5-7 December 2012
Hyatt Regency Pune
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Quick to grow, slow to change

PUNE 7 DECEMBER 2012: Growth is throwing up some new and unusual challenges for logistics in India, as well as highlighting familiar problems. New challenges include a sharp increase in sales going to rural areas, and OEMs making commitments to many more after-sales service points.The continuing problems include poor infrastructure, weak central government, local corruption and inadequate multi-modal logistics.

Amid recent uncertainty about economic growth there remains confident that, despite not being able to accurately forecast it, India is still on its way to 5 million annual car sales within a handful of years.

That compares with an expected 2.6 million for 2012, and will move the country up to being the world’s third biggest car market, after China and the USA.

Overall, India is “nearing an inflection point” at which its economic growth will increase rapidly, says consultancy Roland Berger. Having started its economic liberalization about 15 years after China, the next 15 years will see “dramatic” reductions in poverty and put India on course to be the world’s third largest economy in terms of purchasing power by 2020. 

These were some of the key takeaways from the 6th annual Automotive Logistics India conference, held in Pune.  The event was characterized by a new level of openness and debate among the 300 delegates, and a genuine wish to move on from recitals of familiar problems to engaging together to solve them.  

Some of the changes going on include the fact that the country’s biggest carmaker, Maruti Suzuki, is currently selling 25% of its volume into rural areas, five times more than five years ago, with the attendant impact on finished vehicle logistics, spare parts and after-sales.

And the country’s biggest commercial vehicle manufacturers, Tata and Ashok Leyland, are committed to having many more service points; Ashok Leyland of some 20,000, while Tata is committed to a service point every 25 km, according to consultancy Roland Berger.

Meanwhile, there is a new mood of collaboration among OEMs. Prem Verma, chief executive of Tata Motors’ TML Distribution, and Ford’s Amlan Bose, vice-president of logistics for Asia Pacific and Africa, revealed they were in close dialogue on working together at their neighbouring factories in Sanand, in the western state of Gujarat.

“We’re waiting for a third OEM to take the place next door to us that was going to be occupied by Peugeot,” said Bose.

“I had a meeting with Prem [Verma] and Ford’s global head of logistics, Steve Harley, and Prem told Steve that we should not compete on trucks and rail wagons, but rather in dealer showrooms.” Peugeot had announced in 2011that it would build its first plant in India in Gujarat, but its financial troubles in Europe subsequently caused it to cancel the plan.

The conference again featured participation from a high level of national government, with a keynote address by Vinita Kumar, senior advisor for transport at the Planning Commission. Only one year into her job, she admitted to needing ‘some level of courage’ to face the expert audience, but told delegates that the government “is very keen to make changes”.

Kumar said that transport-related issues are a focus of the India’s 12th five year plan, which is a year underway. She noted its intention of raising the share of GDP invested in transport from 7% to 10%, which she characterized as a “five lahk crore programme” (50 trillion rupees or $1 trillion).

The conference this year also featured several new voices and themes, and heard that private investment in rail is back on the agenda.

India at a glance

Unit vehicles sales million PA                           2012       2020

Cars  – high          2.6          9.0   
            base          2.6          4.9
Commercial         0.8          1.9
Tractors                 0.6          1.4
2-Wheelers        13.4         25.0

Market presence (cars)

                  2000      2012
OEMs          11          14
Models       19          87
Petrol                   58%
Diesel                  36%
Gas                         6%

Market presence (cars)

                  2000      2012
OEMs          11          14
Models         19          87
Petrol                   58%
Diesel                  36%
Gas                        6%

Road v rail transport – all sectors                        2011        2021

Bn Tonnes     1793        3232
Road                 63%        64%
CAGR                               11%

Rail                    37%       36%
CAGR                                6%

12th five year plan

Total spend        $1,000 bn

Of which Road        12.5%

                   Rail          8%

Overall automotive environment

•    Frequent changes in regulation
•    Highly competitive
•    Close collaboration with suppliers
•    Long term approach to networks/
     ealers need clear business case
•    Invest in after-sales
•    Need experienced Indian professionals

Following years of explosive growth, the Indian market has cooled this year with economic growth of around 5%. Rajiv Bajaj, principal at Roland Berger Strategy Consultants, gave delegates a detailed review of the effect on the auto market, in which he said that car sales should finish at around 2.6m this year, only marginally up from the 2.52m in 2011. This is in sharp contrast to the 29% and 25% year-on-year growth seen in 2011 and 2010 respectively.

