SCM strategies and practical constraints, would lead to understanding the status and scope of SCM practices in Indian Tyre manufacturing industries. Presently, the majority of the Indian companies have a weak alignment of supply chain strategy with business strategy. This is primarily so because the companies are rigidly structured along functional lines with department-specific performance measures.

Survey Methodology

A survey instrument, in the form of a questionnaire, is used in order to fulfill the objectives as mentioned. The questionnaire designed for the survey, will be conducted during December, 2010, for nearly 18 companies covering Tyre manufacturing industry in various regions of the country. Various lists of manufacturing companies, Internet websites of the companies, and personal contacts were the main sources for obtaining information about the companies and creating a database. The companies were selected randomly from the database. Although the survey will be conducted for a specific time period, the issues considered remain highly relevant for understanding the operating principles, norms, problems, and implementation aspects of SCM practices in the Indian Tyre manufacturing companies.

The questionnaire is designed to know about the responding companies, their main objectives of employing SCM, positions of companies in the supply chain for their primary products, and views of the respondents on the principles of effective SCM practices. The questionnaire was divided into two sections: Section A and Section B. Section A was designed for the companies which have already implemented the SCM concepts like information sharing with suppliers and customers, or have decided to implement SCM concepts in near future, contains questions pertaining to several important issues related to SCM practices, such as a company’s role in servicing customers’ needs, its role as a customer to its suppliers, the role of IT in SCM, the performance measures used in supply chain performance evaluation, and the activities or actions hindering SCM practices. Section B presents the items related to several types of barriers and government policies commonly found in implementing SCM practices in the Indian Tyre manufacturing industries.

A combination of checks, yes/no, `Likert’ scale, and multiple choice questions are framed against the issues as mentioned.

The following specific tests will be employed on the data obtained:

• Two-Tailed Significance Test-this provides a level of significance for differences between two groups to a question requiring a response using a Likert scale.

• Bivariate Correlation (Pearson) Coefficient-this tests the relationships between responses to two different questions. The test provides a `p value’ indicating the strength of the relationship. A value of p=0 represents no relationship, and p=±1 a strong relationship, and shows the significance level of the relationships.

• Reliability Analysis-In order to assess the homogeneity and inter-correlations of the factors used in an item, Cronbach alpha (a) [Cronbach (1951)], a measure of internal consistency often used in cases where participants respond to questions on a Likert scale The values of a lies in the range (0, 1).

For the purpose of analysis, the survey responses are divided into three categories:

Category 1: Questions that need ranking of alternatives (Likert-scale questions)

The importance of the alternatives under each issue is established based on the values of statistics obtained.

Category 2: Questions requiring degree of agreement (multiple choice questions)

For the questions requiring degree of agreement, Specific issues such as main objectives of SCM, principles of effective SCM practices, integration of divisional areas in the supply chains, information communication tools with suppliers and customers, area of IT applications, and barriers of SCM implementation are included in this category. The percent responses of all the alternatives under each issue are computed and the rankings of the alternatives are done based on the percent responses resulting in identifying the important alternatives.

Category 3: Yes/No type questions

For this category, two yes/no type close-ended questions have been framed against different issues. The percent responses of `Yes/No’ is computed against each issue, which provide the general views of the respondents on a particular issue.

Company Details

Apollo Tyres Ltd

Shanmugham Road Cochin, KL – 682031 Phone : +91-0484-2381902/2381903/ 2380720/ 2372767/ 2363760

Birla Tyres

Syed Amir Ali Avenue Kolkata, WB – 700019

Email : [email protected] Phone : +91-33-22814516

Ceat Tyres

Ceat Tyres. D – 6/5, SMB ENGINEERS, TTC INUSTRIAL AREA MIDC TURBHE NAVI MUMBAI, MH – 400705 Phone : +91-22-27622079

Elgitread (India) Ltd

Elgitread (India) Ltd 2000 Trichy Road Coimbatore, TN – 641005 Email : [email protected] Phone : +91-422- 4321000

Falcon Tyres Ltd

Falcon Tyres Ltd K. R. S. Road Metagalli Mysore, KK – 570 016 Email : [email protected] Phone : +91-821-2582453/ 2582055/ 2582041

Govind Rubber Limited

Govind Rubber Limited G -15,Creative Industrial Estate,Sitaram Mill Compound,72-N. M. Joshi Marg Lower Parel Mumbai, MH – 400 011 Email : [email protected] Phone : +91-22-2309 5641/1784 / 309 21124 / 309 21126

JK Tyres

JK Tyres 3 Bahadurshah Zafar Marg New Delhi, DH – 110002 Phone : +91-11-23311112/7

Malhotra Rubbers Limited

Malhotra Rubbers Limited D-4, Sector 11 Noida, UP – 201301 Email : [email protected],[email protected],[email protected] Phone : +91-120-2543028/2543029/2553724

Metro Tyres

Metro Tyres Metro House, 134/4, 135/5 Zamrudpur Kailash Colony New Delhi, DH – 110 048 Email : [email protected],[email protected] Phone : +91-11-6219097/98

Modi Rubber

Modi Tyres Company Pvt. Limited.

