“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
EXECUTIVE SUMMARY In the field of management practical work plays a vital role, it is this practical knowledge which drives one to his or her ultimate desire. In the similar way company can achieve its ultimate goal only if it has sufficient service which contents prospective workers. Title of the project: “Logistics Management in VRL Logistics Limited at Varur”. This fruitful venture was accomplished by undertaking the study at VRL Logistics Limited, which is well known for its quality and in time service. The pioneer provides service in goods transportation, passenger transportation and courier service. The Logistics chain starts from suppliers or consigner, the strength of the chain would emerge from the relationship that are nurtured between the consignee (person to whom the goods are delivered) and transporter of each line and the flexibility would be a result of the transparency of communication, speed of reaction and the focus on core competence. Need for the study: To study the various aspects involved in the Logistics management. Objectives of the study: i.
To study the various costs involved in the Logistics management.
ii.
To the importance of warehousing in Logistics management.
iii.
To know overview of freight movement.
Limitations of the study: The necessary information about the project was given by the company. Some of the study was depended on observation.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
Findings: i.
The effective pricing strategy of VRL Logistics Limited.
ii.
The various kinds of services offered by them.
iii.
The material handling in the Varur TPT.
iv.
The capacity of the warehouse.
v.
The strategies of the VRL logistics Limited.
vi.
Factors affecting road transportation.
Suggestions: i.
It should emphasize on warehousing facilities provided.
ii.
Transhipment labours should be given sufficient training to handle the goods.
iii.
The company should build relationship with industries for more contracts.
iv.
TPT labours may be divided into three shifts for the efficiency. At present they are working in two shifts of 12 hours each.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
INTRODUCTION TO LOGISTICS Logistics is a broad, far-reaching function which has a major impact on a society’s standard of living. In a modern society, we have come to expect excellent logistics services, and tend to notice logistics only when there is a problem. The difficulty in shopping for food, clothing, and other items if logistics systems do not conveniently bring all of those goods or items together in one place, such as a single store or a mall. The challenge in locating the proper size or style of an item if logistical systems do not provide for a wide mix of products, colours, sizes, and styles through the assortment process. The frustration of going to store to purchase an advertised item, only to find out the store’s shipment is late arriving. There are only few of the issues for granted which illustrate how logistics touches many facets of daily lives. Because of the magnitude of the impact of logistics on society and individuals, a macro approach is taken to understand the logistics management. Logistics is called by the many names, including the following: Business logistics Distribution Logistical management Supply chain management Supply management What these terms have in common is that they deal with the management of the flow of goods or materials from one point of origin to point of consumption, and in some cases even to the point of disposal.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
The Council of Logistics Management (CLM) describes logistics management as “The process of planning, implementing and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to the point of consumption for the purpose of conforming to customer requirements.” KEY LOGISTICS ACTIVITIES Outlined below are the key activities required to facilitate the flow of a product from point of origin to point of consumption. All of these activities, listed below, may be considered part of the overall logistics process. Customer service Demand forecasting/planning Inventory management Logistics communication Material handling Order processing Packaging Plant and warehouse site selection Procurement Return goods handling Traffic and transportation Warehousing and storage While all organization may not explicitly consider these activities to be part of logistics activities, each activity affects the logistics process.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
Figure shows how logistics activities drive total logistics costs. Place/customer service levels •
Customer service
•
Parts and service support
Inventory carrying costs •
Inventory management
•
Packaging
Transportation costs •
Traffic and Transportation
Lot quantity costs
Warehousing costs
•
Material handling
•
Warehousing and storage
•
Procurement
•
Plant and warehouse site selection
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
Order processing and Information costs •
Order processing
•
Logistics communication
OBJECTIVES OF THE STUDY
1. To understand the logistics management. 2. To study the role of infrastructure in logistics management. 3. To study various documents maintained while transportation of
goods. 4. To study manpower used and material handling in loading and
unloading of trucks. 5. To study various costs involved in logistics and steps to reduce
those costs. 6. To study the booking and delivery process maintained in
organization. 7. To study the importance of warehousing in logistics. 8. To know the potential for logistics industry in fourth coming years.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” METHODOLOGY It’s not only the data; it is the way in which we collect the data. So methodology is the sequence in which the data are collected. The tools for collection of data for the present project work are the primary data and secondary data. The information furnished in this report has been collected primary data as well as secondary data. The primary data is collected through the interaction with the managers, supervisors, drivers, and labours of the company. The secondary data has been collected from annual reports and company website.
INDUSTRY PROFILE INDUSTRY OVERVIEW Healthy economic growth, rise in the production of key commodities, infrastructure investments and growth in import-export have led to growth in freight movement in the past 5 years, with roadways dominating freight movement on account of higher flexibility, reach and customer preference. Domestic freight transportation service (DFTS) refers to transportation of goods within India; Here the mode of transportation also mainly refers to roadways and railways, as they carry nearly 90 per cent of the cargo in volume terms. The domestic freight transport services may be characterized as a large growing sector. The size of the DFTS sector in India, comprising mainly transport by roads, railways, coastal shipping and pipelines is estimated at 1,590 billion tonne kilometres (btkm) in volume terms and at Rs. 1,990-2,010 billion in value terms in 2006-07. In volume terms, as per CRISIL Research it is estimated that the sector has grown at 10.5 per cent per annum during 2001-02 to 2006-07, whereas during 2006-07 to 2011-12, it is forecast to grow at 10.1 per cent per annum, and reach a projected size of 2,569 btkm by 2011-12.Going forward, given the buoyancy in the economy and expected completion of infrastructure projects, the overall freight movement is expected to remain strong. As a result, roadways will further gain market share, backed by its inherent advantages of flexibility and due to the growth in demand from
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” redistribution segment. On the other hand, railways’ share will decline on account of capacity constraints, until the dedicated freight corridors are completed. In 2006-07, road transport services comprised nearly 58 per cent of the total freight share, followed by rail transport at around 32 per cent and coastal shipping and pipelines with relatively smaller shares of around 5 percent each. As per CRISIL Research roadways expects to continue to dominate freight movement, with its share expected to grow to a tidy 61 per cent in 2011-12. On the other hand, the share of railways is expected to decline to 29 per cent in 201112, on account of capacity constraints during the same period, while the share of pipelines and coastal movements will remain small. Thus, road transport will remain the growing segment,
owing to its plus points such as greater coverage, higher flexibility and door-to-door delivery. The sector will enjoy the benefits out of its inherent advantages despite higher effective cost. Other factors like lower risk of handling loss, lesser loading and unloading of goods, investments made in the NHDP and relatively higher customer orientation as perceived by users also give road freight transport an edge. INTRODUCTION Transportation is the process of moving goods and passengers from origin to destination in the timely and cost efficient manner possible with the available modes of transportation. MODES OF TRANSPORTATION: In order to transport material from one place to another transporters have to use Rail, Road, Air, Water and Pipe Line as the modes of Transportation. A brier introduction to the various mode of transportation is as follows Rail: Used for delivery of a wide range of goods including coal, iron ore, cement, food grains, fertilizers, steel, petroleum products and other heavy goods. Road: Used by suppliers to deliver goods in a cost effective manner. Many transport companies have expertise for fast delivery, packaging etc. for making scheduled delivery.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Air: Used mostly for delivery of high value and low volume goods from distant suppliers, usually not connected by any other mode of Transportation. It is also suitable for emergent item to be imported for some specific requirement. Water: Used by firms for delivery of goods from distant suppliers, mostly conducted in containers of varied size. This mode is ideal for transportation of heavy and bulky goods and suitable for products with long lead times. Pipe Line: Used by oil sector companies for mass movement of Petroleum products including gases. Due to quite low operating cost it is one of the preferred modes of transportation.
INDUSTRY CLASSIFICATION
FRAMEWORK FOR FREIGHT DEMAND DETERMINATION
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR�
DRIVERS THAT INFLUENCE FREIGHT MOVEMENT The overall freight movement in the country depends significantly on the growth in industrial, agricultural production and imports. This is also reflected in the high degree of correlation (>0.99) between GDP (industrial plus agriculture) and imports (called adjusted GDP) versus freight movement during 1971-72 to 2006-07.Besides economic growth, the investments made in infrastructure of transport segments also are an important driver of freight movement in a particular mode of transportation. Even though economic growth is the most significant driver for freight movement in a broad sense, the extent of influence specific demand drivers will have on a particular mode of transport may vary. For instance, freight movement in coastal shipping mainly depends on the extent of import-export in the country, while, rail and road freight movement has been significantly influenced by the hub and spoke model of freight distribution.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR�
REVIEW OF FREIGHT MOVEMENT During 1991-92 to 2006-07, the total freight movement is estimated to have increased at a CAGR of around 7.2 per cent, to 1,590 btkm in volume terms and at Rs 1,990-2,010 billion in value terms in 2006-07, in line with the CAGR of 5.9 per cent in adjusted GDP during the same period. Further, when the adjusted GDP growth declined from 7.3 per cent in 1996-97 to 2.3 per cent in 1997-98, demand for freight movement also declined from 5.2 per cent to 4.4 per cent. Similarly, over the past years, while adjusted GDP growth increased at a CAGR of 7.3 per cent, freight movement during the same period has increased at a CAGR of about 10.5 per cent.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
DOMESTIC ROAD FREIGHT TRANSPORTATION SERVICE: Overview Going forward, given the buoyancy in the economy and expected completion of infrastructure projects, the overall freight movement is expected to remain strong. As a result, roadways will further gain market share, backed by its inherent advantages of flexibility and due to the growth in demand from redistribution segment. On the other hand, railways’ share will decline on account of capacity constraints, until the dedicated freight corridors are completed. In 2006-07, road transport services comprised nearly 58 per cent of the total freight share, followed by rail transport at around 32 per cent and coastal shipping and pipelines with relatively smaller shares of around 5 percent each. As per CRISIL Research
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” roadways expects to continue to dominate freight movement, with its share expected to grow to a tidy 61 per cent in 2011-12 (excluding demand from last mile). On the other hand, the share of railways is expected to decline to 29 per cent in 2011-12, on account of capacity constraints during the same period, while the share of pipelines and coastal movements will remain small. Thus, road transport will remain the growing segment, owing to its plus points such as greater coverage, higher flexibility and door-to-door delivery. The sector will enjoy the benefits out of its inherent advantages despite higher effective cost. Other factors like lower risk of handling loss, lesser loading and unloading of goods, investments made in the NHDP and relatively higher customer orientation as perceived by users also give road freight transport an edge.
