padmini 0356 supplierappraisal

8/12/2019 Padmini 0356 SupplierAppraisal

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DECLARATION

IPadmini.Yof M P Birla Institute of Management, Bangalore,

hereby declare that the Project report titled SUPPLIER

APPRAISAL for EB Purchases Department in MICO,

Naganathapura has been submitted in partial fulfillment of

the requirements for the Master of Business Administration

Degree of Bangalore University during 2003-2005 is an

original work and this has not formed the basis for an award

of a Degree/Diploma by any other University or Institute.

DATE:

PLACE:Bangalore (PADMINI Y)


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ACKNOWLEDGEMENT

Project report is in partial fulfillment of the requirements for

MBA Degree course of the Bangalore University.

I acknowledge deep sense of my gratitude to Mr.B.V.Sudarshan, Purchases Head,EB Purchases MICO, Naganathapura for the opportunity offered to me to undertakethis study. I also thankMr. T.Karthikeyan for his unrelenting support and guidance,without which this endeavor would not have been possible.

I express my grateful thanks to Dr. Nagesh Malavalli, the

Principal, MPBIM and my guide Prof.B.K.Ramaswamy for

their invaluable guidance in preparing this report.

I also thank all the staff of the MICO for their help and

administrative support during the tenure of the study.

I take this opportunity to thank my parents and friendsfor

their constant and consistent encouragement.

PADMINI.Y


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CONTENTS

CHAPTER

NO

PARTICULARS PAGE

NO

I DECLARATION

II CERTIFICATES

Guide

Principal Company

III ACKNOWLEDGEMENT

A. EXECUTIVE SUMMARY

1. INTRODUCTION 1 to 2

2. COMPANY PROFILE 3 to 25

3. BACKGROUND OF THE STUDY

Problem Statement

Objective of the Study

Significance

Theoretical Framework 26 to 31

4. METHODOLOGY

Research design

Study population

Sample size

Data Gathering Procedure

Study Type

Data Analysis 32 to 39

5. FINDINGS

40 to 59

6. RECOMMENDATIONS AND CONCLUSIONS 60 to 63

7. BIBLIOGRAPHY 64

8. APPENDICES 64 to 73


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LIST OF TABLES

Serial Number Particulars Page number

Table no. 1 Cost/Price Rating Factors 36

Table no. 2 Quality Rating Factors 37Table no. 3 Logistics Rating Factors 37Table no. 4 Supplier Grading 39Table no. 5 Supplier Assessment PUR 49 to 51Table no. 6 Supplier Assessment QSG 52 to 54

Table no. 7 Supplier Assessment PPR 55 to 57Table no. 8 LEB - 2005 58 to 59

LIST OF GRAPHS AND CHARTS

Serial Number Particulars Page number1 Organisation Structure of MICO 10

2 M & SS Manpower 123 Classification of Suppliers Bar Graph 42

4 Classification of Suppliers Pie Chart 42


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A. EXECUTIVE SUMMARY

As a part of the course curriculum of degree of Master of Business

Administration at Bangalore University, I am required to undertake a projectwork in an organisation in forth semester. The purpose of this is to createthe manager with greater adaptability and who can provide creative solutionto the organisation they work with, so it help the student to becomecomplete manager and efficient in the industry. This project report is aneffort of mine for the fulfillment of the same.

MICO is one of the reputed companies in India. It is one of the oldest

and fastest growing company. It has a leading presence in India.

MICO, Bosch Group has over the years, acquired a strong reputation

in the field of sparkplugs, pumps, and other competitive products.

I undertook this project to evaluate the suppliers of the EB Purchases

Department, MICO, Naganathapura Branch. This project report focus on

the classification of the suppliers in to key suppliers, Technology

Specialist, Essential Suppliers, New Suppliers, Suppliers to be eliminated,

Customer Specified, suppliers not feasible to eliminate and reviews the

importance of supplier performance.

For this purpose, weighted point technique of vendor rating is used as

a tool to determine the supplier performance under the following

criteria- Price/cost, Quality, and Logistics.

The objective of this report is to get a clear picture with regard to the

Supplier Base Reduction (SBR) activity and identifying the key

suppliers to Energy Body (EB) Purchases, MICO Bosch Group,

Naganathapura Plant.

This helps in providing feedback to suppliers with average rating to

encourage improvement in their performance, black listing the


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vendor with low rating from the list, selecting of preferred supplier

and giving supplier awards.

By the data analysis done, the 52% of the total suppliers are essential

suppliers with average performance, 21% are key suppliers and 11%

of the suppliers are to be considered for elimination, 6% are new

suppliers to MICO, 2% are suppliers not feasible to eliminate,

customer specified suppliers to MICO, Naganathapura - EB Purchases

are 1%, and 7% of the total suppliers are technology specialists.

MICO has accepted my findings and has started implementing my

suggestion by considering the suppliers with grade C for elimination.


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CHAPTER 1


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INTRODUCTION

Today we are in Competitive World & lot of Advancements are taking place

around us & we are suppose to improve continuously every minute in order to

cope with these advancements. In this competitive world every activity of the

company has become very critical. Purchasing is one among those critical

activities.

Materials, supplies and equipment are the pivotal function concerned to

industry, governmental agency or commercial operations. The efficiency of

any business is contingent upon having them available in the right quantity, in

right quality at right place with right price. Failure in any of these fronts adds to

the cost and has the adverse impact on the companys profits and will speak

on ineffective buying techniques. Thus the purchasing is the main factor in the

timely execution of industrial projects.

A true measurement of an effective purchasing department is obtained by the

quality of reliable vendors selected for supplying goods and services. Poor

supplier performance accounts for billions of currencies in product recalls.

Such problems, combined with today' s dynamic, global business environment,

require buyers to evaluate and manage supply partners' efficiencies.

Suppliers those who fail to meet performance standards can cost

manufacturers a bundle in actual expenditure, customer dissatisfaction, and

loose the business ultimately. So every Organisation is looking for having

dedicated limited Quality suppliers on whom one can rely upon & constantlyhave focus on them.

Hence as a specimen MOTOR INDUSTRIES COMPANY LTD,

Naganathapura has been chosen & Project has been carried out to assess

and rate their suppliers performance.


