Stephen Harley, Executive Director, Global Material Planning and Logistics (MP&L), and NA Parts Supply & Logistics (PS&L), is responsible for the strategic direction and leadership of MP&L globally. During a recent visit to India, he sat down with @Ford.
Q: Is this your first trip to India? What is your opinion of India’s economic growth and its potential?
This is my first visit to the Ford office in New Delhi, but I have been to the Chennai plant here several times.
The country has an enormous opportunity, clearly a great thing. The opportunity in growth and economic development is evident, but so are the obstacles that need to be addressed before it can be achieved. There are gaps in infrastructure and many other things that need to be resolved so that everyone benefits.
It’s a huge challenge but India of course is a fantastic place to be. We at Ford are very much poised to be part of India’s new future.
Q: You spoke at the Society of Indian Automobile Manufacturers (SIAM) Logistics Conclave in New Delhi. What is your opinion of India as an emerging manufacturing and logistics hub for Ford in Asia Pacific? What can it do to improve its infrastructure to achieve that?
It was good to see that for the most part, my presentation was on target for that audience of knowledgeable people. My message to them was simple. India presently has a logistic cost equivalent to 13 percent of GDP. Around the world, developed countries have logistics costs anywhere from 6 percent to 9 percent of their GDP. So there is 5 percent of GDP that could be released from the logistics waste and could be poured back into growth agenda. We don’t have to do anything except introduce genuine multimodal solutions for logistics and eliminate the chronic waste which is inherent in the long-line of traffic at our ports, plants and toll roads.
It is the incapable infrastructure and its inefficiencies that prevent people from being more productive. If you look at the average speed of vehicles in India is less than half of expected levels. People here do not just drive slower, but in effect wait longer. That is a fixable thing. That we need more drivers, more capacity, is clear. Much of it is there already...it is a question of allowing people to move.
Q: Has Ford been able to work with the Government to see that these gaps in infrastructure are addressed so that India emerges as a regional export hub?
We’re pressing all the people responsible for policy and I’ve been able to advocate the case for a multi-modal network to connect our plants to ports— a combination of coastal shipping and railroad to introduce genuine inter-modal, multi-modal solutions that will allow India to assume its rightful role as a major exporter into Asia Pacific and other business units. The potential is there. But it’s the physicals….the physicals to get it right.
Q: With 5 million cars expected to be on India’s roads by 2015, India is poised to transform itself into one of the largest global markets. How is Ford preparing to face the increased demand for our cars and service?
There are two things here— one of the things is that we have to recognize the need to get the physicals right as we move to what you call second and third tier dealerships in more difficult to access places. We will have to create an appropriate delivery network that we call the last-mile …Physically taking the finished vehicle inside the dealership will be different until such time there is a highway system that enables large efficient deliveries. So our proposal is that we will create a series of hubs where we could do effectively efficient high volume bulk delivery by rail or by large road-going trucks and trailers. We will have dealers served appropriately from those hubs.
Additionally, as our customers and dealers grow, and we ultimately reach 500 dealerships by mid-decade,the other important part of the business will be Parts Supply & Logistics and the Ford Customer Service Division. We are going to build a new regional distribution centre (RDC) adjacent to the Sanand facility, then we will put in place six additional local facilities so that we can support the dealer network so there is almost next day service, there will be 95 percent next day service of the supplier component of service, which is the global standard. We will get the global standard in India so that dealers can effectively service their customers, and we mean it.
Dealers need their stores to be profitable in two ways — they sell cars and make a margin, but they have to win and retain customers through service, maintenance and repairs. The customer revisits the dealer within the warranty claim and there is an opportunity for the dealer to win the customer for a lifetime. And in India there is strong competition for small repair jobs that may appear less costly, more convenient and we have to enable the dealers so that they fulfill their rightful role in their lifetime relationship with car owners.
Q: As you know, India has a large workforce that supports much of Ford’s AsiaPacific Manufacturing and Logistics operations. What is your message for them?
What I so much appreciate is their open-mindedness, their willingness to learn, their adaptability and their desire to be a genuinely competitive team. And they’ve achieved whatever we’ve ever asked them…our team has always stepped-up.
As a result, we continue to grow our India base and regional based group to perform not only for Asia Pacific but, in addition, also to provide services for our other business units. We take it to be a huge Centre of Excellence for MP&L in our whole range of business. We are multi-faceted in Asia Pacific both in India and parts of the same region.
Right now, I must say their role is not only significant but as yet incomplete as they keep growing across key business areas such as risk mitigation and other things they are stepping up to. They must carry on the same competitiveness and open mindset as they face newer and bigger challenges.
We’ve a phenomenal workforce in APA PS&L in AsiaPacific. It’s incredible how capable the team has demonstrated itself to be.