Introduction

Supply Chain Management (SCM) is a systematic integration of suppliers, Original Equipment Manufacturer (OEM), distributors and customers in order to produce and distribute the right quantities, to the right locations, at the right time, and at the cheaper cost, while satisfying the entire supply chain partners (Balsubramanium & Roosebelt). It is an approach that involves a multi-organizational system, which encompasses the procurement of raw materials, conversion of raw materials to finished goods, and distribution of finished goods to the end users smoothly, by sharing required information throughout the supply chain. Recent supply chain practices dictates zero stock level of inventories at all stages of supply chain. A well-managed supply chain links the suppliers, OEM, distributors and customers by a suitable information system for controlling and coordinating the supply and distribution flow of services, products, and related information across boarder in order to achieve optimum productivity, overall satisfaction and joyful relation at cheaper cost. Hence, movement of materials and information flow must move parallel to have effective control over the whole system of supply chain. The success of supply chain ultimately depend upon the capacity of the supply chain partners to respond as quickly as possible to the demand, through a reliable information bridge, which connects the whole chain. Thus the faster information plays an important role for managing the pull based equipment supply process throughout the chain. The very philosophy of supply chain is based on the coordinated information and smooth material flow (Lee and Billington, 1993). According to Chandra and Chilove (2001) various supply chain members, maintain synchronized coordination through commitments amongst its members, which leads to reduction of lead time, reduction in cost, mutually agreed decision making process and enhance the productivity of each member, which ultimately enhance the performance of whole network. For achieving this mutually beneficial coordination with a suitable and dedicated information system is essentially required. Quick and effective information system helps manager to understand the customers response, their demands, inventory in the stock, how much to be produced, when to be produced and where to deliver and when, within no time. Here comes the role of Internet, which is considered as a cheapest inter-organizational information-system, which helps in aligning the interdependent strategies to achieve cooperative rather than competitive role of SCM partners.

Supply Chain is shown, in which goods flow starts from tier-II supplier and ends with products at final customer. Tier-II supplier keeps inventory of raw material at the starts of the production and an inventory of component at the end. Tier-I supplier gets supply of components from Tier-II supplier, keeps inventory of component at the start of the production and an inventory of sub-assembly at the end. Original Equipment Manufacturer (OEM) gets sub-assembly from Tier-I supplier, keeps inventory of sub-assembly at the start of the production and an inventory of final product at the end. Similarly at further stages of supply chain i.e. at OEM’s warehouse, distributor’s warehouse and retailer’s warehouse also inventory is maintained and finally supply is made to the customer on demand. But it is also shown that all the stages of supply chain are connected with Internet with each other. Hence, information can flow from any stage to every stage within seconds. If ordered goods can also be supplied from any stage to every stage on demand. For example, Sundram fasteners supplies to brakes India, Brakes India supplies to Maruti car manufacturer, Maruti car co. supplies to the warehouse, from warehouse car moves to distributors and from distributors to customers. At the same time any stage can get supply from all stages on demand because inventory is maintained at all the stages. Here information and goods move parallel from one stage to the another stage. Since, computers at all the stages are connected with network of Internet, the overall management of material flow, types of transportation, distance, lot size, lead-time, storage system at the shop floor, timeliness, reliability of system, order volume, number of suppliers, system of transportation, payment schedule, vendor selection etc., can be optimized with mutual cooperation. Optimization reduces cost and improves services, which results in customer satisfaction.

