Evident of SCM in Indian Manufacturing Firms

8/2/2019 Evident of SCM in Indian Manufacturing Firms

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ISSN 1750-9653, England, UKInternational Journal of Management Scienceand Engineering Management, 6(3): 198 -209 , 2011http://www.ijmsem.org/

Evidence of Supply Chain Management in Indianmanufacturing rms: a survey

Jinesh Kumar Jain , Govind Sharan Dangayach , Gopal Agarwal

Department of Mechanical Engineering, Malaviya National Institute of Technology, Jaipur 302017, India

(Received 16 September 2010, Revised 26 February 2011, Accepted 28 March 2011 )

Abstract. Despite the extensive research carried out in the area of Supply Chain Management (SCM) throughout the world, SCMpractices have not yet been very well-adopted in developing countries like India. This paper assesses the present status and scopeof SCM practices through an extensive survey conducted among the Indian manufacturing organizations. In this survey, opinion of Indian managers across the country has been assessed. A number of issues such as level of information sharing with their immediatecustomers, mode of communication in supply chain, degree of investment in supply chain automation tools, and benets of using bar

coding technology have been addressed in the context of Indian manufacturing companies. The paper presents statistical analysisof the survey responses indicating the usefulness of the ndings to the rms contemplating implementation of SCM practices. Thendings of this article would provide important implications for the management in the manufacturing companies to understanddeterminants that contribute to the SCM success. More importantly, based on the obtained results, these companies can enhance theSCM performance by improving the current practices/strategies through focusing on the determinants that signicantly inuenceSCM performance.

Keywords: Supply Chain Management, information sharing, Bar Coding, ERP, EDI

1 Introduction

Manufacturing companies are under increasingly mount-ing and diverse pressures due to more sophisticated mar-kets, changing customer choice and global competition. The

market is becoming increasingly international for prod-ucts. In this situation, companies nd themselves having toadopt international standards. Environmentalists and Com-munity groups are bringing increased pressure to bear onmanufacturers to improve the reliability and safety of theirproducts and distribution processes. As a result of this, In-dian industry is facing competition both from multinationalcompanies and imports in the domestic markets. The newcompetition is in terms of improved quality, products withhigher performance, reduced cost, a wider range of productsand better service; all delivered simultaneously (Dangayachand Deshmukh, 2003 [11]).

Advanced Manufacturing System (AMS) is an integratedcombination of processes, machine systems, people, orga-nization structures, information ow, control systems andcomputers, whose purpose is to achieve economic products,competitive performance, responsiveness, exibility, qual-ity products and services (Kakandikar, 2009 [55]). In sucha competitive situation companies have to nd for new pro-cesses, new materials, new shop oor design, new vendorsand new channels to deliver their products and services atcompetitive price. In the last few decades Indian compa-nies have quite often followed an opportunistic approach togrowth as opposed to a capability driven approach, and paidvery little strategic attention to their shop oors (Chandraand Sastry, 1998 [ 40]).

Houlihan (1985) [23] is credited with rst coining theterm supply chain, but it seems that researchers havevarying interpretations of exactly what managing a supplychain means. The common thread in any denition is thatSupply Chain Management seeks to integrate performancemeasures over multiple rms or processes, rather than tak-ing the perspective of a single rm or process.

In the current competitive scenario Supply Chain Man-agement assumes a signicant importance and calls for se-rious research attention, as companies are challenged withnding ways to meet ever-rising customer expectations at amanageable cost. To do so, businesses must identify whichparts of their supply-chain process are not competitive, un-derstand which customer needs are not being met, estab-lish improvement goals, and rapidly implement necessaryimprovements.

SCM has been interpreted by various researchers. Basedon the relatively recent development of the supply chainliterature, it is not surprising that there has been muchdebate as to a specic SCM denition.

This paper is organized as follows: section 2 describesLiterature review; next section elaborates all Indian manu-facturing industries i.e. Automobile, Electronics, Machineryand Process industry. Section four describes the researchmethodology used. Section ve presents suggestions andresults. Concluding remarks are given in section six. Sec-tion seven gives the limitations and directions for futureresearch.

The specic objectives of this survey are to assess variousissues in Indian manufacturing rms such as:(1) Assess the level of information sharing with customers.(2) Assess the investment in supply chain automation tools.

Correspondence to : E-mail address : [email protected].

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International Journal of Management Science and Engineering Management, 6(3): 198-209, 2011 199

Table 1 The conceptual approaches of SCM

Conceptual approaches of SCM Authors yearsIntegration of various functional areas of an organization to improvethe ow of goods from the direct strategic suppliers up to the end user,along the production and distribution chain.

Houlihan 1987

A management philosophy that reects a systemic view of SC(by viewing the chain as a single entity) based on partnership concept

that involves the joint efforts of several companies directed to totalgoods ow management, from supplier to nal customer.

Ellram and Cooper 1990

Management of relationships between corporate functions and companies. Ellram and Cooper 1993A network of facilities and distribution options that performs thefunctions of procurement of materials, transformation of these materialsinto intermediate and nished products, and thedistribution of thesenished products to customers.

Ganeshan and Harrison 1995

SCM consists of the integration activities taking place among a networkof facilities that procure raw material, transform them into intermediategoods and then nal products, & deliver products to customers througha distribution system.

Lee and Corey 1995

Integration of key business processes from end user through originalsuppliers that provides products, services and information that add value

for customers and other stakeholders.

Lambert et al. 1998

The network of organizations that are involved, through upstream anddownstream linkages, in the different processes and activities thatproduce value in the form of products and services in the hands of theultimate customer.

