IMPACT OF SC INTEGRATION ON MANUFACTURING FIRMS IN INDIA

A Dissertation Submitted As A Part of the Requirements For The Degree of Master of Business Administration

Submitted by
Sachin Chauhan PRN : 10020441217 DIV & Roll No. E - 28 Operations - IB Batch 2010 - 2012

Under the Guidance of

Prof. Dr.Pradnya Chitrao

Symbiosis Institute of Management

Studies ( SIMS )

(Constituent of Symbiosis International University)

SIMS Dissertation Certificate from Internal Guide

To whom it may concern

This is to certify that SACHIN CHAUHAN PRN No. 10020441217 has completed his Dissertation report on the topic IMPACT OF SUPPLY CHAIN AND IT INTEGRATION ON INDIAN MANUFACTURING FIRMS under my guidance.

Guide name: Prof. Dr. Pradnya Chitrao Signature: Place: Symbiosis Institute of Management Studies, Pune Date: 2

ACKNOWLEDGEMENT
I would like to express a deep sense of gratitude to my dissertation guide, Prof.Dr. Pradnya Chitrao whose constant mentoring, encouragement, cooperation and teaching helped me complete this dissertation successfully. He made me work professionally and think in terms of a manager all the time. Further, I want to thank Mr. Amit bhandari(Operations manager Maruti Suzuki Manesar,Gurgaon) for his support, without him the collection of data would not have been possible. I could not have completed this project without his assistance and I am grateful to him for his unconditional help & support for the entire duration of the project. The present report is an amalgamation of my thoughts and efforts to study the present processes.

Sachin Chauhan SEC E- 28 (Operations) Batch 2010-2012 10020441217

TABLE OF CONTENTS:
CERTIFICATE ACKNOWLEDGEMENT INTRODUCTION LITERATURE REVIEW RESEARCH METHODOLOGY TYPE OF RESEARCH DATA COLLECTION METHOD NEED, OBJECTIVE, HYPOTHESIS CONTENTS CASE STUDY DATA ANALYSIS FINDINGS CONCLUSION 2 3 5 5 6 6 6 7 7 34 39 44 45

RECOMMENDATIONS

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REFERNCES

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INTRODUCTION
In the 1980s companies discovered new manufacturing Technologies and strategies that allowed them to reduce costs and better compete in different markets. In the last few years, however, it has become clear that many companies have reduced manufacturing costs as much as is practically possible. Many of these companies are discovering that effective supply chain management is the next step they need in order to increase profit and market share (Simchi-Levi, 2003). In order to compete the effective management of the supply chain is critical.In todays dynamic market, companies can no longer exploit the traditional drivers in order to remain competitive. The nature of competition has forever changed, and more significant change will occur going forward. Companies can no longer compete by designing, manufacturing and selling a single product,now they have to innovate at a very high pace and need to streamline their supply chain through the use of information technology(BPR,ERP and IS systems) which works as supply chain enabler.In this paper I would be presenting the fact about how the supply chain integration with IT has helped Indian firms to become competitive in this world of hyper competition,how they have integrated SC with IT and how that has affected their performance.I would also present a case study for M & M and along with that I would be discussing about M & M and P & G regarding how they have implemented the IT in supply chain and how much their performance has changed after this integration.

LITERATURE REVIEW
Supply Chain Management is a network of facilities that produce raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a distribution system. It spans procurement, manufacturing and distribution (Lee & Billington 1995) the basic objective of supply chain management is to optimize performance of the chain to add as much value as possible for the least cost possible. In other words, it aims to link all the supply chain agents to jointly cooperate within the firm as a way to maximize productivity in the supply chain and deliver the most benefits to all related parties (Finch 2006). Adoption of Supply chain management practices in industries has steadily increased since the 1980s. A number of definitions are proposed and the concept is discussed from many perspectives. However Cousins et al. (2006); Sachan and Datta (2005); Storey et al. (2006) provided excellent review on supply chain management literature. These papers define the concept, principals, nature, and development of SCM and indicate that there is an intense research being conducted around the world in this field they critically assessed developments in the theory and practice of supply management. Gunasekaran and McGaughey (2003) extended the scope of SCM beyond material management, partnership, information technology to the Total Quality Management areas like management commitment, organizational structure, training and behavioral issues. As firms' survival lies on integration, a good understanding of the integration process is a key aspect in SCM. Mouritsen et al. (2003) discussed that basic hypothesis the more integration (wider the scope) the better the management of the chain" is not always true and proved that it Depends very much on the environment" of the supply chain and the power relations between the participants in the supply chain. Authors proposed a set of management techniques and tools to analyze successful SCM strategies. It is also observed that research is not limited to hypothesis testing and data analysis, but more advanced techniques like simulation, Artificial Neural Network, and Fuzzy logic are also used for optimization and decision making in SCM.

Koh and Tan (2006) used the principles of fuzzy logic for analyzing and monitoring performance of suppliers based on the criteria of product quality and delivery time where as Chiu and Lin (2004) showed how the concepts of collaborative agents and artificial neural networks (ANNs) can work together to enable collaborative supply chain planning (SCP). It appears from literature review that researchers have studied supply chain management from a system perspective, or the systemic natures of interactions between the participants of supply chain are observed. Although numerous studies views SCM from different perspectives, this paper gives the better understanding of the supply chain and various forms of IT(BPR, ERP etc). RESEARCH METHODOLOGY For this research I would be using various secondary datas available from the internet and various books.I have also prepared a questionnaire which has questions related to the performance of the firms after the SC and IT integration.Like how their performance has changed in terms of contemporary measures of performance like cost,lead time,time to market,input cost etc. Any task without sound objectives is like tree withoutroots.Similarly in case of any research study undertaken,initially the objectives of the same determined and accordingly the further steps are taken on.A research study may have many objectives but all these objectives revolve around one major objective which is the focus of the study.In this study the focus would be on the impact of supply chain IT integration on the manufacturing firms in India in general and then I would also discuss the impact on particular firms and also, I would be discussing a case study regarding how they have implemented BPR in their igatpuri plant and how that had improved their performance.The following objectives have been set forth.They are to: 1) Present a brief knowledge about the basic components of supply chain. 2) Provide a brief knowledge about the importance of IT in supply chain. 3) Provide a brief knowledge about the various IT implementations like BPR, ERP and Eprocurement etc. 4) Study and analyze the impact of supply chain and IT integration on the performance of manufacturing firms in India.

TYPE OF RESEARCH My research would be an analytical research where using secondary datas from various sources I would be showing that why and how SC and IT is happening and what are the results of such integration.

DATA COLLECTION METHOD 1)QUESTIONNAIRE- As the questionnaire is self administrated one ,the survey is kept simple and user friendly .Words used in questionnaire are readily understandable to all respondents.Also technical jargons are avoided to ensure that there is no confusion for the respondents.

2) SECONDARY DATA- It will collected with the help of various books,research papers,magazines ,news papers,journals,internet ,etc.

NEED
To understand what benefits manufacturing firms in India have derived after the supply chain integration and also what they have done and how they have done the integration of supply chain with IT OBJECTIVE. The purpose of this paper is to emphasize on the benefits of the supply chain an IT integration and also to understand how Indian firms have implemented different IT technologies in their supply chain successfully inspite of very high rate of failure of BPR and ERP implementation because this could then help other companies to follow the suit and apply ERP and BPR in their supply chain without any risk of failure.

HYPOTHESIS
HI-integrating supply chain has helped firms in improving their performance H2-integrating supply chain has no impact on the performance of the firms And the performance in supply chain effectiveness is measured in terms of cost, quality, lead time, customer service level and time to market. SUPPLY CHAIN (SC) Before discussing any further I wanted to clear certain points like what is supply chain, why is it so important not only in manufacturing industry but in most of the industries, and what do we mean by supply chain management. Also I would like to throw some light on the IT (information technology) and why it is so important in todays competitive world. The simplest definition of supply chain is it is a system of organizations, people, activities, information and resources involved in moving a product or service from supplier to the customers.

SUPPLY CHAIN ILLUSTRATION

SUPPLY CHAIN PROCESSES The following are the processes that are involved in supply chain, these processes are very important as they are the basis of any supply chain. These processes need to be healthy in order to strengthen our supply chain. Procurement-source Production-make Distribution-deliever

These are the three processes which are involved in every supply chain whether manufacturing or any other,supply chain starts with the procurement process where manufacturing firm procure raw material from its various vendors for producing the final finished product,for e.g maruti Suzuki procures engines from Fiat India ltd.for its SX4,the second process is the production of finished good that is in our example it is the production of SX4 in its Manesar(Gurgaon plant) and then the third process which is as important as other two is the distribution which starts after the production process is complete,it involves various issues like where to keep our inventory so that it can be made available without much lead time to the their distributors,so that they can cater to the demand of the customers,these processes plays an important role in the customer satisfaction,reducing lead time and reducing the input cost.

