They are also looking to make the most of India's rising prominence as a global manufacturing hub to meet their export targets. Auto component manufacturers tend to locate their production facilities near these OEMs, driving the growth of domestic logistics market, including transportation and warehousing.
New analyses from Frost & Sullivan (automotive.frost.com), Logistics Scenario Tracker on Indian Auto Components Industry, and Logistics Scenario Tracker on Indian Automobile Industry find that the total automotive sector including auto components and automobiles spent a total $3.13 billion in 2011 on logistics activities. Within this, auto components industry spent an amount of $1.65 billion in 2011 on logistics activities, accounting for 5.5 percent of the industry turnover. Transportation accounts for the largest share of the entire logistics spend of the industry, while warehousing accounts for the second largest share. The automobile industry spent an amount of $1.48 billion in 2011 on logistics activities accounting for 3.5 percent of automobile industry turnover. Transportation accounts for the largest share of the entire logistics spend of both the industry segments and is also the most outsourced function to logistics service providers (LSPs).
Although the market has significant potential, the rising costs of materials erode the profits of auto component and automobile manufacturers, and limitations in logistics infrastructure result in supply chain inefficiencies. "Auto components and automobile companies are exploring alternate sources of raw materials to reduce input costs, while logistics service providers must seek to adopt global models and standards to improve the supply chain efficiencies of their clients," said Srinath Manda, Program Manager, Transportation & Logistics Practice, Frost & Sullivan.
Importantly, they should look to plug security loopholes, as around 65 percent of Indian auto component companies declared that their most important concern in logistics is the risk of information leak to competitors through their logistics service providers (LSPs), while around 78 percent of Indian automobile companies declared that their most important concern in logistics is the safety of goods during transit and warehousing by LSPs.
Capability enhancement and qualified resources engagement is another need of the hour for LSPs as around 60 percent of auto component companies were apprehensive about their LSPs' ability to keep pace with evolving end-user volumes and technical requirements, while nearly 76 percent of automobile companies expressed that their second greatest apprehension was their LSPs' lack of skills and expertise in handling logistics needs, both within their own organization and at the LSPs.
LSPs should acquire modern transportation assets (vehicles and equipment) and modern warehousing assets (modern warehouses and material handling equipment) to reduce the scope of goods damage. They should also invest in advanced high-security information management systems to address security issues and offer customers complete visibility of their goods' movement. These systems should possess a high control security structure that can provide authorized information access, according to customers' requirements.
Currently, over two-thirds of end users employ multiple LSPs, since a single provider is inadequate to meet all their needs. Additionally, more than three-quarters of the Indian auto components industry participants have only one-year contracts with LSPs, indicating a high propensity to switch providers. "To address the challenge of matching the evolving end-user volumes and technical requirements, LSPs should work more closely with their customers to develop customized and mutually acceptable logistics solutions and standards of performance," noted Manda.
"In addition, LSPs should improve their recruitment strategies by hiring graduates from exclusive logistics institutes. They also need to undertake regular training programs for their staff to hone their skills in logistics and fulfil customer expectations," concluded Manda.
If you are interested in the virtual brochure, which provides a brief synopsis of the research and a table of contents, please send an email to Ravinder Kaur/Priya George, Corporate Communications, at ravinder.kaur[.]frost.com / priyag[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country. Upon receipt of the above information, the brochure will be sent to you by email.
Logistics Scenario Tracker on Indian Auto Components Industry and Logistics Scenario Tracker on Indian Automobile Industry are part of the Logistics Growth Partnership Services program, which also includes research in the following markets: Strategic Analysis of Logistics Spend and Outsourcing Trends in India, Logistics Scenario Tracker on Indian Pharmaceutical Industry, and Strategic Analysis of Logistics Technology Usage Trends in India. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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Logistics Scenario Tracker on Indian Auto Components Industry / P4E8-13
Logistics Scenario Tracker on Indian Automobile Industry / P4E9-13
Media contact:
Nimisha Iyer, Corporate Communications ? South Asia & Middle East
M: +91 98200 50519 / P: +91 22 6607 2004 - E: niyer[.]frost.com.
Source: http://www.przoom.com/news/122210/
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