A per­fect fu­ture for au­to­mo­tive lo­gis­tics

Ac­cord­ing to Kalpesh Pathak, Vice Pres­i­dent, Cor­po­rate SCM, Fiat In­dia Au­to­mo­biles; though the cur­rent trends in au­to­mo­bile in­dus­try are not very en­cour­ag­ing due to var­i­ous eco­nomic fac­tors and medium-to-long term clar­ity on fuel-pric­ing pol­icy, there is

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a t present, ex­cept the two-wheeler in­dus­try, all other sec­tors (pas­sen­ger cars, com­mer­cial ve­hi­cles, etc) are see­ing a neg­a­tive trend. “How­ever, this is not go­ing to be a per­ma­nent phe­nom­e­non, and things are go­ing to change. Look­ing at the per-capita pen­e­tra­tion of pas­sen­ger cars in In­dia, as com­pared to de­vel­oped economies, we are still far be­hind. And even if it im­proves by a few per­cent­age points; in ab­so­lute num­bers, it is go­ing to see a huge growth,” Pathak pointed out.

In his opin­ion, the growth in pas­sen­ger cars’ de­mand and im­prove­ment in other eco­nomic pa­ram­e­ters will drive the growth of com­mer­cial ve­hi­cles as well. “The lo­gis­tics com­pa­nies need to think in­no­va­tively and pro­vide more value-added ser­vice so­lu­tions for cus­tomers,” he ob­served. For ex­am­ple, for trans­porta­tion ser­vices, ser­vice providers have to think about and ma­te­ri­alise mul­ti­modal so­lu­tions. Sim­i­larly, the lo­gis­tics move­ments across the coun­try are go­ing to re­main im­bal­anced and they will have to fig­ure out smart bal­anc­ing so­lu­tions through col­lab­o­ra­tion amongst play­ers in the auto in­dus­try. Fur­ther be­yond, they also need to think about col­lab­o­rat­ing across the in­dus­try to re­duce the turn­around time of as­sets and re­duce ‘va­cant trips’, thereby re­duc­ing the costs.

3PLs for Au­to­mo­tives: Are They Ready?

Pathak be­lieves that 3rd party lo­gis­tics ser­vice providers still have a long way to go in terms of so­lu­tions, ef­fi­cien­cies, costs and re­spon­sive­ness. The pace is slow for such im­prove­ments due to frag­mented ser­vi­ce­providers’ mar­ket. In medium-to-long range, even­tu­ally, it has to con­sol­i­date. How­ever, con­sol­i­da­tion doesn’t mean only merg­ers and ac­qui­si­tions, but it can also mean tac­ti­cal ar­range­ments be­tween ser­vice providers who can work to­gether and off­set their rel­a­tive weak­nesses in the mar­ket. “The process has be­gun, but the pace has to be ex­pe­dited,” he said. The skill gap is­sue is also af­fect­ing the ca­pa­bil­i­ties of ser­vice-providers for pro­vid­ing so­lu­tions, since the op­er­a­tion teams are not able to con­vert the vi­sion of their lead­er­ship into work­able so­lu­tions. This is the most cru­cial area, in which ser­vi­ce­provider lead­er­ships need to start tack­ling by min­imis­ing the skill gap. “There is no doubt when it comes to top lead­er­ship’s com­mit­ment level for cus­tomers, but at the op­er­a­tional level, the in­tent gets di­luted which re­sults into un­war­ranted griev­ances in re­la­tion­ships. Again, this gap can be di­luted once com­pa­nies fo­cus on skill gap min­imis­ing, where cer­tain soft skill is­sues are also ad­dressed,” Pathak main­tained.

Chal­lenges and So­lu­tions

There are sev­eral chal­lenges be­fore the au­to­mo­bile in­dus­try, like the sud­den change in de­mand at a spe­cific vari­ant level. This is due to the lim­i­ta­tion for fore­cast­ing in com­plex mar­ket like In­dia, where a num­ber of bot­tle­necks and in­ci­dents. “Th­ese sit­u­a­tions are not unique, but the dif­fer­ence which can be made is (1) the abil­ity of ser­vice-providers to quickly com­mu­ni­cate such ex­cep­tions to the cus­tomer, (2) the abil­ity of the ser­vice-provider to work with the cus­tomer to quickly put ‘Plan B’ in place and ma­te­ri­alise it, and ( 3) the abil­ity of ser­vice providers and cus­tomer-teams to work as one team, rather than blam­ing or de­fend­ing each other in such sit­u­a­tions,” Pathak sug­gested.

“Also, one is­sue that needs to be ad­dressed from the cus­tomer’s stand­point is that ser­vice provider ap­point­ments have to be made on a medium-term ba­sis (at least 3 years) rather than one year or less than that,” Pathak con­cluded.

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