SUPPLY CHAIN MANAGEMENT AND ITS SIGNIFICANCE

Managing the flow of information through supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costs.This statement defines the supply chain in simple words. There are certain keys to effective supply chain management and those are Information sharing among all the members of the supply chain. Communication among all the members of supply chain. Cooperation among all the members of supply chain. Trust between the manufacturer and their suppliers. These are the four very important points in order for a supply chain to be a successful one.These are the points that have been implemented by most of the manufacturing firms in India,like Maruti Suzuki India ltd has implemented all of them like they share all their information with their suppliers regarding everything ranging from sales forecasting to change in customer prefernce.They treat their suppliers as a part of the organization not as a separate identity because if they will treat their suppliers as a separate entity,then their suppliers might feel rejected or might feel that they can be thrown out of the contract any time,and that would lead to the various problems like delay in shipment of parts etc.

ELEMENTS OF SCM

ELEMENTS Customers Forecasting Design Capacity planning Processing Inventory Purchasing Supliers Location Logistics

TYPICAL ISSUES Determining what product and services customer wants. Predicting the quantity and timing of customer demand. Incorporating customers, wants, manufacturability, and the time to market. Matching supply and demand. Controlling quantity and scheduling work. Meeting demad requirements while managing the costs of holding inventory. Evaluating the potential suppliers, supporting the needs of operations. Monitoring suppliers quality, on time delivery, flexibility :maintaining relations. Determining the location of the facilities. Determing how to best move the information and materials.

SUPPLY CHAIN UNCERTAINITY FACED BY INDIAN MANUFACTURING FIRMS PRIOR TO INTEGRATION OF SC AND IT The goal of a supply chain is simply to respond to any kind of customer demand without creating excess costly inventory, but prior to integration of IT with supply chain most of the manufacturing firms were facing uncertainties due to different factors which I would discuss. There are some negative impacts of uncertainty and that are Lateness in the delivery of order Incomplete order which would lead to the strained relations between suppliers and manufacturers. Various factors that contributed to the uncertainty in Indian manufacturing firms are Inaccurate demand forecasting which results from lack of information sharing between suppliers and manufacturers and also from lack of point-of-sale data which can be made available through the use of IT. Long variable lead time which was due to various factors like the non availability of raw material or due to other factor like strike in the firm and that results in delay of the delivery of finished good and increased lead time. Late deliveries were due to the lack of communication between suppliers and manufacturers.

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Incomplete shipments were also due the lack of communication between the suppliers and manufacturer and also due to lack of information sharing between the two. Product changes. Batch ordering. Price fluctuation and discounts. Inflated order also caused uncertainty because if demand is suddenly increased then the suppliers wont be able to supply the raw materials to the manufacturer and because of that the manufacturer will not be able to produce the finished good on time and those results in loss of sale opportunity. BULLWHIP EFFECT

Another problem that was faced by the Indian manufacturing firms due the lack of use of information technology was the bullwhip effect. This problem was faced in India mainly by the denim manufacturing firms prior to the integration of their supply chain with IT, we all know the objective of supply chain management is to provide a high velocity flow of high quality, relevant information that will enable suppliers to provide an uninterrupted and precisely timed flow of materials to customers. However, unplanned demand oscillations, including those caused by stock outs, in the supply chain execution process create distortions which can wreck havoc up and down the supply chain. There are numerous causes, often in combination that will cause these supply chain distortions to start what has become known as the Bullwhip Effect While the devil is usually buried in the details, as is the case here, the most common general drivers of these demand distortions are: Customers Promotions Sales Manufacturing Policies Processes Systems Suppliers This unplanned for demand results in a disturbance or lump of demand, which may be a minor blip for any one customer, oscillates back through the supply chain often resulting in huge and costly disturbances at the supplier end of the chain. Often, these demand oscillations will launch a mad scramble in manufacturing with the need to acquire and expedite more raw materials and reschedule production. This bullwhip effect was faced mainly by the denim manufacturing firms in India prior to the integration of supply chain and IT, But this is the kind of problem can be faced by any manufacturing firm whether its FMCG firm or fertilizer firm because occurrence of this effect depends mainly on the information sharing between the partners of the supply chain. Even though, The Bullwhip Effect has in the past been accepted as normal, and in fact, thought to be an inevitable part of the order-to-delivery cycle. Yet, the negative effect on business performance is often found in excess inventories, quality problems, higher raw material

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Costs, overtime expenses and shipping costs. In the worst-case scenario, customer service goes down, lead times lengthen, sales are lost, costs go up and capacity is adjusted.Therefore, from here we can conclude that an important element to operating a smooth flowing supply chain is to mitigate and preferably eliminate the Bullwhip Effect. CAUSES OF BULLWHIP EFFECT IN INDIAN MANUFACTURING INDUSTRY It is very important to understand the causes of bullwhip effect in order to take corrective step, certain factors that I found out from the studies of Indian manufacturing firms are Sporadic sales promotionsMany Indian companies that conducted sales promotions that effect current inventory and the supply pipeline did not understood the impact, on a quantitative and qualitative basis, of what their sales promotion policies and practices actually do. After gaining a complete and accurate understanding of what sales promotions do for you vs. what sales promotions do to you, most companies were left with the need to answer the question, What sales promotion policies and practices should we change? A common complaint from the manufacturing side of the business, and a common reason for severe demand distortions that cause supply chain oscillations, were Unforecasted and unknown sales promotions. These unplanned for sales promotion events ripple throughout the supply chain creating excess costs which border on the incalculable. Sales incentive plansSales targets,quotas and commission accelerators when applied to an extended quota period, such as three months, they often caused demand distortions. Management needs to examine the rationale for sales incentives to be based on shorter-intervals rather than three months or longer. Typically, shorter measurement periods promote a smoothing of demand resulting in decreased ordering lumps resulting in a dampening of the Bullwhip Effect. False order and subsequent cancellations

The two common cause of false order that were found were1) The customer does not have confidence in the ability of the supplier to rapidly and reliably supply product. In other words, the customers do not believe that supplier will ship their orders on-time. As a result, customers will hedge by placing higher than projected demand on the manufacturer in the hope they will receive what they need, when they need it and then, when product availability is considered satisfactory, cancel the balance of future orders. These false orders often result in excess purchased material in inventory and in the pipeline as well as underutilized capacity. 2) Sales personnel who will not meet their quota for a time period that would accelerate commissions and qualify them for a bonus, will often have added or Change orders placed by a cooperative customer to achieve quota. The Customer in turn may later cancel, or return, part or all of the order, as well as Expect some concessions and/or special treatment from the salesperson in the Future for providing the service.

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Transportation incentivesTransportation discount incentives for volume orders will often cause customers to accumulate orders and then release lumps of demand. After thoroughly examining the impact that this incented distortion has on hampering your own supply chain planning capabilities, and the resultant associated costs, it may be time to examine your freight incentive practices. Trust deficit between supplier and manufacturerWith distributors often leery of a manufacturers ultimate intentions, especially with the possibility the distributor will be removed from the sales chain, and, the manufacturer selling directly to end-users, there is no desire to frequently share customer volumes, demand patterns and inventory positions. On the other hand, this mistrust contributes to demand oscillations, stock outs, higher inventories and lost sales for the manufacturer and distributor. Developing a workable and effective solution is essential. For whatever individual or combination of causes that create demand surges and oscillations, these lumps of demand explode out through your supplier network and their supplier network often extending leadtime due to unexpected, and often false, increases in demand. Then, the supplier network may not be able to get raw material in a short enough lead time which reverses in the supply chain as it causes theirs and your delivery lead time to lengthen. Then, the product manufacturer tells their distributors who tell their dealers that leadtime have increased due to supply problems. The Bullwhip Effect is now traveling the other way - - down the supply chain. And, it may get worse with another Bullwhip Effect going up the chain again as longer lead times cause customers replenishment planning systems to kick-out new, and very often, false demand for future supply coverage. This new surge in demand often causes decisions to be made that will increase capacity unnecessarily as the Demand ultimately dissipates. As unnecessary demand variability complicates the supply chain planning and execution processes the following undesirable effects increase in their severity as they negatively impact operating performance. Schedule variability increases Capacity is overloaded and/or under-loaded Cycle times lengthen Working and safety stock inventories increase Overall costs increase Customer service levels decrease Sales and profits decrease

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BULLWHIP EFFECT DIAGRAM

INFORMATION TECHNOLOGY: A SUPPLY CHAIN ENABLER Information links all aspects of supply chain and the various uses of IT that had been made by the Indian manufacturing firms are E-businessReplacement of physical business processes with electronic Ones. Electronic data interchangeA computer-to-computer exchange of business documents. Bar code and point of sale-

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Data creates an instantaneous computer record of a sale. Radio frequency identification (RFID)Technology can send product data from an item to a reader via radio waves. InternetAllows companies to communicate with suppliers, customers, shippers and other businesses around the world instantaneously. Build-to-order (BTO)Direct-sell-to-customers model via the Internet; extensive communication with suppliers and customer.

