Company Description: Founded
in Australia in 1945, CHEP is a leading solutions provider based on pallet and
container pooling for many of the world’s largest supply chains. The company
issues, collects, conditions and reissues more than 300 million pallets and
containers from a global network of service centres, helping manufacturers and
growers transport their products to distributors and retailers. It is a part of
Brambles which is a leading global provider of supply chain solutions,
operating in over 54 countries and employing over 17,000 supply chain experts.
In the automotive space, combining superior technology, decades of experience
and an unmatched asset base, CHEP handles pallet and container supply chain
logistics, as components move from the point of production to the vehicle
manufacturers’ locations. In India, CHEP works with most of the top vehicle
OEMs and their tier-1 and tier-II suppliers.
You had your stints with a couple of
automobile firms. Why did you make a sudden switch to CHEP India?
This is because if you see the
automotive industry and the way it is growing, it offers a fountain of
opportunities to its supply chain. As more organisations have to meet the
demands of the customers, they have understood that they need to collaborate at
the back end to optimise their supply chain. So a huge focus is there in this
vertical and with my past experience in the automotive industry, I thought this
is the right way to go and that’s the reason I am here.
As the auto industry evolved, has
the logistics industry supporting it evolved too in India? And is it now in
tune with global standards?
The Indian automotive industry is
coming in line with global standards. This is because most of the multinational
firms that have entered here are focussing deeply on its supply chain. The
automobile industry has to be on par with global standards and needs to
optimise its resources as per international practices. That is the reason they
are bringing in a lot of efficiencies into the entire system. And as a result,
a lot of global logistics companies are making a foray into India. So I won’t say that the auto logistics
industry has completely evolved, but is evolving gradually.
How much does the automotive segment
contribute to your overall business?
The Indian automotive sector is
quite huge and we see this as a huge opportunity, contributing a large chunk to
our local business operations. I can just say that this share is significant
and more importantly, growing every day!
In the automotive industry, which
segment gives you the maximum volumes?
If you look at our client profile in
India, we have the leading car and tractor manufacturers and their component
suppliers in the country as customers.
The tier-1 and tier-2 component manufacturers/Original Equipment
Suppliers (OES) as well as the vehicle manufacturers (OEMs) adopt our
solutions. The basic premise of this solution is the end-to-end supply chain
collaboration. This can only happen if we have all the players sharing the
equipment pool. The value created through this collaboration is shared by one
and all. Our team of supply chain experts, work very closely with the customers
in squeezing out every bit of inefficiencies in the system thereby deriving
maximum value, and this requires a very high level of engagement. Our current strategy is to consolidate in the
segment that we operate in today. We
will evaluate and decide on opportunities in other segments as and when they
You have claimed that your company
is actively involved in greening the end-to-end supply chain. Could you explain
CHEP solutions are consultative and
we focus on all the challenges faced by the automotive industry in their
inbound logistics in addition to greening. We can chart these as below.
From an environment
perspective, many of the OEMs are sourcing their components through one-way
packaging i.e. by wooden or corrugated boxes. Owing to its one-time use, there
is wastage of sorts in the supply chain. This is one of the areas where the
CHEP TCM (Total Crate Management) solution based on returnable crates adds huge value.
Components move in these reusable crates from the tier supplier locations to
the OEMs. All waste is eliminated
thereby greening the entire supply chain. In addition, there are savings on
labour, space requirements and scrap disposal. The value addition happens
across the supply chain thereby significantly reducing the overall packaging
Please could you also talk a little
more about the CHEP TCM?
Total Crate Management (TCM) is the
outsourcing of designing, development and management of reusable packaging to a
service provider like CHEP, the global leader in automotive packaging
solutions. Vehicle manufacturers and their tier suppliers convert all packaging
within their supply chain to high quality, ready to use, reusable packaging
which is owned and managed by the service provider. In managing the packaging
the cleaning, conditioning and on time delivery are handled as well. TCM is built around the concept of equipment
pooling which is the shared use of standardised equipment by multiple
customers. The outer crate is standardised to achieve optimum results while
transportation and handling, yet internally customisable by placing low cost
durable component specific insert which can be reused throughout the life cycle
of the auto component. Post the design phase, TCM encapsulates end-to-end
movement of the packaged components from the point of production to the point
of consumption and its reverse logistics effectively allowing the OEM and the
component manufacturer to concentrate on their core activity - Manufacturing.
