Logistics & Supply Chain Management           ASSIGNMENT    Name of the Student: Paul Franklin
Abstract       In a competitive world, organizations are constantly looking for opportunities toproduce and deliver produc...
Table of ContentsAbstract ...................................................................................................
2.6.1 Engine.................................................................................................................
List of FiguresFigure 2. 1 Two-Wheeler Domestic Sales Trend .................................................................
List of TableTable 1. 1 Merits & Demerits of the Current Trends..............................................................
NomenclatureAcronymsBAL            Bajaj Auto LimitedGCMMF          Gujarat Cooperative Milk Marketing Federation LtdSCM  ...
CHAPTER 11. Introduction:       Supply chains are continually subjected to forces, internal and external, that are inconst...
the most significant factors of the business. Data warehousing is the process of centralizationof data which facilitates t...
1. A global data repository to maintain both internal and external data necessary to manage   and comply with global busin...
out and innovative Supply Chain models need to be created to manage a company’s globalSupply chain. An inefficient and poo...
CHAPTER 22.0 Introduction to Bajaj Auto Limited       Bajaj Auto Limited (BAL) is a major Indian automobile manufacturer a...
2.2 Bajaj Pulsar       Bajaj Pulsar is a motorcycle brand owned by Bajaj Auto in India. The two-wheelerwas developed by th...
The graph above shows the two-wheeler domestic sales trend from 2004 to 2010. Thesteady increase in the sales can be notic...
The graph above shows the sales of Bajaj Pulsar 180 in the months of year 2011(present year). The pulsar 180 series itself...
The demand for the next year has been forecasted using the Exponential Smoothing         Method. The sales for the next ye...
Workforce        Production    Inventory       Overtime                    -7.10543E-15         836         6.0254E-11    ...
company expects a market share growth of 20%. The aggregate plan developed above shouldhelp the company grow its market sh...
The manufactured product has been broken down into 5 key parts and analysis iscarried out. The 5 key parts are:2.5.1 Engin...
2.5.2 Ignition Coil          The Ignition coil is another major part of theBajaj Pulsar DTSi vehicle. This Ignition coil h...
2.5.4 Braking System       The Bajaj Pulsar uses a260 mm ventilated disc brakingsystem for the front wheel andthe traditio...
2.6 Make or Buy Decision       The make or buy decision is the act of making a strategic choice between producingan item i...
2.6.3 Handle Bar Assembly       The handle bar assembly of the Bajaj Pulsar is a modular part. BAL has theknowledge to pro...
of logistics is reduced thus providing an efficient supply chain. Bajaj auto maintains sevendays inventory. All the Mediat...
CHAP TER 33.0 Introduction to Bajaj Auto Limited       Bajaj Auto was founded in 1945.It is Indias second largest two whee...
3.1.2 Waluj AurangabadThis is second plant with a production capacity of 0.86 million per year. Productsmanufactured here ...
The present situation does not satisfy the current market requirements and as a resultof this customers need to wait for a...
n = number of potential plant locations/capacity       m = number of markets or demand points       Dj = Annual demand fro...
Demand Region                 Production and Transportation Cost per 10,00,000           Fi xed      Low        Fi xed    ...
 Plants at Bengaluru and Chennai meet requirements at Bengaluru.  3.3.2 Gravity Location Model[10]          The gravity l...
X=              20 Y=              75Cost=        3852057439                                Table 3. 6 Gravity Location Mo...
3.6 Results and Conclusions       To model a supply chain, a systematic approach is needed with respect of Quantitativeand...
CHAP TER 44.1 Comments on Learning Outcome:       Traditional manufacturing knowledge will never help an engineer to grow ...
REFERENCES[1] Tage Skjott Larsen., Philip Schary., Juliana Mikkolaand., Herbert Kotzab., Managing the   Global Supply Chai...
[16]   Unknown., Picture of Pulsar Disc Brakes, http://bikes.indiandrives.com/bikes/wp-   content/themes/bikes.indiandrive...
BIBILIOGRAPHY[1] Sunil Chopra, Peter Meindl, D.V.Kalra, Supply Chain Management, 3rd edition, Pearson, New   Delhi, 2007.[...
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Modelling supply chain

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  1. 1. Logistics & Supply Chain Management ASSIGNMENT Name of the Student: Paul Franklin
  2. 2. Abstract In a competitive world, organizations are constantly looking for opportunities toproduce and deliver products at the most cheapest price with a sufficient profit margin and inthe process of dealing with these issues, the organizations are required to master the goodpractices of Supply Chain Management. Organizations are realizing that it is very importantto follow good Supply Chain Management practices to achieve the company’s goals and tomeet customer requirements. It is imperative that a successful supply chain will win theconfidence of stake holders and deliver efficiency and effectiveness in all phases of theorganizations processes. So, supply chain management, its tools and techniques are of greatimportance in the present manufacturing scenario. The assignment consists of 3 parts. Each part is designed in such a way as to covermajor principles of Supply Chain Management. The first part consists of a debate validatingthe statement, ― “Research-based innovative models are essential for managing complexglobal supply chains”. Appropriate literature reference, case studies, discussions and personalopinions have been provided to validate the statement. The second part of the consists of theBajaj Pulsar 180’s demand forecasting, planning as to how to meet the demand, breakingdown the product into key parts and making Make or Buy decisions for each part. Adiscussion on the company’s vendor base is also provided to see how cost efficient theprocess can be made by minimizing logistics cost. Role of Supply Chain Management in eachstage is shown. The third part of the assignment consists of two supply chain models forBajaj Auto Limited. The outcome of the assignment involves: The learning that the organizations need tocontinuously update their supply chain with the latest technologies and in the most efficientmanner; the process of estimating a company’s future demands and planning towards meetingthose demands; creating efficient supply chain model based on mathematical calculations.Most important outcome of the assignment is the knowledge received during the process ofcompletion of the assignment.