RFID FLOWCHART RFID IMPLEMENTATION IN SUPPLY CHAIN ENVIRONMENT There is little question that RFID is fast becoming a critical component in the new world of supply chain management, especially in fast growing Asian economies. This is especially so for Asian companies that do import and export business with large Western nations such as the United States and greater Europe. However, even as RFID is necessary, it is important to

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determine carefully just what needs to be done, and who can help make RFID a success within the company. And what Indian manufacturing companies have done especially Tata motors, Mahindra & Mahindra tractors ltd and Maruti Suzuki India ltd. Increasingly, India is fast becoming the new automotive region, given that manufacturing and labor costs are far lower than the Europe and USA. For example, region-specific models of Mahindras XUV 5oo are manufactured in India, while Volkswagen and Skoda now has shared manufacturing in China, catering specifically to the mainland Chinese market with the popular VW Passat and Skoda Octavia (and now Superb) models. Even mainstream Japanese car manufacturers are relocating some of their manufacturing of region-specific models (such as Altis and Corolla) to lower-cost locations such as India. Some manufacturers have used RFID to keep track of the most critical (and sometimes most expensive) item of a car, the engine block. RFID tagging can help reduce misplaced engines (which must be scrapped due to the sensitivity of such products). It is possible that RFID tagging can become important in keeping track of major parts within a car, including the drive train assembly, in the near future.

APPROACH FOLLOWED BY INDIAN FIRMS IN APPLYING RFID Before implementing RFID, it is important to conduct a feasibility analysis of the supply chain environment. Setting out to do a conceptual model, with the right definitions, you should then analyze the process within your entire supply chain (all the way to your ultimate customer and include all stakeholders). After creating a budget with an invitation to your vendor for demonstrations and any small scale tests, you need to conduct an analysis of your sites, and then have some of your personnels to gauge the usability of the RFID system. You should attempt to launch your RFID installation in phases, with a test or pilot site, running for perhaps a reasonable length of time, to iron out any kinks in the system. Once you are assured that it will work enterprise-wide, then roll out the system to the entire site. It is also important to re-visit every step of this process of implementation, to ensure that you can improve or tweak the system as necessary. This is what is done by major Indian automotive manufacturing firms in order to compete at the world stage.

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EDI (ELECTRONIC DATA INTERCHANGE) Various EDI services utilized by the Indian manufacturing firms specially the giants like Tata motors ltd., M & M etc are1) Transaction management. 2) On demand support. 3) Supply chain community management.

These services were used by the Indian manufacturing firms to electronically connect the enterprise without incurring the costs associated with software and personnel. This provides services ranging from hostel translation to enabling the entire supplier communities and it also streamlined their supply chain and maximized the effectiveness of their trading partner. These services comes in various categories but can be customized according to the need of specific companies and it depends on number of factors like Current extent of community integration. Level of internal integration. Number of trading partners a company has at a particular moment. Complexity of business processes. Current EDI infrastructure. TRANSACTIONAL MANAGEMENT Transaction Management services offer companies the ability to completely outsource all aspects of their EDI operations.

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ON DEMAND SUPPORT On Demand Support services are designed to supplement an organizations existing infrastructure and personnel. Whether you need to quickly onboard new customers or simply need coverage for peak processing times.

SUPPLY CHAIN COMMUNITY MANAGEMENT Supply Chain Community Management services are designed help organizations expand their trading partner communities through the use of cost effective, easy-to-use, web-enabled solutions.

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BENEFIRTS THAT INDIAN FIRMS HAVE REAPED AFETR SC INTEGRATION WITH IT 1) Information sharing among supply chain members has helped in Reducing bullwhip effect. Helped in detecting problem at the earliest. Helped the companies in giving faster response. Helped the firms in building trust and confidence with their suppliers. 2) Collaborative planning, forecasting, replenishment, and design has helped in Reducing bullwhip effect. Lower costs (material, logistics, operating, etc.) Helped in improving capacity utilization. Helped in improving customer service levels. 3) Coordinated workflow, production and operations, procurement Improved production efficiencies. Faster response to any kind of uncertainty. Improved service levels. Less time in making product available in the market. 4) Adopting new business models and technologies has helped in the following Helped in the penetration of the new markets. Helped in the creation of the new product. Helped in improving the efficiency. Helped in the mass customization of the product. COLLABORATIVE PLANNING, FORECASTING, AND REPLENISHMENT (CPFR) This is the Process where two or more companies in a supply chain synchronize their demand forecasts into a single plan to meet customer demand. It helped the companies in electronically exchanging Past sales trends. Point of-sale data. On hand inventory.

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Scheduled promotions. Forecasts.

SUPPLY CHAIN MANAGEMENT SOFTWARE USED BY THE INDIAN FIRMS 1) Enterprise resource planning (ERP) 2) Process control and SCOR. ENTERPRISE RESOURCE PLANNINGIts software that integrates the components (functions) of a company by sharing and organizing information and data. PROCESS CONTROL AND SCORThis is used not only for manufacturing operations but can be use for any kind of processes. SCORIts a cross industry supply chain diagnostic tool maintained by the Supply Chain Council.

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SCOR MODEL USED BY INDIAN FIRMS

KEY PERFORMANCE INDICATORS IN A SUPPLY CHAN 1) Inventory turnover ratioCost of goods sold/Average aggregate value of inventory 2) Total value (at the cost) of inventoryAverage aggregate value of inventory=(average inventory for item i)(unit value for item i). 3) Days of supply=Average aggregate value of inventory/(cost of goods sold)/(365 days) Let us take an example of maruti Suzuki ltd company in understanding the KPISLast year the cost of goods sold for MS was $452 million. The company had the following average value of production materials and parts, work-in-progress, and finished goods inventory Production materials and parts $4,629,000 Work-in-progress $17,465,000 Finished goods $12,322,000 Total average aggregate value of inventory $34,416,000 The company wants to know the no. of inventory turns and days of supply being held in inventory. SOLUTION) Inventory turns=cost of goods sold/average aggregate value of inventory =$425,000,000/$34,416,000 =12.3 Days of supply=Average aggregate value of inventory/COGS/(365 DAYS) =$34,416,000/(425,000,000)/((365)

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Days of supply=29.6 VARIOUS MODELS OF IT USED BY INDIAN MANUFACTURING FIRMS IN SYNC WITH SUPPLY CHAIN Various models used by Indian firms in sync with supply chain in order to compete with their rival firms and also to improve their performance in terms of cost, lead time etc are ERP(Enterprise resource planning) BPR(Business process reengineering) E-procurement ERP(Enterprise resource planning) In the past many companies have unsuccessfully tried to apply ERP but have failed miserably as their performance didnt improve a bit and one of the main reason I think is that the Selecting and implementing a new ERP system, and the process changes that go with it, is unquestionably a complex undertaking. Regardless of your size and perceived resources, an ERP implementation is not something that should be approached without a great deal of careful planning. Among companies that have been through a less-than-fully successful ERP implementation, five reasons for poor results show up consistently: 1) Operating strategy did not drive business process design and deployment. 2) Implementation took longer than expected. 3) Pre-implementation activities were done poorly. 4) People were not well prepared to accept and work with the new system. 5) The cost to implement was much more than what was expected. But, there were some of the Indian firms that implemented ERP successfully and these organizations like MS, Tata motors, M & M demonstrated how we can avoid mistakes in implementing ERP solutions to our company. In implementing ERP solutions to their supply chain most of the giant automobile manufacturing firms in India were very successful compared to the other firms in the same sector as well as other sector because they took a different approach toward applying ERP solutions to their supply chain and from their study I found out that if a company successfully wants to implement ERP software to improve their supply chain they must keep the following points in their mind1) What many manufacturers fail to realize is that extensive supply chain improvement requires that management begin to redefine its business in terms of strategic opportunities. The purpose of ERP technology is to support the business processes that support the companys strategic opportunities. 2) The firms who successfully implemented it understood the fact that there is no magic in ERP software. ERPs benefits are a direct result of effective preparation and implementation, and appropriate use. This seems obvious, but nine out of 10 companies dont get it right the first time around. Expecting a quick fix, silver-bullet solution is a dangerous mindset. 3) No amount of advanced information technology can offset the problem of a flawed business strategy and poorly performing business processes. This area, in particular, is something that ERP software implementers may not fully address because it can slow system deployment.

