SUMMER INTERNSHIP REPORT

ON

“SUPPLIER QUALITY RATING”

UNDERTAKEN FOR

VARROC POLYMERS PVT. LTD.

GREATER NOIDA

IN PRTIAL FULFILLMENT OF DEGREE OF

MASTERS OF BUSINESS ADMINISTRATION

OF

AMITY GLOBAL BUSINESS SCHOOL, NOIDA Session:2009-2011

DECLARATION

I, the undersigned, hereby declare that the Project Report entitled “SUPPLIER

QUALITY RATING” written and submitted by me to the Amity university, in partial

fulfillment of the requirement for the award of degree of Master of Business

Administration is my original work and the conclusions drawn there in are based on the

material collected by myself.

PRERNA VERMA

ACKNOWLEDGEMENT

I would like to take this opportunity to express my sincere thanks and gratitude to Mr. Pradeep Sharma and Mr. Manish Saxena , Varroc Polymers Pvt Ltd, Greater Noida for giving me an opportunity to do my summer internship in the esteem organisation and it has indeed been a great learning and enjoyable experience.I would like to express my deep sense of gratitude and profound thanks to all staff members of Varroc Polymers Pvt Ltd., Greater Noida for their kind support and cooperation which helped me in gaining lots of knowledge and experience to do my project work successfully. I would like to thank all the respondents without whose cooperation my study/project

would not have been completed.

Last but not the least I feel indebted to all those persons and organizations whose/which

have provided help directly or indirectly in successful completion of this study.

PRERNA VERMA

CONTENT . ACKNOWLEDGEMENT

EXECUTIVE SUMMARY Chapter 1: INTRODUCTION 1.A Concept & context of the study 1. B Objectives of the study 1.C Scope & limitation of the study

Chapter 2: PROFILE OF THE ORGANISATION

2. A Name, Address & Location of company 2. B Vision & Mission 2. C Historical background 2. D Organizational chart 2. E Product profile of company 2. F Awards

Chapter 3: RESEARCH DESIGN & METHODOLOGY 3. A Sources of data collection 3. B Sample Description

Chapter 4: CONCEPTUAL BACKGROUND 4. A Theoretical Background 4. B Conceptual description of topic

Chapter 5: DATA PRESENTATION & ANALYSIS

Chapter 6: FINDINGS & CONCLUSION

BIBLIOGRAPHY

ANNEXURE

EXECUTIVE SUMMARY

“Tree cannot touch the skies, but certainly can have branches.” Varroc Group too

believes in this axiom, and has strong footholds in Polymer, Electrical, and Metallic

Divisions and exists in all important areas of Automobile sector.

Now, Varroc Group has ventured into the field of automotive components & sub

assemblies of 2, 3, and 4 wheeler in domestic and overseas market with an objective to

become the preferred quality supplier across the globe.

To survive and achieve success, any ventures need to understand the dynamics of

competition in their industries and develop skills and capabilities that give them a

competitive advantage. This is especially true among automotive industries. Customer do

not buy only products as such, they buy satisfaction, hence organization must be clear

about the satisfaction the customer is seeking and check out whether supplier is also

meeting the standard as per concern of quality, delivery & service provided so that proper

improvement is achieved throughout the supply chain.

This report is based on above mentioned problems i.e. quality standards of existing

suppliers. This report is broken down into four main parts, first its deals with the

introduction and the scope of the research, second explains the profile of the Varroc

Group followed by process or methodology adopted under the research methodology and

the review of literature and finally concluding by analyzing the collected data.

The work environment of Varroc group was absolutely encouraging and full of support.

During my training, on one hand I learned much about Varroc, their work culture, on

other hand I got the knowledge of supply chain management.

CHAPTER – 1 : INTRODUCTION

OBJECTIVES OF THE STUDY :

1. To learn how assessment technique can help in enhancing decision making in materials Managments. 2. To equip with the required depth & balance of technical & managerial competencies to Handle supplier quality issues successfully.3. To develop familiarity & competence with the supplier quality audit techniques.4. To analyze the supplier quality audit to assess the supplier quality rating

SCOPE OF RESEARCH

After completing this project, the researcher will get knowledge about today’s

challenging supply chain management. Since this project is a part of researcher’s course

curriculum so it is essential for researcher for completing “Masters of Business

Administration” degree which will help researcher in building his career. It will also

increase researcher’s confidence level so that he will be able to adjust himself in such

kind of esteemed organization. This research study will help the company to know about

the existing supplier quality rating. This study will also help the company to determine

the strategy about supplier quality up gradation.

