The economy is heading towards inflation, but unlike European or US economies, India has seen an inflation at around 7% so far this year. The country still has a high potential for growth, which is also the case in its automotive industry with high resilience amid supply chain challenges.
India's auto industry is very competitive with global brands trying to get a bigger presence in it. Hemant Barge, VP of Purchase & Supply Chain of Tata Motors delivered a keynote speech at the Supply Chain Summit, hosted by DIGITIMES Asia, on September 27 to elaborate on how India's auto industry has revived after the COVID and is now moving toward the growth phase.
"And that's where the real opportunity lies," said Barge, referring to India's fast growing car industry.
In the last three years, a lot of COVID challenges have hit the Indian auto industry. And there have been additional pressure from the financial crunch, labor shortage, disruptions caused by geopolitical challenges, the regulation leapfrog from Euro 4 emissions to Euro 6, semiconductor and components shortages.
Protectionism is another factor that has made the situation even more difficult. India still depends heavily on some technology parts from external suppliers, particularly Korea, Taiwan, China, Europe, and to some extent the US. "Our supply chain did experience significant disturbances because of global conflicts. We saw some trade restrictions," said Barge, as he recapped the difficulties over the past few years.
"In the history of the automobile industry, probably this was the first time when the real strengths of the supply chain were tested. And the teams who were agile or bold enough, probably they were able to overcome these challenges faster," Barge emphasized.
Reengineering for managing semiconductor shortage
From survival to revival and growth, Tata Motors has supported many tier-1 and tier-2 suppliers in restarting their operations and overcoming financial difficulties, further securing Tata's capacity. Tata also has consolidated multiple purchase teams together to integrate the procurement information, which also makes suppliers feel confident in talking to Tata.
To minimize the impact of global components shortages, Tata has started to remap its value chain for semiconductor and parts. Besides reaching out to fabs where the chips are being made, and mapping their locations, Tata is also able to generate dashboards to monitor the situation on a minute-to-minute basis, which helps the company overcome the difficulties or micromanage the supply chain.
By looking for alternative chip solutions and reengineering critical architecture of the chips, Tata will be able to overcome the regular challenges in semiconductor supply in the long run. "Finally, we came out with solutions... the number of chips required for that particular part was reduced from five to one," said Berge, recalling how the company managed to reduce the number of components.
China plus one strategy
To stay resilient in supply chain management, Tata emphasizes the importance of agile corporate culture. It is now starting to activate "China plus one strategy" for supply chain sustainability.
"We have been having significant challenges in organizing parts," Berge said. "Exports from China was a real big challenge. And practically all the flights out of Shanghai or Changi Airport were fully booked. There was a lot of offloading of flights happening. And then we started looking at 'China plus one strategy"; that's a specific action plan that we had triggered probably, and that has become our primary workstream going forward, in response to this global crisis of supply chain management and reduce our vulnerability."
As electrification now is revolutionizing the automotive industry, automotive OEMs, like Tata, would like to work with many partners from around the world to extend their technological capacities in developing electric vehicles and related technologies, ranging from batteries, power electronics, infotainment, to ADAS.