Supply Chain Management Practices of Indian Automobile Industry

Supply Chain Management Practices of Indian Automobile Industry

B. S. Sahay (Indian Institute of Management, India), Vikram Sharma (Galgotias College of Engineering and Technology, India) and G. D. Sardana (Birla Institute of Management Technology, India)
DOI: 10.4018/jisscm.2011070104
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The automobile industry is a major contributor to India’s economy. The Indian automobile manufacturers face stiff international competition in the wake of all major US and European car manufacturers entering the Indian market. In the contemporary scenario, supply chain management practices can be adopted to improve operational efficiency and profits. This paper presents the current status of Indian automotive supply chains. For this, data was collected by conducting a nationwide survey. The paper highlights some major problems plaguing the Indian automotive supply chains and finally, presents some recommendations that are potentially useful to bring Indian automotive supply chains at par with global industry leaders.
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Indian automobile industry has in recent years, flourished and displayed extra-ordinary growth capabilities. This has become possible mainly because of improvement in living standards of Indian middle class and increase in their disposable income. The liberalization steps initiated by the Government of India, such as reduction of tariffs on imports, and refining the banking policies, have played an equally important role in bringing the Indian Automotive industry to greater heights. According to Automotive Components Manufacturers Association (ACMA), today, India is forth largest and fastest growing passenger car market in Asia, second largest two-wheeler market and the largest three-wheeler market in the world.

The export boom in automobile sector has largely been possible due to improved performance of auto components segment. In the component industry, the top rung manufacturers made desperate attempt to overcome depressed domestic market of late 90s by tapping the export market and making efforts to improve quality and competitive potential. Exports also earned them higher margins. ACMA reports that the component exports crossed US 1.8 billion dollar mark in 2005. It is expected to touch US 6 billion dollar mark by 2010 and 25 billion by 2015. Some companies are also vigorously trying to build global supplier capabilities through acquisitions as shown in Table 1. Such acquisitions protect the companies from fluctuations in the demand in various geographical regions.

Table 1.
Acquisitions made by Indian auto companies (Source:
CompanyAcquisitions Made
TATA MotorsDaewoo commercial vehicle plant, S. Korea, Ford U.K.
Bharat ForgeScottish stamping ltd., Scotland
Fedral Forge, USA, Imatra Kilsta AB, Sweden,
Aluminiumtechnik, Germany
Mahindra and MahindraSar Auto products ltd., Jianglang Motor company, China
Sundram FastnersCramlington Forge, UK, Greenfield plant, China, Precision forging, UK
TVS GroupCJ components UK, RBI autoparts, Malaysia

ACMA reports that out of 498 members, 456 are ISO certified. The suppliers are embracing modern shop floor practices such as 5S, Kaizen, TQM, TPM, Six sigma and lean manufacturing. Table 2 gives accomplishments of its members.

Table 2.
Awards and certifications won by Indian automobile companies (
CertificationNo. of companies
ISO 9000456
TS 16949248
ISO 14001129
OHSAS 1800123
Deming prize winners09
JIPM award04
Japan quality medal winner01

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