LIMITATIONS

1. Stipulaed time period is the main limitation of the study project. 2. It was very difficult to get the suitable data as supplier is scattered.

CHAPTER – 2

ORGANIZATIONAL PROFILE

NAME AND ADDRESS OF ORGANIZATION

Varroc Polymers Pvt. Ltd.,

Plot No. 35A, Udyog Vihar, Greater Noida.

Dist.Gautam Budh Nagar – 201306

U.P India.

CORE VALUES OF ORGANIZATION

We are committed to making Varroc a leader in the industry & ensuring that varroc is always the first & most trusted choice for its customers.We plan to achieve this by practicing,

S INCERITY:

To go the distance

In carrying out roles & responsibilities transparently

In expression of thoughts & feelings

In concern for the team & the company

H UM ILITY:

To walk with everyone

By showing respect for others

By sharing success & achievements

By being open & positive

INTEGRITY:

To do what is right

To inculcate a culture of healthy competition

To have no tolerance for unethical practices

To adhere to commitments

PAS S ION:

To achieve against all odds

To proactively participate in the organization

To bring about innovation in all work

To remain motivated against all odds

SELF DISCIPLINE:

To make it happen

To take ownership for your actions

To be consistent & dependable at all times

To learn & improve everyday

VALUED CUSTOMERS

VARROC GROUP : OVERVIEW

VARROC GROUP : OVERVIEW 12 VALUED CUSTOMERS VARROC GROUP Varroc Engg

VARROC GROUP

1) Varroc Engg Pvt Ltd

. 2) Varroc Polymer Pvt Ltd.

HISTORICAL BACKGROUND

“POLYMER DIVISION”

1990 - Establishment of ‘polymer division’ from Waluj, Aurangabad.1995 - Varroc successfully introduced ‘rubber moulding process.’1995 – ‘Mouldcraft Hindustan Pvt. Ltd.,’ (MHPL) set up as joint venture with Videocon.1996 – ‘Foam moulding process’ introduced by varroc group.

1998 – ‘Mouldcraft Hindustan Pvt. Ltd.,’ (MHPL) introduced ‘sheet extrusion process.’ 1999 – New plant set up at Takve in Pune specializing in ‘plastic moulding process’. 2001 – ‘Mirror plant’ operations started at Takve in Pune. 2002 – Varroc Polymer Pvt. Ltd., Greater Noida (VPPL-GN) was set up with specialization in “Gas assisted Injection moulding process”.2003 – ‘Paint shop’ started its operation from plant I.2003 – ‘Air cleaner assembly’ production for 2 wheeler of Bajaj Auto Ltd.2004 – Establishment of ‘Technology Development Center’ (TDC) for Bajaj 2 wheeler business.2004 – VPPL-GN received ‘Best Partners Excellence Award (2004)’ from LG Electronics.2004 – VPPL-GN won prestigious ‘Excellent Vendor Award (2004)’ from LG Electronics2005 - Varroc Polymer Pvt. Ltd., Binola (VPPL-BN) was commissioned with specialization in “Moulding process” at Binola in Haryana.2006 – Shifting of ‘Mirror plant’ at Ranjangaon in Pune i.e. Plant II. 2006 – Increase in the domain of expertise of ‘Technology Development Center’ (TDC) By incorporating activities integral to 4 wheeler business.kkkkkk2007 – ‘Expansion of Varroc Polymer Pvt. Ltd., Plant II’ (VPPL - II) at Ranjangaon in Pune to cater the “four wheeler Business”.

2008 – ‘Hot and cold Injection process’ introduced at VPPL Plant II at Ranjangaon in Pune.

2008 - Varroc Polymer Pvt. Ltd., Binola (VPPL-BN) won Achievement Award (2008) for meeting quality and delivery targets by Honda Motorcycle and Scooter India (P)Ltd.

2008 - Varroc Polymer Pvt. Ltd., Greater Noida (VPPL-GN) added another feather in its cap by winning Excellence Award (2008) in Q, C, and D in Mold Category from LG Electronics.

ORGANIZATIONAL CHART

“VENDOR DEVELOPMENT: POLYMER DIVISION”

1) DEPARTMENT HEAD

Corporate Material

(Polymer division)

2) DEPARTMENT HEAD

Vendor Development

3) AM Material Vendor Development

4) Sr. Officer

Vendor development

a) Engineer Vendor development

b) Engineer Vendor development

PRODUCT PROFILE

Varroc Group has adopted the TPM system to ensure continuous improvement and sustenance of the quality of the products. All divisions manufacture precision high quality parts for the automobile industry.

