Journal of Information and Operations Management ISSN: 0976-7754 & E-ISSN: 0976-7762, Volume 4, Issue 1, 2013, pp.-340-343. Available online at http://www.bioinfopublication.org/jouarchive.php?opt=&jouid=BPJ0000270

LOGISTICS MANAGEMENT SYSTEMS IN THE INDIAN AUTOMOTIVE COMPONENT SECTOR

CHOPADE B.B.* Department of Commerce, Art, Commerce and Science College, Sonai- 414 105, MS, . *Corresponding Author: Email- [email protected] Received: November 07, 2013; Accepted: December 05, 2013

Abstract- The Indian Auto Component Sector had its tiny beginnings in the 1940s. If the development of this sector is traced in India, it can be secret into three separate phases i.e.  Epoch preceding to the entrance of Maruti Udyog Ltd (1940- 1984).  Epoch after the ingress of Maruti Udyog Ltd till financial liberalization (1984-91).  Phase post Liberalization (1991 onwards). The period previous to the entry of Maruti Udyog Ltd was branded by low knowledge and assured business for most of the auto-component manufacturers who used to deliver to a handful of organisation in the Indian vehicle market like , Automobiles, Tel- co, Bajaj, Mahindra & Mahindra etc. With the ingress of Maruti in the 1980s, the auto auxiliary sector in the country showed a gush in growth. This era witnessed the appearance of a new age group of auto auxiliary manufacturers who were requisite to meet the strict quality values of Maruti's associate Suzuki of Japan. The good show of Maruti resulted in an upswing for the home auto auxiliary sector. It was also during this period that auto mechanism from India began to be exported. Keywords- Component, economic, quality, Automobiles

Citation: Chopade B.B. (2013) Logistics Management Systems in the Indian Automotive Component Sector. Journal of Information and Opera- tions Management, ISSN: 0976-7754 & E-ISSN: 0976-7762, Volume 4, Issue 1, pp.-340-343.

Copyright: Copyright©2013 Chopade B.B. This is an open-access article distributed under the terms of the Creative Commons Attribution Li- cense, which permits unrestricted use, distribution and reproduction in any medium, provided the original author and source are credited.

Introduction The automotive sector pretend mechanism fall under six broad The Indian automotive component sector has shown marvellous product categories according to Automotive Component Manufac- growth over the previous decade. Today it has 480 organisation, tures association (ACMA) [Table-2]. workers more than 2, 50,000 people and has an approximate turno- History of the Indian Automotive Component Sector ver of just about ` 45,000 crore (US$ 10 billion). On export front The Indian Auto Component Sector had its was in early stages in also, the sector has developed by leaps and limits, generating an the 1940s. If the development of this sector is traced in India, it can abroad sales of to ` 8,190 Crores (US$ 1.8 billion) in 2005-06, be secret into three distinct phases namely [2]: which is almost three times of what it exported in 2001-02 (US$ 578 million) [1]. The marvellous growth in the automotive element sector 1. Epoch preceding to the entrance of MarutiUdyog Ltd (1940s to over the last few years is shown in [Table-1]: 1984). 2. Epoch after the ingress of MarutiUdyog Ltd till financial liberali- Table 1- Growth in Production and Exports in the Indian Automotive zation (1984-91). Component Sector (` mn and %) 3. Phase post Liberalization (1991 onwards). Production Y-O-Y change Exports Y-O-Y change FY2004 120317 14935 The period previous to the entry of Maruti Udyog Ltd was branded FY2005 129967 8 15685 5 by low knowledge and assured business for most of the auto- FY2006 163559 25.8 18330 16.9 component manufacturers who used to deliver to a handful of or- FY2007 178569 9.2 27065 47.7 ganisation in the Indian vehicle market like Hindustan Motors, FY2008 216021 21 28019 3.5 Premier Automobiles, Telco, Bajaj, Mahindra & Mahindra etc. FY2009 255354 18.2 34965 24.8 With the ingress of Maruti in the 1980s, the auto auxiliary sector in FY 2010 306400 20 45000 28.7 the country showed a gush in growth. This era witnessed the ap- Source: Federation of Automobile Dealers Associations pearance of a new age group of auto auxiliary manufacturers who