Bajaj from Roland Berger Consultants (left) with WWL’s Kohli

The problem with forecasting is the future

The picture for commercial has continued strong, however. Light vehicle sales in 2012 are expected to be up 27% on the previous year at some 460,000 units, said Bajaj, while medium/heavy vehicle sales are forecast to have risen 50% year-on-year to reach almost 350,000.

Meanwhile India’s two-wheeler market, the world’s biggest, has seen cumulative annual growth of 17% since 2008 to reach an expected 13.4 million unit sales in 2012. These are expected to almost double to 25 million per annum by 2017. 

OEM activity means the market has transformed remarkably in just a few short years. In 2000, said Bajaj, 11 carmakers in India launched 19 new models, yet in 2012 there have been no fewer than 87 models from 14 carmakers.   

He presented a wide range of growth forecasts for car sales because of the uncertain picture for national GDP.  They ranged from a pessimistic 8% compound annual growth rateto as much as 17%. In numbers, this gives predicted passenger car sales of some 3.6m units in 2015 and 4.9m in 2020 at the low end, to as many as 5.3m units in 2015 and 9.0m in 2020 at the high end.    

The range means carmakers and their logistics providers face uncertainty over equipment and asset investment. Anand Venkateswaran, general manager of sales logistics at Hyundai India, pointed to the varying forecasts.  “Even SIAM [India’s association of carmakers] has changed its forecast several times within just one year. But we have to keep looking at the big picture, because if logistics and its capacity do not grow, we will not be able to grow.   

Tata’s Prem Verma maintained that it was critical to work in close partnership with logistics providers, particularly at times of uncertainty. “The LSPs need to invest even if we cannot forecast accurately,” he said. “Our providers need to be able to plan.” 

Kumar from the government Planning Commission: ‘over-reliance on road’

Planning Commission faces up to the challenges

Weaknesses in policy that have characterised debate at the previous five Automotive Logistics conferences were frankly acknowledged by Vinita Kumar from the Planning Commission.

She reviewed many well-documented challenges, including an over-reliance on a road network which is itself under-developed, bottlenecks and capacity constraints at ports, a general lack of multimodal transport including under-use of rail, and maze of bureaucracy that makes moving goods cumbersome and costly.

Encouragingly from the point of view of most delegates, she outlined plans to tackle some of the operational issues.

The latest five year plan includes a range of upgrades to rail infrastructure and rolling stock, as well as roadworks and some port developments. The share of the investment anticipated from the private sector is expected to grow substantially from its current levels of around 25%, she said. In general the intention is to have more ‘optimally distributed’ transport with more intermodal and move away from the present excessive reliance on road.

The Planning Commission estimates that for the financial year 2012-13 India will have moved 1,025m tonnes by rail, and nearly twice as much as that by road. Port cargo will have reached 1,032m tonnes, though coastal shipping will have moved only 125m tonnes. In total, rail transport will have accounted for around 30% of freight movement (although it is much lower for automotive), with just a few percentage by water and air. Unfortunately the bias to road transport will get worse in the near future.

Kumar also acknowledged the soft issues. She accepted “the near-absence of an integrated regulatory regime for overseeing tariff-setting, the cost of operations, anti-competitive practices, etc”.  However, her description to delegates of the content of the 12th national plan did not include any reference to tackling these issues.

“In a democratic process like in India, sometimes things just don’t work the way you would like them to,” she noted wryly.

