Strategic Supply Chain Management of Kirloskar Pneumatic Co.

Ltd for Critical Items

Summer project report submitted in partial fulfillment of the requirement for the post graduate diploma in management.

Submitted to -

Submitted by

1. Company Guide: - Mr.D.D.Kenjale 2. Alumni Guide: - Mr.VSR Prasad 3. Faculty Guide: - Dr.V.S.Pai

Pramod Hiremath Roll No 71

Kirloskar Institute of Advanced Management Studies Harihar, Karnataka 2011-2013 ACKNOWLEDGEMENT

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I take immense pleasure in thanking Prof. M.K. Seshasayee, our course facilitator for introducing us to the basic concepts of Supply Chain Management in Operation Management; and I acknowledge the valuable guidance and consistent encouragement extended to me by Mr.D.D.Kenjale my project guide in KPCL, Dr.V.S.Pai my Faculty guide in KIAMS, Mr.S.Solanki Dr.Gopal Iyengar, Mr.Sachin Dikonda, Mr.Nitin Jallawar, Prof.Pradeep Joglekar, Prof.R.N.Venkateswaran and my alumni Guide Mr.V.S.R.Prasad who shared their experience and guided me during my Summer Internship program in KPCL for project Analysis. Also, I would like to thank SIP Coordinator Mr. Arvind Sinha of Kirloskar Institute of Advanced Management Studies and the members of ACR & PG procurement department of KPCL who help me in all way during my Project Period, I am thankful to all of them for their guidance and support which enabled me to accomplish this project. Their technical acumen and years of experience have provided me with crucial inputs during the Internship period.

EXECUTIVE SUMMARY
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Kirloskar Pneumatic Company Ltd. (KPCL) the leading manufacturer of a wide range of refrigeration compressors, engineered sets, packages & customized refrigeration systems in India and overseas. My Summer Internship Project consist of understand the present procedure followed by Air Conditioning, Refrigeration & Process Gas Division (ACR & PG) in KPCL from taking orders from Customers to dispatch of package to the customer. Find reason for late delivery of package to customer and understand the present procedure especially in procurement department of ACR-PG and the ground level problem faced by vendors as well as buyers of KPCL within boundary condition of company. KPCL is Project Business Company, each product is customized according to customers requirement as the degree of customization has increased in the marketplace, one of the immediate effects of challenging supply chain management, relates to late deliveries of customized products, Firms are developing several strategies in order to provide variety while keeping costs under control, these include reducing differentiation of the Product and introducing more commonality and modularity in product lines. KPCL is trying to improve the process to meet committed delivery date (CDD), and solving the issues related to late delivery of package. It will help to increase the profit of company. My aim through this project is to reduce the late delivery time of package to customer by understanding the critical item vendors, buyers of KPCL and constrains of both, after analyzing the process and understanding the vendors, try to improve the strategy to make Supply Chain more efficient and effective to the company, and in future years due to new strategic supply chain; saving of money will goes on increasing.

Pedagogical Objectives: The case discusses KPCLs business model. Study of Strategic Supply chain management of KPCL

TABLE OF CONTENT

SUBJECT
1.

PAGE No

Introduction.......................................................................................... 4 Brief about the industry / Organization................................................ 5 Objective of study.................................................................................10 Present SCM procedure followed in KPCL..........................................11 Brief description of the concept............................................................14 Tabulation and finding Result...............................................................22 Vendor satisfaction survey....................................................................23 Interpretation and Summery..................................................................26 Recommendation..................................................................................30 in SCM of KPCL................................................................30

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8.

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10. Limitation 11. Scope

and future improvement.............................................................31