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4) Define a business strategy that will give you a competitive advantage or, at the very least, make you competitively equal. Then, analyze your current business processes and develop your objectives. 5) Acquire flexible ERP information technology that can accommodate rapidly changing business conditions. The high-velocity flow of information needed to support action up and down the supply chain is a major step forward for most manufacturers. It will be mandatory in the future just to compete, much less stay ahead of, the competition. 6) Have the implementation led by a senior executive who has the authority to make changes happen and happen quickly. Make sure there is a sense of urgency and true accountability for completing preparation and implementation activities on time. Also, until and unless ERP system is completely integrated into day-to-day business operations, it is not likely that it will be beneficial for the organization. If enterprise integration or more advanced supply chain management strategies are to have any chance of complete success it will be due, to a large extent, to the removal of traditional cross-functional barriers. PLAN TO SUCCED IN ERP IMPLEMENTATION Successfully implementing ERP the first time requires a structured methodology that is strategy-, people and process-focused. This is the only Way to manage the risk effectively. A good methodology covers all the bases, but when the unexpected pops up, as it usually does, you will be prepared to handle these exceptions without severe negative consequences. One very common mistake is not having your employees prepared to use the new processes and support system. The consequence here can range all the way to total failure, but they are avoidable. Evaluate your business strategy and ERP plan before you commit to software acquisition and installation. Doing it right the first time is the only cost-effective way to go. Many people out there wish they had paused to evaluate their direction. The following questions do not cover every possible contingency, but should be helpful to stimulate thought and discussion How do we want to run our business? What business problems need to be resolved? Do we know and understand our priorities? Do we fully understand our as-is condition versus our could be condition? Have we carefully defined an action plan for pre- implementation preparation activities? What tasks will be accomplished and when? What are the missing links in our current system and our software of choice? What are the real costs, benefits and timetable going to be? Do we have an executive level ERP champion to provide the necessary link to the top management? Who will implement ERP and make it work? ERP and supply chain management systems implementations are, in fact, projects without an end. After all, the supply chain is, to a large extent, the Very life blood of a manufacturing company. For the well-prepared, new

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supply chain management systems based on ERP have become significant Competitive differentiators. Implementing ERP can become a mind-altering experience for those involved. Following a sound methodology Will greatly increase your likelihood of success the first time. Yet, it will not guarantee your success. Only you can do that. BPR (BUSINESS PROCESS REENGINERING) BPR is nothing but the radical change and what constitute dramatic change are the overhaul of organizational structures, management systems, employee responsibilities and performance measurements, incentive systems, skills development, and the use of information technology. And in the year 1993 most of the big Indian manufacturing firms realized the importance of BPR in staying competitive in the time of globalization and they also realized that in order to reduce cost and lead time they need to revamp the those processes which are not adding any value to their product. Successful BPR Model can result in enormous reductions in cost or cycle time. It can also potentially create substantial improvements in quality, customer service, or other business objectives. The promise of BPR is not empty -- it can actually produce revolutionary improvements for business operations. As has been shown by M&M and other Indian manufacturing giants. On the other hand, BPR projects can fail to meet the inherently high expectations of reengineering. Recent surveys estimate the percentage of BPR failures to be as high as 70%. Some organizations have put forth extensive BPR efforts only to achieve marginal, or even negligible, benefits. Others have succeeded only in destroying the morale and momentum built up over the lifetime of the organization. Many unsuccessful BPR attempts have been due to the confusion surrounding BPR, and how it should be performed. Organizations were well aware that changes needed to be made, but did not know which areas to change or how to change them. As a result, process reengineering is a management concept that has been formed by trial and error -- or in other words practical experience. As more and more businesses reengineer their processes, knowledge of what caused the successes or failures is becoming apparent. EMERGENCE OF BPR IN INDIAN MANUFACTURING INDUSTRY This was the concept which was developed by Dr. Michael Hammer, James champy, and Thomas davenport, according to Dr. Michael Hammer BPR is the fundamental rethinking and radical redesign of the business processes to achieve dramatic improvements in critical contemporary measure of performance, such as cost, quality, service and speed. This concept was introduced in India by M&M in the year 1993 when they applied this concept at their Igatpuri plant to improve the performance of their plant which was going through a very bad phase at that time in terms of expenses, high cost, low productivity etc. I would be giving a case study related to the implementation of BPR in the supply chain by the M&M at their Igatpuri plant and the after effects of that implementation.

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COMMON STEPS TAKEN BY INDIAN MANUFATURING FIRMS IN IMPLEMENTING BPR Project phases required for successful BPRPhase 1: Begin Organizational Change Phase 2: Build the Reengineering Organization Phase 3: Identify BPR Opportunities Phase 4: Understand the Existing Process Phase 5: Reengineer the Process Phase 6: Blueprint the New Business System Phase 7: Perform the Transformation These were the common steps used by most of the Indian manufacturing firms in implementing BPR in their supply chain to make their supply chain more effective against any kind of competition and also to reduce cost, increase customer service level etc. Phase 1: Begin Organizational Change Activities included in this phase were as follows Assess the current state of the organization. Explain the need for change. Illustrate the desired state. Create a communications campaign for change. The first step is to take a long, hard look at how the organization operates. The focus of this examination is on the operating procedures and the bottom-line results that are generated by them. The purpose of performing the analysis described below is to determine whether dramatic change by doing BPR is really necessary. It may be that only marginal change (the result of Continuous Process Improvements, Total Quality Management, and other similar programs) is needed -- which would expose the change initiative and the organization to much less risk. Aspects of the business that need to be evaluated are: how things are currently done, what changes may be occurring, and what new circumstances exist in our business environment. Next, a look at how certain operating procedures within the organization have caused or will cause irreparable damage to the companys livelihood. What is the source of the organizations concern? Maybe the demands of the marketplace are shifting. Perhaps competitors have made significant advancements in products and services. Regardless of the reasons, it should be clear whether or not the organization, in its current state, is able to meet the needs of the markets it serves. The consequences of inaction should be identified and well understood. In most cases, these consequences are the loss of jobs by shutting down portions of the business, or perhaps the entire business. Finally, the proper future direction of the organization should be decided. The future "vision" of how the business must operate will serve as a clear and concise guide with measurable goals for employees to focus on. If an organization wishes to change the way it operates, it must turn to its people to make it happen. People are the agents of change. Creating business plans and strategies are important, but they are only tools to guide the actions of people. Because BPR can potentially require significant changes throughout an organization, it must begin with a communications campaign to educate all those who will be impacted by this

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change. Communication to all levels of personnel must remain active from start to finish to keep everyone involved and working towards a common goal. Without a common understanding about what is happening, confusion and uncertainty about the future can result in resistance strong enough to stop any reengineering effort. BPR is most effective when everyone understands the need for change, and works together to tear down old business systems and build new ones. In order for change to be embraced, everyone must understand where the organization is today, why the organization needs to change, and where the organization needs to be in order to survive.

Phase 2: Build the Reengineering Organization

Activities involved in this phase were as follows Establish a BPR organizational structure. Establish the roles for performing BPR. Choose the personnel who will reengineer. An infrastructure must be established to support reengineering efforts. Although this phase consists of only a few tasks, it has a tremendous impact on the success of a BPR endeavor. Who are the people that will be chartered to reengineer the business? What will their responsibilities be? Who will they report to? These are the questions that must be answered as the reengineering staff is gathered together to communicate, motivate, persuade, educate, destroy, create, rebuild, and implement. One of the most important members of the reengineering effort is the executive leader. The leader must be a high-level executive who has the authority to make people listen, and the motivational power to make people follow. Without the commitment of substantial time and effort from executive-level management, most BPR projects cannot overcome the internal forces against them and will never reach implementation. A process owner is responsible for a specific process and the reengineering effort focused on it. There should be a process owner for each high-level process being reengineered. Allocating the responsibility of a process to a specific person ensures that someone is in charge of how that process performs. Process owners are usually appointed by the executive leader. The process owner convenes a reengineering team to actually reengineer his or her process. The team dedicated to the reengineering of a specific process should be made up of current insiders, who perform the current process and are aware of its strengths and weaknesses, along with outsiders who can provide objective input to spark creative ideas for redesign. The team should be small, usually five to ten people. Since they will be the ones who diagnose the existing process, and oversee the redesign and implementation, they should be credible in their respective areas. This qualification plays an important role in reducing the resistance by company personnel to the new process.

Phase 3: Identify BPR Opportunities

Activities involved in this step were as follows Identify the core/high-level processes Recognize potential change enablers

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Gather performance metrics within industry Gather performance metrics outside industry Select processes that should be reengineered Prioritize selected processes Evaluate pre-existing business strategies Consult with customers for their desires Determine customer's actual needs Formulate new process performance objectives Establish key process characteristics Identify potential barriers to implementation

In this phase, we begin to break away from normal patterns of identifying business opportunities. We start by dividing the entire organization into high-level processes rather than the usual vertical business areas such as marketing, production, finance, etc. These processes, usually less than a dozen, are the major or core processes of the organization. This activity is not a time consuming task, but it is difficult because it requires a shift in how we think of ourselves. One goal here is to identify the process boundaries (where the process begins and where it ends), which will help set the project scope for those processes that are to be reengineered. In many cases, seeing the company from the customers point of view can help identify what these high-level processes might be. At this point, it is helpful to begin thinking about potential change levers which may lead to dramatic changes in the organizations processes. Change levers usually will fall under one of three categories: the use of information, the use of information technology, and human factors. What new information is available and easily accessible to the organization? What new technologies have recently been introduced, or are on the horizon, that can change how businesses and customers interact? What new ways of structuring cross-functional work teams, compensation systems, and incentive methods have proven to be effective in improving operations within other organizations? In many instances, a modification in one of these areas requires changes in the other two areas to be the most effective. Once the major processes have been defined, we need to decide which of our high-level processes needs to be reengineered. The most objective and accurate way is to compare the performance of our high-level processes, identified earlier, with the performance of our competitors as well as organizations outside of our industry. Even if we outperform our direct competition, there may be companies in other industries which may be much more effective in performing a similar task -- such as order fulfillment or product development. If we fulfill orders in six months, while a competitor fulfills orders in two weeks, we may consider this a process that needs to be reengineered. What we are looking for here are overall, bottom-line performance metrics for the high-level processes that will help us select which of these processes to reengineer. Typically, organizations use the following three criteria: Dysfunction (which processes are the most ineffective), Importance (which processes have the greatest impact on our customers), and Feasibility (which processes are at the moment most susceptible to accomplish a successful redesign, or which ones are the "low hanging fruit" as many experts call them). Picking the "low hanging fruit" can show quick success and help build the much needed momentum and enthusiasm at all levels of the organization. Prioritizing the processes we have chosen to reengineer guides us in scheduling the order we will reengineer these processes.

