Formulation of Research Preposition for Productivity Improvement in Development of Supply Chain (SC)

IJSTE - International Journal of Science Technology & Engineering | Volume 2 | Issue 6 | December 2015 ISSN (online): 2349-784X

Formulation of Research Preposition for Productivity Improvement in Development of Supply Chain (SC) Model in Capital and Industrial Goods Manufacturing of Indian Industries Vinay A. Parikh Department of Production Engineering S. S. Engg. College, Bhavnagar

Mangal G. Bhatt Principal Shantilal Shah Engineering College, Bhavnagar, Gujarat

Abstract A supply chain management (SCM) is a network of departments which is involved in the manufacturing of a product right from the procurement of a raw material till the distribution of the final product to the customer. India has a very wide base of capital and industrial goods manufacturing industry serving as a backbone of manufacturing industries. Author has identified lack of productivity in the above sector and taken it as a problem for development in supply chain model. Here author is taking initiative about five research preposition based on SC model, Capital and Industrial Goods manufacturing industries, supplier-buyer relationship, strategic sourcing, agility, supplier evaluation practice etc. based on the concrete literature. Out of all above preposition based on „strong buyer-supplier relationship‟ and „strategic sourcing‟ has vital impact on machine tool manufacturing industry. However all the above preposition when tested will be proven actually.

Keywords: Supply Chain Management (SCM), Preposition, Capital & Industrial goods Mfg. Industry ________________________________________________________________________________________________________

I. INTRODUCTION The concept of supply chain management is too much emerging as India is witnessing “Make In India” campaign and going to become a worldwide manufacturing hub. Supply Chain Management deals with management of all these activities associated with moving goods right from the raw material stage till through the end user. (Quinn, 1997) Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements. (Simchi Levi). Some broader definitions of supply chain as well as supply chain management were also given. According to Stock & Lambert (2001), “Supply Chain integrates the key businesses processes of an organization from end user through original suppliers that providers products, services and information that add value for customers and other stakeholders.” While Mohanty and Desmukh (2004) described, “A Supply Chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products and the distribution of these finished products to the customers. A Supply chain exists in both services and manufacturing organizations although the complexity of the chain may vary greatly from industry to industry and from firm to firm.”Beamon (1999) defined supply chain as an integrated process where raw materials are transformed into final products then delivered to customers, while Berry (1995) views it as a system whose constituent parts include material supplies.

Products and facilities, distribution services and customers linked together by feed forward flow of materials and feedback flow of information. Ganeshan and Harrison (1995) defined it as a network of facilities and distribution options that performs the functions of procurement of materials, transforms these materials into intermediate and finished products and distributes products to each customers as well Johnson (1995) called it as a process of strategically managing the movement and storage of materials, parts and finished inventory from suppliers to the firm and on to the customers. One more author Kalakota (2000) defined it as an integrating process based on flawless delivery of basic and customized services, New and Payne (1995) viewed the chain linking each element of the manufacturing and the supply process from the raw materials through to the end user, encompassing several organizational boundaries.

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Formulation of Research Preposition for Productivity Improvement in Development of Supply Chain (SC) Model in Capital and Industrial Goods Manufacturing of Indian Industries (IJSTE/ Volume 2 / Issue 6 / 006)

Fig. 1: Basic Supply Chain Model India stands 17th in production and 12th in the consumption of machine tools in the world. (IBEF Report 2014). Capital and Industrial Goods Manufacturing Industry is a sub-sector of Mechanical Engineering as Machine Tools are at the origin of almost any manufacturing process.(European Machine Tool Industry report 2011). Capital and Industrial Goods Manufacturing Industries (C & I GM Ind.) are also facing competition and become competitive in terms of cost, quality, Creativity delivery and Research & Development. Successful Supply Chain with the aim of improved productivity can become an ideal potential solution and make the above sector more competitive. Here author has identified five different preposition for proposed SC model in above sector.

The paper is organized in three sections. First section refers to the preliminary literature review. Preposition has been generated in the second section. Third section concludes the whole paper.

II. LITERATURE REVIEW & PREPOSITION FORMULATION In order to fulfill research gap in the literature author has identified research preposition as listed below: A. Research Preposition 1: (H1) “Objective of adopting SC model differs for Capital and Industrial goods manufacturing industries and other organizations.�

Supply chain of each and every industry differs in their own way as their suppliers, manufacturers, warehouses also differs.

M.I.Maixell, V.B.Gargeya(2005) found that a number of industries have been explored in the model based literature including electronics manufacturing, apparel, fiber and textile and automotive. Other industries have not been investigated such as aircraft, Heavy machinery (A type of capital and industrial goods industry) and services. Here author identifies an objective of improving productivity of capital and industrial goods manufacturing industry with the help of improved supply chains. M.Eswaramoorthi et al. (2011) concluded that the business cycle in machine tool manufacturing closely follows the general economic cycle and has therefore always been subject to cyclic fluctuation. As per the European Machine tool Report 2011 Customers tend to postpone investment decisions during economic slowdown and they buy new machine tool during booming. Supply Chain of Capital and Industrial goods industry is completely differs as machine tool builders produce machine which may be demand driven. However Machine tool builder offers a wide range of services including application, engineering, maintenance, repair, handy training of operators etc.

