Launch of Strive V - Automobiles

The fifth edition of Strive, the biannual publication from OPEP (the Operations and Supply Chain Club of IIM Raipur), was launched on the 4th of October, 2013, by Prof. B S Sahay, Director, IIM Raipur together with Dr. Raghuram Rajan, Governor of the Reserve Bank of India.

Dr. Raghuram Rajan, Governer of RBI (left) and Dr. B.S Sahay, Director of IIM Raipur

This time around the central theme of the magazine is ‘Automobiles’. The main features of this publication include articles on Supply Chain Performance Measurement by Prof. Parikshit Charan (Prof.  IIM Raipur), Emergence of Supply Chain in Indian automotive industry by Dr. Tapan Sahoo (VP, Maruti Suzuki) and also an interview with Mr. Sanjeev Khapre (EVP, Exide Industries India Ltd.) The edition also features articles on the scenario of Hybrid Cars in the Indian context and reverse logistics in the Indian automotive industry. 

The publication presents articles written by students about some of the contemporary issues and trends in the automobile sector – ‘Green Revolution Part – III’ discusses the present trends in electric car industry in India and provides insights on the growth potential for these cars in the future. ‘Evolution of Supply Chain in Automotive Industry’ talks about the various stages of development in the concepts, philosophies and practices in the field of Supply Chain Management across the world in the automobile sector.

The ‘Regular’ section in the magazine covers Summer Internship experiences of students, Guru Mantra - which explains the concept of Car Sharing, Debate on Two Wheelers against Four Wheelers in India, Book Review – Lee Iacocca and a Crossword puzzle.

The magazine will now be available for students of all B-schools across India and abroad and also for industry-relevant professionals.

Click on the link below to read.
http://opepiimraipur.blogspot.in/p/e-magazines.html

Post by OPEP Club, IIM Raipur.

HOW E-MARKETPLACES HAVE HELPED IMPROVE SUPPLY CHAIN

Supply chain is the term used to define the system of organizations, assets and activities involved in the conversion of raw materials into finished products and moving the product or service from the supplier to the customer. Supply Chain Management (SCM) is defined as the efficient integration of warehousing, manufacturing, logistics and distribution. In lay mans’ terms, SCM is ensuring that materials are available at the correct point in the correct amount at the correct time.

The primary objective of SCM is to minimize the costs involved the sourcing, warehousing, logistics and distribution.

The major obstacles in SCM are:

• Purchasing
• Unstable volume requirements.
• Delivery schedule.
• Large volumes.
• Manufacturing
• Production cost.
• Quality requirements.
• High productivity.
• Warehousing
• Optimized inventory management.
• Transportation management.
• Quick replenishment capability.
• Customer delivery
• Diverse product portfolio.
• Reduced backorders and lead time.
• Bullwhip effect.

As understandable, traditional methods of demand forecasting, vendor rating, procurement ordering takes a lot of time and effort. In today’s proactive and competitive world and delay in demand orders are inventory management can add to the bullwhip effect resulting in loss of money and efficiency. In a cost sensitive market this difference can result in the final product cost thus making the product dearer to the customer and can therefore influence the profit margins.

One of the major advancements in terms of SCM is Enterprise Resource Planning (ERP). This automated software which helps in streamlining the supply chain operations and also holds the records and data at a central repository so as to ease retrieving the data. The limitation of ERP is the requirement of the software and the compatibility and hence it is used largely within an organization and does not link suppliers to the customers.

IT WOES IN SUPPLY CHAIN MANAGEMENT

What is supply chain management? Most of us have come across the following two words very frequently – Supply chain management (SCM) & Operations management (OM). Do they mean the same thing or are they totally different from one another. These are some of the questions that need to be answered before we find out the ‘IT Woes in Supply chain management’. While there are many definitions of Supply chain management, my favourite definition is that of Cooper & Ellram - “SCM is an integrative philosophy to manage the total flow in the distribution channel from the supplier to the ultimate user”. Operations Management is responsible for supplying the products or services of the organization and managing the transformation process that converts inputs into outputs. On the other hand, SCM is a melting pot of broad based functions which encompass all of the business and operational processes involved in Logistics (transportation), Operations Management, Materials distribution management, marketing, as well as purchasing and information technology (IT). Thus, OM encapsulates SCM.

Over the years, SCM as a concept has evolved at a rapid pace simply because it plays such a significant role in the firm's performance. Earlier it was the manufacturer who decided the pace at which products were manufactured and distributed. Now, the customers demand various styles, designs, features in their products within a shorter time period and with better quality. Earlier quality of the products used to be a critical factor but now meeting customer’s specific demands for product delivery has also emerged as the critical opportunity for competitive advantage. Overall demands for increasing transparency of corporate activities, sustainability of business, corporate social responsibility and corporate governance has led to large number of researches on topics - ‘Sustainable Supply Chain Management’ and ‘Green Supply Chain’. 

In the current competitive scenario SCM assumes a significant importance as companies are challenged with finding ways to meet ever-rising customer expectations at a manageable cost. To do so, businesses must search out which parts of their supply-chain process are not so competitive, understand customer needs which are not being met, establish improvement of goals, and rapidly implement these necessary improvements.

