Available online at [www.ijeete.com] IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT FOR PARFORMANCE IMPROVEMENT: A CASE STUDY

International Journal of Exploring Emerging Trends in Engineering (IJEETE)
Vol. 02, Issue 06, NOV-DEC, 2015 Pg. 252-258 WWW.IJEETE.COM
ISSN – 2394-0573 All Rights Reserved © 2015 IJEETE Page 252
IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT FOR PARFORMANCE
IMPROVEMENT: A CASE STUDY
1
RAVINDER KUMAR ,2
Mr. VINEY JAIN
1
M.Tech Research Scholar, (IIET,KINANA)
2
Assistant Professor,Mechanical Engg, (IIET,KINANA)
ABSTRACT
This paper aims to convey how to do a conceptual
work during supply chain design, planning and
operation, and how to improve performance. In
present work, efforts have been made to analyze
techniques like logistic management, quick customer
service, vendor base management, inventory
management etc. The key effective to supply chain
management is supply chain integration, ensuring
that all parts of the supply chain work together, rather
than cross purpose. The supplier selection is no more
based on factor like having low cost or speed of
delivery alone. Productivity and quality have become
perquisite. Trustworthiness, speed flexibility and
responsiveness are main issues. Keywords
Keywords: Supply chain management, Process
management, Performance management, Suppliers,
Strategic management.
1. INTRODUCTION
Supply chain management (SCM) is the term used to
describe the management of the flow of materials,
information, and funds across the entire supply chain,
from suppliers to component producers to final
assemblers to distribution (warehouses and retailers),
and ultimately to the consumer. In fact, it often
includes after-sales service and returns or recycling.
In contrast to inventory management, which
coordinates inventories at multiple locations, SCM
typically involves coordination of information and
materials among multiple firms. Supply chain
management has generated much interest in recent
years for a number of reasons. Many managers now
realize that actions taken by one member of the chain
can influence the profitability of all others in the
chain. Firms are increasingly thinking in terms of
competing as part of a supply chain against other
supply chains, rather than as a single firm against
other individual firms. Also, as firms successfully
streamline their own operations, the next opportunity
for improvement is through better coordination with
their suppliers and customers. The costs of poor
coordination can be extremely high. However,
because of trade promotions, volume discounts, long
lead times, fill truckload discounts, and end of
quarter sales incentives the orders seen at the
manufacturers are highly variable (Hammond)[7]. In
fact, the variability, increases in moving up the
supply chain from consumer to grocery store to
distribution center to central warehouse to factory, a
phenomenon that is often called the bullwhip
effect.The bullwhip effect has been experienced by
many students playing the "Beer Distribution Game."
(Sterman)[6], Chen & Samroengraja[10]. It seems
that integration, long the dream of management
gums, has finally been sinking into the minds of
western managers. Some would argue that managers
have long been interested in integration, but the lack
of information technology made it impossible to
implement a more "systems oriented" approach.
Clearly industrial dynamics researchers dating back
to the l950’s (Forrester)[1] have maintained that
supply chains should be viewed as an integrated
system. With the recent explosion of inexpensive
information technology, it seems only natural that
business would become more supply chain focused
1.1 Key Components of SCM
The key components of Supply Chain Management
includes:
1. Strategic planning: Quality planning has to be
done for the implementation and optimization of
the necessary tools for determining the location,
size and the kind of facilities opted in order to
meet the customer service goals.