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CHAPTER 2


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COMPANY PROFILE

MICO.. AN INSIGHT

MICO is the largest manufacturer of diesel fuel injection equipment in India

and one of the worlds largest company. In addition, it manufactures industrial

equipments, auto electrical equipments, hydraulic gear pumps for industrial

and tractor applications, electric power tools and packing machines. In the

automotive industry , MICO is synonymous with high precision. Be it spark

plugs, fuel injection equipment, auto electricals or hydraulics, the one constant

is precision.

MICO (Motor Industries Co. Ltd.), a member of the Bosch Group, Germany,

has contributed to India' s status as an industrial force within the automotive

industry for over fifty years. It has been part of India' s transition from a newly

independent nation to an international capital of technology.

Today, MICO products play a vital role in varied sectors of the economy. You

will find them performing with precision in pump-sets, tractors and power

tillers, in most vehicles on Indian roads, in diesel locomotives and defense

applications. World-class quality, inspired innovation, entrepreneurial

leadership and high professionalism have made MICO a company to be

reckoned with anywhere in the world. And a force that will continue to drive

the Indian automotive industry through the new millennium.


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BOSCH, GERMANY AN INSIGHT

World over the name Bosch stands for competence and product diversity in

automotive equipment, power tools and accessories, thermo technology,

household appliances, communication, automation and packaging machines.

The workshops for precision engineering and electrical engineering that

Robert Bosch founded in 1886 have grown in the course of more than 100

years to become a global player. Employing 221,000 at 227 manufacturing,

Bosch has 250 subsidiaries and associate companies spread across 50

countries. There are 18500 scientist, engineers and technicians engaged in

R&D activities resulting in 2000 patent activities per years. All this place the

company at the top in the entire automotive industry.

Bosch India develops software solution for Bosch units across the globe and

brings the renowned BOSCH technology in gasoline engine management

systems to its customers. The software division of BOSCH India is 9001-2000

certified and assessed at CMM level 4.


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COMPANY PROFILE

MOTOR INDUSTRIES COMPANY LTD. ( MICO )-BOSCH GROUP

LEADERSHIP THROUGH INNOVATION AND TECHNOLOGY

MISSION STATEMENT OF MICO BOSCH

To delight customers through world class products as well as a nationwide

network of dedicated sales and service outlets. Its All-India network is well

equipped to provide quick solutions, backed by mobile service workshops,

excellent training in maintenance and availability of genuine spares.

VISION STATEMENT OF MICO-BOSCH

We, the employees of MICO, are motivated, informed, creative and open

minded.

Our aim is to delight our customers through world-class products, services

and solutions.

Continuous improvement is our way of life and we will work professionally to

succeed.

ROBERT BOSCH saysI have always acted on the principle: Rather lose money than the confidence

of the customer, the integrity of my goods and my given work always meant

more to me than temporary gain.

It all started off when Bhailal C.Patel visualised a greater partnership between

India and Germany and urged Bosch to setup a base in India. Later, an

Indian entrepreneur, Raghunandhan Saran approached Bosch to setup a new

venture in India. Established in 1951 in Chennai with a capital of Rs.2.8

million and employee strength of just two persons.


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Founded in 1951, Motor Industries Company Ltd. (MICO), a group member

of the BOSCH GROUP, is a pioneer and acknowledged leader in DIESEL

FUEL INJECTION EQUIPMENT & SPARK PLUGS. Access to state-of-the-

art technologies from Bosch and a zealous commitment to quality, have

made MICO the countrys largest manufacturer of Diesel Fuel Injection

Equipment and one among the largest in the world. In addition, MICO

manufactures industrial equipment, auto electricals, hydraulics for industrial

& tractor applications, electric power tools, packaging machines and

Blaupunkt car multimedia systems. MICO enjoys monopoly in many of its

products, as it is in automobile ancillary industry. Its main clients are Telco,

Ashok Leyland, MarutiUdyog Ltd. and Mahindra & Mahindra.

With its head office in Bangalore and hi tech manufacturing facilities in its

branches at Naganathapura (near Bangalore), Nashik and Jaipur, MICO

manufactures products as diverse as industrial equipment, auto-electricals,

hydraulics for industrial and tractor applications, electric power tools,

packaging machines, and Blaupunkt car audio systems.

MICO has 800 outlets both in service and sales and have a firm and well

established network. Today MICO is the THIRD LARGEST Manufacturing

Center outside Germany of the BOSCH GROUP.Bosch is one of the leading

automotive companies in the world. MICO is the Bosch in India

(representative of Bosch products) . MICO has 85% market share and its only

competitors are LUCAS & TVS. All around the world, the Bosch name stands

for competence and product diversity in the following sectors:

automotive equipment

power tools and accessories

thermos technology

household appliances

communication

automation and packaging machines.

MILESTONES:


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1951 Establishment of the Company

1953 Construction of the first factory building at Bangalore

1954 Manufacture of spark plugs, single- cylinder diesel fuel injection

pumps and nozzle holders

1955 Manufacture of elements and delivery valves

1956 Manufacture of multi-cylinder diesel fuel injection pumps

1972 Manufacture of nozzles and nozzle- holders at Nashik Pilot Plant

1974 Production begins at Nashik Plant

1981 Manufacture of special purpose machines and tools

1986 Manufacture of VE Distributor pump

1989 Manufacture of Hydraulic products

Manufacture of auto-electricals

1990 Naganathapura Plant inaugurated

1991 MICO becomes the Bosch Global Development Center for

single- cylinder diesel fuel injection pumps

MICO represents Bosch for imported automotive after market

products, Automotive workshop test equipment and

hydraulics and pneumatics

1992 Marketing of automotive accessories

ISO 9001 Certification for all three plants

1993 Manufacture of Bosch electric power tools

1994 Manufacture of packaging machines

1995 MICO becomes the Bosch global development center for a range of

Multi cylinder diesel fuel injection pumps

1996 Blaupunkt car audio systems launched

1997 QS 9000 Certification for Bangalore, Nashik and Naganathapura

Plants

1998 20 millionth single- cylinder pump produced

1999 Jaipur Plant inaugurated

Manufacture of Blaupunkt car audio systems in India

2000 MICO Application Center (MAC) inaugurated

MICO, Bangalore has been adjudged as All India Best


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Establishment for the 25thtime

Naganathapura Plant manufactured one millionth auto- electrical

unit 50000 VE pumps produced at Jaipur Plant

QS 9000 Certification for Jaipur Plant

2001 Launch of Terra 25 packaging machine

2002 25 millionth single cylinder pump produced.

