Standardization in Supply chain CII Auto SCM Delhi ,July 15 Versi on 4.0

Factors Infrastructure Taxation policies Labor laws Land laws An overview Infrastructure Taxation policies Labor laws Land laws Fuel prices Currency Competition…..… etc

Complexity – Internal factors How the customer explained it How the project leader understood it How the business consultant described it What operations installed How the customer was billed What the customer really needed

Standardisation – is it possible?

Packaging The very basic unit of Supply Chain No. Challenges 1 Space utilisation 2 In-efficient Handling 3 Component damage and cardboard contamination 4 High CAPEX for non-core activities 5 Disposal costs of waste (one way packaging) 6 Lack of Standardisation 7 CO2 emissions per vehicle built All these have cost implications which are built up in the cost of a component!

Inefficient handling & Component damages Quality- Supplier Line to Customer Line ? Multiple Handling? Decanting? Waste disposal? OEM’s and suppliers have to build a system to minimize these inefficiency’s, which is a cost

Non core activities Line side collection of waste Disposal costs & CAPEX Line side collection of waste Investment in infrastructure for waste disposal CAPEX involved in buying/ replenishing of crates Man-hours for decanting and collection activities Significant supply chain savings can be derived from removing waste alone from one-way packaging!

Standardization can drive the efficiencies in supply chain Standardisation No countrywide standards in place for crates and pallets All manufacturers have different standards with small variations in Length, Width or height. OWP is largely customized, decreasing fill up rates in trucks and driving up Logistics costs. Standards of truck sizes not available Standardization can drive the efficiencies in supply chain

Summary- Major concerns Tier 1 OEM CAPEX burden Storage efficiencies Outsource non-core activity National network coverage Part protection Control & Handling Supply chain expertise Storage efficiencies Damage reduction Eliminate One Way Packaging Control & handling National network coverage On-time delivery of parts Supply chain expertise TODAY Pain-Points Export solutions Inter-cluster flows Tracking Export/Import solutions Total Equipment Management Entire SC on Returnable FUTURE Pain-Points With the increasing volumes, the future pain-points will be much more complex

Automotive hubs NCR Gujarat Jamshedpur Pune Bangalore Chennai NCR, Pune and Chennai Similar Components criss-crossing the country as per OEM requirements Examples - Starters from Lucas to NORTH and from Denso to SOUTH Clutch Sets from Am Valeo to NORTH, Clutch Auto to WEST and Valeo to SOUTH Gujarat – Green field opportunities NCR Gujarat Jamshedpur Pune Bangalore Chennai

Only pay for what you use What is Pooling ??? Equipment pooling is the shared use of standardised packaging by multiple customers Equipment Pooling incorporates the many different processes involved in owning and managing returnable equipment in one simple package. CAPITAL EXP. EQUIPMENT WASH & SERVICE RELOCATING TRACKING Outsource management of packaging reusable standard industry accepted equipment Managed Equipment Pooling MODERNIZATION Only pay for what you use when you use it. CHEP adds value by enabling you to outsource equipment management activities & costs Purchase transaction costs Capital expenditure / finance costs Depreciation costs Repair costs Wash costs Tracking / retrieval costs Off peak storage costs R&D / research costs [Slide Objective: reduce the perceived risk of loss & highlight this as a key differentiator vs. other pooling competitors] CHEP continues to invest significant resources each year to help its customers reduce the risk of equipment loss The transfer-hire system eliminates the need for tracking Web based transaction / hire balance & invoice review system (Portfolio) PC based transaction / invoice reconciliation systems (CHEPMate) Equipment Control Training Courses (ECAP) National field service team focused on helping customers: improve processes/procedures implement systems train staff assist with stock take reconciliations CHEP Confidential 11

Is it just another theory to talk???

Who is pooling today in India ??? 250+ Tier 1 Suppliers and OEMs are using pooled packaging in India Today! 13

Collaboration in Packaging Cost reduction No CAPEX required for non-core activities Standardization of trucks, racking, material handling equipment, warehousing etc… Space savings at OEM and supplier Reduced manpower – decanting, warehouse, waste management etc. Improved Truck Utilisation & Less Truck Movements Reduced component damages and losses Greening of entire supply chain. Reduced carbon footprint Availability and sharing of global best practices in packaging.

The way forward… Working with Industry Members to agree and sign off to returnable packaging standards OEM’s and Tier 1’s need to look at the “Total Cost of Ownership” – end to end costs of the supply chain OEM’s move to separate packaging costs from component cost Senior level leadership at the OEM is critical and driven from top-down Greenfield plants collaborate and implement from start up Continued joint OEM / Supplier visits to educate the Industry CHEP is ready to partner with OEM’s and suppliers to help to uncover all costs in Supply Chain from packaging perspective.

Thank you for your interest and time! More details on www.chep.com Email us at salesindia@chep.com 16