2. Demand Planning: Based on the customer
demand predictions the demand planning is done
thus, ensuring better and accurate customer
demand.
3. Distribution Planning: There are a lot of recent
changes in the corporate world due to
globalization. The planning for distribution is
done to determine which demands can be fulfilled
by the existing supply elements.
4. Manufacturing Planning: The manufacturing
division is usually confronted with a lot of
complexities when compared to other divisions.
2. LITERATURE REVIEW
Early research on the global plant location problem
appears in Hodder and Jucker [2] and Hodder and
Dincer[3]. Here, we focus on a representative
publication, Hodder and Dincer. the authors
studied the international plant location problem and
developed a single-period model to determine the
best locations, material flows and financing patterns.
The model identities the best sourcing plan given
multiple possible production sites for a product to be
sold in multiple markets. Breitman and Lucas[4]
modeled a number of features relating to global
supply chains, including tariffs, local content,
balance of trade, and trade complementation. Global
parameters in the model include currency exchange
rates and transportation costs. In Cohen and Lee
[5],the supplier and assembly plant tiers are linked
using a bill of material specified as a usage rate in the
constraint set. The paper describes a case study
application from the personal computer
manufacturing industry. In fact, the variability,
increases in moving up the supply chain from
consumer to grocery store to distribution center to
central warehouse to factory, a phenomenon that is
often called the bullwhip effect . The bullwhip effect
has been experienced by many students playing the
"Beer Distribution Game." (Sterman)[6]. Canel and
Das[13] extend this research line with a model that
integrates manufacturing and marketing decisions in
a global context. In Rosentield[9] the author
developed a model to describe production and
distribution costs for an international location
problem and then explored its structural properties to
draw insights on location and capacity strategies
when exchange rates are uncertain. However,
because of trade promotions, volume discounts, long
lead times, fill truckload discounts, and end of
quarter sales incentives the orders seen at the
manufacturers are highly variable (Hammond)[7].
The bullwhip effect has been experienced by many
students playing the "Beer Distribution Game." Ster
man)[6], (Chen & Samroengraja[10]. It seems that
integration, long the dream of management gums, has
finally been sinking into the minds of western
managers. Some would argue that managers have
long been interested in integration, but the lack of
information technology made it impossible to
implement a more "systems oriented" approach.
Clearly industrial dynamics researchers dating back
to the l950’s (Forrester)[1] have maintained that
supply chains should be viewed as an integrated
system. These authors have also highlighted that
supply management is crucial for organizations’
strategic planning functions. Several researchers have
also focused on the evolution of supply chain
management from simply purchasing or procurement
to incorporating other functions including logistics
and transportation and information management,
among others,(Ayres[11], Fredendall and Hill[13],
Ross[3]). Purchasing incurred a significant portion of
costs of goods sold, but was not managed by skilled
personnel. Interest in materials management grew
around 1960s to 1970s and the focus was more on
solving the problems from a total system viewpoint
for an organization rather than the individual function
(Fredendall and Hill[12]. Lori[15] has shown in his
study, the experience of developing models in which
the principles of design for supply chain management
have been implemented for new product
development. By Simchi-levi et. al.[14] Supply
chain management is a set of approaches utilized to
efficiently integrate suppliers, manufacturers,
warehouses and stores, so that merchandise is
produced and distributed at the Fight quantities, to
the right locations, and at the right time, in order to
minimize system wide cost while satisfying service
level requirements.Dasu and de la Torre[8]
developed a model that describes the price-setting
and production allocation processes for multinational

corporations supported by a network of partially
owned subsidiaries. Debendra [16] showed that the
small and medium sized construction enterprise face
challenges like high fragmented structure and low
productivity. Many industries s improved their
business performance using the SCM. The linkage
between the small and medium general contractor
and other supply chain member. Ganeshan and
Harrisonmiyet[18] another analogous definition: A
supply chain is a network of facilities and distribution
options that performs the functions of procurement of
materials, transformation of these materials into
intermediate and finished products, and the
distribution of these finished products to customers.
Using IT systems to capture and analyze information
can have a significant impact on a firm’s
performance. Information is the key to the success of
a supply chain because it enables management to
make decisions over a broad scope that crosses both
functions and companies. Successful supply chain
strategy results from viewing the supply chain as a
whole rather than looking only at the individual
stages Christoph Fuchs, Andreas Otto[17].
3. A CASE STUDY OF SUPPLY CHAIN
MANAGEMENT IN INDIAN
MANUFACTURING INDUSTRY
3.1 Company Profile
Precision Engg.Works Auto Pvt.Ltd.Gurgaon is
initiated in 2003. The company has earned all these
years to acquire a distinctive identity for its brands as
well as company name. Precision Engg.Works Auto
Pvt.Ltd.,Gurgaon change his name on 04/12/12 as a
A.P. Percision Auto Pvt. Ltd. manufacturing various
turning parts.
3.2 LAYOUT OF PLANT
Figure 3.1 Plant Layout
3.2 Supply Chain in Persision Engg.Works Auto
Pvt. Ltd.
Precision Engg.Works Auto Pvt. Ltd..have different
department like engineering or R&D, purchase,
quality, production, heat treatment and logistics and
have good collaboration in each department.
Precision Engg. Works Auto Pvt. Ltd.is getting good
response from its customer like Bajaj, Suzuki and
Hero etc. It receives order from its customer, and
along with this receives drawing of all part that it has
to manufacture for its customer.
Now A.P. Precision Auto Pvt. Ltd..study this drawing
and give order to supplier for material. Customer
requires development plan and give a fix date to
submit it. After this company submits its plan of all
process and drawing and get approved from its
customers. After confirmation from customer, it
sends product to the customer. Then customer checks
that product and gives order for mass production to
the A.P. Precision Auto Pvt. Ltd.
Roll of vendor in SCM: - A.P. Precision Auto Pvt.
Ltd..depends on other vendor to supply raw material.
It have approved vendor, and yearly it gave rating to
them according to their performance. Hero or Bajaj
also recommended some vendor to A.P. Precision
Auto Pvt. Ltd. selection of order.
In this for buying specific part A.P. Precision Auto
Pvt. Ltd. have to depend permanently on that vendor.
TRAUB
SECTION
FORGING
SECTION
INVENTORY
STORE &
PACKING
VMC
SECTION
QUALITY
ASSURANCE
&
INSPECTION
WORKSHOP
FOR AXLE
EDM TOOL STORE
OFFICE GREENARY & PARKING

