International Journal of Engineering and Technical Research (IJETR)

ISSN: 2321-0869, Volume-3, Issue-5, May 2015

A Study of Supply Chain Management Performs in

Indian MRO Paper Mill Problem
Pooja Sharma, Mr. Nitin Kumar Waghmare

operating costs, reducing inventory investments, and

improving fixed asset utilization.
Abstract Supply chains have been ever since businesses
organized to convey products and services to customers, the A number of analysts have already sought to comprehend and
concept of their modest advantage, and subsequently supply substantially redraw the boundaries of, and the essential
chain management (SCM), is a comparatively recent thinking in
nature of, this domain of theorising and practice. For example,
management literature. Although research interests in and the
importance of SCM are growing, intellectual materials continue in one of the more coherent and developed attempts at a
dispersed and disjointed, and no research has been focused reconceptualisation, Harland et al. (1999) present the case for
towards a systematic documentation of the core creativities and a new expanded body of knowledge and field of practice
constructs involved in SCM. The site appointments provided which they suggest should be labelled supply strategy. The
valuable visions that allowed us to understand current MRO supply chain of the pulp and paper industry can be segmented
supply chain performs. Moreover, the site visits helped us to into the following four sub-chains: 1) fiber procurement
hone in on the suitable measures of supply chain performance which includes all the activities that are required to deliver
and the primary drivers of MRO supply chain performance. wood chips to a pulp and paper mill; 2) pulp and paper
With much effort, we have collected a limited number of
manufacturing; 3) customer fulfillment which spans order
responses from the survey. It is not as big a sample as we would
hope; however, it provides us a statistical basis to collect visions taking, production, and delivering of products to customers;
from the survey and field data on several important dimensions. and 4) non-fiber procurement which includes the activities
required to manage maintenance, repair, and operating
(MRO) supplies. While opportunities exist to improve all four
Index Terms SCM, MRO mill, quality factor, etc. components of the supply chain, our focus in this research was
to study the MRO (or non-fiber) supply chain for paper mills.
I. INTRODUCTION Typical MRO supplies in the paper and pulp industry include
Supply management can be observed as both a developing bearings, power trains, pipe valves, electrical components,
field of practice and an emerging academic domain. Neither lubricants, clothing (felt and wires) and office supplies. We
perspective is completely developed but each has significant selected the MRO portion of the supply chain as the focus of
promise. The future progress of each will be enhanced and our research since many in the industry have identified this as
certainly is finally dependent upon the other. Hence, the a critical area for which very limited research has been
purpose of this paper is to take typical of growths in theory accomplished. According to Kapoor and Gupta (1997),
and repetition to date and to classify barriers and possibilities. business specific purchases (includes MRO) account for 15%
Furthermore, given the off-remarked acknowledgement of the to 20% of a company's indirect purchases while indirect
vital importance of the interactive and people dimension but purchases account for roughly 24% of the company's total
the relative desertion of this in any functional form, we give purchases. From discussions with Jim NcNutt (2001), a paper
special consideration to this aspect. Supply (chain) mill spends approximately $60 to $80 per ton of paper on
management is eventually about manipulating performance in MRO supplies.
specific directions and in particular ways. The fundamental
logics, drivers, enablers and barriers value and require close II. LITERATURE REVIEW
attention. The economic significances of supply chain In this section, for each one of the topics used to classify the
problems are even worse when stock price performance is papers we provide a description of the topic, an analysis of the
examined from a quarter before the formal announcement of impact of the Internet on it, a summary of the existing studies
the glitch to a quarter after the formal announcement of the and some directions for further research. This section is
glitch. During this period, glitches are associated with an structured as follows: we first focus on each one of the
average loss in shareholder value of about 20%. While many processes identified by the Global Supply Chain Forum, we,
firms in the automotive, consumer goods, and electronics then, continue with the enablers and, finally, we cover the
industries have exploited the value creation potential of SCM, impact of the Internet on the industry structure and
firms in the pulp and paper industry are just beginning to competitive challenges, and on the firms performance.
recognize the vast scope of the potential opportunities that
exist. McLean (1999) argues that SCM is a critical business New and Payne [5] have described an empirical study
issue in the pulp and paper industry that offers tremendous investigating the power interplay in supply chain partnerships.
potential for improving customer satisfaction, lowering They found that the relationships were asymmetrical,
depending on whether it was with upstream or downstream
Pooja Sharma, Dept. of Mechanical Engineering, Manav Rachna organisations.
International University, Faridabad ,India,+919650435232.

Guide:Mr. Nitin Kumar Waghmare,Dept. of Mechanical Engg.

96 www.erpublication.org
 A Study of Supply Chain Management Performs in Indian MRO Paper Mill Problem

Watts and Hahn [7] reported on a survey carried out to assess

the extent and success of supplier development programs.
They found these programs to be broad in scope and quite
prevalent (63%), specially among the larger firms surveyed.
The aim of these programs was more to improve the
purchased products than to improve the capability of the
supplier.

Krause [3] carried out a survey of firms on the extent of

supplier development activities and on the benefits accrued
from the activities. The responding firms participated more
often in limited involvement such as supplier evaluation and
feedback, site visits, requests from improved performance,
and promises of increased present or future business, than in
extensive involvement such as training/education of
suppliers personnel or investment in suppliers operations.
While the supplier development efforts were generally
fruitful, the buying firms were not very satisfied with the
results.

