Had the Japanese not invented just-in-time (JIT) and zero-inventory concepts, life would be much simpler. Manufacturers would be stocking a few months’ requirements at their factory premises or nearby warehouses to feed their assembly lines as and when needed. Few would have developed lines on their foreheads worrying about how quickly their supplies would reach factory gates and move to assembly lines without production disruption. Nor would supply chain visibility be so vital.
However, such system processes have spread the world over, including to India. Supply chain visibility has become one of manufacturings’ most important support functions. Gartner analysts Christian Titze and Tim Payne point out in a recent report that since many companies have heavily outsourced their supply chains, they must work more closely with suppliers to maintain visibility. “Because of the need for collaboration and co-ordination to reduce risk and maintain efficiency across extended networks, end-to-end visibility is critical to complex global supply chain success; technology solutions can help to enhance multi-enterprise, multi-tier collaboration and visibility,” they wrote.
Some companies have taken to military tactics to control their supply chains, setting up ‘control towers’ that monitor flows. In India, such an approach has attracted less interest, partly because of supply base locations and delivery terms. Fiat India Automobile’s Kalpesh Pathak, assistant vice-president for supply chain management, does not see a need for control towers because the supply base is concentrated close to plants, and because carmakers procure logistics on delivery terms that leave transport to suppliers. “Therefore, we are not doing consolidation and optimisation of inbound movement because of locational advantage,” he says. “Very few Indian companies – irrespective of verticals they operate in – have this concept of the ‘control tower/room’.” (Read more here)
However, OEMs have shown a desire to gain more control over their logistics operations to avoid disruptions. Hyundai Motors India together with Glovis, its logistics subsidiary, are among the most serious about visibility. Glovis built a ‘control room’ to monitor inbound and outbound flows for Indian cargo movement and global component exports. It’s part of improving what Glovis India managing director Min Joo calls “customer delight” (Read more here).
While the dynamics of the inbound supply chain may not require control rooms for all OEMs in India, there is a rising interest in a variety of tracking tools, including for outbound logistics. “For outbound, 100% carriers are now fitted with GPS/GPRS tracking devices,” says Achal Paliwal, head of logistics and exports at Honda Cars India. “This information is integrated to Honda’s in-house logistics management system, wherein information is visible online to all stakeholders. As inbound is vendor managed, such information is available on demand, but not integrated into any platform.
Although Honda, which implemented its outbound control tower-type operation three years ago, would prefer to have information in real time, Paliwal says that the first step has been to have updates at pre-determined intervals, as there are integration problems with multi-supplier tracking systems.
Moving from tracking flows in silos towards integrating them into a single entity has been difficult, admits Paliwal. However, the efforts were worth it because of the impact on provider performance, reduction in queries and response time as well as having more reliable information. It all adds up to better customer satisfaction. “It is a first step toward automation,” says Paliwal. “Our final goal is to integrate info feed from all LSPs on a real-time basis.”
India’s largest carmaker, Maruti Suzuki, also tracks its outbound movement through several tools provided by IT specialists Trimble Transport & Logistics and Efkon. US-based Trimble, which has been in India for more than three years, uses on-board and celluar technology to provide both GPS tracking as well as control and monitoring, according to Ravindran Natarajan, head of business development for Trimble’s South Asia region (SAARC). The company currently serves Maruti Suzuki, Hyundai Glovis and Hero Motocorp, and is also used by carriers themselves, such as Agarwal Packers & Movers, which has a fleet of nearly 1,000 trucks.
Efkon India, a Subsidiary of Efkon AG in Austria, also offers value-added tracking services to Maruti Suzuki in a large way, as well as factory-fitted GPS for Mahindra, Daimler and Volvo Eicher. “Maruti did not sign us up just for tracking, but for the value-add we proposed through eLSS (Efkon Logistics Support System),” says Anshuman Roy, chief operating officer at Efkon India, citing reductions in road damage, better fleet utilisation and better on-time delivery as important results. "Cost matters but that is not all."
Indeed, a GPS-tracking system on its own is not a cure-all, not least because it is not always relieable. “On the outbound side for Fiat, GPS roll-out is currently about for 65% among carriers,” says Pathak. “It’s possible that vehicles are GPS-fitted, but the system doesn’t work.”
Bangalore-based promoter-director of ATIC Data Systems Satish Ranjit sees a bright future for tracking services in the Indian automotive sphere. “Tell me, why should Maruti invest in Trimble? It is not just monitoring locations online and google mapping,” he says. “A tremendous amount of value addition happens when the data captured, analysed and integrated with the ERP platforms.”
Others agree that the volume and complexity in the supply chain require more automated processes for tracking. “How can you manage, manually, hundreds of vehicles that ferry components, sub-assemblies and finished goods every day?” asks G Sudhir, chief operating officer of Goods Mover Technologies, which services several car carriers. “Don’t forget the psyche and illiteracy of truck drivers on whom the entire automotive industry depends either. Not having tracking is equal to committing suicide,” adds Sudhir.
Sanjiv Tripathi, chief operating officer of Mercurio Pallia Logistics, which uses Efkon for Maruti Suzuki outbound tracking and Goods Mover Technologies for non-Maruti clients, agrees that automated tracking is a must. “Manually managing 700 fleets constantly is humanly impossible. Besides assisting OEMs in tracking deliveries to dealer points, the data captured helps improved fleet management at our end,” he says.
"Cloud-based solutions have not surfaced even globally...users in one vertical are concerned about information leaks to competition and the level of customisation sought by each user" - Ravindran Natarajan, Trimble
Murali Thandavamurthy, country head for Swiss software provider U-Blox, sees a huge upside in the tracking and tracing mechanisms business, which he estimates will be worth $100m in India by 2018. However, he sees issues in the market, such as a lack of commitment on timeliness, poor pricing and a lack of expertise.