Launch of indigenously developed marble and granite cutter.

Launch of first Bosch Car Service outlet.

MICO enters into Communication, Security and Imaging business.

ISO 9001:2000 certification for industrial equipment, packing

technology and power tools divisions.

ISO 14001 (Environmental Management Systems) certification for

Bangalore Plant.

2003 10 Millionth inline A pump produced.

Bosch Security Systems launched.

TS 16949 certification for all MICO plants.

ORGANISATION STRUCTURE


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CODE DESCRIPTION OF THE ORGANISATION STRUCTURE

LF - Joint Managing Director ( Manufacturing and Quality).

L - Director.

LK - Joint Managing Director (Commercial Administration).SRD - Automotive Equipment and Hydraulics.

SAA - Sales Automotive After-market.

EW/PL - Power Tools.

VT/PL - Packaging.


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SXE - Exports.

EB/PL - Energy System.

SP/PL - Spark Plug and Glow Equipment.

COM - Corporate Communication.

ST/PL - Security /Technology.

CEP - Corporate Engineering and Building Projects.

QAL - Corporate Quality.

BanW/QSG - Quality Assurance.

NaW/QSG - Plant Assurance(Nashik).

NhW/QSG - Plant Assurance(Naganathapura).

JaW/QAE - Plant Assurance (Jaipur).

RMB/QSG - Special Purpose Machines And Tool Room.

BanW/TL -Technical Plant Management, Manufacturing (Bangalore)

NaW/TL -Technical Plant Management, Manufacturing (Nashik).

JaW/TL -Technical Plant Management, Manufacturing (Jaipur).

NaW/KL - Commercial Plant (Nashik).

JaW/KL - Commercial Plant(Jaipur).

CDT - Corporate Direct Taxation.

CEC - Central Excise, Import Licensing And Customs.

CFN - Corporate Finance.

CPR - Corporate Personnel and HR.

CTG - Corporate Accounting/MIS/Controlling.

ICA - Internal Commercial Audit.

ISY - Information Systems.

SEC - Legal Council and Company Secretary.

PJ-SAP - Project SAP.

DSO - Data Security Officer.


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MANAGERIAL & SUPERINTENDENT STAFF MANPOWER

LEVELS IN MICO :

GM - General Manager

DGM - Deputy General Manager

DM - Divisional Manager

Gr.1 - Senior Manager

Gr.2 - Manager

Gr.3 - Deputy Manager

Gr.4 - Assistant Manager

Gr.5 - Senior Engineer / Senior Officer / Senior

Superintendent

Gr.6 - Engineer / Officer / Superintendent

Gr.7 - Assistant Engineer / Assistant Officer / Foreman

MICO PRODUCT RANGE:

HRM11 08.04

This is the exclusive property of Mo tor Industries Co.Ltd.. Without their consent, it may no t be reproduced or given to third parties.

M&SS MANPO WER AS ON 01.08.04(VA included)

GM

DG M

DM

Gr.1

Gr.2

Gr.3

Gr.4

Gr.5

Gr.6

Gr.7

Total* 2434 2443 Total 753 764 -11 2432 41

1

-4

5

8

40

25

22

32

-62

-78

15

29

39

82

13 5

22 9

38 1

58 6

43 1

50 5

51

52

48

49

45

42

40

37

36

42

2

2

10

23

65

98

134

199

157

63

1

6

5

15

25

73

112

167

219

141

(Strength as on 01.08.04 - 2432) A dd it io ns D el eti on sNet

Change

Average

Age

Present Strength

(as on 01.06.04)Strength

(01.06.03)Level Strength

(01.01.04)

14

33

34

74

95

204

359

554

493

583

14

34

33

74

95

204

359

562

495

564


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Diesel Fuel Injection equipment

Fuel Injection Pumps Single Cylinder, Multi cylinder, Distributor type

(VE)

Common Rail Systems

Electronically Controlled Distributor Pumps (VP37)

Governors , Injection Times and Feed Pumps

Nozzles and Nozzle-holders

Elements

Delivery Valves

Monoblock Pumps

SPARK PLUGS

Bosch Safety Systems

Antilock Braking Systems (Hydraulics)

AUTO-ELECTRICALS

Starter Motors

Alternators

AUTOMOTIVE ACCESSORIES

Halogen Bulbs

Fog Lamps

Stop and Tail Bulbs

Miniature Bulbs

Festoon Bulbs

Two-wheeler Head Lamp Assembly

Ignition Coils

Voltage Regulators

Horns

Diesel Filter / Filter Inserts, (Spin on / bowl), Lub Oil Filters, Air Filters,

Petrol Filters, Petrol Injection Filters


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Wrapped V-Belts, Clogged V-Belts, Poly V-Belts

Clutch Auto Belts

Clutch Plates / Cover Assemblies

Glow Plugs, Glow Duration Unit, Glow Indicators & Glow Resistors

ARAL Lubricants & Coolants

Shock Absorbers

Batteries

Blaupunkt Car Audio Systems

Diesel Fuel Injection Pipes

Automotive Relays

Wiper Blades

Gear Pumps

INDUSTRIAL EQUIPMENT

Special Purpose Machines

Lapping Machine

Deburring Machines

Electro Chemical Machining (ECM), Thermal Energy Method (TEM)

Measuring & Inspection Automats

Assembly/ Cleaning Equipment

Fully Automated Transfer Line

Super Finishing Machines

Special Purpose Grinding Machines

Test Benches for Service

PACKAGING MACHINES

Vertical form fill and seal machines

Dosing Systems Cup Filler, Auger Filler, Weigher & Pump

Pharmaceutical packing machines


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Confectionery processing machines

