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A Report

On
Supplier selection criteria (buying strategy) for SAE-Supra

As a partial fulfillment of the subject


Supply chain management

Submitted by : Devesh razdan submitted to : Dr. Surya prakash


Shivam vyas
Contents:

Topic Page number


Introduction 3
Background & Methodology 4
Objective 5
Buying strategies 6-11
Conclusion 12
Appendices 13-15
Introduction
In this work we aim to look into the supply chain aspect of creating a formula car
for a student competition. For this we compare 2 distinct buying/sourcing
strategies that the team MARCOS could have used instead of the one they used
for supra 2019 competition .Since we cannot judge the performance of the
vehicle based on purely hypothetical scenarios , we make the assumption that
the better the quality of the components used , the better the performance of the
vehicle , this allows us to idealize the three strategies .

Another simplification that we have done for the sake of the study is that we have
only looked into the sourcing of certain components and all the components that
were used. These include:

1. Engine
2. Shock absorbers
3. Rack and pinion
4. Chassis material
5. Sprocket
6. Wiring loom
7. ECU
8. Tyre
9. Brake callipers
10. Brake disc
Background and Methodology
About SAE SUPRA
SAE supra is a student competition at the collegiate level where students are
tasked with conceptualizing , designing , manufacturing and finally racing a
formula car.

The event provides a platform for students to apply their engineering skills to
design and construct a Formula category vehicle as per defined performance and
safety specifications. SUPRA comprises of a series of Static and Dynamic events
spread over five days, concluding with a final Endurance run and a valedictory
function .

The teams work on a budget (depending on access to funds) and a tight


schedule. The financial constraints typically cause students to come up with
ways to optimize their supply chain to make the best vehicle possible .

Methodology :

Supplier selection is an important issue in supply chain management. Typically,


manufacturer spends more than 60% of its total sales on purchased items, such as raw
materials, parts, and components , In addition, manufacturer purchases of goods and
services constitute up to 70% of product cost . Therefore, the selection of suppliers is an
area of tremendous importance and should be considered a strategic issue in the
effective management of a supply chain.

In this project we plan to investigate how a supplier is selected for a SAE supra team.
This entails the supplier selection strategy a team must undertake to find prospective
suppliers , negotiate the price for various components and finally keep the overall
budget in the competition low . one of the key aspects in selecting a supplier in such
competitions is to find a supplier who is willing to sponsor the required components or
help in any other way . In the end we plan to compare the strategy for supplier selection
to be undertaken by the BMU team to a different SAE participating team to find out the
pros and cons of the proposed strategy .
Objectives of study
The objective of this study is to look into the complexities and problems faced by a team
taking part in the SAE supra . The study aims to work towards an ideal buying strategy
for one such team (MARCOS) comparing two different strategies in comparison to the
actual buying strategy of the team .
Also to be kept in mind is the fact that this study in no way is trying to make a comment
on the performance of the vehicle but for idealization we go with the rule of thumb
‘costlier means better quality means better performance’. Using this rule , we go ahead
with the study to device a buying strategy in this case study .
Buying strategies
We have used 3 different scenarios :
1. First we look into the vehicle that was actually created by the team.
2. Second, we compare it with an expected cost report for a responsive supply
chain (highest quality components).
3. Finally we look into the efficient supply chain which is definitely at the cost of
quality .

A. The original buying strategy (case-1):

Many of the components were salvaged from the older vehicle that took part in
the previous competition. The engine , for example was an engine dismantled
from a bike .
Shock absorbers were also refurbished , sourced from a local dealer. One of the
advantages that the team had was its proximity to major component markets of
delhi which provided for a large variety to choose from and at varied price
ranges.
The rack and pinion was custom made while the chassis material was brought in
from pune , the downside of which was that the team had to wait for a longer
period for the material to arrive as sourcing of the chassis material was done
keeping in mind an efficient approach .
Sprockets being a very crucial part needed to be of the highest quality and that is
why it was sourced directly from the OEM at KTM.
Wiring loom was salvaged from the older vehicle which eventually worked to the
team’s disadvantage as there were problems with the wiring and subsequent
running of the engine, had the team brought a new loom which is not one of the
more costly components of the vehicle , the team could have saved a lot of time
in fine tuning other components of the vehicle , this is one such case were trying
to make the job cost efficient did not work out as planned .

The brake callipers , disks and tyres were refurbished and sourced from
suppliers in NCR While the original ECU was salvaged from the original vehicle .
One of the primary sources of concern here is that many of the components here
are either salvaged or refurbished which albeit being cost effective , leads to
higher chances of failure because of age . this kind of strategy has its benefits
but can deeply hurt the tragated quality and also costs time which not ample
during the final stages of preparations .
One of the other pitfalls of such an approach is that lack of dedicated supplier
sometimes leads to products not arriving on time or not being delivered
altogether as was seen in the case of the body of the vehicle which failed to
arrive on time for the competition and the team had to scramble for a makeshift
body for the vehicle.
The summary of the above discussion is given in the table below:

Comp. Sourced from Price Quantity strategy


1. Engine Engine 63375 1 Efficient and
dismantled responsive
from bike

2. Shock Refurbished 1800 4 Efficient and


absorbers responsive

3. Rack and Custom 12500 1


pinion

4. Chassis Dealer from 220 per metre 8 Efficient but not


material Pune responsive

5. Sprocket OEM KTM 2400 1 Not efficient but


responsive

6. Wiring Loom Refurbished 5000 1 Efficient and


responsive

7. ECU Refurbished 13000 1 Efficient and


responsive

8. Tyre Refurbished 2600 4 Efficient and


175/65R13 responsive

9. Brake caliper Apache brake 1400 4 Efficient and


calliper responsive
Refurbished

10. Brake disc Suzuki Brake 820 4 Efficient and


disc responsive
Refurbished

B. Responsive buying strategy (case-2):

In this section we look into the buying strategy that would be most responsive . It
is a well believed notion that the more we are willing to spend on a product the
better its quality will be. Considering that budget was not as much of a constraint
for the team , we assume what would it have been like had the team spent more
money on the vehicle. By this we do intend to say that the team should have
splurged (increase cost and in quality where-ever possible ).

