Logistic services & Market Analysis of Tyre Industry by Sanjay Gupta

“Logistic services & Market Analysis of Tyre Industry” (RELATING TO FINAL FINISHED GOODS) At “J.K. INDUSTRIES LIMITED” (BANMORE TYRE PLANT) A project report submitted in partial fulfillment of the requirements for the award of MBA

Acknowledgement

I take this opportunity to express my deep sense of gratitude towards all the persons who helped me through their guidance and cooperation to complete the project successfully. It is great privilege and honor to have an opportunity of doing project at JK TYRE & INDUSTRIES LTD - BANMORE TYRE PLANT.

First of all I would like my sincere thanks to reference XYZ, General Manager (Quality Assurance), Mr XYZ (Chief Manager – (HRD) & XYZ (Manager Personnel) and I would also like to thank Mr. XYZ (Deputy General Manager Legal, Excise and Dispatch) for guiding me in this project and giving me necessary inputs to deal with the situation. Without his constant and sincere support the project would not have been completed. XYZ

Table Of Contents

Topic Section1: Company Profile

Page No. 4

1. Organization Structure

2. Management Style

3. Product and Markets

4. Competitors

5. Various Product Range

6. Strategies

7. Financials of The Company

8. SWOT

Section 2: Summer Training Project

• • •

Concept Of Logistic Arrangements Concept Of Supply Chain Management Cost structure

19 21 24

Project work undertaken

1. Objectives

2. Research Methodology

3. Limitations

4. Analysis & Interpretation of Data

6. Findings

7. Observations

8. Suggestions and Recommendations

9. Enclosure of Questionnaire

10. Bibliography/ References

531

SECTION I: Company Profile

J.K. Tyre – About the Company J.K. Organization’s flagship company, J.K. Tyre, is the country’s leading four-wheeler tyre manufacturer, and the 18th largest tyre manufacturer in the world. Set up in 1977, foreseeing the advent of an automotive revolution in the country,J.K. Tyre was set up in technical collaboration with General Tyre international co, USA. There has been no looking back since then, with J.K. Tyre racing ahead year after year, registering growth rates of over double that of the industry average.

Ever since its inception it has been J.K. Tyre's belief in the value of technological superiority that has made it grow by leaps and bounds. This division produces and sells tyres and tubes under the brand name "J.K. Tyre" for Truck, Buses, Passenger Cars, Jeeps,

Light

Commercial

Vehicles,

Multi

Utility

Vehicles

and

Tractors.

The company pioneered Steel Radial Technology in India in 1977 and continues to be the industry leader in the Radial segment in India. J.K. Tyre is the only Tyre Manufacturer in the country to produce high performance 'T' & 'H' -rated steel radial tyres. J.K. Tyre has consciously followed a policy of continuously modernizing and expanding its tyre manufacturing facilities to retain its edge in the market place. Our customer base covers virtually the entire Original Equipment Manufacturers (OEMs) in India together with Replacement Market for four wheeler vehicles, Defense and State Transport Units. Besides India, we have a worldwide customer base in over 45 countries across all 6 continents. To keep pace with the market demand as well as technological leadership in Indian market, J.K. Industries acquired Vikrant Tyres Limited, Mysore in 1997. J.K. Industries and Vikrant Tyres Limited are the only tyre companies in India to have received all three ISO 9001, QS 9000 and ISO 14001

certificates. This indeed is a true reflection of our commitment to system oriented approach. The company has a technical collaboration with M/s Continental AG, Germany, which is among the top five tyre manufacturers in the world to keep pace with latest technological developments. To stay at the forefront of technological advancements a state of art Research & Development Centre, HASETRI, was set up, which remains the nerve centre for providing cutting edge technology. In a short span of time it has emerged as the 17th largest tyre manufacturer in the world an achievement in itself.

With three plants located in Rajasthan, Madhya Pradesh and Karnataka, J.K. Tyre is the largest manufacturer of truck and bus tyres in India. The truck and bus tyres produced account for nearly 74% of the total tyre business in India, thus giving J.K. Tyre an undisputed position. Additionally, J.K. Tyre is the only manufacturer of truck/ bus steel radial tyres, and the second largest manufacturer of 4-wheeler tyres in the country. Location In 1991 J.K. Industries setup a plant at Banmore, since it has been a symbol of quality for millions of people. Today it is very well known for its punch line “ J.K. TYRE TOTAL CONTROL”. Banmore plant is located 25 Kms. short of Gwalior on AB road. Banmore Tyre Plant manufactures and markets under the supervision of highly qualified technicians. The quality control standards are adhere to, at this modern manufacturing unit equipped with advanced machinery and technology. Research is ongoing process at JK Tyre’s well equipped laboratory. So, its development keeps pace in changing needs and trends.

