In working with a major OEM that sells premium lightweight motorcycles in India, Ricardo Strategic Consulting (RSC) creates essential roadmaps that support supply base localization.
India is the largest motorcycle market in the world and an important source of growth for the client. Motorcycles are imported as CKD (complete knockdown kits) from China then assembled and distributed by a local Indian retailer.
Their current sourcing strategy is subject to tariffs that increase cost. In this highly competitive market with price-conscious customers, the client is seeking assistance to identify a product to launch that meets their long term vision, decreases cost, and provides a more competitive edge to its product pricing.
RSC addresses the challenge by exploring the supply base capability to manufacture quality components, identify high potential suppliers, and create a localization roadmap.
RSC works apace with client leadership to develop a customized process that identifies top suppliers and creates a localization roadmap using the following approach:
1. Conduct landscape analysis to understand India's market characteristics and develop a list of customer-tailored attributes for supplier evaluation
2. Organize a client workshop to explore Indian manufacturing capabilities and align supplier selection methodology
3. Re-classify client manufacturing BoM (Bill of Materials) into sub-systems conducive to the sourcing process and prioritize those sub-systems on sourcing complexity (commodity vs. specialized components) to structure a localization path
4. Evaluate results to identify top suppliers for select sub-systems and build detailed supplier profiles to support on-site assessments
5. Conduct sub-system gap analysis to ensure a comprehensive assessment of the local supply base
6. Identify additional factors and risks within the target market that could impact future sourcing considerations
Following a comprehensive evaluation of the India supplier base, RSC pinpoints a list of high capability suppliers for all sub-systems. In support of the efficient sourcing process, RSC presented a localization roadmap to client senior management. Listed below is a condensed sub-set of recommended initiatives:
- Consolidate sourcing to a limited number of suppliers to drive efficiency and build leverage
- Utilize the localization roadmap to efficiently execute sourcing activity
- Limits client resources needed to qualify suppliers and conduct onboarding activities
- Adapts supplier selection process to the local market
- Integrate market characteristics when selecting a motorcycle to localize and impact sourcing activity due to
- Upcoming regulatory changes driving the need to source new/additional components to meet standards
- Government initiatives driving electrification
- Indian trade agreements with neighboring countries that could be a useful supply base
RSC compiles a comprehensive supplier database including contacts, product lines, customers, certification, locations, etc. that will source the majority of motorcycle parts in India.
RSC ranks over 400+ suppliers within the Indian supplier database into a sub-system to produce a process list of top suppliers for client reference and investigation.
RSC identifies a sourcing strategy to efficiently source ~85% of BoM from a small group of suppliers allowing the client to increase volume and gain leverage during negotiations.
RSC constructs a scorecard for on-site supplier assessment.