12. Bibliography.........................................................................................31

1) INTRODUCTION
Now a days supply chain management is back bone of any manufacturing company, along with other departments, strong supply chain management significantly contribute in net profit of industry. Supply chain practices have immediate impact on business to business transactions. A few years back Toyota had to shut down its manufacturing facility in Japan due to supply shortages for its brake pedals, Boeing took a charge for several million dollars a couple of years back due to insufficient capacity and part shortage resulting from an inability of the supply base to ramp up production, while firms such as Dell Computers, Wal-Mart, 7Eleven Japan and Big Bazaar of future group has consistently outperformed competition due to their great supply chain management. Study and Improvement in supply chain management of any industry is most important in present competitive market, in this project we will study the supply chain of Air Conditioning, Refrigeration & Process Gas Division (ACR & PG). This division contributes significantly in revenue of Kirloskar Pneumatic Company Ltd. (KPCL) Project consists of understanding the present procedure followed in KPCL right from taking orders from customers to dispatch of package to the customer. Try to find the reasons for late delivery of critical items to KPCL, analyze the present purchase procedure followed especially in ACR procurement department and understanding the ground level problem faced by vendors as well as buyers of KPCL within boundary condition of company. KPCL manufactures products as per customers various requirements / specifications. For every product Procurement department of company has to search some new vendors, prepare new quotation, new enquiry etc. as per product and customer requirement. In my project I am trying to find the reason for late delivery of package to customer, by understanding the critical item vendors, their process and their history with KPCL through procurement department. After conducting face to face meeting with vendors, understanding and analyzing their issues; find the way to implement new strategy in supply chain management. Way forward for strengthening partnerships with vendors for win-win situation.

2)

Brief about the industry / Organization Kirloskar Pneumatic Company Limited (KPCL)
The Kirloskar group was founded in the year 1888 by the late Mr. L. K. Kirloskar and has a rich engineering heritage of 123 years. It is counted amongst Indias largest multi-product; multi-location diversified engineering conglomerates with annual sales of $1.6 billion. The name Kirloskar is synonymous with quality and dependability in the engineering industry. Pioneering industrial revolution in India, Kirloskar group has contributed immensely in every field of its operation during its 123 year-long journey, and holds a place of repute in the industry for its good business values and customer focus. Kirloskar Pneumatic Co. Ltd. was incorporated in the year 1958 under the Chairmanship of Late Shri. Shantanurao Kirloskar.

Kirloskar Pneumatic Company Ltd Company started its operations with the manufacture of Air Compressors and Pneumatic Tools. New product lines were then added, included Air Conditioning and Refrigeration systems, Marine HVACR, Process Gas systems and Hydraulic Power Transmission machinery. The company has also earned an enviable reputation for its Systems Engineering and Turnkey Project expertise. KPCL has the distinction of acquiring advance technologies from world over, adapting them to suit Indian conditions and continuously updating them to maintain the highest standards of quality and reliability. Kirloskar Pneumatic Company Ltd (KPCL), an ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007 Company, QMS Quality System Certification by Indian Register Quality Systems (IRQS) since February 1993 for Companys entire operations. Every employee is responsible for adhering to the quality systems established. These are documented in the form of functional quality manuals, work instructions and formats applicable to the respective departments / divisions.

Over the years, Kirloskar Pneumatic Company Ltd (KPCL) is the leading manufacturer of a wide range of refrigeration compressors, engineered sets, packages & customized refrigeration systems in India and overseas, company developed various sophisticated and high-tech products in the above categories to cater to the demands of various industrial sectors. KPCL has also established a number of joint ventures and technology partnerships with leading global companies. It has earned the distinction of developing a host of advanced products to suit Indian conditions and has been continuously updating them to maintain the highest standards of quality and reliability. Companys registered office as well as main manufacturing set up is situated at Hadapsar Industrial Estate, Pune whereas KPCL also has another two manufacturing set up one is at Saswad (Tal. Purandar, Dist. Pune) and second manufacturing plant is at Eklahare, (Tal. Nashik).KPCL is one of the core group companies.

Board of directors of KPCL

Mr. Rahul C. Kirloskar (Executive Chairman) Mr. Atul C. Kirloskar (Chairman & Managing Director) Mr.Aditya Kowshik (Managing Director) Mr. Sanjay C. Kirloskar (Director) Mr. A. C. Mukherji (Director) Mr. G. Krishna Rao (Director) Mr. D. R. Swar (Director) Mr. Vikram S. Kirloskar (Director) Mr. J. Y. Tekawade (Director) Mr. P. S. Jawadekar (Director) Mr. Sunil Shah Singh (Director)

MISSION We will demonstrate an EDGE to all our Stakeholders in our offerings for converting / transmitting energy. We will strive to make our Company an employer of Choice. VISION Its time to grow KPCL will achieve sale of Rs. 11,000 Million by year 2015-16

ACR & PG will achieve a sale of Rs.6300 Million with a focus on KC compressor exports, CNG & API complaint compression packages (11P, 619, 618) for the domestic & export markets and Vapour Absorption Chillers. ACD will achieve a sale of Rs.3200 Millions by increasing its market share in Oil Free screw, Oil flooded screw and centrifugal Compressors market and maintaining its leadership in Reciprocating Compressor market. TRM will achieve a sale of Rs.1500 Million by strengthening its position in Wind mill gear box & Railway market and entering into Propulsion.