Christopher 1998

A set of approaches used to efficiently integrate suppliers, manufacturers,warehouses, distribution and sales centers, implying the production anddistribution of goods in adequate quantities, at the right place and theright time, in order to minimize overall system cost while satisfying therequested level of demand and customer service.

Simchi-Levi et al. 2000

To improve the long term performance of the compaines and the supplychain as a whole systemic, strategic coordination of the traditionalbusiness functions and the tactics across these business functions withina particular company and across businesses within the supply chain isessential.

Mentzer et al. 2001

The proactive management of bidirectional coordination and movementof goods, services, information and funds, from raw material to nal user.

Trent 2004

Since SC is a network of companies, or independent business units, fromoriginal supplier to end customers, management of this network is a complextask having the goal to implement cross-functional business processes andintegrate them with other key members of the chain.

Lambert et al. 2005

Alliances with key partners and information technology that allows supplychain partners to share accurate information on a timely basis are thebuilding blocks of efficient and responsive supply chain operations. Upon thisfoundation, the introduction of lean manufacturing and lean logisticsprocesses, together with the integration of key business processes up and downthe supply chain create SCM.

Russell 2007

(3) Effective mode of communication in supply chain.(4) Benets of using bar coding technology.

2 Literature review

2.1 Relationships with customer and supplier

A successful strategic alliance and integrated relation-ship with suppliers and customers must be revolved aroundtrust, loyalty, positive sum game (a win-win relationship),cross-functional teams, achieving common goals and col-laboration Chandra and Kumar (2000) [ 5], Spekman et al.

(1998) [45] suggested that a rms success is linked to thestrength of its relationship with supply chain partners andit could reduce and increase revenue. Chandra and Kumar(2000) [5], Choy et al. (2003) [7] found that the long-termsuccess of a rm depends on the reliability of its suppli-ers and level of satisfaction of its customers. Previous re-search found that collaborative relationship between cus-tomer and supplier has positive signicant inuence to SCMperformance improvement. Fearne and Hughes (1999) [ 16],Humphreys (2001) [36] also explored that supplier satis-faction and contribution lead to customer satisfaction and

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200 J. Jain & G. Dangayach & G. Agarwal: Evidence of Supply Chain Management in Indian manufacturing rms

SCM performance. Managers and researchers, in the inter-est of determining how to develop more effective inter-rmrelationships, have enlarged the focus from formal contractsto more behavioral and relational approaches. Managers be-lieve that these latter approaches can create more exible,responsive partnerships thereby improving a rms perfor-mance (Mukherji and Francis, 2008 [ 56]).

2.2 Information and communication technology(ICT)

Technology is an enabler in SCM for helping supplychain members to establish partnerships for better sup-ply chain system performance (Jonsson and Gunnarsson,2005 [26]; Boubekri, 2001 [3]). Gunasekaran (2004) [ 20] ex-plored that information technology is an essential ingredi-ent for business survival and improves the competitivenessof rms. Dawson, 2002 [12] dened that efficient supplychain network can offer substantial improvements in pro-ductivity and in customer satisfaction by making availableonline, real time information networked around the organi-zation and giving full supply chain visibility. Besides that,McLaughlin et al. (2003) [32] found that successful compa-

nies around the world are partly dependent on their abilityto apply IT to SCM. In addition, ndings from McLaren(2004) [31] shows that operational efficiency and opera-tional exibility have high relationship with SCM informa-tion system. IT enhances the service level of SCM, improvesoperational efficiency and information quality (Auramo etal., 2005 [1]).

Jaiswal (2009) [54] described that SMEs can adopt in-formation systems to establish a platform for growth. Themultiple benets through successful utilization of Informa-tion System also deliver advantage in strategic apart fromTangible and Intangible ways. Indian SMEs should adoptappropriate Information and Communication Technology(ICT) tools to leverage business advantage. Effective uti-lization of ICT tools will provide SMEs a disciplined busi-

ness environment to operate in, where decisions concerningsupply and demand are fully supported by facts and helpmaximum business value in order to enhance growth andcompetitiveness.

The number of Supply Chain Management factors thatconfront global manufacturers remains relatively stablefrom year to year. But the way those factors mingle andcollide makes each year a new challenge, and 2011 will holda particularly tricky mix that will make Supply Chain Man-agement a tenuous balancing act. No great surprises there.These fundamentals have been the bedrock of supply chainmanagement for a long time. Year in and year out, manu-facturers must balance a matrix of supply chain consider-ations, including production and distribution costs, inven-tory carrying costs, product quality, supply chain speed,

intellectual property protection, and competitive markettrends (Chiappinelli, 2010 [53]).

3 Indian manufacturing industries

Manufacturing industry comprises of many different sec-tors, each of which is inuenced by the overall manufac-turing climate, but each of which also has its own ups anddowns. From Indian perspective, the major manufacturingsectors are machinery, automobile, electronics, and processindustries. We selected these four sectors of industries forour survey.

3.1 Auto industryOn the canvas of the Indian economy, automotive indus-

try occupies a prominent place. Due to its deep forwardand backward linkages with several key segments of theeconomy, automotive industry has a strong multiplier ef-fect and is capable of being the driver of economic growth.A sound transportation system plays a pivotal role in thecountrys rapid economic and industrial development. Thewell-developed Indian automotive industry ably fulls thiscatalytic role by producing a wide variety of vehicles: pas-senger cars, light, medium and heavy commercial vehicles,multi-utility vehicles such as jeeps, scooters, motorcycles,mopeds, three wheelers, tractors etc.