ELECTRIC POWER TOOLS

Construction Tools

Wood Working Tools

Specialty Tools

Cordless Tools

Metal Working Tools

Bench Top Tools

Pneumatic Tools

Bosch Accessories for all the Tools

High Frequency Tools

Bolting Technology

Fischer Fixing Systems

BOSCH AUTOMOTIVE PRODUCTS:

BLAUPUNKT CAR MULTIMEDIA

Car radios

Speakers


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Amplifiers

Subwoofers

CD changers

Accessories Digital Signal Processors(DSPs)

Antennas

Remote Controls

Coach Audio/Video

In Car Multimedia Players DVD/VCD/In Car Multimedia screens

MP3 players

DVD/VCD/In Car Multimedia screens & Public Address Systems

Trunk Systems

SECURITY SYSTEMS

Communication: Public address system, Conference system, Sound

management system, Industrial PA system

CCTV : Cameras and lenses, CCTV monitors, Digital Vide Recorder,

Observation Systems

Fire Alarm

Access Control & Building Integration System

Intrusion Alarm

MAJOR MICO CUSTOMERS

Ashok Leyland

Bajaj Tempo

Eicher Tractors

Escorts

Hindustan Motors

HMT


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FACTORY : SALES OFFICE :

BANGALORE NEW DELHI INDORE

NASHIK MUMBAI CALICUT

NAGANATHAPURA KOLKATA SECUNDERABAD

JAIPUR BANGALORE

SPECIAL FEATURES OF MICO

CIP-CONTINUOUS IMPROVEMENT PROCESS


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CIP is thought and action process that always questions the present systems,

processes and behavioural systems in all fields at all levels and improve

them. Main objective of CIP is to maintain competitiveness through

continuous improvement by involving all employees. They have this CIP

because of increased competition and increased quality requirement.

The CONTINUOUS IMPROVEMENT PROCESS (CIP) is participation of

employees at all levels has also been introduced at MICO. This is a thorough

action process which always questions the present system, processes and

behavioural systems in all fields, at all levels and improves them. It is a time

bound action plan that ensures effective implementation. This helps in

identifying flaws in working methods, and helps to bridge the gap between

ideal work methods and present methods. Customer orientation and

satisfaction stays at the core of CIP. This is achieved through improvements

in Quality, Cost and Delivery. CIP has no end.

The goal of CIP is to

initiate small improvements in daily activities.

involve all employees .

improve continuously Quality, Cost and Delivery

LERNSTATT

LERNSTATT is formed out of the German words Lernen and

Werkstatt

it was devised by an institute in mid 70s for BMW in Germany

its first task was an on-the-job language course for foreign workers

soon other companies adopted the idea, Bosch initiated Lernstatt

activities in 1980 and MICO initiated in 1992.

LERNSTATTactivities are organized by the moderators to make the group

aware of the requirements. The activities are not limited to one level in the

hierarchy. It is planned to be propagated to all levels in the organization. This

is to tie up communication and improve teamwork at all levels.


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Continuous training through Regular workshops and Seminars helps

employees at MICO to upgrade their skills and widen their professional

outlook.

MICO VOCATIONAL CENTRE (MVC)

MICO Vocational Centre (MVC) was established in 1960. It was conceived

and set up as a full-fledged training centre to develop a reservoir of skilled

personnel required to produce quality products on sophisticated machines.

Since then, MVC has been the centre to cater to all training needs of the

company.

One of our major activities is to train trade apprentices. They undergo basic

training common to all trades in the first year. Job-oriented training starts in

the second year, at the end of which they acquire advanced skills. In job-

oriented training, the demand for accuracy is on par with what is required in

the Tool Room. The output has to pass the normal modes of inspection. At

the end of the second year, they are ready to be posted to different shops for

in-plant training. Trainees in Tool & Die making undergo special training in the

third and fourth years, respectively.

FACILITIES OFFERED TO EMPLOYEES

MICO Library

MICO General Library

MICO Technical Library

Membership is opened to all employees at minimum fees of Rs.5

MICO Sports Club started in 1956

Provides recreation to employees and their family members

Promote and encourage sportsman spirit

PRED-Performance Review Employee Development


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It is an annual feature of MICO where in employees performance is evaluated.

CANTEEN

Technical Director, Mr. E. Lang, started MICO canteen in 1959. The canteen

in Bangalore is a show piece of the factory and one of the best equipped in

the country and it can accommodate 1200 person at a time. The working of

the canteen is guided by an advisory committee on which the employees have

an equal representation with the nominee from the management.

MEDICAL

Medical Center works round the clock and also provides a 24 hours

ambulance service. Most of the medicines are dispensed here. The medical

also liaisons with important hospitals, labs and senior medical consultants in

the city.

MICOs ENDEAVOUR & CONTRIBUTION TOWARDS

SOCIAL SERVICE

During the year 1996, MICO employees donated a days salary/wages

amounting to Rs. 13,68,271 towards the Andhra Pradesh Chief Ministers

cyclone Relief fund. The company made a matching contribution taking the

sum to Rs. 27,36,543. MICO has provided MSSI, a social service

organisation, with office space and other facilities. Machines are made to

serve people. Technologies are developed to lighten their load. MICO is

dedicated to satisfy the needs of the coming generations. Producing better,

safer, cleaner and more economical products for the realisation of a futurethat offers a better quality of life. MICO has also adopted a village near

Bangalore, for the development of that village. MICO ensures about the better

educational infrastructure, hygienic facilities etc.

ENVIRONMENTAL PROTECTION


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One of the foremost principles and desires of MICO has been

Environmental Protection. Within and around the factories trees and plants

are planted to take care of nature. MICO continuously improves its product

lines to ensure environmental protection through the following activities:

Elimination and reduction in the use of hazardous substances in

processes.

Through the process of reclamation like recycling of treated Canteen

waste water , sewage and process rinse water.

Through the process of treatment and safe disposal of effluents generated

in heat treatment and surface treatment processes in line with standards

laid out by environmental protection statutory bodies.

MICO has an Automated Treatment plant for process effluent at all sites. The

type of effluent treated in these plants are cyanide rinse, chrome rinse, nitrite

rinse, acid / alkali rinse, nitrite salts and used emulsion.

Also there is a Biological Treatment plant for Sewage & Sullage. The canteen

waste water is treated in this plant and the recycled water is used for

gardening purpose. Sewage is let into the underground drainage system for

final treatment by Govt. agency at Bangalore.