1. POLYMER DIVISION:

Interior Pillar Trims, Door Panels, Floor Console

Exterior Parts – Bumpers, Fenders, Claddings, Wheel Arches

Underbody/ HVAC parts

Injection and Compression Molded Rubber Parts

Mirror Assemblies and Mirror Rubber Parts

Air Cleaner Assembly

PU Foam Pad and Seating System Assembly

Multilayer co-extruded Thermoplastic Sheets

Molded parts for White Goods and Consumer Electronic Parts

Series Molds and Pre Production Molds

2. METALLIC DIVISION:

Engine Valves

Crank pins for motorcycle

Hot, cold & warm forged machined components

Catalytic converters for 2, 3 and 4 wheelers

3. ELECTRICAL DIVISION:

A.C. generator & Magneto

Digital CDI, digital regulator rectifier units

Starter Motor, Wiper Motor

Switch Assembly and handle bar assembly for motorcycle, LED Lights

Electronic control units.

AWARDS & ACHIEVEMENTS

Excellence and perfection are the key stones of Varroc manufacturing philosophy. Varroc

emphasis on Quality Systems and insistence on process reliability ensures that products

not only meet customer requirements in every respect, but also satisfy the international

norms of product excellence. The passion is reflected in the excellence of work, for

which varroc received a lot of appreciation from the clients and even some awards. With

these achievements, Varroc group has proud feeling that, ‘this is just a beginning, and our

best is yet to come.’

VPPL-GN:

Best Partners Excellence Award (2004) from LG Electronics . Excellent Vendor Award (2004) from LG Electronics. Excellence Award (2008) in Q, C, D, in Mold Category from LG Electronics .

VEPL-IV:

•

BAL- Silver Quality Award (2007) . BAL- TPM Award (2007) . ACMA–Gold Award (2008) in SME category for Excellence in Quality and

Productivity.

DIPL:

•

Indian Manufacturing Excellence Award (Gold) in 2007 out of 85 competing companies. It was sponsored by Frost and Sullivan .

Best Kaizen Award (2008) by bagging the first position and winning Rs. 1,

00,000/- after beating Bharat Forge, Tata Motors, Mahindra, Maruti Udyog

etc.This event was sponsored by Sona Koyo.

VPPL-BN:

•

Achievement Award (2008) for meeting quality and delivery targets by Honda Motorcycle and Scooter India (P) Ltd.

VPPL-I:

•

Best Supplier of the year 2006 - 2007 for “Excellence in Quality" from Tata Johnson Control Automotive Ltd.

VESPL:

•

BAL- Silver Quality Award (2007)

CHAPTER – 4 RESEARCH DESIGN AND METHODOLOG

RESEARCH METHODOLOGY

Redmanand Mory define research as a, “systematized efforts to gain new knowledge”

Research methodology is a way to systematically solve the research problem. Research

methodology not only includes research methods but also consider the logic behind the

methods we use in the context of our research study and explain why we are using a

particular method or technique so that research results are capable of being evaluated by

researcher himself or others.

•

Type of Universe:

Here, type of universe is finite universe, because we can count the number of sample units.

Sampling Unit:

Here sampling units are existing suppliers of Varroc polymer pvt ltd.

Type of Sample Design:

It is a type of non-probability sampling, it is also known as convenience sampling – under this sampling design every item of the universe has an unequal chance of including in the sample. In this type of nonprobability sampling, the sample being drawn from that part of the population which is close to hand. That is, a sample population selected because it is readily available and convenient

. •

Method of Data collection:

Here, Method of Data collection is Questionnaire Method.

No of questions: 63 questions excluding profile. Type of questions: Open & close ended questions .

Primary and Secondary Data Sources:

The primary source of information was supplier quality audit reports. Supplier quality assessment is carried out by Audit team to assess the quality of the supplier so as to determine the supplier quality rating.. The company’s website, Magazines, information provided by the vendor development team of Varroc group were my secondary sources of information.

CONCEPTUAL BACKGROUND

1. Theoretical Background

A. Supply Chain Management B. Vendor Development

2. Conceptual description

A. Varroc Quality Policy B. Supplier Quality Management C. Supplier Quality audit D. Supplier Quality Rating E. Supplier Quality Rating Calculations

THEORETICAL BACKGROUND

A.1) SUPPLY CHAIN MANAGEMENT:

The definition, put forward by an American professional association,

is that Supply Chain Management encompasses the planning and management of all

activities involved in sourcing ,procurement, conversion, and logistics management

activities. It also includes the crucial components of coordination and collaboration with

channel partners, which can be suppliers ,intermediaries , third-party service providers,

and customers. In essence, Supply Chain Management integrates supply and demand

management within and across companies. Supply Chain Management spans all

movement and storage of raw materials, work-in-process inventory, and finished goods

from point of origin to point of consumption.