FREIGHT MOVEMENT: BULK VERSUS NON-BULK Freight movement can be divided into bulk and non-bulk freight. Bulk freight includes commodities like cement, fertilizer, food grains, POL, iron ore etc and non-bulk freight includes general cargo (increasingly containerized). In 2006-07, bulk commodities are estimated to have constituted about 70 per cent of the total freight movement. While 90-95 per cent of the railways’ freight constitutes bulk commodities, roadways’ freight is evenly balanced between bulk and non-bulk commodities, with the non-bulk commodities contributing 45-50 per cent of its total freight movement. Coastal shipping and pipelines largely move bulk commodities. Over the next 5 years, the share of non-bulk freight movement is expected to increase to 40 per cent of the overall freight movement, largely
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” supported by road transport. While 60 per cent of the road freight transport is expected to be constituted by non-bulk commodities, the railways’ freight mix will continue to be dominated by bulk commodities at 90 per cent. (Estimations are on btkm terms.)
ROAD FREIGHT MOVEMENT: HAULAGE-WISE The road transport sector can be broadly divided into two areas, primary transportation that is, long haul (>800 km), medium haul (350-800 km) and short haul (50-350 km)] and secondary transportation (referred to as last mile distribution with <50 km). In 2006-07, out of the total primary road freight movement (estimated in btkm terms), long haul contributed close to 20 per cent, medium haul contributed over 55 per cent and short haul around 25 per cent. Railways have an upper hand over roadways in long haul movement of commodities mainly on account of its favourable cost economics (lower freight rates) and tie up with government undertakings for freight movement. On the other hand, road transport has been a favoured mode of transport in the medium haul, due to competitive and effective freight cost, fuel efficient vehicles, improved highway infrastructure etc.
INHERENT ADVANTAGES INFRASTRUCTURE SUPPORT GIVE AN EDGE TO ROAD TRANSPORT Historically, railways has remained a dominant mode of transport in India, over the past few decades, roadways has gained a significant share in the overall traffic movement, while railways has lost its market share. The reasons that have helped roadways gain market share are as follows: Greater coverage as compared to any other mode of transport
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Higher flexibility in terms of door-to-door delivery, giving it an edge despite higher effective cost Lower risk of handling loss, due to lesser loading and unloading of goods. Investments made by the government in the NHDP. Given the above-mentioned advantages and growth in road infrastructure, the road transport network has acquired a considerable advantage over a period of time. This is evident from the fact that during 2001-02 to 2006-07, while freight demand in road transportation sector is estimated to have grown by 12.3 per cent, the growth in the overall road freight movement was about 10.5 percent, and the growth in rail freight movement was just about 8.5 per cent. Consequently, over the past few decades, the share of road transport in the total freight movement has also been increasing; this share has been estimated to increase from 53.3 per cent in 2001-02 to around 57.8 percent in 2006-07, supported by strong economic growth, inherent advantages of roadways and initiatives in infrastructure development. (It may be noted that this share of road excludes last mile freight movement).
BUSINESS OVERVIEW OF THE VRL LOGISTICS LIMITED VRL Logistics is into the business of transportation and logistics service of goods and transportation of passengers by road. They have a long operating track record of more than two decades in this business. The chairman Mr. Vijay Sankeshwar has over three decades of experience in the transportation industry. They have also recently forayed into wind power generation and air charter business. VRL Logistics offer following services which are summarized below 1. Goods Transportation
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” a. Full truck Load b. Less than full truck Load (Parcel) • General Parcel • Express Cargo c. Courier d. Passenger Travels 2. Wind Power Generation 3. Air Charter Business
VRL OPERATION VRL LOGISTICS LIMITED
Transport and logistics
Passenger Travels
Wind Power Generation
Air Charter Operation
Goods Transportation
Vijayanand Travels
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
Full Truck Load
Less Than Full Truck Load
Courier
(Parcel)
Express Cargo
Maruti Parcel
General
Carriers
Parcel
Rail
Air
Road
Shiva Road lines
Goods Transportation and distribution business is carried across 17 states and 7 Union Territories i.e. Pondicherry, Daman, Silvassa, Chandigarh, Karaikal, Yanam, Mahe covering 649 cities through out India. They cover the states of Karnataka, Andhra Pradesh, Tamilnadu, Kerala, Maharashtra, Goa, Gujarat, Rajasthan, Punjab, Haryana, Delhi, Himachal Pradesh, Uttar Pradesh, Chhattisgarh, Madhya Pradesh, West Bengal (Kolkata) and Uttarakhand under this business. Passenger transport business is carried on under the name of “Vijayanand Travels”. They carry on this business within the state of Karnataka, Maharashtra and Tamilnadu covering 56 cities in all. They have 40 branches and 466 franchisees across the states of Karnataka, Maharashtra and Tamilnadu for their passenger transport business.
The fleet strength as on February 29, 2008 comprises of 2,683 vehicles, all of which are owned by the Company. The fleet comprises of 2,446 vehicles for goods transportation, 197 vehicles for passenger travels and 40 vehicles for internal use which includes fork lifts, cranes, staff buses, water tankers, diesel tanker, tractors etc. Wind power generation: In 2006 VRL Logistics commenced wind energy business in southern India at Kappatgudda, Gadag district in the state of Karnataka. Company had issued various purchase and work orders to various Suzlon entities for the supply, commissioning and erection of 34 Wind Turbine Generators (WTGs). As on date all the 34 WTGs are operational. These WTGs are presently under warranty period which expires on
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? March 31, 2008. Operations and maintenance of windmills are been taken care of by Suzlon Energy Limited by a team of experts at the site. Company has installed 34 wind turbine generators (10 WTGs in the month of September 2006 and 24 WTGs in the month of March 2007) with a capacity of 1250 KW (1.25MW) and all are operational. The total capacity of the wind turbine generators amounts to 42.5 MW. Between April 1, 2007 and February 29, 2008, 77818019(KW) units of power have been generated with a PLF of 22.77%. Air charter business: VRL Logistics have entered into the air charter business by providing services to individuals and corporate passengers. Recently, the Company has purchased premier 1A aircraft from Hawker Beech craft Incorporation, USA. Premier 1A is 2 pilots and 6 passenger seat aircraft (with 4 club configuration seats). They have also entered into MOU dated November 1, 2007 with Indamer Company Private Limited for the maintenance of the aircraft. Company have also made an application to the Ministry of Civil Aviation, requesting for a no objection certificate which grants a Non Scheduled Operator Permit. They have been granted the initial NOC dated March 23, 2007 to operate Non Scheduled Operator Permit from the Ministry of Civil Aviation. They will operate on an all India basis subject to necessary government approvals. The air charter business is headed by Vice President- Air Charter, who looks after all the activities of this business. They also started recruiting the pilots, co pilots, security officers and other staff for the business. They will be on the payroll of the VRL Logistics Limited.
COMPANY PROFILE VRL LOGISTICS LTD VARUR, HUBLI
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;?
BRIEF HISTORY OF THE COMPANY The Managing Director Mr. V, B, Sankeshwar started as an individual transporter in January 1976. Without any background and experience, initially for the first two years he suffered heavy losses, and then by end of 1977 he started as a local transporter between Hubli and Gadag. In 1978 due to personal management and effective service he purchased one old lorry and he observed activities of other well known transporter, and started first parcel service from Bangalore to Hubli, Garage, and Belgaum. With only two Lorries gradually business picked up. Similarly Smt Lalita .V. Sankeshwar purchased one old lorry in the year 1979 and running individually and some times hiring out to Vijayanand Road Lines which was proprietary concern then, company came in to existence effective from 31st march 1983. Due to efficient management and co-operation from the staff the total turn over and business picked up.
The above proprietorship firm was converted into a private limited company and sold its lorries to the company and the company came in to existence effective from 31 st march 1983. Since then, the business has grown leaps and bounds and VRL LOGISTICS LTD is
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” presently engaged not only in the goods transportation business but in the passenger transportation and courier business. VRL LOGISTICS LTD today is the leader in the parcel transportation business in India – in fact the only organized segment player with a clear focus on the parcel segment- and has an extensive network of more than 800 branches throughout the country. VRL LOGISTICS LTD’s revenue for the year ending March 2008 is 2750 million; the company got 81% of its revenues from goods transportation, 18% from passenger transportations 1% from other source.
COMPETITIVE STRENGTHS An established brand having a good reputation:
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” They have built a brand over two decades, owing to their commitment to quality service standards, reliability and timeliness of services offered and long-standing presence in the industry. They have a long operating track record in the industry. They have expanded their service offerings over the years; having commenced operations with parcel cargo transportation, they presently offer other services such as express cargo, courier and passenger transportation. They provide several luxury offerings in passenger transportation business. They also share good relationships with their business associates such as truck manufacturers and equipment manufacturers who are very critical to the business. Large and established size and scale of operations: There are a multi-service transport and logistics provider with their presence in 17 states and 7 Union Territories in India. They offer a wide range of services such as parcel cargo, express cargo, full truck load and courier services in addition to passenger transportation. Company has an extensive network of operations which enables us to provide connectivity even to certain remote locations. As on February 29, 2008 they have a fleet strength of 2683 owned vehicles for carrying on the goods transportation and passenger transportation business. They have presented below a summary of the size of operations in the goods transportation and passenger transportation business: Details
Goods Transportation
Passenger Travels
No. of vehicles owned
2479
222
No. of States covered
17
3
No. of Union Territories
7
-
No. of cities covered
649
56
No. of transhipment hubs
43
-
No. of branches (owned)
799
40
No. of Franchisees
1387
466
The large fleet size provides them multiple benefits like ability to provide the services in larger number of routes, better margins on consignments, less dependence on hired vehicles, and reputation for reliable delivery of the consignment / passengers in a timely manner. Also the variety of vehicles fleet enables them to service the diverse nature of consignments of their customers and requirements of their passengers.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Long operating history in the transport and logistics business: They have an operating track record of over 24 years in the transport and logistics business. The chairman Mr. Vijay Sankeshwar, who has been actively involved in the business and management of the Company enjoys over three decades of experience in the transport industry. They have extensive experience in the transport and logistics industry enables us to gauge and understand the changing trends and growth prospects in the industry. They have always believed that there is a growth potential in the transport and logistics industry. During 1991-92 to 2006-07, the total freight movement is estimated to have increased at a CAGR of around 7.2 per cent, to 1,590 btkm in volume terms and at Rs 1,9902,010 billion in value terms in 2006-07, in line with the CAGR of 5.9 per cent in adjusted GDP during the same period. Strong In-house capabilities: They have developed strong in-house capabilities over a period of time which enables to improve the efficiency of the vehicles and improve their delivery model. Their in-house body designing facility enables us to build the structures for the vehicles based on their specifications, thereby maximizing utilisation of space and minimising the body weight by using light metals like aluminium along with the steel, rather than steel alone. The in-house competency also includes vehicle repair and maintenance facility at Varur where they focus on carrying on preventive maintenance measures to minimize the events of breakdown or damage to vehicles.
Long serving and experienced management team: They believe that employing and retaining individuals with experienced backgrounds has enabled us to capitalize on their collective expertise in understanding this business and ensuring its growth. They are led by a management team with sound experience and expertise
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” in the transport and logistics industry. The promoters are actively involved in management of the business operations. The Chairman and Managing Director, Mr. Vijay Sankeshwar, has over 3 decades of experience in the industry and provides the strategic direction to the operations.