Automotive Industry comprises of automobile and autocomponent sectors and is one of the key drivers of the na-tional economy as it provides large-scale employment, hav-ing a strong multiplier effect. Being one of the largest indus-tries in India, this industry has been witnessing impressivegrowth during the last two decades. It has been able to re-structure itself, absorb newer technology, align itself to theglobal developments and realize its potential. This has sig-nicantly increased automotive industrys contribution tooverall industrial growth in the country.

The automotive industry (including components & tyres)has already attained a turnover of US$ 48.86 billion. Theindustry provides direct and indirect employment to 13.1million people. The contribution of the automotive indus-try to GDP has risen from 2.77% in 1992-93 to 4.14% in2008-09.The industry is also making a contribution of 17%to the kitty of indirect taxes of the Government.

The data for calendar year 2010 shows production growthof 32.69 percent over same period last year with produc-tion of 17,076,659 vehicles (includes Passenger vehicles,Commercial vehicles, three wheelers and two wheelers).Domestic sales registered a growth of 30.92 percent with14,824,072 vehicles being sold in India. Domestic Sales of Passenger vehicles grew by 31.34 percent, Commercial ve-hicles grew by 45.24 percent, three wheelers grew by 22.03

percent and two wheelers grew by 30.51 percent. In April-December 2010, production grew by 30.0 percent as com-pared to same period over last year. In December 2010,production grew at 27.78 percent over December 2009. Do-mestic Sales recorded a growth of 30.51 percent in Decem-ber 2010 as against December 2009.Domestic sales

Passenger Vehicles segment during April-December 2010grew at 31.83 percent over same period last year. Passen-ger Cars grew by 32.00 percent, Utility Vehicles grew by20.82 percent and Multi Purpose Vehicles grew by 50.58percent in this period. The overall Commercial Vehiclessegment registered growth of 34.08 percent during April-December 2010 as compared to the same period last year.While Medium & Heavy Commercial Vehicles (M&HCVs)

registered growth of 42.85 percent, Light Commercial Ve-hicles grew at 27.12 percent.Three Wheelers sales recorded a growth rate of 19.13

percent in April-December 2010. While Passenger Carriersgrew by 21.67 percent during April-December 2010, GoodsCarriers registered growth of 8.86 percent. Two Wheelersregistered a growth of 28.21 percent during April-December2010. Mopeds, Motorcycles and Scooters grew by 24.47 per-cent, 24.62 percent and 48.90 percent respectively.Exports

During April-December 2010, overall automobile exportsregistered a growth rate of 31.24 percent. Passenger Vehi-cles registered decline and the growth rate was (-) 1.49 per-

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Industry UnitProduction

Growth rate (%)(April-November) 2008-09 (April-November) 2009-10

Industrial Machinery Rs. lakhs 324487.1 436052.1 34.38

Machine Tools Rs. lakhs 160577.2 148408 7.58

Boilers Turbines Rs. lakhs 539502.2 621715.1 15.24

Turbines (Steam/Hydro) Rs. lakhs 212057.5 246910.5 16.44

Electric Generators Rs. lakhs 89995.7 113648.9 26.28Power Distribution Transformers Mill. KVA 41.05 51.16 24.62

Telecommunication cables Mill. Mtr. 5094.7 4008.5 21.32

Commercial Vehicles Numbers 311718 326577 4.77

Passenger Cars Numbers 1023616 1202031 17.43Source: Department of IPP.

Table 3 Cement production & dispatches (P)

Description Sep-10 Aug-09 Sep-092010-11 2009-2010

(Apr.-Sep.)Cement Production 12.54 12.85 11.83 81.54 77.22Cement Dispatches 12.56 12.82 11.74 81.10 76.50

Source: Cement Manufacturers Association.

Cement production during April to January 2009-10 was130.67 million tonnes as compared to 115.52 million tonnesduring the same period for the year 2008-09. Dispatcheswere estimated at 129.97 million tonnes during April toJanuary 2009-10 whereas during the same period for theyear 2008-09, it stood at 115.07 million tonnes.

Major Players [51]: (1) Ultratech Cement; (2) CenturyCements; (3) Madras Cements; (4) ACC; (5) Gujarat Am-buja Cement Limited; (6) Grasim Industries; (7) India Ce-ments Limited; (8) Jaiprakash Associates; (9) JK Cements;(10) Holcim; (11) Lafarge; (12) Heidelberg Cemex.

3.4 Electronics industry

Electronics sector includes rms manufacturing tele-phones, electronic circuits, control panels, computer periph-erals, insulators and domestic electronic appliances. In elec-tronics industry, entry of multinational companies such asSamsung, LG, Sony, Daewoo, Aiwa, etc. raised the compe-tition level in the domestic market of India.

Domestic electronic appliances are now in the reach of middle class consumer due to competitive prices and easilyavailable nancial schemes, which has increased the demandfor a variety of appliances. A typical middle class consumerin India wants to have his own television, washing machine,music system, videocassette recorder etc.

4 Research methodology

The research methodology is based on empirical datacollected through a questionnaire survey. The objective of this survey is to examine the status of information shar-ing with customers, investment in supply chain automationtools, Effective mode of communication in supply chain andBenets of using bar coding technology in Indian manufac-turing companies. The objective of the study is to makemore familiar through survey and information is collectedat one point in time. The methodology was based on a sur-vey through a questionnaire and personal interviews. Finalversion of the questionnaire was sent to the 375 companies.

