Benchmarking involves comparing business processes and performance metrics to best practices. This study benchmarks the supply chain of major Indian two-wheeler companies from 2009-2012. It analyzes total supply chain length, efficiency, and working capital productivity. Hero MotoCorp had the shortest supply chain length of 11 days and most efficient supply chain. TVS had the longest length of 28 days and least efficient supply chain. All companies showed negative working capital productivity due to capacity expansion investments. Recommendations include reducing distribution time for Bajaj, adopting JIT for TVS and Enfield to cut inventory costs, and improving production efficiency for TVS.

1. Supply Chain
Benchmarking Study
Indian Two wheeler
Industry

2. Benchmarking

“the process of comparing one’s
business process and performance
metrics to industry bests or best
practices from other industries”.

Benchmarking can be of two types
◦ Qualitative
◦ Quantitative

3. Types of Benchmarking
Qualitative
Quantitative
Study of best practices of the
industry or a particular and
implementing the findings
Developing KPI’s or performance
metrics and study competitors on
each metric to find possible areas
of improvement
Overhaul of an existing process or
developing an entirely new
process.
The performance metrics give an
idea to the firm for possible
improvements in their processes
Eg: Adoption of Toyota’s kaizen in
various industries
Eg: Toyota in early 70’s did
qualitative benchmarking of US
automotive industry and improved
on those practices

4. Scor® Model
Supply chain council (SCC), provides
an appropriate framework for
conducting benchmarking.
 Framework links business process,
metrics and best practices into a
unique structure.
 Includes 11 performance measures

◦ Internal measures – Cost, assets
◦ External measures - flexibility and
reliability of the firm w.r.t. Customer

5. Objective of study
To carry out a supply chain benchmarking study of
Indian Two-wheeler industry.
 Target area of study

Company
Reason
Bajaj Auto Ltd.
First entrant in the market
Market leader in scooter segment till 2010
Hero Motocorp
Market leader in Indian 2W market
TVS Motor
A market follower has been in the shadows of its
more illustrious competitors. TVS motor
Enfield India
Niche player in motorcycle segment. A long history
and also first entrant in Indian Market.
Mahindra 2W
New entrant of the market

6. Objective of study
Longitudinal Analysis of Supply Chain
Performance for the period 2009-2012
 The companies were evaluated on
following three performance
measures;

1. Total length of the supply chain
2. Supply chain efficiency
3. Supply chain working capital
productivity

7. Indian two-wheeler industry
Indian 2-wheeler Market Share
3% 2% 1%
13%
38%
18%
25%
Hero Motocorp
Bajaj Auto
Honda
TVS
Suzuki
Mahindra
Enfield India

8. Indian 2W Industry
Existing market structure
Year 2000
Year 2011
Remarks
Bajaj Auto
Bajaj Auto
Bajaj Auto exited the scooter segment
in 2010
Hero Honda
Hero Motocorp
Hero Honda entered domestic
scooters segment in 2006; ended its
JV with Honda in 2010
TVS-Suzuki
TVS Motor
TVS and Suzuki parted ways in 2011;
Both Continue to be Indian 2-W
market
Royal Enfield India Royal Enfield India Remains a niche player
manufacturing cruiser bikes
Mahindra 2W
Mahindra 2-W
Entered the scooter segment in 2010

9. Production Capacity
Trend in capacity utilization

10. Methodology
• Identified Indian two wheeler industry
• Study of secondary data for the industry and identifying possible
objects of study. (Parameter chosen was , market share)
• Collected financial data for the five companies. Sources used
were CMIE "Prowess" & respective company's annual reports.
• Data Analysis was done through MS Excel
• Interpretation and results of data

11. Data Analysis
Total Length of Supply Chain
1.
◦
◦
◦
The firm with the minimum length of
chain can be said to have the best
performance.
Longer supply chain means more time
for conversion of raw materials into
finished goods.
Total length of supply chain in days =
DRM+DWIP+DFG

12. Interpretation





Hero Motocorp has least supply chain
length of 11 days.
Hero Motocorp has the lowest DFG of 2
days compared to Bajaj’s 8 days.
As expected Mahindra has the highest
supply chain length.
TVS has supply chain length of 28 days
which is significantly higher than industry
average.
TVS’s DWIP is 2 days compared to
industry average of half a day.

13. Data Analysis
Efficiency of Supply Chain
Management
1.
◦
◦
Parameter measures the overall
inefficiency of supply chain
management.
Lower the value, better managed is the
supply chain of company
 Calculated as
 SCC = DC + (INV x ICC)
 SCI = SCC/ NS

14. Interpretation






Industry average of 0.25
Bajaj Auto has the most efficient supply
chain.
Hero motocorp in spite of highest inventory
costs has inefficiency ratio of 0.3 – because
of their higher net sales.
Hero motocorp is incurring maximum
inventory cost in terms of raw material (High
DRM and High inventory cost)
TVS has the most inefficient supply chain
management – because of their longer
supply chain length (High DRM, DFG &
DWIP).
Mahindra 2W has increased the efficiency of
its supply chain since 2011

15. Data Analysis
1.
Working Capital productivity
◦ gives the overall measure of the
improvements in the organization due to
the various improvement projects.
◦ Calculated as,
 SWC = INV+AR-AP
 SWCP = NS/SWC

16. Interpretation

For overall industry, this ratio is negative
– due to investment in capacity
expansion projects.
◦ Mahindra 2W is expanding capacity of its
Pithampura plant.
◦ TVS has invested in Mahabharat motors mfg
ltd in West Bengal, to gain presence in West
Bengal.
◦ Hero Motocorp is building its fourth
manufacturing plant in Rajasthan.
◦ Bajaj Auto is planning its fourth plant at
Mundra, Gujrat.

17. Recommendations
Bajaj Auto needs to implement more
sales source and outlets to reduce
their DFG which is stretching their
supply chain and hence the costs of it
 TVS motors and Enfield India need a
better inventory management system
or a implementation of Just in Time to
reduce their raw material inventory
costs.


18. Contd…
The production process of TVS motors
is highly inefficient and there is
considerable scope of improvement.
Use of technology can help them
reduce their DWIP.
 TVS, Bajaj & Hero all have high
inventory costs, which need to be
reduced to increase the efficiency of
supply chain.