ORGANISATIONAL STRUCTURE

Vice President Unit Head

BUSINESS BUSINESS BUSINESS BUSINESS

BU # 1 BU# 2 BU# 3 BU # 4

UNIT UNIT UNIT UNIT

1 2 3 4

SUPPORT SERVICE UNIT 1 SUPPORT SERVICE UNIT 2 SUPPORT SERVICE UNIT 3 SUPPORT SERVICE UNIT 4 SUPPORT SERVICE UNIT 5

MIXING & DIPPING BIAS TYRE PROCESSING RADIAL TYRE PROCESSING LEGAL, EXCISE & DESPATCH (LOGISTICS)

SSU # 1 - TECHNICAL SERVICES SSU # 2 - ENGINEERING SERVICES SSU # 3 - COMMERCIAL & ACCOUNTING SERVICES INCLUDING FINANCE & ADMINISTRATION SSU # 4 - PESONNEL & HR & SECURITY SSU # 5 – MIS & INDUSTRIAL ENGG.

MANAGEMENT STYLE • • • • • •

Open & Free Communication Man Power Development Training Needs & Fulfillment CSR – Active Participation Quality Excellence concept & Customer Care Integration to OE Supplies

Each Business and Support Service Unit work keeping in view the statutory requirements and company’s profitability. Company has been awarded with number of Quality Awards. Product & Market Product

JK Tyre Manufacture tyres, tubes and flaps of various ranges. Market Their customer base covers virtually the entire original equipment manufacturers (OEM’S) in India together with replacement market for four wheeler vehicles, defence and state transport undertakings. Besides India they have world wide customer base. KEY CUSTOMERS Replacement Market Distributors) OEM’S

(Dealers/

Export Institutions

COMPANIES/ INSTITUTIONS BASE 3500 – Spread all across the country MUL, M&M, Telco, HM, Bajaj Tempo, Ashok Leyland 50 countries across the six continents Defence, STU, Fleets

BUSINESS (%) 53 32 11 4

COMPETITORS Since 1991 with the opening of Indian economy, the business is facing fierce competition from MNC’s. PRODUCT Passenger Car Tyre

COMPETITORS Bridgestone

FACTORS International Brand Image

Bus and Truck Tyre Agriculture Tyre

MRF, Apollo MRF, Ceat

Marketing and Product mix Product Range

Others (Tube & Flap)

MRF

Brand Loyalty

Various Product Range J.K. Tyre is the leader in the Truck/Bus segment. With its customer oriented state-ofthe-art product offerings, it has outpaced the industry growth rate and surged ahead of its

competitors.

Our tyres are specifically designed in accordance to the different loading and application requirements of our valued customers. The "Unique SEV System" in its Truck/Bus and LCV range of tyres ensures a highly efficient and uniform tyre curve the best option for a wide variation of road and load conditions under which trucks

operate in our country. The SEV System offers the outstanding advantages of Super Mileage, Greater Strength and Higher Retreadability - They Run More to Earn More. • •

International Domestic

Domestic •

Truck /Lcv

•

Passenger

•

Farm

Truck and Bus Tyre Range

Truck and Bus

Bias

Radial

Bias

Semilug

Rib

Lug 10.00-20 18PR JET TRACK DX

10.00-20 18 PR JET ACE 10.00-20 16 PR JET MILES

9.00-20 16 PR TRACK TUF DX

10.00-20 16 PR JET RIB 10.00-20 16 PR, 9.00-20 16 PR SUPER TRACK KING

10.00-20 16 PR, 9.00-20 16 PR VTL234

10.00-20 16PR JETTRACK XL 10.00-20 16 PR,8.25-20 16PR JET ONE

TRAK KING

10.00-20 16PR JET XTRA

10.00-20 16 PR, 9.00-20 14 PR, 8.25-20 14 PR TRACK KING

10.00-20 16 PR, 9.00-20 16PR JETKING-10 10.00-20 16PR STARLUG 10.00-20 16PR JETSTAR

10.00-20 16PR TLUG 10.00-20 16PR JET SPEED 10.00-20 16PR JET PACE

Radial Rib

Semilug 11.00 R 20 16PR Jetway- JUH 12.00R 20 18PR Jetway – JUH 9.00 R 20 14/16PR Jetway – JUH

Lug

10.00 R16PR JetxtraJDM

9.00R 20 16PR Jetsteel-LDH

11.00 R 20 16PR Jetxtra-JDM

10.00R20 16PRJetsteelLDH 10.00R 20 16PR JetstelLDH

10.00 R 20 16PR Jetway – JUH 11.00 R 20 Jetway – JBR Strategies COMPANY’S VISION “To be among the most admired companies in India committed to excellence” COMPANY’S MISSION  To be the largest and most profitable Tyre company in India.

 To remain No. 1 position in truck and bus segment and to be amongst top too in all other four-wheeler segments.  To make Truck / Bus radial operations profitable and retain leadership in passenger radial market.  To be the largest Indian Tyre exporter. Continue to be significant player in the world in the Truck bus segment.  To be customer obsessed company.  To enhance value to shareholders and service to all stakeholders.  To develop a highly motivated team with a sense of Ananda.

 To excel as a values driven organization.  To be the most preferred Tyre brand in India.