After reminders, phone calls, e-mail and re-reminders, 98lled responses have been received, which gives a response

rate of 26.13%. Area wise distribution of respondent com-panies is observed as under:

Region Number of respondentsWithin Rajasthan 67Outside Rajasthan 31Total 98

4.1 Justication of methodologyIn this study, empirical research is used to document the

practice of Supply Chain Management in Indian compa-nies. Surveys are fairly common in empirical Productionand Operations Management (POM) research (Malhotraand Grover, 1998 [30]). The term empirical (which meansknowledge based on real world observations) is used here todescribe eld-based research, which uses data gathered fromnaturally occurring situations or experiments, rather thanvia laboratory or simulation studies, where the researchershave more control over the events being studied (Flynn etal., 1990 [17]). Empirical research provides a powerful toolfor building or verifying the theory.

Survey involves the collection of information from a largegroup of population. It relies on self reports of factualdata, as well as opinion. Survey research is prominent asa methodology that has been used to study unstructuredorganizational problems in the Production and OperationsManagement (POM) area.4.2 Industry database

A database of 375 manufacturing companies has beenextracted from all over the country. This contains name of the Organization, their location, main products, type of in-dustry, and their postal addresses. Selection criterion wasbased on two parameters i.e. number of employees (100)and annual sales (Rs. 2 Crores). A random sample of 375companies was drawn from the (Industrial directory, 2006[50]).

The manufacturing industry is made up of many differentsectors. In Indian perspective, major manufacturing sectorsare automobile, electronics, machinery, and process indus-tries (Statistical Outline of India 2009-2010). All these foursectors are included in our study. The criteria for selectionof automobile and electronic sector in our study is based onthe fact that:(1) companies belonging to these two sectors are fairly de-veloped one;(2) these sectors involve considerable investments in re-search and development;(3) these sectors are seen as an indicator of the economicprogress of the country, and;



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(4) these sectors have witnessed a proliferation of entrants(global players) following the liberalization of the economy.

In machinery and process industry, lead-time plays a vi-tal role. The aim is to reduce throughput time to deliverthe product earlier than competitors. All these four sectorsform the backbone of industrial economy of the nation. Newproduct developments are at a faster rate in automobileand electronics industry whereas lead-time is an important

strategic aspect in machine tool and process industry. Theseare the key reasons for selection of particular four sectorsfor the study.4.3 Development of questionnaire

Based on the literature, Morita and Flynn (1997) [ 35],Humphreys et al. (2001) [36], Hitomi (1997) [ 22] a ques-tionnaire was designed. The questionnaire has been devel-oped on a ve point Likert scale. Various issues of Sup-ply Chain Management have been incorporated relevant toIndian context, which were missing in the questionnairesused by earlier researchers. The questionnaire contained3 sections A B and C section. Section A contained6 questions, pertaining to organizational prole and sec-tion B contained 26 questions related to level of informa-tion sharing with customer and with suppliers, competi-tive strengths, performance measurement activities, use of ERP and EDI technique for data exchange, benets ob-served by IT enabled supply chain, reasons for adoptinguncertainty model in supply chain and benets of bar-coding technology. The Implementers (i.e. middle manage-ment level) may ll the section B. Section C containsthree questions related to performance measurement issues.General questions regarding mission, vision, number of em-ployees, sales turnover, prot trends, product, exports, mar-ket share, quality/productivity awards, ISO 9000 certica-tion etc. were also framed.

Annexure was given in the end of questionnaire, whichcontained key for the responses and explained in brief theterminology used in the questionnaire to avoid unknownbias. To assess content validity a dry run was made andfew questionnaires were administered to three leading prac-titioners, one consultant and two academicians. Based ontheir feedback the present form of the questionnaire hasbeen evolved and the nal version was sent to 375 compa-nies. After reminders, phone calls, e-mail and re-reminders,98 lled responses have been received, which gives 26.13%response rate.

Flynn et al. (1990) [17], Ganeshan and Harrison (1995)[18] identied some norms for survey research. These normswere followed in the present research. The research is ex-ploratory cross-sectional in nature since data collection isdone at one point of time and it is focused on examin-ing issues in supply chain management. The unit of anal-ysis in this study is a company. In our survey major-ity of respondents were of Vice President/Divisional Man-

ager/Works Manager/Production Manager level and thusappropriate for research questions. Both multi-item andsingle item questions were included as suggested by Mal-hotra and Grover (1998) [ 30]. To reduce sampling error, arandom sample of 375 companies was drawn and responserate was higher than 20% as suggested by Malhotra andGrover (1998) [ 30]. The validity measures two things. First,does the item/scale truly measure what it is supposed tomeasure? Second, does it measure nothing else? Reliabilitymeasures the extent to which a questionnaire repeatedly ad-ministered to the same people will yield the same results.Thus it measures the ability to replicate the study (Flynnet al., 1990 [17]).

Content validity Content validity is a judgment, by experts, of the ex-

tent to which a scale truly measures the concept that itintended to measure study (Flynn et al., 1990 [17]). To as-sess the content validity a dry run was made and fewquestionnaires were pilot-tested with leading practitioners,consultants and academicians. Based on their feedback, thepresent form has been evolved and nal version of the ques-

tionnaire was sent.Construct validity Construct validity measures whether a scale is an ap-

propriate operational denition of a concept (Flynn et al.,1990 [17]). Most of the contents of the questionnaire weretaken from the literature Morita and Flynn (1997) [ 35],Humphreys et al. (2001) [ 25], Hitomi (1997) [22]. Thesecontents are tested for construct validity.Reliability/Internal consistency

Inter-item analysis is used to check the scales for inter-nal consistency or reliability. Cronbachs coefficient alphais calculated for each scale, as recommended for empiricalresearch in operation management (Flynn et al., 1990 [ 17];Malhotra and Grover, 1998 [30]). SPSS for windows package(version 17.0) is used for calculation of Cronbachs Alpha.

