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Moving Auto Components in India: More Complex than You’d Expect

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The new “Make in India” initiative is a major factor in the growing trend to move automotive manufacturing to India. On their way to becoming a preferred destination to source auto components by major OEMs and tier-1 manufacturers, India’s workforce has the knowledge and skills to deliver quality products. As much as those in the auto component industry embrace this opportunity, they still have to navigate through several challenges when manufacturing in India, and one of those challenges is transportation.

All companies face internal challenges to meet the demands and expectations of their customers. However, many of the auto components manufacturers who choose to include India in their supply chain and handle their own shipping face concerns over the current infrastructure across the country. With a large mix of modern paved highways and narrow, unpaved trails, India’s road network is challenging at best when trying to build a consistent, reliable supply chain. Getting parts from inland India locations across this unreliable mix of roads—sometimes congested with copious amounts of traffic—to the port facilities can be difficult and costly. Overcoming all of these challenges is made easier with a professional provider to help along the way.

As transportation and logistics are their primary responsibilities third party logistics providers (3PLs) are often able to achieve more regular transit times, not to mention have the knowledge and skills to optimize inventory carrying costs, and keep freight in check and on schedule despite difficult situations. The level of service gained by the auto manufacturing industry—or any industry—means they can promise high standards of service to their customers.

Every day, I get to help auto manufacturing organizations with their supply chain challenges in India. One company a few years back sticks with me to this day. The company was pretty young, but was growing fast. When we started reviewing their supply chain, we discovered they were moving multiple smaller shipments from multiple facilities to multiple buyers in the United States to meet customer demand. As soon as something was produced, it shipped immediately and from multiple locations, which required them to ship multiple less than container (LCL) shipments every month. But despite shipping as quickly as they were producing, the company often fell behind schedule. Their transit times were unusually long and the cost of shipping LCL all the time was very high. After we studied their shipping patterns, we made two simple but effective changes to how they shipped.

The first change we made as to start consolidating what they produced in a week with products from all their facilities and for multiple buyers. Consolidating into full containers helped immediately reduce the cost of transit over LCL shipping. The second change we implemented wasn’t actually in India at all. We set up a crossdock operation to ship the goods directly to the end buyer. This helped reduce transit time and made tracking shipments easier and clearer. In the long term, that customer has achieved better inventory carrying costs, a reduction in air freight because they no longer fell behind schedule as regularly, and they increased customer confidence as a supplier who can meet and exceed delivery expectations.

As more auto component manufacturers and other industries take advantage of the great opportunities India has to offer, I know that fewer and fewer of the challenges we face today will stand in their way—although I also know new ones will come up too. While what we do sometimes seems simple—after all, we’re just moving things from one part of the world to another—I know that sometimes it’s the innovative, complex solutions that make the real difference.