COMPANY’S CORE VALUES  Caring for people.  Integrity including intellectual honesty, openness, fairness and trust.  Commitment to Excellence. Company’s USP •

Continuous innovation and state of the art technology backed by quality is the mantra of success at JK Tyre and this has given them a clear competitive edge over its’ competitors.

•

JK Tyre, Pioneered the Radial revolution in India two decades ago and ever since then JK Tyre have been riding the technology ladder.

Financials Of The Company Source of Funds Schedule 30.09.07

30.09.06

30.79 503.13 533.92

30.79 560.93 591.72

Loans Secured Loans Unsecured Loans

686.82 228.13

724.77 219.1

Deffered Tax

105.32

Share Holder’s Fund Capital Reserves & Surplus

Total

1554.19

Application of Funds

1535.59

Fixed Assets Gross Block

2156.07

2084.22

957.27

860.03

1198.809

1224.19

20.34

22.51

1219.14

1246.7

62.6

61.46

Less: Depreciation Net Block Capital work in progress

Investment Deffered Tax

1.61

Currents Assets Loans & Advances 1100.18

1013.52

Less :Current Liabilities & Provisions

835.95

796.86

Net Current Assets

264.23

216.66

8.22

9.16

Miscellaneous Expenditure Accounting Policies & notes on A/Cs

1554.19 1535.59 J.K Tyre continues to maintain its leadership in the 4 wheeler tyres. All the 4 tyre plants of the company operated at high capacities producing world class tyres. The company continues its relentless drive towards improvement in productivity and operating efficiency and launching of new products in market. Company’s turnover over the years is depicted as follows:

Turnover(Rs Cr.) 3500 3000 2500 2000

Turnover(Rs Cr.)

1500 1000 500 0 1982

1991- 1996- 2001- 2005- 200692 97 02 06 07

SWOT Strengths * Established brand names (key in the replacement market) * Extensive distribution networks - For example, JK TYRE has 09 Regional Offices, with 112 depots more than 5500 Dealers (All India) * Good R&D initiatives by top players

Weakness * Cost Pressures - The profitability of the industry has high correlation with the prices of key raw materials such as rubber and crude oil, as they account for more than 70% of the total costs. * Pricing Pressures – The huge raw material costs have resulted in pressure on the realisations and hence, the players have been vouching to increase the prices, although, due to competitive pressures, they have not been able to pass on the entire increase to the customer. * Highly capital intensive - It requires about Rs 4 billion to set up a radial tyre plant with a capacity of 1.5 million tyres and around Rs 1.5-2 billion, for a cross-ply tyre plant of a 1.5 million tyremanufacturing capacity.

Opportunities * Growing Economy -> Growing Automobile Industry -> Increasing OEM demand -> Subsequent rise in replacement demand. * With continued emphasis being placed by the Central Government on development of infrastructure, particularly roads, agricultural and manufacturing sectors, the Indian economy and the automobile sector/ tyre industry are poised for an impressive growth. Creation of road infrastructure has given, and would increasingly give, a tremendous fillip to road transportation, in the coming years. The Tyre industry would play an important role in this changing road transportation dynamics. * Access to global sources for raw materials at competitive prices, due to economies of scale. * Steady increase in radial Tyres for MHCV, LCV

Threats * Continuous increase in prices of natural rubber, which accounts for nearly one third of total raw material costs. * Cheaper imports of Tyres, especially from China, selling at very low prices, have been posing a challenge. The landed price is approximately 25% lower than that of the corresponding Indian Truck/ LCV tyres. Imports from China now constitute around 5% of market share. * With crude prices scaling upwards, added pressure on raw material prices is expected. * Ban on Overloading, leading to lesser wear and tear of tyres and subsequent slowdown in demand. However, this would only be a short-term negative. * Cyclical nature of automobile industry

SECTION 2: Summer Training Project

CONCEPT OF LOGISTIC ARRANGEMENTS Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers (frequently, and originally, military organizations).

Logistics

involve

the

integration

information,

transportation,

inventory, warehousing, material-handling, and packaging. The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word, calculation, reason, speech, oration"). The logistic chain includes the owners (wholesalers & retailers), manufacturers, agents & transportation channels, which an item passes through between initial manufacture & final purchase by a consumer. At each stage, goods belong (as assets) to the seller until the buyer accepts them. Logistics management:

Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements. A professional working in the field of logistics management is called a logistician. Business logistics: Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and is the science of process and incorporates all industry sectors. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies. In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption (see supply chain management). The main functions of a qualified logistician include inventory management, purchasing, transportation, warehousing, consultation and the organizing and planning of these activities. Logisticians combine a professional knowledge of each of these functions so that there is a coordination of resources in an organization. There are two fundamentally different forms of logistics. One optimizes a steady flow of material through a network of transport links and storage nodes. The other coordinates a sequence of resources to carry out some project. Production logistics: The term is used for describing logistic processes within an industry. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right point in time. The issue is not the transportation itself, but to streamline and control the flow through the value adding processes and eliminates non-value adding ones. Production logistics can be applied in existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency.