Galt and Dale [2] studied ten organisations in the U.K., and
found that they were working to reduce their supplier base,
and to improve their communications with the suppliers Table2: properties of mill Visited in SCM
urgently.
These practices define how a specific mill obtains and stores
Fernie [1] carried out an international comparison of supply MRO items and manages the maintenance function. The
chain management in grocery retailing industries. He found collection of mill practices within a firm will influence the
significant differences in inventory held in the supply chain by corporate offices MRO strategy since corporate will want to
the U.S. and European grocery retailers, which could be make decisions that help the mills and the company as a
explained by their SCM adoption. In a similar vein, Tan et al. whole. A mill obtains MRO items through a procurement
[6] sought a relationship between firms SCM practice and process, characterized by how MRO items are categorized,
their performance. They were able to show positive and the extent of forecasting used to predict MRO requirements,
significant correlation between certain SCM practices and the use of reorder points to maintain optimal inventory levels,
performances of their respondent firms. and the overall value of inventory kept at the mill. These
specific tasks are measured within the survey in order to give
Kwan [4] investigated the use of information technology (IT) an overall picture of the procurement process.
in SCM in Singapore electronics and chemical industries, and
found that the top two SCM strategies were: 1) to position IV. DATA COLLECTION AND ANALYSIS
logistics as one of the core competencies within the company,
2) to produce to demand rather than to forecast. The top To achieve this, we developed two standardized and
barrier to the use of IT was a lack of education and training. psychometrically sound research survey instruments: one
instrument is to be completed by the maintenance manager
III. RESEARCH METHODOLOGY and the other by the procurement manager. The research
instruments reflect the in-depth understanding developed in
Phase 1 of MRO supply chains based on site visits
The survey design reflects the relationships uncovered in We collected data in two phases. The first phase started in
Phase 1 as well as state-of-the-art knowledge of supply chain August 2003 when we sent out the survey instruments, along
management principles. This latter feature is desirable so that with letters of support for this research from Paper
we may leverage our knowledge of best practice supply chain Management Industry Association (PIMA) and CPBIS, to
approaches in other process industry domains. Phase 2 of the over 500 mills listed in the Lockwood database. Each mill
study focused on data collection and the development of received two surveys in each envelope (one survey for
prescriptive recommendations to improve performance of the procurement, one for maintenance), so we sent out a total of
MRO supply chains for the paper mills. Additionally, we over 1000 surveys.
asked how and how often procurement and maintenance
interacted and coordinated activities, how the department As an incentive for filling out the surveys, we offered a free
forecasted demand for maintenance activities and parts, and copy of the completed report. After sending out reminder
key recent or future MRO improvement initiatives. Finally, cards two weeks later, we received 12 surveys back from 10
we asked about other critical issues or challenges that hadnt unique mills a 1.2% response rate. We started a second data
been discussed yet. Through these open-ended questions we collection effort in January 2004, with the goal of improving
formed a general picture of industry progress to date, the response rate.
terminology, and critical areas for improvement for the three
We combined the Lockwood database with two other
case study mills.
databases from CPBIS for an updated mailing list with

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 International Journal of Engineering and Technical Research (IJETR)
ISSN: 2321-0869, Volume-3, Issue-5, May 2015
contacts at 709 separate mills. Instead of mailing out all of the
surveys at once, we called each contact, informed him/ her of 100%
the nature of the survey and asked him/ her to fill out or help 90%
find the appropriate person to fill out the surveys. We made a 80%
maximum of two attempts to Page 14 reach each potential 70%
recipient. On the second attempt, we left a voicemail message Series 2
60%
about our research effort and mailed the surveys. Since some
contacts requested we not send them a survey, a total of 616 50%
envelopes were mailed to mills, with two surveys in each 40% Company
envelope for a total of 1232 surveys. From this effort, we 30% Number
received 27 completed surveys. Nine mills completed both 20%
the procurement and maintenance surveys, which accounts for 10%
18 of the 27 surveys.
0%
V. RESULTS 0 5 10 15 20 25 30

We look at how each capability of a supplier factors into Figure1: Corporative practice Score by company
buy/dont buy decision in Criteria for MRO Suppliers. We
asked the procurement manager at each mill to tell us the VI. CONCLUSION:
importance of each of the following criteria when selecting
This study finally forced firms to reduce costs while
suppliers from 1 (none) to 5 (very high).
maintaining or improving quality and delivery reliability, it is
not surprising that procurement managers overwhelmingly
Cost of MRO items
responded that the three most important criteria for choosing
Quality of MRO items
suppliers were cost, quality, and on-time delivery, closely
Supplier on-time delivery performance of MRO items
followed by suppliers ability to offer solutions to a mills
Suppliers ability to change order quantities
problems. Mills follow a regular maintenance schedule and on
Suppliers ability to change delivery lead-time
average stick to their schedule and budget. They rely heavily
Accessibility of MRO supplier for problem resolution
on IT to help the maintenance process, but could probably
improve performance by using IT more to facilitate the
item N* Mean Median SD
procurement process and MRO inventory system.
SD
Cost 20 4.15 4.0 0.59 REFERENCES
quality 20 4.30 4.0 0.66
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