GST is the wolf that will come

Interestingly, the mood among delegates this year about GST has shifted from ‘if’ to ‘when’. “The GST is coming, like the wolf in a fairy tale,” said Tata’s Prem Verma. “The wolf in these stories always comes eventually.”

Delegates know the year-on-year failure to implement the single Goods and Service Tax (GST), which would sweep away tariffs, controls and corruption at the borders between India’s 28 states, is the single biggest regulatory weakness affecting logistics.

Quite aside from the avoidance of cost and delay, a great amount of potential development and, for logistics providers at least, revenue remains locked away because of it.

Volkswagen’s Detlef Kaufold, chief general manager of logistics, gave a specific example, revealing how the carmaker has ambitions to develop its supply chain management in India to global standards, but is held back. Its new logistics concept (NLK) in Europe aims to synchronise the supply chain through a network of group-wide crossdocks, and includes time-scheduled routes and highly defined time slots for deliveries.

While such a sophisticated system would be challenging enough given India’s infrastructure, Kaufold said that GST is a key obstacle. “That’s why I’m disappointed when I hear the government unable to provide timelines for change,” he said. “For Volkswagen, getting the GST ‘in a few years’ just isn’t good enough.”

Roland Berger’s Bajaj summed up: “A critical success factor for logistics in India is to accept the fact that unpredictable regulation changes are the norm here.”In electronic voting, some 51% of delegates said that they believed the government would continue to be the most important player in deciding the future of Indian automotive logistics. Several highlighted reforms as the ‘X’ factor that would help Indian logistics grow into the 2020s and 2030s.

Stepping forward in rail

The under-performance in multimodal logistics in India masks the tremendous growth which the country has seen in its rail freight traffic in the past decade. It took the rail system 50 years up to the year 2000 to grow its annual freight traffic to just under 500 million tonnes, said Kumar, but only a further 10 years to add another 500 million tonnes to reach 970 million carried annually in 2011. 

“Our freight movements have exploded,” she said, and revealed that, at least insofar as the Planning Commission is concerned, rail is to be at the centre of several important projects. They include the development of high density networks along the ‘golden quadrilateral’ stretching between Mumbai in the west, Kolkata in the east, Delhi in the north and Chennai in the south. 

These call for doubling third and fourth lines, creating intermediate block stations and automatic signaling works, yard remodeling, and terminal modernization.  Kumar said that there were currently 124 works identified that required an investment of 14,000 crore ($2.5 billion). 

The Indian Railways has developed a concept plan for a dedicated freight corridor network that would also cover much of the quadrilateral, with double or triple-stack rail cars, maximum train lengths up from 700m to 1500m, and an increase in the average speed of rail from a poor 25km/h to 75 km/h. “Dedicated freight corridors can also explore new areas of traffic like automobiles, road trailers and ro-ro services,” she added. 

While not all of the routes have been officially sanctioned yet, those that have include Delhi-Mumbai, which will stretch 3,000km and be operational by 2017, as well as the corridor between Kolkata and Delhi, and north to Ludhiana. 

 “We have setup manufacturing units with private public partnerships to cater to [the] demand for rolling stock,” she said. 

Finally, there are also plans to build multimodal logistics parks in major commercial regions such as Navi Mumbai, Jaipur, Palanpur, Kanpur and elsewhere. The scope of these parks would include container, ro-ro and automobile terminals, as well as consolidation centres and warehouses, she said.

One of the strongest and most valuable sessions for delegates was a session on ‘The Big Issues’ with active participation from delegates and a panel containing Ford, Hyundai, Toyota, Visteon and TCI Supply Chain Solutions.
 
Ably moderated by Tata’s Prem Verma, who undoubtedly has a career as TV anchorman waiting, the session discarded yet more discussion about the ‘known’, to explore what 2020 could be like for automotive logistics.


We know all that…now what’s the vision for 2020?’
 

As Verma said in introduction: “Rail, we’re there but not there; collaboration, we all want it even if we don’t know how to go about it; GST, is coming; yes to driver shortage, yes to driver training; LSPs, are they here, and are one year contracts right?.  I’ll keep the discussion away from these issues completely and look at the future.”

