Many new vehicles have been successfully and smoothly unveiled in India but, as Ramesh Kumar reports, the delivery of each model poses its own challenges, with some logistical difficulties unique to the model’s country of birth.
Creation is a unique phenomenon, whether in making a new life or a new product. With any birth, there is always a thrill, a joy – not forgetting the conception stage – and a bit of secrecy. That secrecy is significant because nobody is sure about the look, feel and shape of the ‘final product’ until it is delivered. New automotive launches are no different, but for supply chain and logistics professionals, this ‘birth’ is often a painful process, from the moment top management gives the go-ahead until the actual vehicle rolls off the assembly lines.
Launches are among the most expensive and complicated events in the automotive industry; leaving aside the millions of dollars spent on advertising, carmakers and their suppliers must develop, produce and ship several rounds of prototype parts and cars – and later dealer-display vehicles – all before executing a complicated commercial rollout that is often launched simultaneously across an entire region, if not the globe. And they must do this in the strictest secrecy, in the fear that a photo snapped of a vehicle in development could leak to the press or be posted on social media, giving it all away before the curtain is drawn back.
In any country, a new launch is a tremendous logistical as well as engineering and marketing feat. Such launches increase demand for premium and air freight, even for finished vehicles. Daimler revealed recently that it sends about 400 cars a year by air, many of them during new launches.
But add to that the size, infrastructure limits and bureaucracy of India, and you have a very complex supply chain challenge for logistics. The mere fact that transport in India requires more checks, certifications and state border inspections means that there are more potential points of ‘exposure’ than in almost any other market. Meanwhile, on-time and damage-free delivery is not easy in India even during ‘normal’ distribution, let alone the launch phase.
But despite these challenges, and the increasing number of launches in India, most carmakers have handled this distribution rather well. Marc Nassif, managing director of Renault India, says that the French carmaker has successfully launched five new models on the Indian tarmac in the past 15 months. “I don’t lose sleep over our launches. On the contrary, I sleep well. It is an achievement that we were able to do what we did,” says Nassif.
Achal Paliwal, head of logistics and exports at Honda Car India, also says that the Japanese OEM has proven to be adept at launching vehicles in India. “The pace of launches in India may have surprised the world. Despite India’s geographical size, we launch products simultaneously within a span of three days at our dealerships,” he says.
Planning the launch
A new model launch begins with the approval of a concept from top management, and usually results in a prototype being developed around six months later for secret testing. After studies and subsequent changes, a second lot of cars is produced for dealer displays and customer testing purposes. Finally, once quantities are determined, serial production begins several months in advance of the launch.
“Some trial vehicles are created on the lines that undergo rigorous tests. Only when we are fully satisfied with the quality do we proceed further,” says Randheep Singh Kalsi, executive officer for parts, accessories and logistics at Maruti Suzuki, who has ‘midwifed’ many launches since joining the carmaker in the 1980s. “A broad idea of the volumes is usually decided in the beginning. These approximate numbers help us to arrive at a target cost and also help vendors plan their capacities.”
Kalsi is currently overseeing the launch of the Alto 800 – a new and upgraded version of the entry-level version of Alto. “Model development is usually an extensive exercise and has a lead time of around three or four years,” he says.
Honda’s Paliwal sees new launches, including logistics, as an on-going cycle. “Launches are always part of the sales preparation plan which starts as soon as the introduction of any new model is finalised,” he says. “Be it marketing, sales or logistics preparations, detailed planning by each department is done and reviewed periodically. The logistics planning happens in terms of both capacity and capability. Preparation also includes training for new product handling and awareness programmes just before a new launch.”
Kalpesh Pathak, senior vice-president of corporate supply chain management at Fiat India Automobiles and an ex-General Motors honcho, has also been involved in more than 20 launches. Among his proudest achievements has been to ensure 85% of the components used for one of his launches at Fiat were sourced locally, even though he says that launches with a high proportion of imported components are easier to manage because they have more standard procedures and packaging. “If you believe in a lean management philosophy, you cannot just allow the entry of components in whatever format,” says Pathak. “Routine supply chain design and management for existing models is already etched, but new launches – like new babies – demand 24/7 attention.”
The role of suppliers
Involvement from suppliers and logistics providers in launches is critical, with information on prototypes shared only with a select group of suppliers for their input and preparation. According to Kalsi, carmakers aim to develop the value chain from the earliest stages. “This saves time and OEMs are able to bring new models in a shorter lead time,” he says. “Vendors start working on the parts with their design teams. Jigs, dies and fixtures are created for the parts and assembly.”