Integrated Business model: They offer a range of services that are complementary to each other and thus constitute a unique business framework. They have adopted a hub and spoke distribution model for delivery of their consignments, which entails establishment of several transhipment hubs and re-distribution of consignments there from to the respective destinations. This ensures significant cost savings, rationalization of routes covered by the vehicles and optimum utilization of resources including vehicles, manpower etc. They have 43 transhipments hubs, 799 owned branches and 1387 franchisees, which enables the smooth flow of goods and services. They are an integrated transport solution provider with the variety of services that they offer. The service offerings enable us to access a diversified customer base comprising both institutional and retail customers. This enhances brand visibility among different customer segments.
CURRENT POSITION The company currently is on a growth path having achieved a turnover exceeding Rs 2,750 million for the year ending March 2008. The company has the largest network of branches among all transport companies in south India with over 1000 branches in Karnataka,
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? Tamil Nadu, Andhra Pradesh and Kerala. The company currently owns 2479 trucks and LCVs, 222 buses and regularly hires additional trucks from the market to render its services. This makes the company the largest individual owner of vehicles in India giving the company additional flexibility in its operating margins higher than other players in the organized transport industry. The company is known for its reliable quality service during its operation for the last two plus decades. VRL is an established brand name and this enables the company to charge premium rates to its customer. Turnover of Logistics division increased to Rs.51258.80 lacs in the current year registering on increase of 17.20% over turnover of FY 2006-07. Express Cargo which is part of logistics has achieved considerable operational success to reach turnover of Rs.2663.69 lacs in FY 2007-08. The Turnover details are as below.
From the above figures we can say that there is steady increase in the growth of the turn over of the company. Within 25 years company has focused towards its Goals.
VISION, MISSION AND OBJECTIVES
VISION
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” To become the primer company that cuts across various segments and remaining as the torchbearer of each segment that the group venture in to.
MISSION To provide the highest quality service to our customers by continuously increasing cost efficiency and maintaining delivery deadlines. To encourage our employees /workforce to strive for quality and excellence in everything they do. To promote team work and create a work environment that takes care of talent and brings out the best in our employees.
THE VALUES “PUNCTUALITY, INTEGRITY, HONESTY, LOYALTY AND CREDIBILITY”
THE QUALITY POLICY We are committed to provide Quality Logistics services consistently at reasonable price and to continually improve the same to achieve customers’ delight on a sustainable basis.
OBJECTIVES OF THE COMPANY The main objective of the company is to provide good service to customer with the reasonable rate and provide quick prompt and safe service.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” To develop the transportation business in states like Andhra Pradesh, Tamilnadu and Kerala. To have fixed-assets mainly own storehouse in big cities like Davanagere, Gulbarga, Bangalore etc. To have an independent own building with printing machines &computer for each &every district. Training for all the employees. Quick and safe service. Customer satisfaction. Competitive price. Attain market leadership.
ACHIEVEMENTS AND AWARDS VRL LOGISTICS LTD well known as ‘VRL’ has been a staunch believer of ‘Symbol of Service’ and has become a familiar name in the country and in the state of Karnataka with
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” more than 600 branches all over the country. The company has 1600 vehicles consisting of cargo and passenger buses and claims to be the largest single fleet owner in the world. The company has been making all the efforts to have its own infrastructure facilities like trans shipment yards, etc, in all the key business places, by acquiring the immovable properties, the company has already established its own business activity centres and has also been acquiring land properties. Thus, the group has been acquiring valuable assets. Managing director of VRL LOGISTICS LTD Sri V.B.Sankeshwar has been awarded “Udyog Ratna Award” in 1994, “Sarige Ratna Award” in 1998 and “Vishveshwarayya Navaratna Award “in 2003.
CENTRALIZED BUILDING / LAND IS UTILIZED FOR THIS PURPOSE Head office Building.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Transhipment godown. Work shop for existing vehicles. Canteen facilities for employees. Drivers rest room. The company has own petrol bunks Indian Oil Corporation. Effluent treatment plant with capacity of 1, 75,000. Rain water harvesting plant’ surface rainwater harvesting. Surface rain water harvesting. Roof water harvesting.
OWNERSHIP PATTERN AND MANAGEMENT This company has been converted into a full-fledged public ltd company since 14-02-1997. The authorized, issued, subscribed and paid up share capital of the company as on date is 2000crores (200000 equity share of Rs 1000 each). To augment resources for its future infrastructure development, the company is envisaging a public deposit scheme for since infrastructure development such as purchase of buildings, godowns, etc, at various places where the company has established its activities.
SHIFT FROM UNORGANIZED SECTOR TO ORGANIZED SECTOR
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? Currently, it is estimated that the unorganized sector accounts for over 86% of the goods transport in the country. With the introduction of VAT, significant shift of the business is expected from the unorganized sector to the organized sector (given that sales tax evasion is no longer an attraction under the VAT scheme) and VRL LOGISTICS LTD is well poised to take advantage of this shift with its wide network and the image of being a reliable service provider. Leadership position with revenue in excess of Rs 51258.80 lacs from the Logistics division for the year ending March 31, 2008, the company is a leader in this segment, in fact, the only organized sector player with a distinct focus on the parcel segment. The companies further hopes to consolidate the position in this segment by increasing its thrust on marketing and establishing further stations across India to increase its reach. With the largest reach in south India, the company has a well established network of branches enabling, procuring and distribution of goods across south India. The company currently has in excess of 350 branches in Karnataka, Tamil Nadu and Kerala making it the transporter with the largest reach in south India. Needless to say the impressive reach of VRL LOGISTICS LTD within south India combined with its reliability has made VRL LOGISTICS LTD the preferred transport of many a corporate houses in the southern region.
BOARD OF DIRECTORS
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Sri. VIJAY SANKESHWAR (Chairman and Managing Director) Has ardent faith in transparency to the core. He is a cut throat business entrepreneur and a technocrat, highly professional in finance and accounts, legal and personnel, advertisements and in circulation or marketing. Sri. ANAND SANKESHWAR (Managing Director of Vijayanand Logistic Ltd) Sri. L. RAMANAND BHAT
(CTO VRL LOGISTICS LTD)
He is the brain behind the entire computer system, heads the entire activities of the workshop and garage for maintaining the bodybuilding of vehicles. Sri. K. N. UMESH
(Chief Executive Officer)
Heads the entire cargo transport activities of the southern and northern parts of the country with HQ in Bangalore. Sri. D. N. KULKARNI
(Vice President of finance department)
Director of board at VRL handles finance and accounts wing of the group.
ORGANIZATION CHART
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Vijay Sankeshwar Chairman and Managing Director
Anand Sankeshwar Managing Director
R.P.Raichur
K.N.Umesh
L.R.Bhat
V.V.Karmadi
G.S.Ayyer
Director
CEO
CTO
VP (Operation)
VP (Finance)
(Finance) Anjan Rao VP (Aviation) D.N.Kulkarni
Sunil Nalavadi
VP (Finance)
Chief Accounts Officer
S.L.Nagaraj Chief Accounts Officer
S.R.Hatti
Y.M.Hannalli
C.M.Baluthi
Prabhu Salageri
GM
GM
GM (MPC)
GM (Travels)
(Administration
(Infrastructure)
)
S.G.Patil GM (HRD)
DEPARTMANTS HELPING IN SMOOTH RUNNING OF ORGANIZATION
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
Legal department
Complaint department
Maintenance department.
H R Department (Personal Department)
Account and finance department
Garage Department
Commission department
Service department
Information Technology
Legal department
Legal department is one which plays most prominent part in the company. It focuses on all the legal aspects concerned to the company. It functions positively towards the success of the VRL LOGISTICS LTD group of companies.
Its functional activities are:
Settlement of industrial disputes Industrial disputes include strikes; lockouts are settled under industrial
dispute act. Thus settlement of these disputes is one of the activities concerned with trade unions.
Settlement of workmen compensation
This compensation, under workmen compensation act include accidents, matters related to gratuity pension etc are settled provided accidents to employees on job.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
Settlement of accidents claims:
In case of accidents are losses to the vehicles of VRL LOGISTICS LTD of companies occurs then compensation can be claimed by this department.
To avoid illegal activities in the firm:
Illegal activities such as theft, robbery within premise are avoided thus this department is created.
Advice the departments in firm
This legal department acts as an advisor for the different department of the firm concerning with ethics, Social obligation towards the public.
Suit against debtors
Customers are given maximum period to clear the debt. If the positive response is not given first notice is sent. That is within 30 days and second notice within 90 days and third notice within 20 days and thereafter are not sent but personnel approach is given and then legal action is imposed, these notices are issued in order to avoid legal litigation, enmity.
Suit against bounced Cheque:
Customers paying by the cheque if return by bank when there is no enough money in an a/c for it to be paid then the company has right to the customers for such as act.
Settle legal charges.
It is the responsibility of this department to pay all legal charges charged by the court/govt.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Complaint department Here is department to handle and settle the customer complaints, this department takes care of customers to keep up their interest in the companies service problem of customers will be handled efficiently and settled properly of their satisfaction. Complaints settled by this department are
Delays
Delay caused in delivering of materials to destination point. Delay due to delivers negligence inconvenience etc. Settlement When the customer complaints about delay in delivery of goods with LR no enquiry will be made from destination point about the undelivered goods. And the date of right delivery date will be given. If any loss is caused to customer due to delay, such loss is compensated based on value of goods.
Exchange of materials:
This is one complaint that customer may complain. Sometimes the goods may be misplaced by the consignor unknowingly. So the customer is not in a position to receive the goods. Therefore the above complaint is placed. The company takes back the goods from wrongly delivered consignee and redelivers to the right consignee.
Road robberies, fire theft etc
The goods are undelivered to the destination point due to robberies fire theft etc. If the goods are lost during transit, short certificate will be issued to customer until the goods are traced. If fail to trace, loss is compensated on the basis of value of goods on certain condition.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
Demurrage Collection Points
It is a point at which goods consigned will be stored when consignee fails to take responsibility of these goods that is when goods consigned reach the destination, point and fails to take delivering consignor. When they fail to respond the notice, goods will be sent to and stored in demurrage collection point. The notice inform them to take delivering of the goods consigned and settled and unclaimed charges if any generally. 3 notices will be sent first 30 days, second 90 days, and third 120 days. And a notice will be sent from demurrage collection point. When goods are about to sell through auction. Booking place – Destination (delivery point) 1st notice – 30 days 2nd notice – 90 days 3rd notice – 120 days
Department
Sold through Auction
–
Final notice
_
before setting
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Maintenance department and House Keeping Department It means maintenance of various vehicles which includes bus, lorry and other goods carries. At present there are 2686 vehicles which include Volvo buses, luxury, buses, lorry, mini bus etc. Functions of Maintenance Department: Centralized purchasing Repairing the vehicles Complete body building of vehicles Changing of oil clutches as per the schedule for precautions. Hiring the lorries on the buses of locality and demand Maintenance of drivers accounts i.e. payment of salary to drivers, looking after their performance, appointment of new drivers etc. Maintenance department is playing an important role in the company because The Company can save the cost with proper maintaining of available resources and proper utilizing them.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Account and Finance department Significant of Accounting Policies. Bases of preparation of financial statement The financial statement are prepared on the historical cost convention basis in accordance with the generally accepted accounting principles and they accounting standards referred to in section 211(3C) of the companies act 1956 except otherwise stated. Revenue recognition: The company generally follow mercantile system of accounting expect on claims which is a counted on cash basis. Fixed assets Fixed assets are started at cost of acquisition construction except in certain fixed assets. Which has been revaluing less depreciation? All cost relating to the acquisition and installation of fixed assets are capitalized and include borrowing cost the assets is put to use. Depreciation Depreciation on fixed assets has been provided on straight line method at rates prescribed in schedule XIV to the companies’ Act 1956. Borrowing cost Borrowing cost directly attributable to the acquisition or construction of qualifying fixed assets are capitalized as part of the cost of the assets up the date assets is put to use other borrowing cost are charged to the profit and loss account in the year in which they are incurred.
