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In highly globalized and competitive markets, companies adopted latest business strategies to improve their top line and bottom line. For example many auto companies adopted BPR and KAIZEN in big way to improve their productivity. And also companies adopted ERP to standardize their processes world wide. All these tools and technique reached a saturation point on delivering the results and made companies to think beyond their boundaries i.e. supplier side and customer side.
Many companies are focusing on end customer and now competition is not between products or services but of one supply chain with another. Companies never ending quest to improve their process to meet global customer requirements in terms of time, cost and quality, forcing companies to look beyond their boundaries to optimize the resource at each stage from design stage to delivery stage.
In a recent study it has been found that approximately 20 to 25% of GDP is spent on logistics in India. In case of US it is just 10 to 15% of GDP and Wal-Mart's is around 8 to 10%of their total turnover on logistics. These numbers shows the opportunity for improvement in transport and logistics area. Recent inflation trends like oil and food prices threatening the sustainability of the business and directly affecting profitability of companies. In coming days to sustain growth, companies needs to innovate ways to cut cost and remove non value added activities in their supply chain. This is possible only if companies start improving their activities from design to delivery with effective Supply Chain Management.
Many organizations started recognizing the importance of their supply chains and one best example is BEML's success. BEML Ltd was incorporated under Companies Act 1956 with Corporate Head Quarters at Bangalore on 11.4.1964.
BEML is a premier ISO 9000 certified company in India and the second largest manufacturer of earth moving equipments in Asia. BEML plays a vital role in diverse sectors of economy such as Coal Mining, Steel, Cement, Power, Irrigation, Construction, Road Building, Defence and Railway including Metro Railways.
A profit making MINI RATNA public sector undertaking under administrative control of Ministry of defence, BEML commands major market share in domestic earth movers industry. The sales turnover of the company was Rs 3013.47 Crores and profit before tax was Rs 387.47 Crores during 2008-2009, and having total manpower strength of 12,600. Nearly 40% of its equity has been divested to financial institutions and public. The company's unit at Kolar Gold Fields, Mysore and Bangalore incorporate Hi-Tech Manufacturing facilities with sophisticated CNC machines, flexible manufacturing systems and Arc welding Robots.
The transfer of state of the art technologies from global partners like M/s.Bucyrus, M/s.Tatra, and Bumar Labedy has enabled BEML to achieve high standards in product engineering and gain International Competence. But by the middle of 2006 company was facing the huge task of integrating its entire supply chain due to rising Raw Material cost and at the same time it had to reduce its costs, inventory, and improve customer satisfaction which was a serious concern for the company.
So as a first step Siemens Information Systems Ltd. was selected as the implementation partner and BEML SAP ERP implementation project kicked off and went live in 2007 after Testing Phase ,Transaction Data Migration, Master Data Migration and Master Data Rationalization. As a next step in 2008 BEML implemented SCM and SRM software's from SAP. For streamlining supply of spares across the BEML depot effecting inter depot transfer and rationalizing inventories which enables faster response to customer needs BEML launched a dedicated satcom network called BEMLNET.
OBJECTIVE OF THE STUDY:
The present study explores and investigates how BEML uses Supply Chain Management to gain competitive advantage and increase business success. This study provides a framework to understand a firm's performance and argues that Supply Chain Management will help a firm to be competitive and successful. The objective of this study is to explore and investigate the firm scope, design and implement Supply Chain Management. It also tries to find the advances and new ideas in Supply Chain Management. As companies cannot compete on the basis of price alone, some sort of differentiation is necessary. The Internet coupled with other computer technologies, allow companies new avenues to distinguish themselves from their competitors. One of these avenues is Supply Chain Management. Supply chain management allows a company to reduce its costs, create opportunities to increase value for its customers and increase its competitive ability in the market. Most importantly, this study endeavors to determine how a Public Sector company like BEML used Supply Chain Management to overcome its Limitations and to gain competitive advantage.
In fulfilling this objective, this study addresses the following issues:
1. To see the effect of implementation of Supply Chain Management technique on the
overall performance of the company.
2. To analyze the profit margin of the company before and after implementation of
Supply Chain Management package.
3. To study the inventory status of the company before and after implementation of Supply Chain Management.
4. To highlight areas of improvement.
In order to reach the objective of the study the following major hypothesis were formulated.
1) Implementing SCM has made a reduction on the working capital of the company.
2) There has been a decrease in the volume and value of inventory of the company.
3) There has been a decrease in cost of production of the company and increase in
5) There has been improvement in the customer order management and customer
6) Supply chains of this company contribute to competitive advantage and long term
profit and health of the company.
METHODOLOGY OF THE STUDY:
This study employs the research process. There are several reasons for this:
Supply Chain Management is a vast collection of techniques. Hence, selection of supply chain factors and strategies can be a complex process. In such a dynamic setting it is best to use research methodology to understand the situation.
Furthermore face-to-face meetings with employees will help to provide understanding and information on several qualitative areas, such as: reasons for implementing specific supply chain factors (or strategies); customer needs data, and discussions and feedback.
The secondary data needed for this study has been collected from various sources like Journals, annual report, Profit and loss account, Balance sheet, financial Statement of the company, online published document on internet.
There are several limitations in this study.
The research is focused on single company operating geographically in Bangalore, India. The goal of this research effort is to seek greater understanding that can lead to building a foundation for more extensive research in the future. This research work has been completed after facing various types of difficulties as it is too tough to measure directly the success of an SCM implementation in a company. The first tough task was collection of data for the purpose of review as the data related to implementation of SCM is of confidential.
The second difficulty was that the SCM has been implemented during 2008 end, and hence the exact information regarding inventory turnover due to consequent change in costing methodology after implementing SCM will be only available from annual report of 2009-2010 which will be published only by July 2010.For being a Public Sector company under the Ministry of Defence, the employees of the company have restrictions to share information which is specific to BEML. Through this report I have tried to give useful and positive result so that it can act as a guideline for further research in this field for BEML Ltd.