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“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
By
Harshit Gupta
Under the guidance ofMr. J.N Kaushik,
Dy. General Manager (Legal, Excise & Despatches)
J.K Tyre & Industries Ltd., Banmore
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 Shri K. K. Jha, General Manager
(Quality Assurance), Mr. B. De Roy (Chief Manager – (HRD) & Shri Prafulla Ch. Dhar
(Manager Personnel) and I would also like to thank Mr. J. N. Kaushik (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.
Harshit Gupta
MBA 4th semester
IISCS indore
2
Table Of Contents
Topic Page No.Section1: Company Profile 4
1. Organization Structure 7
2. Management Style 8
3. Product and Markets 8
4. Competitors 9
5. Various Product Range 10
6. Strategies 13
7. Financials of The Company 14
8. SWOT 17
Section 2: Summer Training Project
Concept Of Logistic Arrangements
Concept Of Supply Chain Management
Cost structure
18
19
21
24
Project work undertaken 25
1. Objectives 26
2. Research Methodology 35
3. Limitations 37
4. Analysis & Interpretation of Data 38
6. Findings 43
7. Observations 47
8. Suggestions and Recommendations
48
9. Enclosure of Questionnaire 49
10. Bibliography/ References 531
3
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
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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/
5
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
BUSINESS UNIT 1BUSINESS UNIT 2BUSINESS UNIT 3BUSINESS UNIT 4
BU # 1 - MIXING & DIPPINGBU# 2 - BIAS TYRE PROCESSINGBU# 3 - RADIAL TYRE PROCESSINGBU # 4 - LEGAL, EXCISE & DESPATCH (LOGISTICS)
SSU # 1 - TECHNICAL SERVICESSSU # 2 - ENGINEERING SERVICES
6
SUPPORT SERVICE UNIT 1SUPPORT SERVICE UNIT 2SUPPORT SERVICE UNIT 3SUPPORT SERVICE UNIT 4SUPPORT SERVICE UNIT 5
Vice President
Unit Head
SSU # 3 - COMMERCIAL & ACCOUNTING SERVICES INCLUDING FINANCE & ADMINISTRATION
SSU # 4 - PESONNEL & HR & SECURITYSSU # 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 COMPANIES/ INSTITUTIONS BASE
BUSINESS (%)
Replacement Market (Dealers/ Distributors)
3500 – Spread all across the country
53
OEM’S MUL, M&M, Telco, HM, Bajaj Tempo, Ashok Leyland
32
Export 50 countries across the six continents
11
Institutions Defence, STU, Fleets 4
COMPETITORS
7
Since 1991 with the opening of Indian economy, the business is facing fierce
competition from MNC’s.
PRODUCT COMPETITORS FACTORSPassenger Car Tyre Bridgestone International Brand Image
Bus and Truck Tyre MRF, Apollo Marketing and Product mixAgriculture Tyre MRF, Ceat 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-
of-the-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
8
Truck and Bus
9
Bias Radial
Bias
LugSemilug
10.00-20 18 PR JET ACE
10.00-20 16 PR JET MILES
10.00-20 16 PR, 9.00-20 16 PR SUPER TRACK KING TRAK KING
9.00-20 16 PR TRACK TUF DX
10.00-20 16 PR, 9.00-20 16 PR VTL234
10.00-20 18PR JET TRACK DX
10.00-20 16PR JET-TRACK XL
10.00-20 16 PR,8.25-20 16PR JET ONE
10.00-20 16PR JET XTRA
10.00-20 16 PR, 9.00-20 16PR JETKING-10
10.00-20 16PRSTARLUG
10.00-20 16PR JETSTAR
10.00-20 16PR TLUG10.00-20 16PR JET SPEED
10.00-20 16PR JET PACE
10
Rib
10.00-20 16 PR JET RIB
10.00-20 16 PR, 9.00-20 14 PR, 8.25-20 14 PR TRACK KING
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.
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Radial
Rib Semilug Lug
11.00 R 20 16PR Jetway- JUH
12.00R 20 18PR Jetway – JUH
9.00 R 20 14/16PR Jetway – JUH
10.00 R 20 16PR Jetway – JUH
11.00 R 20 Jetway – JBR
10.00 R16PR Jetxtra-JDM
11.00 R 20 16PR Jetxtra-JDM
9.00R 20 16PR Jetsteel-LDH
10.00R20 16PRJetsteel-LDH
10.00R 20 16PR Jetstel-LDH
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
Schedule30.09.07 30.09.06
Share Holder’s FundCapital 30.79 30.79Reserves & Surplus 503.13 560.93
533.92 591.72
LoansSecured Loans 686.82 724.77Unsecured Loans 228.13 219.1
Deffered Tax 105.32
Total 1554.19 1535.59
Application of Funds
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Fixed Assets
Gross Block 2156.07 2084.22Less: Depreciation 957.27 860.03Net Block 1198.809 1224.19Capital work in progress 20.34 22.51
1219.14 1246.7
Investment 62.6 61.46Deffered Tax 1.61Currents Assets Loans & Advances
1100.18 1013.52Less :Current Liabilities & Provisions 835.95 796.86Net Current Assets 264.23 216.66Miscellaneous Expenditure 8.22 9.16Accounting 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.)
