It’s better to outsource these sorts of jobs to the professional experts.
Chennai, in the Indian state of Tamil Nadu, has been a major trading centre and sea-port since the 17th century. Now the city has attracted the attention of the global automotive industry and has become a major centre of vehicle production.
Around 30 percent of India’s automotive exports and 40 percent of its auto components come from Chennai. As a result, the city has been called: ‘the Detroit of India’.
The Renault-Nissan factory at Oragadam, near Chennai is a flagship investment for the region and the global alliance partners have pledged to invest 45 billion rupees ($990 million).
Kou Kimura, CEO & MD of Renault-Nissan Automotive India Pvt. Ltd. (RNAIPL), explains: “India is well placed for our new markets so we began operations here in Tamil Nadu with production starting in 2010. We have the capacity to build 400,000 cars a year.”
In order to help achieve its ambitious volume and quality targets, RNAIPL has partnered with Wallenius Wilhelmsen Logistics (WWL) in India on two key logistics functions: compound management (including yard space control and car movement) at the Renault-Nissan Chennai plant and inland distribution across the sub-continent.
“Producing cars is our know-how,” says Kimura. “But transportation and outbound logistics of vehicles, we can outsource. We do not have the skills to handle this aspect of the business properly. So, it’s better to outsource these sorts of jobs to the professional experts.”
Among the many challenges Renault-Nissan faced when starting from scratch in India was the need to maintain the highest possible quality to the end customer; the need to create a reliable and cost-effective transportation service; and to ensure a high proportion of local content.
“We need good local partners in this country and our great challenge is to achieve 85 percent local content,” explains Kimura. “This is not about price; our intention is to manufacture to the best quality.”
“We know we can count on WWL’s performance to maintain the best quality, from our experience with WWL in the US, and that is why we selected them,” he adds.
WWL India used its expert local knowledge to create and manage a cost-effective inland distribution network which is currently delivering around 3,000 vehicles a month to 47 dealers across India – in some cases a journey of more than 3,000 kilometers.
Part of this process has involved identifying the correct local transport operators and establishing proper contracts and quality controls.
“In India the trucking business is largely in the hands of local operators, mostly one-man shows,” explains Ramasamy Hariharan, WWL’s Yard and Transportation Manager for Renault-Nissan.
“We have studied the trucking market, built good relationships with the operators and hired the right people for the job. As a result, we can offer a quality-led process with low freight rates and cost savings for the customer.”
Processes were also created for the compound operations where staff training has played a vital role in maintaining high efficiency, productivity and quality. Recruitment of local staff began as early as 2009 and training started in 2010; there are now 21 WWL staff and more than 125 contract employees on site at the plant, working across three shifts.
Production has been ramped up rapidly. In the final quarter of 2011, RNAIPL will build almost twice as many cars as it did at the start of the year. The Indian domestic sales target is 40,000 vehicles in 2011 and the target number of dealers will be increased to 55 by March 2012.
Takehiro Nagaosa, Deputy General Manager, Production Control and SCM Department of RNAIPL, says: “The volume of vehicles that WWL has to handle has almost doubled in a short time. WWL is working with us to manage the capacity increase and to prioritise training for staff and contractors to maintain the current high quality.
“WWL also has the contract to transport our Renault cars. Currently the Renault production is not so much but, from next January, production of a new Renault will start at almost 1,000 cars per month.”
Kou Kimura, RNAIPL CEO & MD, concludes: “We appreciate WWL’s support in increasing our production numbers and we are satisfied with their operations. We want to maintain this relationship for the future and I believe WWL has the skills to continue to support our growth targets in India.”
ABOUT RENAULT-NISSAN INDIA
The new Renault-Nissan factory at Oragadam, near Chennai, represents a major investment of 45bn rupees by the alliance partners in global car production. Production capacity: 400,000 vehicles a year.Markets: India plus exports to over 100 countries in Europe, Middle Eastand Africa.Nissan models: Nissan Micra (from May 2010), Nissan Teana (from May 2010) , Nissan Sunny (from September 2010).Renault models: Renault Fluence (from June 2010), Renault Koleos (from September 2010), new Renault model (from December 2011).Employment: 1,500 at production startup, up to 6,000 including supplier park.