Outsourcing trend in bearing industry

Abstract

Today’s bearing manufacturing industry is observing a sea change in the manufacturing processes owing to development in technology, stiff competition and change in the mindset of manufacturing industry. Gone are the days when an Original Equipment Manufacturers (OEM) were involved in the entire value chain of the product, right from procurement of raw material to final sale of the product. Almost all manufacturing related activities were performed under the premises of OEMs. Today’s competitive world has forced them to look for the ways to achieve higher efficiency at the lower cost to remain competitive in the market. Outsourcing is one such solution to the problems, which helps OEMs in becoming cost effective by outsourcing the non-core activities while concentrating on their core activities where their core competencies lies. Over the period of past 50 years of bearing industry, there has been less significant improvement in the design as such of Bearing. More focus has been laid on the process innovation and improvement, turnaround time, distribution and their effective supply chain management. Cheaper alternatives available in the market in the form of spurious and Chinese bearings have made them bring such improvements all the more to remain cost effective and competitive in the market. Application of bearing in Industrial and automotive industries also demands that OEMs should adhere to stringent quality standards at the same time being cost competitive. Solution to such problems for OEMs today is Outsourcing, therefore it has attracted our attention towards understanding the outsourcing trends in the bearing industries in India. We have done a detailed study on the trends being followed in this industry through both primary and secondary data research and their analysis. The focus of the entire study has been centered around the SKF bearing. The report here entails the information about necessity of outsourcing, its classification based on activities and their advantages for the bearing industries. For the purpose of our study, the entire project has been divided into two sections i.e. secondary and primary data analysis. Secondary research comprises of detailed study of Journals and internet research to understand the trends in Indian and other markets. Whereas primary research includes visit to OEMs like SKF and Timken in Bangalore, visit to tier-I supplier of SKF, Pushp Industry and conducting interviews with employee of Timken Jamshedpur. For the purpose of primary data collection, a questionnaire was prepared and the information was sought through detailed personal interviews with the employees of both OEMs and their suppliers. Based on the information gathered, our report so prepared is is broadly divided into four parts. It starts with giving an overview of the Indian Industries and brief introduction about SKF bearing. It then explains about Outsourcing, its current trends, classification and pros and cons of outsourcing for Indian bearing industries. The report then entails the elementary processes involved in the bearing manufacturing along with it cost benefit analysis. Moving ahead, report lays emphasis on the analysis of supplier and other competitors of SKF which is Push Industry and Timken India respectively. Report covers detailed study of supplier, their challenges and today’s trend. A one to one comparison between SKF and Timken has been done to show the differences in their outsourcing strategies. The report finally concludes with our observation and conclusion on the entire outsourcing trend in the Indian Bearing Industries.