ENVIRONMENTAL POLICY

Environmental Protection is one of the MICO' s basic corporate principles.

Product quality, economic efficiency and environmental protection are given

equal importance. MICO' s Environmental Policy envisages continuous

improvement to control and minimize the potential impacts of the over all

company activities on the environment.


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The Environmental Management Systems is in place in which integrated

measures are being implemented in the processes instead of the end of the

pipe measures. It includes the following-

1. ENVIRONMENTAL PROTECTION AS A CORPORATE PRINCIPLE

Regard for environmental protection is one of our basic corporate

principles. We consider product quality, economic efficiency and

environmental protection as equal objectives.

2. REDUCTION OF ENVIRONMENTAL IMPACTS

Environmental protection concerns all process and modes of

behaviour in the corporation.

3. SENSE OF RESPONSIBILITY OF EMPLOYEES

Environmental protection is the concern of every employee. Creating

and promoting a sense of responsibility for the environment among all

employees is a part of the managing task

4. CONTINUOUS IMPROVEMENT

By way of a continuous improvement process, we are attempting to

control and minimise the potential impacts of our overall company

activities on the environment.

5. LEGALITY

Laws and regulations on environmental protection must be strictly

observed.

6. ENVIRONMENTAL TECHNOLOGY

We are applying the best possible technology to protect the

environment, taking into account economic aspects.

7. ENVIRONMENTAL MANAGEMENT


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We have an environmental management system in place with we are

subjecting to continuous development. It includes an organisation

with clearly assigned responsibility and defined delegation of tasks.

8. CONTRACTORS

We involve contractors and suppliers in our environmental protection

measures.

9. PUBLIC RELATIONS

We cultivate a co-operative relationship with authorities and an open

dialogue with employees and the public.

10. ENVIRONMENTAL CONTROLLING

We regularly review the compliance of these principles to ensure the

effectiveness of our environmental management system.

SERVICE

The customer pays for a promised product performance. MICO backs this

performance with a nation wide network of over 300 service points including a

service point at Ladakh (Kashmir).

Well-equipped and manned by MICO trained personnel, these service centers

render the expert servicing required for the high precision MICO products.

The customer has access to genuine spare parts through sales dealer outlets

numbering over 330.

VENDOR DEVELOPMENT

Indigenisation, which triggered the growth of MICO, is a continuing priority in

MICO. This covers product and process technology, besides import

substitution achieved through a concerted vendor development programme.


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Among its suppliers are over 600 small-scale industries. By sharing know-

how, by providing tools and gauges and by training their personnel, MICO

helps them become reliable suppliers not only to MICO but to others as well.

The suppliers Meet is organized to appraise the suppliers of factors such as

rising material cost, high material content in our products and the expected

rapid growth in both the local and international market. The meet is broadly

structured into technical and management session. The technical sessions

covers usage and merits of quality, cost control, continuous improvement

process, do it right, statistical process control, process plan and control,

metrology and gauges,

ISO 9000 and QS 9000 and also Preventive Maintenance and inspection.

Topics such as WORKING CAPITAL MANAGEMENT , LABOUR

MANAGEMENT, VALUE ENGINEERING and BENCHMARKING are covered

during the Management Session.

CHAPTER 3


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BACKGROUND OF THE STUDY

PROBLEM STATEMENT

The basic function of purchasing is to ensure continuity of supply of raw

materials, sub contracted items and spare parts and at the same time

reduce the ultimate cost of the finished goods.

But the poor supplier performance accounts for billions of currencies in

product recalls and also having control over no of suppliers is difficult. It is not

always easy to identify good vendors. In many cases purchasing department

is unjustly criticized because of poor performance. Generally, if the supplier


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base is too large it is very difficult to concentrate on all the suppliers in terms

of Quality, Cost & Delivery. The ability to select reliable vendors is a mark of

successful purchasing action. In this context, there is no substitute for an

objective means of SUPPLIER APPRAISAL.

OBJECTIVE OF THE STUDY

The objective of this project is to classify the suppliers based on their

performance, to get a clear picture with regard to the Supplier Base

Reduction (SBR) activity and identifying the key suppliers to Energy Body

(EB) Purchases in MICO Bosch Group, Naganathapura Plant so that only dedicated limited Quality suppliers on whom one can rely upon exists.

SIGNIFICANCE

Supplier assessment has become an asset and a valuable tool in the hands

of a buyer in making his purchase decisions and also providing feedback to

suppliers with low rating to encourage improvement in their performance or

black listing the vendor from the list.

THEORETICAL FRAMEWORK

With manufacturers increasingly relying on external suppliers, it is hardly

surprising that some 70% of the companies responding to an Aberdeen

survey view supplier performance as critical to their operations. Many

manufacturers have established strict supplier performance measurement

processes and procedures to ensure external suppliers meet stringent

operational requirements. As companies move beyond trying to squeeze

costs out of their supply chains, the performances of their suppliers become

critical.

Manufacturers can attain multiple benefits by appraising supplier

performance. Companies that fail to assess most of their suppliers, risk large-


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scale quality mishaps, service deficiencies, and cost overruns that can eat

into bottom-line profits and damage competitive positioning in the market.

On the other hand, companies that subscribe to such practices can reduce

buffer inventory, cut cycle times, and lower the total cost of Management of

their supply chains.

The ability to select reliable vendors is a mark of successful purchasing

action. An objective and accurate vendor rating can become an asset and a

valuable tool in the hands of a buyer in making his purchase decisions as to

eliminate the low rated supplier from the list or provide feedback to them to

improve their performance.

VENDOR RATING

In plain terms, the Vendor Rating system checks to what extent a supplier

does what he agreed to do like quality, delivery reliability, flexibility and the

price. The Vendor Rating System is the continuous observatory over Supplier

and Product / Performance / Service Quality

It is very much essential to evaluate vendors with common parameters by

giving weights for various evaluation criteria. It is required for creating a solid

& consistent vendor base to take challenges in business. The evaluation is

based on Indexes / Indicators, tailored to the different activities to be

monitored, that measure strategic components of the purchased goods

Vendor analysis and performance improvement is always part of quality

standards. The modern purchasing organizations evaluated the suppliers

based on the following parameters-

The desired quality defined as the suitability of product or service of use as

intended.