  3. 3. Table of ContentsAbstract ....................................................................................................................................... iTable of Contents .......................................................................................................................iiList of Figures ........................................................................................................................... ivList of Table ............................................................................................................................... vNomenclature ............................................................................................................................ viCHAPTER 1 .............................................................................................................................. 1 1. Introduction: ......................................................................................................................... 1 1.2 Stance Taken ................................................................................................................... 1 1.3 Current Trends on Supply Chain Competitiveness.............................................................. 1 1.4 Discussion and Interpretations on Managing Complex Supply Chains ..................................... 2 1.5 Case Study .......................................................................................................................... 3 1.6 Conclusion.......................................................................................................................... 3CHAPTER 2 .............................................................................................................................. 5 2.0 Introduction to Bajaj Auto Limited ....................................................................................... 5 2.1 Rationale for Identifying the Company ................................................................................. 5 2.2 Bajaj Pulsar......................................................................................................................... 6 2.3 Demand Estimation ............................................................................................................. 6 2.3.1 Forecasting Demand...................................................................................................... 8 2.4 Translation of demand into deliverable quantities .................................................................. 9 2.4.1 Capturing Market Share............................................................................................... 10 2.5 Break down of Manufactured Product in to Key Parts .......................................................... 11 2.5.1 Engine........................................................................................................................ 12 2.5.2 Ignition Coil ............................................................................................................... 13 2.5.3 Handle Bar Assembly.................................................................................................. 13 2.5.4 Braking System........................................................................................................... 14 2.5.5 Suspension ................................................................................................................. 14 2.6 Make or Buy Decision ....................................................................................................... 15Logistics & Supply Chain Management ii
  4. 4. 2.6.1 Engine........................................................................................................................ 15 2.6.2 Ignition Coil ............................................................................................................... 15 2.6.3 Handle Bar Assembly.................................................................................................. 16 2.6.4 Braking System........................................................................................................... 16 2.6.5 Suspension ................................................................................................................. 16 2.7 Discussion on Vendor Base................................................................................................ 16 2.8 Role of SCM ..................................................................................................................... 17 2.9 Conclusion........................................................................................................................ 17CHAPTER 3 ............................................................................................................................ 18 3.0 Introduction to Bajaj Auto Limited ..................................................................................... 18 3.1 Manufacturing locations .................................................................................................... 18 3.1.1 Akurdi, Pune............................................................................................................... 18 3.1.2 Waluj Aurangabad ...................................................................................................... 19 3.1.3 Chakan, Pune.............................................................................................................. 19 3.1.4 Pantnagar , Uttarakhand............................................................................................... 19 3.2 Data Collection and Evaluation .......................................................................................... 19 3.3 Modeling a Supply Chain................................................................................................... 20 3.3.1 Capacitated Plant Location Model ................................................................................ 20 3.3.2 Gravity Location Model .............................................................................................. 23 3.4 Analysis and interpretation with respect to framework ......................................................... 24 3.5 Decision Making From the Analyzed Data .......................................................................... 24 3.6 Results and Conclusions .................................................................................................... 25CHAPTER 4 ............................................................................................................................ 26 4.1 Comments on Learning Outcome: ...................................................................................... 26REFERENCES ........................................................................................................................ 27BIBILIOGRAPHY .................................................................................................................. 29Logistics & Supply Chain Management iii