BUSINESS VALUES In an ever changing world one thing that will remain constant is our Commitment towards all our stakeholders. Each one of us will be guided by the following values. CUSTOMER FOCUS
Our activities / actions will be focused on enhancing internal / external customer's satisfaction

COMMITMENT
We commit to achieve our targets / goals. We will be responsible / accountable for our commitment.

CONTINUAL IMPROVEMENT
We will consciously work to improve our procedures, processes and systems with an objective to improve our business processes.

 ETHICAL BUSINESS PRACTICES

We will be fair in our dealing with all our stakeholders. It will be based on Integrity, honesty and transparency.

EHS POLICY OF KPCL

Awards and achievements of KPCL

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 State Level Energy Conservation and Management award

This competition is organized by Maharashtra Energy Development Agency (MEDA). The award was given at the hands of Honorable Governor, Maharashtra State, and His Excellency S.C. Jamir.

Award For Excellence

KPCL receive this award from Federation of Cold Storage Association of India for meritorious contribution & distinguished service of KPCL in the field of technical development of cold storages & refrigeration industries.

National Award For Excellence In Energy Management

KPCL received this award from Confederation of Indian Industry for Excellence in Energy Management at the hands of Hon Mr. Dilip Walse Patil, Minister of Energy, and Government of Maharashtra.

National Energy Conservation Award

2nd Prize in National Energy Conservation Competition-2008 in General category in a competition organized by Bureau of Energy Efficiency (BEE) under the Ministry of Power, India, at the hand of energy minister (Shri. Sushil Kumar Shinde , Govt. of India )

Best Kaizen Award

Best Kaizen Award in State level Kaizen competition organized by Confederation of Indian Industries (CII)

3)

Objective of study:-

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Find the reasons of late delivery of Package to KPCLs customers. Study and understand the present supply chain management of KPCL. Study the material flow, information flow and financial flow in supply chain of

KPCL. Study whether late delivery was only because of vendor or was there any other problem in process, or department like Store, logistic, finance etc.

Find the new strategy to make Supply chain management of KPCL more efficient and effective.

Reduce delay in supply, hence reduce LD in future.

Strategic suppliers review on his capabilities, expansion plans and constrain, who contribute more in revenue of KPCL, i.e. study of class A items vendor (Critical items vendors) of KPCL. And way forward for strengthening partnerships for win-win situation. KPCLs vision is to achieve sale of Rs.11000 Million by the year 2015-16. To achieve this vision, KPCL needs to strengthen one of their foundation i.e. Vendors and, convey them that they are a part of KPCL & along with the success of KPCL, they will also achieve their success.

Procurement Department Process:1. In supply chain management of KPCL, procurement department play a major role. Procurement department receive technical specification and commercial information from marketing team through Order transfer meeting.
2.

3. Marketing department is bridge between customer of KPCL and Procurement department.

4. 5. 6. 7. 8.

Enhance procedure followed in KPCL for Purchasing. Work on problem faced by Buyers or constrains of buyers. Help to solve the problem faced by Vendors, or constrains of Vendors. Understand and resolve problem for delay in material receipt.

Procurement department act as a platform to bridge the gap between the KPCL and vendors.

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4) Present Supply chain management procedure followed in KPCL:A Project completion phase identifies a sequence of steps followed in KPCL; Developmental stages of a project can be distinguished in sequence. Typical sequence and development phases of an engineering project at KPCL,
1. Marketing team keeps tracking the tenders in market and quotes the project.

2. Marketing department bid the project, On the basis of capability of KPCL, vendors quote and past experience. 3. If order is bagged by KPCL, Order Transfer Meeting (OTM) takes place with all concern departments.

In order transfer meeting all technical specification, project requirements, cost, period of completion, procurement department review, present status of material availability of project, LD charges if project is not completed on time and all contextual issues are discussed.

