Polycab: Setting up the End-to-End Supply Chain

Polycab: Setting up the End-to-End Supply Chain

It was a misty Monday morning in December 2011. Raman Golivadekar (Raman), VP, Supply Chain of Polycab, was having his morning cup of coffee. There was a huge pile of files on his desk and he surely was distressed. Having joined the company 6 months back, he was given the herculean task of setting up the end-to-end supply chain. He had achieved a lot in his life given his spectacular tenure at Unilever. However, he had taken this assignment as a challenge and he did not want to fail.

Polycab an ISO 9001:2008, ISO 14001: 2004, OHSAS 18001:2007 company, is India’s No. 1 Cables & Wires Company, with a glorious track record of over four decades. It is considered to be the fastest growing company in the Indian Cable industry. Its competitive edge lies in product innovation, superior quality and easy availability......

Polycab

Polycab is a 40-year old young organization created by four enterprising brothers from the Jaisinghani family (Girdhari Jaisinghani, Inder T. Jaisinghani, Ramesh T. Jaisinghani and Ajay T. Jaisinghani). The brothers began their journey from a small 200 sq. ft. retail electrical store and then created an empire through forward and backward integration..............

Cable Industry in India

The organized sector in the Indian Cable & Wire industry is estimated to be around INR22,000 crore. The total number of manufacturers is estimated to be 1500. 65% of the market is in the organized sector............

Overview of Cables and Wires

Wires & Cables consist of a metallic conductor over which a polymeric coating is given to protect the same. All electric cables consist of three essential points:

• The conductor for transmitting electrical power
• .............

Classification of Cables

• Extra High Voltage Cable of 110 KV and above rating for power transmission
• High Voltage Cable of 66 KV rating for power transmission
• ..........

Cable and Wire Manufacturing at Polycab

Manufacturing of wires & cables consist of number of procedure stages, which are:

• Heavy Wire Drawing
• Medium Wire Drawing
• Fine Wire Drawing
• .............

Make To Order and Make To Stock (MTO and MTS) Items

The manufacturing lead-time of cables is approximately 4 weeks while that of wire is 2 weeks. The nature of the business is such that 85% of the business is MTS (Fast Moving Items) while the balance is MTO. There are no set rules to classify an item as MTS or MTO. A MTS item may be termed as MTO when the customer provides some specification..............

Drum Selection

Cables are wound on drums and are sold to the customers in drums. For internal movement within the plant, there are internal drums. At the last stage, the drums are wound on external drums and shipped to customer (customer picks it up in case of Ex-Works). The cost of the drum is built in the pricing. The high logistics cost.............

Purchasing

The raw materials are mainly Copper and Aluminium whose prices are governed by the London Metal Exchange (LME). This has huge implications on its pricing and stocking strategy. Exhibit XVII depicts the Raw Material trends...........

Inventory Management

Sales Order lines have tolerances and it is imperative that stock allocation and/or manufacturing caters to these tolerances. Inventory visibility is based on length of cable along with size of drum. Sometimes, due to production errors, non-standard lengths are produced which also have visibility in the stock register...........

Exhibits

Exhibit I: Snapshot of Polycab

Exhibit II: Pan-India Presence of Polycab

Exhibit III: Growth Trend of Polycab

Exhibit IV: Market for Cables

Exhibit V: Overview of Cable and Wire Market Segment

Exhibit VI: Cable and Wire Ecosystem

Exhibit VII: Cable and Wire Industry Value Chain

Exhibit VIII: Cable and Wire Industry Drivers

Exhibit IX: Key Strategic Imperatives for Cable and Wire Companies

Exhibit X: Cable Manufacturing Process

Exhibit XI: Polycab Group Companies

Exhibit XII: Polycab Manufacturing Facilities

Exhibit XIII: Sales Figures (km) for Year 2013 for Cables

Exhibit XIV: Demand Process Flow for MTO and MTSIs

Exhibit XV: Business Process Framework for MTS Items

Exhibit XVI: Business Process Framework for MTO Items

Exhibit XVII: Raw Material Price Trends

Exhibit XVIII: Non-Ferrous Pricing

Exhibit XIX: Stock Visibility

Polycab: Setting up the End-to-End Supply Chain

Synopsis

Polycab, India’s No. 1 cable and wire company has come quite far from its humble beginning. But as it is expanding into newer areas, there is a need to set up a strong end to end supply chain network. This case study looks at the various business functions of Polycab and tries to find answers to the challenges and what needs to be done to support its expansion plans.

Prerequisite Conceptual Understanding

This case study presupposes conceptual understanding of the following. A working knowledge along with the business implications of the following concepts would enable an effective discussion leading to more practical solutions than a mere intellectual exercise.

• • An understanding of end to end Supply Chain
• • An understanding of the cost elements involved in a supply chain in the cable industry
• • An understanding of the implications of fluctuating metal prices and fast moving items

Expected Learning Outcomes

• • Understand the stakeholders in the supply chain for a cable and wire manufacturer
• • Appreciate the concept of Fast Moving Items (Make to Stock and Make to Order)
• • Understand the Stocking and Pricing Strategy
• • Understand the significance of Stock Allocation

Case Positioning and Setting

This case study can be used in either MBA or Executive MBA or Executive Development Programs, for the following modules/topics in the Supply Chain  Management course:

• • Inventory Management
• • Stock Allocation
• • Pricing Management

Assignment Questions

The case study seeks answers to the following questions:

• I. What are the typical challenges in the Cable Industry?
• II. How will Raman identify the Fast Moving Items?
• III. How much Safety Stock should he maintain?
• IV. ........................