Cronbachs alpha values are calculated for 98 responses re-ceived. Values for few items appeared less than 0.5 andthus these scales were excluded from analysis. Cronbachsalpha values more than 0.5 are considered adequate for theexploratory work (Nunally, 1978 [37]).4.4 Survey administration4.5 Questionnaire administration

Data is collected through a postal survey from compa-nies (from four sectors i.e. automobile, electronics, machin-ery, and process) in beginning of the year 2010. A coveringletter, which describes the objectives of the research andprocedures for completing the questionnaire, was enclosed.A reminder through e-mail, phone calls and postal servicewas sent to non-respondents three weeks after the ques-

tionnaires were mailed. A check for non-respondent biaswas carried out by comparing non-respondents with re-spondents in the same sector on the basis of reported salesvolume and number of employees. This check revealed nopattern of differences between the two groups.4.6 Prole of respondents

After the reminders, phone calls, e-mail and re-reminders, 98 lled responses have been received, whichgives 26.13% response rate. Out of 98 respondents 48(51%) were CEO/General Manager/President/Vice Pres-ident/Executive Director with 20-30 years experience.With 10-20 years experience, 35 (35.71%) respondentswere of Divisional Manager/Production Manager/Head-Operations/Works Manager/Director-Technical level. 15(15.30%) respondents were Assistant Manager/DeputyManager/Production Engineer/Quality Engineer with 5-10years experience.

5 Vital statistics of respondentsTab. 4 gives the statistics of the respondent companies

i.e. number of employees, annual sales, exports, and indus-try sector. Among 98 respondent companies from automo-bile, electronics, machinery, and process sector, maximum29(29.58%) responses are from process companies. Majori-ties of companies (28) have number of employees in therange of 101-500 people. In terms of exports, 56% compa-nies have less than 10% exports of annual sales. Out of 98



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companies annual sales of 24 companies is more than INR500 crores. Average statistics of the respondents is given inTab. 5. Products manufactured by respondent companiesare listed in Tab. 6.

Table 4 Statistics of the respondent companies

Number of

employees

Respondent

companies (%)1. 100 10(10.20)2. 101-500 28(28.57)3. 501-1000 20(20.40)4. 1001-3000 24(24.49)5. > 3000 16(16.32)Total 98(100)Annual sales(in Rs Crores)

1. 2-5 6(6.12)2. 5-25 16(16.32)3. 25-100 27(27.55)4. 100-500 25(25.51)5. > 500 24(24.49)Total 98(100)Exports(% of total sales)

1. Nil 15(15.31)2. 10% 55(56.12)3. 10-20% 15(15.31)4. 20-30% 10(10.20)5. > 30% 3(3.06)Total 98(100)Industrysector

1. Automobile 19(19.38)2. Electronics 25(25.51)3. Machinery 25(25.51)4. Process 29(29.58)Total 98(100)Figures in bold refers to modal responses.

6 ObservationsIn this study Indian manufacturing rms are mapped to

assess various issues in SCM practices. Reliability analysisof 98 responses has been made by using SPSS for windowspackage (version 17.0). Chronbachs Alpha is computed for

items used in the study. The results of the survey are di-vided in ve sections i.e. Chronbachs Alpha, level of infor-mation sharing with immediate customers, mode of supplychain communication, degree of investment in supply chainautomation tools and benet of using bar-coding technol-ogy.

6.1 Chronbachs alphaInter-item analysis is used to check the scales for reliabil-

ity or internal consistency. Chronbachs coefficient alpha iscalculated for each scale, as suggested for empirical researchin operations management (Flynn et al., 1990 [17]; Malho-tra and Grover, 1998 [30]). Cronbachs alpha values for each

item are more than 0.5, which is considered adequate forexploratory work (Nunally, 1978 [37]).

Table 5 Average statistics of the respondents

Parameter Sample average RangeAge of respondents 40.4 years [25,55 ]Experience 18.3 years [5,30 ]Number of employees 1155 [100, 5000 ]Annual sales > 14 million US $ [0.25, > 25 ]Exports < 9% of total sales [0, > 30 ]

Table 6 Products manufactured by sampled companies

Automobile

(1) Four wheelers including cars, Trucks, tractors, and buses;(2) Two wheelers Includes scooter and motorbike;(3) Automotive components includes shock absorber, head

lights, battery, bearings, clutches, brakes, steering andsuspension systems, speedometers, mileage meters etc.

Electronics

(1) Electronic consumer items such as televisions, washingmachines, radio, VCRs, telephones etc;

(2) Measuring instruments includes optical pyrometer,electronic energy meters, stabilizers;

(3) Industrial electronics includes microcircuits, electronicpanels, fuse gears, telephone exchange chambers, cables,transformers etc.

Machinery

(1) Agriculture machinery;(2) Sewing machines;(3) Material handling equipment such as fork lift trucks,

cranes;(4) Construction machinery;(5) Grinding machines;(6) Diesel engines, generators, rotors, stators, electric

motors etc.Process

(1) Tyres, paint, cement, fertilizers;(2) Fabric and textiles, paper, medicine etc.

