Supply Chain Management Practices of Indian Automobile Industry

Introduction

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.

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.