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Logistics Management Systems in the Indian Automotive Component Sector

were requisite to meet the strict quality values of Maruti's associate Today, many global and home automotive players are more and Suzuki of Japan. The good show of Maruti resulted in an upswing more sourcing workings from Indian automotive part manufacturers. for the home auto auxiliary sector. It was also during this period that As the insist for manufactured automotive components with the tag auto mechanism from India began to be exported. "made in India" increases, the automotive companies have to addi- With the liberalization of the Indian financial system in 1991 and tional improve the excellence of their products and operations as coming of many distant automobile manufacturers like Hyundai, worldwide players need excellence components at sensible prices Daewoo etc., the auto ancillary sector witnessed huge ability expan- and at exact time durations. This has made the automotive compo- sions and modernization initiatives in this period. This also led to a nent manufacturers in India to be under harsh pressure to meet tough spirited scenario, which saw a lot of consolidation, technologi- such burdensome demands. Hence, to meet such demands, today cal collaborations and equity partnerships within the sector and with all the major players in this sector are having one or the other logis- foremost global players abroad. tics management system. Table 2- Classification of Automotive Components according to ACMA Product Group Products Share* (%) Some of the Key Players Pistons, Piston Rings, Engine Valves, Car- Motor Industries Organisation, Ucal Fuel Systems, Shriram Pistons, India Pistons, Engine Parts 23 buretors, Fuel Injection Systems Goetze, IP Rings, Electrical Parts Starter Motors and Generators 7 Motor Industries Organisation, Denso, India Nippon Electrical Drive Transmission and Rico Auto Industries, Sona Koyo Steering Systems, Automotive Axles, GKN Gears, Clutches, Axles 14 Steering Parts Driveshafts, Bharat Gears, (Madras), Clutch Auto, Ceekay Daikin Suspension and Braking Brakes India, Sundaram-Clayton, Munjal Showa, Gabriel India, Rane Brake Linings, Brakes, Leaf Springs, Shock Absorbers 11 Parts Sundaram Brake Linings, Jamna Auto Equipment Headlights, Dashboard Instruments 8 Premier Instruments & Controls, Lumax, MothersonSumi Systems Sheet Metal Parts, Pressure Die Castings, Others 36 Jay Bharat Maruti Tyre Tube Valves and Cores Source: ACMA Segmental market shares of the organized sector in FY2003 in rupee terms

Sympathetic Logistics Management  Order Processing: Order processing starts with the receiving Logistics is the organized group of materials and, sometimes, peo- of an order from a consumer and ends when the order is pre- ple. The term was first linked with the military but slowly increase to pared for wrapping. cover industry activities. Logistics Management is defined as a busi-  Packaging: Packaging is done mostly to guard the product ness planning framework for the management of fabric, service, when it is being transported from the basis to the destination. It information and capital flows. It includes the more and more com- can also be used for promotional purposes. plex information, message and control systems required in today's  Parts and Service Support: This covers the whole after-sales business environment [3]. Logistics management includes an entire service process. range of processes like planning, procurement, moving, preserva-  Plant and Warehouse Site Selection: This function is carried tion, supply and substitute of personnel and material. to determine where the plant and the store are going to be lo- The course of logistics management differs from one firm to anoth- cated, keeping cost-benefit analysis in mind. er. In some firms, all these activities are placed within a single logis-  Production Scheduling: This function's task is to balance tics section; in others, they are shared amongst the departments. demand for goods with the existing plant capability and ease of The firm may also go in for what is called third-party logistics, which use of inputs. is a contract with an outside party to perform specific logistics ser- vices.  Purchasing: This is a very important purpose in the logistics management as the superiority of inputs that are purchased The following indicative list gives some of the functions that a firm's determines the quality of the finished product. Vendor selection logistics management system is supposed to perform [4]: is an important sub-process of this function.  Consumer Service: All the activities that are done to keep the  Returned Products: There are many categories of returned active consumers pleased come under the gamut of consumer products. A few are subjects of product recalls, meaning that a service. safety defect or hazard has been discovered, e.g. laptop battery  Demand Forecasting: This course includes various statistical recall by Dell. These products are removed from the shelves, method that allow the firm to assess the demand prospect, and both retailers and consumers attempt to return them to the which in turn helps in correct demand management. producer. This is a form of overturn supply, with goods moving  Documentation Flow: This course covers the faction of the in the reverse direction of their usual flow. paperwork that accompanies the movement of physical product.  Salvage Scrap Disposal: How a firm takes care of its waste  Interplant Actions: This is only valid to those firms where pro- objects is enclosed in this function. The firm might recycle its duction procedure is expert in more than one plant, requiring ravage or sell the waste to various processors who specialize in the movement of semi-finished products from one plant to an- recycling it. other.  Traffic Management: All the transport wishes needed to move  Inventory Management: Inventory management requires a a firm's freight is known as traffic management. cost effective maintenance of stocks of goods and materials.  Warehouse and Distribution Centre Management: This logis-

