Celerity in Business through Supply Chain November- December 2018

SUPPLYCHAINTRIBE.COM November - December 2018 Volume 2 Issue 6 For private circulation only

SPECIAL STORY How does it feel to be on top of the world? And what does it take to get there?

Venkatesh Maheshwari, Sr VP – Supply Chain, ABRL, shares his experiences to successfully reaching the Mt Everest summit.

interesting AT AN

STAGE

The last couple of years are a clear indicator of the pivotal role Indian pharma companies play in the local and global market. Is a supply chain transformation in the offing?

LEADERSHIP Charles Brewer, CEO, DHL eCommerce, shares his exuberant journey from the days of Telex to instant information and deliveries within a few hours.

PUBLISHER’S NOTE

Recognition is a Great Feeling Dear Readers, It’s a great feeling to interact with many senior supply chain and logistics professionals in a single day.

It’s not only overwhelming since Celerity is now recognized by every one of them for quality content and design, but also exhilarating to know that we have so many thinkers and mavericks in our midst.

To recognize the young mavericks, we will be launching the ’30 under 30’ recognition platform. Thirty individuals, below the age of thirty, from across industries and services will be selected by a panel of senior professionals from the entries we get. More details will be shared soon via emailers and in our January 2019 issue. While we are still firming up this platform, please do feel free to share your thoughts on this idea.

The next pages of this issue are as usual filled with ideas, information and deeper insight into the industry- insights, which I am sure will inspire you to continue being a logistician.

One such inspiring story is of our own Venkatesh ‘Venki’ Maheshwari who answered the call of the mountains and summitted Mt Everest. Read all about his trials, his grand success and the lessons that this experience has taught him.

As an endnote, globally, this year has been super-hot and a little bizarre and I don’t mean just the weather. From @elonmusk rampage on Twitter to India’s own #pornban, memes have recognized it all and captured the internet’s heart and turned into viral sensations.

Here’s to a more stable 2019!

Charulata Bansal Publisher Charulata.bansal@celerityin.com www.supplychaintribe.com

Published by Charulata Bansal on behalf of Celerity India Marketing Services Edited by: Prerna Lodaya • e-mail: prerna.lodaya@celerityin.com Designed by: Lakshminarayanan G • e-mail: lakshdesign@gmail.com Printed by: Xposures, A 210, Byculla Service Industrial Estate, D K Cross Road, Byculla, Mumbai- 400027.

Logistics Partner: Blue Dart Express Limited

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CONTENTS

November - December 2018 Volume 2 Issue 6

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COVER STORY Injecting A Booster Shot As a global pharma player, India has been experiencing interesting times. The next phase of growth will come from a more efficient and compliant supply chain.

The e-commerce and modern trade channels are also establishing themselves. Collaboration between the entire value chain be it pharma companies, distributors or the specialized LSPs is desired to up the ante.

27 FEATURE For the Health Conscious Soul

6 LEADERSHIP Last Mile, First Priority “We work really hard to create a great place to work for our employees because we believe great people, with the right tools and a culture of customer centricity win the game,” shares Charles Brewer, CEO, DHL eCommerce.

11 PERSPECTIVE Infra Woes & Wows Industry veterans unanimously pointed INFRASTRUCTURE as one of the major constraints hindering their growth which needs immediate attention from the authorities.

14 SPECIAL STORY

Kottaram Agro Foods has brought out 20 strikingly innovative organic healthy breakfast products on the back of a strong distribution network and tight sourcing strategy.

31 FOCUS Riding on all Elements It’s high time that multi-modal transportation starts being considered as a serious option in order to reduce logistics costs, writes Prashant Bhatmule, Head-Outsourcing, JK Paper Ltd.

35 OPINION Seven Up Supply chain leaders need to imbibe the seven steps inspired from path-breaking strategist of ancient times, Kautilya’s Arthashastra, writes Rajat Sharma, Head – Supply Chain, Hamilton Group.

