As supply chains move from efficiency-led models to resilience-led ecosystems, Daimler India Commercial Vehicles is using India’s manufacturing, engineering and supplier capabilities to support both domestic requirements and a growing global mandate. The DICV shift is strategic and driving the industry at large, writes Ashish Bhatia.
Every truck carries within it a chain of decisions spanning engineering, sourcing, supplier capability, logistics, quality, inventory and increasingly, digital visibility. When that chain is disrupted, the impact is not limited to a missing component. It can stop production, delay deliveries and, ultimately, affect the earning potential of the customer. That equation has become considerably more complicated over the past decade. For Daimler India Commercial Vehicles (DICV), this is translating into a broader role for India within the Daimler Truck ecosystem. The company’s journey from establishing a new operation and brand in India to supplying vehicles and components beyond the domestic market has created a platform on which procurement, engineering and supplier capabilities can increasingly work for a global requirement.
At the heart of this evolution is a deceptively simple idea: resilience is becoming as important as cost. The traditional procurement question was relatively easy to frame: where can the required component be sourced at the most competitive cost while meeting the necessary standards for quality and delivery? Today, that question has several more layers. A commercially attractive source can become strategically expensive if a geopolitical event disrupts the route, a trade relationship changes, or a supplier cannot maintain continuity. The objective, therefore, is no longer simply to identify the best sourcing country. It is to understand the complete risk around that decision. For Michael Moebius, President and Chief Procurement & Supply Chain Officer at DICV, this represents a fundamental shift in thinking. “Our job is to make the uncertainty as certain as possible,” he says. The key word, according to Moebius, is resilience. The procurement function now has to consider economic conditions, political tensions and the relationship between countries, including trade agreements, alongside the traditional parameters of cost, time and quality. “Basically resilience beats cost,” he says.
The distinction is important. Cost efficiency remains necessary, but a part that cannot be delivered when required can cause damage far greater than the saving achieved through a lower purchase price. That has turned procurement into an increasingly strategic function, one that has to anticipate rather than merely react. The system behind the product. Moebius’ experience across different continents has reinforced his belief that robust systems ultimately determine how organisations perform. “No matter in which part of the world I’ve worked, what really beats everything is a robust system,” he says. Processes, policies, clear rules and defined responsibilities create the structure. But the system still needs people who are engaged and passionate about the product. That combination has particular resonance in India, where Moebius sees a young workforce with an unusually strong appetite for change. His own experience with the founding team of DICV provides an illustration. He recalls having 10 people in a room with 11 different opinions. The diversity of opinion, however, was not the problem. Everyone was trying to bring the best solution to the table. For an industry undergoing simultaneous changes in propulsion, digitalisation and regulation, that mindset can become an important competitive advantage.
The global ambition was embedded into the DICV strategy from the outset. When the operation was established, the intention was never for products manufactured in India to remain confined to the domestic market. But a global role cannot simply be assigned to a new facility. It has to be earned. A new brand and a new manufacturing operation must demonstrate that it can deliver consistently to customers as well as to the wider organisation. That journey has progressed from the first export product, introduced within two years of DICV’s inception, to a much broader global contribution. Moebius points to a much larger component-sourcing role for India within the wider Daimler Truck organisation. He cites 300 million parts supplied from India to the world as a measure of that contribution.
The next challenge is that the future of commercial vehicles is unlikely to be defined by a single powertrain. Daimler Truck is looking at multiple zero-emission and alternative technology pathways, including battery-electric vehicles, fuel cells and hydrogen internal-combustion engines. Different markets, however, will adopt those technologies at different speeds. That makes technology selection a market-intelligence exercise. Markets differ in their regulatory environments, infrastructure, economics and customer requirements. As Moebius explains, even emission norms do not evolve at the same pace everywhere. The question is therefore not simply which technology is best? It is which technology is right for which market, and when?
