Tuesday, January 21, 2014

Recent supply chain advancements in Indian Automotive Industry

Various automotive manufacturers and logistics providers in India are striving to develop their supply chains at every level by investing more in the country. Maruti Suzuki, the market leader for passenger vehicles, is moving towards ‘hub-and-spoke’ distribution models for vehicle and spare parts. The hub and spoke model is a system which makes transportation much more efficient by simplifying a network of routes. It is extensively used in commercial aviation for both passengers and freight and the model has been adopted in the technology sector as well.

Maruti Suzuki is also building regional vehicle and parts distribution centers. Building up various distribution centers will help reduce the lead time from days to hours. They are also planning a new factory in Gujarat and are increasing their infrastructure for outbound vehicles and for spare parts distribution. These steps will help them integrate the supply chain which is essential to meet customer requirements and fulfill demand in the market.

Global Car Maker Networks: To manage the increasing complexity of global products in India, other car makers like Ford are strengthening their logistics operations. Ford is planning to implement a large suite of systems for inventory and transport management, which will integrate forecasting, order, inventory and transport management across their suppliers and destination points in India. Many processes like the bill of distribution and routing are getting automated soon. Ford’s supply chain operations in India have been transformed by the sale and production of global models that are also built in other regions, the production and distribution scene has improved especially after they built the "Ecosport" in Chennai which is the auto hub due to various reasons including its strategic location at a port. Chennai has emerged as “Detroit of India” due to the large development of auto industries there.

                                                   Ford’s Maraimalai plant near Chennai

Another automotive giant who is striving to make India a leader in automotive logistics, Mahindra & Mahindra, has been a leader in supply chain management innovation in India. They have been working on a project to further integrate their inbound supply chain, which would help them meet their promised delivery dates to dealers and end-customers right from the order stage of vehicles. India has the strategic location advantage and all OEMs(Original Equipment Manufacturer) desire India to be a hub for global car production because it is located at the center of several developing countries and car makers are realizing that it is cheaper than China in several areas of production. So India’s strategy right now should be increasing the export volumes by employing these effective supply chain methodologies. Transport and routing should be focused upon thereby carrying less inventory as they better integrate the supply chain.

Delivery and Logistics :  Toyota came up with a supplier development programme to maintain their 100% delivery rate. This involves issuing each supplier a scorecard with red, yellow or green to indicate whether performance is good or to identify if there are potential issues. Where suppliers score a ‘red’ warning, Toyota sends it teams to help correct the issues. The car maker’s expectations for quality in manufacturing as well as logistics are very high.

Strengthening the supply chain: To strengthen the Indian automotive industry, supply chains need to be flexible or proactive rather than being historic. The industry need not to be held back by its legacy processes. Reducing outbound supply chain costs with the nationalization of depots and inventories, the use of more hub and spoke distribution and multimodal logistics will improve supply chain and logistics of Indian automotive industry to a great extent.



  1. Great article. Supply chain management services from Global4PL definitely helps businesses in generating substantial supply chain cost savings, penetrating new regional markets, optimize their supply chain delivery models etc.

  2. Thanks for reading John! Yes, global strategies are very useful in improving supply chain and to make the delivery faster.


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