Taxation
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Provision for current tax is made and retained in the accounts on the basis of estimated tax liability as per the applicable provisions of income tax act 1961 and considering assessment order and decision of appellate authorities in company’s case. Goods and passenger transport business are subject to various taxes, which may significantly affect profits. VRL is exposed to various taxes imposed by the State and the Central government which include Wheel Tax for seater and sleeper buses, Inter State Transportation Tax for buses operating between two states and service tax which are levied upon private operators. The rates of these taxes have steadily increased in the past three years. For example, the Wheel Tax which is payable by a private transport operator has increased from Rs. 3,300/- per quarter in fiscal 2005 to 43.03% Rs. 4,720/-, in fiscal 2007 (per quarter), for sleeper busses, and, Rs. 750/- in fiscal 2005 to 200% Rs. 2,250/-, in fiscal 2007 (per quarter), for seater busses. As they plan to expand their services and enter different states, they may be exposed to different tax regimes in different states, which may adversely affect profitability. In goods transportation they pay tax to the municipal corporation which is called as octroi. They pay octroi in Maharashtra, Andaman and Nicobar, and Manipur. If the octroi is paid by the company then the penalty will be received from the customer. The company also pay State entrance tax which is 1% of the value of the goods.
H R Department
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” It is heart of VRL LOGISTICS LTD group. It is department where matters relating to recruitment, settlement of grievances etc taken place. A well experienced person any manager of personnel department looks it after. Its activities are spread out over large area, some are:
Employment
Well force of employees
Facilitating for provident fund gratuity
Facilities of ESI
Matters relating to leave, salary, bonus etc
Improving employer employee relation
Providing facility to relating employer or by termination
Training Training can be defined as the process whereby people learn the knowledge, behaviour, skills needed in order to perform the job more effectively. It is the systematic process of matching employee characteristics and employer requirements. So, it is closely linked to other human resources. It is designed for non-managers. It is for a short duration and for specific job related purpose. It is essential for all the employees in the organization because trained person/manpower is the biggest asset to an organization. Objectives of HR Department
To increase productivity of the organization
To reduce cost
To prepare for future assignment
To reduce labour absenteeism
To minimize the operational errors
To establish a sound relationship between worker and his job
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
To increase employees moral and confidence.
Importance of Training Better quality work; if the training (formal) is provided with the best methods and standardized norms, then it will help to improve the quality of service. Trained employees will do less operational mistakes and perform the work effectively. Less learning period; a systematic training program helps to reduce the time and cost involved in learning. Employees can easily reach the acceptable level of performance. They need not waste their time and effort in learning through trail and error. Higher productivity; as training improves the skill and knowledge of employee’s increases which helps to increase output have quality and quantity. Cost reduction More economical use of machineries and resources can be done through training, which will in turn reduce the cost of operation per unit. Supervision Well-trained employees tend to be self-reliant and motivated Therefore, supervisory burden is reduced and the span of supervision can be enlarged.
STAFF SELECTION IS ON THE BASES OF CERTAIN COMPANY RULES AND REGULATIONS
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Employees who complete 5 years in the company get gratuity funds and insurance facilities. VRL LOGISTICS LTD implemented these schemes for all employees Pension schemes are based on salary + dearness allowance at the rate of 12% from employee’s salary matching amount is also contributed by the company and deposited in the account of employees...There has not been a single instance of labour unrest. This is due to the strong employee-employer relationship and various. Welfare ensures adopted by the company such as provident fund, educational benefits, gratuity scheme, medical reimbursement, pension scheme, maternity benefits. The company has introduced various novel schemes like payment to drivers based mileage driven by them. Even the labour and drivers of the organization are given benefits of ESI/PF etc. Apart from direct employment, the company has introduced a self-employment scheme for local entrepreneurs by appointing them as agents of the company. The company has found that in small places, local people are in a better position to cater to the needs of customers without adding overheads to the company. It is estimated that at least 15000 people are benefited by way direct and indirect employment from this company. ENTERPRISING MANAGEMENT TEAM The top management of the team is a highly proven team in planning and implementing new plans and consolidating leadership position in their business. The team has over 20 years experience in running a leading transport business. Management Responsibilities (ISO 9001- 2000)
Customer satisfaction.
Statutory or regulatory requirement needed to conduct business.
Management requirement
Employee’s satisfaction
GARAGE DEPARTMENT
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;?
The repairs and maintenance of all the vehicles including buses are undertaken at the centralized garage located at Varur Hubli. Shirr. L. Ramananda Bhat, CTO of the company heads the garage operation. They have been maintaining stock of all spares and tyres and oil required for the up keep of the vehicles. The total stock of spares and tyres and others on any given date is of the order of Rs. 3.50 cores. The minimum reorder level depends upon the type of vehicles and availability of spares. This is being monitored both at the garage as well as the head office. The entire operation and the infrastructure control have been computerized and the efficiency is to the extent of 95%. BODY BUILDING OF VECHICLES AND OTHER ACTIVITES In the beginning VRL LOGISTICS LTD was arranging the truck bodies built the other bodybuilding located at Namakkal and Mettupalyam. The company has since taken up with the body building activities of VRL LOGISTICS LTD vehicles with all modern facilities. This part VRL LOGISTICS LTD activity has been self-sufficient. All the heavy goods vehicles and LCVs purchased during 1996-97 are mounted with in-house bodybuilding. With this view in mind VRL LOGISTICS LTD has been procuring all the inputs such as aluminium sheets, iron and steel bars, etc, required for the body building activities. There is
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” considerable saving by way of excise duty and central tax by virtue of VRL LOGISTICS LTD activities having taken up all acts it’s on own.
Information Technology The information technology division is located in the workshop in Varur. This division oversees the information technology requirements of Company including the computerizing of their branches, hubs and offices. The computerization of hubs has facilitated mailing of delivery reports and quick flow of information between different offices, delivery offices and transhipment hubs of the Company. This enables effective coordination and tracking of the consignment. Information technology division prepares software which are hardware-related such as office automation-related, courier tracking and accounting software. Global Positioning System (“GPS”) – they have developed their own GPS based tracking device which they have installed in selected vehicles. In addition to helping us keep track of the movement of the vehicles, the GPS system also tracks the time spent by the vehicle when not in motion, the location it has stopped in addition to tracking pre assigned route to be followed by the vehicle. This discourages the drivers from not complying with the instructions given to them regarding the route and time sheets that they are required to comply with. Most of the software requirements are met in-house and in the event that any activity is outsourced by the company, the source code is retained by the Company to ensure that it can be used at a later stage as per the requirements of the Company.
Some of the important developments of information technology division include: Vehicle Maintenance Tracker: This application schedules the maintenance of the entire fleet and generates reminders and alerts automatically when any maintenance events become due. These reminders help in avoiding the premature failure and the excess consumption of parts.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Vehicle Traffic Application: This application controls the entire movement of the vehicles and keeps track of the drivers’ performances in terms of the fuel average and the distance travelled. This also tracks the advance amount paid to the drivers and the diesel vouchers issued for en route fuelling. This application is online and ensures access to this data from any part of the world. Consignment Delivery Application: This application is used in delivery branches to raise online cash receipts and track the consignment. This application also maintains a record of the stock in the Company’s godowns and is used to answer queries from the customers regarding the arrival of consignments. The records of stock and the delivery particulars are updated every 24 hours. Hub Application: This application receives the consignment from other hubs and booking branches and dispatches them to the final destination and some times reroute to other hubs. On line bus ticket booking system: This application is hosted online on the web server and all agents and passengers log on to this application for booking passenger tickets. Accounting package: This application consolidates all accounting programs and helps in the preparation of periodical financial statements, MIS reports etc. Remote access to networked computers: This application enables the Company to take remote access of any computer system linked to the network. This facility is used for monitoring the operations of the employees and also for conducting training sessions for employees in remote locations.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” SWOT ANALYSIS STRENGHT None regulated industry: Since, it is a courier service industry it needs no license to enter this industry, it is a non control industry. High entry barriers: The courier companies have to make a lot of investment in establishing a national network and for it the requisite, infrastructure and technology has to be set up. This discourages new entrants to a large extent, for instance Elbe has 124 branches. 1200+servicesable locations and 10 major hubs
WEAKNESS Dependent on economy scenario: In the mid-80 the Industry grew at a rapid rate. This growth rate was sustained in the 90’s but with the revival of the economy and the greater reach of major players in the segment, the industry is expected to ground at an increasing rate. Have to face the bureaucracy: Express companies like other multinationals have introduced new technology and standards PF efficiency into India, The major courier companies, which have tie ups with international giants are facing problems with bureaucratic setup in India
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? OPPORTUNITIES Value added services: The courier companies endeavour to add to the products of their customers to differentiate themselves from their competitors. Backward integration: The companies cease to be dependent on others for the service they need and have integrated backwards; this is explained by the huge distribution network and the number of vehicle owned by these companies.
THREATS Economy showdown: Being driven by the general economic scenario there is always the threat of it being affected by showdown in the economy. New technology: The company also needs to be constantly in touch with the latest technology to help them provide the best service possible; today a thing like tracking are fairly common and has become a norm.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
TRANSPORT AND LOGISTICS BUSINESS
The Transport and logistics Business is divided into two segments:1. Goods Transportation 2. Passenger Transportation
GOODS TRANSPORTATION VRL Logistics, goods and logistics services include Full Truck Load, Less than full truck load (Parcel) and courier service. Less than full truck load is further divided into express cargo and general parcel service.
They have a fleet strength of 2479 vehicles, which includes: Light Commercial Vehicles (“LCV”) with a gross vehicle weight of up to 7500 Kg, Medium Commercial Vehicles (“MCV’) with a gross vehicle weight between 7500 Kg and 12,000 Kg, Heavy Commercial Vehicles (“HCV”) with a gross vehicle weight of more than 12,000 Kg, Trailers with carrying capacity up to 49 tonnes Small vehicles for internal use like collection and delivery of goods in the cities and towns.
