Interview with Mudit Gupta

Head-Automotive, North and South OEMs, CHEP India Pvt. Ltd.

Date: 02 Aug 2013
Mudit Gupta, Head-Automotive, North and South OEMs, CHEP India Pvt. Ltd.

Company Description: Founded in Australia in 1945, CHEP is a leading solutions provider based on pallet and container pooling for many of the world’s largest supply chains. The company issues, collects, conditions and reissues more than 300 million pallets and containers from a global network of service centres, helping manufacturers and growers transport their products to distributors and retailers. It is a part of Brambles which is a leading global provider of supply chain solutions, operating in over 54 countries and employing over 17,000 supply chain experts. In the automotive space, combining superior technology, decades of experience and an unmatched asset base, CHEP handles pallet and container supply chain logistics, as components move from the point of production to the vehicle manufacturers’ locations. In India, CHEP works with most of the top vehicle OEMs and their tier-1 and tier-II suppliers.

 

You had your stints with a couple of automobile firms. Why did you make a sudden switch to CHEP India?

This is because if you see the automotive industry and the way it is growing, it offers a fountain of opportunities to its supply chain. As more organisations have to meet the demands of the customers, they have understood that they need to collaborate at the back end to optimise their supply chain. So a huge focus is there in this vertical and with my past experience in the automotive industry, I thought this is the right way to go and that’s the reason I am here.

 

As the auto industry evolved, has the logistics industry supporting it evolved too in India? And is it now in tune with global standards?

The Indian automotive industry is coming in line with global standards. This is because most of the multinational firms that have entered here are focussing deeply on its supply chain. The automobile industry has to be on par with global standards and needs to optimise its resources as per international practices. That is the reason they are bringing in a lot of efficiencies into the entire system. And as a result, a lot of global logistics companies are making a foray into India.  So I won’t say that the auto logistics industry has completely evolved, but is evolving gradually.

 

How much does the automotive segment contribute to your overall business?

The Indian automotive sector is quite huge and we see this as a huge opportunity, contributing a large chunk to our local business operations. I can just say that this share is significant and more importantly, growing every day!

 

In the automotive industry, which segment gives you the maximum volumes?

If you look at our client profile in India, we have the leading car and tractor manufacturers and their component suppliers in the country as customers.  The tier-1 and tier-2 component manufacturers/Original Equipment Suppliers (OES) as well as the vehicle manufacturers (OEMs) adopt our solutions. The basic premise of this solution is the end-to-end supply chain collaboration. This can only happen if we have all the players sharing the equipment pool. The value created through this collaboration is shared by one and all. Our team of supply chain experts, work very closely with the customers in squeezing out every bit of inefficiencies in the system thereby deriving maximum value, and this requires a very high level of engagement.  Our current strategy is to consolidate in the segment that we operate in today.  We will evaluate and decide on opportunities in other segments as and when they present themselves.

 

You have claimed that your company is actively involved in greening the end-to-end supply chain. Could you explain how?

CHEP solutions are consultative and we focus on all the challenges faced by the automotive industry in their inbound logistics in addition to greening. We can chart these as below.

From an environment perspective, many of the OEMs are sourcing their components through one-way packaging i.e. by wooden or corrugated boxes. Owing to its one-time use, there is wastage of sorts in the supply chain. This is one of the areas where the CHEP TCM (Total Crate Management) solution based on   returnable crates adds huge value. Components move in these reusable crates from the tier supplier locations to the OEMs.  All waste is eliminated thereby greening the entire supply chain. In addition, there are savings on labour, space requirements and scrap disposal. The value addition happens across the supply chain thereby significantly reducing the overall packaging costs.

 

Please could you also talk a little more about the CHEP TCM? 

Total Crate Management (TCM) is the outsourcing of designing, development and management of reusable packaging to a service provider like CHEP, the global leader in automotive packaging solutions. Vehicle manufacturers and their tier suppliers convert all packaging within their supply chain to high quality, ready to use, reusable packaging which is owned and managed by the service provider. In managing the packaging the cleaning, conditioning and on time delivery are handled as well.  TCM is built around the concept of equipment pooling which is the shared use of standardised equipment by multiple customers. The outer crate is standardised to achieve optimum results while transportation and handling, yet internally customisable by placing low cost durable component specific insert which can be reused throughout the life cycle of the auto component. Post the design phase, TCM encapsulates end-to-end movement of the packaged components from the point of production to the point of consumption and its reverse logistics effectively allowing the OEM and the component manufacturer to concentrate on their core activity - Manufacturing.