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Going after the highest priority process first, we assess the preexisting business strategy which governed its component tasks. Most likely, this existing business strategy is not focused on driving a process; therefore, we will have to define a new process strategy to reflect our new strategic goals for the process. Process customers are an important source of information to help set the new direction. We must consult with them to not only discover their desires, but also to find out what they actually need by watching what they do with our output. Process goals and objectives can be determined by combining customer needs with competitor benchmarks and "best of industry" practices (metrics on the best performers of a similar process in other industries). In addition to goals and objectives, we need to complete the conception of the new process by identifying key performance measures, key process characteristics, critical success factors, and potential barriers to implementation.

Phase 4: Understand the Existing Process

Activities involved in this step were as follows Understand why the current steps are performed Model the current process Understand how technology is currently used Understand how information is currently used Understand the current organizational structure Compare current process with the new objectives Now that we know which process to reengineer, we need to take a look at why we currently perform the process the way we do. Understand is a key word here. We may not need to scrutinize every detail of how we are performing the process -- this effort has the potential to go on indefinitely, sometimes referred to as analysis paralysis, which can weaken the momentum needed to carry the project all the way to implementation. What we need to do is understand the underlying reasons why the existing process is carried out the way it is, so that we can question those assumptions during our reengineering sessions later on. When we have the new process objectives clearly defined (in Phase 3), we can measure our existing process in terms of the new objectives to see where we are and how far we have to go. Modeling the current process is an important part of this phase. It not only helps us to better understand the existing process, but also helps with planning the migration from the old to the new process and executing the physical transformation of personnel, organizational structures, information requirements, and how technology is used. Information that should be included in the models are process inputs (such as task times, data requirements, resources, demand, etc.) and process outputs (such as data outputs, cost, throughput, cycle time, bottlenecks, etc.). Understanding how and why the current processes use information is also important. Do staff members have access to essential information? Are some business areas wasting time and effort by creating duplicate information when it can be shared across organizational boundaries? Why is technology used to support some tasks and not others? How effective are the current interfaces? Are they easy to use, or are they counter-intuitive and thus inhibit the effectiveness of current tasks? In what way does the existing process take advantage of technology, and in what way has technology imposed artificial restrictions? We need to end up with an estimate of the current cost, robustness, and functional value of each technology and information systems currently being used.

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Phase 5: Reengineer the Process

Activities involved in this phase are as follows Ensure the diversity of the reengineering team Question current operating assumptions Brainstorm using change levers Brainstorm using BPR principles Evaluate the impact of new technologies Consider the perspectives of stakeholders Use customer value as the focal point During this phase, the actual "reengineering" begins. Weve moved from strategy and analysis phases into the redesign phase. The Reengineering Team that was formed to take part in the reengineering sessions should consist of designers and implementers, including people well versed in technology. These team members should come from both inside and outside the existing process. The "inside" perspective may reveal information about the existing process that was not uncovered in Phase 4. Having people who will be the future process owners, or those responsible for the new process, is a critical component of the Team. Including the future owners will help to ensure that the reengineered process succeeds once it is implemented. Equally important is the "outside" perspective of someone who will look at the process with a "fresh eye" and raise questions about operating assumptions that may not be obvious to the insider who might be too close to the process to see this. Lastly, a technologist will provide insight as to how technology can be applied in new and innovative ways. In other words, the technologist will help to visualize how the process can be performed outside the boundaries of the current implementation. Including both outsiders and technologists on the team will help spark "out-of-box" thinking (thinking creatively above and beyond the current restrictions - the walls of the box). Having developed a good understanding of how the existing processes work in the previous phase, it is now necessary to question the operating assumptions underlying the processes. Is there some (outdated) historical reason why a process has been performed a certain way? Are there customer requirements that dictate the steps in a process? Many times the operating assumptions can be thrown out and new ones developed. However, it is important to evaluate the impact the assumptions have outside the process in question.

BPR PRINCIPLES THAT WERE FOLLOWED BY INDIAN MANUFACTURING FIRMS

Several jobs are combined into one. Workers make decisions. The steps in a process are performed in order. Processes have multiple versions. Work is performed where it makes the most sense. Checks and controls are reduced. Reconciliation is minimized. A case manager provides the single point of contact.

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Hybrid centralized and decentralized operations are prevalent.

Phase 6: Blueprint the New Business System

Activities involved in this step are as follows Define the new flow of work Model the new process steps Model the new information requirements Document the new organizational structure Describe the new technology specifications Record the new personnel management systems Describe the new values and culture required Blueprints are detailed plans required to build something in accordance with the designers intentions. In BPR, blueprints must be created to identify all the necessary details of the newly reengineered business system and ensure it will be built as intended. This phase of the project takes the reengineered process developed in the previous phase, and provides the details necessary to actually implement it. Blueprinting involves modeling the new process flow and the information required to support it. Just as we modeled the "as is" process and information requirements in Phase 4, we need to create "to be" models to illustrate how the workflow will be different. The information models, or data models, will indicate where the new process will use information that is shared across functional areas of the business. The blueprints should also contain models of the redesigned organizational structure. Instead of the traditional organization chart, a different kind of chart is needed. This chart will show the new process flow along with the process team members, the process owners, the case managers, the process facilitators. The chart should also indicate parts of the organization which interact with the process personnel. In addition, detailed technology specifications required to support the new process should be defined. Although minor changes, or fine tuning adjustments to the technical configuration will probably occur during the implementation phase, an initial physical description of the technologies used and their physical specifications should be recommended in this phase, to set the stage for rapid application development. Included in the blueprints should be the new management systems and values or belief systems of this redesigned area of the business. New management strategies, along with new performance measurements, compensation systems, and rewards programs should be outlined. The reengineered process may require a change in the values or belief systems of the company. The redesign may require an entirely different culture, or atmosphere, than what is prevalent in the organization today. It is critical to have these areas, and their responsibilities, defined as we go into the implementation phase.

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Phase 7: Perform the Transformation

Activities involved in this phase are Develop a migration strategy Create a migration action plan Develop metrics for measuring performance during implementation Involve the impacted staff Implement in an iterative fashion Establish the new organizational structures Assess current skills and capabilities of workforce Map new tasks and skill requirements to staff Re-allocate workforce Develop a training curriculum Educate staff about the new process Educate the staff about new technology used Educate management on facilitation skills Decide how new technologies will be introduced Transition to the new technologies Incorporate process improvement mechanisms Now we are ready to transform the organization. We have communicated, strategized, analyzed, reengineered, and blueprinted our ideas for the new process. This is where all of the previous efforts are combined into an actual business system -- something we can see and feel and use to enable our organization to meet the market demands of today and tomorrow. The first step in transforming the organization is to develop a plan for migrating to the new process. We need a path to get from where the organization is today, to where the organization wants to be. Migration strategies include: a full cutover to the new process, a phased approach, a pilot project, or creating an entirely new business unit. An important point to consider is the integration of the new process with other processes. If only one process is reengineered, then it must interact with the other existing processes. If multiple processes are slated for reengineering, then the new process must not only integrate with existing processes, but also with the newly reengineered processes that will come on line in the near future; therefore, the implementation of the new process must be flexible enough to be easily modified later on. Successful transformation depends on consciously managing behavioral as well as structural change, with both sensitivity to employee attitudes and perceptions, and a tough minded concern for results. BPR Implementation requires the reorganization, retraining, and retooling of business systems to support the reengineered process. The new process will probably require a new organization, different in structure, skills, and culture. The new management structure should result in the control paradigm being changed to the facilitation paradigm. The new process team structure should result in the managed paradigm being changed to the empowered paradigm. Once the new structures are established, we should map tasks in the process to functional skill levels, and ultimately to workers. Transforming the workforce will require an array of activities. It begins with an assessment of the current skills or capabilities of the workforce to include soft skills, operational skills, and

