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

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.