Securing Indian automotive supply chain from disruptions

The supply chain and logistics heads of Indian automotive and component manufacturers are still haunted by the disruptions that started with the Covid-19 pandemic. However, there are better solutions now available to tackle these issues with technology and digitalisation taking it up.

“The global energy transition and changing emission norms are putting automotive and component manufacturers into a very unique and tricky position as we have to fund the existing product line to meet the tighter and greener norms and at the same time invest in the future energy.”

This is how Shubhankar Chatterji, chief supply chain officer of Cummins India responded to the questions on how Cummins India is managing the changing business environment.

He was speaking during the 7th edition of the Auto SCM Summit on December 5, 2023, organised by Indian Transport & Logistics News. Presented by Frankfurt Airport, AutoSCM Summit 2023 also had Dachser as Supporting Partner and Hong Kong Air Cargo Terminals (Hactl) as Sustainability Partner.

Chatterji also spoke about the investments and efforts they are putting into transforming the industry and business. “The good part is that Cummins India is into all alternate energies. For example, we acquired the world’s fourth-largest manufacturer of fuel cells and electrolytes,” he said.

Talking about the importance of visibility in the supply chains, Mandar Vaidya, Director of Materials Management, Region India, ZF Group, said, “For at least the incoming supply chain we want to know where they are. The same applies to our customers who are the OEMs, be it for the manufacturing process or spare parts. Beyond resilience and visibility, if there is a shift in technology or consumer preference, the supply chain can plan or anticipate them.”

He also mentioned the need for stakeholders to be agile when a disruption hits to deal with it in the short term as well as the efforts to take it back to normal in the long term.

Digital solutions for disruptions
It was on the same lines that Om Vijayvargiya, Head – SCM & Logistics, Schaeffler India, spoke about the rate with which the demand fluctuations happen in the market and how managing inventories is always a problem for automotive manufacturers and their logistics companies. However, on a positive note, he also mentioned that new solutions, particularly digital solutions, coming into the market.

He said, “During the Covid-19 pandemic, the industry understood the need for agility and resilience. One of the biggest challenges was the absence of real-time visibility of our consignments and the inability to plan our production because of that.”

“In the last three years, many visibility solutions have been coming to the surface and now with these solutions, we can plan our production accordingly. Production schedules are also getting settled accordingly. Sometimes the consignments arrive early is also an issue because the inventories are also going up. And in this case, visibility can help us to cut future orders,” he added.

Building on the challenges in managing the inventories, Yogesh Ramtekkar, Head of Supply Chain Management, PV Clean Mobility Technologies, pointed out the importance of sales projections and predictions as well as the communication gap.

“I think the communication gap between OEMs, Tier 1, Tier 2 and Tier 3 suppliers is one of the most important challenges. It applies to overseas suppliers as well, because for instance, the transit time from the US is 60 to 90 days and any challenge to the free flow of information can adversely affect the industry,” he said.

Empowering the future of logistics
The Japanese EV company Terra Motors' chief executive officer Akihiro Ueda spoke about the EV manufacturing at Terra Motors, the charging infrastructure provided by Terra Charge and the financing solutions provided by Terra Finance with his presentation titled "Empowering the future of logistics."

In fact, in December 2023, Terra Motors announced the launch of its blanket solution to electrify last-mile delivery that includes L5 Loader vehicles, EV financing, charging infra, and software solutions.

He also spoke about the current status of EV adoption in India and how the Return on Investment (ROI) for EVs among logistics companies are high. "It makes a lot of economic sense," he said.

Digitization of international logistics for auto customers
“Automotive customers are looking for better visibility of rates and routes as there is a lot of uncertainty throughout the supply chain.”

Madhumeeta Kumari, Enterprise Sales Lead at Cogoport was delivering her presentation and spoke about how the digital freight forwarder helps their automotive customers to navigate the international logistics arena.

“The customers are looking for longer contracts and shorter routes to ensure better customer experience and faster deliveries. The digital freight forwarders are also venturing beyond international shipping into customs, CFS and last-mile delivery to help these customers deal with supply chain issues effectively. These companies also possess data of the latest trends and changes in the industry and thereby help customers to take better and faster decisions,” she said.

Tech advancements for a seamless supply chain
Reflecting on the lessons learned in recent years from a strategic standpoint, Hirendra Digvi, Executive Director of Divgi TorqTransfer Systems, emphasizes the importance of economic and geopolitical protection in the current scenario. He points out that for the automotive industry to thrive, whether in electrification, automation, or other key technologies, understanding the current position and sources of technology is crucial. Digvi highlights the necessity for supply chain security, stating, "No investor would buy the strategy if I say that I can become the number one EV supplier but be 70% dependent on China. I must have supply chain security that enables me to make my long-term value propositions sustainable."

JP Mishra, Country Manager-India at Newland AIDC, a global RFID manufacturer, shares insights from his extensive experience in the automotive industry, emphasizing the pivotal role of RFID (Radio Frequency Identification) technology in enhancing supply chain transparency and information management. Mishra underscores the multifaceted benefits of RFID, explaining how it enables the meticulous tracking of components, tools, and machinery, thereby substantially elevating operational efficiency. In the past, committing to tentative dates for consumers was challenging, but with RFID, businesses can now calculate logistics, inventory, and production plans through a unified platform. “Unlike before, now you can commit to a tentative date for consumers by calculating logistics, inventory, and production plans through a single window. This not only enhances the company's goodwill but also offers improved visibility across the entire system,” he added.