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technical skills. This inventory may require personal evaluations (including areas of interest), peer evaluations, and supervisor evaluations. Feedback should be provided to all personnel to ensure accuracy of current skills and interests for all staff. Armed with the new process skill requirements and a current skills inventory, the gaps can be assessed. Is the new process feasible with the current skill set? Which are the areas to focus on to enhance personnel skills to meet the requirements of the new process? An education curriculum needs to be established to get all employees educated on the business and, most important, on how their jobs relate to the customer. An educational pyramid is an effective way to transfer knowledge of team building, self mastery, and subject matter knowledge. Systems training is essential to understanding the use of new information systems and how to take advantage of their capabilities. Process training may be needed to help employees think beyond a linear process to a more holistic interdependent process. Facilitation training for management is critical to develop their abilities to listen, allow mistakes, handle disputes among process experts, and transition to a coach/facilitator role. Education may be necessary for Total Quality Management (TQM), Statistical Process Control (SPC), or Continuous Process Improvement (CPI) if these mechanisms are designed into the new processes. Finally, a structured on-the-job training (OJT) program is instrumental in providing continuity of the new process during periods of personnel turnover or attrition. As with any dramatic change, people will have personal difficulties, to varying degrees, with the paradigm shift that has taken place. Almost all new process implementations are surrounded by confusion, frustration, and sometimes panic. The best transition strategy is one that minimizes, as much as possible, the interference caused to the overall environment. Attempts should be made to keep the new process chaos to a controlled level, to maintain the focus of the reengineering team and the faith of the employees. Transforming information systems to support the new process may involve retooling the hardware, software, and information needs for the new process. One approach to this transition could be a controlled introduction. The method would ensure that each part of the system is operational for a segment of the business before going on to the next module to implement. Although the risk may be low while the bugs in the new system are ironed out, it may be difficult to integrate the hybrid old/new systems in a step-wise manner. The flash cut approach is where the entire system is developed in parallel to the existing system, and a complete transition occurs all at once. This may put the organization at a higher risk if the systems do not function properly at first, but it is the more common approach due to the "all-or-nothing" nature of BPR. Most reengineered processes function in an entirely different manner than existing processes; thus, a step-wise introduction would, most likely, not be fully functional until all steps were introduced anyway. An important reason to justify the flash cut approach is that the reengineering benefits can be realized much sooner than with a controlled introduction.

E-PROCUREMENT
Technology has enabled the introduction of faster, more responsive and flexible ordering, manufacturing and distribution systems, which has diminished even further the need for warehouses to be located near to markets that

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they serve. Just as desktop computing in the 1980s and 1990s served as catalyst to the reengineering movement, the Internet and WWW can be considered as the catalyst for the radical change in business context and business process viewpoint what Keen and McDonald term the e-process perspective. (Kim & Ramkaran, 2004) When a company uses the Internet to shorten order-to-delivery times, improve reliability, and broaden product choice, its customers respond, increasing price realization, market share, or both (Christodouleas, 2001: 5). BMW, for example, currently requires about 12 days. In the near future, they plan to reduce further order-to- delivery time to ten days. Today, instead of taking more than four years to design a new model, manufacturers take less than 18 months. Tata motors, for example, plans to roll out one new model every 6 months. (Benko and McFarlan, 2003) General Motors, ford, Tata motors and M & M are planning to launch their online procurement company. This was seen as a way to conduct auctions for parts, organize a global purchasing network and return a profit. However, the results have been less than expected and suppliers have resisted putting sensitive information online. Nevertheless, the system and other similar ventures, remains as an information channel and a facility enabling co-design Of parts. The impact of the Internet on the automotive industry Is a theme that will dominate corporate and investment thinking in the foreseeable future. Business-to-business (B2B) initiatives have the potential to change forever the supply-chain structures that are currently in place and improve the efficiency and information flows that currently exist in this industry. The term "e-business" can be characterized as the support of the several distinct phases of a business transaction through information systems that use the Internet as a communication medium. E-business plays a key role in the function of todays automotive industry. As an increasing number of transactions are carried out online and relationships among industry participants like OEMs and suppliers grow ever more complex with increased interaction between participants of different tiers, E-business is emerging as a necessary tool and enabler of this new business paradigm. For companies in the automotive supply chain, future business success requires a readiness to adapt to the e-business climate and co-evolve with it. One of the most important challenges that have affected traditional purchasing strategies and organization are the solutions, which are provided by modern information technology and the Internet. In just a few years manufacturing companies have invested millions of Rupees in setting up electronic market places. The rapid improvement of technology and its application by business seems to be accompanied by similarly rapid changes in terminology. The use of the term 'electronic commerce' has been supplemented by additional terms such as e-business, e-marketing, ecommerce and more specialist terms such as e-CRM, e-tail and e-procurement. In the theme of ebusiness, e-procurement is regarded as having far greater potential for cost savings and business improvements than online retailing or enterprise resource planning systems. A survey of a new economy by the Economist proclaimed that the biggest savings from business-to-business ecommerce are likely to come in procurement. The advents of e-procurement and developments in the procurement behaviors of the OEM's have altered the success equation for every automotive supplier. It will be vital that management quickly begin to focus on strategic sourcing of direct materials. By cutting the time and paperwork out of these transactions, suppliers can improve time-to- market on new products, production lead times and quality. For instance, Ford reengineered employee requisitioning processes in an attempt to save billions of dollars spent purchasing office supplies and filing expense reports. Ford spent an estimated

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$15.5 billion each year on non-production goods and services, making it one of the largest purchasers of such goods worldwide. Until recently, most global firms operated domestic accounts, such as payroll, procurement and logistics systems in every country in which they operated. The Internet has now enabled global firms to centralize these functions. According to the Prime Consulting Group (2002), global firms are optimistic on the level of savings that can be achieved through full implementation of e-procurement strategies. The potential for savings is tremendous. E-Procurement is sometimes referred to as a magic bullet, where the early adopters are stating that the buying process can be improved. However, the new way of doing business demands a long-term serious effort and continuous improvements. new e-procurement technologies will become an important part of supply chain management and that the rate of adoption will accelerate as aggressive adopters share their experience and perceptions of low risk. The actual benefits and risks will determine the speed at which the technology moves from its development infancy to the adoption and the maturity stages. There are some fundamental things the purchasing company wants to achieve when it comes to purchasing. These include reducing the time employees spend looking for a product, service or suitable supplier, reducing the time and cost of administering purchases, reducing cycle times, increasing volume with a few preferred suppliers to get better pricing and other conditions, as well as limiting choices to only a number of pre-qualified suppliers to ensure quality. E-Procurement has a role to play in all of these areas, and the potential gains are huge.

VARIOUS STRATEGIES USED BY FIRMS FOR SC AND IT INTEGRATION

There are different integration strategies used by Indian manufacturing firms for becoming competitive through reduced costs, improved customer service levels, less lead time and better quality after our market was opened in 1991.These different strategic integration were1) SC and BPR integration. 2) SC and ERP integration. 3) SC and E-procurement. 4) SC and information sharing.

CASE STUDY
M&M'S PROBLEM PLANTS In the mid-1990s, India's largest multi utility vehicle (MUV) and tractor manufacturer M&M was facing serious problems at its Igatpuri and Kandivili plants in Maharashtra. The plants were suffering from manufacturing inefficiencies, poor productivity, long production cycle, and suboptimal output. The reason: highly under-productive, militantly unionized, and bloated workforces. The company had over the years been rather lenient towards running the plants and had frequently crumbled under the pressure of union demands. The work culture was also reportedly very unhealthy and corruption was widespread in various departments. Alarmed at the plant's dismal condition, Chairman Keshub Mahindra tried to address the problem by sacking people who allegedly indulged in corrupt practices. M&M also tried to implement various voluntary retirement schemes (VRS), but the unions refused to cooperate and the company was unable to reduce the labor force. During this period, M&M was in the process of considering the implementation of a Business Process Reengineering (BPR) program throughout the organization including the manufacturing units. Because of the problems at the Igatpuri and

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Kandivili plants, M&M decided to implement the program speedily at its manufacturing units. The program, developed with the help of the UK-based Lucas Engineering Systems, was first implemented on an experimental basis at the engine plant in Igatpuri. Simultaneously, an exercise was initiated to assess the potential benefits of implementing BPR and its effect on the unions. M&M's management was not surprised to learn that the unions expressed extreme displeasure at the decision to implement BPR and soon went on a strike. However, this time around, the management made it clear that it would not succumb to union demands. Soon, the workers were surprised to see the company's senior staff come down to the plant and work in their place. With both the parties refusing to work out an agreement, observers began casting doubts on the future of the company's grand plans of reaping the benefits of BPR.
BACKGROUND NOTE Mahindra & Mahindra Ltd. (M&M) was the flagship company of the Mahindra group, one of the top ten industrial houses in India. The company's history dates back to 1945, when two brothers, J.C.Mahindra and K.C.Mahindra, decided to start a business of general-purpose utility vehicles. The brothers formed a company, Mahindra & Mohammed Ltd., in association with their friend Ghulam Mohammed. In October 1947, the first batch of 75 jeeps was released for the Indian market. In 1948, the company was renamed Mahindra & Mahindra Ltd. Over the next few decades, the group promoted many companies in areas as diverse as hotels, financial services, auto components, information technology, infrastructure development and trading to name a few Though M&M had established itself in the markets and was among the leading players in many of the segments it operated in, it realized that some of its businesses were not closely related to its core business. This realization marked the beginning of the biggest change exercise since the company's inception. In 1994, a major restructuring exercise was initiated as part of a BPR program. M&M introduced a new organizational model, in which various divisions and companies were regrouped into six distinct clusters of related businesses, each headed by a president. M&M's core activities, automotive and tractors were made autonomous business units. The other activities of the group were organized into infrastructure, trade and financial services, telecommunication and automotive components. According to company sources, the whole exercise was intended to develop a conceptual map to provide direction for the future growth of various business lines. It was decided that, in future, the group would confine its expansion to the identified thrust sectors. The two main operating divisions of the company were the automotive division, which manufactured UVs and LCVs, and the farm equipment division, which made tractors and farm implements. The company employed over 17,000 people and had six state-ofthe-art manufacturing facilities spread over 500,000 square meters. The plants were situated at Kandivili (MUVs and Tractors), Nasik (MUVs), Zaheerabad (LCVs, Voyager, three-wheelers), Igatpuri (Engines) and Nagpur (Implements and tractors).