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tics movement involves organization of the locations where the (Japan Institute of Plant Maintenance). firm's inventories are stored.  Shriram Automotive Products Ltd: This Organisation has Logistics Management Practices in Important Indian Automo- tried to progress its logistics management by establishing, im- tive Component Producer plementing and maintaining a quality system in unity with the requirements of ISO 9002. It tries to stick to consumer delivery  Sundaram Clayton Limited (SCL): Sundaram Clayton uses schedules through ample planning and monitoring and tries to inclusive TQM (Total Quality Management) practices that allow bring down non-conformities by firmly monitoring the efficiency it in being a spirited world-class manufacturer in terms of excel- lence, cost and timely delivery of goods. SCL uses cellular man- of corrective and anticipatory measures. ufacturing, which gives it the elasticity to react in tune to con-  India Pistons Ltd (IPL): India Pistons Limited strives to sustain sumer needs. It does inclusive addition of the supply chain a comprehensive system of professional logistics management through functioning of ERP (Enterprise-Wide Resource Plan- intended to identify probable defects right from the first phases ning) programme [5]. of growth, hence, preventing problems that could potentially  Bharat Forge Limited (BFL): Bharat Forge has been success- cost the organization dear. In all IPL locations, systems & pro- fully leveraging computers as an important tool for dipping costs cedures based on TPM, TQM and Lean developed are used to in the ground of logistics management. In 2000-01, the organi- ensure that Quality levels are on par with the best in the world. sation implemented SAP enterprise supply planning package. All its plants are QS 9000 certified. Bharat Forge is moving at full speed to build e-commerce appli-  Premier Instruments & Controls Limited (): As a part cations with SAP as a backbone for BFL legacy systems and of its logistics management policy, Pricol gives bundle of stress other combined software’s like SCM (Supply Chain Manage- on procurement quality through methodical vendor growth, val- ment), PLM (Product Lifecycle Management), etc. ue plan, and vendor upgradation through Vendor Center of At Bharat Forge, SAP also provides in-built capabilities like quality, process facility, vendor quality review, examination and CRP (Capacity Resource Planning), BPR (Business Process guidance. Re-engineering) and thus offers a commanding link between  Lumax Industries: Lumax became an ISO 9002 authorized the entire value chain extending from the consumers to the organisation in 1995, attained its QS 9000 official recognition in suppliers [6]. the year 1998and achieved the ISO/TS 16949: 2002 and ISO The organisation has also set up an incorporated supply chain man- 14001 in 2003. Lumax is aiming for repeated development of agement system, which enables real-time visibility of material ne- manufacturing processes with stress on consistent quality and cessity and inventory all through the value chain, and provides deci- cost efficiency. sion shore up at all stages of operations. It also assists the organi-  Sona Koyo: Sona Koyo is touching on the path of Total Quality sation in giving contracts to vendors on current and aggressive Management (TQM) by budding its core capability and aligning terms and ensures better execution of contracts. Widely held of the objectives at all levels to understand synergy in its operations. It organisation's suppliers have been logged into its supply chain and has adopted Total Productive Maintenance (TPM) to progress with Bharat Forge e-enabled with its consumers, the organisation performance through the viewpoint of avoidance of accidents. has a real time total claim management system in place. All these measures help it to have a robust logistics manage- A fundamental private marketplace has been created for Bharat ment system. Forge through which the organisation engages in e-procurement  Munjal Showa: Munjal Showa is a TS-16949 & ISO 14001 and reverse auctions. The organisation has already started selling organisation which aims at providing highest customer pleas- scrap online. ure, cost competitiveness, continuous enhancement, on-time  Exide Industries Limited: Exide has eight manufacturing delivery of goods and direct on-line system by having a desira- plants manufacturing world class goods. Exide factories are ble logistics management system. situated tactically around the country to provide logistic support Besides the firms that have been mentioned above, other major for its manufacture of over five million batteries per annum7. automotive component manufacturers like Rico Auto, Sumi Mother- Exide's R&D is affianced in projects acceptance process tech- son, Cluth Auto etc. too realize the significance of strict inventory nology aimed at improving the product quality &constancy, pro- management and delivery obligation and hence have their own duction effectiveness and material utilization [8]. Exide employ- state of the art logistics management systems in place. ees Total Quality Management programme in its office and factories to set higher values for itself at every step of its Implication for Further Development in the Logistics Manage- "consumer-service route". "Zero-error" benchmarking, and deliv- ment Systems (LMS) in the Indian Automotive Component Sec- ering superiority orientation throughout operations has led Exide tor to get the coveted DIN ISO 9001 certification by RWTUV of The Indian Automotive Component Sector can additional progress Germany [9]. its competitiveness, but the Association of Indian Automotive Com-  Sundaram Fasteners Ltd (SFL): SFL makes just-in-time (JIT) ponent Manufacturers and the Indian government have to make supplies for various unique tools manufacturers (OEMs) through effort hand in hand to tackle some of the trouble that are being out the country. It has a successful Inventory Management sys- faced by this sector, like uneconomical infrastructure in terms of tem. Currently, in order to enhance its logistics management; ports, roads, etc; unutilized capital tools vacant in the sector, gov- and with the aim of achieving high quality and low cost in its ernment led intrusive hurdles and many more such speed breakers operations, it is using Total Productive Maintenance program that can curtail the speed of expansion that this sector is witnessing (TPM), which was initiated in 1995 in discussion with JIPM today.