4. After OTM, Order Acknowledgement (OA) is sent to customer which is legal letter of

order acceptance.
5. Release of BOM (Bill of Material) and drawing from design department in Oracle ERP

system.
6. On the basis of BOM and Drawing, procurement department receives Purchase

requisition through Oracle ERP system. 7. Procurement department sends enquiry to approved vendors, normally gets 3 quotations. 8. Negotiation is most important stage in Procurement department, it is done in all areas like,

Price. CDD (Committed Delivery Date) and related terms. Packing and Freight. Inspection terms like TPI (Third Party Inspection) e.g. QAE/ABS. Payment terms. Warranty. Erection and Commissioning.

9. Buyer makes a comparison sheet of Best price got from different vendors and budgeted

price given by marketing people. 10. On behalf of procurement department, buyer releases Purchase Order (PO). 11. Depending on price of product buyers has to take approve from different authority to release purchase order.

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12. Respective Buyers are responsible for follow up with vendors and arranges for

attending inspection call as and when required.

13. After completion of product at vendor shop, final inspection take place and release note is given to vendor for dispatch. 14. Store makes the GRR after goods receipt. 15. Assembly and testing takes place at manufacturing plant during package completion. 16. Final release note is given by Customer to dispatch the package after final inspection. 17. Packaging and Dispatch is done by KPCL at manufacturing plant in Saswad. In Project type of Businesses, all projects may not have every stage mentioned above, some steps can be dropped before they reach completion. Some projects do not follow a structured planning and/or monitoring process. Many project based industries follow different process in their business; and there are many changes takes place in planning which are made at initial stage of project. Some times company has to modify stages to complete the process. More flexibility needs to maintain in project business industries and KPCL is one of them. Present Typical sequence and development phases of an engineering project at KPCL, is explained in flow chart below.

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FLOW CHART OF PROCEDURE FOLLOWED IN KPCL 1.MARKETIN G 2.DESIGN 3.PROCURM ORDER / ENT LOI 4.EXECUTIO N OTM 5.COMMERCI AL 6.INSPECTIO OA N ENQUIRIE S QUOTE EVALUATION COMPARISIO N BP Vs BUDGETED 3 TIER NEGOTIATI ONS DESIGN PR THROUGH ERP PROCUREME NT PO PLACEMENT
PLACEMENT

CUSTOME R MARKETING DEPT

RELEASE NOTE

FOLLOW UP / INSPECTIO N

DISPATCH GRR
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5)

Brief description of the concept

PAYMENT TO VENDOR ON DUE DATE

Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all 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. Supply chain is the system by which organizations source, make and deliver their products or services according to market demand. Supply chain includes,
1. Material flow.

2. Information flow. 3. Financial flow. Supply chain management is faciliated by,

1. Processes. 2. Structure. 3. Technology.

In supply chain management procurement department play important role, all purchasing is done through procurement department only, purchasing is a window to outside world. The prime function of purchasing department is to be sensitive to the external market condition and also to give feedback this information to the other departments of the organisation. However,it is usually understood that procurement will get the right quantity of material of the right quality at the right time,at right place, from the right source and at the right cost. Procurement department can increase the profit without increase in revenue of company. A good vendor is an asset to the company and therefore, just as customer goodwill is considered important, a good relation with the vendor should be treated likewise. There are many situations like material need in hurry; material is shortage in supply market etc. In such situations, good relationship with good vendors pays dividends. This may entail personal relationship, professional relationship.

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By helping the vendor in times of stress and strain with financial aid, technical aid, by providing management skills if necessary, and Maintaining a healthy professional relationship by fair negotiation, fair evaluation and fair compensation.

A modern management theory and worldclass manufacturing call for a long term, almost a lifetime association with vendors. This also means that there will be fewer vendors but these will be dedicated vendors almost as a part of the organisation. Until the present and even now, the Indian industry has not given/is not giving much attention and importance to vendor relations.

Study the supply chain management of KPCL, understand and find the reason for late delivery of package.

There may be several reasons like,

Criticality in projects. Time limit of project. More expectation from vendors etc. There may be several other ground level problems with vendors.

To study the above problem and supply chain of KPCL, understanding the vendors is most important, especially with critical item vendors to strengthen the partnership and understand each other in much better way, for that we arranged Annual Strategic Review Meet, and conveyed them that, we are inviting partners of KPCL for annual strategic review meet to understand each other for future business success. For that a meeting in the month of April was planned. This was the first year of such type of face to face review meeting. In the month of April each vendor is somewhat relaxed because of financial year beginning. Where each vendor can meet individually and discuss the problem in person, for that prepared the strategy, how to approach the vendors in 2 hour meeting. For vendors it should be like formal meeting; where he can express himself more in front of KPCL in term of their business model, manpower, there future plans, order in hands, and suggestions for KPCL etc. This meeting was not to blame each other for
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previous problem faced by both, but to discuss the solution to such problems for future business.