  5. 5. List of FiguresFigure 2. 1 Two-Wheeler Domestic Sales Trend ............................................................................. 6Figure 2. 2 Various Two-wheeler Company Sales in 2009 and 2010 ................................................ 7Figure 2. 3 Bajaj Pulsar 180 Sales in the Months of 2011 ................................................................ 7Figure 2. 4 Comparison on Current and Future Demand .................................................................. 8Figure 2. 5 Bajaj Pulsar 180 Specifications ................................................................................... 11Figure 2. 7 Bajaj Pulsar Engine.................................................................................................... 12Figure 2. 6 Bajaj Pulsar Engine.................................................................................................... 12Figure 2. 10 Reflectors on LH & RH Switches ............................................................................. 13Figure 2. 8 Ignition Coil .............................................................................................................. 13Figure 2. 9 Handle Bar Assembly ................................................................................................ 13Figure 2. 12 Bajaj Pulsar Suspension ........................................................................................... 14Figure 2. 11 Braking System ....................................................................................................... 14Fugure 3. 1 Distribution Network ................................................................................................ 19Logistics & Supply Chain Management iv
  6. 6. List of TableTable 1. 1 Merits & Demerits of the Current Trends........................................................................ 2Table 2. 1 Demand Forecast for 2012............................................................................................. 8Table 2. 2 Aggregate Plan Decision Period ..................................................................................... 9Table 2. 3 Constraints ................................................................................................................. 10Table 2. 4 Aggregate Plan Costs .................................................................................................. 10Table 2. 5 Present Market Share .................................................................................................. 10Table 2. 6 Fine and Whitney Framework ...................................................................................... 15Table 3. 1 Plant Wise Capacity .................................................................................................... 19Table 3. 2 Demand in Various Regions ........................................................................................ 20Table 3. 3 Inputs: Costs,Capacities, Demands .............................................................................. 22Table 3. 4 Decision Variables ...................................................................................................... 22Table 3. 5 Constraints ................................................................................................................. 22Table 3. 6 Gravity Location Model .............................................................................................. 24Logistics & Supply Chain Management v
  7. 7. NomenclatureAcronymsBAL Bajaj Auto LimitedGCMMF Gujarat Cooperative Milk Marketing Federation LtdSCM Supply Chain ManagementLogistics & Supply Chain Management vi
  8. 8. CHAPTER 11. Introduction: Supply chains are continually subjected to forces, internal and external, that are inconstant states of flux. Managing a supply chain is therefore a demanding activity thatrequires a thorough understanding of the concepts and mechanisms that underpin theoperation of the supply chain and the factors that influence its performance. In a globalenvironment, these factors are many, often interrelated and beyond the reach of mostorganizations to influence or control. Knowing what these factors are and understanding howthey are likely to impact on the strategic and operational decisions that must be made whilemanaging the global supply chain is critical. Sharing information is critical to themanagement of relationships, and Information Technology (IT) is an important facilitator inthis regard.[1]1.2 Stance Taken After conducting an analysis on the topic, it has been decided to stand for and validatethe statement, ―“Research-based innovative models are essential for managing complexglobal supply chains”.1.3 Curre nt Trends on Supply Chain Competitiveness Information technology plays a vital role in the field of SCM. To keep up with thedynamic market demands, companies are taking IT support to enhance its SCM system.Proper flow of information is very crucial in SCM system. For smooth operation and takingdecision, the information about customer, inventory status, demands, shipment schedule,payment etc. should be available to the supply chain members. Various IT enabled servicesmake this information available to them.[2] Two most important factors in SCM are planning and coordination. Companies nowdepend on various software like Material Requirements Planning (MRP), ManufacturingResource Planning (MRP-II), Distribution Requirement Planning (DRP), Advance Planningand Scheduling System (APSS) for effective planning and coordination among variousfunctional part of the organization.[2]Data mining and warehousing are also two important aspects of supply chain managementsystem. Data mining is the process of analyzing data in different viewpoints to emphasize on
  9. 9. the most significant factors of the business. Data warehousing is the process of centralizationof data which facilitates the available access and analysis. [2]Another current trend in Supply Chain is the electronic services (E-Commerce and DigitalBusiness). Customers are able to purchase goods or book tickets from their home itselfthrough internet services. Going to shops or booking counters are not necessary.[2]1.3.1 Merits and Demerits of the Current Trends Merits DemeritsMarking/Retailing- Data mining helps aid in Time consuming.direct marketingBanking/Crediting- Data mining can assistfinancial institutions in areas such as credit Costly to implement.reporting and loan information.Manufacturing Sector- MRP and ERP helps in Accurate bills of materials, part numbers andspeeding up the whole process. inventory records is requiredDistribution and retail Stores- DRP helps access Not 100% accurate or perfectthe status of the goods.Transport Sector- MRP and ERP help transmit Inconsistent manpower also acts as limitation.commodities through online transactions.Project Service industry- MRP and ERP helps Serious problem may arise if small organizationfastens the compilation of reports. fails to maintain good inventory record. Table 1. 1 Merits & Demerits of the Current Tre nds[3][4]1.4 Discussion and Interpretations on Managing Complex Supply Chains Upon conducting various researches, it has been discovered that the ideal solution tomanage a complex supply chain is one that:  Integrates all activities of the physical and financial global supply chain.  Translates physical and financial activities into information.  Contextualizes information and provides visibility to operators and decision makers.  Supports decision- making and accelerates required action.[5]The task of simplifying a highly complex global supply chain requires five fundamentalcomponents:Logistics & Supply Chain Management 2
