Discuss how did EVML strategically improve its in-bound and out-bound supply chain to reduce costs, minimize inventories and enhance customer…

A supply chain is a complete network of entities involved in serving customers or end consumers—whether linked directly or operating interdependently. It includes vendors who supply raw materials, manufacturers who transform these materials into finished products, warehouses that store the products, distribution centres that facilitate their movement to retailers, and retailers who finally deliver the product to the end users. In the case of EVML, a decline in volume by 14.29% led to the accumulation of unsold inventory, indicating inefficiencies in the supply chain. To address this challenge, EVML decided to re-gear its systems, including material ordering, handling, procurement, and inventory control. As a strategic response, the company embarked on a comprehensive revamp of both its inbound and outbound supply chains, with the objective of enhancing operational efficiency, reducing costs, and improving responsiveness to market demand. Management of Upstream Supplier Chain (Inbound) To strengthen its inbound supply chain and address the challenges arising from excess inventory due to a decline in volume, EVML identified two key strategies to reduce supply chain costs: (i) reduction in material costs, and (ii) reduction in inventory carrying costs through the implementation of the Just-in-Time (JIT) technique. The company adopted value engineering to analyze the composition of parts and explore opportunities for cost reduction by substituting or eliminating expensive materials and processes-without compromising on functionality. EVML transitioned from a traditional "Push” system to a "Pull” system, where production at each stage was synchronized with the actual demand of the subsequent stage. It implemented JIT ordering for high-value, low-volume items to minimize capital lock-in, and optimized logistics for low-value, high-volume items to reduce transportation costs. To support this strategic transformation, the following actions were undertaken: Relationship with Suppliers EVML considered its suppliers as key partners in its growth and success, fostering strong, collaborative relationships built on mutual benefit. To strengthen these partnerships, the company provided technical assistance, including training, sharing best practices, and supporting process improvements to help suppliers consistently meet quality standards and delivery schedules. EVML's supplier strategy emphasized sharing the cost benefits gained through value engineering and process enhancements, encouraging continuous innovation and collaboration. This approach ensured consistent quality, timely delivery, and enhanced overall supply chain efficiency. Number of Suppliers As part of its supply chain restructuring, EVML began by developing a comprehensive database for over 18,000 parts, aligning them with corresponding supplier part numbers. Using Pareto analysis (80/20 rule) to evaluate supplier performance, EVML identified that approximately 25% of its 1,500 suppliers accounted for nearly 80% of its procurement value, while 60% of the suppliers contributed to only 5% of the total business volume. This imbalance indicated significant inefficiencies and high transaction costs in managing a fragmented supplier base. To streamline procurement operations and improve supply chain efficiency, EVML set a strategic goal to reduce its supplier base from 1,500 to 800. The company assessed potential and existing suppliers based on their ability to meet quality standards, technical specifications, pricing benchmarks, and delivery reliability. A fundamental shift towards Tiering and system buying drove its vendor consolidation initiative, wherein EVML engaged directly with Tier-1 suppliers supported by Tier-2 and Tier-3 vendors. This structure not only improved coordination but also established clear responsibility chains within the supply network. The consolidation was in alignment with lean manufacturing principles, aiming to reduce waste, optimize resource utilization, and enhance flexibility across production processes. Cost, Quality, and Speed of Delivery To optimize cost, ensure consistent quality, and enhance the speed of delivery, EVML adopted a structured supplier engagement strategy. Local suppliers were advised to maintain warehouses within a 35-40 minute radius of EVML's production plants, thereby reducing lead time and logistics costs. The company provided necessary technical assistance to these suppliers to uphold stringent quality standards and ensure timely delivery of components. A comprehensive ABC classification of main production components and their respective suppliers enabled EVML to develop tailored delivery norms for each category, aligning supply frequency and priority with production needs. The introduction of a JIT system ensured that the plant sent JIT cards via email, prompting suppliers to dispatch components directly to the assembly line precisely when required. This minimized inventory holding and enhanced production responsiveness. Furthermore, the Single Window Vendor Management System facilitated seamless coordination with suppliers—streamlining the sharing of technical drawings, pricing negotiations, and resolution of quality-related issues. Together, these initiatives contributed significantly to cost efficiency, higher product quality, and faster delivery cycles within EVML's inbound supply chain. Make or Buy and Outsourcing EVML's purchasing policy emphasized maximizing the proportion of bought-out parts, both indigenous and imported, rather than relying heavily on in-house manufacturing. This strategy enabled the company to focus on its core competencies such as design, assembly, and quality control, while leveraging external expertise for component manufacturing. To ensure cost competitiveness and access to high-quality components, EVML adopted a global sourcing approach—identifying and engaging with