CHAPTER I

INTRODUCTION
Supplier selection project is one of the most important decision making problems for many firms. Selection is the process of identifying individuals who have relevant Qualifications/ experience/ skills and competencies to fill in the jobs. The stage in the buying process when the intending buyer chooses the preferred supplier or suppliers from those qualified as suitable during supplier selection. The supplier selection criteria approach is a key tool for New Supplier Identification and Qualification. It is used to build supplier profiles and find the suppliers who match these profiles. A structured approach is necessary in order to document the supplier selection process and reassure the company that all its needs have been correctly understood, identified and taken into consideration. The supplier selection criteria are a direct outcome of the Voice of the Customer approach. The structured approach will consist in: First, building the supplier profile, by identifying the following criteria: Company global policy (e.g. supplier commitment to security / conditions of work) Purchasing global policy (e.g. suppliers in Eastern markets in order to sustain sales and development in those areas) Purchasing category / segment strategy (technical criteria, criteria due to the market situation, etc.) Second, defining the relative importance of each criterion, and especially the ones considered as veto (go / no go items). Third, defining a measurement system for these criteria. Document it so that the different people using it will bring an homogeneous result, i.e. all suppliers will be evaluated against this profile with the same rules Forth, finding the suppliers and measure them against the profile. A special care shall be taken for the presentation of results, so that anyone can read the supplier evaluation and comparison without any risk of misunderstanding.

Choosing the right suppliers involves much more than scanning process of various performers. Your choice will depend on a wide range of factors such as value for money, quality, reliability and service. How you weigh up the importance of these different factors will depend on your business priorities and strategy. Effective purchasing focuses on what your business needs and what you want to achieve. The right products or services and a good price are not the only factors to consider. This selection procedure is essentially considered as a multiple criteria decisionmaking (MCDM) problem which is affected by different criteria tangible and intangible criteria such as quality, price, delivery, service performance, technical capability, execution time, and so on. For a decision makers (DMs), selecting the right suppliers will significantly reduces purchasing cost, improves competitive ability and increase customer satisfaction. Therefore, DMs need to planned evaluate the suppliers performance in order to maintain those suppliers can meet company requirement under different evaluation criteria. Usually, quality is a critical factor for most manufacturers; a high quality supplier has always been an important selected for manufacturing organization however, it is not enough to promise that the suppliers can avoid addition cost and offer right quality for manufacturer. Organizational buyers used a variety of methods to assess suppliers price; the purchase price is also a highlighted consideration by the purchasing organization due to it can affect the product pricing. Service quality form the supplier is also very important to the manufacturer. Improving service quality is considered an essential strategy for success and survival in todays competitive situation Miller suggested manufacturers need to look at the supplier organizational two systems; one called process-based evaluation system, including costing, delivery, quality, management and technology; the other called performance-based evaluation system, including suppliers quality and delivery performance. In spite of, the emphasis on supplier evaluation, there are has been little empirical investigation of the supplier evaluation process in terms of the suppliers reaction to it. It is important that this study examine all these relevant criteria in selecting a best supplier.

SCOPE OF THE STUDY:

This study focuses of how and why the customers (organization) make decision to goods and services that they acquire from outside for its performance in manufacturing unit in consideration to final customers requirement in global perspective. The dissatisfaction with a choice of suppliers perhaps leads to many reasons. This can be continuing poor distribution problem like logistics of transportation, poor influence of the existing customers towards potential customers and vintage product mix for prolong period. This study also influences performances of each and every individual supplier of all raw materials through evaluation each of suppliers activities in reaching the organization. It also helps in identification of effective and non effective suppliers and various steps to improve their process for continuous availability of materials for production process of an organization. It also indentifies the week performers whose actions to be literally barred or should be improved in future cases on various steps.

STATEMENT OF PROBLEM:
The study on supplier selection helps us to know what the manufacturer wants from a supplier of raw materials to particular product. The wants and needs of manufacturers must be carefully examined by the suppliers and the effectiveness of the individuals must be proved. In order to show their excellencies of each supplier, they will introduce and execute various steps inorder to retain the supplying tendency. The factors, aspects and determinants through which the supplier for a manufacturing unit will be analyzed inorder for effective and continuous production process. In this context the research felt that it is suitable to study the socio- economic activities of the raw material suppliers and industrial potential buying attitudes. It hoped that the study will help to gain knowledge on the issue such as the factors influencing the industrial preference on particular suppliers, the sources of purchase, to know the satisfaction of the industry towards their manufacturing performance and to know the opinions and ideas of the various suppliers.