Among issues debated were green logistics, power efficiency and its rising expense, a zero-fault mindset, JIT and logistics outsourcing. The session was powerful feedback to the government and an excellent conclusion to the first day of the conference.

**Read more on Prem Verma’s views of the future in Finished Vehicle Logistics, the magazine from Automotive Logistics which is dedicated to the outbound sector. Also available via the Apple Store


One LSP steps forward, how many more on the fence?

But while the mood music about rail was certainly welcome, participants at the conference needed to hear about policy changes. Achal Paliwal, head of commercial and logistics for Honda Car India, pointed to hold-ups that have prevented rail from increasing its share of automotive traffic. The government has announced private sector reforms, only to go back on them or to delay them, he said.  He noted the attempts by Adani Logistics to use rail, with some legs using containers over the years. There had also been an attempt by NYK, but neither project is active today.

“Rail is a highly capital intensive investment, and what we’ve seen has been unwilling railways, hesitant LSPs and divided OEMs,” Paliwal said. “Many LSPs are waiting and watching the reforms [before investing].”
 
One of the other stumbling blocks has been the poor design and standards for rail wagons, most of which are old converted passenger wagons. However, in one of the more ambitious projects by a foreign logistics provider in India, APL Logistics has linked with Vascor, a fellow NOL Group company, to build a prototype rail wagon specifically for the Indian market.
 
Bill Villalon, vice-president of automotive for APL, said that the wagon, called AutoLinx, will be a double-decker and have a capacity of around 320 cars, at least a third more than any wagon today, he said. As well as being fully covered, it will have an adjustable middle deck, chocks for quicker securing of cars, lock mechanisms, and a central well section to provide extra height for taller vehicles. The wagon will be able to move passenger cars, light commercial vehicles and two-wheelers.

Villalon said it could be ready for viewing in early 2013. But to be put into service the government must finish its revision of the Automotive Freight Train Operator (AFTO) policy, which would open the way for private companies to operate terminals for automotive rail.

This has still “some ways to go”, said Villalon, “[but] we believe we are close to a revised AFTO, and then we will be open for business. We are encouraged by the private freight terminal development which was revised in April 2012, and we think there will be more terminals available.”

The conference opened with a networking cocktail reception, complete with caricaturist

Is water transport being left adrift?

The geography of India would seem to make sea and inland waterway transport an obvious alternative to over-loaded roads. The Planning Commission’s Vinita Kumar told the conference there were also plans to increase port dredging and encourage more land-side capacity. 

But here too there were concerns over the slow and unpredictable pace of liberalization, and the reform policies needed to bring private investment.  Delegates from shipping lines pointed to port tariffs and bunker taxes which, together with costly customs and taxation policies (including Countervailing Duties (CVD), an anti-subsidy tax on international trade) all make shipping costs considerably higher than other countries. 

According to Gur-Prasad Kohli, country head of India for Wallenius Wilhelmsen Logistics, Indian port costs are about five times more expensive than Singapore. And  “trucking is five times more polluting than shipping and yet it gets a diesel subsidy, while shipping lines pay a bunker tax of 30%,” he noted. 

Once again Kumar could only say that ministries are aware of these issues. “Things are happening, but it will take time,” she said. “The CVD, bunker, over-manning, all of these things are making the shipping industry uneconomical. I can’t say when, but hopefully we will see change soon, hopefully even in the next [annual tax] budget. Let us hope.” 

Such hope is not reassuring.  VW’s Kaufold, noted the impact on India as a production centre. He showed pictures of cars from BMW and Mahindra & Mahindra awaiting export which were covered in coal or grain dust because clean cargo was not handled in different locations to bulk. He explained that VW’s Indian plants compete with its plants in other countries, and that quality is a deciding factor in which locations win volume. 

“Nobody at the ports or the government seems to care right now,” he said. Detlef has worked previously for VW Brazil and told delegates he saw many comparisons, including a lack of willingness by governments to develop the necessary port facilities.