In the 21st century, changes in the business environment have contributed to the

development of supply chain networks. First, as an outcome of globalization and the

proliferation of multinational companies, joint ventures, strategic alliances and business

partnerships, there were found to be significant success factors, following the earlier

"Just-In-Time", "Lean Manufacturing" and Second, technological changes, particularly

the dramatic fall in information communication costs, which are a significant component

of transaction costs, have led to changes in coordination among the members of the

supply chain network.

A.2) SUPPLY CHAIN DECISIONS:

The decisions for supply chain management are classified into two broad

categories - strategic and operational. As the term implies, strategic decisions are

made typically over a longer time horizon. These are closely linked to the corporate

strategy and guide supply chain policies from a design perspective. On the other hand,

operational decisions are short term, and focus on activities over a day-to-day basis. The

effort in these type of decisions is to effectively and efficiently manage the product flow

in the "strategically" planned supply chain.

There are four major decision areas in supply chain management

as: 1) location, 2) production, 3) inventory, and 4) transportation (distribution), and there

are both strategic and operational elements in each of these decision areas.

A.3) SUPPLY CHAIN MANAGEMENT APPROACH:

Supply chain management is a cross-function approach to manage the

movement of raw materials into an organization, certain aspects of the internal processing

of materials into finished goods, and then the movement of finished goods out of the

organization toward the end-consumer. As organizations strive to focus on core

competencies and becoming more flexible, they have reduced their ownership of raw

materials sources and distribution channels. These functions are increasingly being

outsourced to other entities that can perform the activities better or more cost effectively.

The effect is to increase the number of organizations involved in satisfying customer

demand, while reducing management control of daily logistics operations. Less control

and more supply chain partners led to the creation of supply chain management concepts.

The purpose of supply chain management is to improve trust and collaboration among

supply chain partners, thus improving inventory visibility and improving inventory

velocity.

B.1) VENDOR DEVELOPMENT:

Vendor development is one of the popular techniques of strategic sourcing,

which improves the value receive from suppliers. Vendor Development can be defined as

any activity that a Buying Firm undertakes to improve a Supplier's performance and

capabilities to meet the Buying Firms' supply needs.

Traditionally one of the reasons for developing vendors is to build more

competition in the supply market so as to eliminating monopoly or oligopoly. The

company can then buy a material from a number of sources. Another traditional reason

for vendor development is to spread the risk of non availability or shortage of input

materials over a number of suppliers.

B.2) BEST PRACTICES IN VENDOR DEVELOPMENT:

Vendor development can be seen as an attempt to get the advantages of both spreading

risk, building competition and at same time establishing a good rapport. Vendor

development involves helping or building up the vendor by various means such as:

1. Providing technical help by making company engineers and technicians available to the vendor to help him tide over the initial technical problems.

2. Guaranteeing vendor a certain amount of business, this is particularly needed during initial stages of setting up the vendor.

3. Help in R&D, by again lending technical help to not only to establish the company, but also to help improve its products and services on a continuous basis. 4. Lending money for part of his capital equipment, working capital requirements etc. 5. Working directly with Suppliers either through training or other activities etc. 6. AssessingeSuppliers'soperations.

B.2) BARRIERS TO VENDOR DEVELOPMENT:

Vendor development is one of the most powerful approaches that a firm

can engage to achieve the World-Class Supply Chain Management. The focus should be

on developing vendor to become self- sufficient at Developing, Implementing and

maintaining World-Class performance. There are many barriers to effective supplier

development, such as,

1. 1. Credibility of customers 2. Legal issues 3. Resource limitations 4. Poor communication and feedback 5. Complacency 6. Initiative fatigue

CONCEPTUAL DESCRIPTION

A. VARROC QUALITY POLICY:

“We at Varroc group are committed to manufacture & deliver Quality products efficiently on time that comply with customer & regulatory requirements & provide excellent service by continually improving effectiveness of all processes, while striving to become a world class organization.”

B. SUPPLIER QUALITY MANAGEMENT:

Supplier quality management has emerged as one of the leading business practices in the

past few years. World- class manufacturers are making significant investments in systems

and processes to improve supplier quality. With companies outsourcing their

manufacturing to strategic partners across the globe, the supply chains have become very

long. In addition, many of these manufacturers have streamlined their supply chain and

implemented lean inventory techniques. As a result, any issue in supplier quality can

quickly result in stock outs.