In this scenario , the engine is scraped from the market , which increases its cost
yet we are not buying a new engine from the OEM , which would have
significantly increased the cost . The market from which the engine is scrapped
is preferably in the NCR region since engine being a heavy component means
higher transportation fee .

Rack and pinion and chassis material are sourced from ‘3 brothers’ a seller
based in ahmedabad via indiamart , the components are better than the ones
used in the original vehicle since they are new i.e have no wear and tear and are
sourced from a manufacturer/supplier that specializes in SUPRA based
components .

The shock absorbers and sprockets are sourced from the OEM which ensures
top quality but the downside is that prices cannot be negotiated .

With the problems faced with the wiring loom in the preparations of the original
vehicle , it is imperative that new looms are purchased , since the component is
not necessarily dependent on a company we search for the cheapest and closest
OEM so that we can keep it efficient as well as responsive .

Tyres are brought brand new and the size is also reduced for better performance.
This is one of the costlier /deviations from the original costs but a necessary one
and will therefore be highly responsive .
One of the peculiar things that we observe here is that despite our aim to make
the vehicle of a better quality and in turn costing more , we do not spend much
on the engine and ECU as they are one of the costliest components and buying
brand new will seriously hurt the budget of the team .

The summary of this selection is entered in the table below :


Comp. Sourced from Price Quantity strategy
1. Engine Scraped from 80000 1 Efficient
market

2. Shock OEM 4500 4 Responsive


absorbers

3. Rack and 3Brother, 16000 1 Responsive


pinion ahemdabad

4. Chassis 3Brother 180 per metre 8 Responsive


material Ahmedabad

5. Sprocket OEM KTM 2400 1 Responsive

6. Wiring Loom New OEM 56000 1 Responsive as


well as Efficient

7. ECU Refurbished 13000 1 Efficient and


resposive

8. Tyre Brand New 12000 4 Responsive


175/65R10

9. Brake caliper Wilwood 8000 4 Responsive


calliper

10. Brake disc Custom disc 1200 4 Responsive


brakes
C. Effective buying strategy (case-3):
In this strategy , our primary focus to keep the costs low as compared to the
strategy used in case 2. This is because the costs and buying strategies were
already conservative in the 2nd case and therefore we need to see the most
effective way to create the vehicle while not spending a lot . In other words, this
is the ideal buying strategy that the team should use .

The shock absorbers are custom made in house so as to cut costs and are
made inhouse for responsiveness .
Tyres are again brought brand new.
The rack and pinion is bought refurbished from the team , the profit of this that
this rack and pinion is not as worn out as a second hand component scraped
from a supplier and the price is less .
The chassis material is sourced from local dealers in bhiwadi making the
transportation costs negligible and is also cheaper than the previous case.
Sprocket, wiring loom and ECU are refurbished and are therefore cheaper
options with reasonable quality .

This is the cheaper of the two proposed hypothetical strategies and therefore is
the most efficient .

The summary is given in table below:


Comp. Sourced from Price Quantity strategy
1. Engine Scraped from 40000 1 Efficient
market

2. Shock Custom 1500 4 Efficient and


absorbers Responsive

3. Rack and Refurbished 8000 1 Efficient and


pinion from other Responsive
team

4. Chassis Local dealer for 160 per metre 8 Efficient


material 4031 material
5. Sprocket Refurbished 1500 1 Efficient
from market

6. Wiring Loom Refurbished 10000 1 Efficient


from market

7. ECU Refurbished 25000 1 Efficient and


Responsive

8. Tyre Brand New 2133 4 Responsive


175/65R13

9. Brake caliper Kbx calliper 5500 4 Efficient

10. Brake disc Custom disc 1200 4 Efficient


brakes
Conclusion:
From the above case study , we can conclude that making a formula vehicle on a
student’s budget is a very complex task with a lot of pitfalls but with the right
understanding of supply chain management we can device a strategy that fits in
perfectly with the team and help the team make the best vehicle at that price point .

For team MARCOS , we would suggest the strategy 3 because this strategy is highly
efficient and given the geographic location of the team and their easy access to major
markets to purchase required components , there will be lot of buying options at
cheaper prices , and the distance makes it such that there will be very short waiting time
for most of the components to be delivered making the overall strategy a responsive
one.
One thing we would like to add here is that the team must always look for reliable
suppliers for crucial parts even if it costs more so that last minute hiccups can be
avoided .

Thank you,
Appendix-1
Component pictures
1. Engine

2. Shock absorbers

3. Rack and pinion

4. Chassis material
5. Sprocket

6. Wiring Loom

7. ECU

8. Tyre 175/65R10

9. Brake caliper
10. Brake disc

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