Around 230 vendors work for Maruti Suzuki, many of which are involved in concurrent engineering with the carmaker. The vendor’s R&D team works with the Maruti Suzuki team to develop new designs and new material. “Overall, with every new model the effort is to work as a team,” says Kalsi. “For example, in the case of the Alto 800, our headlight vendor Lumax created new lamps with all new material. It reduced the number of parts and made the lamps lighter. “
The role of suppliers and providers in maintaining the secrecy surrounding pre-launch stages is critical to the competitive element of rolling out a new product. This cloak is difficult to uphold considering the number of stakeholders involved in a launch, but this is an important part of an OEM’s relationship with suppliers, according to WWL’s country head in India, Gur-Prasad Kohli.
“All new vehiclesared i spatched to reach the dealers at the same time. This reminds me of the Class 12 exams when all question papers reached the examination centre and were opened at the same time,” he says. “Non-disclosure agreements must be signed at the time of making the vendor agreement. It is a standard practice across the globe. Any lapse may land the vendor out of an alliance to the extent that he is likely to lose business forever with that particular OEM.”
According to Kalsi, it’s necessary to instil the importance of secrecy into an OEM’s entire team and supplier base. “The sense of responsibility and ownership is very high in our teams. Everyone looks forward to a new model. It is an exciting journey and everyone lives through this journey with sincerity. We sensitise our teams and partners about confidentiality,” h e s ays.
Jasjit Sethi, CEO of TCI Supply Chain Solutions, has managed many launch logistics challenges in the automotive sector. At any point, he and his team are usually involved in half a dozen programmes. He points to challenges for outbound logistics in shielding vehicles from public or media viewing. “ There may be temptations, particularly from the media, to snap pictures on the roadside when transporters halt for a short break. We take extra precautions to ensure prevention of any ‘d a m age’ to our customers,” he says.
At Honda, a detailed logistics plan is prepared and shared with local as well as senior management of logistics partners. Crew members and their supervisors are trained at its facility before each and every launch on a list of procedures. “It is a challenging task but these additional efforts pay a lot in return,” says Paliwal.
While it is important to maintain strict control and entry rules in the vicinity of new vehicles, Renault India’s Nassif agrees that legal clauses cannot replace working closely with suppliers and providers to make sure they help protect a launch vehicle’s secrecy. “[Non-disclosure] agreements don’t buy you much. You cannot bind people through contracts,” he says. “We bring our stakeholders on board and give them a sense of responsibility and pride.”
Is the secret safe within Indian logistics?
Honda’s Paliwal believes that maintaining confidentiality is particularly challenging for logistics in India; from official approvals through production, to launch dispatches, to dealership. The red tape, checks and certification that vehicles must move through when being transported across the country also expose the vehicle to those who might leak or reveal design or technological secrets. “In India, transportation of cars to various certifying and regulatory agencies before launch remains a huge challenge in terms of secrecy, being out of a controlled environment,” says Paliwal.
Paliwal, Kohli and others also say that transporting launch and pre-launch vehicles in good condition in India is another challenge, particularly when delivery time is required to be faster than usual to meet promised launched dates. “All the failures of meeting time commitments by production have to be covered by finished vehicle logistics to ensure the vehicle reaches dealers on time for launch,” says WWL’s Kohli. “Secondly, most new car launches coincide with [the New Delhi] Auto Expo or the festive season, when the logistics chain is already stretched out due to regular demand.”
For Maruti Suzuki, there are many challenges in the supply chain and logistics in getting a vehicle launched on time. “Availability of parts before launch is critical for trials and the start of production, since we follow a strict lean inventory management system,” says Kalsi.
Maintaining availability of cars in the retail network after a launch is another challenge that carmakers and logistics providers face. In response, Maruti Suzuki has requested that its fleet operators install GPS in their car carriers. “With over 8,300 GPS-enabled trailers, we are now able to get a real-time update on the movement of our car carriers,” says Kalsi. “With real-time tracking, it’s also easier for our dealers to communicate accurate times of delivery to their customers.”
Kalsi adds that having GPS also helps to track trailers in the case of thefts, as well as to monitor driver behaviour.
According to Fiat’s Pathak, the ever-increasing complexity of the supply chain and a growing number of parts from different locations mean that launches rarely present the same problem twice. Nonetheless, it’s a challenge that supply chain managers agree is worth the pain, as a prototype gives way to launch, which gives way to serial production and substantial flows to dealers and compounds.
For Pathak, it is also the joy of watching the final product on the roads by actual users – not unlike a parent watching his child make its way in the world.