Brief description of Strategic review meet with vendors:-

1. Strategy to resolve the previous project conflict between KPCL and vendors and strengthen

the relationship for future business.

2. This project will act as a platform to bridge the gap between the KPCL and critical item

vendors, this development program facilitated exhibition of the capacities of the KPCL.
3. Try to find and elimination of unwanted wastage in process. 4. Enhancement in cooperation to vendors to execute the project. 5. KPCL is committed to improve the performance and delivery of service to customer with

the help of Vendors.

6. On the basis of feedback received from vendors, KPCL will plan to enhance the process,

increase efficiency and work on loop hole if any in the process.

Steps taken for project:-

1. Selected the critical vendor on the basis of Product, Value of Product, Delivery (Lead time)

etc.
2. Studied the history of each selected Critical Vendor. 3. Conveyed the purpose of meet to selected vendors through mail and phone. 4. Sent Invitation to all critical items Vendor to discuss the issue face to face and asked

convenient date for meeting between 16th 21st April 2012

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5. Prepared the strategy to approach the vendors during meeting i.e. to channelize & keep

focus of the discussions.

6. Prepared the questionnaire for feedback form. 7. Teams formed, from each department minimum one concern person was involve in team to

attend Strategic review meet.

8. Arranged memento for each vendor as appreciation for attending review meeting and

memory of Kirloskar Pneumatic Company Ltd.

9. Arranged Gate pass before vendor reaches to KPCL gate. 10. Arranged Lunch in companys canteen and Snacks for vendors.

11. Prepared Minutes of meeting and sent to respective vendors.

Prepared strategy to approach the Vendors in Meeting

1. Convey the business model of KPCL. 2. Participation in proposal stage Vendor to marketing team. 3. Response during Enquiry stage Request for quotation response time should improve. 4. Involvement in Order stage- Order to order acknowledgment time need to improve.

5. Flexibility to overcome issues or dispute, if any.

6. Immediate communication if any issue in understanding of drawing / Document / QAP. 7. Response to Resubmission of drawing / QAP after our comments to improve. 8. Fortnightly status report should be submitted or communicated to KPCL.

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9. Inspections call-Before 3 to 4 days. 10. Completing job before CDD (Committed Delivery Date). 11. Final documentation and release note before dispatch. 12. Submission of BG (Bank Guarantee) in time with prescribed KPCL format. 13. Terms of delivery / Transport / Logistic related issue. 14. Consequence of late delivery in terms of time lost for projects hence LD to our total

package, and due to delay carrying cost of inventory of project hence total laps of cash flow for the project.
15. Specific issues related to recent orders executed. 16. Commitment in payment stage-Promise on time payment if delivery reached on time.

17. Site support: After repairing the faulty part(s) of the equipment(s), if it doesnt fulfil the requirement then supplier shall replace the same with new one within agreed time frame.

18. Supplier shall attend the site within seven (7) working days of receipt of notice. 19. If needed we can invite any sort of EHS training.
20. Problems whatever sort of if any should be communicated to KPCL immediately so that

we may help you to sort out the same. 21. Commitment in contract execution.

All these points are discussed with vendors in meeting in above sequence only.

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Vendors Invited for Annual Strategic Review Meeting No Vendors Name

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Ak Ent / Process Equipments United Heat Transfer Aero Engineers Indcon Projects Positronics Pvt. Ltd Patel air Temp India Ltd Cummins India Fox Controls Sharp Engineers Beko Compressor Hindustan Dorr Oliver (HDO). Newfield, Baroda R. D Engineers, Mumbai Reynolds, Belgaum GMM Pfaudler, Anand Alfa Laval, Pune Howden Compressor U.K. Multitex Delhi Geccy Mumbai Precision Equipments, Chennai Instrumentation Ltd. Palakkad Kerala Dresser valve Coimbatore Emerson Chennai ltd. Chennai Severn Glocon (I) Pvt. Ltd. Niton valves, Mumbai Steel strong, Mumbai Sopan O & M Co. Pune Elmot Alternators Bharat Heavy Electricals Ltd. John Crane Sealing Systems India Pvt.Ltd.
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Products
Air exchanger, PV HE, Pressure Vessels HE, Pressure Vessels HE, Pressure Vessels Panel Air Exchanger Gas Engines PLC Hardware Canopy Filters HE, Pressure Vessels HE, Pressure Vessels HE, Pressure Vessels HE, Pressure Vessels HE, Pressure Vessels HE, Pressure Vessels Compressor HE, Pressure Vessels HE, Pressure Vessels HE, Pressure Vessels Control Valve Control Valve Control Valve Control Valve Valves Valves Priority Panel DC Motors (Naval) AC Motors Coupling, Seal, Oil filter