TCM is successful
because it delivers reduced overall supply chain managed packaging costs to the
industry while providing on-time delivery of reusable packaging resulting in a
better quality component being delivered to the line. TCM standardises all
crates and pallet footprints throughout the industry. And standardisation
drives efficiencies in pack density, truck utilisation, automation of handling
processes, and standardisation of truck and rail container sizes, loading
docks, and material handling equipment.
How does TCM work?
CHEP engages with the OEM and their
Tier suppliers in converting 100pc of the components to reusable
packaging. The TCM solution is built
through a consultative approach wherein various teams from CHEP work closely
with the customer in planning and implementing the solution to cover the entire
cycle for a given component. This 360o approach ensures that all
inefficiencies are driven out of the supply chain enhancing the value
proposition and the savings associated with it. Benefits are visible throughout
the supply chain. As the component moves from the point of production to the
point of consumption in standard packaging, space saving and labour
reduction are visible as no
decanting is required along the supply chain nor is there a need for separate
storage area for each supplier at the OEM location. Reusable packaging also
reduces damage, especially during monsoon the warehouses and eliminating the
removal of unwanted waste and the space and labour required. All this leads to a positive impact on the
environment. Built around the
proven cost efficiencies
of pallet and plastic
crate pooling, TCM will
be a game
changer for the automotive logistics industry in India CHEP equipment
pooling is the shared use of high quality standard crates and pallets by
multiple Tier suppliers and OEMs
Being a leading player in pallet and
crate pooling globally, are you planning to integrate your Indian operations with
the international ones?
Our customers benefit from our
global expertise as we draw in all our resources at the solution building
stage. We are currently channeling all our efforts in creating a pan-India
sustainable and agile automotive supply chain to leverage the pooling model.
Our vision is that each and every automobile produced in India has the CHEP
touch! We have to really focus and engage well locally to achieve our vision
and this by itself is a big task. Our mantra today is ‘Engage Globally Implement
Are your products locally made in
As you must have realised by now,
our product is actually the solutions we offer rather than the pallets or
crates which are just the part of the offering used to achieve the value
addition. We need to be compliant with safety, quality and regulations and
hence source both globally as well as locally. To give an example, most of our
lumber comes from sustainable and renewable forests in Europe, as do some of
our large containers. We have manufacturing and service locations across the
What is the strength of your
We have a footprint of over 35
service centres pan-India. Our focus is to be close to our customers and is one
of the values that we bring in terms of dependable delivery as part of our
solution. In addition, our supply chain experts are based in the main metros,
engaging customers, every day!
What are the current challenges and
issues that you are grappling with in your business model?
As I said earlier briefly, the
biggest challenge that we have is the industry understanding the actual costs
of its supply chain. As of now, the supply chain is divided into various heads.
They don’t understand the total costs of the entire supply chain that they are
incurring while transporting components from one destination to another. So
when we are having commercial discussions with them, it’s very hard to make
them understand the larger benefits derived from our packaging solutions
vis-à-vis one-way packaging. We are making sincere efforts in educating our
customers and are also engaging with various industry bodies for overcoming
these challenges. Hopefully, Motown will lead this advocacy initiative as an
industry thought leader.
Lastly, how important will be the
Indian arm for CHEP globally in the automotive space?
is a very large automotive market and CHEP has created an important and
credible partnership in the industry through our sustainable solutions. Ours is
a very asset-heavy business model and hence investment intensive. Brambles, our
parent company is very bullish on India and will continue to invest in the
growth story. So, this is Foreign Direct Investment (FDI) and one more value
addition to India!