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PROBLEMS FACED BY THE COMPANY AT THE IGATPURI AND KANDIVALI PLANTS

Manufacturing inefficiency Low productivity Long production cycle Sub optimal output

REASONS FOR THOSE PROBLEMS

Unhealthy work culture. Corruption was widespread. Militantly unionized workforce. Management lenient and often crumbled under pressure.

DESIGNED IN TWO PARTS 1 PART-Restructuring of M&M

Restructured in six distinct clusters of related businesses as SBU Each headed by a president. Infrastructure. Trade and financial services. Telecommunications. Automotive components. Automotive division(UV, LCV, 3 wheelers) Farm equipments divisions. nd 2 PART-Implementation of BPR at Igatpuri and Kandivili plants Developed with help UK based Lucas Engineering System
st

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Re-engineering the entire layout & processes of working Cellular Manufacturing Multi-tasking through Multi-machine manning Reduction in non-productive Activities Implementation of TPM and Kaizen Formation of 3 cross functional teams Horizon 1: Improvement in existing Product Horizon 2: Upgradation of existing Product Horizon 3: Development of new Product

BARRIERS/CHALLENGES MODEL

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SOFT BARRIERS
People problems Employee and union resistance. Vendors resistance. Fears of downsizing. Several jobs combined into one. Inflexibility of workers. Structure and culture. High corruption. 1st Indian company to go for BPR. Resistance from vendors.

HARD BARRIERS
IT problems. Resource problems. Legal obstacles.

What plant faced afterward was the strike from the workers who went on strike for 5 months. But, management demonstrated that they are firm on their decision to implement BPR in their supply chain and top management decided not to succumb to the demands of vendors and workers but to go ahead with their plan and in this process they sacked corrupt employees and introduced VRS scheme. Afterwards 3 full time teams were formed namely Production related team BPR execution team. Handling unrest team.

DEPLOY
Testing the new improved processes and demonstrated Around 100 officers produced 35 Engines a day as compared to 1200 Employees producing 70 Engines in pre-BPR days. Implementing new improved processes in regular operations of organization

After this there was no stooping for the BPR and it gained the momentum from there on as the union had called of its strike.

BENEFITS REAPED DUE TO BPR

Igatpuri Plant: Employees declined by 400 but productivity went up by 125 Engines per day. Nasik Plant : 125% Improvement in productivity Reduction in Employee costs 1994: 12.4% & 1996: 10.1% Value added per employee increased from 0.3 million to 0.46 million i.e., increase of 53.33 % per employee. Better Inventory control.

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Better order distribution across plants. Online and Transparent access of data. Integrated sales and supply chain.

QUESTIONNAIRE
NAME OF THE COMPANYDESIGNATION1. Input cost has been reduced through supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree 2. Lead time has been reduced through supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree 3. Quality of product has improved due to supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree 4. Customer service has improved due to supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree 5. Throughput has improved due to supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree

Strongly Disagree

Strongly Disagree

Strongly Disagree

Strongly Disagree

Strongly Disagree

6. Information flow across SC has become fast through supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree Strongly Disagree 7. Flow of end product has become smooth and continuous matching consumption due to supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree Strongly Disagree 8. Relationship with suppliers has improved due to supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree Strongly Disagree 9. Forecast has improved through supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree

Strongly Disagree

10.Stock out situation has been reduced through supply chain integration? Strongly Agree Moderately Agree Neutral Moderately Disagree Strongly Disagree

DATA ANALYSIS
As per the questionnaire filled and the data from the internet the following analysis is made

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1) Input cost has been reduced by the supply chain integration?

Strongly agree 3 6 2 17 22 Moderately agree neutral Moderately disagree

There are 34% employee who strongly agrees that the implementation of SC integration has reduced the input cost for the company and other 44% moderately agrees to this So, this clearly shows that the integration of supply chain has a positive impact on the performance of the company in terms of reduced cost

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2)Lead time has been reduced through supply chain integration?

1 8 9 19 13 Moderately agree neutral Strongly agree

As can be seen from the response of the employees for this question, there are 26% employees who completely believes that the lead time has been significantly reduced through the use supply chain integration and also there are 38% employees who moderately agrees to this, so from the overall response of the employees we can safely predict that lead time has been reduced to a good extent through supply chain integration. 3)Quality of product has improved due to supply chain integration?
Strongly agree 8 7 20 4 11 Moderately agree neutral

Improvement in the quality of product is also an important part of the supply chain integration and from the response of the employees with 22% and 44% respectively agreeing strongly and moderately and also 34% are disagreeing on strongly or moderately, it can be predicted that to a good extent quality has been improved through SC integration. 4) Customer service has improved due to supply chain integration?
Strongly agree 4 7 14 4 21 Moderately agree neutral Moderately disagree

Customer service improvement is one of the most important constituent of the supply chain and any improvement in the customer service shows that supply chain is improving and from the pie-chart it can be seen clearly from the response of the employee that customer service level has improved with the supply chain integration as total of 70% of the respondents agrees that the customer service level has improved with supply chain integration.

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5)Throughput has improved due to supply chain integration?

Strongly agree 7 12 8 9 14 Moderately agree neutral Moderately disagree

Throughput shows the amount of product that is being consumed from the total product that you are manufacturing and in one or the other way throughput depends upon the supply chain performance, and from the response of the respondents it can be gauged very easily that 62% of the respondents are either in agreement that the performance has improved or else are neutral, but rest 38% do not agree with the statement that the throughput has improved, but an overall response is that the throughput has improved with supply chain integration. 6) Information flow across SC has become fast and accurate through supply chain integration?
210 16 31 Strongly agree Moderately agree neutral Moderately disagree

Flow of fast and accurate information across the supply chain members is very essential for the health of the supply chain and regarding this question out of the total 50 respondents 94% agrees that information flow has become fast and accurate through supply chain integration. So, it can be safely predicted that supply chain integration has helped in the fast and accurate flow of information though the supply chain members.

7) .Flow of end product has become smooth and continuous matching consumption due to supply chain integration?

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2 1 17 13 17

Strongly agree Moderately agree neutral Moderately disagree

Smoothening of the flow of end product means that the supply is matching consumption and to this question out 50 respondents 30 or total of 60% has responded in affirmative and only 6% have responded negatively. 8) Relationship with suppliers has improved due to supply chain integration?
1 7 9 14 19 Strongly agree Moderately agree neutral Moderately disagree

Relationship with supplier is very important for any manufacturer as both are dependent upon each other and this relationship is very important for the overall performance of the supply chain, and in response to this question out of 50 respondents 33 or 66% respondents have responded in affirmative and only 16% have responded in negative. 9) Forecast has improved through supply chain integration?
0 7 25 18 0 Strongly agree Moderately agree neutral Moderately disagree

Forecast is something which can never be 100% accurate but you can try and get as close as possible to accurate and it accurate forecast depends on many factor like the extent to which information is shared between the members of the supply chain and also on the real time data availability, and in respond to this question out of total 50 respondent 33 or 86% responded have their answers in affirmative and believes that forecast can be improved if supply chain is integrated. 10) Stock out situation has been reduced through supply chain integration?

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Strongly agree 6 15 11 9 Moderately agree neutral Moderately disagree

Stock out is a situation where we are not left with any material to satisfy the need of the customer and it can occur when there is lack of communication between the members of the supply or when members of supply chain do not trust each other, and in response to this question 40% respondents have agreed that stock out situation has improved and 30% disagrees with this statement.

