During the first half of 2020, when the pandemic was creating mayhem throughout the world, the automotive industry faced the worst challenges whose production was halted to a larger extent. The industry was the residue of several disruptions such as electric mobility, and ridesharing, and also deprived of its financial growth. The increasing competition in this sector mostly in manufacturing has paved the way to overcapacity, which is now viewed as one of the serious challenges by the experts. Moreover, the demand-supply graph is also highly unpredictable and the rapid changes in the automotive supply chain ecosystem have forced the manufacturer to go to the extreme and invested in various resources in developing vehicles that are actually not required in the industry. By the time manufacturers thought of this serious blunder, the finances are already wasted on labor, raw materials, and production. Wastage of resources and over-investment turned out to be a stern obstacle in the industry. In this regard, we spoke to Dheeraj Tiwari, Co-founder and CEO at CapGrid about the current situation of the automotive industry, the growth, and investments and how start-ups are playing an important role to boost the sector.
Q. When CapGrid was founded and what are your current vision and business strategies post COVID-19?
CapGrid is a 2 year old company that commenced business in 2020. The objective right from the start was to set-up a sourcing company for the metal manufacturing requirements of the automotive and industrial manufacturers. With shortening product cycles and focus shifting towards innovative technologies, auto makers should be focusing on the most strategic parts and components and should consolidate the remaining parts with a player like CapGrid that has deep expertise in this domain and the sourcing process. Also, vendors should be focusing on their core, that is manufacturing.
Q. Explain about the enabled B2B marketplace offering end-to-end sourcing and procurement services facilitating higher quality output in a short period of time?
CapGrid consolidates the source-to-procure-to-deliver cycle for direct material B and C parts, consolidating 100s of suppliers and 1000s of parts for automotive and industrial manufacturers. CapGrid is able to leverage its proprietary tech-product to seamlessly discover and develop suppliers/parts about 10X faster than the traditional way. It provides complete inventory visibility and traceability to customers thus improving efficiency multi-fold.
Q. How CapGrid is helping industry players with the procurement of direct material?
CapGrid consolidates the source-to-procure-to-deliver cycle for low complexity parts and components for automotive and industrial manufacturers. For our customers, on day 1, procurement cost becomes to Zero, the complexity around logistics, gate entries, invoice processing comes down by 90%, inventory reduces by 50% and frees up their bandwidth to be utilized for new product launches, other strategic categories. Consolidation also places CapGrid to leverage economies of scale at source to bring down costs too. For supplier partners, CapGrid acts as a strategic partner helping them focus on core manufacturing removing hassles of jumping hundreds of hoops to reach out to a customer. In essence, OEMs are able to focus on their core, coming out with high quality, customer centric products frequently and suppliers are able to focus on their core- that is manufacturing.
Q. How many precision parts have been sourced and delivered? How CapGrid is ensuring a vast supply pool and discovering matching suppliers using AI algorithms?
More than 3500 SKUs and 7.5 crore plus parts have been delivered to the assembly line so far from our 6 warehouses across the country. India is the under-rated manufacturing hub of the world with more than 50,000 suppliers capable of catering to the automotive industry alone. AI has helped CapGrid create a dynamic capability intelligence of 20,000+ suppliers from India and another 10,000 from 15+ best cost countries for sourcing through a wide breadth of intelligence from online and offline sources. AI also assists in mapping requirements to supplier capabilities anywhere in the world.
Q. Can you please shed some light on your partnerships, associations and initiatives? How CapGrid is reducing complexity in procurement Management?
CapGrid is working with leading Automotive and EV manufacturers. Some of the prominent ones being Action Construction Equipment, VST Tillers & Tractors, Captain Tractors, Case New Holland, LML to name a few. On the supply side CapGrid is working with Sundaram Fasteners, CEAT and 150 other partners. It has partnered with Om Logistics and a few other players for the national warehousing and logistics. CapGrid consolidates demand that was earlier being procured from 100s of suppliers. Consolidation of this fragmented spend eliminates hidden and handling costs and drives the OEMs to focus on new product launches, other strategic parts and components.
Q. Where will CapGrid lead the supply chain and vendor management segment in the next 5 years? Measures implemented to stay relevant with the times.
CapGrid is revolutionizing the way source-to-procure-to-deliver is being run. CapGrid’s proprietary tech products are helping create the supplier-to-logistics-to-delivery transparency not just in terms of real-time inventory but also in quality. A head of supply chain would have a real-time control tower view of what is happening to 1000s of parts and components along with quality visibility. OEMs will only focus on strategic parts, initiatives, branding and new product launches. CapGrid’s strong warehouse network will further enable this optimized supply chain. Vendors are realizing better capacity utilization due to consolidated demand coming in. They can focus on their core, i.e. manufacturing. CapGrid was born in the middle of the pandemic out of key global megatrends realigning the way supply chain operates. Every day we are working with more and more manufacturers and showcasing the relevance of leveraging technology to provide transparency and traceability to both customers and supply partners. Next key platform we are building is focusing on automating quality reporting during the production process at supplier partner end and while it is under transit.
Q. How tech infusion is enhancing sourcing, enabling cost optimization for businesses
In the current dynamics with product cycles shortening and frequent product launches, speed matters. The cost of manual supply chains not only restrict velocity but also prevent optimization. Data generated lies in individual desktops, emails, excel sheets. Tech helps CapGrid carry out sourcing 5x faster with insights from data constantly optimizing the cost and quality assessment. Real-time alerts and visibility ensures a predictive approach rather than a reactive one where you are caught napping with supply chain risks.