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Logistics Management Systems in the Indian Automotive Component Sector

Some of the steps that can further improve the logistics manage- ment system being used by various firms in the Indian Automotive Component Sector are:  Improving efficiency of suppliers by skill transfer and support.  Further dipping inventory buffers and supply chain bottlenecks.  Using most recent technological initiatives to improve the active excellence levels and reform the processes further.  Using software’s like Supply Chain Event Management or SCEM that check forecasts, briefing, developed schedules, inventories, and shipments etc. Conclusion The more aggressive the Indian automotive component sector be- comes in the worldwide arena, the more indivisible will the princi- pals of logistics management become to its achievement and out- look growth. Though many of the primary automotive component manufacturers in India are having some kind of logistics manage- ment system in place, there are still a number of inconvenience that the automotive component sector is face on the logistics manage- ment border. In order to make a bigger spot in the worldwide arena of automotive components, these inconvenience have to be ad- dressed and solutions implemented at the first. References [1] Anderson D.L., Britt F.E., Favre D.J. (1997) Supply Chain Man- agement Review, 1(1), 31-41. [2] Beamon B.M. (1998) International Journal of Production Eco- nomics, 55(3), 281-294. [3] Chandra P., Sastry T. (1998) Vikalpa, 23(3), 25-36. [4] Cock M. (2000) Transportation and Distribution Magazine, 5. [5] Drew S., Coulson-Thomas C. (1997) Team Performance Man- agement, 3(3), 162-178. [6] King J. (2000) Computerworld, 34(10), 42. [7] Kraker J. (2000) Buyers Expect systems soon will deliver them, Engineering News Record, 2. [8] Liedtka J.M. (1996) The Academy of Management Executive, 10(2), 20-34. [9] Wynstra F., Axelsson B., Weele A.V. (2000) European Journal of Purchasing & Supply Management, 6(2), 129-141.

Journal of Information and Operations Management ISSN: 0976-7754 & E-ISSN: 0976-7762, Volume 4, Issue 1, 2013

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