Road cannot be forgotten…

For all the talk of multi-modal, Vinita Kumar made it clear that road transport, which carries the majority of the country’s freight and up to 97% of automotive traffic, will receive substantial investment. Indeed, a live electronic survey of the delegates showed that the biggest proportion, 38%, called for the government to invest the most in road transport, compared to 30% who wanted to prioritise rail. 

“The idea is to shift more focus to rail transport, but that doesn’t mean that road transport will diminish. It will just be more optimally distributed,” Kumar said. 

India’s current National Highway network makes up only 2% of all roads but carries around 40% of road-based traffic. Only about 23% of it has four lanes, while the same 23% has just a single lane. 

Meanwhile, state highways and major district roads which make up 13% of the road network carry another 40% of traffic. In total, 80% of India’s traffic moves on 15% of roads. 

Trucking is also woefully inefficient and fragmented, with a low fuel efficiency and low utilisation. According to Honda’s Paliwal, the average truck in India moves just 250-400km per day, compared to 700-800km in most other countries. 

Kumar pointed to substantial efforts to increase public-private partnerships for road developments, including a concessionaire agreement system which is seeing about 16% of current road construction being built through private-public partnerships. There are also plans to build more truck terminals. 

The government is also looking to electronic toll collection, with three current trial projects and the intention that National Highways are covered by 2014.

…but it’s not enough

But the pace of improvement in the roads is far too slow.  Honda’s Paliwal noted that the 4% annual growth in the road network is less than half the 9% growth of the logistics sector. 

Jasjit Sethi, chief executive of TCI Supply Chain, one of India’s largest logistics companies, added: “We are building infrastructure to meet the problems of the past rather than the future. With the projected growth, the ‘golden quadrilateral’ will soon only be able to fit trucks across moving bumper to bumper.”

Advanced supply chain management

Though they are held back by physical infrastructure, India’s carmakers have made significant progress in managing their supply chains and implementing advanced IT systems. 

Among the most notable examples at the conference came from Shailesh Harsora, deputy general manager of e-demand chain management (eDCM) for Mahindra and Mahindra.

The OEM has been focused for several years on shortening its order-to-delivery lead times and providing more visibility, both within its own organisation and to customers, said Harsora. The core mission of eDCM is that when a customer walks into a dealership, the dealer must be able to either offer him the vehicle of his choice, or else give him a firm date of delivery.

An SAP system is used to allocate production dates to dealers based on vehicles in stock and the order pipeline. Mahindra has also switched from weekly to daily production planning, and implemented a new stock buffer management system that helps it better manage what is n stock or in the order pipeline. The system identifies when production of a particular vehicle may need to be brought forward.

Mahindra has rolled out an online tracking system for its customers, which Harsora called the first of its kind. Buyers receive emails and text messages when orders are created, when delivery dates are confirmed, and when vehicles are billed from the plant and reach the dealership.Thanks in part to these changes, Harsora said that the carmaker has reduced its order-to-receipt time by 25%, while also improving its ability to meet committed delivery dates by 30%. Most variations to delivery times tend to occur during final distribution, he said, since manufacturing adherence to the committed date is now better than 95%.

Hidden costs in outbound

Some of the costs which are real but are not being effectively measured were identified by WWL’s Gur-Prasad Kohli in a break-out session of the conference dedicated to the outbound supply chain. 

He instanced yard management as an area of weakness, with vehicles spilling out into “gardens” and open areas, and IT systems which were not able to provide effective parking or retrieval. 

In-plant vehicle logistics is not even being measured, he said, and the real costs of damage and re-work are generally not known. WWL handles Renault and Caterpillar vehicles. 

The session also heard from GM’s Piyush Bharatiya, general manager of logistics, and from Nidhish Kuchal, deputy general manger of outbound logistics, for Mahindra. Kuchal made a powerful call for quality and highlighted that 80% of trucks are more than five years old.