The total number of products required, including the schedule by which the

product or service is required.


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Price, which is a measure of value along with discount received, credit

terms provided, freight and delivery charges.

Tangible and intangible service that are benefits over and above the

quality and price.

The past performance of a particular vendor if he is an existing supplier.

The quality and safety measures followed by them so as to attain

international standards, which has become a need of the age and their

quality certification.

The sheer size of the supplier, which is an important parameter to know

about the growth potentials of the firm. It also helps to identify the

companies which are having economies of scale.

Their flexibility to sudden changes in delivery schedules and their delivery

commitments.

The technology used.

The infrastructure and R&D facilities.

Major customers of these vendors.

Maintenance of specifications and compliance with other specifications.

Promptness of delivery.

Co-operation and co-ordination of the supplier with his customers.

Financial position of the supplier.

No of rejections.

Cost reduction projects.

Final evaluations will be applied to:

o Qualified Supplier List management

o Contractual clauses

o Improvement trend measurement

o the redefinition of supply strategic objectives

o the identification of new alternative proposals


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ADVANTAGES OF VENDOR RATING & SUPPLIER APPRAISAL

More effective assessment of suppliers can ensure that the right supplier

is selected for a project and realise many benefits for customer

organisation throughout the procurement lifecycle in its widest sense,

Is a good strategic approach to assessing markets and suppliers

Helps the suppliers to assess their own suitability for individual projects,

principally by defining requirements in a clear, accurate and meaningful

way.

Helps in achieving supply chain transparency: a full understanding of

prime/subcontractor and consortium arrangements.

Helps in managing working relationships for maximum benefit.

It concretely adds new value to the procurement process as a spring of

competitive advantage.

High focus can be achieved as one can have focus on all the issues of

Quality, Cost & Delivery supplier wise in depth.

As low rated suppliers are eliminated and better suppliers are identified, it

leads to reduction of follow up/ documentation, reduction of inspection

time, logistics and hence reduce the cost and time.

More accountability on supplier.

As the purchases from key suppliers increases, cost advantage can be

obtained based on increased turnover.

DRAWBACKS OF VENDOR RATING & SUPPLIER APPRAISAL

Despite of considerable efforts to set up a good system, the end results

have too often been viewed as a group of antagonized suppliers and an

impractical, and meaningless mass of data.

With large number of non standard items and exclusive items it is very

difficult to find competitive vendors.


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The complete exercise will be farce if the number of persons responding to

it is few i.e., it cannot work well unless the people involved understand it

and are convinced that its is worthwhile.

CHAPTER 4


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RESEARCH METHODOLOGY

RESEARCH DESIGN

The type of research undertaken is descriptive in nature.

When a study is designed primarily to describe what is going on & what has

already taken place it is called a Descriptive Research. As this research

interprets facts as they are, Descriptive Research has been selected.

STUDY POPULATION

Population for this study is all the suppliers of MICO.

SAMPLE SIZE

The sample size is all the existing suppliers, new suppliers and the suppliers

already under the Supplier Base Reduction of Energy Body Purchases of


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direct materials in MICO, Naganathapura Plant. The total number of suppliers

are 93.

DATA GATHERING PROCEDURE

Date type Primary data

Data source data is obtained from employees in the EB Purchases

Department, EB Procurement Department EB QSG Department with

the help of Questionnaire, through which the ratings for each supplier

under various factors are obtained.

Data ratings of the suppliers on various criteria.

STUDY TYPE

To analyse the supplier performance, vendor rating tool weighted point plan

is used.

DATA ANALYSIS

METHODOLOGY FOR CLASSIFICATION OF SUPPLIERS-

The suppliers are classified strategically using the pyramid given below

E NT

K Key SuppliersT Technology SpecialistE Essential SuppliersN New SuppliersX Suppliers to be eliminated

D Customer SpecifiedW Not feasible to eliminate

K


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New Suppliers

The suppliers supplying to MICO for less than a year are classified under this

group. These suppliers have further business potential and can be developed

to replace the suppliers under deletion.

Technology Specialists

The suppliers having special technology or process and owning patents for

particular products are classified under this category.

Customer Specified Suppliers

These are the suppliers who are determined by MICO or the suppliers who

are recommended by customers.

After placing the suppliers in above categories, for all other suppliers the

following methodology must be used to classify the suppliers.

First, the Suppliers are rated by 3 different departments on different

parameters and the overall rating by each department is calculated by taking


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the average of the ratings corresponding to the factors. This is called as

Supplier Assessment, 2005 for MICO

NOTE: minimum of the ratings given by various employees for each supplier

are considered for each department.

For EB Purchases Department following are the factors considered

Purchase Volume, Technical dependency on MICO, Financial Strength of the

supplier, SOB with MICO (Dedication to MICO), Cost Competence, Sample

submission lead time, Organization strength, Capacity (TEK), Flexibility,

Responsiveness and Attitude of the suppliers.

For EB Procurement Department following are the factors considered-

Proximity, Adherence to schedule, Willing towards KANBAN, Organization

strength, Flexibility, Responsiveness and Attitude of the suppliers.

For EB Quality Assurance (QSG) Department following are the factorsconsidered-

Series Production Quality, Quality System, Rejection at Initial Sample

Inspection Report (ISIR) stage, Process Transparency, Ability & Response to

solve problem, Knowledge on quality tools.

Second, the above factors are consolidated into certain criteria according to

MICOs guidelines for 3 fields i.e., Price, Quality and Logistics. Each criteria is

given certain weights, these weights are specified by the MICOs judgment

about the relative importance of the respective factors. Consolidated factors

ratings are based on the ratings of certain factors of Supplier Assessment

2005 multiplied by 10.


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EB Purchases departments ratings are consolidated as COST/PRICEfactors.

Following factors along with weights are considered under cost/price

COST/PRICE RATING FACTORS

Factor Based on weights

1. Price (Price ratings) x 10 0.4

2. Price discipline (Financial Strength

ratings) x 10

0.2

3. Cost reduction projects (Flexibility ratings) x 10 0.3

4. Communication and co-operation

towards buyers when asked for price

reduction.