Thus it has been concluded that the above preposition has been derived correctly as on today production of machine tools is done more in supply chain network and less in-house.The upstream suppliers in the chain comprises primary material supplier, companies providing R & D as well as consultancy services. They may have different chain partners e.g.companies manufacturing electric controls, refrigeration unit, hydraulic unit and machine structural components.

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Formulation of Research Preposition for Productivity Improvement in Development of Supply Chain (SC) Model in Capital and Industrial Goods Manufacturing of Indian Industries (IJSTE/ Volume 2 / Issue 6 / 006)

B. Research Preposition 2: (H 2)”SC Model for Capital & Industrial Goods Manufacturing Industries significantly improves the productivity and hence leads to better organizational performance of the firms. “ This preposition shows the importance of SC Model to C & I G M Industries. As per the Vibrant Gujarat Reports 2015 Indian Machine Tool Industry is serving at 38.4 % to global market. Productivity is the major concern for the whole society (Vrat et al.

1995) For the better organizational performance of the above industries they have to adopt a particular Supply Chain model that can be suited to their requirements.

Supply Chain driven organizational performance depends upon a) Resources, b) Output and c) Flexibility (Gunasekharan et al.

2001) A literature review summarizes that if Industry specific SC model is not developed organizational performance like delivery of customer orders, back order level, percentage of stock out, delivery lead time, supply chain cycle time, capacity utilization may effect. (Arif Khan et al. 2009).

C. Research Preposition 3: “Compared to other sectors, Capital and Industrial Goods Manufacturing Industries pays relatively more attention to improve internal business activities.”

As per IBEF reports India Stands 17th in Production and 12th in the consumption of machine tools. The report also briefs that approximately 75 percent of Indian machine tool producers are ISO certified.

Fig. 2: User Industry Segmentation The above chart indicates contribution of the user industry segments to the machine tool sector.Thus the growth has a positive impact on the above sector. For upgrading and expanding capabilities C & I G M Industries has to adopt certain new methodology like Supply Chain as their Internal Business activities got momentum.

Here internal business activities like a)productivity improvement with SC, b) Strong Vendor-Buyer relationship between ancillary industries and parent machine tools industries, c) SC model as strategic choice for long term goal is focused.

D. Research Preposition 4: “Strategic sourcing, Effective strategic supplier collaboration and Effective supplier evaluation practices including higher level of trust in collaborative sc members significantly enhances the supply chain agility of C & IGM Ind.” Strategic Sourcing plays an important role in above industries. As per the European Machine Tool Industry reports Machine tool builders purchase cheaper components from outer countries such as cast iron basements and frames etc. The supplier base is also depends on numerical controls, linear guides, spindles, clamps and tooling etc.Highly valuable parts procured from suppliers are electronic components, refrigeration units, hydraulic units and machined structural components which requires eminent supplier collaboration.Huin et al. (2002) also found that the frequent change of orders by machine tool builders (OEM) or first or second tier buyers is the biggest challenge for C & I G M Ind. Sahay et al. (2012) developed an integrated trust building model for supply chain partner‟s relationships. The trust development between SC partners with improved collaboration will not improve trust but also raises agility which improves productivity.According to Guteirrez & Hinsta (2006) a risk worthy characteristics and risk worthy rationale related economics as well as emergent international terrorism may cause vulnerability.

But on the larger end the above preposition is to be checked between SC partners with its latent components for the target industry.

E. Research Preposition 5: “Strategic drivers, obstacles and operational areas affected in applying SC model is differ significantly in Capital & Industrial Goods Manufacturing Industries and other organizations.”

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Formulation of Research Preposition for Productivity Improvement in Development of Supply Chain (SC) Model in Capital and Industrial Goods Manufacturing of Indian Industries (IJSTE/ Volume 2 / Issue 6 / 006)

As this is an Industry specific SC, drivers for motivating the SC may be common as well as different. However common drivers that boost up supply chain like a) Management Approach b)Specific SC Strategy c) Digitization d) Level of Trust & Collaboration e) Broad Supplier base f) Agitators for agility g) Deep Vision for Productivity improvement etc. are to be checked.

Author takes a note that there are common obstacles observed in SC model adoption and no specific obstacle that differs in target industry. Chin et al. (2004) investigated the barriers of collaborative SCM initiatives. One can count several obstacles like a) Culture of an organization b) Management Approach c) Lack of specific SC strategy d) Digitization e) Level of mistrust f) Hindrances to Agility g) Lack of knowledge towards productivity etc. may be checked.

Simchi-Levi et al. (2003) studied implementation problem. Buonamo et al. (2005) also mentioned that Industries lack organizational preparation for adopting SC model. It is assumed that C & I G M Industries may have their own constraints for full implementation of SC model. According to Sharma and Bhagwat (2005) lack of vision towards productivity is the major hindrances towards implementation.

Author also feels that negative feelings like fear, mistrust, lack of money, various threats, and barriers may lead to improper implementation of SC model.

III. CONCLUSION The above five preposition has been formed after careful study of the prevalent literature of supply chain, productivity and careful study of machine tool manufacturing segment. However, all the above hypotheses are to be checked either with survey technique followed by interview method if possible. The data can be modeled and specific solution for the above industry and their productivity can be improved. Author believes that preposition number 4 which suggests “Supplier-Buyer Relationships” and “Strategic Sourcing” have a vital effect as they C & I G M industries has to depend a lot on suppliers. Author takes a note that existing system of supply chain of Capital and Industrial Goods manufacturing Industries may be change due to implementation of this model.

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