FINDINGS
1. In the wake of increasing competition supply chain integration has become very much essential to keep an organization competitive. 2. Implementation of BPR in supply chain needs lots of efforts and great will power as you can face lots of internal and external resistance. 3. Information sharing among the supply chain member is very important to keep bullwhip effect at bay. 4. Selection of ERP software for a particular organization is made depending on different factors. 5. Communication among the members of the supply chain can be improved through the use of IT. 6. Cooperation among the various members of the supply chain can be improved through the use of IT as it will help in exchange of real time data as accurately as possible across the supply chain members. 7. Trust between the supply chain members which is very essential for the mutual growth of both can also be improved through the use IT as IT would help them in exchanging the data regarding the demand and consumption pattern on real time basis and depending on that supplier can supply the raw material to the manufacturer thus preventing any kind of uncertainty across the supply chain. 8. Uncertainty occurs across the supply chain when there is lack of information sharing among the supply chain members. 9. Lateness in the delivery of the order whether from the supplier side to the manufacturer or from the manufacturer side to the customer or warehouse can be improved by making use of IT. 10. Inaccurate demand forecasting results from the lack of information sharing among the supply chain members and can result in the bullwhip effect across the supply chain. 11.Through the IT suppliers can get access to the international market and manufacturer can also get access to the international market but they also get access to the international supplier, and so this can help in reducing the monopoly of the supplier if a company has only one supplier which is very rare now a days in India.

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12.Long variable lead time which occurs due to conditions like non availability of raw materials
or due to a strike in the firms can be tackled through IT as you can search for some other supplier who can make raw material available to you within in a short span of time. 13.Batch ordering can also be improved through IT as you dont have to go through a long process of placing an order you can simply use net and can send the demand of raw material to the supplier within a very short time interval. 14.IT can help in collaborative planning, forecasting and replenishment. 15.Workflow, production, operations and procurement can be co-ordinated through the use of technology in the supply chain. 16.BPR is a process oriented approach and not a set of predefined sequence.

CONCLUSION
The final conclusion that can be drawn from the material that is presented here is that if an organization wants to remain competitive in todays world they need to make use of IT and they need to develop IT infrastructure it doesnt matter whether they are small firms or large firms. This holds much importance for the automotive manufacturing firms as India is one of the fastest growing country in terms of automobile consumption and with such a huge potential for growth many well known international manufacturing firms are either entering Indian or have already entered India. These foreign companies are already making use of new technologies in their supply chain in order to reduce their because they that all other means to reduce their price have been over and the only option left to reduce their price, improve quality, improve customer service, reduce lead time etc. is to make use of latest technologies in their supply chain. So, I think small Indian firms should also realize this and should make use of latest technologies by developing IT infrastructure as large Indian firms have already done this. Eventhough, the initial cost of implementing ERP and the failure rate is higher firm should go for these because success rate depends upon how well you have braced yourself for these change and to implement BPR and ERP you should carry out an all out inspection of your organization like where your organization is and where you want to take it in the future.

RECOMMENDATIONS
Nothing resonates more strongly with large companies that have hundreds or even thousands of suppliers than the concept of supply chain integration. True integration, often called universal supply chain connectivity, can result in constant improvements in the breadth and depth of the electronic interactions with suppliers, which can ultimately mean increased profitability. Building this universal connectivity can take multiple forms. Though many members of the Fortune 1000 already have significantly integrated with their Tier 1 suppliers, universal connectivity could mean extending that integration to the small and mid-sized, or Tier 2 and Tier 3, suppliers. Or it could mean deepening the level of integration with suppliers that are already electronically enabled by adding new transaction sets or even collaborative business processes to the current platform. Either approach can deliver substantial savings related to decrease manual labor, inventory, logistics, and other supply chain efficiencies. In addition,

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Increased customer satisfaction and a healthier bottom line are certain to be natural by-products of any integration effort. Many companies estimate that increased supply chain efficiency saves millions per year. Non-Exclusive Process A three pronged set of best practices for supplier enablement that can help companies avoid the horror stories of failed integration attempts, angry suppliers, and a combination of low or slow adoption rates. The first practice has to do with process, specifically a non-exclusive process. A non-exclusive process looks at enablement from the suppliers perspective, and includes a heavy dose of planning and project management. Think of this practice as getting the proverbial ducks in a row by developing exact technology guidelines and specifications upfront, while remembering to give suppliers the freedom to integrate using whatever method they want. The only caveat, of course, is that they must comply with the guidelines. Interestingly, successful enablement programs often result in as many as half of the suppliers testing a solution they already have which happens to measure up to such guidelines. However, remember that even suppliers whose existing solutions dont make the mark should be able to choose how they want to become enabled. Group Buy-In There are also a few groups that need to be onboard from the hub company side to ensure the supplier enablement project is successful. The first and most important group to approach resides in the executive suite. To guarantee that an enablement program will truly return its weight in gold, there must be an executive or business sponsor who is keenly aware of the return on investment that universal supply chain connectivity can deliver. In addition, the information technology group must be onboard as they will be intimately involved in the implementation and support of the suppliers. Finally, the individual or group that is most involved with the suppliers must fully endorse the project and be fully engaged. This may be a vice president of merchandising, vendor relations or whoever heads up the buying group within the organization. Getting these individuals on the same page is a critical part of the initial planning phases. Realistic Rollout Plan In addition to securing the buy-off of all involved parties from the hub, developing a realistic rollout plan is also an important part of this non-exclusive process phase. Theres no need to be overly ambitious here. Most organizations can only handle turning on a subset of their suppliers at once, so a phased project plan is likely to be the most efficient and the most effective in the long run. Even though suppliers will be enabled in a phased manner, its still a terrific idea to have a formal, orchestrated kick-off of the entire program. Promote a scheduled Webcast or make it part of a supplier meeting or convention. In fact, make it a big party if possible. This accomplishes several important goals. It lets suppliers know that the hub company is absolutely committed, that this is important to everyones financial health, and that participation from all parties will be a cornerstone of the programs success. Once thats done, its time to roll up the integration sleeves and help the first batch of suppliers get going. Count on some 50% of suppliers wanting to update and test their current set up with your company guidelines. Smaller suppliers may want to look at other options, such as an inexpensive, easy-to-use hosted solution. This is where the second prong of the best practices trio comes in technology options.

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Testing Platform When you consider that an enablement program will typically involve hundreds or even thousands of suppliers that may vary in size from $1 billion in revenue per year to less than $10 million, its no surprise that providing a broad range of technology options is an essential best practice. One of the most essential of those options is a top-notch and easy-to-use testing platform so suppliers can certify their existing solution. Do not underestimate the importance of this. Though many companies believe they know the number of suppliers who have EDI software, they almost always underestimate how many have intentionally kept it a secret. The result is higher than expected demand from hundreds or thousands of suppliers that will be looking to test in a short period of time. In the best-case scenario, the testing platform will let companies confirm sender and receiver identification set-ups. It will test Value Added Network (VAN) information set-up, and will validate transport, syntax, and content. It will also either pass or fail the vendor on compliance. And for those that fail, the testing platform or service will provide the vendor with diagnostic feedback so they can quickly make adjustments and re-test their system successfully. Solution Options For many small and mid-sized enterprises (SMEs), the existing solution will be the fax machine. To minimize resistance, vendors need an easy, inexpensive way to quickly meet your guidelines without causing a big change in behavior. Thankfully, numerous hosted solutions that specifically address the needs of SMEs are available and have been available for some time. The best solutions provide the vendors with a suite of hosted options. The options help high volume vendors to integrate a service directly into their back-end system. Medium and low volume vendors often utilize intelligent Web forms to minimize manual entry wherever possible. And for the slow adopters, services are available that will convert their faxes into electronic data formats on their behalf. In most cases, these services can be utilized with multiple customers over time not just with the hub that causes the initial adoption. Once the enablement program is unveiled, there are several truisms that have emerged regarding suppliers and their adoption rates. Expect around 40% of suppliers to actually sign up early and completely embrace the program. Another 30% will sign up at the last minute. These will be the least problematic groups. Another 20% will complain bitterly about enablement and will struggle to comply or may even attempt to ignore the program. Dont be discouraged. These vendors may not necessarily have a problem with universal supply chain connectivity. More than likely, they are merely the same 20% that always complain, and you probably already know who they are. Then there is the 10% of suppliers that prove the exception to the rule. These are the ones that you may need to deal with separately because of special needs. They may have extremely low volume, for example, where asking a vendor to utilize a solution or service for 3 documents a year just isnt worth it. And that brings us to the third and final best practice maintaining universal supply chain connectivity is a process that never really ends. To maintain a successful program, never think of integration as a one-time event. The third and final best practice would be to think of integration as a journey that involves ongoing, dedicated support of suppliers. It means staying on top of planning for the next enablement event from the perspective of the hub company, helping suppliers stay informed about the necessary requirements, and making sure that technology problems are taken care of swiftly and properly.

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SOURCES AND REFERENCES 1) http://en.wikipedia.org/wiki/supply_chain_management. 2) http://www.spscommerce.com/asset 3) Supply Chain Integration: Challenges and Solutions
By
Edward Sweeney, Dublin Institute of Technology

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