Item Chronbachs alphaLevel of information sharing withimmediate customers

0.7672

Mode of supply chain communication 0.8852

Degree of investment in supply chainautomation tools

0.9443

Benets of bar coding technology 0.8928

6.2 Level of information sharing with immediatecustomers

More and more companies have recognized that there isa direct link between the performances of supply chains andthe availability and quality of timely information. In fact,many supply-chain related problems can be attributed tolack of information sharing between supply chain members.



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One important observation in supply chain management,prominently known as the bullwhip effect, suggests thatdemand variability is magnied as it is further upstreamin the supply chain. The bullwhip effect is an importantconcern in supply chain management for several reasons.First of all, the increased order variability requires eachsupply chain member to hold excessively high inventorylevels in order to meet a boom-and-bust demand pattern.

Secondly, despite the overall overstocking throughout thesupply chain, the lack of synchronization between supplyand demand could lead to complete stock out at certaintimes. Finally, the bullwhip effect increases not only thephysical inventories but also the operating costs.

Recently, academic researchers have showed a growing in-terest in the value of information sharing in supply chains.Padmanabhan and Whang (1997) [39] found that sharingreal demand information across the supply chain membersreduces the bullwhip effect. Chen (1999) [ 6] studied the rel-ative benets of echelon-stock policies over those of instal-lation stock policies in a multi echelon environment. Thelatter decisions at a given facility depend only on local in-ventory information as opposed to this information com-bined with information on all downstream facilities. Sei-

dmann and Sundararajan (1998) [42] treated the level of information sharing not based on its exact content, butrather, based on the impact it has on the parties that con-tract to share the information. They identied four differentlevels of information sharing: ordering information, opera-tional information, strategic information, and strategic andcompetitive information. They investigated how competi-tion and contracting affect the nature of value sharing ateach of these levels. Chen (1999) [ 6] quantied the bull-whip effect for multiple-stage supply chains with and with-out centralized demand information and demonstrated thatcentralizing demand information can signicantly reducebut not completely eliminate the bullwhip effect. Gavirneni(1999) [19] analyzed information ow between a supplierand a retailer in a two-echelon model of capacitated sup-

ply chain. They studied the relationships between capacity,inventory, and information at the supplier level and howthese relationships are affected by inventory system and de-mand distribution. Using a multi-agent simulation model,Tan (1999) [46] tested the impact of information sharing onsupply chain performance. She studied how various infor-mation sharing policies, i.e., no information sharing, sharingof complete demand information, sharing of downstreamcustomers shipment data, and sharing of downstream cus-tomers inventory information, behave under different sup-ply chain structures and demand patterns. One of her inter-esting ndings is that a hybrid information sharing policyimproves supply chain performance under volatile demand.Cachon and Fisher (2000) [4] investigated a supply chainmodel with one supplier, and N retailers, stochastic con-sumer demand, and batch ordering. They showed analyt-ically how the manufacturer can benet from using infor-mation about the retailers inventory levels.

While querying the respondents about their level of in-formation sharing with their immediate customers in thesupply chain, they were asked to address ten different busi-ness areas within their company: Related to purchasing, or-der tracking, Inventory status, Product development, Salesforecasting, Market developments, Companys future plans,Companys production costs, Technology know-how andthey do not share any information.

All the questions were measured on a ve point Likertscale ( 1 = Hardly, 5 = extensively). Thus this study surveys

the respondents perceptions about the extent of sharing of information with their immediate suppliers in each of theseten issues mentioned above.

Table 7 Level of information sharing with customers

S. No. Information Related to Mean Std. Deviation Median1 Purchasing 3.4 0.96 3.46

2 Order Tracking 3.45 0.89 3.53 Inventory status 3.38 0.91 3.474 Product development 3.48 0.84 3.565 Sales forecasting 3.37 1 3.496 Market Development 3.57 1.06 3.667 Companys future plans 3.47 1.08 3.53

8 Companys productionout put

3.02 1.05 3.09

9 Technology know how 3.30 1.05 3.45

10 We do not share anyinformation

2.47 1.34 2.49

Scale 1 to 5 Hardly to Extensively.

Tab. 7 summarizes the answers concerning the Level of information sharing with immediate customers. The resultsof the survey indicate that the factor of Market develop-ment for information sharing has received the most atten-tion in Indian manufacturing industries. It is clear from thestatistics of all the manufacturing rms the overall mean forthe factor market development is highest (mean = 3.57 ).The factor of product development was second most in shar-ing the information with their immediate suppliers withan overall mean of 3.48 followed by information sharing incompanys future plans (mean = 3.47 ) than order track-ing (mean = 3.45 ) and so on. A very few respondents donot want to share their information. These data indicatesthat most of the organizations are very much interested insharing their rms informations related to market devel-opment so that they can assess the need of the customerthat is the end user of the supply chain. Some respondentshave a view not to share their companys information withcustomers because they may have a fear of leakage of theirsecret information which they do not want to disclose.6.3 Mode of supply chain communication

Firms engaged in supply-chain relationships, as cus-tomers, suppliers, or providers of services, need to share agreat deal of information in the course of their interactions.Over the years, companies have managed these informa-tion ows in a number of ways, including telephone calls,letters, telex, faxes, and electronic data interchange (EDI).More recently, rms have begun using the power of the In-ternet to create more effective and open transmission pro-

tocols for machine-to-machine communication of the samehigh frequency data now handled by traditional EDI (itis the implementation of these Internet-based informationsystems that is most often referred to as Supply chain inte-gration (SCI), even though EDI and telephone/fax are alsoways of integrating supply chains).