OBJECTIVES OF THE STUDY: PRIMARY OBJECTIVES: To study the supplier selection of raw materials to a PAPER industry and suppliers
aspects towards industry.

SECONDARY OBJECTIVES
To know the socio-economic factor of the respondents. To determine the needs and wants of paper industry. To know aspects such as quality of materials supplied, delivery period of materials and price of the product that they quoted. To know the effective logistics and supply chain system of a supplier. To study the channel management and distribution of materials. To understand the effectiveness of supply of materials among competitors. To determine the various factors for suppliers to attract towards the kraft paper manufacturer.

CHAPTER II COMPANY PROFILE

JR GROUP

A brief introduction to the business group and its companies is as follows. The group and its companies
The name JR in the JR group of companies is coined from the initials of the first names of the founder directors Smt. Jaya Ramamurthy and Shri Ramamurthy Munusamy. The group is has been successful in all its business ventures. It started its business operations in the packaging field initially way back in the nineties through the establishment of JR Packages (P) Ltd a company, which has grown from being an SSI unit to a large business enterprise in the packaging industry. With the phenomenal success in the packaging business, the group has subsequently diversified and integrated itself into various other business sectors. The first integration for the group began with the establishment of a 20000 TPA paper mill for the manufacture of kraft paper under M/s. Venkraft Paper Mills. The group diversified into retailing, steel trading, printing and reality businesses. The group has also vertically integrated its steel trading business with the establishment of an integrated steel mill. Please click the following links for a brief introduction to each of the group units is as follows. Paper Manufacturing: Venkraft Paper Mills (P) ltd.

Packaging Business: JR Packages (P) Ltd. Kraft PackCartons

Steel & Alloys:

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JR Steel Industries (I) Pvt. Ltd

Services:
JR Fuels JR Business and Resorts (P) ltd.

VENKRAFT PAPER MILLS (P) LTD:

Venkraft Paper Mills is a leading producer of recycled and virgin containerboard in Emerging India, with integrated production sites and an outstanding sales and logistics network. The full vertical integration of Venkrafts business from forestry and pulp to finished converted products guarantees consistent premium product quality and reliable customers. From rugged boxes for protecting fruit in transit, to those in direct contact with fast food, or from safe shipping of heavy duty electronic goods to luxury products where highquality printing is essential, Venkraft has an innovative, cost-effective Test liner and fluting solution. We are fully committed to leading the way in innovative, high-quality solutions across a paper portfolio for every box application. We support our extensive product portfolio with our reliability and availability promise. Venkraft Paper Mills (P) Ltd (hereafter referred to as Venkraft) was incorporated in the year 2004 for the manufacture of Kraft paper as a result of backward integration of our packaging business. It is an ISO 9001:2000 certified company. It not only serves the captive consumption of our packaging business but also serves the supply needs of over 300 independent corrugators in southern India. Venkraft Paper Mill is equipped with one of its kind paper manufacturing technology with two separate streets of pulping that gives consistent quality products, which are unmatched in the Indian paper industry. Therefore, it is not surprising to say that today Venkrafts kraft paper is in substantial demand and the order book of the company is filled in over 6 months in advance. We are pioneers in the field of packaging business with more than a decade of experience in serving the packing requirements of our esteemed customers. As a result of backward integration we have installed a 24000 Metric tones per annum Kraft Paper Mill quite close to our premises. We have a steady growth in the turnover of our paper mill since its inception and the same is reflected in our financial statement. With two separate streets of

pulping for the long fibers and the short fibers we have a competitive edge over our peers in this industry who have only one Pulp Street for both the fibers.

Process Capability:
Right from the pulping process to the paper machine and ETP plant all the equipments are selectively chosen from the best in the field. As stated earlier we have two separate streets for the pulping of long fiber and the advantages of the same are illustrated in simpler terms as follows. Conventional Pulping Process (Single Street):

The processes illustrated above are only a gist of important operations in paper manufacturing process

Disadvantages

The Fibers are manually mixed before feeding and thereby there shall be variations in proportions of mixture and as a result there shall be inconsistent BF test results

The low consistency pulper will not slush the long fibers efficiently and there by a there is a fiber loss in this pulping process

Long fibers should be refined for a longer time compared to the short fibers. But in this process since the fibers are mixed prior to refining process the long fibers shall not be refined completely

As a result of the above three processes we shall have an improper blending and refining of fibers and the paper produced shall have poor RCT and BF values

Two separate streets of Pulping Process:

Advantages

The Long and Short Fibers are sorted before feeding and are fed separately in two different pulpers.