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? All these 2479 vehicles are owned by the company. However, in peak seasons company also take vehicles on hire for transporting goods. This ensures that customers are not put to any inconvenience. Therefore, last minute bookings are usually not turned away.
OFFERING IN THE GOODS TRANSPORT BUSINESS ARE AS FOLLOWS:
FULL TRUCK LOAD Under full truck load, they provide door to door service to the customer, wherein the goods are loaded at the premises of the customer and are delivered to a certain delivery point as specified by the customer. Here the customer hires full truck for transport of goods from one location to another. This service is used by customers / manufactures who have large quantities of goods to be transported. This service is offered to the customer at a pre determined price. In this the whole and sole responsibility will be on the driver only. He only has to react to the negotiations of the customers. In full truck load price will be determined on per tonne base. Now the price is 3020 Rs/tonne. Here the driver will be provided with three water proof covers to provide good service to customer. Before rise in the fuel prices the full truck load service was available for 2900Rs/tonne. Some of the organizations which take help of this service are
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West coast paper mill Dandeli.
Kalyani steels Ltd.
Sri Renuka sugar’s Munavalli.
Bell ceramic’s for clay transportation
Omkar purified water Ltd
Vijay Karnataka Paper Industry
All pharmaceutical’s situated in Hubli, Belgaum, Bijapur and Banglore
Organization itself.
etc.
The company provided this facility to transport mines from Hospet to Manglore which was then exported. This service was dropped as it was not profitable. To trace the misuse of full truck load organization takes help of certain weighbridges situated in different places.
LESS THAN FULL TRUCKLOAD (PARCEL) Less than Full Truckload service is categorised into two categories; parcel and express cargo. Under Less than Full Truckload the customers do not hire the entire truck.
GENERAL PARCEL VRL Logistics provides general parcel services in 17 states, 7 Union Territories covering 649 cities in India. The parcel business is not a time bound service. However the company aims at faster deliveries to enhance customer satisfaction. Booking of the parcel is done at booking office, and then sent through one or more transhipment hubs. At each of the transhipment hubs the goods are segregated and finally delivered to delivery office. The
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? customer then collects it from delivery office. However in case customers demand, they provide door to door also on extra charges. If the parcel is not collected by the consignees from their branches within the specified periods they collect demurrages charges and also send reminders to the consignor and the consignee. In case such reminders are not responded to within the specified period they intimate the customer that the consignment is sent back to head office at Varur. If the parcel is still not collected within the time specified in the intimation letter, a notice of auction is sent to the consignor and consignee, after which the consignment is disposed off in accordance with the notice.
Freight charges for parcels in VRL Logistics In this category the charges made on the bases of weight and space occupied by the consignment which ever is higher.
On the basis of weight: Min weight considered is 40 kg i.e. if the weight of the consignment is below 40 kg then also it will be considered as 40 kg only. Freight also varies according to distance it has to cover. For example: to transport the parcel of 7 kg from Dharwad to Banglore the company charges 60/- Rs
On the basis of space: For determining the rate the parcel is weighted at the booking house on the bases of CFT. The organization considers 1 CFT = 10kg.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” CFT=Length*Breadth*Height/1728
Example: For the container of 18 ft length, 8 ft width and 7 ft height CFT is calculated as CFT=18*12*8*12*7*12/1728 kg =1741824/1728 kg =10.08 kg =10 kg
If the goods are of light weight and bigger in size then the goods are measured. The height, width and length are measured in terms of inches and multiplied.
If the CFT cannot be measured, rate is charged as per the weight and distance. After determining the rate, the WAYBILL No. Is marked or labelled on the goods. The goods are then forwarded. Competitors: In Karnataka a.
Ghatge Patil Transportation Ltd
b.
Prakash Roadlines
c.
DHL
d.
Deluxe
a.
Kirti
b.
Navatha
In Andhra Pradesh
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” c.
SMRT
MARUTI PARCEL CARRIERS Maruti Parcel Carriers (MPC) is one of the goods carrier divisions which operate independently under its own name “Maruti Parcel Carriers”. Under this they provide services from booking office to delivery office without routing it through the transhipment hubs. MPC offers its services in the state of Karnataka covering 17 cities in all. MPC has a total network of 25 branches. Currently it has two booking centres one at Bangalore and other at Hubli. Rest of the 23 branches act as delivery offices. Parcels are collected from the booking centres and transported to various delivery offices.
SHIVA ROADLINES Shiva Roadlines was started in the year 2003 as a separate division by the company. Shiva Roadlines provides service only in the state of Karnataka covering 6 cities. Shiva Roadlines has 6 owned branches. It provides door to door services without routing it through transhipment hubs. It carries goods weighing more than two tonnes only.
VRL EXPRESS CARGO
"Anywhere Anytime"
Delivery on time zero excuses. This mantra is driving force behind the success of VRL Express Cargo. Surface, Train & Air Cargo mode services. Dedicated Company owned vehicles. Door pick-up and door delivery. On-time delivery. Online track & trace facility. 24X7X365 days operations.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Dedicated & well-groomed customer care windows. Extensive nation-wide network.
The express cargo business of company is done on a door to door basis and in a time bound manner using road/rail/air as a mode of transport. The express cargo business was initially started for booking and delivery of goods within Karnataka; however today express cargo service is available in 17 states, 7 Union Territories covering 649 cities in India. Express cargo mainly focuses on the requirements of their corporate customers who want time bound deliveries of goods to their various locations. The company charges higher freight amount towards the transportation of goods under this service. Company transport a substantial part of their express cargo using roads as mode of transport. In certain instances they may transport express cargo using roads and the services of railways or airlines.
Under this category the charges will be 4 times than the general parcel. In this service the company uses two drivers to provide quick and safe service. There will be time bound for the drivers. If drivers are late then penalty will be paid by them.
VRL COURIER SERVICE
"On Time Every Time"
Capitalising on the synergy of their transport network that connects all over Karnataka, they are into Courier Services focusing on delivering documents and small parcels in a time bound manner. Storing & dedicated Operating Team. Time Bound Delivery with an Emphasis "On Time Every Time". Delivery Schedules ranging From 24/48/72/96 hours. Dedicated Route Vehicles.
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? VRL LOGISTICS LTD started courier services in the year 1992, which marks the beginning of courier services in company. The turnover of courier service was Rs 4 corers per annum in the year 2007-08. It has become famous at the national level. But on July 17, 2007 it has reduced to only Karnataka.
Company now offers courier services in the state of Karnataka, covering 27 districts and 164 cities. Under this service, they receive non-bulky parcels which include small articles/documents from consignors to be delivered to the consignees in a time bound manner and on a door-to-door basis. The price charged by the company for transporting parcel through courier service is determined on the basis of the weight or volume of the goods and the distance of the delivery at customerâ&#x20AC;&#x2122;s place. Under this company has divided customers in to categories i.e. walking and regular customers. Door pick-up facility is provided for the regular customers. Regular customers are also awarded with some credits in the payments. They can pay monthly once.
Charges for courier service: For one dock of 250 Grams: 10/-Rs For 1 kg the charge will be: 20/-Rs 250 Grams is considered as the minimum weight. Above 250 Grams and below 1 kg is considered as 1 kg only. This dept is having its branches and agencies in various cities. The branches are maintained by the organization only. The agents have to deposit certain amount in the favour of the organization. The agents in Bangalore city deposit 20000/- Rs and in other cities 10000/-Rs are deposited.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
LIST OF DAILY CUSTOMER OF COURIER SERVICES IN HUBLI •
ICICI BANK
•
STATE BANK OF INDIA
•
WEST COAST PAPER MILLS
•
Other daily customers.
THE COMPETITORS OF VRL LOGISTICS LTD (COURIER SERVICE)
1) DTDC Courier service. 2) Professional couriers. 3) Teja courier. 4) First flight courier 5) Parkash courier. 6) Other couriers
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TERMS USED IN LOGISTICS Consignments VRL will transport all types of goods like cloth, medicines electrical parts, motors parts, stationary etc. Consigner A consigner is the party who books the consignment for transport through VRL. Consignee A consignee is the party who takes delivery of goods booked on presentation of his copy of waybill Types of Risk Beard
Carriers Risk:
Explains that all risks are borne by the transporter while in transportation.
Owner Risk:
Makes the transporter unliable from all risk.
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DRIVERS Drivers are the life & blood of VRL Logistics Ltd. Wages & salary is given to drivers is on per km basis1Km = 70 paise. The drivers have to cover 40 kms per hour. Driver are also hired on fixed salary basis Rs. 1,950/- per month For Long distance journey Double Drivers
- 400 Kms 40 paise per km
Single Driver
- 400 Kms 70 paise per km
Facilities for drivers 1)
House rent allowance is given to drivers. This allowance is given at
20% of the salary 2)
Education allowance all the drivers are also provided with education
allowance. This facility is given only to that person who has completed one year of service in the organization 3)
Provident fund- all drivers are enjoying this facility. Employee have to
contribute 12% towards provident fund & the employer has to contribute the same amount 4)
Employee state insurance- employees are contributing 1.75% of their
basic salary & DA. Employer is contributed 4.75% of the total salary paid by them. 5)
Gratuity- This is available to only those who has completed 5 year of
services. Company also provide various types of incentive schemes to truck drivers besides the fixed amount paid to them for their services.
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These incentive schemes work on a monthly basis and are as follows: Monthly incentive structure for light commercial vehicles (5 Toner) (Above 7000 kms & 8000 Kms); this incentive is based on the kilometres covered by the drivers. Monthly incentive structure for 9 toners (Above 6000 kms to 8000 Kms); this incentive is also based on the kilometres covered by the drivers. Monthly incentive structure for long route multi axel vehicles; this incentive is based on the kilometres covered by the drivers on specified long route. Quick incentive; this incentive is based on reaching the fixed destination before scheduled time. Diesel incentive: This incentive is based on the saving of the diesel in one trip and accordingly the incentive is provided to them Company has also started the Loss Recovery levied for late service if the vehicle reached the fixed destination after schedule time. They charge their driver very minimum amount depends on how much hour taken for delay. Terms and conditions The company does not take the responsibility of leakage, shortage damage to goods by rain sunlight, other cause beyond its control Crockery, glasses & other delicate items are booked at the absolute risk of consigner. The company shall not be liable for wrong deliveries if the addresses not mentioned exactly. The court in Hubli along shall have the jurisdiction in respect of all claims & matters arising under the consignment. The company has the right to reweightment at the destination & collection before delivery such amount that have be omitted or under charged.
