Facing further declines and difficulties, OEM executives talk about their plans to survive the ongoing Brazilian storm
For the Brazilian automotive industry, 2015 has been bad, and next year is expected to be even worse. However, despite the sharp declines and pessimism, executives are optimistic that things will eventually get better. Until this happens, OEMs, suppliers and LSPs are reorganising themselves, trying to save money, and putting plans in place to survive the storm. In the final session at Automotive Logistics South America 2015, OEM executives discussed both high level topics, including changes, collaboration, and creativity, along with more specific details, including the conundrum between price versus cost cutting, outsourcing to LSPs in a difficult market, and how the network in South America is often bigger than just Brazil.
The panel featured (left to right): Neuton Karassawa, logistics director, General Motors; Antonio Taranto, customer service operations director, South America, Ford; Fabio Castello, vice president logistics, Scania Latin America; and Orlando Moral, operations director, Chery Brasil.
…on the potential for collaboration
Karassawa, General Motors: In Brazil we have Anfavea (the Brazilian OEM association), which facilitates discussion between OEMs. Carmakers can discuss things of common interest such as container transportation: there are currently limitations for 40ft containers and we have to pay 11,000Real to move a load like that. That’s just an example, but the group allows us many opportunities, and adds value to the whole market. In a challenging market we need to be more creative, and we need to encourage other practices such as that.
Taranto, Ford: We collaborate on the distribution of parts and how these parts arrive at our clients. We have great partnerships in Anfavea, where we deal with subjects that are in the interests of everyone. We do have room for improvement though.
We are currently launching a new distribution centre with Penske in Gravati, in the south of Brazil, where GM also has a plant. Could we work together? Also, we need to think outside the box. Ford has 550 distributors spread over Brazil, and we have four distribution centres. Why not use some of our distributors as distribution centres to get closer to the market?
Castello, Scania: What Neuton Karassawa said it extremely important as it refers to legal aspects, regulatory aspects, and national standards. Anfavea has an important role and joins together the interests of all OEMs, and clearly shows what the gains would be for OEMs in facilitating some standards.
When we talk about collaboration in logistics flows I’m a bit more skeptical. OEMs have methods that are quite different, and internal standards that are different. Logistics operators can identify possibilities and bring them to OEMs, if that translates into savings for both parties. At Scania, we talk about collaborating, and many times there are gains within OEMs, such as connecting inbound with outbound, and planning transportation – you can find many opportunities in-house. The synergies are there. It doesn’t have to be complicated. You just need initiative and to connect the flows within companies.
Moral, Chery: I agree with my colleagues. There are a number of regulations and rules that we have in Brazil and sometimes they get in the way and don’t make sense. Synergies on routes can work: we were talking about an OEM that made an agreement to take back some parts of another OEM. There is a lot of room for improvement within organisations themselves. Logistics could bring savings, and logistics can show companies that they are making money for them. You can make more money with logistics than several products in Brazil.
Castello, Scania: The fact of being here for me is already collaboration. The ideas that come up at the coffee breaks, or the think tanks, or the presentations by OEMs or LSPs are enough to create new ideas and new products. These initiatives, like others that happen in our country, are worthy of attention. The exchange of ideas is good, even though we have companies here that are competitors. The Brazilian manufacturing industry should be more competitive.
…on saving costs versus cutting prices and rates and logistics providers
Taranto, Ford: We’ve gone through about 10-13 crises in the market. What we’re sure of is that this will recover, but we might also be sure that it will drop again. We have to have a partner that’s very reliable and a partner that works with transparency and a long-term partnership. It’s difficult to find a win-win today, it’s currently who loses less. The opportunity in the future is that we’ll be able to recover. As for transparency, that’s fundamental.
…on the flexibility of LSPs
Taranto, Ford: What makes me happy when talking about the market is the creativity of the Brazilian people and companies. I believe a lot in creativity: we are flexible, we are quick. We can’t lose the people that have developed. If you are able to retain talent, and be prepared, the acceleration of recovery is much quicker. This makes me happy. It’s the flexibility, and aggressiveness throughout all segments that makes me happy.
…on outsourcing and the relationship between OEMs and LSPs
…on working across markets in South America
Taranto, Ford: We have operations in all of South America, and we benefit from having global products that share the same parts. That means products produced and sold in Brazil, are then imported to Argentina and have the same number of parts. I am able to balance security stock throughout the whole of Latin America.
…on hopes for improvements from LSPs in 2016
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