The buck for demand-supply forecasting should stop at the highest level: industry experts at FADA Conclave

Top-notch inventory management as well as forecasting of demand and supply dynamics, across all industries, remains a skill wherein ­­ only a few achieve sustained excellence. In the automobile industry, where there are multiple variables as well as the price-conscious Indian consumer involved, getting the numbers right, from the  manufacturing operations through to stocking the dealerships across the country, this is easier said than done.

While the latest data mining tools can significantly aid in anticipating trends, India Auto Inc stakeholders are in consensus that the forecasting responsibility rests with the highest levels of leadership at automakers even as OEMs continue to get the right equation when anticipating demand-supply dynamics.

Apex dealer body, the Federation of Automobile Dealers Associations (FADA) yesterday hosted the fourth edition of the Auto Retail Conclave on the overall theme of ‘Success Through Synergy’ in New Delhi. The conclave was attended by the who’s who of the Indian auto industry along with over 300 dealer members of FADA, which represents more than 15,000 automobile dealers with 26,500 outlets across India.

Optimising demand-supply dynamics
The focus on the subject of forecasting came to the fore in the panel discussion on ‘Perfecting Supply & Demand’ which saw six panellists – Shashank Srivastava, Executive Director, Maruti Suzuki India; Tarun Garg, Director (Sales, Marketing & Service), Hyundai Motor India; Ashutosh Verma, National Sales Head, Hero MotoCorp; Ravneet Phokela, Chief Business Officer, Ather Energy; Sabyasachi Chakraborty, National Sales Head (2-wheelers), Greaves Electric Mobility; Vikas Panday, Executive VP, HDFC Bank and Soham Misra, State chairperson, FADA West Bengal. The panel discussion was moderated by Hormazd Sorabjee, editor, Autocar India.

According to Hyundai Motor India’s Tarun Garg, there is always a fine line between "demand exceeding the supply" and "supply exceeding the demand," and despite a baseline, moderation will still be necessary and should be carried out by individuals. A prominent member of the senior management should be in charge of forecasting. "Forecasting going wrong is a costly mistake," pointed out Garg.

Hyundai Motor India’s marketing chief underlined the need for situational awareness and said that forecasters shouldn't become overwhelmed by the number of bookings they have. Instead, attempts should be made to go beyond that in terms of cancellations, model-specific demand and other facets of market trends. Additionally, since “monthly averages conceal more than they disclose”, the forecaster would be right to avoid using them as during a downtime, demand can also swiftly go down.

Forecasting, according to Shashank Srivastava, executive director of Maruti Suzuki, continues to involve a combination of human judgement and a wealth of data that can be mined with the aid of cutting-edge technology tools. He added that being grounded to reality is key to being a good forecaster. Along with overall scaling up of the national and global economies, which will have a significant long-term impact on the industry’s fortunes, shifts in fuel costs and also legislative changes could also have an impact on demand and supply. Converting the underlying market demand into production still remains a challenge for most automakers, he said.

While there is no doubt that digitalisation has made forecasting somewhat simpler than before, and enables OEM to knows from which town, cities or markets the customers of specific products hail from, Greaves Electric Mobility’s Sabyasachi Chakraborty said estimating requires an in-depth understanding of the market's pulse. He cited the fact that Rajasthan's petrol prices continue to be among the highest, which has led to a significant increase in demand for electric vehicles in the state.

Balancing out the irregularities in supply and demand dynamics is critical for success in a competitive marketplace. All vehicle manufacturers are keen to ensure that their products roll out at the right time and are delivered smoothly to their dealerships across a vast market like India. This call for judicious dealer inventory management to ensure optimisation of demand-supply as well as to slash operational inefficiencies.

All in all, achieving optimised demand and supply in the automobile industry calls for industry to have its ears to the ground and its finger on the pulse of the consumer, which is where dealers matter most. From the OEM perspective, this will help drive sizeable gains in vehicle supply chain management and in turn help develop a robust inventory replenishment programme, which ensures seamless vehicle deliveries.