There is an energy loss in slashing long fibers in low consistency pulper and moreover there is improper slashing of the same. This could be completely avoided in high consistency pulper and hence forth two separate streets are necessary

Long fibers should be refined for a longer time compared to short fibers and the separate refining process ensures the same

Both the refined pulp is finally blended to exact volumetric proportions and the paper produced shall have better RCT values and consistency in BF

The End Product has consistency in formation and quality

We are proud to say that we are the only monolayer kraft paper manufacturer in the Indian industry with above system in place. The customers who have used our products have appreciated the run ability, usage and superior ECT, Bursting Strength values being observed in the cartons made of our kraft paper.

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CHAPTER III RESEARCH METHODOLOGY

A research design is purely and simply basic frame work or plan for a study that guides the collection of data and analysis of the data. In supplier surveys, I adopted this description research design in collecting and analysis of the data.

DESCRIPTIVE RESEARCH DESIGN:

Descriptive research design is one that simply describes something such a demographic characteristic of suppliers who supplies the products to a manufacturer. The descriptive study is typically concerned with determining the frequency with which something occurs. This study is typically guided by an initial hypothesis.

SAMPLE DESIGN:
The study has adopted non probability sampling technique in this survey. In this method, the manufacturers concerns are analyzed in suppliers perspective of various raw materials required for production unit. The suppliers factors like delivery time, price that they offer for all materials are analyzed for our study.

DATA COLLECTION METHOD:

As we have considered the input part on industry, we are going to deal with suppliers of raw materials. In accordance we are going to collect the data directly from the manufacturer. In our aspect, we are going to collect the necessary data from manufacturing plant through questioning to concerned officials and also from previous years data (secondary). Care must be taken that as far possible, it should not contain any room of misinterpretation. The data fetched will be vulcanized and the effective suppliers would be retained and less effective suppliers would be motivated towards the achievement of objectives of an organization.

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STATISTICAL TOOLS USED

There are various tools used for supplier selection such as, Cost-ratio method Cost-based method Categorical models Weighted point method Vendor profile analysis Dimensional analysis. We have been particularly concerned to vendor rating technique, annual rating methods and finally we concern to taguchi method for determining the effective supplier of raw materials. In some cases we also use regression analysis for determination of effective supplier.

VENDOR PROFILE ANALYSIS (OR) VENDOR RATING: The various factors concerned to vendor rating are. Quality Delivery Price

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LIMITATIONS OF STUDY:

1. Lack of finance, time and manpower resulted in restricting the study of the confined materials. 2. In few cases, illiteracy of the manufacturers proved a stumbling block on electing responses. 3. Research is carried out on manufacturers, who are human beings. Human beings have a tendency to behave artificially when they know that they are being observed. So the respondents starts behave artificially when they know that their attitudes, opinions, beliefs etc., are being studies. This aspect of human satisfaction distorts the research results on. 4. As it is a paper manufacturing industry, the suppliers are random and variant, so analysis seems difficult. 5. Seasonal variations in manufacturing results in less production.

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CHAPTER IV SUPPLIER SELECTION SOME THEORITICAL ISSUES:

Someone whose business is to supply a particular service or commodity. One who supplies materials, products, or services to others; firm in either the wholesale or the retail supply business. Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.

FUNCTION/ACTIVITIES OF SUPPLIERS: STRATEGIC LEVEL TACTICAL LEVEL OPERATIONAL LEVEL

TYPES OF SUPPLIERS: Suppliers are essential to any retail business. Depending on your inventory selection, you may need a few or dozens. Sometimes suppliers will contact you through their sales representatives, but more often, particularly when you're starting out, you'll need to locate them yourself--either at trade shows, wholesale showrooms and conventions, or through buyers directories, industry contacts, the Business-to-Business Yellow Pages and trade journals Suppliers can be divided into four general categories. 1. Manufacturers: Most retailers buy through company salespeople or independent representatives who handle the wares of several different companies. Prices from these sources are usually lowest, unless the retailer's location makes shipping freight costly. 2. Distributors: Also known as wholesalers, brokers or jobbers, distributors buy in quantity from several manufacturers and warehouse the goods for sale to retailers. Although their prices are higher than a manufacturer's, they can supply retailers with small orders from a 14

variety of manufacturers. (Some manufacturers refuse to fill small orders.) A lower freight bill and quick delivery time from a nearby distributor often compensates for the higher peritem cost. 3. Independent craftspeople: Exclusive distribution of unique creations is frequently offered by independent craftspeople, who sell through reps or at trade shows. 4. Import sources: Many retailers buy foreign goods from a domestic importer, who operates much like a domestic wholesaler. Or, depending on your familiarity with overseas sources, you may want to travel abroad to buy goods.