  10. 10. 1. A global data repository to maintain both internal and external data necessary to manage and comply with global business requirements.2. A comprehensive execution platform to enable operations and management to complete their job requirements effectively, efficiently and in relative independence.3. An open, integrated and synchronized information infrastructure to provide total visibility of the global supply chain and all supporting information.4. A business information reporting tool to provide immediate access to the information so that operators and managers can view and quickly analyze critical information to support decisions and ultimately take effective action.5. A business collaboration environment to support the free flow of information to authorized individuals.[5]This ideal solution requires the use of the latest Information Technologies.[5]1.5 Case Study AMUL is a dairy cooperative in the western India that has been primarily responsible,through its innovative practices, for India to become the world’s largest milk producer. Thedistinctive features of this paradigm involves managing a large decentralized network ofsuppliers and producers, simultaneous development of markets and suppliers, lean andefficient supply chain and breakthrough leadership.[6]From the very beginning, in the early 1950s, AMUL adopted its network as a basic model forlong-term growth.  The network explicitly includes secondary services to the farmer-suppliers.  Several of the entities in the network are organized as cooperatives linked in a hierarchical fashion.[6]To manage the supply chain at AMUL was a complex task. The task was overcome by theuse of a research based basic model that linked everyone involved in the chain.[6]1.6 Conclusion Developing, manufacturing and selling a product can challenge the best organizationsin the best of times. As a company’s business driver’s change, SCM technology investmentand the overall approach to SCM must change and keep pace. Researches need to be carriedLogistics & Supply Chain Management 3
  11. 11. out and innovative Supply Chain models need to be created to manage a company’s globalSupply chain. An inefficient and poorly functioning supply chain can negatively impactevery aspect of an organization, jeopardizing the long-term performance and success of abusiness.Logistics & Supply Chain Management 4
  12. 12. CHAPTER 22.0 Introduction to Bajaj Auto Limited Bajaj Auto Limited (BAL) is a major Indian automobile manufacturer and is Indiaslargest and the worlds 4th largest two and three-wheeler maker. BAL is based in Pune,Maharashtra, with plants in Akurdi and Chakan (Pune), Waluj (Aurangabad) and Pantnagar(Uttaranchal). Bajaj Auto produces and exports scooters, motorcycles and the auto rickshaws.Over the last decade, the company has successfully changed its image from a scootermanufacturer to a two wheeler manufacturer. BAL’s real growth in numbers came in the lastsix years after the successful introduction of a few models in the motorcycle segment. Thecompany is headed by Rahul Bajaj. Bajaj Auto came into existence on November 29, 1945 asM/s Bachraj Trading Corporation Private Limited. The company started off by sellingimported two and three-wheelers in India. In 1959, it obtained license from the Governmentof India to manufacture two and three-wheelers and it went public in 1960. In 1977, BALmanaged to produce and sell 100,000 vehicles in a single financial year. In 1985, BAL startedproducing at Waluj in Aurangabad. In 1986, BAL managed to produce and sell 500,000vehicles in a single financial year. In 1995, it rolled out its ten millionth vehicles andproduced and sold 1 million vehicles in a year.[7]2.1 Rationale for Identifying the Company Bajaj Auto Limited is automobile manufacturer that started booming recently. Its topmost products the Bajaj Pulsar series hit the market with a huge success. Before theintroduction of this product series, the Indian motorcycle market trend was towards fuelefficient, small capacity motorcycles. The introduction of the Bajaj Pulsar in the year 2001changed the total market trend in India which then later encouraged other manufacturers likeHonda, TVS and Hero Honda to come up with higher capacity and more powerful vehicles.Also, it was the Bajaj Pulsar that introduced the trend of alloy wheels, DTS-I (digital twinspark ignition), digital meters, disk brakes, black coloured engine, etc, into the Indian market.The process through which Bajaj was able to change the trend in India without putting aheavy burden on the prices was the inspiration and rationale for selecting the company andcarrying out studies on its Supply Chain.Logistics & Supply Chain Management 5
  13. 13. 2.2 Bajaj Pulsar Bajaj Pulsar is a motorcycle brand owned by Bajaj Auto in India. The two-wheelerwas developed by the product engineering division of Bajaj Auto in association withmotorcycle designer Glynn Kerr Tokyo. Currently there are four variants available withengine capacities of 150, 180 220cc and 220cc FI. Since the introduction and success of BajajPulsar, the Indian youth began expecting high power and other features from affordablemotorcycles.[7]2.3 Demand Estimation Two- wheeler sales in the country have boomed in the recent years and the annualsales of motorcycles in India crossed the 10 million mark in 2010. The low penetration oftwo-wheelers in the country 31 two-wheelers per 1000 citizens (2004) changed rapidly overthe time. Overall the industry sales of two-wheelers have grown by 15% from 6.57 million in2004/2005 to 7.57 million in 2005/2006. The buoyant Indian economy with a growth rate ofaround 8% per annum is further expected to fuel the growth of two wheelers in the country. The major factors that determine the demand in the automobile industry areaffordability, product innovation, style, looks and power and fuel efficiency. Rapidly growingmiddle class and the change in life style of Indians has lead to a huge demand in India forperformance vehicles like the Bajaj Pulsar 180. Statistics shows a steady upward trend indomestic as well as exports passenger vehicle sales.[7] Two-Wheeler Sales Domestic 12000000 10000000 8000000 Sales 6000000 4000000 2000000 0 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Year Figure 2. 1 Two-Wheeler Domestic Sales Trend[7]Logistics & Supply Chain Management 6