Name of Person
Mr.Shingnapurkar Mr.Vivek Patil Mr.Umesh Surotia Not attended Mr.Sanjay Khadse, Mr.Dev Mr. Bhatia Mr.Vikram Shinde Mr.Amit Agarwal Mr.Manjur Mr.Saket Not attended Mr.Devan Mr.Prashan Mohorir Mr.Udayan Shah Not attended Mr.Mike Montgomery Not attended Mr.Umesh Kondkar Not attended Not attended Mr.Subhod Mr.Yogesh Shete Mr.Vikas Panikar Mr.Naved Mr.Santosh Mr.Rege Mr.Bhanupratap Mr.A.K.Bose Not attended

31 32 33 34

Parker Hannifin India Ltd Boultan Trading Narhari Engineering Tushoco Pumps

Fittings, Filter Dealer (Parker, Sporlan) Motors (Naval) Pumps

Mr.Prasad Karve Not attended Mr.Kiran Shah Mr.Amit Chemate

Vendors Response:-

Invitation sent to vendors 34 Strategic Meet attended 24 Not able to attend Strategic meet 10

VEND ORSRES PONS E

Meetingnot a ttended 29%

Meeting a ttended 71%

In selected 34 vendors, 24 vendors were able to attend the vendors review meet, some

vendors informed they were busy in that period.

The major problem in Project business is uncertainty in orders that affect the relation with

vendors, especially with small vendors.

To reduce Overall Cycle Time, partners have to improve response time from both sides.

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Meeting schedule with critical item Vendors Day-Date

Monday 16-April 2012 Tuesday 17-April 2012

9am-11am

11am-1pm
Mr.Vivek Patil (United Heat Transfer) Mr.Udayan Shah (GMM Pfaudler, Anand)

2pm-4pm

4pm-6pm

Mr.Amit Agarwal (Sharp Engineer) Mr.Shingnapurkar (Process Equipment)

Mr.Rege (Sopan O&M Co. Pune)

Wednesday Mr.Naved 18-April (Niton Valves, 2012 Mumbai )

Mr.Devan (R.D. Engineers, Mumbai) Mr.Sanjay Khadse, (Positronics Pvt Ltd) Mr.Prasad Karve (Parker Hannifin India Ltd)

Mr.Vikas Panikar (Severn Glocon (I) Pvt Ltd.) Mr.Amit Chemate (Tushoco Pumps)

Mr.Yogesh Shete (Emerson Chennai Ltd.)

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Thursday 19-April 2012

Mr.A.K.Bose (Bharat Heavy electrical Ltd.)

Mr. Thomas George Mr.Santosh, (Steel strong, Mumbai) Mr.Manjur (Beko Compressor)

Mr.Kiran Shah (Narhari Engineering ) Mr.Prashant Mohorir (Reynold, Belgaum) Mr.Saket (Hindustan Dorr Oliver Ahemdabad Mr.Vikram Shinde (Fox Control) Mr.Dev (Patel Air Temp India Ltd)

Friday 20-April 2012

Mr.Bhatiya (Cummins India)

Mr.Subodh (Dresser valve Coimbatore) Mr.Mike Montgomery, Mr.Alex Rennie, Mr.Angus Mackay Howden Compressor UK

Saturday 21-April 2012

Mr.Bhanupratap (Elmot Alternators)

Some snaps of strategic review meeting with the vendors. 1. Mr.Khadase from Positronics Pvt Ltd. 2. Mr.Bhatiya from Cummins India 3. Mr.Naved from Niton Valves 4. Mr.Prasad from Parker Hannifin India Ltd. 5. Mr.Amit Chemate from Tushoco Pumps 6. Mr.Mike Montgomery from Howden Compressor UK.