Production logistics is getting more and more important with the decreasing batch sizes. In many industries (e.g. mobile phone) batch size one is the short term aim. This way, even a single customer demand can be fulfilled in an efficient way. Track and tracing, which is an essential part of production logistics - due to product safety and product reliability issues - is also gaining importance especially in the automotive and the medical industry.

CONCEPT OF SUPPLY CHAIN MANAGEMENT Supply chain management (SCM) is the process of planning, implementing and controlling the operations of the supply chain as efficiently as possible. 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. The

definition of Supply Chain Management encompasses the planning and

management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes 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. More recently, the loosely coupled, self-organizing network of businesses that cooperates to provide product and service offerings has been called the Extended Enterprise. Supply chain management must address the following problems: •

Distribution Network Configuration: Number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers.

•

Distribution Strategy: Including questions of operating control (centralized, decentralized or shared); delivery scheme (e.g., direct shipment, pool point shipping, Cross docking, DSD (direct store delivery), closed loop shipping); mode of transportation (e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal, including TOFC and COFC; ocean freight; airfreight); replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owneroperated, private carrier, common carrier, contract carrier, or 3PL).

•

Information: Integration of and other processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, and potential collaboration etc.

•

Inventory Management: Quantity and location of inventory including raw materials, work-in-process and finished goods.

•

Cash-Flow: Arranging the payment terms and the methodologies for exchanging funds across entities within the supply chain.

Supply chain execution is managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional. Activities/functions Supply chain management is a cross-functional approach to managing 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. The management components of SCM The SCM components are the third element of the four-square circulation framework. The level of integration and management of a business process link is a function of the number and level, ranging from low to high, of components added to the link (Ellram and Cooper, 1990; Houlihan, 1985). Consequently, adding more management components or increasing the level of each component can increase the level of integration of the business process link. The literature on business process reengineering, buyer-supplier relationships and SCM suggests various possible components

that

must

receive

managerial

attention

when

managing

supply

relationships. Lambert and Cooper (2000) identified the following components which are: •

Planning and control

•

Work structure

•

Organization structure

•

Product flow facility structure

•

Information flow facility structure

•

Management methods

•

Power and leadership structure

•

Risk and reward structure

•

Culture and attitude

Reverse Supply Chain Reverse Logistics is the process of planning, implementing and controlling the efficient, effective in bound flow andstorage of secondary goods and related information opposite to the traditional supply chain direction for the purpose of recovering value or proper disposal. Reverse logistics is also referred to as "Aftermarket Customer Services". In other words, anytime money is taken from a company's Warranty Reserve or Service Logistics budget that is a Reverse Logistics operation.

Cost Structures, Margin Scenario Raw material costs account for almost 70% of the tyre industry’s incomes. Labour cost is another significant overhead. The Tyre industry has a narrow product range, huge operating overheads and high break-even levels. Raw material costs for the last three years have been raising constantly, especially those of rubber and crude oil-linked raw

materials. The steep rise in raw material prices has impacted profit margins of all players. Consistent rise in major raw materials costs (those of natural rubber, nylon tyre cord, carbon black, synthetic rubber), with limited pricing flexibility, has resulted in pressure on margins of tyre companies, despite a good topline growth. Consequently, while the revenues showed a healthy growth, profitability remained depressed. In fact, some of the major tyre companies are operating at break-even situations.

Raw Material Costs

20%

35%

5% 5% 13%

22%

Project Work Undertaken

Rubber NTC Fabric Carbon Black SBR PBR Others

Objectives of the Study The major objective of the study were Primary objective 

To study logistic handling procedures.



To do a comparative market study of different tyre brands, in Gwalior region.



To study the main factors affecting the logistic services provided by JK Tyre to the dealers through their depots / C &F Agents, communication pattern between the two and in the dealer network, transport services and the after sales services of JK Tyre.

Secondary objectives 

How should orders be handled? (Order Processing)



Where should stocks be located? (Warehousing)



How much stock should be held. (Inventory)



How should goods be shipped? (Transportation)

LOGISTICS SERVICES: Market Logistics Physical distribution starts at the factory. Managers choose a set of warehouses (stocking points) and transportation carriers that will deliver the goods to final destinations in the desired time or at the lowest total cost. Physical distribution has now been expanded into the broader concept of supply chain management (SCM). Supply chain management starts before physical distribution: It involves procuring the right inputs (raw materials, components, and capital equipment); converting them efficiently into finished products; and dispatching them to the final destinations. The supply chain perspective can help a company identify superior suppliers and distributors and help them improve productivity, which ultimately brings down the company’s costs. Mission of the Department To make all Logistic arrangements with full compliance of law and procedures including quality standards as laid down from time to time and to ensure full satisfaction of all customers both internal with safe delivery. INTERNAL WORKING MANUAL The internal working of the Logistics Department can mainly be understood as: 1) Objective of the jobs: Objective of the jobs can be divided into its three defended categories. These categories are as follows:

A) Receiving of goods: The receiving of finished goods (Tyre, Tubes and Flaps) by the department includes following things. 1. Size / Pattern / Quality: Different types of size of Tyres, different patterns and various types of qualities of tyres, which are manufactured by the company, are received by this logistics department. Some of the sizes and Quality of Tyres, which are manufactured in the company, are: I. TRUCK SIZE 9.00



20 14 PR FK



20 16 PR JTK



20 14 PR FK (DOT)



20 16 PR JET KING-10



20 16 PR TRACKTUF 2001 II. TRUCK SIZE 10.00 20



10.00 x 20 16 PR JETKING



10.00 x 20 16 PR JETTRAK



10.00 x 20 16 PR JETRIB



10.00 x 20 16 PR STARLUG



10.00 x 20 16 PR TRUKTUF III. LT. BIAS



7.00 x 16 12 PR JRB



7.50 x 16 16 PR JTK



7.50 x 16 16 PR JTK –39



8.25 x 16 16 PR JRB PE –T

(ii) Quantity: The quantities of finished goods i.e. Tyres are measured in terms of number of units.

(iii) Certification by Quality: No Tyre, Tube or flap is to be received in the Warehouse unless quality assurance department certifying the approved quality of the product certifies it. b) Storing of Goods: After receiving finished goods, the department has to store these finished goods in their warehouse. The storing of these finished goods involves three things.

(i)

Height of storage conditions: The height of storage of Tyres varies according to the size or pattern of Tyres. Different Tyres have different storage specification.

TECHNICALLY APPROVED TYRE STACKING NORMS BIAS TYRES: SIZE

NUMBER

Truck Tyres

10 Tyres and 2 Binders

Light truck Tyres

15 Tyres

Passenger Tyres

20 Tyres

Tractor Tyres

07 Tyres

RADIAL TYRES:

(ii)

SIZE

NUMBER

Passenger Radial Tyres

10 Tyres and 2 Binders

Light Radial Tyres

10 Tyres and 2 Binders

Reshuffling: Reshuffling of Tyres are done at regular intervals. This is done to maintain the required pneumatic position of the Tyres and to prevent the deformity to the Tyres. Which is placed in the stacking at the bottom. If the Tyres are kept at one position for a longer time then their stretchbility gets affected. Therefore reshuffling is done in which the tyre which was placed at the bottom is now placed at the top and the tyre which was on top is placed at the bottom.

(iii)

FIFO (first in first Out): For storing of the finished goods FIFO system is maintained by the department. According to this. The goods that come first in the Warehouse are dispatch first.

Goods: The clearance or dispatch of the goods to the customers

involves three stages. (1) Packing specification (party wise): The packing of the finished goods depends upon the needs and requirements of the customers. Different customers require different types of pickings of the finished goods. The different pickings specification are enclosed herewith and marked as Different packing Specification Specification Applying powder in Tyre Tyre, Tube, Flap with air Empty Tube in polythene Empty Flap Only Tyre

Customer Ashok Leyland, Bajaj Tempo,Hindustan Motors, Mahindra & Manindra, Swaraj Mazda, Telco. Bajaj Tempo, Hindustan Motors. Hindustan Motors. None Bajaj Tempo, Hindustan Motors,

Tube Rotation Position of Tube valve at Yellow dot Position of Tube valve towards serial number Position of Tube valve towards non serial number (LUG) 50% towards serial number 50% towards non serial number Valve cap plastic Colour on strip Dispatch according to FIFO Load weight test Test certification Quality certificate Crayon marking

Telco. Hindustan Motors, Maruti, Manindra & Mahindra, Telco. Bajaj Tempo, Hindustan Motors, Maruti, Mahindra & Mahindra, Swaraj Mazda, Telco. Ashok Leyland, Bajaj Tempo, Hindustan motors, Maruti, Manindra & Mahindra, Telco. Ashok Leyland, SwrajMazda, Telco. Escort, Eicher, Manindra & Mahindra. Escort, Eicher, Mahindra & Mahindra. Ashok Leyland, Bajaj Tempo, Escort, Eicher, Hindustan Motors, Mahindra & mahindra, Telco. Ashok Leyland, Telco. Ashok Leyland. Ashok Leyland, Bajaj Tempo, Hindustan Motors, Mahindra & Mahindra, Swaraj Mazda, Telco. Maruti. Ashok Leyland, Bajaj Tempo, Escort, Eicher, Hindustan Motors, Mahindra & mahindra, Telco. Escort, Eicher, Mahindra & Mahindra.

(2) Mode of Transports: Trucks mainly do the transportation of the finished goods. When customers ask for the delivery by train or by Air then goods are transported by trucks to the railway station or to the airport. From there the goods are booked by plane or by the train as required by the customer. Normal dispatches to all segments of market are through trucks. (3) Delivery in Time: It is ensured and utmost care is taken that the finished goods are delivered to the customers in proper time. All necessary steps are taken so that there is no delay in the delivery of the goods.

