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    Automotive Supply Chain in India

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    Sriza Ghosh
    The Indian automotive industry has grown since the 1990s economic liberalization, with major global companies arriving and driving domestic companies to adopt supply chain practices. This has greatly increased competitiveness and exports. However, the unique Indian environment poses further challenges to the complex automotive supply chain. Key challenges include a lack of visibility, high attrition rates, and a fragmented supplier base. Solutions require applying advanced supply chain concepts, inclusion of all stakeholders, a global outlook, and government interventions to support infrastructure and skills development.

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    Automotive Supply Chain in India

    Uploaded by

    Sriza Ghosh
    122 views3 pages
    The Indian automotive industry has grown since the 1990s economic liberalization, with major global companies arriving and driving domestic companies to adopt supply chain practices. This has greatly increased competitiveness and exports. However, the unique Indian environment poses further challenges to the complex automotive supply chain. Key challenges include a lack of visibility, high attrition rates, and a fragmented supplier base. Solutions require applying advanced supply chain concepts, inclusion of all stakeholders, a global outlook, and government interventions to support infrastructure and skills development.

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    Supply chain management and practices in India

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    The Indian automotive industry has grown since the 1990s economic liberalization, with major global companies arriving and driving domestic companies to adopt supply chain practices. This has greatly increased competitiveness and exports. However, the unique Indian environment poses further challenges to the complex automotive supply chain. Key challenges include a lack of visibility, high attrition rates, and a fragmented supplier base. Solutions require applying advanced supply chain concepts, inclusion of all stakeholders, a global outlook, and government interventions to support infrastructure and skills development.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    122 views3 pages

    Automotive Supply Chain in India

    Uploaded by

    Sriza Ghosh
    The Indian automotive industry has grown since the 1990s economic liberalization, with major global companies arriving and driving domestic companies to adopt supply chain practices. This has greatly increased competitiveness and exports. However, the unique Indian environment poses further challenges to the complex automotive supply chain. Key challenges include a lack of visibility, high attrition rates, and a fragmented supplier base. Solutions require applying advanced supply chain concepts, inclusion of all stakeholders, a global outlook, and government interventions to support infrastructure and skills development.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Automotive Supply Chain in India

    Submitted By: Sriza Ghosh


    The Indian automotive industry, comprising vehicle and component manufacturers, has
    grown steadily since the economic liberalization of the early 1990’s. The arrival of major
    global auto companies has galvanised the domestic sector into adopting Supply Chain
    practices. This has enhanced competitiveness leading to a quantum growth in exports.
    However, the Indian automotive industry has to operate in an unique environment further
    posing challenges to the already complex automobile supply chain.

    Features of Automatic Supply Chain in India:


     The industry comprises various groups – assemblers, multi-national assemblers,
    Indian component suppliers, multi-national component suppliers.
     Presently, there are more than 30 OEMs offering more than 75 options in all categories
    of vehicles.
     India’s automotive industry is the world’s sixth largest producer of automobiles in
    terms of volume and value and has grown 14.4% in the last decade.
     The industry contributes 7% to India’s GDP, 7-8% of the total employed population
    (about 13 million people), 4% of exports, 39% of FDI inflows (USD 5.5 billion between
    2009-13) and contributes 17% to total indirect taxes collected.
     Overall domestic sales are led by two-wheelers, (77.4% of total sales in 2012-13)
    followed by passenger vehicles (15.1%) and commercial vehicles (4.45).
     India has the best-in-class fuel economy rates as well as affordable total cost of
    ownership.
     The setting up of manufacturing facilities in India by large automakers such as
    Hyundai, Ford, Toyota etc has also ensured rapid establishment and growth of a robust
    auto ancillary/component sector.
     Design, development and simulation capabilities have increased substantially and
    global companies like Bosch, Goetze-Werke and Johnson Control have set up facilities
    in the country.
     The multi-tiered auto component industry presently contributes significantly to the
    overall growth of the automobile Industry and major part of exports go to the Original
    Equipment Manufacturers (OEMs) and Tier I suppliers and only 30% to global
    aftermarkets, indicative of the advancements in this sector.

    Challenges faced by Automotive Supply Chains in India


     The top five global supply chain challenges are – visibility
    cost containment
    risk management
    increasing customer demands
    globalization
     Preference for small cars and two wheelers, lack of visibility at the customer end
    specially in rural markets, packaging complexities due to language and cultural
    diversity, quality challenges due to resource shortcomings, large number of
    fragmented suppliers which impede effective collaborations, complex tariffs and
    duties, lack of infrastructure (off highway transit is difficult) and a multilevel
    distribution system impacting price of products are some of the significant supply
    chain challenges.
     The biggest challenge being integration of end-to-end supply chain followed by
    managing in-bound logistics, proliferation of products and parts. The auto component
    industry , a major contributor to export and growth, is replete with frequent changes
    in costs of raw materials, customer demand for product quality, timely deliveries and
    sourcing of raw materials. Multinational companies entering India face challenges of
    cultural diversities, pricing-income disparities and sourcing.
     Only 50% of the workforce is considered to be of high quality with a high attrition rate
    averaging 40%. Skill development is being undertaken by some Tier-1 auto-
    component manufacturers.

    Solutions to various challenges faced by automobile supply chains


    Some of the lessons learnt from the transformation phase of the Indian automotive
    industry are
    • Application of advanced supply chain concepts in a developing economy and in
    emerging markets.
    • Inclusion of all stakeholders during process of change and transformation.
    • Global outlook. Focus on developing and maintaining overseas markets especially in
    small car, LCVs and auto component sector by adopting a global outlook to supplier
    management, manufacturing, sales, etc.
    • Supply chain practices and product development. This necessitates incorporation of
    ‘Leagile’ practices in automotive supply chains by dynamically positioning the
    decoupling point and also making changes in basic vehicle design based on product
    platform and modular structuring of sub-systems.
    •Matching of demand (variety) of vehicles with assemblies/components supply
    through increased visibility, enhancing service levels, customer relationships and skill
    development are some contemporary imperatives.
    • Government intervention. Governmental interventions, such as a favourable tax
    regime, enhancing R&D capabilities especially related to hybrid car technologies and
    fuel-cell development and infrastructure are necessary to enhance the sector’s
    competitive edge.
    • Supplier networks. There is a need to galvanise the supplier networks, especially in
    the SME sector to adopt global technologies and practices. Sub-contracting should be
    based not only on cost but on capabilities of design, innovation and engineering.
    Websites used for research
    http://www.atkearney.in/automotive/ideas-insights/article/-
    /asset_publisher/LCcgOeS4t85g/content/building-world-class-automotive-supply-chains-in-
    india/10192
    https://www.supplychainbrain.com/articles/17343-indian-automotive-supply-chain-faces-
    challenges
    https://www.supplychainbrain.com/articles/17343-indian-automotive-supply-chain-faces-
    challenges
    http://www.ijaiem.org/volume1Issue2/IJAIEM-2012-10-26-047.pdf
    http://www.leansupplysolutions.com/blog/top-7-challenges-impacting-automotive-supply-
    chain/

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