TCM is successful because it delivers reduced overall supply chain managed packaging costs to the industry while providing on-time delivery of reusable packaging resulting in a better quality component being delivered to the line. TCM standardises all crates and pallet footprints throughout the industry. And standardisation drives efficiencies in pack density, truck utilisation, automation of handling processes, and standardisation of truck and rail container sizes, loading docks, and material handling equipment.

 

How does TCM work?

CHEP engages with the OEM and their Tier suppliers in converting 100pc of the components to reusable packaging.  The TCM solution is built through a consultative approach wherein various teams from CHEP work closely with the customer in planning and implementing the solution to cover the entire cycle for a given component. This 360o approach ensures that all inefficiencies are driven out of the supply chain enhancing the value proposition and the savings associated with it. Benefits are visible throughout the supply chain. As the component moves from the point of production to the point of consumption in standard packaging, space saving and  labour  reduction  are visible as no decanting is required along the supply chain nor is there a need for separate storage area for each supplier at the OEM location. Reusable packaging also reduces damage, especially during monsoon the warehouses and eliminating the removal of unwanted waste and the space and labour required.  All this leads to a positive impact on the environment. Built  around  the  proven  cost  efficiencies  of  pallet  and plastic  crate  pooling, TCM  will  be  a  game  changer for the automotive logistics industry in India CHEP equipment pooling is the shared use of high quality standard crates and pallets by multiple Tier suppliers and OEMs

 

Being a leading player in pallet and crate pooling globally, are you planning to integrate your Indian operations with the international ones?

Our customers benefit from our global expertise as we draw in all our resources at the solution building stage. We are currently channeling all our efforts in creating a pan-India sustainable and agile automotive supply chain to leverage the pooling model. Our vision is that each and every automobile produced in India has the CHEP touch! We have to really focus and engage well locally to achieve our vision and this by itself is a big task. Our mantra today is ‘Engage Globally Implement Locally’.

 

Are your products locally made in India?

As you must have realised by now, our product is actually the solutions we offer rather than the pallets or crates which are just the part of the offering used to achieve the value addition. We need to be compliant with safety, quality and regulations and hence source both globally as well as locally. To give an example, most of our lumber comes from sustainable and renewable forests in Europe, as do some of our large containers. We have manufacturing and service locations across the country.

 

What is the strength of your distribution network?

We have a footprint of over 35 service centres pan-India. Our focus is to be close to our customers and is one of the values that we bring in terms of dependable delivery as part of our solution. In addition, our supply chain experts are based in the main metros, engaging customers, every day!

 

What are the current challenges and issues that you are grappling with in your business model?

As I said earlier briefly, the biggest challenge that we have is the industry understanding the actual costs of its supply chain. As of now, the supply chain is divided into various heads. They don’t understand the total costs of the entire supply chain that they are incurring while transporting components from one destination to another. So when we are having commercial discussions with them, it’s very hard to make them understand the larger benefits derived from our packaging solutions vis-à-vis one-way packaging. We are making sincere efforts in educating our customers and are also engaging with various industry bodies for overcoming these challenges. Hopefully, Motown will lead this advocacy initiative as an industry thought leader.

 

Lastly, how important will be the Indian arm for CHEP globally in the automotive space?

India is a very large automotive market and CHEP has created an important and credible partnership in the industry through our sustainable solutions. Ours is a very asset-heavy business model and hence investment intensive. Brambles, our parent company is very bullish on India and will continue to invest in the growth story. So, this is Foreign Direct Investment (FDI) and one more value addition to India!


Tags Mudit Gupta Head-Automotive North and South OEMs CHEP India Pvt. Ltd.


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Mudit Gupta
Date - 02 Aug 2013

Head-Automotive, North and South OEMs, CHEP India Pvt. Ltd.





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