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DOCUMENTS MAINTAINED BOOKING SECTION: In booking section there are two persons who book the parcels while booking process, staff use receipt book. That book involved five copies Consignor copy. Consignee copy. Proof of delivery copy (POD). Head office copy (HOP). Delivery sheet. a) CONSIGNOR COPY: In Consigner copy booking staffs write in consigner copy “who has booked the documents” and in another consignee section of the consignor copy write “who will receive the document or its destination and write amount, date signature, declarations” in consignor copy. It contains consignor’s Name and address. Phone number Amount Value of consignments Charges Weight of parcel or document TERMS AND CONDITIONS OF CONSIGNER COPY: The customers after entrustment of documents or cargo or goods to VRL LOGISTICS LTD Courier division for carriage or transportation shall be deemed to have accepted and agreed to the terms and conditions and specified as standards conditions of carriage. 1. All documents or covers or envelopes letters are accepted for transport by air, road, and railways. 2. Nature, contest, conditions and values of consignment are unknown to the company and carriers are packed by owners and are at OWNER’S RISK. 3. Consignor or consignee shall be responsible for any delay, detection, loss or forfeiture of goods by any government authorities due to wrong declaration to contest or improper documents etc.
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4. The company will not carry explosive or prohibited coin or industrial diamond, currency (paper or coin) of any nationality, lottery ticket and contraband items. 5. The company is not liable for any loss or damage or leakage, or for late delivery due to break-down, accident, fire, riots, strike, theft, flood, rain, sun and other natural calamities which are its beyond its control. 6. The company shall not in any case be liable for consequential losses such as loss or profit, interests, market and utility, VRL LOGISTICS LTD. Disclaims all warranties expressed or implied with respect to this consignment for any loss, shortage, damage or unfair seen delay, in the carriage. 7. No complaints or enquirer will be entertained after 15 days from the date of booking. 8. No agent, servant or representative of company has authority to after modify any provisions of consignment note. 9. The court in Hubli City alone shall have jurisdiction in respect to all disputes arising under this consignment note.
b) CONSIGNEE COPY (RECEIVER) This copy gives to receiver of the parcel. That addresses mention in consignee’s copy.
THE CONSIGNEE COPY (RECEIVER) CONTAINS It contains consignor’s address. Phone number. Amount. Value of consignments. Charges. Weight of parcel or document. Receiver’s signature.
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c) PROOF OF DELIVERY COPY (POD) This copy gives to receiver and takes his signature and that come back to booking office and will give to person or company who have booked the parcels (consignor) It contains consignor’s address. Phone number. Amount. Value of consignments. Charges. Weight of parcel or document. d) HEAD OFFICE COPY (HOC). This copy is for head office reference It contains consignor and consignee address. Phone number. Amount. Value of consignments. Charges. Weight of parcel or document.
TRIP SHEET This copy is prepared in triplicate. It contains courier LR number, receipt number, weight of consignment and content of consignment. Number of pieces, source of origin & source of destination. It is prepared in order to know the places from where the cover is sent & to which place it is to be sent.
DELIVERY SHEET Delivery of articles is done by delivery post. Particulars of delivery of articles are written in delivery sheet. It contains the details of branch office, consignee name, original place, consignee note, time, date & signature. Also if the booking party is a company seal should be taken from the company.
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ACCOUNTS Booking statement is prepared for accounts purpose single entry system is maintained here. They have a book system as well as computerized system booking statements contains C/N number, weight destination & amount of consignment, branch and date. DEBIT VOUCHER It is a voucher where any expenditure made by the staff is maintained. It is attached to cash statement & sent to the head office to claim the amount. CREDIT VOUCHER This is the voucher which is given to the sub branches or agencies while submitting the accounts, the issue booking statements along with total amount to this branch COMPLAINTS REGISTER It is a book where entry of customer complaints such as late delivery, misplacement, improper courier is noted. NON DELIVERY BOOK It is a book where non-deliveries are noted is case of door locks, shifts, transfers; incomplete address or party refusal parcel is brought back. Entry is done in this book.
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MODE OF PAYMENT OPTIONS FOR THE CUSTOMERS
The price charged by the Company for transporting parcels is determined on the basis of the weight or volume of the goods and the distance of the delivery point. They have three types of payment mechanisms in their parcel and courier business:
i.
Paid:
Under this system, the consignor pays the charges to the Company at the time of booking the consignment. This is the most common mechanism of payment and this enables us to receive the revenues immediately.
ii.
To Pay:
Under this system, the consignor does not pay the charges at the time of booking the consignment but the consignee is required to pay the same upon collecting the consignment from the office.
iii.
Running Account:
Under this mechanism, the consignor does not pay the charges to company at the time of booking the consignment, nor is the consignee is required to pay the same upon collecting the consignment. Company provides its services on credit and keeps a running account of the charges the consignor / consignee is liable to pay, and the consignor / consignee is required to make payment against the running account on a weekly / monthly basis. This facility is only extended to selected high-volume regular customers.
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WORKING OF GOODS TRANSPORTATION TRANSHIPMENT POINT Transhipment point is important section of VRL group, where in all the materials which are booked from the offices all around the country, whose destination is the area under Hubli branches are bought in, sorted out, stored and then sent to their respective destinations within two days, however the goods that are to be claimed by the consignee have a demurrage period of thirty days. In simple words it is the Hub and Spokes arrangement, the Transhipment point acts as the hub and all the destinations (places) coming under this Transhipment point are act as the spokes. There is 110 staff working at Hubli Transhipment point as well as 250 contracted labourers working day and night around thirty- forty labourers working in each batch. The Transhipment point has the following departments
Booking section
Vehicle and accounts maintenances section
Delivery section
Short excess section
Booking section
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” At the booking office the booking of the goods to be transhipped are made. There are thirty plus people working in this section, these peoples are normally sent for collection, making and continuing of the goods, and looking after the clerical work in this section. The main function of the booking section is to take the goods from the consigner and weighting them. Then the freight price is fixed for the goods are sent to the transhipment point for the delivery. Freight rates are varied according to the distance covered, nature of the goods, season, condition of the roads, type of goods to be transhipped and risk involved in it. There for the freight of the goods is charged on the following basis.
Bulky goods
Goods with heavy weight
Weightless goods
Long distances
Short distances
Working of the Booking section The goods to be transhipped are booked as per the instruction of the customers at the booking office and according to the goods forwarding note is prepared. The customer has to fill the goods in forwarding note. The transhipment company verifies the goods according to forwarding note. After the goods forwarding note is filled by the customer marking at goods is done. The marking of goods is done by the clerk in the booking office on it can also be done privately by consigner. The invoice number, and marking number, is included in goods forwarding note. On the basis of forwarding note way bill is prepared. It is bill containing information regarding the consigner’s name, consignee’ name, date of delivery, nature of material weight, type of packing & freight. It is prepared by booking clerk. For convince and documentations, four copies of way billing prepared. They are
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Consignee copy
Consignor copy
Head office copy
Drivers copy
Vehicle and accounts section This section basically deals with load management as well as with some of the miscellaneous accounts. Where the vehicle in charge has to perform the basic function of tallying the total market load that is with them in accordance with the availability of trucks, normally there is a deficit in the availability of trucks, which is fulfilled by hiring trucks from outside.
He has five people working under him. Of these one person handles the cash and accounts for advances given to the drivers which are in turn handed over to the drivers account section. There are three persons looking after vehicle maintains. If the vehicles are in need of some heavy repairs, they sent it to the work shop or else the minor repairs are handled then and there. The last person is meant for the miscellaneous works like collection, booking outside trucks and any other routine work. Delivery Section All the goods collected at different booking office are to be transported are all bought to the transhipment point. These goods are then separated, sorted and according to destination to which they are to be sent. These goods are then sent to their respective destinations and the delivery offices in that area unloads the goods and delivers to the consignees. For goods more than two tones or hundred cartoons boxed, there is availability of free door delivery. Working of Delivery Section When the goods are received from the booking offices they are classified in two ways. Urgent delivery goods
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Non-urgent delivery goods. Urgent delivery goods are those goods which are to be dispatched immediately or at the earliest possible time. The Non-urgent delivery goods on the other hand are the ones which do not require such urgency. The delivery of the goods also depends on the nature of payment, if the payment is already made then it is very easy to delivery the goods, as the delivery is made immediately after collecting the consignee’s copy. But in case of goods in regard of which the payment has not been received, the goods are delivered only after cash is received from the consignee.
In this case a receipt is prepared acknowledging the payment. The consignee’s seal and signature is taken behind the copy of the receipt as a proof. On delivery the name of the person taking delivery, quality and L.R. no. is recorded for future reference. The delivery office stores the goods for free for a maximum period of thirty days in case of regular customers and twenty days for others. After this period a notice is sent to the consignee to collect his goods. If fails, another notice is sent after sixty days. A last notice is sent after ninety days. If he fails to do so again the goods are sold and the amount is adjusted. But in case if the goods are collected after the first notice or the second demurrages are collected. Some of the documents used by this section are
Cash receipt book
Daily delivery and stock report
Inward statement
Short/Excess book
Unloading report
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Short/Excess Section While loading the goods some times the goods are loaded in excess or may fall short this will be at their destinations when verified. In case the excess goods are not claimed, these goods are sent to the search and found department at Gadag. If the goods are sent on to pay basis and nobody claims, the company has a right to sell the goods and make good its loss.
Working of the Transhipment Point The materials that come from the booking offices are verified according to the trip sheet, which is sent by the booking office. Then the materials are unloaded. The next step is to prepare the unloading report. Materials are sorted according to there destinations. Materials are sorted according to their destination in proper section provided at a Transhipment point. Materials of one destination are loaded in a single vehicle. All the required documents are maintained by the respective departmental heads.
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HUB AND SPOKE MODEL OF FREIGHT DISTRIBUTION AT VRL LOGISTICS.
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? Under the Hub and Spoke system, VRL transhipment yards act as hubs and the various booking and delivery offices act as spokes. The hub acts as a connector between the booking office and the delivery office. The hub receives the booking consignments from various branches, which are segregated, based on the destination and then dispatched directly to the delivery office or to the other hub, which connects to the delivery office. Once consignments are booked at the spoke they are unloaded at the nearest hub based on the destination of the consignment. Once the unloading of a certain number of trucks is complete, all the consignments meant for a particular destination are aggregated and loaded into a truck for further transportation. This ensures that every truck is filled to capacity and its utility is improved. In case a hub does not have enough consignments for a particular destination, the goods are unloaded onto the next nearest hub to be further aggregated at that hub en-route to the destination.
The processes followed by the company are designed to meet the various business objectives such as simplicity in understanding and implementation, effective information capture of a particular transaction, traceability of goods, automatic internal controls, etc. A brief overview of order fulfilment process is given below:
Customer walks in
Determine the kind of cargo and type of customer
BOOKING CENTRE
Accept goods from client and issue a goods consignment note
Prepare trip sheet and provide to driver
Consolidate days transactions and forward to HO TPT
Unload goods, aggregate goods check against GCs
Load the goods
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Prepare trip sheet and provide to driver
Prepare consolidate list of days transactions and forward to HO
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Receive goods
Receive updates from various.