  14. 14. The graph above shows the two-wheeler domestic sales trend from 2004 to 2010. Thesteady increase in the sales can be noticed which shows that the two-wheeler demands areincreasing. Company Sales in 2009 and 2010 400000 350000 300000 250000 Sales 200000 150000 100000 2009 April 50000 0 2010 April Two-Wheeler Companies Figure 2. 2 Various Two-wheeler Company Sales in 2009 and 2010[7] The graph above shows the sales comparison of various companies in 2009 and 2010.The sales of Bajaj Auto Limited increased dramatically from 150,000 in April 2009 to280,000 in April 2010. Bajaj Pulsar 180 Sales 2000 1800 1600 1400 1200 Sales 1000 800 600 400 200 0 Jan Feb Mar Apr May June July Months of 2011 Figure 2. 3 Bajaj Pulsar 180 Sales in the Months of 2011[8]Logistics & Supply Chain Management 7
  15. 15. The graph above shows the sales of Bajaj Pulsar 180 in the months of year 2011(present year). The pulsar 180 series itself accounts for a major portion of the sales withminimum sales of 1220 vehicles to a maximum of 1750 vehicles per month.2.3.1 Forecasting DemandThe Bajaj Pulsar demand for the year 2012 is going to be forecasted using the ExponentialSmoothing Forecasting Model. Exponential Smoothing Forecasting Model is a weightedmoving average in which the forecast for the next period’s demand is the current period’sforecast adjusted by a fraction of the difference between the current period’s actual demandand its forecast. Exponential Smoothing Month of Forecast for Month of Period 2011 Demand 2012 1 Jan 1264 #N/A 2 Feb 1463 1264 3 Mar 1211 1403.3 4 Apr 1743 1268.69 5 May 1467 1600.707 6 June 1584 1507.1121 7 July 1467 1560.93363 Table 2. 1 Demand Forecast for 2012[7] Exponential Smoothening 2000 1800 1600 1400 1200 Demand 1000 800 Demand 600 400 Exponential Smoothing Forecast 200 for Month of 2012 0 Jan Feb Mar Apr May June July 1 2 3 4 5 6 7 Period Figure 2. 4 Comparison on Current and Future DemandLogistics & Supply Chain Management 8
  16. 16. The demand for the next year has been forecasted using the Exponential Smoothing Method. The sales for the next year (2012) have been forecasted. The table and graph above show the forecasted demand. 2.4 Translation of demand into deliverable quantities After the demand estimation is carried out, the company must plan in advance as to how it will meet the demand. The planning is done using the Aggregate Planning Method. Aggregate Planning is the plan for the production process which is done in advance based on the demand forecast for a certain period. This provides the company management with an idea about the level of capacity, inventory and subcontracting required over a specified time period. This framework also provides the company with the information as to whether outsourcing is required or not, number of regular time hours and overtime hours of labour required etc. The following information is required to carry out the aggregate planning:  Workforce, resources and facilities available.  Demand forecast of the period for which the planning has to be carried out.  Production cost, inventory holding cost, ordering cost, stock out or backlog cost, labour cost, subcontracting cost, hiring/laying off cost and cost of adding or reducing machine capacity.  The number of labour/machine hours required for each unit.  Constraints regarding the usage of above alternatives. The goal of aggregate planning is to satisfy the demand from the customers while maximizing profit.[9] Ht Lt Wt Ot It St Ct Pt Dt LaidPeriod Hired off Workforce Overtime Inventory Stockout Subcontract Production Demand 0 0 0 40 0 500 0 0 0 1 0 0 40 0 0 0 0 764 1264 2 0 0 40 0 0 0 0 1403.3 1403.3 3 0 0 40 0 0 0 0 1268.69 1268.69 4 0.017675 0 40.017675 0 0 0 0 1600.707 1600.707 5 0 0 40.017675 0 0 0 0 1507.1121 1507.112 6 11.50567 0 51.52334075 0 500 0 0 2060.9336 1560.934 Table 2. 2 Aggregate Plan Decision Period Logistics & Supply Chain Management 9
  17. 17. Workforce Production Inventory Overtime -7.10543E-15 836 6.0254E-11 400 1.42109E-14 196.7 0 400 1.42109E-14 331.31 0 400 -6.31439E-15 0 -2.27374E-13 400.17675 7.10543E-15 93.5949 0 400.17675 -3.55271E-15 0 4.54747E-13 515.2334075 Table 2. 3 Constraints Regular Over Stock SubPeriod Hiring Lay off time time Inventory out contract Material 1 0 0 40000 0 0 0 0 764000 2 0 0 40000 0 0 0 0 1403300 3 0 0 40000 0 0 0 0 1268690 4 530.25 0 40017.675 0 0 0 0 1600707 5 0 0 40017.675 0 0 0 0 1507112.1 6 345170 0 51523.34075 0 1000000 0 0 2060933.6Total Cost 10202002 Table 2. 4 Aggregate Plan CostsTotal cost for January 2012 to July 2012 is Rs. 102020022.4.1 Capturing Market ShareThe present market share of two-wheeler automobiles are shown in the figure below. Hero Honda Motors Ltd 44.80% Bajaj Auto Ltd 23.20% TVS Motor Company Ltd 15.90% Honda Motorcycle & Scooter 12.00% India Yamaha Motor Pvt Ltd 1.50% Suzuki Motorcycle India Pvt Ltd 1.20% Kinetic Motor Company Ltd 0.70% Royal Enfield 0.50% Electrotherm (India) Ltd 0.20% Majestic Auto Ltd 0.10% Table 2. 5 Present Market Share[7] Bajaj Auto’s future plans for the year 2012 will be the year of investment for BajajAuto. The company is developing an all new breed of its Pulsar range of motorcycles. TheLogistics & Supply Chain Management 10
  18. 18. company expects a market share growth of 20%. The aggregate plan developed above shouldhelp the company grow its market share from the present 23.20% to 35%.[11]2.5 Break down of Manufactured Product in to Key Parts The product taken for the analysis is the Bajaj Pulsar 180 DTSi. The figure belowshows the specifications of the vehicle. Figure 2. 5 Bajaj Pulsar 180 Specifications[12]Logistics & Supply Chain Management 11
  19. 19. The manufactured product has been broken down into 5 key parts and analysis iscarried out. The 5 key parts are:2.5.1 Engine The DTSi stands for Digital TwinSpark Ignition. It is a technology from Bajajwhich potentially revolutionized themotorcycle world in India. The DTSitechnology incorporates twin spark plugs ateither ends of the combustion chamber forfaster and better combustion. This is the heartof the new technology from Bajaj.[17] Figure 2. 6 Bajaj Pulsar Engine[13] Figure 2. 7 Bajaj Pulsar Engine[14]Logistics & Supply Chain Management 12