(Response ratings) x 10 0.1

QSG Departments ratings are consolidated as QUALITY factors. Following

factors along with weights are considered under quality

QUALITY RATING FACTORS

Factor Based on weighs

1. Communication of the supplier with

the employees of QSG Department.


2. Co-operation of the supplier towards

the employees of QSG Department

(Attitude ratings) x 10 0.1

3. Series production quality (Series production quality

ratings) x 10

0.5

4. Quality system (Quality system ratings) x

10

0.1

5. Initial sample quality (Rejection at ISIR stage

ratings) x 10

0.2

EB Procurement departments ratings are consolidated as LOGISTICS

factors. Following factors along with weights are considered under logistics

LOGISTICS RATING FACTORS


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Factor Based on weights

1. Proximity (Proximity ratings) x 10 0.2

2 Adherence to schedule (Adherence to schedule

ratings) x 10

0.5

3 Flexibility (Flexibility ratings) x 10 0.2

4 Communication and co-operation

towards the Procurement Department

employees


Each fields (i.e., Price, Quality and Logistics) overall rating is calculated by

multiplying rates with its corresponding weights for each supplier and then are

added to get the overall rating for each criteria.

Overall ratings = (W1*Ra1) + (W2*Ra2) + (W3*Ra3) + .

Where, W1 is the weight of 1stfactor

W2 is the weight of 2ndfactor

W3 is the weight of 3rdfactor

Ra1 is rating corresponding to a supplier and 1stfactor

Ra2 is rating corresponding to a supplier and 2ndfactor

Ra3 is rating corresponding to a supplier and 3rdfactor

Third, equal weights are given to overall ratings of each Field (Price-P,

Quality-Q, Logistics-L) and to get the final ranking which is called by MICO as

LEB ratings (supplier performance assessment of existing suppliers) the

rates are multiplied by corresponding overall ratings of each criteria and

added up.

LEB ratings = (Wp*Rap) + (Wq*Raq) + (Wl*Ral) / 10

Where, Wp is the weight given to Price/cost = .33

Wq is the weight given to Quality = .33


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Wlis the weight given to Logistics = .33

Rap is the overall rating corresponding to a supplier and

Price/cost.

Raq is the overall rating corresponding to a supplier and

Quality.

Ral is the overall rating corresponding to a supplier and

Logistics factor.

NOTE: if only two fields are rated, the weight for both the field is 0.5

Fourth, vendors are graded according to their ranking. Following table shows

the grading given to the suppliers and their classification.

SUPPLIER GRADINGS-

LEB - SCORE GRADE Supplier classification

8 and Above A Key supplier fully compliance6 to 8 B Essential suppliers conditionally compliantBelow 6 C Supplier for elimination - Not compliant

Note:

Below mentioned 10 suppliers have not been rated on the Quality parameter

hence their totals are calculated on 1:1 ratio for price and logistics.

1. BEICO INDUSTRIES LTD

2. CLASSIC WIRE INSULATION

3. HARINAM WIRES4. IMPEX INSULATIONS

5. INTEC POLYMERS LTD

6. PRECISIONS WIRES INDIA LTD

7. SUMI MOTHERSON INTEGRATED

8. SIMMONDS MARSHALL LTD


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9. SOUTHFIELD PAINTS & CHEMICALS

10. DOW CORNINGS INDIA LTD

CHAPTER 5


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FINDINGS

Classification of Suppliers Supplier Pyramid

E

47

D

1

N

5

T6

W

2

X

10

K Key SuppliersT Technology SpecialistE Essential SuppliersN New SuppliersX Suppliers to be eliminated

D Customer SpecifiedW Not feasible to eliminate Total = 91

K19


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GRAPH NO. 3

19

6

47

5

10

1 2

0

5

10

15

20

25

30

35

40

45

50

no of

suppliers

K T E N X D W

classification of suppliers

GRAPH NO. 4

CLASSIFICATION OF SUPPLIERS

21%

7%

52%

6%

11%

1%

2%

K T E N X D W


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Note:

Below mentioned 4 suppliers have been rated as X Elimination as they are

already under Supplier Base Reduction (SBR).

1. N D TESTING SERVICES

2. P E P CHARLES LIMPENS

3. SARA PRESSTECH

4. SUDHIR ENTERPRISES

Below mentioned 3 suppliers are not applicable for vendor rating as they

come under either under imports or TIRE-2 i.e., supplier of the supplier.

1. HINDUSTAN COPPER LTD

2. HENKEL TERSON INDIA LTD

3. SHIMO RESINS PVT LTD

Key Suppliers

- Supplier exceeds specific demand.

- Performance is above average.

- Scope of enhanced business.

- Total LEB score > 8 i.e., A grade suppliers

K


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1 ABILITY IN DISABILITY

2 CTR MANUFACTURING INDUSTRIES

3 CHAITHANYA HI-TECH ENGINEERING COMPANY PVT LTD

4 EMCEE PRESSINGS

5 ELECTROMAGS

6 GOZTZE (INDIA) LTD

7 INCHINOTEK PRECISION TOOLS

8 IMPEX INSULATIONS

9 METLOK COMPANY

10 POOJA PRECISION SCREWS PVT LTD

11 RESISTORS MANUFACTURING COMPANY

12 RAJAMANE INDUSTRIES

13 S K F BEARINGS INDIA LTD.

14 SABB ENGINEERING

15 SHASHWATI PLASTICS

16 STANDARD ELASTOMERS

17 SUJA RUBBER INDUSTRIES

18 S N AUTOMATS

19 DOW CORNING INDIA LTD

Technology Specialists

The suppliers having special technology or process and owning patents for

particular products as specified under this category.

1. ASSAM CARBON PRODUCTS LTD

2. CARBONE LORRAINE MADRAS

3. FAIRFIELD MANUFACTURING

4. GKN SINTER METALS LTD(FOR

5. S.J.S ENTERPRISE

T


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6. SAHNEY COMMUTATORS P LTD

Essential Suppliers

- Supplier meets general requirements.

- Scope to be a key supplier.