Deliver goods against a cash receipt note.
Update the database with the received information.
DC
HD
As soon as the customer agrees to the terms and conditions of the contract, the goods are booked and the customer is issued a Goods Consignment Note (‘GCN’). The GCN contains all relevant details such as the\ type of consignment (i.e. express, full load, parcel, etc), type of customer (to pay, paid, account paying), volume of goods, rate, and estimated value of goods. At the time of loading the goods at the branches, a “trip sheet” is prepared and handed over to the driver. If the customer pays at the time of booking, cash is received based on a “Cash Receipt Note” which records the details about the cash received like amount of cash, and corresponding GCN. At the Transhipment yard (TPT) the goods are unloaded and an unloading report is prepared which needs to tally with the trip sheet. The goods to a particular destination are aggregated and are loaded onto a truck wherein a fresh trip sheet is prepared. At the delivery point, the goods are unloaded (and an unloading report is prepared). The goods are released to the receiver and acknowledgement obtained. If the goods to be delivered were of “to pay” type, goods are released after cash is received and a Cash Receipt Note is generated. All branches (booking or delivery) deposit the cash receipts of each day to pre-designated bank accounts. In case of computerized branches, where the database is prepared for all the bookings made on these branches and sent to the Head Office. In case of non-computerized branches,
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” copies of documents are sent directly to the Head Office. Each branch and Transhipment yard also sends Daily Reports on the activities to the Head Office. As the location and the extent of these transhipment hubs are essential for the smooth functioning and success of the business, we try to ensure that these hubs are strategically located and the consignments that are booked to the various destinations are within a radius of 200-250 km of the destination. The transhipments hubs are overseen by a Vice President – Operations (TPT) and the employees work on a shift basis to ensure that there is no stoppage in the activities. The operation team personnel deployed at their hubs include managers/in charge, shift in charge, supervisors, clerks, and traffic in charge, data entry clerks and skilled labourers. All the hubs are interlinked to each other, which provide us with the opportunity to ensure effective delivery of the goods and also track the consignment. This also enables the hubs to be aware of the goods, which are being transported. The loading and unloading activities take place
with the help of cranes, forklifts and trolleys, which are equipped to handle heavy goods in a safe and smooth manner.
Branches Currently, they have 839 branches in 17 states and 7 Union Territories in India. In all the branches they provide booking and delivery services.
Particulars No. of Branches
No. Of Branches
Goods Transportation General Parcel
342
Express cargo
342
Courier
79
Maruti Parcel Carriers
25
Shiva Roadlines
6
Total Branches for goods Transportation
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Passenger Transportation
40
Total Branches
839
INDUSTRY STRUCTURE AND PARTICIPANTS
Freight consignors usually prefer roadways over railways due to its inherent advantage of higher accessibility and reach, and customer orientation unlike other modes of transport. Moreover, the customers get an edge in bargaining power, as the roadways is highly fragmented and there is intense competition even among the large transporters. However, the large organised players who provide value-added services such as warehousing, containerised
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” movement, supply chain management etc are also able to influence the terms and conditions of the freight contract, as not many transport operators provide such services. Also, while the bargaining power of suppliers seems strong, given that there were only a few equipment suppliers catering to a large customer base of transporters, more players showing interest in entering the equipment manufacturing space, bargaining power of suppliers is set to come down in future. Industry participants in road freight transportation sector The structure of the road freight transport industry in India has always been and continues to be highly fragmented. It comprises many players who provide transportation services, intermediaries – transport contractors / booking agents who can provide haulage services, brokers who fetch equipment and drivers for a commission, and the consignors / users who constitute the ultimate demand for the services.
TRANSPORT OPERATOR Transport operator is the one who provides transportation in the entire transportation services value chain. These operators can be broadly classified into single truck or small fleet operators (those who own up to 1-5 trucks) and fleet operators (those who own more than 5 trucks). Fleet operators can be further segmented into medium fleet operators who have a fleet of 6-20 trucks and large fleet operators who own more than 20 trucks.
ROLE OF TRANSPORT OPERATOR
Small truck operators
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Single truck or small fleet operators are operators who own up to 5 trucks. While in certain cases, the single truck operator is both the owner and the driver of the truck, the truck may be operated by the operator’s family members, relatives etc. Following are some of the typical characteristics of a small fleet operator: Ownership: Ownership of up to 5 trucks Broker dependence: Significant dependence on brokers for business Haulage: Mainly ply on last mile and short haul routes not exceeding 150-200 km Operations: Operate mostly in the full truck load business Attachment of vehicles: Small operators are usually attached to the large fleet operators.
Large fleet operator Following are some of the typical characteristics of large fleet operators are: Ownership: They own or control a relatively larger fleet size, typically over 20 trucks Broker dependence: They directly bid for contracts with consignors / users without the support of any intermediary Haulage: They operate predominantly on long haul on a hub and spoke distribution model Operations: They operate in both the fully loaded and partly loaded truck businesses Attachment of vehicles: They use the services of smaller operators when they need to have additional vehicles.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Large fleet operators dominate road transport In terms of structure, the road transport services segment is highly fragmented, while the Railways are owned by the government. Coastal ships are either captively owned by end users or by several small fleet operators, while pipelines are owned by a few organizations mainly in the public sector. While road freight transport is generally described as highly fragmented, large fleet operators control a significant portion of both the stock of commercial vehicles and freight. According to estimates the large fleet operators (defined as owning more than 20 trucks each) cumulatively own about 50 per cent of the total stock of commercial vehicles and control about 65 per cent of the total stock of commercial vehicles. Similarly, freight carrying capacity of vehicles owned by large fleet operators is estimated to be over 70 per cent and the same for vehicles controlled by them is estimated to be close to 85 per cent of the total road freight capacity. Apart from the vehicles that are owned, controlled vehicles also include vehicles attached by small fleet operators.
Domination on stock and load carrying capacity The organised large fleet operators of the industry are relatively small in number and have varying payloads; but, these large fleet operators carry a significant portion of both the stock of commercial vehicles and freight. CRISIL Research estimates large fleet operators to own over 50 per cent of the total stock of commercial vehicles (commercial vehicles includes light, medium and heavy commercial vehicles excluding three-wheelers goods) and control about 65-70 per cent of the total stock of commercial vehicles. Controlled vehicles are vehicles owned and net of vehicles attached with the fleet operator. Net of vehicles attached means vehicles received on attachment less vehicles given on attachment. According to CRISIL Research estimates, large fleet operators’ load carrying capacity with owned vehicles is over 70 per cent and with controlled vehicles is close to 85 percent for the year 2006 -07. The fleet is primarily used for general goods transportation, with the
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” operators working on a hub and spoke distribution model. The industry interactions with operators and users also revealed that apart from their broad-based transport stock, large fleet operators are able to generate business on account of goodwill, assurance of timely delivery and quality, distribution network and necessary infrastructure. Transport operation and haulage Large fleet operators operate on all haulage segments — short, medium and long. However, as they are dominant in the medium and long haul operations, they operate on a hub and spoke system of distribution. As the large operators cover a wide geographical area, ranging from 200-1,500 km or even more, they typically have a wide network of branches throughout the country, apart from the necessary infrastructure to support their network. This enables them to attract users and get business on a continuous basis. Unlike small fleet operators / single truck owners, large fleet operators operate on both the full truckload and parcel truck load operations. Parcel truck load refers to small packages booked by consignors that occupy only a part of the entire truck space. Large fleet operators are able to operate in both the segments due to their wide range of distribution network and clientele, the consignors’ perception of higher reliability and quality assurance.
FREIGHT RATES As per the research, demand-supply and cost factors emerge as the two key determinants of freight rates; however, regulations and industry structure also have a role to play in influencing freight rates. These factors explain why freight rates have risen continuously over the past five years, despite significant fragmentation of the road transport sector. Over the next 5 years, the cost of transport operations may reduce structurally and this will reduce freight rates (adjusting for inflation); however, the rates may continue to remain firm over the next 1 year, due to continuation of healthy economic growth as well as cost pressures.
FREIGHT RATE DETERMINANTS
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Demand-supply dynamics Freight rates have a direct impact on the distribution costs of the manufacturing sector and therefore have indirect implications for the economy as well. A recent World Bank study states that, “despite many impediments, mainly related to the existing infrastructure, India has achieved a highly competitive, low-cost road freight transport for basic services, with its highway freight rates being the lowest in the world”. However, it should be noted that the costs of delay and uncertainty in transportation do push up the effective cost of the users significantly.
Fuel price and capital cost
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Fuel costs typically constitute more than 50 per cent of the transport operator’s total costs; accordingly, any increase in diesel prices may reduce the player’s operating margins. However, empirically, it has been observed that while the transport operators have been able to pass on the fuel cost increase through higher freight rates when freight availability was at its peak, the same has not been the case during recessionary periods, when they had to absorb the small changes in diesel prices, and take a toll on their profitability. The following graph will show the trends in freight rates and diesel prices.
Capital costs (interest and depreciation): also constitute as a major cost for transport operators; in fact these costs constitute 6-10 per cent of their freight income. Moreover, considering the 95 per cent penetration of finance in new truck sales and over 85 per cent penetration in second hand sales, interest cost have gained significant importance in the cost structure of transport operators over the past few years. Likewise, as the number of commercial vehicles that are 0-4 years old is as much as 40 per cent — usually 0-4 years is the period during which the finance for new commercial vehicles has to be repaid — the influence of any change in interest cost may affect the freight rates. Hence, hardening of interest rates may lead to postponement of truck purchases and in a scenario of good freight availability this may lead to a further rise in freight rates.
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? Comparison with Railway as mode of transport An analysis of the normal freight rates of roadways versus railways revealed that while the railway freight has risen marginally during 2002-03 to 2006-07, the road freight has continued to grow. Moreover, during the same period, while the market share of roadways (excluding last mile) increased from 54.0 per cent in 2002-03 to 58.0 per cent in 2006-07, that of railways declined from 34.0 per cent to 31.5 per cent.
However, if we consider the effective freight rate, which is the normal freight rate plus freight cost for last mile transportation and loading and unloading cost, the rail and road freight rates are relatively comparable. This shows that even though the effective freight rate of railways is competitive, the share of roadways is higher in the total freight movement, due to its inherent advantages such as door to door delivery, higher accessibility and customer orientation.
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Other Factors affecting Road Transportation Road development India has a road network of 3.3 million km, one of the largest in the world, of which national highways and state highways together contribute only about 6 per cent. But they carry about 80 per cent of the total road traffic. Given that roads occupy a crucial position in the growth and development of the transportation industry in general and specifically the road transportation segment, the government undertook several projects to expand the road network nationwide to provide connectivity and mobility in both the rural and urban areas.
