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BharatBenz and the drive towards zero BS-IV stock

Murali Gopalan | Updated on April 23, 2020 Published on April 23, 2020

Satyakam Arya, Managing Director & CEO of DICV

Riding on meticulous planning, Daimler India Commercial Vehicles sucessfully transitioned to the BS-VI regime by liquidating its inventory of BS-IV trucks across its ecosystem by March 31

It was a scene straight out of a crime thriller.

Three hours before the Tamil Nadu government announced a lockdown from March 24 to combat the Covid-19 scourge, a handful of BharatBenz trucks had already begun their journey out of the Oragadam plant near Chennai.

They soon crossed the Tamil Nadu border en route to Karnataka and beyond. In the process, Daimler India Commercial Vehicles (DICV) had bid adieu to its last batch of Bharat Stage-IV trucks.

“It was Rajaram Krishnamurthy’s fighting spirit which ensured that the number was down to zero,” recalls Satyakam Arya, Managing Director & CEO of DICV. The reference is to his colleague who is Vice-President, Domestic Sales, Product Management & Network.

The dramatic saga on the last convoy of trucks is part of a larger story where DICV had planned its transition from BS-IV to BS-VI down to the last detail. It was this sharp focus and a relentless drive by Krishnamurthy and his team which saw a tally of zero BS-IV stocks posted across the plant and dealerships on March 31.

This was the last day of registration for these trucks since only the BS-VI versions would now have to be retailed from April 1. By the time the last batch of BS-IV trucks reached the Regional Transport Office (RTO), all the registration formalities had been done online, which meant only the inspection was due.

“We asked the RTO in Maharashtra to wrap up the inspection on March 24 and we had the registration copies three days later,” says Krishnamurthy. It was a nail-biting finish and marked a triumph of sorts for DICV, especially when a host of other manufacturers still had considerable BS-IV stocks lying unsold.

Arya has reasons to be pleased with this achievement which, in turn, was a result of meticulous planning and execution. The fact that the strategy was drawn up in a difficult year (2019), when the medium and heavy commercial vehicle virtually collapsed, made it even more creditable.

M&HCV sales were down 34 per cent in 2019 and it was during the second half that the fall was even steeper, by over 50 per cent. “We were absolutely categorical that we wanted zero BS-IV stocks (on March 31, 2020),” says Arya. The leadership team also decided that even if more BS-IV trucks could still be sold owing to demand, the company would consciously steer clear of this route.

“We said we would rather offer BS-VI trucks to customers because they were less polluting. Rajaram came to me in the beginning of this year saying that there were customers still keen on buying BS-IV trucks,” says Arya. Yet, he stuck to his guns, reiterating that the better option was to sell cleaner BS-VI trucks. It was a tough call but had to be taken nevertheless. “For me and my top management, we had to clearly make a choice: are we prioritising environment or short-term economic gain? Once you have your priorities clearly in place, the rest follows easily,” says the DICV chief.

The thinking was based on the Daimler value system, where environment and safety cannot be compromised at any cost. The roadmap was crystal clear in terms of shifting quickly to BS-VI rather than continue to sell BS-IV trucks.

“Rajaram’s team managed that successfully and he led the charge. We took this call early on when the market was dramatically dropping and it was indeed challenging,” says Arya.

The availability of diesel was another issue and this was especially critical for trucks. There were still issues on accessing the fuel across every nook and corner of the country and this became possible only by March. “This was a reality we had to contend with while managing the transition because there was no leeway/room to manoeuvre,” he adds.

With all these headwinds, Krishnamurthy knew he had his work cut out and told his team to obsessively think of zero BS-IV stocks across the entire value chain, from suppliers to dealers. Work had kicked off in August 2019 which meant that the company had barely eight months to complete its task.

War room

At that point in time, the economic crisis in the country was not so dire as it turned out to be from September-November. A war room was set up within the Oragadam plant where suppliers were roped in, too, along with specifications on BS-IV components. Additionally, dealer stocks were factored in as part of the exercise. “We knew what it took to get to zero and it was a complete picture relied in the war room,” says Krishnamurthy.

There was a four-member team responsible for operations with different schedules planned daily for other teams involved in a slew of functions ranging from procurement, supply management and dealer management to invoicing and financing. The war room was small with hardly any seating space but a whole lot of charts splashed on the walls displaying key numbers on stock level information, etc. The participants were allotted the tasks of getting parts from suppliers on schedule and preparing customers to whom BS-IV trucks could be sold.

“We identified people from our database built over many years as potential buyers,” says Krishnamurthy. Once the orders started coming in, the momentum within the war room kicked off in right earnest. Despite this, there were unforeseen hiccups along the way. In mid-February, banks indicated that they would not fund BS-IV trucks, which caught manufacturers like DICV by surprise.

“We now needed to change our strategy and target customers with a good track record, which meant starting anew. We went back to different buyers and used our in-house financing to support them,” recalls Krishnamurthy.

It was hard work since trucks were already on their way to different destinations, which meant “we had to think quickly of new customers in the same region”. The local teams were on their feet and went flat out to woo the new buyers for these BS-IV trucks.

This literally meant that for every single customer initially earmarked for sale in a region, five more had to be found in record time thanks to the new bank diktat. This was the only way to guarantee the sale of at least one truck. “You need to be prepared for surprises in India but self-belief eventually wins the day,” reasons Krishnamurthy. As he puts it, “many things happened in the last fortnight” of March 31 even while the team managed to overcome these obstacles and eventually came out tops. According to Krishnamurthy, the team was convinced that they could achieve the target and this was thanks to their fighting spirit.

In his turn, Arya was amazed to see every conceivable detail etched out in the war room. “It was orchestrated seamlessly across the value chain,” he says.

Dealer involvement

This, in his view, formed the backbone of the success story, especially when companies typically leave it to dealers to liquidate stocks. “We decided to involve dealers early enough since they are partners by the end of the day,” says Arya.

In the past, there were quarterly reviews with dealers but monthly reviews soon became the norm during this period. The idea, says Krishnamurthy, was to give them the confidence on the BS-VI transition as well as the zero level target.

There would be a meeting in the war room everyday and a weekly top management preview with the members. Everyone was taken on board and even for the last few trucks that had to be sold, key members in the team were chosen to find the right customers. Behind each team member was a sales person to execute the deal.

Discounts were clearly a no-no during this exercise. As Arya explains, this may seem the easier option but value selling makes much more sense. “There was no point discounting BS IV trucks and charging a premium for BS-VI since it would have diluted the brand,” he says.

The focus on producing only cabin trucks saved 15 days of bodybuilding time and it was also decided that the last BS-IV truck would be fully built from the factory. The leadership team also had to take into account that there were States which had their own rules on registration cut-off dates which meant planning had to be spot on.

“We were constantly thinking ahead, especially in this volatile market with different dynamics panning out in various States. We had to be vigilant and take on-the-spot decisions. The war room was therefore critical,” says Arya.

Even while this remarkable achievement has in a way been clouded by the pandemic, the DICV chief reiterates that “Rajaram and his team deserve kudos for this marathon effort” despite the market environment and now the virus threat.

“The idea was to avoid waste and we went all out out to ensure that nothing remained unsold. Dealers were convinced of the intent behind it and everyone participated wholeheartedly,” says Arya.

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Published on April 23, 2020
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