  20. 20. 2.5.2 Ignition Coil The Ignition coil is another major part of theBajaj Pulsar DTSi vehicle. This Ignition coil hastwo terminals and also harness for ground (Earth)connection is provided. The benefits of the DTSitechnology engine can only be fully realized whenthe ignition system consisting of the ignition coil arecombined and used.[18] Figure 2. 8 Ignition Coil[18]2.5.3 Handle Bar Assembly The handle bar assembly consistsof the locking mechanism, switches, andbrake and clutch levers. It is this part ofthe Bajaj Pulsar released in 2006 thatcreated more demand among thecustomers. The switches on the handlebar come with reflectors. It can be seenin the figures below. Figure 2. 9 Handle Bar Assembly[15] Figure 2. 10 Reflectors on LH & RH Switches[15]Logistics & Supply Chain Management 13
  21. 21. 2.5.4 Braking System The Bajaj Pulsar uses a260 mm ventilated disc brakingsystem for the front wheel andthe traditional 160 mm drumbraking system for the rearwheel. The combination of boththe braking systems providesthe vehicle rider with utmostcontrol of the vehicle. BajajPulsar was among the first two-wheelers to introduce discbrakes in India. The figure Figure 2. 11 Braking System[16]below shows the disc brakes ofthe Bajaj Pulsar.[12]2.5.5 Suspension The Bajaj Pulsar uses 37 mm inner telescopic forks for the front of the vehicle andtriple rated hydraulic, gas filled shock absorbers for the rear. This provides a throughsuspension system providing the rider and pillion rider with utmost comfort. The figuresbelow show the suspension system of the Bajaj Pulsar.[12] Figure 2. 12 Bajaj Pulsar Suspension[17] Breaking down of the product into key parts helps the organization to decide whichparts should be manufactured in- house and which parts should be outsourced.Logistics & Supply Chain Management 14
  22. 22. 2.6 Make or Buy Decision The make or buy decision is the act of making a strategic choice between producingan item internally (in-house) or buying it externally (from an outside supplier). The buy sideof the decision also is referred to as outsourcing. Make or buy decisions usually arise when afirm that has developed a product or part is having trouble with current suppliers, or hasdiminishing capacity or changing demand, or finds it easier and economical to outsource thepart.[19] Bajaj Auto Limited does not manufacture all the parts required for the Pulsar 180motorcycle. Major portion of the parts are outsourced from various suppliers depending onwhich supplier produces the best of the component in the industry. Bajaj Auto’s decisionwhether to Make or Buy is based on the Fine and Whitney Framework for Make or BuyDecision. The table shows the framework. Dependant for In dependant of In dependant of Product Knowledge and Knowledge. Dependant Knowledge And Capacity for Capacity CapacityOutsourced Item Outsourcing Opportunity Outsourcing is Risky Outsourcing OpportunityIs Modular to Reduce CostOutsourced Item Worst Outsourcing Outsourcing is an Option Keep Production Integralis Integral Situation Table 2. 6 Fine and Whitney Frame work[20]2.6.1 Engine The engine of the Bajaj Pulsar is one of its integral parts. BAL has both theknowledge and capacity to produce its own engines. The Pulsar’s engine is also the corecompetency of the vehicle. So, the decision is to Make the engine internally.2.6.2 Ignition Coil The ignition coil of the Bajaj Pulsar is a modular part. BAL has both knowledge andcapacity to produce its own ignition coil, but this part is outsourced reduce cost. Outsourcingoption was found more cost effective and so the decision here was to Buy the part fromMinda Industries Ltd.Logistics & Supply Chain Management 15
  23. 23. 2.6.3 Handle Bar Assembly The handle bar assembly of the Bajaj Pulsar is a modular part. BAL has theknowledge to produce this part but does not have the capacity. So, the decision was to Buythis part from Minda Industries Ltd. This decision also gave a boost to the vehicle sales asMinda Industries developed the reflectors for the switches on the handle bar assembly whichturned out to be a huge attraction among customers.2.6.4 Braking System The braking system is a modular part of the Bajaj Pulsar. Outsourcing this part is arisky option, but it has been outsourced as BAL does not have the knowledge or the capacityto produce its own braking system. So, the decision was to Buy the braking system fromEndurance Group.2.6.5 Suspension The Suspension is a modular part of the Bajaj Pulsar. Outsourcing this part is a riskyoption, but it has been outsourced as BAL does not have the knowledge or the capacity toproduce its own braking system. So, the decision was to Buy the braking system fromEndurance Group.2.7 Discussion on Vendor BaseBajaj auto has approximately 198 vendors for their raw materials and parts.Some of the key vendors are:- JBM – Frames. Company located at Faridabad, Noida and Nashik. MRF–Tyres. Company located at Goa, Medak, Arakonam, Tiruvottiyur, Pondicherry, Kottayam. Minda – Handle Bar Assembly & ignition system. Company located at Haryana, Pune, Mumbai, Bangalore, Hyderabad, Pantnagar. Endurance – Brakes and Suspension. Company located at Pantnagar, Pune, Chennai. Varroc – Plastic parts & Digital Meter. Company located at Aurangabad.[22] BAL manufacturing plants are situated in the states of Maharashtra, Aurangabad andUttarakhand. The vendor locations (mentioned above) also come in and around these statesand so procurement of parts and raw materials is not a time taking process and also t he costLogistics & Supply Chain Management 16
  24. 24. of logistics is reduced thus providing an efficient supply chain. Bajaj auto maintains sevendays inventory. All the Mediators are connected with each other through IT linkage to knowexact status of delivery of goods. [21]2.8 Role of SCM From the viewpoint of a manufacturing or distribution company, Supply ChainManagement can be thought of as the Pull of raw materials or products into a company fromsuppliers and Vendor Compliance as the Push of manufactured finished goods or products tocustomers who then sell to consumers. The goal of supply chain management is to bring the most efficiency to the movementof goods. Having all vendors operate in the same manner, utilizing standards such as barcodelabels and EDI (Electronic Data Interchange), helps to a huge extent in keeping costs down. The customer, supplier and consumer all benefit from supply chain management. Thecosts saved by the customer can translate to lower retail prices, ensuring supplier’s productsare selling off and more money can be spent on opening retail locations. This increases thesales by the consumer and thus purchases by the customer of the suppliers goods.[21]2.9 Conclusion In today’s global world where competition is extremely high, forecasting demand andmanufacturing according plays a crucial role in the survival of the company. This has beencarried out using the Exponential Smoothening Method. A plan also has to created to meetthe demand requirement forecasted which has been done using the Aggregate PlanningMethod. Breaking down of the product into key parts and the making decision as to whetherto Make or Buy the parts has been carried out using the Fine and Whitney Framework.Selection of suitable vendors also plays a crucial role. The closer the vendor location, thebetter as the logistics cost reduces there by reducing overall costs. Bajaj Auto Limitedefficiently and effectively manages these activities and that is the reason why Bajaj Autoremains competitive as one of the best two-wheeler brands in the country.Logistics & Supply Chain Management 17