Potential for world class packaging

By contrast, an area where India could slowly be on the way to considerable improvement seems to be in returnable packaging and container pooling. Tom Gorman, chief executive of Brambles, the parent company of packaging specialist Chep, told delegates that customers in India include Maruti Suzuki, Mahindra and Mahindra, Delphi and Tata.

Regional production hubs with fairly equal production volumes give the Indian automotive industry an opportunity to adopting standards and packaging loops that could greatly improve efficiency and reduce cost, he said.
 
“India has the opportunity…that the rest of the world could learn from,” said Gorman. “I would strongly advise to do it now rather than to wait.”
 
Several trends are aiding the use of returnable containers, he said, including increasing vertical integration whereby tier suppliers are doing more sub-assembly for OEMs, and therefore increasing the parts flows from their own supplier base.
 
He also pointed to global vehicle platforms, and the use of modular components from different regions, which is driving demand for returnable packaging loops over long distances. Chep has developed its new Icocube packaging product to maximise utilisation of sea containers, said Gorman. It has a ratio of nine collapsible containers fitting into one for return loops.

The human factor:  drivers and beyond

No Automotive Logistics India conference can be complete without full attention being paid to the importance of training and development of employees – in particular, truck drivers. They suffer from low wages, poor working conditions and often a lack of basic rest and hygiene facilities during journeys. A large number suffer from what Sunil ChaturvedI, chief executive of India’s Automotive Skills and Development Council (ASDC), characterized as “grossly inadequate training”.

“Having a license in India is not a sign on its own that you are a good driver,” he said.

Chaturvedi of the Automotive Skills Council: ‘teaching drivers life skills’

It’s also a job that can take a significant human toll. Maruti Suzuki’s Mahesh Rajoria, general manager of its driver training programme, pointed out that deaths and accident rates are high, while HIV rates from prostitution are rising among drivers.
 
There is also a supply issue. India currently has a truck driver pool of about 3 million said Rajoria, while demand is set to increase to 5 million by 2015. The sector is already struggling to recruit or retain drivers, and a shocking 10% of trucks in India stand empty for lack of drivers.
 
In response to this challenge, Maruti Suzuki has been building a significant network of driving schools for commercial vehicle drivers (about 10% of the capacity is also offered to public driver training). The company has around 225 schools already, and has six larger facilities that include test tracks, health facilities, training centres and recreation facilities to help train current and potential drivers, including those in Delhi, Haryana and Gujarat. In total, Rajoria said, Maruti is training around 100,000 drivers each year, some 80% of whom are novices.

ASDC’s Chaturved revealed that it has assembled an expert council that includes Maruti Suzuki, Ashok Leyland, Tata, Mahindra and  Mahindra and Toyota which, together with the association, has developed training and retraining courses that Chaturved said could handle 500,000 drivers per year. He stressed that driver training needed to encompass issues like road rage, HIV risks, and what he called ‘life skills’ and ‘team skills’. 

Jitendra Goyal, deputy general manager of production control and logistics at Toyota India, pointed out that schools alone are not enough, and emphasised that the sector needs a change in mindset. “We as OEMs bring the drivers to our plants, and then when we are not ready to release a vehicle, we force them to wait three days until we are ready, without providing any facilities,” he said. “We don’t act as though we care about the drivers’ well-being.” 

The practical barrier to investing in drivers is that customers are not willing to pay more.  Mathieu Renard-Biron, Asia-Pacific regional vice-president for Geodis, gave a frank assessment of the driver, and indeed general, labour issue when he said: “If I go to my customer for a fuel-cost adjustment, he will understand and agree to pay it. But he will not accept a labour-cost adjustment,” despite the fact that employment costs have risen 30% in two years, he said. 

Discussion of human factors also included the development and retention of managers. Jens Möller, senior vice-president of automotive, and Hariharan Sivaprakasam, director of control logistics, explained how this is critical as UTi tries to enforce its global processes and standards with a global team in the automotive vertical. They gave the example of feeding VW’s just-in-time, just-in-sequence parts for its plant in Pune, with the use of a scorecard on key performance indicators which is the same as that used in Germany, South Africa and elsewhere. The system also includes rewards meant to motivate employees. 

