“Optimization is the most important element for an organization to succeed. The best way to do that is to integrate the entire value chain and processes. The more you integrate, the more you are able to optimize the entire supply chain,” asserts Pankaj Chandak, Asst. Vice President, FCA India Automobiles. Having close to two decades of experience in managing automotive SCM, he shares his insights on the transformative landscape of supply chain over the years. Excerpts…
You have been a part of the automotive transformational journey in India. How do you describe the scenario then & now?
The journey has been exciting as well as challenging. In my journey of over two decades, the automotive supply chain transformation has been huge. The transition is from a limited number of production plants & capacities to an entire global range available in the country today. What used to happen then is that, the product innovation used to take the lead and supply chain innovation used to happen later. The gap used to be significant in terms of timing also. But now, it’s almost reversed or parallel. These days, supply chain innovations take place simultaneously with product innovation. This gives OEMs the time to optimize the operational efficiency of the supply chain and ensure the process is more robust. The biggest positive transformation that is being witnessed today is in our organically stimulated capability to match international standards. The time gap has been reduced significantly and sometimes, supply chain innovation is even ahead of product innovation. This is surely a good sign for companies setting foot in this burgeoning market.
What are the prerequisites for any automotive company to stay ahead of the curve in such a stiff competition?
As the cost pressure is mounting, the supply chain is gaining more significance when it comes to optimizing the prevailing costs. In this highly competitive market, supply chain provides you an edge to stay ahead of the curve. If that can be managed smartly, half the battle is won. It also enhances a company’s footprint in the market and ensures a faster customer outreach. Earlier the service intervals for cars used to be 5000 km. Nowadays, the cars we produce need not be serviced for 15000 km, which means that our customers get to enjoy their ownership experience with our cars without having to worry about the next service interval. This reflects the quality of our manufacturing and reliability of our products.
How can we optimize the entire automotive supply chain from production to service?
Optimization is the most important element for an organization to succeed. The best way to do that is to integrate the entire value chain and processes. The more you integrate, the more you are able to optimize the entire supply chain. This means that you can understand the needs of the entire value chain well in advance. You have a better understanding of the value chain. You have a fair idea on the fluctuations in the chain. All these aspects give you input for optimisation. Integration has two dimensions to it: integration through information technology and integration through analytics or human intelligence. One must ensure that these two aspects are taken cognizance of while optimizing supply chain. Integration also offers you the ability to become more transparent across the value chain.
What are the qualities that you look for in a dealer & partner?
The most important criteria for evaluating a prospective partner is that he should have a system which gives us visibility of his entire operation. He should be mentally prepared to have his systems as transparent as possible. He should have a reasonable infra-structure with a sound financial bandwidth.
How do you build better supplier relationships to harness mutual benefits?
There are two significant elements of a business among others – technology innovation and the capability to produce. There should be a seamless transfer of technological know-how as well as capability enhancements. A successful partnership is all about benefiting from each other’s strengths and grow together profitably. The expectations are set at the beginning of the contract. We work in tandem with our suppliers by transferring intellectual input and technical expertise as we progress with our partnership. Today we have over 100 dealers in our network. From the input side, there are about 350 – 400 different categories of suppliers who supply us various products and services in India.
With Fiat Chrysler Automobiles being a global alliance, how are global best practices leveraged on the Indian ground with its inherent limitations?
The FCA India plant is as good as any global FCA facility because we have adopted all the global processes in our local manufacturing facility. As far as supply chain is concerned, the in-bound side, we adopt many global practices, because we have a specific pattern for in-bound logistics. However, for the out-bound side, we have to be dependent on the external situations such as infrastructure. We have certain specific locally developed practices to beat the inherent challenges.
How crucial is the reverse logistics?
Reverse logistics is gaining importance these days because it is an important tool for automobile companies to control warranty costs and provide speedier support to its clientele. At times, it fills in the gaps related to technical in-adequacies.
What’s your message to new age supply chain professionals?
One of the important messages that I would like to give new age supply chain professionals is to remain grounded. They should never lose sight of the end customer even if you are not directly connected. Whenever you are part of any operation, you should ensure that you should ease the life of an end consumer.
Kindly share with us one of the most critical projects you managed at Fiat Chrysler Automobiles India.
About two years back, as our business needs were increasing in terms of the space resource, we had two options – expand within the current space ratio or move out to a bigger place. After thorough evaluation, we realized that moving to a bigger resource would give rise to many transitional challenges because it might have impacted serviceability to the customer. We improved our process to about 60% by using various elements and by improving that, we could have achieved 60% more space, which was adequate for expansion plans. Prior to the year 2012, we had an external partner for our dealer network. However, in early 2012, we decided to develop our own national sales & service network. The call of the day was to change the existing dealer network to a completely new network. This was a really challenging task as we also had to ensure that our end consumers don’t suffer because of this operational transformation.
We evaluated all the partners and had to ensure they all were operational at the same efficiency level at which the network was, previously.
How can companies build sustainable supply chains?
Good quality human resource is the cornerstone of creating a sustainable supply chain. This should never be compromised. Also, one should be judicious when adopting new techniques to ensure they suit the purpose and help achieve the objective of the business.
Kindly comment on the supply chain era post-GST.
We are changing from a very fragmented structure to possibly a very unified structure. That will bring in a lot of change. Expectation from the GST regulation is extremely high right from a consumer to an organization. Everyone feels that things will change overnight post-GST. But that’s not going to happen. To achieve such a level of efficiency will take some time. The biggest pressure on the supply chain will be to ensure that there is a visible benefit to every element of the chain till the end consumer.
What are the green initiatives taken by the company?
We are working on a new supply line for new products which are to be manufactured in the year 2017. We have taken green initiatives for that. We might be buying zero energy from outside. This is under work in progress.
GLOBAL UPDATE Amazon has recently struck a landmark deal with Fiat Chrysler to sell three different models – the Panda, the 500, and the 500L, via the web, and for significant discount over what a dealership charges, the cars, which will initially only be available to Amazon shoppers in Italy. Times are a changing for automotive industry as well and it’s going to see disruption of sorts once online model starts working for this sector as well.
Categories
