Excerpts from interview with Kalpesh Pathak, assistant vice-president of supply chain management, Fiat India Automobile    

"At Fiat, most of our inbound cargo comes from nearby regions, and we have Free on Road (FOR) delivery terms. Therefore, we are not doing consolidation and optimisation of inbound movement because of locational advantage. Very few Indian companies – irrespective of verticals they operate in – have this concept of the ‘control tower/room’. 

“Neither Maruti Suzuki nor Honda Cars use this [for inbound] because of the concentration of suppliers in their vicinity, and the FOR formula adopted. In the United States,


manufacturing bases are concentrated and the supplier base is scattered. In India, it is a different story. With regard to imports, Fiat has a division called World Materials Flow (WMF), which tracks movements across the globe. 

“The need for a control tower emanates from an OEM’s location and its supplier footprint. When you have your suppliers within

'shouting distance', the ability to respond to any critical moment is much better. Excessive tracking would therefore be wasteful. On the other hand, during my tenure at General Motors, suppliers were not always in reachable vicinity and hence tracking used to be critical. There we had a service provider keeping a close watch or tracking and updating the movement of materials, to ensure production was not affected at any time. 

“At Fiat, we nevertheless do a lot of data analytics. We have a supplier relationship management (SRM) tool wherein all suppliers are linked to our plant. Whenever a consignment leaves the factory gate of a supplier, this invoice is updated onto our portal and we know, more or less, the exact time of arrival of that consignment at our factory gate. Plus, these consignment-carrying drivers alert us on handsets and mobiles, so there are no surprises.

“More than return on investment, what anyone will examine is the value addition in any tracking system. It does not always make sense for OEMs to invest directly in these mechanisms. Going forward, as the market grows, logistics providers such as 4PLs (fourth party logistics providers) should invest. OEMs, I believe, will not mind shelling out some recurring costs, but certainly not as an investment. This approach will surely help 4PLs, so that the viability of tracking and tracing is addressed positively.