Toyota’s Goyal pointed out that logistics should be seen as engineering, and so should receive the same level of education and specification. “We have to start thinking about logistics right in the beginning, when we’re building a plant or designing a part,” he said. “I hope that in future we will have more schools covering this kind of engineering.”

So where does all this leave India’s automotive logistics?

The heading on this report of the 2012 Automotive Logistics conference is ‘Quick to grow, slow to change’.  It is well-recognised that its scale and cultural complexity make India, at local level, more like a series of countries than a single nation and government. 

And patience remains the biggest virtue needed in operating there. As the market continues to grow towards being one of the world’s largest, OEMs and their automotive logistics management and suppliers have to apply plenty of such patience. 

At the 2012 conference there was, however, also a discernable air of impatience for more rapid progress. 

Ford’s Amlan Bose instanced it. “We don’t need to prophesy,” he said. “Multi-modal is the basic answer. In mature markets, it happens, so we should be able to copy them.”  BP Shiv of tier supplier Plastic Omnium had a similar frustration: “India does understand the need for supply chain management, not just transport management.” 

So it’s about execution. The conference session on managing a global network of suppliers had one delegate contradicting the general complains about customs. “Get the information correct, get the freight handler properly informed, get your paperwork right, and customs is not a problem.”   

Another session, on finished vehicle logistics, saw a lively discussion between Hyundai and Toyota about whether, faced with a physical or petty regulation barrier to moving a road transporter, the answer should be to take a long detour at extra cost, or take the risk of not being insured while unloading and later reloading on other side of the barrier. 

So bureaucratic challenges too can be overcome. 

Perhaps the neatest analysis came from Roland Berger consultant Rajiv Bajaj. “India,” he said, “is a disturbed surface on a calm sea.”   

The sea does seem to be moving calmly towards increasing success.

Down to work on packaging: one of the intensive round table sessions which finished the conference


IT case study:  Hyundai at Chennai  

An example of implementing a new automated storage and sequencing system was presented to delegates by Hyundai India’s AG Nanda Kumar, who heads the company’s production planning and control.
 
Hyundai is second to Maruti Suzuki as the biggest producer in India, with output from its factory in Chennai of 610,000 units per annum, comprising nine different models having more than1,000 specifications.
 
The supply chain is about 80% localized, with some 120 tier suppliers providing more than 25,000 components. The balance are delivered from suppliers in South Korea, China and Japan. Cars produced in India are exported to 116 countries.
To manage the global supply chain, Hyundai has its own container yard with capacity for 576 containers, and a warehouse with capacity for 10,400 cases. According to Kumar, Hyundai receives about 250 containers per week, and manages with 30 days of inventory counting the material in transit to the factory.

To improve its capacity utlitisation and better manage inventory, Hyundai has been focusing on improving IT systems and integration across the plant’s CKD warehouse, container yard, intermediate storage and the production line. For example, the carmaker has recently implemented a new warehouse management system which has improved response time by 70%, according to Nanda Kumar.
 
Hyundai has also introduced more automated processes, including a sequencing and parts feeding system. “This system has made us…less labour dependent,” he said.
 
Also in the warehouse, Hyundai has introduced several new racking and storage systems to increase capacity. It imported a vertical, automated storage system from its parent in South Korea, and designed further storage systems in-house.

The conference again featured participation from a high level of national government, with a keynote address by Vinita Kumar, senior advisor for transport at the Planning Commission. Only one year into her job, she admitted to needing ‘some level of courage’ to face the expert audience, but told delegates that the government “is very keen to make changes”. 

Kumar said that transport-related issues are a focus of the India’s 12th five year plan, which is a year underway. She noted its intention of raising the share of GDP invested in transport from 7% to 10%, which she characterized as a “five lahk crore programme” (50 trillion rupees or $1 trillion). 

The conference this year also featured several new voices and themes, and heard that private investment in rail is back on the agenda.