INFRASTRUCTURE OF THE DEPARTMENT MANPOWER Manpower in Logistics Department in Banmore Tyre plant (Gwalior) is as follows: The number of regular staff is 6 (1+6), Business unit Head one + 5 Business Team Members (skilled / unskilled / trained) who are hired depending on the requirement of the work in the Department.

MACHINERY AND EQUIPMENT The various Machinery and Equipment which are used by the Logistics Department are: •

Auto Inflator: It is used to fill air for the fitment of Tyre / Tube. For various type of Tyre there are various air filling specification, which are done in warehouse for various vehicles and their Manufacturers.

•

Semi Automatic Strapping Machine: This machine is mainly used to attach strips to the Tyres. There are many customers who ask to strip the Tyres with the logo or label of J. K. Tyres before the dispatch the Tyres. This to ensure that the Tyres are not changed or tampered.

•

Poly Wrapping Machine for Trucks and Passenger car Tyres: This machine is used to wrap the whole Tyre with the label of logo of J. K. Tyre. There are various customers who; want the Tyres to be fully wrapped by polythene or plastic labeled with J. K. Tyres Pvt. Ltd

•

Conveyor Belt System: It is used to transfer the Tyres from one place to another in the warehouse.

•

Air Compressor: It is used to compress the air, which is filled in the Tube by the inflator.

SAFETY NORMS IN THE WAREHOUSE “ Safe work practices make Safe work places, Safe manpower and Safe material”. It’s not mere a Slogan by the Department but also a working practice. Proper safety precautions are taken in the warehouse so that there are no accidents and no damage to machines as well as lives. Some of the safety precautions are: 1) There should not be a loose piece of cloth lying near the Conveyor belt. 2) The pipes of the inflator should not be lying here and there. 3) The electric switches of the machines should be handled with care. The fire emergency gates are installed so that in case there is a fire in the warehouse due to any reason then these gates woll allow the safe passage for the people.

LOADING PATTERN Trucks mainly do clearance of ‘TYRES’ Loads of the finished goods for the purpose of dispatch. The Transport agencies they hire are authorized Transport agencies. The Head Office in New Delhi decides this hiring and awarding contract of transport agencies and the rates of the Trucks. The trucks have a standard width of about 7.5 to 8 feet and length from 18 ft to 40 feet. Sometimes open body containers are used and sometimes – closed body containers are used depending upon the requirement. On an average daily 22 to 25 Trucks of finished goods are dispatched to various customers. The number of Tyres which are loaded in the Truck depends upon the type of the Tyres and the size of the Truck available. The materials are loaded in such a way so that they do not full or get damaged. Sometimes mixed consignments of different types of tyres are also sent in the Trucks. Few specifications are:

TYPE OF TYRE

LENGTH OF TRUCK (Feet)

NUMBER OF TYRES

Truck Tyres Truck tyres LCV LCV

18 22 18 22

130 160 260 320

PRESENT PRACTICES RELATING PRODUCTS 1)

Truck / Bus and Tractor Tyres are in – fitted by insertion of slightly inflated tube (so that it shape in Pneumatic cavity of the Tyre) and flaps. Thereafter this set is taken to strapping machine where three / hot sealing does four-poly stripping.

Radial Tyres are fully wrapped with poly and sealed with adhesive based cello tape (bearing printing of J. k. Tyres logo). Thereafter price stickers are pasted.

PACKING MATERIALS BEING USED The various packing material which are used are: 1) Nylon strip 2) Poly (Printed as well as Transparent) 3) Cello tape (Adhesive based) 4) Price and Packing Stickers 5) Poly bags for Tubes 6) Sealing Wire and Sealing leads.

Research methodology Research is the systematic design, collection, analysis, reporting and interpretation of a specific problem or situation. The research methodology for this project is as follows. Type of research-

Descriptive Research

Descriptive research is an attempt to describe systematically a situation, problem, service or program and provide information of living condition of a commodity or

decision and attitudes toward issue. The objective of such a study is to answer the “who, what, when, where and how” of the subject under investigation. Type of data-

Primary data

Primary data are original data gathered by the researchers for the project at hand. Primary data can be collected two methods observation and communication. Primary data are gathered for a specific research project. Method of research – Observation method In this method fresh data can be gathered by observing relevant sets of information and data received from different agencies involved in making observations with regard to product’s performance and intended development in the process and performance of the qualitative specifications/observations. We may observe and record observations. Instrument used for data collection – Questionnaire method A questionnaire consists of questions presented to the dealers for their answers. In this project I used structured interview questionnaire. It contained open-ended questions. Since this project was carried out to study the main factors affecting the logistic services provided by JK Tyre to the dealers through their depots / C &F Agents, communication pattern between the two and in the dealer network, transport services and the after sales services of JK Tyre. So the data was collected from the dealers as well as from the plant.

Limitations of the study 

The first and foremost limitation was the availability of the time factor from respondents.



The information given by the respondents (dealers) was limited.



The respondents did not describe internal issues of the company clearly.



Time available is only 6 weeks, in which it is not possible to have very exhaustive study.