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6)

Tabulation and finding results on the basis of Feed Back of Vendors:-

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120% 100% 80% 60% Yes 40% 20% 0% WasMeeting tim e suitable for you? Are you satisfied with Do you suggest to Are you satisfied with dialogue process held arrange strategic meet our hospitality? in m eeting? periodically? No

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Rate the initiative taken by Rate the KPCL on the level How do you rate your KPCL for strategic m eet of fulfilling a commitm ent overall experience with us? VeryGood Good Satisfactory Dissatisfactory

Note: - Data taken from Feedback of the vendors

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7)

Vendor satisfaction survey done by KPCL in FY 2010-2011 Supplier Profile

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Component Qualification / Tech Support from KPCL Percentage satisfaction

General Attribute Percentage satisfaction

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 Overall satisfaction of KPCLs Vendors

Distribution by Satisfaction Level

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8)

Interpretation and Summery

On the basis of feedback received from vendors; Expectations of vendors is more in different aspects from KPCL, but KPCL can provide support with in boundary condition of company only. To make supply chain more efficient, each department of KPCL has to contribute more and take active participation.

Contribution of each department of KPCL to improve the delivery time, and making a supply chain more effective and efficient. 1. 2. 3. 4. 5. 6. Marketing Department. Design Department. Procurement Department. Logistic Department. Ware House (Store) Department. Manufacturing Department.

1. Marketing Department

Marketing people should know the vendors and their history. Involve the vendors in proposal stages so that it will be easy for vendor to understand the project, at least it will save 5 to 6 days of cycle time.

2. Design Department: Problem:There is major problem with vendor is man power, technical people leave the company after getting trained, shortage of technically sound people is always their so Engineering activities get delayed. Solution:Design department need to take maximum responsibility of designing of product because some vendors dont have designing capability, design software and even design people as there is always a technical man power problem with vendors. It will save Product cycle time of KPCL. If only drawing is given to vendors it will get manufacture as fast as expected by KPCL, it will save 4-5 days of cycle time.
a) Realistic estimation and work scheduling should be there by design department with the

help of project lead.

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b) Part requisition should be avoided, it can save Time of job completion. Work load of buyer. Money in term of discount. Time to manage the vendors. c) Design departments lead time for drawing approval is 6 to 8 weeks but some times it takes 10 to 16 weeks. Here KPCL can save 2 to 8 weeks of cycle time of project by increasing efficiency of design department.

3. Procurement Department
d) Negotiation is a part of purchasers routine. Much of this belongs to the behavioral

e) f) g)

h)
i)

science, a great deal is the success of negotiation. Whether the negotiation is for cost, quality or quantity. For negotiation with vendors training on communication and behavioral science, product knowledge to buyers, need to upgrade periodically. Payment should be done to vendors according to ageing. Lead time of control valve is 6 to 8 months, but buyer gets purchase requisition late so package gets delay. To improve the delivery time, purchase requisition of product like control valve should be according to scheduled time. Rate contract should be applicable as and where is required, this help in getting discount and delivery. For common parts single PO is recommended for year, which saves time of repeatedly releasing PO for same items. E.g. Fitting, gasket, flanges, pipes, PGS instrumentation gauges, nuts and bolts etc

4. Logistic Department
a) Problem:

Take more time to deliver the goods than scheduled. Standardization cant be done in logistic, because Size of project is not fixed. Weight of project is not fixed. Location, freight terms, commercial terms and priorities are changing according to projects. For small parts delivery at remote location, KPCL has to pay full freight of truck where light commercial vehicle doesnt go.

Solution: a. Black lists the transporter who will give repeatedly late service. b. Selection of reputed transporter can save transportation time. c. Need driver mobile no, some times transporter or broker of transporter switch off the phone, that time KPCL is unable to track the goods, if KPCL has drivers mobile no at least it will help to track the vehicle, for urgent parts it will be more beneficial.
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5. Ware House Department / Inventory Management.

The various operations related to stores management are:1. 2. 3. 4. 5. 6. 7.

Receiving and inspection. Issues and Dispatch. Stock Record. Stores accounting. Stock Taking and checking. Stores preservation. Store arrangement.

a) Except inventory arrangement all other operation are followed properly in Saswad

plant. Material is stored on floor near by respective project skid b) At least proper rack arrangement should be there to take care of incoming products through vendors. c) There is material laid in improper manner, if there is proper implementation of 5S take place. It will save more money to company and save cycle time also. d) Proper arrangement of inventory saves time in finding material, whenever required. It will save the overall cycle time of project.