suppliers across international markets who could meet its stringent quality, cost, and delivery benchmarks. Use of Information Technology EVML strategically leveraged Information Technology to streamline its inbound logistics and vendor coordination. Key digital tools such as RFID, GPS tracking, Electronic Data Interchange (EDI), and barcoding systems were introduced to enhance real-time visibility, traceability, and efficiency across the supply chain. The use of JIT cards, transmitted electronically via email, enabled suppliers to dispatch components directly to the assembly line in sync with actual production needs, minimizing inventory holding and improving responsiveness. Further integrating its procurement and quality functions, EVML established a Single Window Vendor Management System, jointly managed by the Procurement and Quality Engineering teams. This system served as a centralized platform to facilitate technical assistance, price negotiations, quality resolution, and approval workflows. Within the framework of centrally negotiated pricing agreements, unit-level material functions used this platform to interact with an approved panel of vendors, ensuring that materials were "pulled" just in time, in alignment with dynamic production schedules. Downstream Supply Chain Management (outbound) EVML's downstream supply chain management focused on ensuring timely and efficient delivery of finished products to customers. The company revamped its distribution network by establishing regional distribution centers at strategic locations and launching 3S (Sales, Services, and Spares) dealerships across various cities to enhance customer reach and service. With tailored delivery schedules and advanced logistics tools like RFID and GPS tracking, EVML improved order fulfillment speed and reliability. Regular dealer training and a robust customer relationship management system helped maintain high service standards, ultimately boosting customer satisfaction and loyalty. Relationship Marketing EVML's launch of new 3S (Sales, Services, and Spares) dealerships across various cities, along with 24x7 operational service outlets and mobile service vans, reflects a strong focus on relationship marketing as per the Six Markets Model. By setting up regional distribution centers for faster delivery and organizing bi-annual dealer training programs, EVML effectively manages multiple markets—such as supplier markets, and customer markets—ensuring high service quality and customer satisfaction. This comprehensive approach strengthens long-term relationships with customers, dealers, and other stakeholders, fostering loyalty and creating a competitive advantage through enhanced service, trust, and communication. Customers Relationship Management Despite focusing on improving operations at the shop floor, EVML never lost sight of its prime objective—customer satisfaction. To support this, the company revamped its distribution network for finished products and established different delivery schedules tailored to various product lines. Customer Relationship Management (CRM) systems were employed to monitor market trends and forecast demand based on customer inputs. Additionally, EVML automated the post-delivery feedback process, which highlighted three key service level targets: order-to-delivery time, reliability of deliveries, and availability of order status information. These efforts ensured a seamless customer experience and helped EVML maintain high service standards. Customer's Selection, Acquisition, Retention, and Extension EVML's customer strategy seamlessly integrates selection, acquisition, retention, and extension to build lasting relationships. Customers initially select EVML vehicles with confidence due to the one-year assurance-type warranty included in the selling price, which guarantees product quality and reliability. During acquisition, EVML offers the option to purchase an extended warranty plan—covering repairs or replacements of mechanical parts-either at the time of sale or just before the standard warranty expires, providing added flexibility and security. This extended warranty, priced separately at 15,000, represents a distinct performance obligation, reinforcing customer commitment. To ensure retention, EVML relies on its strong post-sale support, including resolving technical errors even beyond the warranty period, as decided by the Board on 01.11.2024, though not publicly announced. This comprehensive approach not only enhances customer satisfaction and trust but also encourages long-term engagement through extended service offerings and proactive support. The use of Information Technology in Downstream Supply Chain Management EVML leverages advanced information technology to streamline its downstream supply chain management. The company uses real-time tracking systems, automated inventory management, and electronic data interchange (EDI) to ensure timely and accurate delivery of finished products to regional distribution centers and dealers. Integration of IT tools enables efficient order processing, better demand forecasting, and improved communication with dealers, enhancing overall customer service and responsiveness in the sales, services, and spares (3S) network. Brand Strategy EVML's brand strategy focuses on building a strong, reliable, and customer-centric image in the competitive automobile market. By consistently delivering quality products, offering excellent after-sales service through its 3S dealerships, and emphasizing innovation and sustainability, EVML aims to create lasting trust and loyalty among customers. Conclusion In short, EVML's supply chain transformation—driven by JIT implementation, digital integration, and strong supplier and customer relationships—led to a 75% reduction in inventory, significant cost savings in warehousing and payroll, and faster product delivery. Despite added JIT costs, the overall returns exceeded expectations, enhancing efficiency, customer satisfaction, and long-term competitiveness.