Supply chain information systems require a great deal of data input, both from automated sources (software applica-tions, control systems, bar code readers, sensors, analyticalinstruments) and manual interactions. In an ideal system,each piece of data would be entered only once and be avail-able to any system in the information network that needsit. High-frequency, routine data input tasks should be fully



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automated, with oversight on a periodic basis by skilled sys-tems optimizers, such as planning or logistics personnel. Ina similar manner, high frequency information ows shouldbe fully automated and transmitted in standard formatswith common protocols.

During survey the respondents were asked about theirmode of communication or correspondence by their com-pany in the supply chain, they were asked to address, seven

different mode of communication within their company:Post or courier, Phone, Fax, Extranet, E-mail, Websitesand Electronic data Interchange.

All the questions were measured on a ve point Likertscale ( 1 = Hardly, 5 = extensively). Thus this study sur-veys the respondents perceptions about the extent of usingthe mode of communication with their suppliers.

Table 8 Mode of supply chain communication

S. No. Mode of Correspondence Mean Std. Deviation Median1 Post or Courier 3.73 1.26 42 Phone 3.26 0.99 53 Fax 3.26 0.89 54 Extranet 3.93 1.32 45 E-mail 4.21 1.1 56 Websites 4.03 1.28 5

7 Electronic DataInterchange

4.44 1.29 4

Scale 1 to 5 Hardly to Extensively.

Tab. 8 summarizes the answers concerning the mode of communication with their suppliers. The results of the sur-vey indicate that the communication mode Electronic Datainterchange is most liked by the Indian manufacturing or-ganizations. It is clear from the statistics of all the man-ufacturing rms the overall mean for the mode of EDI ishighest (Mean = 4.44 ). The mode of E-mail was secondmost in all communication modes for sharing the infor-mation with their suppliers with an overall mean of 4.21followed by use of website for correspondence with suppli-ers (mean = 4.03 ) than Extranet (mean = 3.93 ) and soon. These data indicates that most of the organizations arevery much interested in using Electronic Data Interchangeas the best way for communicating regarding any businesspurpose. Electronic Data Interchange (EDI) refers to thestructured transmission of data between organizations byelectronic means. It is used to transfer electronic documentsfrom one computer system to another, i.e. from one tradingpartner to another trading partner. It is more than mere E-mail; for instance, organizations might replace bill of ladingeven cheques with appropriate EDI messages.

The ways that companies communicate with suppliersand customers will undergo major changes in the near fu-ture. The classic communication means such as phone, let-ter and fax is reported to experience a reduction in utiliza-tion.6.4 Degree of investment in supply chain

automation toolsWhile asking the respondents about their degree of in-

vestment in the supply chain automation tools, they wereasked to address ten different automation tools within theircompany: Related to Bar coding/ Automatic identication,Computer hardware, Extranet, Local area network (LAN),Electronic Data Interchange (EDI), Office automation, Em-ployee training, Automated storage and retrieval system

(AS/RS), Supply Chain Software and Enterprise resourceplanning (ERP).

All the questions were measured on a ve point Likertscale ( 1 = No investment, 5 = Heavy investment). Thusthis study surveys the respondents perceptions about theextent of investment in automation tools mentioned above.

Tab. 8 summarizes the answers concerning the degreeof investment in supply chain automation tools in an or-ganization. The results of the survey indicate that the in-vestment in the computer hardware section is most likedby the Indian manufacturing organizations. It is clear fromthe statistics of all the manufacturing rms the overall meanfor the investment in computer hardware is highest (mean= 3.98 ). The investment in Automated Storage and Re-trieval system was second most in all tools of automationwith an overall mean of 3.92, followed by investment in em-ployee training (mean = 3.88 ) than in office automation(mean = 3.82 ) and so on. These data indicates that mostof the Indian manufacturing organizations are very muchinterested in investing much on computer hardware so thatthe man power can be reduced and maximum processes canbe computerized.

6.5 Benets of bar coding technologyBarcodes have inuenced almost every aspects of sup-

ply chain Management. The use of barcodes makes busi-ness integration process in SCM simpler and more efficient.Barcodes are an effective identication tool that helps trackproducts and greatly reduce errors. Barcode technology hasa range of advantages such as being affordable, easy to han-dle and accurate. These advantages make barcodes widelyused in SCM and accepted across the world. Employingbarcode technology in inventory practices enables timelyand accurate information that helps to operate with greaterwarehouse efficiency and lower inventory on hand. Usingbarcodes along with the Just-In-Time inventory method al-lows companies to estimate precisely when they run out of stock dependence on huge buffer stocks.

While querying the respondents about their benets of bar coding technology in the supply chain, they were askedto address seven different benets of bar coding technol-ogy within their company: updating of stock position, Ac-curate forecasting, Minimizes on-hand inventory, Improvescustomer service, Veries orders at receiving and shipping,Speed up data entry and Enhances data security.

All the questions were measured on a ve point Likertscale ( 1 = Not important, 2 = some, 3 = Moderate, 4 =much, 5 = Most important). Thus this study surveys therespondents perceptions about the benets observed by theuse of bar coding technology as mentioned above.

Tab. 9 summarizes the answers concerning the benetsobserved by the use of bar coding technology in an organi-

zation. The results of the survey indicate that the benetsobserved by the use of bar coding technology in enhance-ment of data security are much observed by the respon-dents of the Indian manufacturing organizations. It is clearfrom the statistics of all the manufacturing rms the overallmean for the benet in data security enhancement is high-est (mean = 4.10 ). The minimizing on hand inventory wassecond most in all benets mentioned with an overall meanof 4.04, followed by the speed up of data entry (mean = 4.0 )than it improved customer service (mean = 3.99 ) and so on.These data indicates that most of the Indian manufactur-ing organizations are very much beneted in data securityenhancement by the use of bar coding technology.



