Nomura Research Institute's Ashim Sharma: 'Expect continual disruptions across the automotive supply chain.

by Mayank Dhingra 02 May 2020


Ashim Sharma: "The paradigm is going to shift to how resilient are our supply chains, so that disruptions are fewer going forward."

May 1, also known as International Labour Day, saw Autocar Professional conduct a webinar on the subject of 'Manufacturing and Skilling after Covid-19; inviting five industry experts and veterans who brought to the webinar several years of experience to deal with the novel challenge posed to the global and Indian automotive industry by the coronavirus pandemic.

The panelists for the first webinar of May 2020 comprised Vijay Kalra, Head, Mahindra Institute of Quality and Ex-Chief of Manufacturing Operations- Automotive Division, Mahindra & Mahindra; Nikunj Sanghi, Chairman, Automotive Skill Development Council (ASDC); Ramashankar Pandey, Managing Director, Hella India Lighting; Rohan Rathod, Managing Director, Delux Bearings; and Ashim Sharma, Partner & Group Head - Business Performance Improvement (Auto, Engineering & Logistics), Nomura Research Institute.

The webinar, which opened at 11am and went on till nearly 2pm, was moderated by Sumantra B Barooah, Executive Editor, Autocar Professional.

Nomura Research Institute's Ashim Sharma, a well-known speaker in auto industry conclave, kicked off the webinar by setting up the context with regard to the 'new normal' in a post-Covid scenario where 'social distancing' will be de rigeur.  

The new normal
"While there are a lot of different predictions, nothing is certain in the post-Covid scenario other than the fact that people are going to see a huge change in their daily lives. The new normal means industry should expect continual disruptions across the automotive supply chain," said Sharma.

The industry expert and analyst added that going forward, there will be challenges such as a change in consumer behaviour in lieu of risk aversion due to economic distress, disruptions in supply chain due to 'chokes' at different nodes and a significant impact on production due to the unavailability and shortage of material and workforce due to reverse migration in the short-term.

With a vaccine for the coronavirus still under research phases, the risk of a community spread will remain in the coming months until a possible cure for the Covid-19 is forthcoming. So, the resumption of industrial operations will only come at the behest of companies ensuring strict guidelines restricting intermingling of employees and shopfloor workers inside factories.

According to Sharma, "There will be mandatory social distancing norms including at the shopfloor which will be crucial for reducing human interfaces to minimise the risk of contact and spread of the coronavirus."

"Contact tracing is also going to be important and that is why the industry should expect greater supply chain digitisation," he further added.

Sharma explained that while some of the larger companies were able to retain the manpower by paying advanced payments, the same does not hold true with smaller companies. So, labour shortage at the outset will lead to productivity losses.

Need for greater automation
Citing the possible solutions, he said, "On the shopfloor, a lot of changes will need to be done including planning and availability of manpower and components. Use of digital tools will drive the productivity to its maximum during these times of limited workforce.

"There will be additional checklists before start of operations and redefinition of the standard operating procedures in the manufacturing industry," pointed out Sharma.

"Also, the Japanese concept of 'Jidoka' or automation will gain more relevance in Tier 2 and Tier 3 organisations with social distancing norms calling for less congestion on the shopfloor and thus the need for a single operator to manage multiple machines" he added.

However, bringing out the money for investment into automation is going to be a huge challenge, according to Sharma.

Some other factors that would directly affect the productivity on the shopfloor include logistics and the supply chain wherein due to the industry's high dependence on road transportation, unavailability of truck drivers who have gone back home, will lead to troubles in material inflow. Moreover, restriction on movement of goods and inability to open warehouses in lock-down zones will also be hindrances in smooth operations. People going into these zones will need to be given PPEs for ensuring their health.

While companies are grappling with financial challenges in terms of the revenues drying up due to the nationwide lock-down in place, Sharma stressed upon the empathetic need for organisations to support their staffers in this hour of crisis. "Not only shopfloor workers who work in plants but also their family members and relatives who work in other industries need to be taken care of," remarked Sharma.

Transformation across operations
Shedding light on the sales and aftersales front, Sharma mentioned that there will be substantial changes in dealership footfalls. Sales promotion and customer engagement activities will change in rural and urban areas and there will be operational difficulties due to reduced manpower.

"There will be dynamic changes in dealership SOPs with customers no longer being pushed for test drives at the showrooms and service centres focusing more on extensive sanitisation of vehicles before and after the work is done," said Sharma.

Talking about the possible solutions to address each of these problem areas across the different places of the supply chain, Sharma gave his viewpoints to restart operations in a post-Covid scenario.

In terms of worker safety, he pointed out that automakers can focus on in-plant stay of local assembly line associates and improve high levels of sanitisation practices to ensure health safety. Extensive health screening for people coming in and maintaining quarantine guidelines to minimise the chances of the spread of the disease inside the plant premises. 

As regards shopfloor safety, the suggestions involved dynamic planning of manpower and material, use of digital tools to gain maximum operations possible and developing protective cells for assembly shops, alongside staggering of worker shifts with zero contact of people between two shifts.

Sharma also suggested reconfiguration of the plant infrastructure and machinery to bring in additional parts from suppliers and reduce dependency on external sources.

A radical transformation would come in the form of low-cost automation with companies needing to collaborate with startups to automate back-end operations such as purchase order creation, invoice payment and material handling.

Furthermore, Sharma touched upon the implementation of IoT solutions for tracking and tracing of not just components but also people who might have contracted the disease.

He indicated the transformation of the logistics industry due to digitisation and that Covid-19 will force a lot of consolidation in the sector. On the other end, demand might just spur for more high-end, comfortable trucks for long journeys. Also, remote servicing in a larger radius and provisioning of spares across arterial highways will boost truckers' confidence.

At the showroom level too, there will be tremendous strengthening of digitisation and online presence to make up for the lack of contact and that the industry should expect new investment in dealership infrastructure to enable social distancing and sanitisation. Doorstep delivery of new vehicles may become a popular concept going forward, according to Sharma.

Sharma brought the focus on the need for greater localisation and that for India Auto Inc to become self-reliant, the industry must focus on net localisation rather than gross localisation and that some changes in policy will go a long way in enhancing self sufficiency. "The thinking across India Auto Inc needs to change from net localisation to gross localisation. The paradigm is going to shift to how resilient are our supply chains, so that disruptions are fewer going forward."

Sharma summed up his address by pointing out that reskilling across all functions including R&D, logistics, procurement, manufacturing and sales, marketing and aftersales is required to ensure that the workforce is ready to navigate through the new normal.

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