It buys raw material from vendor according to
requirement and sometimes customer asked to buy
material from some specific supplier. So SCM plays
a big role in the vendor development. A.P. Precision
Auto Pvt. Ltd. makes a schedule for its entire vendor
for continuous supply of raw material and final
product to the customer to avoid line break
down.
3.3 Inbound Logistics
The supplier supply raw material to the company unit
as they receive order from A.P. Precision Auto Pvt.
Ltd..Inbound logistics includes sourcing, order
placement and expediting, transportation, receiving
and storage. Overall, procurement operations are
called inbound logistics. A procurement cycle of A.P.
Precision Auto Pvt. Ltd. is shown in figure 3.3.
Figure 3.3 Inbound Logistics In A.P. Precision Auto Pvt. Ltd
According to its requirement these orders are based
on the demand it receives from its various customers.
Customer order: - SCM play a wide role in the all
department simultaneous. Customer orders are
received directly from Bajaj, Suzuki and Other
Companies. Customer order are received through
letters, mail, fax or phone And sometimes order are
placed by minute of meetings. Sales order is
prepared for the same.
Raw material: - All the raw material are easily
available .Raw materials are supplied from various
vendor and these are thoroughly examined by the
AP PRECISION purchasing department to ensure
the quality of the material of which the product is
made of the suppliers are provided by their own
vehicles and are deliver at the doorstep of the
manufacturing unit. They are supplying Steel block
to its purchase and material department.
Inventory: - Depends on the demand of product to
the customer. Generally, one day inventory is
necessary for company to avoid breakdown in
customer line production. If breakdown acquired in
the supply of products to the customer than A.P.
Precision Auto Pvt. Ltd. have to pay for that loss
acquired due to breakdown of supply of final
product. Sometimes vendor ask A.P. Precision Auto
Pvt. Ltd. to inventory 3-7 day, customers have to
pay cost of this inventory.
Power and fuel: - The unit requires power load of
1200 KVA for which an application which made by
the company. Provision of diesel generator set also
been made to operate the critical item of machinery
during power cuts. The running load in the
company is 800 KVA.
Water and its disposal: - The suitable provision of
borewell with water storage tank has been made in
the plant. The waste water is treated in waste water
treatment plant in Precision Engg. Works .
3.4 Outbound Logistics
Value added goods are to be made available in the
market for customers to perceive value. Finished
goods are to be distributed through the network of
warehouses and supply lines to reach the consumer
through retailers’ shops in the market. Outbound