Mishra contends that RFID technology is a game-changer, empowering businesses to optimize their operations, build consumer trust, and navigate the complexities of modern supply chains with precision and reliability. “Many individuals in the logistics sector hesitate to adopt RFID technology due to concerns about increased costs. However, it has gained significant popularity, particularly in the automotive sector, where the demand for swift deliveries is paramount,” he added.

Vijendra Singh emphasizes advancements in monitoring and enhancing visibility within the supply chain through the incorporation of multiple alarm reports, geo-fencing, and RFID technology. He notes the transition from manual data collection to a more efficient push mechanism. By implementing geo-fencing for suppliers, OEMs, and their own hubs, coupled with RFID tags, real-time data provision has become a reality. Singh highlights the impact on customer service, stating, "Now, dashboards are providing us more visibility of the real-time location of the parts." This evolution in data acquisition methods signifies a proactive approach, leveraging technology to streamline processes, improve accuracy, and offer customers up-to-the-minute information on the status and location of their materials.

Tech-driven cost reductions in auto supply chain
The automotive industry faced unprecedented disruptions and vulnerabilities during the Covid-19 pandemic, largely attributable to the Just-In-Time (JIT) supply chain and manufacturing model. This approach, designed for efficiency, was exposed and disrupted like never before.

The integration of technology into logistics operations has significantly enhanced responsiveness, resilience, and visibility in the supply chain. Deepak Tiwari, COO of KSH Logistics, notes the positive impact on coordination and efficiency, stating, "Earlier we used to have so many people coordinating; obviously, those have gone down to some extent. Secondly, with automated billing coming into the picture, people are also reducing in that area. We are seeing a lot of reduction in costs in certain areas."

This technological evolution not only streamlines operations but also results in tangible cost reductions. Automated processes, optimized routing, and data-driven decision-making contribute to a more efficient and cost-effective supply chain, ultimately benefiting both logistics companies and their partners. Speaking about the same, Surendra Gupta, AVP of Apollo Supply Chain, explains, "We are using route optimization, planning routes based on the pin codes of distributors or customers. The program we've built suggests better routes based on proximity and previous experiences, helping decrease the cost of distribution. We pass on these savings to our OEMs. Such technologies bring in efficiency, contributing to the overall reduction in costs."

This technological evolution not only streamlines operations but also results in tangible cost reductions. Automated processes, optimized routing, and data-driven decision-making contribute to a more efficient and cost-effective supply chain, ultimately benefiting both logistics companies and their partners.

How do vehicle manufacturers employ IoT to enhance mobility experience?
Rahul Mehra, co-founder of Roadcast, shared insights into the profound impact of IoT on the mobility experience during his presentation at the Auto SCM Summit 2023. Introducing their IoT technology as a "network of sensors," Mehra detailed its function in absorbing data from the surroundings and broadcasting it onto a network.

Highlighting the significance of IoT, Mehra characterized electric vehicles as "IoT devices on wheels," given that approximately 90% of their components are electronic. Reflecting on the industry's evolution over the past 7-8 years, he remarked on the transition from treating IoT as a luxury in 2015 to its current status as a necessity in every vehicle. Mehra stressed that OEMs now acknowledge IoT's dual role in enhancing customer experience and elevating product quality and service levels.

Discussing IoT's critical role in insurance telematics, Mehra underlined its necessity for models with usage-based insurance, emphasising the dependence on real-time data analysis. Illustrating with a real-life example of battery explosions in two-wheelers, Mehra showcased IoT's potential to proactively identify issues, mitigate potential hazards and ensure user safety.

Decoding automotive resilience with data
Lakshya Sharma, Head of Growth at GoComet, shared insights into the journey of digital transformation in logistics. Reflecting on the past decade, Sharma noted the absence of specialised tools for logistics, with companies often adapting ERPs like SAP for data recording purposes. “The logistics companies were utilising their ERPs in a force-fitted way where their SAPs or ERPs were tweaked in order to make the use cases work predominantly for recording data. This is when we started our journey into digital transformation and that was our goal as we wanted to build that system,” Sharma said.

Citing a 202 report by Gartner, Sharma highlighted the accelerated pace of digital adoption triggered by the Covid-19 outbreak. The reactive change led to an exponential surge in digitization, with businesses rapidly integrating systems and visibility tools. However, Sharma pointed out that many visibility solutions, despite providing awareness of delays, lacked resilience.

In a survey conducted by GoComet, it was revealed that “8 out of 10 visibility solutions were conventional track and trace tools that merely informed businesses about delays without offering proactive solutions citing that over 57.3% of the 1.5 million containers tracked in 2023 did not arrive on time.”

Sharma discussed the evolving expectations from digital systems, noting a demand for a Track and Trace system capable of anticipating risks in pre-approved shipments. This proactive approach aims to better prepare businesses for potential challenges in the logistics process, moving beyond mere awareness to actionable insights.

In essence, GoComet's focus on digital transformation underscores the need for specialized solutions in the logistics industry. The recognition of limitations in traditional track and trace systems emphasizes the importance of proactive tools that anticipate risks and empower businesses to navigate the complexities of the supply chain more effectively.

This article was originally published in Indian Transport & Logistics News' Jan-Feb 2024 issue.