Information Technology 

The combination of computers and telecommunication provided the fastest device of communication in the form of Internet. Internet today is becoming the reliable link between the suppliers and customer. It turned the whole world into a global village. Liberalization and globalization have changed the whole concept of nationalism. Due to globalization all geographical barriers are being broken. With the help Internet customers get free information about the world market. They keep track of the products being produced in the market. They have easy access to the world class quality and respective price. Hence, competition in the market is very high. Monopoly has become the matter of past. It allowed the better utilization of existing facilities and minimized the amount of materials in the stock at any time and reduced the wastage (Singh & Pandey 2002). Manufacturer has to be very flexible to reorient the manufacturing process to meet the frequent design changes resulting from the frequent change in the customer’s choice. Now the customer’s satisfaction is not the only criteria for selling the product in the market but customer’s delight has also to be taken care off. The erstwhile ‘Seller’s market’ has today being transformed into a ‘buyer’s market’ (Singh, Deshmukh, Suxena & Khowala 2001). Earlier producers use to fix the price of the products keeping profit margin, now prices are fixed by the customer’s market and to earn profit producers have to reduce the manufacturing cost. In this changing environment conventional system of planning, manufacturing and delivery of finished products becoming irrelevant. Information Technology offers many opportunities for companies to cut cost and improve responsiveness to customer’s needs. Some of the positive points of IT enabled services are:

1. Information technology is comparatively less capital intensive.
2. It is environment friendly and clean.
3. It is not location specific and can be undertaken from anywhere (large cities, small towns or even remote locations with Internet facilities)
4. It does not require expensive infrastructure facilities like roads, rail heads, etc.

As a result, there has been phenomenal growth of IT applications all over the globe. Indian industries are also reaping substantial benefits from the adoption of IT enabled services (Singh, Deshmukh, Suxena & Khowala 2001). Automobile Industries are pioneer in this regard.

Information Technology in Indian Context

In mid-eighties the government of India in its industrial policy resolution put emphasis on the use of computer. Indian Industries also quickly realized that the use of computer could provide correct, quick and reliable information and could have significant impact on a firm’s performance. The total Indian information technology industry’s turnover that was of the order of Rs. 20 billion only in 1991 has now reached a level of Rs. 295.13 billion in March 2000. This signifies a compound growth rate of about 35% per annum over the 9-year period. The then chairman of the Reliance group of Industries, Mr. Dhirubhai Ambani had this to say “New Internet-based technologies are changing people’s lives and the way business is conducted. Fundamental shifts are occurring in the global economy, owing to revolutionary advances in technology. These have led to the convergence of the communication and information business. There is one time opportunity for the Indian economy to leapfrog from its current inadequate infrastructure to a world class one” (Singh, Deshmukh, Suxena & Khowala 2001). As Singh R.L. et al observed that the use of Internet in India is also showing substantial progress due to its inherent potential to integrate with global economy in a big way.

Various IT Solutions:

i) Communication

Internet is currently an important resource for business to conduct activities ranging from basic communication to data exchange. Application of radio frequency, satellite communications and image processing technologies has become useful. Instead of solely on catalogs, suppliers are delivering product information to customer as data via Internet, making it more convenient to buyers.

ii) Electronic mail (e-mail)

Electronic mail provides medium for communication throughout the globe, any time, within fraction of second at virtually negligible cost. Electronic mail usually occurs over the Internet. The electronic mail market is a multi billion-dollar business. One of the main reasons for the growth in e-mail, in addition to the speed and accuracy of its data transmission is cost saving. With e-mail, the cost of ordering has been reduced. Instead of relying on the post, mail or courier the inventory manager prefer to use Internet for sending information.

iii) Electronic Data Interchange (EDI)

The communication system with suppliers on the supply side and customer on the distribution side exchanged the data through Internet at very low cost. For safety, electronic data exchange information is only available to those who have a dedicated electronic data interchange link. Location tracking of cycle inventory or process inventory can also be done. This technology requires a combination of the Global Position System and wireless communication. (Chopara & Peter 2001)

iv) Enterprise Resource Planning (ERP)

Using Enterprise resource planning information can be gathered from across all of company’s function. ERP system monitor inventory throughout the channel of a business system. The ability to keep track of inventory at different level has become more important as business system became more complex. But this is useful OEM where many components are handled.