Analysis and Interpretation of Data The Indian tyre industry is two tiered; Tier-I players (top 5 tyre companies), account for over 80% of industry turnover and have a well diversified product-mix and presence in all three major segments, i.e., replacement market, original equipment manufacturers (OEM's) and exports. Tier-II companies are small in size, mainly concentrating on production of small tyres (for two/ three-wheelers, etc.), tubes & flaps and the replacement market.

Total Sales Distribution Demand for tyres can be categorized under four segments - Replacement Market (RM), the Original Equipment Manufacturers (OEMs), Exports, and the Government.

11%

4% 53%

32%

SALES DEPOT OEM EXPORT INSTITUTION

Overall Market Share – Tyre Industry The Indian Tyre Industry produced 73.6 million units of tyres (1.1 million tons) garnering Rs 190 billion in FY`07. MRF was the market leader (22% market share) followed closely by Apollo Tyres (21%). The other major players were JK Tyres & Industries (18%) and CEAT (13%).

18%

13%

21% 26% 22%

Tyre Industry Market Share in Gwalior Region

MRF Apollo JK Inds CEAT Others

•

Total Monthly demand of tyres in gwalior region is around 9000.

•

Gwalior region follow similar trend of comparative market of tyres as in overall market share in India as shown below.

10%

27%

Apollo MRF JK Inds. CEAT

16%

Birla 20%

18%

Others

Five Forces Five forces is now been listed, which shows the characteristics, plus & minuses of tyre industry.

Supplier Power - High The demand for most raw materials, especially rubber, has been high, while supply is restricted, resulting in rise in prices

* * * *

Barriers to Entry - High Capital-intensive Distribution Network Low operating margins Branding

Competitive Pressures High Top six players enjoy over 80% of the total market share

Buyer Power - High High competitive pressure due to high bargaining power of OEMs and the wide brand choice in the replacement market

Impact of Growing Economy

Threat of Substitutes Low Imports, especially from China

Growing Economy

Increase in income level, higher disposable income

Increase in demand of freight movement

Increase in demand for passenger cars

Increase in commercial vehicles demand

Increase in demand for passenger cars tyres

Increase in tyre demand from OEMs

Creates Replacement demand after about 24-48 months

Creates Replacement demand after about12-18 months

Increase in Tyre Sales

Fig. The Demand Cycle Chart

Findings PROCEDURES OF THE DEPARTMENT Procedure Of Handling Logistic

Increase in wear & tear of tyres

Create replacement demand for cycles

Headquarter

[Headquarter sends weakly dispatch schedule]

Production Finished Goods

Raw material

Quality Checking Warehouse

[Warehouse located in the company]

Nepal Export Road Transportation

Export Quality Control Sales Depot

[Under the company] Comparative Study – Tyre Market

OEM

MRF MRF is the market leader among tyre manufacturers in India, with a 22% share in terms of revenues. Its leadership position, coupled with its strong brand recall and high quality, MRF commands the price-maker status. MRF has a strong presence in the T&B segment, the largest segment of the tyre industry, and commands around 19% market share in the segment. It is the leader in the two/ three-wheeler segment (including motorcycles) and tractor front tyres, and holds second place in the passenger cars and tractor - rear tyres. Exports account for around 12% of the gross sales in MRF. The Company has a distribution network of 2,500 outlets within India and exports to over 65 countries worldwide. Apollo Tyres (ATL) Apollo Tyres is the second largest player in the Indian tyre industry, with a market share of 21%, in terms of revenues, and the largest player in the T&B segment, with around 22% market share and 82% of its product mix coming from this segment. It also enjoys a strong brand recall. ATL derives 80% of its revenues from the replacement market, where the EBITDA margins are higher; hence, at operating levels, Apollo Tyres

has better margins compared to those of its peers. ATL is a strong player in the domestic market, with just 2% of sales coming from exports. JK Industries JK Industries has a 18% market share, in terms of revenue, making it the third largest player in the industry. The Company ranks first in the MHCV and Passenger Car tyre segments, with 79% and 7% of its product mix coming from these segments, respectively. Exports account for approximately 17% of its gross sales. CEAT CEAT has a 13% market share, in terms of revenues, and is an average player across categories. 68% of its product mix comes from the MHCV segment. Its leading brands in the T&B segment are Lug XL, Mile XL and Rib XL, Secure in two-wheelers and Formula1 in passenger radials. In terms of profitability, CEAT has lower margins compared to its peers, in spite of deriving 60% of its revenues from the replacement market. Goodyear India Goodyear India, with presence across the globe, has a market share of 8% in the Indian tyre industry, in terms of revenues. It has a significant market share in the tractor tyres segment, with 22% share in tractor - front tyres and a 30% share in tractor - rear tyres. It derives 45% of the product mix from the MHCV segment and 31% from the tractor tyres segment. Sales Channel of Replacement Market Sales Channel of Replacement Market of JK Tyre follows a following pattern in Gwalior region:

JK Tyre Banmore Plant C/F Agents Depots

Dealers

End Customers

Sub - Dealers

Transportation Means

JK Tyre Banmore Plant mostly uses trucks and tempos as transport means to deliver finished goods through depots to dealers. Findings in Depot & Dealer Network •

Dealers receives good concession/ discounts to get profit

•

An active supply chain is maintained between depots, C/F Agents and dealers to meet urgent requirements of end consumers

•

Dealers prefer unconditional warranty scheme goods as they are highly demanded in the market.