6. Manufacturing Department
a) Constrain of manufacturing plant at Saswad is space. As KPCL is getting more

order every year, manufacturing space requirement is also increasing, presently its not sufficient but for future business KPCL is expanding manufacturing plant at Saswad. b) Project requirement schedule need to provide by manufacturing department to procurement department.

Saving time in each departments process will significantly contribute to save overall cycle time of project hence KPCL can save the LD for future years, and help to improve the supply chain of KPCL.

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 Summery
From these interactions the project team realized that there are some improvement is needed in response time and delivery time. Some of major issues with existing vendors are,

Need to decrease the Lead time for some products. Prioritization to KPCL orders. Need for analysis of Men, Machinery, Material, Money and Methods with some vendors. More in hand projects with vendors.(Capacity Booking)

Recognizing that late delivery and consequence of late delivery of KPCL to customer must be aware by vendors in order to enable the vendors to meet the challenges of an increasingly competitive market, the project initiated a Strategic review meet of critical item vendors of the KPCL. The objective of the program is to enable selected vendors to create awareness of late delivery, KPCL business model, vision and mission. To achieve operational efficiency / improve production processes in their units by reducing waste; increasing productivity; introducing innovative practices for improving overall competitiveness; inculcating good management systems and a culture of continuous improvement and take support and guidance from KPCL whenever is necessary. In turn, this would enable the vendors to meet the requirements of the KPCL in terms of timely delivery.

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9) Recommendation
a) Periodically vendor rating report should be submitted to vendor so that vendor will judge himself and may ask to KPCL why his rating is low? KPCL will give the reason and help to solve the issues. b) Vendors who have capability but dont have many orders in hand should be given priority in ordering even though their past record shows delay in deliveries. c) Need of more standardization in PGS, because there is less variation in products. d) For CNG products new vendors need to find and develop for future, as it is fast growing business now days. e) Try to improve the process wherever is necessary after analyzing the issues of vendors with the help of management of KPCL. f) Organize the training program for vendors periodically. g) KPCL is already practicing the group buying for common parts in K-groups, it helps to save cost, reduce inventory by consuming dead stock internally and locating new sources.

10)

Limitation in SCM of KPCL

a) KPCL has to purchase from those vendors only which are in Customers approved vendor list. b) More in hand orders to vendors. c) Fixed business cant be given to vendors as it is project business. d) Buffer stock of inventory cant be maintained because of customised product and demand is also not fixed. e) Proper ware house in not available at Saswad plant. f) Standardisation of Supply chain management of KPCL is not possible. g) The vendor's of critical components ask more lead time for new product development, but package lead time is comparatively shorter given by customer to KPCL. h) Component and process standardization cant be done.

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11)

Scope and Future Improvement

E-Sourcing need to implement in future. Make or Buy decision should be analyzed periodically. Implementation of ERP at vendor level will benefit for KPCL. At least through cloud computing KPCL can give limited excess of ERP to vendors. FTP (File Transfer Protocol) server can be use in future for maintaining and exchanging the document in soft copy. It will help to small vendors also. Try to implement GPS system in route for logistic solution. RFID (Radio Frequency Identification) can be used in ware house and logistic for maintaining regular data of inventory. The combination of RFID, GSM/GPRS and GPS technologies, will allow companies to track a fleet of trucks, along with their trailers and the containers within, with a single integrated system. Find the way to make centralized purchasing for K-Group. ERP II Implementation Its next level of ERP system, its web enabled ERP that can run on internet. The concept of multi-organization supply chain has picked up lately. Electronic commerce (e-commerce) is also getting to be trend of the future. Since supply chain is involves several firms integration, only at a single enterprise level is not enough SAP R/3 and Oracle ERP application can be used for business-to-business ecommerce. At least for K-Group ERP II implementation is needed so that identification and procurement for common part will be more effective and efficient. Need to search new vendors for critical items globally. Kirloskar group need to start manufacture some critical items like Heat exchanger and pressure vessels in house or need to acquire such existing company to fulfill the KPCLs demand.

12)

Bibliography
www.kirloskar.com www.kirloskarkpcl.com www.wikipedia.com www.iimm.com www.linkedin.com 35

 Production and operation management by S.N.Chary.

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