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Table 9 Degree of investment in supply chain automation Tools

S.No. SCM issue Mean Std.Deviation Median1 Bar Coding and Automatic Identication 3.4 0.96 3.462 Enterprise Resource Planning 3.45 0.89 3.53 Computer Hardware 3.38 0.91 3.474 Local Area Network 3.48 0.84 3.56

5 Extranet 3.37 1 3.496 Electronic Data Interchange 3.57 1.06 3.667 Official Automation 3.47 1.08 3.538 Employee Training 3.02 1.05 3.099 AS/RS 3.3 1.05 3.45

10 Supply Chain Software 2.47 1.34 2.49Scale 1 to 5 No investment to Heavy Investment.

Table 10 Benets of using Bar Coding Technology

S.No. Attribute Mean Std.Deviation Median1 Updating the stock position 3.69 1.26 42 Accurate forecasting 3.87 1.17 43 Minimizes on hand inventory 4.04 1.1 44 Improves customer service 3.99 1.21 45 Veries order at receiving and shipping 3.64 1.24 46 Speed up data entry 4.03 1.18 47 Enhances Data Security 4.1 1.19 4

Scale 1 to 5 Not Important to Most Important.

7 Concluding remarksIn our study we have tried to map the multi sector man-

ufacturing companies in various supply chain strategy re-lated issues based on the following frameworks:(1) Level of information sharing with immediate customers;(2) Investment in supply chain automation tools;(3) Mode of supply chain communication techniques;

(4) Use of Bar Coding technology in industries.In this paper an attempt is made to study supply chainstrategies in Indian manufacturing rms. We used a ques-tionnaire survey to capture the information from 98 differ-ent companies with a response rate of 26.13% of the total375 contacted companies, this survey is able to provide afairly accurate overview of the status of supply chain man-agement in perspective of level of information sharing withcustomers, degree of investment in supply chain automa-tion tools, mode of supply chain communication used, andbenets of using bar coding technology. First the Inter-itemanalysis is used to check the scales for reliability or inter-nal consistency. Chronbachs coefficient alpha is calculatedfor each question, as suggested for empirical research inoperations management Cronbachs alpha values for each

scale are more than 0.5, which is considered adequate forexploratory work.Second, the answers concerning the Level of information

sharing with immediate customers by the respondent indi-cate that the factor of Market development for informationsharing has received the most attention in Indian manufac-turing industries.

It is clear from the statistics of all the manufacturingrms the overall mean for the factor market developmentis highest (mean=3.57). These data indicates that most of the organizations are very much interested in sharing theirrms informations related to market development so thatthey can assess the need of the customer that is the end user

of the supply chain. Some respondents have a view not toshare their companys information with customers becausethey may have a fear of leakage of their secret informationwhich they do not want to disclose.

Third, the responses regarding the mode of communica-tion used with their suppliers indicates that the communi-cation mode of Electronic Data interchange is most liked by

the Indian manufacturing organizations. It is clear from thestatistics of all the manufacturing rms the overall mean forthe mode of EDI is highest (mean = 4.44 ).The classic com-munication mode such as letter, phone and fax is reportedto experience a reduction in utilization (mean = 3.26 ). Soin near future the use of electronic communication tech-nique and specially based on the internet will increase andbecome dominant.

Fourth, the answers related to degree of investment insupply chain automation tools in an organization indicatethat the investment in the computer hardware segment ismost liked by the Indian manufacturing organizations. Thestatistics of all the manufacturing rms shows the overallmean for the investment in computer hardware is highest(mean = 3.98 ). The investment in Automated Storage andRetrieval system was second most in all tools of automationwith an overall mean of 3.92.

Fifth, the responses regarding the benets observed bythe use of bar coding technology in an organization indi-cates that the benets observed by the use of bar codingtechnology in enhancement of data security is much ob-served by the respondents of the Indian manufacturing or-ganizations. The statistics shows that the overall mean forthe benet in data security enhancement is highest and thatis 4.10. This indicates that most of the Indian manufactur-ing organizations are very much beneted in data securityenhancement by the use of bar coding technology and least



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benetted in verifying order at receiving and shipping end(mean = 3.64 ).

The study depicts that supply chain strategy of mostcompanies is focused on improving information sharingwith immediate customers related to market developmentand delivering products on time, however competitive ad-vantage can be obtained through use of automation toolsof supply chain like Electronic data exchange and using in-

ternet based communication technique and for enhancingthe data security, bar coding technology is also used by theIndian manufacturing rms. It has highlighted a number of interesting aspects of supply chain function and strategy.Organizations selected in the study were different in na-ture and product range. The overall results are encouragingwith 26% response rate, in Indian scenario and underlinethe need for more such studies of Indian rms. Viewing thechallenges to Indian rms, in an integrated framework, oneneeds to put the strategic issues in proper perspective.

8 Limitations and directions for futureresearchIn this study an attempt is made to assess four major

manufacturing sectors of Indian manufacturing industryviz. automobile, machinery, electronics, and process. Re-sponse rate (26.13%) is also better than earlier reportedsurveys in Indian context. However this study has some lim-itations, which future researchers could consider. Due to re-source constraints, software sector and service sector couldnot be included in our study. Second, mono-respondentapproach is used due to high cost associated with multi-respondent approach. Researchers may consider these issuesin future.

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Evident of SCM in Indian Manufacturing Firms

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