BARGAINING POWER OF SUPPLIERS:

Bargaining power is the ability to influence the setting of prices. The more concentrated and controlled the supply, the more power it wields against the market.

Monopolistics or quasi-monopolistic suppliers will use their power to extract better terms (higher profit margins or) at the expense of the market.

In a truly competitive market, no one supplier can set the prices.

SUPPLIER EVALUATION:
Supplier evaluation is a term used in business and refers to the process of evaluating and approving potential suppliers by factual and measurable assessment. The purpose of supplier evaluation is to ensure a portfolio of best in class suppliers is available for use. Supplier evaluation is also a process applied to current suppliers in order to measure and monitor their performance for the purposes of reducing costs, mitigating risk and driving continuous improvement.

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SUPPLIER PERFORMANCE MANAGEMENT:

Some firms want to implement SPM because they have been told that it's the right thing to do. They are convinced that supplier performance will improve and the results will speak for themselves. While supplier performance improvement is a distinctly possible outcome, a specific cost reduction based on that improvement can't be guaranteed because different firms implement SPM with varying degrees of proficiency. However, success will have a much higher probability when senior management understands the business case for SPM and therefore truly gives it support. One of the biggest challenges, however, is that the business case for SPM is not cut and dried. That is, it is hard to guarantee a precise return on investment (ROI) for SPM. Executives are focused on bottom-line improvements and continue to expect them as their firms adopt improvements in strategic sourcing methods and supporting technology. They have come to expect cheaper supplier prices as the only true measure of ROI in Procurement; whereas the ROI for SPM is not so clear-cut.

EVALUATION OF SUPPLIERS PERFORMANCE: The following seven steps comprise a process for developing and deploying supplier assessment: 1. Align supplier performance goals with organizational goals and objectives. 2. Determine an evaluation approach. 3. Develop a method to collect information about suppliers. 4. Design and develop a robust assessment system. 5. Deploy a supplier performance assessment system. 6. Give feedback to suppliers on their performance. 7. Produce results from measuring supplier performance.

Supplier selection has received a significant coverage in the purchasing and supply management literature Based on Dicksons (1966) empirical study, 23 criteria were identified which purchasing managers generally consider when selecting a supplier. Of the identified criteria, quality, on-time delivery, and suppliers performance history were found vital in supplier selection regardless of the type of purchasing environment. Dempsey (1978) 16

identified quality, delivery capability, and technical capability as imperative in supplier selection. Ellram (1990) emphasized the need not only to base supplier selection decisions on the traditional price and quality criteria but also on longer term and qualitative attributes such as strategic match and evaluation of future manufacturing capabilities. For supplier selection process and evaluation, manufacturing firms have primarily considered criteria such as quality, service, cost, flexibility, reputation, and financial stability (e.g. Sarkis and Talluri 2002; Verma and Pullman 1998; Hirakubo and Kublin, 1998). However, in addition to the integration of regulatory compliance, following other authors as well as Kirytopolos et al (2008) the current research considered quality, cost, service, risk, and supplier profile to evaluate each of the four suppliers. The selection and evaluation criteria are described below: Regulatory Compliance: the generic pharmaceuticals industry is under increased pressure from the US Government and the FDA to comply with the rules and regulations governing the quality of its active pharmaceutical ingredients. This also means that the generic pharmaceutical manufacturers are requiring and/or interested selected suppliers that can be in compliance with the FDA rules and regulations in terms of the quality of their commodities. Indeed, pharmaceutical firms are more than ever mandated to update their knowledge of existing laws and regulations. Quality: Quality of raw material and component requirements are very vitally important given that the pharmaceutical industry is the most regulated industry. Because FDA demands quality products from drug manufacturers, it behaves the pharmaceutical firms to select suppliers with suppliers certification, proven record of world-class service and quality raw materials. Lin et al. (2005) note that quality management practices are imperative in supplier selection strategies. Gonzales et al. 2004 found that quality is the most significant attribute in supplier selection. Cost: Cost has traditionally been considered as one of the most important aspects of supplier selection criteria in the purchasing and supply management literature. Service: The level of services consist of delivery time, value added services, and ease of communication. Supplier Profile: This criterion encompasses suppliers reputation, flexibility, capacity, financial health, and production facility. Risk: The ability to manage predictable and unpredictable risks that may occur.

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CHAPTER V DATA ANALYSIS AND INTERPRETATION

This chapter deals with data analysis and interpretation of the information of collected by the issue of questionnaire cum-schedule. The collected information further analysed and interpreted in the following pages.

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