Survey of IT Solutions

Our observation of implementation of above mentioned IT solutions in five OEM, eight tier-I suppliers (have their own R&D and own product) and thirty-two automobile ancillary industries or tier-II suppliers (manufacture as per the order received either from OEM or from tier-I supplier). We observed that the Indian automobile industry has entered the new millennium on an encouraging note. The automobile market is booming. Internet is being utilized in automobile industry in a big way. The application of Just in time and information technology in the field of management control, decision-making, planning, communication, accounting and inventory is gaining ground The companies run by foreign investors are implementing Internet wherever possible, especially in business. They are trying to interlink suppliers, manufacturers, wholesalers and retailers to have better control on inventory at various levels of supply chain. It allowed the better utilization of manpower. It was also observed that although Internet plays an important role in keeping track of inventory, sometime it creates problems also as bad system increases the risks and subsequently wastage of capital and time. At the same time it needs investment every year because new software comes in the market frequently with new ideas. For component manufacturer it is difficult to switch over to new system as frequently as changes are taking place in the field of computer software. Even though, most of the component manufacturers are enjoying the benefits of new technology along with new information technology in the form of Internet. Internet has reached to the every nook and corner, we observed that in India it still under utilized even in the industries like automobile where considerable awareness is there and competition is cut throat. The scope of inventory management is limited to one organization. There is no cooperation between the supplier and the customer firms. We can call it “none integral inventory management’. There is opposition between organizations. “Integral inventory management by domination of one organization over others’ is also found in certain area where few organizations have realized supply chain by one organization dominating the other organizations in the supply chain. But it is fact that Internet has influenced the whole business strategy whether it is policy decision or it is physical implementation. Some of the areas where it’s greater effect felt are given below:

i) Communication

(a) Twenty four hours communication throughout the year all over the world. Because of Internet communication there are saving in manpower, stationery, postage and journey fare.

(b) Quick exchange of views with suppliers or customers, quick exchange of ideas and expertise, customer’s feedback collection becomes easier and quicker, quick delivery of drawings and specifications in digital form etc. are possible.

ii) Selection of vendor or partner

a) Suitable vendor selection from many vendors from any part of the world, at the same time vendor development is also easier.

(b) Since whole world is connected through Internet, it becomes easier to select business partners for joint venture.

iii) Cost Saving

a) Reduce inventory, reduce cost of preparing letters and sending letters, saves postage cost and saving in journey fare. There are saving under different heads to all level of supply chain.

(b) Achieving order and placing order become less costly and also reduces cost of distribution.

iv) Reduction of lead time

(a) Reduces lead-time of material supply.

(b) Reduces retrieval time of documented information.

v) Improves product Promotional Activities

a) Reduces expenditure for market expansion and also reduce market mediation

(b) Customer’s feedback can be collected easily, improves relation with customer and helps in promotion of products in the form of advertisement.

vi) Limitations

Similarly some limitation were also recorded:
(a) Lack of manager’s awareness with the system and lack of management’s full commitments.

(b) Development of electronic data interchange is a costly affair.

(c) Problems of security and privacy.

(d) Since no face to face contact is there hence, lack of trust.

(e) Customers also need awareness for effective utilization of Internet in the business.

Data generated during study were analyzed and it was founds/that due to the implementation of Internet savings in many areas were observed.

Discussion and Conclusion

It is observed that the use of Internet enhanced the quality of product and services because it is easy to select world class quality product and world class technology from all over the world at competitive cost. Internet is utilized to bring the customer’s ideas quickly into the practice. A car plant based in Chennai has given opportunity to the customer to send order through e-mail for a self designed car within certain technological limits, under the slogan ‘You design your own car”. We observed saving in the area of manpower, stationery, office-space, postage and journey fare. Apart from tangible benefits many intangible benefits of Internet are also observed. Internet is mostly used in the area of sending quotations, price fixation by negotiation, sending orders to suppliers and chasing orders. Hence, it is clearly evident that Internet has revolutionized the system of communication and provided the opportunity to surf in the world market for selection of best quality products and can order from the house round the clock a day. Internet has united the whole world. It has made the whole transaction system very fast and accurate.