Businesses rely on suppliers to maintain their efficiencies. Even a minor breakdown in

the supply chain, or a slight deviation from quality performance, can cost an organization

valuable time and reduce profitability. Companies that sell industrial products need to

preserve their preferred supplier status to continue to be considered for future business.

As a result, they are under pressure to ensure that their products continue to meet or

exceed acceptable PPM and Corrective Action thresholds set by their customers. Hence,

managing their own supplier’s quality is very high on the agenda for these companies.

C. SUPPLIER QUALITY AUDIT:

All over the world organizations are under pressure to reduce production lead times &

production costs. These pressures have led companies to attempt to improve the

efficiency of their internal processes by adopting new business practices like Total

Productive Management, Just In Time, etc. But they have now realized that isolated

improvement in individual organization within larger system of interdependent

environment would not be enough to achieve their objectives. They have recognized the

need for better coordination with upstream firms that supply inputs and the network of

downstream firms responsible for the distribution of their products to the customers and

after sales service. This has resulted in the emergence of the concept of supplier up

gradation.

Varroc expect suppliers to meet the same high standards which varroc set for themselves.

In this rapidly changing business environment greater demands are being placed on

business to provide products quickly with greater added value, to the correct location

with least possible inventory levels. Customer expects high quality, design, innovation,

convenience & service at reduced cost. Supplier systems assessments are done through

audits to review suppliers’ quality management system, manufacturing processes,

material handling system & compliance with varroc requirements.

In this system, assessment identifies concerns, Varroc asks the suppliers to develop

corrective action plans & to provide evidence that they are implementing

recommendations. Varroc help suppliers to improve by sharing best practices & work

with them to manage their suppliers, so that sustainable improvements are achieved

through out the supply chain. The key areas are identified and assessed in the supplier

quality audit. This assessment system includes:

• M an ag emen t

• Finance & Accounts

• En g in eer in g

• Quality control

• Measurement control

• In process control

• Manufacturing process

• Packing & dispatch

• Abnormality control

• D ev elo p men t

• S to r es

• Purchase

D. SUPPLIER QUALITY RATING:

A Supplier quality rating or vendor rating is a business term used to describe the process of measuring an organization's supplier capabilities and performance. Supplier rating forms part of Varroc's supplier relationship management. Such systems follow the criteria that are used for assessment broadly falls into quantative and qualative types. Common criteria include:

1.Quality 2.Delivery schedule adherence 3. Cost/Price 4. Capability

5.Service

Results of each variable are then weighted into a final score – usually a percentage,

allowing suppliers to be ranked. Supplier rating is an ongoing activity, suppliers are

assessed periodically. Various criteria can be analyzed within supplier rating system. A

common approach is to utilize Quality, service and Delivery measures and apply

weighting against criteria in accordance with company requirements.

Varroc then often categorized suppliers according to results which may commonly be

used to highlight poor performing suppliers so that they can be blocked from the business

sharing. Supplier rating results may also trigger improvement programs on suppliers that

score low in supplier quality audits. Supplier ratings system is utilized to drive

performance and improve the business relation.

E. SUPPLIER RATING CALCULATION:

1. Quality rating (SQR):

It is one of the best techniques in using facts to rank the supplier’s relative performance within the supply base and tracking improvement in supplier’s quality over the longer period of time.

SQR= [ (Q1+X1.Q2+X2.Q3+Q4) / Q ] * 100

Where,

Q1 = Quantity accepted

Q2 = Quantity accepted under deviation

Q3 = Quantity partially accepted

Q4 = Quantity rejected

Q = Total quantity

X1 = Demerit factor (material accepted under deviation)

X2 = Demerit factor (material accepted with segregation)

2. Service rating (sr):

Service rating is subjective rating given on the basis of service provided in handling the customer concern by the suppliers.

3..Delivery rating (SDR):

SDR= ( Q1 / Q ) * 100

Where,

Q1 = Quantity promised to supply within stipulated delivery time

Q = Actual quantity supplied

4.Supplier rating (SR):

SR = [ SQR * 85% + SDR * 10% +sr * 5% / 100 ]

Where,

SQR = Supplier Quantity Rating

SDR = Supplier Delivery Rating

sr = Service Rating

5. Analytical weightage:

Weightage is applied against Quality, service and Delivery measures in accordance with company requirements.

SQR = 85%

SDR = 10%

sr = 5%

6.Supplier category:

Suppliers are categorized according to supplier rating results which are used to highlight poor performing suppliers so that they can be blocked from the business sharing.

A = greater than or equal to 95%

B = less than 94.99% but more than or equal to 90%

C = less than 89.99% but more than or equal to 85%

D = less than 84.99%

CHAPTER – 5

DATA PRESENTATION AND ANALYSIS