NH-58, Meerut – Roorkee Road

Modipuram – 250110

MEERUT (Uttar Pradesh)

MRF Tyres

MRF LIMITED – KOTTAYAM

MANUFACTURING UNITS P.B.No.2, Vadavathoor P.O.,

Kottayam,

Kerala – 686 010

Tel: 0481-2570461 (12 Lines)

DID: 2575196/97/98,

Royal Tyres

Royal Tyres C-11 Mugappair Industrial Estate(East) Chennai, TN – 600037 Email : [email protected] Phone : +91-44-26565643/42690079/42690089

TVS Srichakra Ltd

TVS Building 7-B West Veli Street

Madurai, 625001

India

+91-45-2420461 (Phone)

Questionnaire for

The Impact of Supply Chain Strategies on the Performance of Indian Tyre Manufacturing Companies

Part 1 – Company Profile

1. Name of Company

2. Address

3. Country

4. Tel

5. Fax

6. Website

7. Contact person:

9. E-mail:

8. Position in company:

[______]

Turnover 2009 :

[_________________]

Part 2 – Theme 1

How do you manage your supply chain? Tick all that apply

Close partnership with suppliers

Close partnership with customers

JIT supply

e-procurement

EDI

Outsourcing

Subcontracting

3PL

Plan strategically

Supply Chain Benchmarking

Vertical integration

Few suppliers

Many suppliers

Holding safety stock

Use of external consultants

Other, please specify

How successful do you think is your company in managing its supply chain in general?

Not successful at all

Not successful

Somewhat successful

Successful

Very successful

1

2

3

4

5

Which of the following you think that your company needs to do in order to manage its supply chain better? Tick all that apply.

Improve

Start Implementing

Satisfied already

Not appropriate

Close partnership with suppliers

Close partnership with customers

JIT supply

e-procurement

EDI

Outsourcing

Subcontracting

3PL

Plan strategically

Supply Chain Benchmarking

Vertical integration

Few suppliers

Many suppliers

Holding safety stock

Use of external consultants

Other (specify)

Does your company have a clear logistics strategic plan? YES NO

Part 3 – Theme 2

What types of systems are currently in use in your company to support Supply Chain Management?

Custom-made

Standard package

Not in use

Material Requirements Planning (MRP)

Manufacturing Resources Planning (MRPII)

Enterprise Resource Planning (ERP)

Warehouse Management System (WMS)

Supply Chain Management (SCM)

Customer Relationships Management (CRM)

Supplier Relationships Management (SRM)

Advanced Planning System (APS)

Just In Time (JIT)

Other (specify)

How much did you actually benefit from using these systems?

Not at all

Little

Average

Greatly

A lot

Don’t know

(1)

(2)

(3)

(4)

(5)

Better quality of information

Better quantity of information

Flexibility

Reduced lead-time in production

Cost saving

Forecasting

Resource planning

Better operational efficiency

Reduced inventory level

More accurate costing

Increased coordination between departments

Increased coordination with suppliers

Increased coordination with customers

Increased sales

Better quality of information

Better quantity of information

Flexibility

In what level your company is facing the problems below when using SCM systems?

No problem at all

Little problem

Some problem

Significant problem

Serious problem

Don’t know

(1)

(2)

(3)

(4)

(5)

Resistance to change from employees

Insufficient vendor support

Hidden cost

Integration with existing system

Integration with supplier’s system

Integration with customer’s system

Other (specify)

What types of systems do you plan to implement in the near future (within the next 2 years)?

Custom-made

Standard package

Not going to implement

E-commerce

E-business

Decision support / expert system

Radio Frequency Identification (RFID)

Bar coding

Other (specify)

Part 4 – Theme 3

19 How satisfied are you with the current public policy regarding SCM and IT?

Not at all

Somewhat

Satisfied

Quite satisfied

Very satisfied

1

2

3

4

5

How important are the following future measures for supporting your company effort in SCM and IT?

Not at all

somewhat

important

quite important

very important

(1)

(2)

(3)

(4)

(5)

More education, e.g. formal qualification

More funding and financial support

Better infrastructure e.g. telecommunications, road, etc

Improved information provision

Increased regional cooperation between institutions, e.g. chamber of commerce

Closer cooperation between companies and governments

Other (specify)

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