logistics starts from manufacturing unit and ends at
the customer, procurement cycle shown in figure 3.4.
Figure 3.4:Outbound Logistics In A.P. Precision Auto Pvt.
Ltd..
 Order management: — After the conversion of
raw material in to final product they have to
supply final product to the customer. Customer
Order is well managed properly in the company. A
list is prepared in which all customer names are
written and how much number of supply of final
product is made is to the customer also mentioned
in to the sheet. There may be some chance that
customer want to increase the requirement of
product than company also made provision for
this.
 Finished goods inventory: - A good purchased
as a "raw material" goes into the manufacture of a
product. A good only partially completed during
the manufacturing process is called "work in
process". When the good is completed as to
manufacturing but not yet sold or distributed to
the end-user is called a "finished good". So
inventory of finished good plays a good role in
SCM.
 Packaging and handling:-Final product is
placed in corregated box in palatize form. The
size and shape of this these are designed and
planned by customer, they asked company to that
they have to supply product packaging on this
shape, size box. Because customer wants that
working people in his company should not face
and problem in unloading of the product from the
truck, and Container storage should be easy and
minimum time requirement of time to place
product box from one place to other place. In
designing the shape, size and weight of the box
company should ensure that when staff working
on product line they should be easily placed and
require very less man power to handle them.
 Transportation: - After the manufacturing
process, raw material converted in to final
product, transportation cost is directly charged
from customer. Now final product supplied to the
customer with the help of company’s own
transportation. It plays a big role in the SCM
because in every field that may be inventory of
raw material supply that may be final product
supply to the customer. Company has 1-3
vehicles for transportation of final product to the
customer. They supply final product to company
by their own transportation. Company has its own
transportation system to supply final product to
the customer at right time, right place and at right
cost. Before the material is loaded in to truck and
container the vehicle is physically checked for
any breakage, it should be cleaned and dirt free.
3.7 SCM Targets
Taking the Objectives in to consideration, we have
set the following targets as shown below:
Increase in Profit
Increase in Sales turnover
Increase in Labour productivity
Customer Complaints decrease
Decrease in production cost
Figure 3.7 Operating Profit Rate

Figure 3.8 Production cost
Figure 3.9 Productivity
Table 3.1Performance Improved table
Description of
parameters
Units Bench mark August
2015
Main Subordinate
1 –
Profit
Increase in
profit amount
Millions
of
Rupees
197.76
(Year 2012-
14)
579.1
2 –
Sales
Turnov
er
Increase in
sales turnover
Millions
of
Rupees
1987.80
(Year 2012-
14)
2785.4
3 –
Produc
tivity
Increase in
plant labour
productivity
Millions
of
Rupees
0.27 0.36
4 –
Quality
Reduction in
customer
complaints
Number
per
month
89 (April-
June 2014
0.0
5 –
Cost
Decrease in
production
cost
% of
sales
75.10 69.45
6 –
Deliver
y date
Increase in
delivery date
% 83.8 (April-
June 2014)
100
3.8 Observations:
 company should increase its floor area so that
inventory can be made maximum and help in
continuous supply of material and final product to
the customer.
 Generally company is using 3 day inventory of
raw material that require more floor area and also
increase the overall cost of final product.
 company should make schedule visiting customer
production site.
 company do the packaging carefully and increase
the packaging standard.
3.10 Summary of Work Done
In Precision Engg.Works Auto Pvt.Ltd.the study is
conducted in three areas
l) Inbound Logistic
2) Manufacturing process of Axle
3) Outbound logistic.
Tangible results achieved:
 Improving Overall Equiped effectiveness.
 Increase in plant productivity.
 Performance rate Improving.
 Inventory control.
 Improving profit of the group.
 Decrease in production cost.
 Improving Quality rate.
 Improving sales turnover.
3.12 Conclusion
Management of a supply chain means managing all
the different processes and activities that produces
value in the ultimate consumer. Companies that
intend to compete globally should implement supply
chain management. It is a vital that they must
continually reach new customers and attract their
existing customers. The leading companies, who
have implemented it the approach, are found to
operating with 36% lower logistics cost than the
average.The success of SCM at this strategic level
requires considerably more integration with other
enterprise systems. Since many business targets and
performance indicators are established in the
budgeting process, efficiency demands that the
planning, budgeting, sales and marketing, and SCM
systems talk with one another. Gisela Wilson,

director of product lifecycle management solutions
program at International Data Corp. (IDC),
Framingham, Mass., reports that the ability to
integrate with other back-end systems has become
one of the most important features of SCM
tools.Among the key features in SCM solutions are:
 Optimization tools to help identify the realistic
solutions that best fit the company's criteria
 Modeling capability to allow creation of realistic
models of your business
 Collaboration tools to support business partner
involvement
 Analytics to evaluate and report performance
relative to key performance indicators.
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model for intemational plant location and Hnancing
under uncertainty. Computers and Operations
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