  25. 25. CHAP TER 33.0 Introduction to Bajaj Auto Limited Bajaj Auto was founded in 1945.It is Indias second largest two wheeler manufacturerand the worlds 4th largest two and three wheeler manufacturer. It is based in Pune withplants in Akurdi and Chakan (Pune), Waluj and Pantnagar in Uttaranchal currently. It holds amarket share of 22% over all two wheeler industry and a phenomenon 71% share in 125- 250cc category. It has a joint venture with Kawasaki and 31.72 % stake in Australian basedcompany KTM.[22] Figure 3. 1 Manufacturing Plant Layout[22]3.1 Manufacturing locations3.1.1 Akurdi, Pune.This is one of the oldest plants of BAL with a production capacity of 0.6 million vehicles peryear. The plant has been closed in order to equip the plant for four wheeler production.[22]Logistics & Supply Chain Management 18
  26. 26. 3.1.2 Waluj AurangabadThis is second plant with a production capacity of 0.86 million per year. Productsmanufactured here are Kristal, XCD, Platina and commerial GC series.[22]3.1.3 Chakan, PuneThis is the biggest plant of BAL and it has a production capacity of 1.2 million per year.Product manufactured here are Pulsar, Avenger and commercial GE series.[22]3.1.4 Pantnagar , UttarakhandThis is the most advanced plant of BAL with a production capacity of 0.9 million per year.Products manufactured here are Platina and XCD.[22]3.2 Data Collection and EvaluationThe capacity of the present plants is shown below: State Town Units Capacity (Nos)Aurangabad Waluj Kristal, XCD, Platina 1,860,000Maharashtra Chakan Pulsar, Discover, Avenger 1,200,000Uttarakhand Pantnagar Platina, XCD 900,000 Table 3. 1 Plant Wise Capacity[22]Products manufactured at these locations are distributed as shown below. Delhi Chakkan West Bengal Khadakpur Chennai Waluj Bengaluru Pantnagar Pune Fugure 3. 1 Distribution Network[22]Logistics & Supply Chain Management 19
  27. 27. The present situation does not satisfy the current market requirements and as a resultof this customers need to wait for a certain period before the product is delivered to them.This poses a great threat to the company as there is a huge chance of customers focusing theirattention to other brands to avoid the waiting period. Data has collected for starting manufacturing and distribution centre at 5 locations,Pune, Bengaluru, Delhi, West Bengal and Chennai. Demand, manufacturing cost, fixed costsand transportation cost are collected. The table below shows the demand in various regions. Regions Demand in Million Delhi 25 Chennai 25 Pune 32 West Bengal 25 Bengaluru 32 Table 3. 2 Demand in Various Regions[22]3.3 Modeling a Supply Chain Modelling a supply chain is very important task for a company especially when thecustomer location is wide. This method helps to identify the new plant locations and to findthe optimum point at which the supply can be done. Organizations perform supply chainmodelling to investigate changes they may have to make to improve the supply chainefficiency.Two models used for modelling supply are demonstrated below. They are the CapacitatedPlant Location model and Gravity Location Model.3.3.1 Capacitated Plant Location Model[10] The capacitated plant location model is performed to discover the most convenientlocation for the plant to be set up to meet the customer demands from the various markets.This is an important factor in designing the supply chain.The following details are required for creating and calculating the model:Logistics & Supply Chain Management 20
  28. 28. n = number of potential plant locations/capacity m = number of markets or demand points Dj = Annual demand from market j Ki = Potential capacity of plant i fi = annualised fixed cost of keeping factory i open Cij = Cost of producing and shipping one unit from factory i to market jAnd the variables are: yi = 1 if plant i is open, 0 otherwise Xij = Quantity shipped from plant i to market jFormula: Obj. func. Minimises the total cost (fixed +variable)Constraints are: - Demand to be met at each location. - No plant can supply more than its capacity. - Enforces the plant is open or closed.The formulae and constraints are applied in MS Excel and solved using Solver tool as shownbelow.Logistics & Supply Chain Management 21
  29. 29. Demand Region Production and Transportation Cost per 10,00,000 Fi xed Low Fi xed High units Suppl y costs costs Delhi Chennai Pune West Bengal Bengaluru Capacity Capacity region Rs Rs Delhi 1300 2563 1834 1500 1754 8500 15 17000 30 Chennai 2563 1300 1560 1850 1465 7500 15 15000 30 Pune 1834 1560 1300 1657 1657 9000 15 18000 30West Bengal 1500 1850 1657 1300 1547 8500 15 17000 30Bengaluru 1754 1465 1657 1547 1300 7500 15 15000 30 Demand 25 25 32 25 32 Table 3. 3 Inputs: Costs,Capacities, Demands Demand Region-Production Allocation Plants Plants Suppl y region Delhi Chennai Pune West Bengal Bengaluru (1=open) (1=open) Delhi 25 0 0 0 0 0 1 Chennai 0 25 2 0 2 0 1 Pune 0 0 30 0 0 0 1 West Bengal 0 0 0 25 0 0 1 Bengaluru 0 0 0 0 30 0 1 Table 3. 4 Decision Variables Suppl y region Excess Capaci ty Delhi 5 Chennai 1 Pune 8.75815E-11 West Bengal 4.999999999 Bengaluru 6.63007E-11 Delhi Chennai Pune West Bengal Bengaluru Unmet Demand 5.54934E-12 6.33804E-12 -5.86198E-11 -9.48219E-10 -3.3296E-11 Objecti ve Function Cost = 263550 Table 3. 5 Constraints Result obtained  Plants have to be opened at all 5 locations, Delhi, Chennai, Pune, West Bengal and Bengaluru to meet customer requirements.  Plant at Delhi meets requirements at Delhi.  Plant at Chennai meets requirements at Chennai.  Plants at Pune and Chennai meet requirements at Pune.  Plant at West Bengal meets requirement at West Bengal. Logistics & Supply Chain Management 22
  30. 30.  Plants at Bengaluru and Chennai meet requirements at Bengaluru. 3.3.2 Gravity Location Model[10] The gravity location method uses data like co-ordinates of location, demand, supply and transportation cost to find out locations with minimum transportation cost. This is done to find the optimal location for the plant which will minimize the cost for the manufacturer. It will give a particular location at which all the supply chain cost is minimum.. The factors used are:  Geometric distance between two points  Transportation cost  Quantity shipped Formula: Total Cost (TC) is given by: The formula is applied in MS Excel and solved using Solver tool as shown below. Quantity Sources Rs/Unit Coordinate Coordinate Dn in dn /Market Fn Xn Yn Shipment Pune 50,000 2500 18.53 73.87 2Sources Aurangabad 50,100 2000 19.88 75.33 0 Uttarakhand 49,900 2000 30.25 79.25 11 Delhi 51,000 1250 28.67 77.22 9 Chennai 51,100 1250 13.09 80.29 8Markets Pune 50,000 1500 18.53 73.87 2 West Bangal 51,000 1000 22.59 88.63 14 Bengaluru 50,100 1500 12.98 77.58 7Facility Location Logistics & Supply Chain Management 23