- Total LEB score 6 to 8 i.e., B grade suppliers

1 ADVANCED COMPONENTS & INSTRUMENTS

2 ANKIT FORGINGS

3 ADITHYA COMPONENTS

4 AVANTI COMPONENTS

5 AZ ENGINEERING

6 BESOTO STARTING SYSTEMS

7 BEICO INDUSTRIES LTD

8 CLASSIC WIRE INSULATIONS

9 DEVILOG SYSTEMS

10 ENGINEERING PLASTICS

11 HARINAM WIRES

12 INTEC POLYMERS LTD

13 J.L ENGINEERING INDSTRIES

14 KLAS ENGINEERING PVT LTD

15 KUDUMA FASTENERS PVT LTD

16 LAKSHMI PRECISIONS SCREWS PVT LTD

17 MACUREX SENSORS PVT LTD

18 MEHRA METALS COMPONENTS (P) LTD

19 METAL NITRIDERS

20 NATIONAL ENGINEERING INDUSTRIES

21 NIVITA TOOLS & ACCESSORIES

22 PRETECH PLAST

E


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23 PRECISION COMPAID

24 PRECISION PRODUCTS

25 PRECISION WIRES INDIA LTD

26 PAVITHRA TOOLINGS

27 PRAGATI PRECISIONS

28 PRESSMATIC ELECTRO STAMPI LTD

29 PROMPTEKK METALS & ALLOYS

30 RAMIND COLD FORGE

31 STUMPP SCHULE & SOMAPPA

32 SHASTRY TOOLINGS

33 SUMI MOTHERSON INTEGRATED

34 SWATHANTHRA INDUSTRIES

35 S J P INDUSTRY

36 SHRI RAM ENGINEERING

37 SIMMONDS MARSHALL LTD

38 SOUTHFIELD PAINTS & CHEMICALS

39 SRIMUKHA PRECISION PRODUCTS

40 SUNDRAM FASTENERS LIMITED

41 SUVESWARU ENTERPRISES PVT

42 UBE PLASTIC AND CHEMICALS

43 ESWAR ENGINEERING WORKS

44 VENKATESHWARA AUTO PRODUCTS

45 VSM ENGINEERING PVT LTD

46 WELL PRODUCTS INDUSTRIES

47 WELL KNOWN TOOLS AND EQUIPMENTS


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New Suppliers

The suppliers supplying to MICO for less than a year are classified under this

group.

- Potential for new products

- Inducted by LPB assessment.

- Competitive to replace sources under deletion.

1 ESSAE DIGITRONICS PVT LTD

2 PRICOL LTD

3 RAJAS ENGINEERINGS

4 SHARATH TECHNOLOGIES PVT LTD

5 WESTCOTT ELECTRICALS PVR LTD

Suppliers for Elimination

- Poor performance.

- No indication for Improvement.

- Total LEB score


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Customer Specified Suppliers

These suppliers are determined by MICO or RB customers. Hence they are

placed under this group.

1. LEO FASTENERS

Suppliers Without New Business

- Same as (X)

- Elimination economically/ technically not feasible.

- Total LEB score < 6. i.e., C grade suppliers

1 INDUSTRIAL TECHNICAL SERVICES

2 R.K.POLYMER INDUSTRIES

NOTE: Ratings obtained are between 1.5.10, where 1 is poor, 5 is

average and 10 is best.

The back up of the findings are shown in the following excel sheets-

RESULTS:

The null hypothesis, Ho has been proved wrong as from the analysis, the

classification of suppliers with the help of Vendor rating tools will help to

identify reliable suppliers to EB Purchases in MICO, Naganathapura.

D

W


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CHAPTER 5


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RECOMMENDATIONS & CONCLUSIONS

Limitations of the study

Some respondents may give biased replies.

Locating the criteria for supplier assessment is difficult.

The study is limited to EB Purchases of direct materials for MICO,

Naganathapura Plant.


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Direction for further research

Methodology used to conduct vendor rating is simple technique i.e.,

Weighted Point technique, so this can be used for classification of

suppliers in any organisation.

Rating of New Suppliers are not been taken into consideration, this can

also be taken.

If time permits, one can also consider his own ratings obtained by

observing the suppliers himself.

Recommendations

Periodic evaluation and grouping of the vendors has to be made accordingto the vendor pyramid guidelines.

The results indicate a large savings.

Suppliers classified under X i.e., Suppliers for elimination must be strictly

deleted from the list.

All the suppliers must have the knowledge of the elimination, so those

suppliers with B grade will be conscious, and perform well.

B grade suppliers must be guide for improving their performance.

Best supplier must be recognized and awarded, so others are motivated to

perform well to get the award next time.

Conclusions

A true measurement of an effective purchasing department is obtained by the

quality of reliable vendors selected for supplying goods and services.

The ultimate aim of this project is to show some direction for MICO,

Naganathapura Plant to identify its key suppliers and poor suppliers so that it

can decide on elimination of the poor supplier, find alternative suppliers,


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provide guidance to the average suppliers to improve and ultimately decrease

its costs indirectly. Leaner the Supplier Base more mutual Benefits to supplier

& the Organisation.

By this exercise, MICO, Naganathapura suppliers for EB Purchases

department are classified into-

Key Suppliers 19

Technology Specialist 6

Essential Suppliers 47

New Suppliers 5

Suppliers to be eliminated 10

Customer Specified 1

Not feasible to eliminate 2

Even though the savings, which are going to be resulted because of this

activity can not be quantified directly but definitely Organisation can feel the

impact of the same.

The over all effeciency of all the realted depatments will increase to the

proportion of number of suppliers being reduced.

To conclude, the 52% of the total suppliers are essential suppliers with

average performance, 21% are key suppliers and 11% of the suppliers are to

be considered for elimination. And also this project has emphasized the need

for Lean supplier base, its advantages, method of segregation of suppliers &

strategies to achieve it.


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MICO has accepted my findings and has started implementing my suggestion

by considering the suppliers with grade C for elimination.

BIBLIOGRAPHY

MICO Journals http://micoweb.in.bopprosch.com http://www.indiainfoline.com

Research Methodology & Techniques - Kothari C.R

Production and Operations Management

K Aswathappa & K Shridhara Bhat


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APPENDICES

Questionnaire

padmini 0356 supplierappraisal

Documents