Automotive manufacturers and choice of their better half, 3PL service Providers
Manufacturing in Automotive sector in India is growing rapidly and the time is just ripe for third party logistics providers to integrate their logistics operations both inbound and outbound into the supply chain of the automotive manufacturing companies to create a win-win situation for both the parties to maximise their ROI through cost optimizations and improvement in service levels to their customers and dealers. Consolidations of strengths in the Logistics arena in India
Manufacturers in India are faced now with the new opportunity to outsource their Transporation and warehousing operations end to end to the new emerging strong third party logistics providers .My advice to Indian Automotive Manufacturers is that Third Party LSPs ( Logistics Service Providers ) can play a very vital role in running your Inbound and Outbound Logistics Operations and can prove to be your life line. Call them your partner or your Better Half , choose them judiciously to make it a long lasting and fruitful partnership. Globally such strong relationships have helped Companies like Toyota, Ford, Chrysler and many more with their 3 PL partners like DHL, Ryder , Schneider Logistics , GEFCO and VASCOR ltd etc evolve cost optimizations in their inbound and outbound logistics increasing their profits and customers/dealers’ delight .
The stage for tying the knot for Automotive manufacturers with 3PL service providers is already set in India as Currently, around 30 multinational automobile majors have a presence in India, including international luxury automobile manufacturers such as Bentley, Porsche, Ferrari, Aston Martin, and Harley Davidson. Time is now ripe for Automotive manufacturers to outsource both of the functions of transportation and warehousing to their 3PL service providers including setting up cross-dock, stockyards or Logistics optimization centres coupled with value added services and a seamless integrated logistics network with end to end logistics solutions. Due to global cut throat competition, Automotive manufacturers in India
Further consider the following facts.
· Logistics in Automotive industry is the most important function after product development as there is a significant volume of goods movement, both inbound (components and material sourcing) and outbound (vehicles distribution).
· On the inbound side, 3PL service providers ensure timely delivery of materials in the required quantities to meet daily production schedules and can play a major role in your order processing.
· On the outbound side, they play a significant role in satisfying Automobile dealers as last mile activity by ensuring timely consignment delivery to automobile dealers increasing responsiveness to Dealers providing them a safe and reliable service. They also play value added logistics functions such as packing, labelling , quality checking and pre-inspection activities.
Having established now the need to outsource your transportation and warehousing functions let us see what could be the criteria to choose 3PL partners who are reliable, secured and affordable.
1. Scalability
Choose a partner for your scalable operations. You should study their capabilities for technology up-gradations and their expansions plans for both inbound and outbound Logistics. A thumb rule is to at least consider a 5 year ahead scenario.
2. Customization and Flexibility
3PL providers should be flexible in accommodating your emergency and contingency requirements. Study their back-up plans including manpower, routes and network resources. Look at their customer reference list where they have customized their operations for large Automotive Corporate. Find out whether he can continuously get involved in for continued process improvements that control costs and ensure ongoing efficiency. See how much you can leverage resources of a 3PL saving your investments and improve your service level. The Mantra in outsourcing is : focus on your core competence and reap the benefits of third party infrastructure by outsourcing to parties who have specialized expertise and experience in these areas.
3. Resource strength in terms of his manpower and network resources.
Study the strength and weakness of your 3PL partner ranging from his network strength, his manpower resources in terms of their motivation level. Look into 3PL’S personnel and their professional development programs. Remember that in a service segment in which Logistics providers operate, 4 Ps unlike in marketing mean people, people, people and people.
As such 3PL’s manpower’ skill set is important consideration .Find out how much spent is on training of their by 3PL provider and compare them with the industry standard.
4. Industry knowledge and expertise
Find a company that has relevant experience with your type of product, technology integration, geographic area and their routes, and other specific needs.
5. Commitment to tight delivery schedules and safety of your products
Stock-out is a dreaded word for manufacturers and dealers and it can only be avoided by commitment of 3PL partner to time schedules for end to end delivery, safety and reliability. "To be more efficient find out how much velocity your 3PL partner can provide to inbound parts and smaller shipments picked up and delivered more frequently to keep inventory low. Logistics is a key foundation of the automotive our production system as such if your 3PL Partner does not move material efficiently and in small lots then automotive manufacturers might lose many of the benefits their lean production systems requirement.
6. Technology resources
7. His operational strengths
Choose a partner that can serve multiple product markets where compliance, safety, and cargo security are required. If one logistics provider can meet the needs of a diverse base of customers, each with its own challenges and industry requirements, then the chances of a successful partnership greatly increase. Ask about certifications that are aligned with your supply chain and industry-mandated protocols. In a present globalized scenario see his capability to handle inbound and outbound multi-modal logistics involving domestic and foreign vendors. His access and proximity to sea port and airports and material handling capabilities, his fleet strength are important considerations. Find out whether he can tackle expedited deliveries. Whether he can run Milk runs to help optimize transportation and production? Manufacturers and Logistics provider both can operate efficiently by increasing the frequency of runs to multiple suppliers, which reduces the lot size of each move, allowing the transporter to fill trucks.
8. Your chemistry with him
See whether he is able to work together to resolve the mutually defined goals and objectives. Would he remain true to your company’s identity, expectations, and needs? Chemistry is important to build up a long term and sustained relationship
Summary
Ensuring a smooth flow in the supply chain is the primary challenge faced by Automobile manufacturing companies.. In addition, Indian automobile companies need to ensure safety of their goods in transit and at the warehouse, as well as deal with the inability of majority of the LSPs to provide end-to-end solutions (either in transportation, warehousing, or integrated activity).With the emergence of strong and qualified third party logistics providers in India supported by foreign and tested knowhow, it is imperative for Automotive Logistics provider to derive maximum benefits by outsourcing their inbound and outbound logistics operations to serve their end customers and dealers better with improvement in efficiency, quality and responsiveness through innovative technology and knowledge source of logistics service providers.Written By
Professor Akhil Chandra, Institute of Logistics
Consultant Logistics and Supply Chain Management
9810223277 ( M) , 011-29210562, akhilchandra06@gmail.com