Others also think the market offerings in India are currently insufficient. Mukesh Haritash, joint managing director of Chetak Logistics, which has a fleet of 2,500 and a number of warehouses across manufacturing hubs, says track and trace is nightmarish. “We were not satisfied with their services in terms of getting the data points captured in the shortest possible time. Moreover, none of them were able to promise 100% capture and accuracy of positioning,” he says. In response his company has developed its own system.
Beside specific tracking systems and approaches, automotive logistics in India is still in need of improvements in automated communication, such as EDI. Likewise, the markets for cloud computing and RFID seem to be fledgling, at best.
Electronic and automated data sharing via EDI and B2B protocols are in vogue but lack standardisation in India, confess both carmakers and service providers.
“It is a challenge to communicate across supply chains using EDI and B2B protocols across India, as there are no standards followed in this industry, nor by different state governments, nor by customers,” says Shinde. “Almost every EDI has to be customised.”
For Fiat, automated communication works well for import and export cargo. The OEM is also using a tool for suppliers that works reasonably well. “However, standardisation of all these EDI and B2B protcols needs to be looked at. Accessibility is not an issue. Willingness and rolling out are key challenges,” says Pathak.
According to Ceva Logistics’ Venu Nair, director of information systems for India, the country has traditionally relied on paper-based transactions, which he thinks will change as companies shift toward adopting web-based applications. “In keeping with our company’s policy of real-time connect with business partners, we use a communication platform called Ceva Matrix Connect to connect our business partners with the Ceva IT world,” he says.
Logistics isn’t yet walking on the cloud
Opinions also differ over cloud-based platforms, but many share concerns over their data integrity and security. “In this domain, cloud-based solutions have not surfaced even globally,” says Natarajan. “This could be because users in one vertical are concerned about information leaks to competition and the level of customisation sought by each user.”
“Owning software is preferred over outsourcing. This mindset has to change for cloud to succeed,” says Atul Kaushal, chairman of Bangalore-based Oriento Solutions.
“We are not able to take advantage of cloud-based technology or platforms because the industry is so fragmented,” says Fiat’s Pathak. “Everyone uses their own software or solution packages, but there is a need for standardisation through collaboration among OEMs and suppliers to take advantage of technology. This is where I see the possibility of a 4PL stepping in.”
On the other hand, Vinay Prasad, director of product management and marketing for Telematics 4U, a Bangalore-based company that provides backend support for Goods Mover Technologies, is full of praise for a cloud platform. “We have built solutions for Mahindra Logistics’ interplant movements. The beauty is, this is integrated with customer’s ERP systems,” he says. “We offer total supply chain visibility”.
"We have built solutions for Mahindra Logistics’ interplant movements. The beauty is, this is integrated with customer’s ERP systems. We offer total supply chain visibility" - Vinay Prasad, Telematics 4U
Getting the most out of barcodes
The growth of RFID technology, meanwhile, appears to have been stunted because of its prohibitive cost, with barcodes still the preferred choice. Kaushal believes that India’s automotive volumes don’t yet justify the use of RFID.
Ceva’s Nair, points to applications outside the supply chain, including employee identification, retail outlets and asset tracking. He believes RFID will eventually be used more in areas like inventory control, yard management and vehicle tracking. “With further development in technology yielding better memory capacities, faster processing times and longer reading ranges, RFID has the potential to become a lot more widely adopted across the industry,” he says.
Pathak says cost is still prohibitive for Fiat, although it has commenced the use of RFID in small doses for tracking and tracing at plant level. He believes the industry has not fully made the best use of barcode technology, let alone RFID. “Before exploring RFID, we need to leverage the untapped potential of barcode,” he says. “Maybe this competition with barcode will help give RFID adequate time to adjust its pricing point to the 'comfortable levels’ of auto OEMs.”
Who is willing to pay?
The main issues when improving any tracking system are cost and return on investment. There are many differences in opinion when it comes to how willing carmakers in India are to pay for such services. “Nothing is free and what is being offered is not a cheap Chinese box, but a solutions package,” says ATIC Data Systems’s Ranjit. “Once the client is convinced of deliverables, pricing is not a challenge.”
Others believe that manufacturers are still in a learning phase. Telematics 4U’s Prasad says that some OEMs have been burned by previous systems. “Hence the hesitancy [to invest],” he says.
Natarajan at Trimble points out that most buyers in India want an oxymoron: a solution that is “cheap and the best”. However, he believes there is appreciation for technological superiority, which results in better pricing.
Oriento’s Kaushal agrees that pricing depends on getting management to understand the value of data integration. Meanwhile, Bhavesh Solanki, handing international business development at Mumbai-based Softlink Global, a cloud-based provider, says clients are ready to invest in technology when they understand the benefits to resource utilisation.
Pricing is also impacted by the multiplicity of software players on the market. A basic vehicle tracking system is not a high-end technology anymore, so the barriers to entry are relatively low. However, not all players understand the complexity of the logistics business.
“Indian brainpower is tremendous and so providing tracking software is easy. Anyone can start. But is that all? What most of the suppliers lack is domain expertise to build a business solution, scalability and understanding of service support need. Otherwise, there are hundreds of GPS box sellers who are keen in dumping cheap GPS hardware on OEM’s laps” says Efkon’s Roy.
Kaushal says that some players are undercutting the market. “The unfortunate part is that these wannabes try to finance their working capital and in the bargain, drop prices steeply, thus creating an impression that other genuine and better players are overpricing,” he says.
“This industry has a revolving door with many entrants and quitters almost every month,” adds Natarajan.