Vehicle utilization Vehicle utilisation is measured in terms of the distance covered by the operator during the year. Changes in vehicle utilisation significantly affect the cash flows of an operator. A 10 per cent improvement in equipment speed, leads to a 5-7 per cent increase in distance covered during the year, thereby resulting in a 15 per cent improvement in cash flows. Consequently, the efficiency of the transporters goes up, as the average turnaround time decreases, and the
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â&#x20AC;&#x153;LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARURâ&#x20AC;? business expands by 5-7 per cent (number of trips). Monetarily also the transporter is benefited, as the fixed costs gets spread over a higher base, thus improving the cash flows. Given the good freight availability, if another driver is added, the vehicle utilisation will go up, as the vehicle halting time will come down when one driver rests the other will utilise the vehicle. Additional revenues from increased vehicle usage may more than offset higher costs like fuel and labour. Variables that affect vehicle utilisation include the type of commercial vehicle, road infrastructure / traffic, time spent at check posts and rest time.
Fuel cost Fuel cost constitutes a major part of the cost structure of a transport operator; it constitutes between 55-60 per cent of the total costs. Moreover, fuel costs are variable in nature; hence, a small movement in fuel price or fuel efficiency significantly affects the cash flows of the transport operator. A 10 per cent increase in fuel costs, for instance, increases the total cost by 4 per cent.
Vehicle-mix and fuel efficiency Transport operators can maximise their profitability by maintaining a suitable vehicle mix, given the existing freight availability, its range of operations, type of freight carried and contracts with customers. Since the late nineties, the preference for higher gross vehicle weight commercial vehicles has been increasing, as they are more profitable with their higher payload capacity and relatively better fuel cost economics.
OUTLOOK OF ROAD FREIGHT TRANSPORTATION SECTOR The overall freight movement to grow at a CAGR of 10.1 per cent over the next 5 years and reach a projected size of 2,569 btkm. Healthy economic growth, increase in production of key commodities, likely completion of infrastructure projects and rise in infrastructure investments are expected to bring about this growth. In terms of proportion, CRISIL Research expects roadways to continue to dominate the freight movement with its
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” share expected to grow from 57.8 per cent in 2006-07 to 60.7 per cent in 2011-12 (excluding demand from last mile). Share of railways, on the other hand, is expected to decline from 31.6 per cent in 2006-07 to 28.8 per cent in 2011-12, on account of capacity constraints during the same period. While the share of air and coastal freight movement will continue to remain small, the coastal freight movement will rise due to rise in export and import in the country, albeit, on a small base. Over the next 5 years, CRISIL Research expects roadways to continue to move majority of its freight in the medium and short haul segments; however, as capacity constraints will crop up at the railways’ end, the roads will gain in the long haul segment as well (till dedicated freight corridors by railways is completed; expected to be completed post2011-12). Growth in the last mile segment will soar to double digits in value terms over the next 5 years, as the redistribution movement from retail consumption will continue to maintain buoyant.
PROJECTED FREIGHT MOVEMENT
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
PROJECTED SHARE OF TRANSPORT MODES
INFRASTRUCTURE FACILITIES AND UTILITIES
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” The network of Transhipments/branches/offices covers 17 states and 7 Union Territories in India. They have their Head Office at Varur and Corporate office at Hubli, 5 Administrative Offices, 43 transhipments hubs, 839 branches (goods transportation & passenger) and 1853 franchisees, (goods transportation & passenger) which enables the smooth flow of goods and services. The booking and delivering is transacted through the transhipment hubs which are connected to the respective branches. They offer the services of express cargo, parcel and courier. This business has been set up to work on a “Hub and Spoke Model” to improve vehicle utility and increase efficiency. Depending on the quantum of material handled by each hub, the hubs are classified as major, mid and small size hubs. a. Major Hubs There are nine major hubs and more than 500 MT materials per day are handled by these hubs. These nine hubs are located at Hubli, Sidrawali (Delhi), Salem, Vijaywada, Hyderabad, Pune and Bangalore (three hubs). b. Midsize Hubs There are nineteen midsize hubs, which handle from 100 MT to 500 MT materials per day. These hubs are located at Mangalore, Gangavati, Mysore, Shimoga, Bijapur, Harihar, Goa, Ernakulam, Coimbatore, Madurai, Chennai, Aurangabad, Shiroli (MH), Solapur, Anantpur, Chittoor, Vishakhapattanam, Hyderabad Local and Ahmadabad. c. Small Hubs There are fifteen small hubs handling less than 100 MT materials per day. These hubs are located at Vapi, Prodattor, Nellore, Kurnool, Rajahmundry, Kozhikode, Bagalkot, Gadag, Gokak, Bellary, Gulbarga, Kolkatta, Nagpur, Trichy, and Indore.
WAREHOUSING FACILITY IN VRL LOGISTICS LIMITED
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Warehousing is an integral part of every logistics system. Warehousing plays a vital role in providing a desired level of customer service at the lowest possible total cost. Warehousing activity is an important link between the producer and the customer. Over the years, warehousing has developed from a relatively minor facet of a firm’s logistics system to one of its most important functions. We can define warehousing as that part of a firm’s logistics system that stores products (raw materials, parts, goods-in-process, finished goods) at and between point of origin and point of consumption, and provides information to management on the status, condition, and disposition of items being stored. Warehouses at VRL Logistics Limited Transhipment hub act as a ware house.
In the transhipment hub the goods which are to be delivered to other destinations are stored. The space of the warehouse in Hubli is 40,000 sq feet. The total space which is called as carpet area is around 60,000 sq feet. The warehouses are not well organised. The goods which are unloaded are brought and kept in the respective places. There is no separate compartment or racks for the goods to store, which may lead to misplacing of the goods. The total capacity of the transhipment is around 1500 tonne to 1800tonne. There are 43 transhipments through out India. As explained above they are divided in to major, mid, and small size hubs.
Store-room for automobile parts.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” They have entered into an agreement with Ashok Leyland for the supply of automobile spare parts and units in the Vehicle Maintenance Department for the maintenance of the vehicles. As per the agreement, they have provided the space to Ashok Leyland admeasuring 1000 sq. feet in their workshop for the storage of spare parts and units. These spares parts are available to them at discounted rates. The spare parts are used as and when required by them and payment done on a weekly base. This eliminates the cost of maintaining the inventory, cost of transport incurred in procuring the spare parts at the same time ensuring timely availability of spare parts. There are 6 branches through out India and all of them are computerised. The fourth coming year’s estimation for stores is 1.74 crores. They store adequate spare parts which will be sufficient for fourth coming three months. Store-room for tyre section. The company uses mainly four types of tyres. They are J K tyre, Apollo tyre, Bridgestone tyre, and China tyre. They prefer Apollo tyres. The minimum stock maintained is 100 tyres and maximum is 6000 tyres. They use their trucks only for the transportation of tyres. Store-room for stationery department. The stationary items which are required for the office use are printed in their printing presses only and stored in the store houses. There are four printing presses through out India. They store 400 items these store rooms. These store rooms are located in Hubli, Bangalore, Delhi, Kanpur, Vijayawada, and Ludhiana.
MATERIALS HANDLING IN VRL LOGISTICS LIMITED
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Materials handling is one of the important aspect in the logistics industry. The materials should be carefully handled without damaging. The organization can use several equipments which help on safe handling. As labours are not skilled they should be given some basic training. In loading and unloading of each truck 10-15 labours are assigned under one supervisor. At a time 22 to 28 trucks can be loaded in the Hubli TPT. The equipments used in VRL Logistics Limited are as follows. Fore clip
This is used to lift the goods and move from one place to another place. This can lift 5 to 6 tonne weight. Hydraulic trolley
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Hydraulic trolley is used by the labours to transfer the goods from one place to another place. Here, the goods are kept on the pallet and then with help of this trolley they can lift that pallet to move the goods. This can lift the goods of 3 to 4 tonnes. They are 25 in number in Varur TPT. Handle vehicle
Handle vehicle can lift up to 2 tonne which will be pushed or pulled by labours to move the goods. The number of handle vehicle in Varur TPT is 55. Pallet
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Pallet is used to keep the materials, which is then lifted to move more goods at time. It can be lifted by both hydraulic trolley and fore clip. Crane
Crane is used to load the goods of large quantity and huge weight. All the major hubs are provided with cranes.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” FINDINGS MAJOR FINDINGS: The model used to provide the better service to the customer is Hub and Spoke model. The process of goods transportation takes place in three steps i.e. booking, transportation, and delivery. The pricing strategy of VRL logistics limited The pricing is done on the basis of weight and space occupied by the consignment (whichever is higher). The labours in the Varur TPT are not skilled and trained, so the material handling is not efficient. The area of the Varur TPT is around 40,000 Sq feet. The area is utilised efficiently for the present demand. The ware house can store around 1400 to 1600 tonne of material. The factors affecting the road transportation. Difference between large truck operator and small truck operator. Freight rate determinants. Potential for the freight movement in the fourth coming years. GENERAL FINDINGS: During the course of the study it was found that VRL LOGISTICS LTD. is a service sector. The organization focuses on customer satisfaction and best and speed service. The major advantage is that the company is a single largest service provider in south India. They discontinued out of state courier service.
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” SUGGESTIONS The following are the suggestions for the company for future growth and prospects: The company should focus more on safe handling and fast service. It should emphasize on warehousing facilities provided. They can construct racks to make use of space in the warehouse. They have to purchase more material handling equipments as the business is growing. Transhipment labours should be given sufficient training to handle the goods. All vehicles used for transportation should be given container facility. The company should build relationship with industries for more contracts. The TPT labours can be divided into three shifts for the better efficiency. Now they are working in two shifts of 12 hours each. The courier service can be provided in Maharashtra to gain more customers.
CONCLUSION
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR”
VRL LOGISTICS LTD is offering high quality service for customers.VRL LOGISTICS LTD’s experience in service market through which the company can offer the best service to the customer. The company has made sincere efforts to achieve its goals and objectives over the years. It has good service record and has good market potential and image. VRL LOGISTICS LTD is building long lasting relationships with its customers. Every member of VRL LOGISTICS LTD is motivated to perform and deliver to the fullest of their ability by constantly upgrading the skill-set of employees to suit long-term goals. Through this the company expects to come out with highly competitive and technologically advanced service and solutions. As the global scenario is changing and due to globalization and liberalization the business environment also went into sea change, so the logistics plays an important role in today’s business environment. As it is the part of supply chain management it is crucial in every business organization. So the company should take the advantage of changing business environment as logistics is called lifeline of any business.
BIBLIOGRAPHY
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“LOGISTICS MANAGEMENT IN VRL LOGISTICS LTD VARUR” Books Referred: “FUNDAMENTALS OF LOGISTICS MANAGEMENT” By D.M. Lambert, J.R.Stock, Lisa M. Ellram “SUPPLY CHAIN MANAGENENT” By B.S.Sahay “LOGISTICS AND SUPPLY CHAIN MANAGEMENT” By G. Raghuram, N. Rangraj. COMPANY REPORTS (ANNUAL REPORT)
Websites: www.vrllogistics.com www.google.co.in www.logisticsfocus.com
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