•

Dealers get goods from depots on credit basis through SAS scheme.

•

Dealers enjoy market reputation of JK tyre.

•

The goods which are highly demanded in the market due to unconditional warranty are as follows: 145/70 155/65 165/65 165/80 175/70

•

R12 R13 R13 R15 R13

ULTIMA/ULTIMA XP, TORNADO TORNADO/RALLY RALLY ULTIMA XPS/ TORNADO etc.

While in truck segment JET TK 16 PR, JET RIB 16 PR and JET TRACK 16 PR are demanded in the market as they are economical.

Market Position of JK tyre JK Industries is the third largest seller of tyres in Gwalior region. While the Company ranks first in the MHCV and Passenger Car tyre segments. In Radial segment JK Tyre is still the first choice of consumers.

Observations 

Company is already maintaining the JIT (Just in time) delivery system with various transportation arrangements. However due to resource constraints in transport arrangements and other local hassle of road conditions. It is being met with little higher cost.



Market requirement and original equipment requirement do fluctuate due to there own reasons like production fluctuation, change in dispatch schedule.

Due to which the logistic arrangements are required for frequent review and arrangements. 

The order schedule is given by the head office (Delhi). Due to some urgent order or some specific requirements the dispatches are delayed.



Some time the consumption and a production cycle is not matched.



Unconditional warranty is favorable & convincing to the customer.

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Dealers have active communication with JK Tyre management.

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Replacement policy of JK Tyre is convincing to dealers.

Suggestions



The company should give some special offers or discounts to the dealers which could increase the sales of JK tyre in the region, as dealers were found to have high convincing power which could influence the buyer.

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To avoid delay in dispatch JK Tyre Gwalior plant should have provisions to fulfill urgent & special requirements.

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The company should take some efforts to make effective transportation arrangements. Because it affect production pricing, on-time delivery performance and customer satisfaction.

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The company should centralized inventory in one place and use fast transportation to fulfill orders. It reduces warehousing and inventory duplication cost.



The company should shorten the order-to-payment cycle i.e. elapsed time between order’s receipt, delivery and payment.



The company should manage effective logistics information management because it helps to link channel partners and share information to make better logistics decisions. Information flows such as customer’s orders, billing, inventories labels and customer data are closely linked with channel performance.

Questionnaire

TO STUDY & ANALYSE DEALERS OF JK TYRE & LOGISTIC SERVICES PROVIDED BY JK TYRE TO THE DEALERS This survey is conducted in order to study the main factors affecting the logistic services provided by JK Tyre to the dealers through their depots / C &F Agents, communication pattern between the two and in the dealer net work , transport services and the after sales services of JK Tyre. Please give your valuable answer to the questionnaire given below. The study is purely academic in nature and the information provided by you would be kept confidential. DISTRIBUTION CHANNEL: Dealer’s Name & Address:

Contact No.: Time since dealing with JK Tyre

QUESTIONNAIRE: 1. Do you have an active communication with JK Tyre management? a) If yes, what is the mode of communication _________ b) If no, what mode of communication would you prefer?

2. The goods which are ordered are been timely arrived? Yes

3. The means of transport used? 4. Are there any damages due to transport? Yes

a) If yes, what type of damage is it ________ b) How often these types of damages occur. _________ 5. What is the cycle time of the goods i.e. the time after which the goods are next ordered? 6. What is the no. of order cycles/ year i.e. the no. of times the ordered is been made? 7. Damaged goods are been timely replaced by J.K Tyre? (End consumer, Retailer) Yes

8. How quickly does it take to respond to a change in demand to a customer? < 1 week

<2 week

2-4 weeks

1month

9. Is your urgent requirement is fulfilled by J.K tyre on time? (stock availability)

10. Specify the product which are most demanded in the market. 11. Do you receive goods from other competitive firms too? a) Name of the firms b) Are you satisfied with pricing policy of JK Tyre as compared to other firms? 12. How much discount do you get from the JK depot of each of the variants that you stock?

13. Suggestions which could help in increasing your profitability.

Bibliography

Bibliography Kotler Philip; Marketing Management; Prentice-Hall of India Private Limited; New Delhi; 2001 Saxena Rajan; Marketing Management; Tata McGraw-Hill, New Delhi; 2002 Jhamb L.C.; Material and Logistics management; Everest Publishing House; Pune; 2000 Beri G.C.; Marketing Research; Tata McGraw-Hill, New Delhi; 2000 Nargundkar Rajendra; Marketing Research; Tata McGraw-Hill, New Delhi; 2004 J.K.Tyre World Web Site; www.jktyre.com Website: www.indiainfoline.com