ceat tyres supply chain

1. LOGISTIC AND
TRANSPORT
MANAGEMENT
TYRES
CEAT TYRES (RPG GROUP)
SUBMITTED BY:
DANESHWAR SINHA
18020329
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2. PRODUCT IDENTIFICATION
Tyre – It is a specialty and non-perishable product. It is a round and
hollow shaped product which is made of natural rubber, carbon
black and chemicals. It has special purpose of being used with any
vehicle be it passenger vehicles, light and heavy commercial vehicles.
Effects on Logistic and Transport Management:
1. Raw materials are being transported depending upon their ease of
handling and durability. Chemicals like Sulphur and others are
transported by tanker trucks or tanker trains, so it needs a special
care, while Natural rubber (NR) and synthetic rubber (SR) are
transported through ships and trucks.
2. Finished product tyres are round shaped so it covers more space if
not Stacked properly. It can be transported from manufacturing units
to warehouses and distributors by combination of truck and train.
No covering of tarpaulin is required.
3. Export to other countries requires cargo ships (ocean logistic) or
air Logistics, to transport the tyres, with minimal care.
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3. COMPANY
IDENTIFICATION
CEAT TYRE – It is one of the India’s leading tyre manufacturers.
It manufactures LCV tyres, Truck & Buses tyres, 2 & 3
wheelers, specialty vehicles and passenger car tyres. It
manufactures over 15 million tyres a day. Its market share is
shared among three markets, 1. OEMs(29%), 2. Replacement
market(59%), & 3. Exports(12%).
Strategy and its effect on Logistic & Transport Management :
1.Pull strategy – CEAT tyres adopts the pull strategy to cater
the demand of customers and dealers. CFAs ( Carrying &
Forwarding Agents) pull the goods from warehouses, as per
the demand, and then distributes it to dealer and
customers.
2.Deep OEM (Original Equipment Manufacturers)
partnership follows the B2B process hence they do not
require an elaborate distribution network, this leads to
reduce the transportation cost.
3.Manufacturing plants are in proximity to raw material
facilities. Most of the manufacturing units of CEAT tyres are
located in Maharashtra state, which is very near to Kerala
from where they procure the 85% of total natural rubber.
Thus it reduces the cost of transportation and also reduces
the lead time.
4.CEAT tyre adopted FMCG-type model in tyre industry, a first
of its kind. They have put one more layer that is CEAT
SHOPPE and CEAT HUBS, between the warehouse and
dealers, which improves their reach and serviceability to
customers substantially.
5.CEAT has tied up with Pirelli, a premium tyre manufacturer (
Italy-based 5th largest in world) to build a strong and
exclusive distribution network, for distributing its product in
world market. 3

4. CEAT TYRE LOGISTIC & TRANSPORT MANAGEMENT
RAW
MATERIAL
500+ CEAT
HUBS &
SHOPPE
06
MANUFACTURING
FACILITIES + 10
OUTSOURCED
UNITS
3500 DEALER
19 WAREHOUSES
ACROSS PAN-INDIA
NR FROM KERALA VIA RAIL/ROAD LOGISTIC
NR & SR FROM CHINA VIA OCEAN/ROAD
30,000 SUBDEALER
EXPORT TO OVER 100
COUNTRIES
CHEMICALS FROM CHINA VIA OCEAN & ROAD
112 CFAs
(CARRYING
&
FORWARDI
NG
AGENTS}
CUSTOMERS
CARBON BLACK FROM KOLKATA VIA ROAD
Strength Weakness
Manufacturing facility at Sri Lanka helped in avoiding import
duties
Dependency over supplier for inbound shipment of raw
material
Using SAP as ERP system helps in optimising inventory level Don’t own transport fleet
Extensive distribution network of warehouses, distributors
and dealers across pan-India
Pilferage of raw materials
Vehicle tracking system is being done by portable wireless
monitoring device which gives accurate ETA.
Rely heavily on road transportation for both inbound &
outbound, poor road condition worsens the situation.
Available online on retail platforms such as Amazons.
VIA JAWAHARLAL NEHRU PORT & FROM AIRPORT
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5. Suggestions
1. Using Shipping racks or Transporting racks in the trucks for outbound logistics will reduce
loading and unloading time, thereby reducing the vehicle turn-around time.
2. Making a tie-up or collaboration with logistics provider (3PL) will give a boost to its
transportation services, as they will have the control over their shipments and its timed
delivery of raw materials and finished products.
3. Supply chain can be further optimized through AI development and its application.
4. As most of the finished products are transported through train, so what CEAT could do is
utilization of Private Freight Terminals. Basically, PFTs are multimodal logistic hub with
integrated facilities like warehouses, containers etc.
5. CEAT tyre should follow Modular product design model efficiently. Their tyre is basically a
brand specific, which can be common for two models of same brand like MARUTI’s Celerio
and Alto K10 both use Milaze 4 wheeler tyre. So, point here is, they can expand their range of
covering other brands present in the market as well. By doing so they can reduce the
manufacturing cost and production time, as the process is same. CEAT Milaze 4 wheeler tyre
can also be used for Hyundai i10.
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6. COST STRUCTURE COMPARISON
PREVIOUS COST STRUCTURE EXISTING COST STRUCTURE
% MARGIN
(RUPEES)
COST AT EACH
STAGE (Rs.)
% REVISED COST AT
EACH STAGE (Rs.)
COST OF MILAZE 4W TYRE 2630 2271
PROFIT MARGIN 13 342 2288 13 2010
TRANSPORTATION 15 298 1990 13.50 1780
WAREHOUSING 5 95 1895 4.50 1568
MANUFACTURING 20 216 1579 1500
Suggestion – CEAT tyre should efficiently use the Modular Product Design model, by doing
so they can reduce the manufacturing cost as well as warehousing cost. As shown in our
exercise that they can save of 79 Rs of manufacturing cost. by this strategy. Right side of the
column shows that at each stage cost is keep on reducing, lesser than the previous, finally
cost of one unit of MILAZE 4W tyre is 2271 Rs. which is much lower than the previous cost
2630 Rs. So this cost optimization will lead to CEAT tyre to gain the competitive edge over
their rivals.
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Table: Most of the figures have been assumed here except the cost of product and profit margin

7. References
https://www.ceat.com
https://www.bseindia.com/downloads/ipo/2015622124337ce
at%20PD.pdf
https://www.outlookindia.com
http://www.businessworld.in/article/Ceat-Tyres-No-Brakes-
On-Growth/31-03-2017-115495/
https://timesofindia.indiatimes.com/business/india-
business/CEAT-inks-distribution-pact-with-Italys-
Pirelli/articleshow/50005360.cms
https://www.pricedekho.com/tyres/ceat+tyres-price-list.html
https://theprimetime.in/tyre-makers-to-invest-rs-20000-cr-in-
3-years-as-demand-sees-uptick/
https://martinsindustries.com/en/?microsite=the-2-solutions-
to-ship-and-transport-tires
https://en.wikipedia.org/wiki/CEAT_(company)
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