Reverse Logistics in Indian Automobile Industry

Reverse Logistics is a process in which a product moves in reverse through the supply chain network. It may be used for the purpose of recapturing value of a final product or for even proper disposal. It may also be termed – service, as the process of planning, implementing and controlling the efficient and cost effective transfer of raw materials, in-process inventory, finished products and related information, from consumption to the point of origin, for the purpose of recapturing value of proper disposal.

While the primary sectors involved in making use of this process may be classified as the Pharmaceutical Sector, Retail sector, Automobile sector and the Electronics sector, we are mainly about to focus all our attention to the practices of ‘Reverse Logistics’ in the Indian Automobile Industry.

To truly know why the whole idea of ‘Reverse Logistics’ assumes significance when considered in terms of the Automobile Industry, first we need to think of the nature of the final product i.e. Automobiles or Vehicles as we call them. The parameter one needs to look at is the life cycle of the product and what happens to the final product once it reaches the end of its useful life. By its very nature, it’s difficult to predict the life cycle of the final product. This is because; it is highly susceptible to the nuances of the human subjectivities. But even if we are unable to predict the duration of the life cycle, we have definitely something figured out for us. What I am referring to is a common observation that even if the vehicle (Here we will be primarily focusing on the flagship product, an automobile) becomes defunct and is no more suitable for use, the same rule doesn’t apply to the metal (that is primarily Iron) that it has been made from. The Iron that has been used in the manufacturing of a vehicle stays in pretty much the same and reusable condition through a considerable amount of time unless exposed to exceptional climactic conditions.

OPERATIONS AND SCM QUIZ

August 2013 - Quiz

The Quiz event organised by OPEP - The Operations and Supply Chain Management Club at IIM Raipur on the 18th of August 2013 saw overwhelming response from the participants. The event witnessed over 30 teams taking part, including both first year and second year students.

Operations in E-commerce Environment

E-commerce is one of the fastest growing markets globally and nationally. Indian e-commerce market was approximately worth $2.5 billion back in 2009 and it went up to $14 billion in 2014. Business Travel (airline tickets, railway tickets, hotel bookings) is a major part in Indian e-commerce market, holding 75% of the market whereas online retailing (e-tailing) contributes only 12.5%. In Indian Retail Market, online contribution is only 0.47% whereas the global Industry average is 4%, which shows that there is huge potential in this market. Online shoppers in India are growing at a rate of 30% every year as compared to the global growth rate which is 8-10%.

With such a high growth rate and the kind of massive potential there is, a number of new e-commerce stores are entering into the market and expanding quite rapidly. With increasing competition most of the e-commerce stores are using discounted prices and attractive coupons as a tool to attract customers which thereby creates a price war and hence shrinks the margins for business. In a situation of reduced margins where the objective is to provide high level of Customer satisfaction through improved services and to run a sustainable business, proper Operations Management plays a vital role in the success of the business.

Different tasks for Operations Management in e-commerce are

• Product / Service Quality
• Forecasting demand
• Inventory Management
• Scheduling Management
• Purchasing Management
• Supply-Chain Management
• Human Resource Management
• Reengineering and Consulting

Role of manufacturing sector in improving India’s Trade Balance

Facts & Figures about India’s Trade Balance:

Cumulative value of exports for the period April-March 2012 -13 was US $ 300.57 billion (Rs. 16.35 lakh crore) as against US $ 305.96 billion (Rs 14.66 lakh crore) registering a negative growth  of  approximately 1.7 per cent in Dollar terms and growth of 11.5 per cent in Rupee terms over the same period last year.

Cumulative value of imports for the period April-March, 2012-13 was US $ 491.48 billion (Rs. 26.73 lakh crore) as against US $ 489.32 billion (Rs. 23.45 lakh crore) registering a growth of 0.44 per cent in Dollar terms and growth of approximately 13.9 per cent in Rupee terms over the same period last year.

The trade deficit for April - March, 2012-13 was estimated at US $ 190.92 billion which was higher than the deficit of US $ 183.36 million during April -March, 2011-12.

Now let us have a look on India’s Foreign Trade Balance to get better idea.

         India’s Foreign Trade Balance               (US $ Million)  

	March	April -March
	Exports (including Re-exports)
2011-12	28839.36	305963.92
2012-13	30849.65	300570.58
% Growth 2012-13/ 2011-2012	6.97	-1.76
	Imports
2011-12	42380.68	489319.50
2012-13	41164.71	491487.22
% Growth 2012-13/ 2011-2012	-2.87	0.44
Trade Balances
2011-12	-13541.32	-183355.58
2012-13	-10315.06	-190916.64

                  Source: Ministry of Commerce, Government of India

Above-mentioned data clearly states that there is very minimal increase in trade balances as compared to previous year in terms of US $.

Oil imports during March, 2013 were valued at US $ 13.33 billion which was 16.56 per cent lower than oil imports valued at US $ 15.97 billion in the corresponding period last year.Import bill of petroleum crude & product have declined in international currency in March 2013 as compared to March 2012. Though, in terms of domestic currency, the import has been increased.

Photo: www.thehindubusinessline.com

 Similar is the case evident even for Non-oil imports also. Non-oil      imports during April - March, 2012-13  were valued at US $ 322.23 billion which was 3.62 per cent lower than the level of such imports valued at US $ 334.35 billion in April - March, 2011-12. However in terms of Rupees there is significant increment in Non-oil imports.A depreciating rupee makes import of various things more expensive, which leads to an increase in the operating expense of the companies which depends on many such commodities, Thereby hitting the profit margin of all such companies.