Manufacturing schedules in automotive plants are highly susceptible to even minor fluctuations in market dynamics and supply chain disruptions. Sudden shifts in market demand or interruptions in component availability can quickly destabilise production plans for both vehicle manufacturers and their Tier-1 suppliers.
Despite rigorous efforts by procurement teams, it is common for assembly schedules to remain unsettled for entire days or even shifts, primarily due to shortages of complete assembly kits. This leads to rising work-in-progress inventories mid-month, resulting in substantial but uneven spikes of dispatches towards month-end. This recurring pattern not only causes substantial capacity wastage but also restricts automotive companies from harnessing the full potential of their manufacturing capabilities.
Yet, even amid industry-wide challenges impacting two-, three-, four-wheelers, and commercial vehicle segments, certain manufacturers have managed to significantly outperform peers. According to Ravindra Patki, Senior Partner at Vector Consulting Group (VCG), such exceptional performance is attainable through targeted collaboration and strategic operational interventions between the vehicle maker and expert consultants.
Over the years, VCG has partnered with leading names like Tata Motors, Ashok Leyland, Sonalika Tractors, Royal Enfield, Fleetguard Filters, and JK Fenner to set new benchmarks in operational performance across diverse business areas - Manufacturing, Aftermarket, and NPD.
Elaborating on the company’s innovative approach to tackling these complex manufacturing challenges, Patki explained to Mobility Outlook that achieving transformative outcomes requires the entire supply chain to perform at significantly higher levels than currently observed. Illustrating this, he cited the example of a two-wheeler manufacturer that previously fulfilled only 35% of dealer orders on the same day. Through implementing VCG’s targeted solution, same-day order fulfilment surged dramatically to 75%, with fulfilment rising to 95% within just three days. This remarkable improvement was achieved by strategically stocking materials at the nearest depots, enabling rapid and efficient supply. Consequently, a manufacturer that once struggled with delivery timelines can now confidently fulfil nearly all orders within three days, guaranteeing complete deliveries within seven days.
Guided Transformation
However, Patki emphasised that such results are not achieved simply by handing clients a set of recommendations. Effective transformation demands continuous expert support throughout the implementation phase. Traditional consulting methods, he noted, typically offer advice without active involvement during execution, leaving clients prone to reverting to old practices when facing hurdles. VCG, in contrast, remains closely engaged with clients, guiding them meticulously through every stage of the change process, he explained.
“Our engagements are deeply implementation-oriented. We actively collaborate with clients to transition smoothly from existing practices to more effective, efficient strategies,” he added. Achieving objectives such as improved vehicle availability often necessitates adjustments not only at the dealership level but also upstream, in procurement and supplier coordination. Patki underscored that VCG’s approach is holistic—never confined to isolated functional improvements but aimed at aligning the entire supply chain, from raw material suppliers through to end-customers, towards a unified, mutually-agreed goal.
Navigating Supply Chain Volatility
Addressing the critical challenge of supplier inventory management, Patki highlighted that suppliers often bear the brunt when supply chains depend heavily on forecast-based planning. Suppliers frequently ramp up production based on overly optimistic monthly projections, only to experience sudden drops in orders. Without real-time visibility into demand fluctuations, they find themselves burdened with excessive inventory, tying up crucial working capital—a particularly acute issue for MSME and SME suppliers.
VCG addresses this imbalance by transitioning OEMs from traditional monthly forecasting towards a real-time, demand-driven inventory model. “We provide suppliers with immediate visibility into actual stock levels at the OEM end, allowing them to produce precisely what is required. This strategy prevents unnecessary inventory buildup, aligning supplier output closely with real demand and significantly improving cash flow efficiency,” he explained.
Instant Insights, Smarter Decisions
Patki further noted that VCG’s model promotes daily, real-time communication between OEMs and suppliers. Suppliers gain clarity not only on current stock positions but also on the urgency of specific components based on their risk of imminent stockouts. With this actionable data, suppliers can effectively manage raw materials and production schedules, ensuring timely availability at the OEMs without unnecessary inventory accumulation. This shift empowers suppliers to operate flexibly and responsively, significantly reducing waste and disruptions in the overall supply chain.
Tackling Complexity With Flexibility
The automotive industry is increasingly transitioning from mass production to mass customisation—a shift dramatically reshaping traditional manufacturing paradigms. Many new-age vehicle makers offer multiple variants of the same model, complicating traditional daily production planning methods. Highlighting this critical transformation, Patki acknowledged the immense challenge this poses, noting that the conventional practice of converting weekly production schedules into daily plans inevitably leads to disruptions when suppliers fail to deliver components on time, triggering chaos across the entire supply chain.
To address this challenge, VCG proposes a fundamentally different approach. Rather than relying on rigid production schedules, the firm advocates for maintaining consistent availability of all essential components, enabling production teams to respond flexibly to real-time demand fluctuations. This proactive method involves daily communication of stock positions with suppliers, ensuring their production precisely mirrors actual consumption patterns, substantially reducing work-in-progress inventory and streamlining supply chain operations.
Patki emphasised that this strategy has successfully been deployed with several commercial vehicle manufacturers, two-wheeler OEMs, and automotive component suppliers, leading to notable reductions in supplier-side inventory issues. By shifting towards a demand-driven supply model, suppliers are safeguarded against abrupt production plan changes that traditionally left them with incomplete components and excess stock.
Change Begins Where The Chain Begins
Addressing concerns that OEMs often leverage their dominance to transfer inventory risks downstream to dealers and suppliers, Patki agreed that genuine transformation must begin at the OEM level. The firm, therefore, engages closely with OEMs to implement fundamental improvements in their supply chain management practices. Additionally, it has empowered various component suppliers—ranging from manufacturers of window regulators and belts to small vehicle parts—to independently shield themselves from OEM-induced demand volatility through vendor-managed inventory (VMI) solutions, creating a resilient and balanced supply ecosystem, he concluded.
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