0
500
1000
1500
2000
2500
3000
3500
1982 1991-92
1996-97
2001-02
2005-06
2006-07
Turnover(Rs Cr.)
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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 tyre-manufacturing 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 thecorresponding 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
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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 of 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.
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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
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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);
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replenishment strategy (e.g., pull, push or hybrid); and transportation control
(e.g., owner-operated, 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
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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
19
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
35%
22%13%
5%
5%
20% Rubber
NTC Fabric
Carbon Black
SBR
PBR
Others
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Project Work Undertaken
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)
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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:
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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
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
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(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 :
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SIZE NUMBER
Passenger Radial Tyres 10 Tyres and 2 Binders
Light Radial Tyres 10 Tyres and 2 Binders
(ii) 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.
(C) Clearance of 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 CustomerApplying powder in Tyre Ashok Leyland, Bajaj
Tempo,Hindustan Motors, Mahindra & Manindra, Swaraj Mazda, Telco.
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Tyre, Tube, Flap with air Bajaj Tempo, Hindustan Motors.Empty Tube in polythene Hindustan Motors.Empty Flap NoneOnly Tyre Bajaj Tempo, Hindustan Motors,
Telco.Tube Rotation Hindustan Motors, Maruti, Manindra
& Mahindra, Telco.Position of Tube valve at Yellow dot Bajaj Tempo, Hindustan Motors,
Maruti, Mahindra & Mahindra, Swaraj Mazda, Telco.
Position of Tube valve towards serial number
Ashok Leyland, Bajaj Tempo, Hindustan motors, Maruti, Manindra & Mahindra, Telco.
Position of Tube valve towards non serial number (LUG)
Ashok Leyland, SwrajMazda, Telco.
50% towards serial number Escort, Eicher, Manindra & Mahindra.50% towards non serial number Escort, Eicher, Mahindra & Mahindra.Valve cap plastic Ashok Leyland, Bajaj Tempo, Escort,
Eicher, Hindustan Motors, Mahindra & mahindra, Telco.
Colour on strip Ashok Leyland, Telco.Dispatch according to FIFO Ashok Leyland.
Load weight test Ashok Leyland, Bajaj Tempo, Hindustan Motors, Mahindra & Mahindra, Swaraj Mazda, Telco.
Test certification Maruti.
Quality certificate Ashok Leyland, Bajaj Tempo, Escort, Eicher, Hindustan Motors, Mahindra & mahindra, Telco.
Crayon marking 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.
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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.
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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:
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TYPE OF TYRE LENGTH OF TRUCK (Feet)
NUMBER OF TYRES
Truck Tyres 18 130Truck tyres 22 160LCV 18 260LCV 22 320
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.
2) 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
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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.
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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.
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53%32%
11% 4%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%).
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22%
21%
18% 13%
26%
MRF
Apollo
JK Inds
CEAT
Others
Tyre Industry Market Share in Gwalior Region
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.
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27%
20%18%
16%
10%9%
Apollo
MRF
JK Inds.
CEAT
Birla
Others
Five Forces
Five forces is now been listed, which shows the characteristics, plus & minuses of tyre industry.
Supplier Power - HighThe 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
Threat of Substitutes - Low
Imports, especially from China
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Buyer Power - HighHigh competitive pressure due to high bargaining power of OEMs and the wide brand choice in the replacement market
Impact of Growing Economy
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Fig. The Demand Cycle Chart
Findings
PROCEDURES OF THE DEPARTMENT
Procedure Of Handling Logistic
Growing Economy
Increase in demand of freight movement
Increase in wear & tear of tyres
Increase in income level, higher disposable income
Increase in demand for passenger cars
Increase in commercial vehicles demand
Create replacement demand for cycles
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
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[Headquarter sends weakly dispatch schedule]
[Warehouse located in the company]
[Under the company]
Comparative Study – Tyre Market
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
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Headquarter
Logistics
Raw material
Production
Finished Goods
Quality Checking
Warehouse
Export
Nepal Export
Road Transportation
Quality Control
Sales Depot
OEM
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 Formula-1 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:
Transportation Means
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JK TyreBanmore Plant
Dealers
C/F Agents Depots
End Customers Sub - Dealers
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 R12 ULTIMA/ULTIMA XP,155/65 R13 TORNADO165/65 R13 TORNADO/RALLY165/80 R15 RALLY 175/70 R13 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
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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.
Dealers have active communication with JK Tyre management.
Replacement policy of JK Tyre is convincing to dealers.
Suggestions
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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.
To avoid delay in dispatch JK Tyre Gwalior plant should have provisions to
fulfill urgent & special requirements.
The company should take some efforts to make effective transportation
arrangements. Because it affect production pricing, on-time delivery
performance and customer satisfaction.
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
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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.:
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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 No
3. The means of transport used?
4. Are there any damages due to transport?
Yes No
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 No
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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.
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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
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