That has a direct consequence for procurement. The supply chain needs to understand future component requirements before the technology reaches mass adoption. Suppliers need to be identified, evaluated and, where appropriate, developed early enough to support the eventual programme. This is why DICV’s sourcing strategy increasingly extends beyond its established supplier base. Moebius points to start-ups as an important part of the search, particularly where emerging technologies could become commercially relevant five or 10 years into the future. The logic is straightforward: if the future is going to arrive quickly, preparing for it cannot begin when it arrives.
Changing Supplier Relationships
This forward-looking approach also changes the relationship between an OEM and its suppliers. DICV has a sizeable supplier ecosystem, but supplier selection is not simply a matter of adding another company to a database. Potential partners are evaluated against technological and programme requirements; at the same time, the company continues to look for new capabilities through supplier registrations, industry events and interactions with emerging businesses like the one it concluded recently in Chennai.
The relationship also extends beyond the purchase order. Moebius’ view of quality illustrates why. “Quality is the argument which sells,” he says. But quality, in his formulation, is not produced by one department. It begins with R&D, where the product is designed; moves through engineering and manufacturing; depends on suppliers to produce the required components; and reaches procurement and the supply chain, which must deliver those parts in the required quantity, on time, at competitive cost, and at the required quality. The sales organisation can only deliver the right product to the customer when the entire chain works together.
Digital Visibility
As the supplier network becomes more complex, visibility becomes critical. Traditional supply chains could operate through relatively distinct interfaces: a part was awarded, produced, shipped and received. Today, those interfaces are becoming increasingly interconnected. Moebius describes a move towards process automation, automated reporting, traceability and real-time data transmission between DICV and its suppliers. The purpose is not digitalisation for its own sake. It is to make the physical supply chain visible enough to support faster decisions.
Knowing where a component is before it reaches the plant can make a significant difference when inventory is being reduced, and just-in-time or just-in-sequence deliveries are required.
The same thinking extends into product development. As technology changes faster, design and testing cycles have to shorten. Moebius compares today’s enthusiasm and anxiety around artificial intelligence with the earlier arrival of computers in engineering. Computerisation did not eliminate engineering; it helped reduce development cycles. The next generation of tools, he believes, should do the same — accelerate development and testing without compromising safety, quality or reliability.
Absorbing Volatility
The supply chain’s ability to absorb shocks becomes particularly important when commodity prices rise. Raw-material inflation affects everyone in the chain, but a manufacturer cannot simply pass every increase directly to the end customer. “If raw material prices are going up by 10 per cent, we cannot increase the price for the truck by 10 per cent,” Moebius says. That puts greater emphasis on collaboration with suppliers, planning and efficiency. Material-price trends can be monitored, sourcing decisions can be made jointly, and longer-term arrangements can provide some degree of protection. But the larger answer lies in finding efficiencies throughout the value chain. The objective is to absorb as much volatility as possible without compromising the customer proposition. That requires the relationship between OEM and supplier to become less transactional. As Moebius puts it, the old “black and white” interfaces are no longer sufficient. The relationship is increasingly interconnected. Supplier programmes therefore need to address not only cost but efficiency, quality, reliability and delivery performance.
The customer is the final measure. “A truck is a tool, and a tool as a truck needs to earn money,” Moebius says. The implication is powerful. A commercial vehicle manufacturer cannot consider the job complete when the truck leaves the factory. Parts availability, service capability, supply-chain responsiveness and the ability to minimise downtime all become part of the customer proposition. The same thinking explains the importance of a global parts ecosystem and an expanding network of customer touchpoints. The objective is to ensure that when an operating asset needs attention, the customer can get it back to work. It also explains why procurement cannot be treated as a purely back-end function. The part that arrives late can affect production. The part that fails can affect quality. The part that is unavailable can affect uptime. The unnecessarily expensive part can affect the customer’s total cost of ownership. DICV’s evolution therefore reflects a larger shift in how India can participate in the global commercial vehicle industry. ACI