  31. 31. X= 20 Y= 75Cost= 3852057439 Table 3. 6 Gravity Location Model Result obtained  A new location for a plant is obtained. The coordinates are ( X=20 , Y=75)  The place best suited for the plant location is identified as Panchora in the state of Maharashtra. 3.4 Analysis and interpretation with respect to framework The framework designed solves various issues faced by the previous frame work. In the previous framework, all the products manufactured by the three plants were first sent to Khadakpur and then distributed from there to various parts of India. The derived framework reduces the cost of transportation and logistics as the products are manufactured at locations where major requirements come from. Also, the number of products manufactured has been increased according to the customer requirement which reduces the waiting time spent by the customers to procure the product. The location identified by the Gravity Location model – Panchora, situated in Maharashtra brings in various benefits for the company as well as its suppliers. Most of Bajaj Auto’s suppliers are situated in and around Maharashtra. Also, the state of Maharashtra has a high demand for Bajaj Auto’s products. 3.5 Decision Making From the Analyzed Data Bajaj Auto Limited’s products have a huge customer demand and in order to meet this demand, plants have to be set up at areas where the supply chain cost will be least. In this way, the cost of the product can be reduced which in turn increases the competitiveness. The locations, Delhi, Pune, Chennai, West Bengal and Bengaluru have vast lands which can satisfy the land requirement for the plant. Skilled labour is also available in these and so are the materials. So, the decision made from the analysed data is to set up plants as per the framework derived. Logistics & Supply Chain Management 24
  32. 32. 3.6 Results and Conclusions To model a supply chain, a systematic approach is needed with respect of Quantitativeand qualitative factors. The result obtained from the process seems to meet all requirementsof the company.Logistics & Supply Chain Management 25
  33. 33. CHAP TER 44.1 Comments on Learning Outcome: Traditional manufacturing knowledge will never help an engineer to grow or permithim to take part in the growth of the business. An engineer who is ignorant of the SupplyChain Management techniques will have to look into learning them, else leaving the fieldmight be the best option. Yet, engineering students often find that they leave the Universitywithout learning these important skills. The course module EMM 506 Supply ChainManagement and the assignment involved train us in such a manner that almost major portionof the Supply Chain Management techniques and the methods to design an efficient supplychain to help in the growth of a business are understood and learnt.In short, the module Supply Chain Management and the assignment involved have providedsufficient knowledge as to how to:-  Run a successful supply chain.  Estimate and Forecast product demands.  Plan on how to manufacture to meet the demand.  How to make a Make or Buy Decision.  Modeling a supply chain.Logistics & Supply Chain Management 26
  34. 34. REFERENCES[1] Tage Skjott Larsen., Philip Schary., Juliana Mikkolaand., Herbert Kotzab., Managing the Global Supply Chain, Transnational Corporations, Vol. 17, Issue No. 1, April 2008.[2] Boby Jhon Sust., Recent Trends in Supply Chain Management, http://ezinearticles.com /?What-Are-Some-Recent-Trends- in-Supply-Chain- Management?&id=6447132, Retrieved on August 8th 2011.[3] Unknown., Merits and Demerits of Data Warehousing, http://www.whamtech.com/ adv_disadv_dw.htm, Retrieved on August 9 th 2011.[4] Unknown., Advantages and Disadvantages of ERP, http://www.systems- erp.com/?id_razdel=1107, Retrieved on August 9th 2011.[5] Blinco Systems Inc., The State of Managing Complex Global Supply Chains, 3rdwave GCM, July 2009.[6] Unknown., Assignment on Supply Chain Management, http://www.scribd.com/ doc/20277585/Supply-Chain-Management-of-amul-and-Wal- mart, Retrieved on 8th August 2011.[7] Nihareika Sinha., Padmadevi., Saurabh Pandey., Gaurang Sahlot., Isha Vashisht., Siraj Siddiqui, Automobile Industry in India, Project Report, LBSIM, 2009.[8] Unknown, Bajaj Pulsar Sales, www.bajajauto.com, Retrieved on August 12th 2011.[9] Unknown., Aggregate Planning, http://en.wikipedia.org/wiki/Aggregate_planning, Retrieved on August 12th 2011.[10] Asst[11] Mahavir., Bajaj Auto Reveals Future Plans, http://bikeadvice.in/bajaj-auto-reveals- future-plans/, Retrieved on August 10th 2011.[12] Bajaj Auto., Pulsar 180 DTSi, Catalogue and Specifications, 2009[13] Unknown., Picture of Pulsar Engine, http://bikeadvice.s3.amazonaws.com/wp- content/uploads/2010/02/Bajaj-Pulsar-135-LS-Review-Photos-3.jpg, Retrieved on August 12th 2011.[14] Unknown., Picture of Pulsar Engine, http://imageshack.us/photo/my- images/132/79130309qc8.jpg/, Retrieved on August 12th 2011.[15] Unknown., Picture of Pulsar Handle Bar, http://1.bp.blogspot.com/_Y5JU0n4majU/S27BpiRuayI/AAAAAAAAFR4/1o8z79D4Qt Y/s400/2010+Pulsar+150+DTS- i+01.jpg, Retrieved on August 12th 2011.Logistics & Supply Chain Management 27
  35. 35. [16] Unknown., Picture of Pulsar Disc Brakes, http://bikes.indiandrives.com/bikes/wp- content/themes/bikes.indiandrives/images/photo_gallery/bajaj-pulsar-220f/disc-brake.jpg, Retrieved on August 12th 2011.[17] Cisituasik., DTSi Technology, http://www.zimbio.com/Motorcycles/articles/ 2258/DTSi+Technology+Bajaj+Pulsar+Bikes, Retrieved on August 12th 2011.[18] Unknown., Ignition Coil, http://www.indiamart.com/nehaimpex/automotive-spare- parts.html, Retrieved on August 12th 2011.[19] E-notes., Make or Buy Decision, http://www.enotes.com/management- encyclopedia/make-buy-decisions, Retrieved on August 12th 2011.[20] Charles Fine., Daniel Whitney., Is the make-buy decision PROCESS a core competence, MIT Center for Technology, Policy, and Industrial Development, February 1996.[21] Unknown., Vendor Compliance, http://www.vendorcompliance.info/vc_scm.htm, Retrieved on August 12th 2011.[22] Harsh Patel., Supply Chain Management of Bajaj Auto Ltd, Documentary Report, Indukaka Ipcowala Institute of Management, 2009.Logistics & Supply Chain Management 28
  36. 36. BIBILIOGRAPHY[1] Sunil Chopra, Peter Meindl, D.V.Kalra, Supply Chain Management, 3rd edition, Pearson, New Delhi, 2007.[2] David Simchi-Levi, P hilip Kaminsky, Edith Simchi-Levi, Ravi Shankar, Designing and Managing the Supply Chain, 3rd edition, Tata McGraw Hill, New Delhi, 2008.Logistics & Supply Chain Management 29

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