Grounded at the Highest Altitude

37 RECAP

Venkatesh Maheshwari, Sr VP – Supply Chain, Aditya Birla Fashion and Retail Ltd., accomplished his dream of scaling the World’s tallest peak, Mt Everest. A look at how he did it and learnings he can imbibe in corporate life.

Scripting a New Success Story The 12th edition of Express Logistics & Supply Chain (ELSC) Conclave ended with much fanfare.

Editor : Prerna Lodaya DISCLAIMER: This magazine is being published on the condition and understanding that the information, comments and views it contains are merely for guidance and reference and must not be taken as having the authority of, or being binding in any way on, the author, editors, publishers who do not take any responsibility whatsoever for any loss, damage or distress to any person on account of any action taken or not taken on the basis of this publication. Despite all the care taken, errors or omissions may have crept inadvertently into this publication. The publisher shall be obliged if any such error or omission is brought to her notice for possible correction in the next edition.

The views expressed here are solely those of the author in his private/professional capacity and do not in any way represent the views of the publisher. All trademarks, products, pictures, copyrights, registered marks, patents, logos, holograms and names belong to the respective owners. The publication will entertain no claims on the above.

No part of this publication can be reproduced or transmitted in any form or by any means, without prior permission of the publisher. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only.

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LEADERSHIP

LEADERSHIP

Last Mile

first priority

“Culture and people make a massive difference. Technology is just an enabler in allowing the couriers to orchestrate a great delivery experience. If we create happy employees, they will be able to deliver the smile in the last mile. We work really hard to create a great place to work for our employees because we believe great people, with the right tools and a culture of customer centricity win the game,” shares Charles Brewer, CEO, DHL eCommerce, during an exclusive interview…

You have a vast & varied experience in the logistics space.

What has the transformation journey been like?

Oh, the transformation has been massive & huge. When I started my journey at DHL Express 35 years back, global shipping was unheard of. Back in those days, we never had mobile phones to connect with people. In those days, when just conveying information used to take more than 24 hours, today it’s a matter of seconds. WhatsApp, mails and SMSs have made lives simpler. Speed, the ease of doing business, connectivity, and the ability for companies to go global has changed beyond recognition.

Specially for start-ups today who are trying to do business globally, it has become so much simpler and easier.

On the other hand, the process has become so complex for us as logisticians to deliver products & parcels to our customers in a seamless manner. DHL as a group has connected the world and has made it simple so much so that sometimes I have to make my team realize that the management of the entire back-end process is so complicated while simultaneously making each and every customer happy and loyal.

Today, e-commerce, innovation and

6 CELERITY November - December 2018

digitization are huge game changers for the logistics sector globally, fueled by the consumer’s increasing demand for speed, visibility, convenience, control and choice. In the coming years, we will see more automation, more personalization, and more innovative solutions.

How has the journey of associating with DHL for the past 35 years been?

At DHL, I first started as a Customer Service Agent and later on moved to various roles including Country Manager in the Philippines and Malaysia. I love that DHL is the most international company in the world, and that it has given me the great opportunity to be based in Europe, US, Middle East, Africa, Asia Pacific and had a great chance to visit over 110 countries in the world.

In 2014, our Deutsche Post DHL Group CEO Frank Appel announced our Strategy 2020 and launched DHL eCommerce, a new division in the group, aimed at being the e-commerce logistics Provider of Choice, Employer of Choice and Investment of Choice globally. E-Commerce is very close to my heart — it represents what I love — excitement, possibilities, combined with the beauty of logistics.

So, when the opportunity came up to

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head DHL eCommerce, I jumped right at it.

How is the logistics diaspora changing with the onset of various newer channels of growth?

We have seen many industries already being disrupted – retail, transport, hospitality, banking, etc., and logistics is now undergoing the next wave of change. It is an exciting time for logistics and I’m certain logistics in the next 5 years will be very different to what it is today.

A lot of changes are being driven by three factors – consumers expectations in terms of speed of delivery; convenience as to how, when or where they want the product to be delivered; and enhanced predictability to track & trace their parcels or goods. In a nutshell, it’s all about managing 3Cs – Convenience, Choice & Control.

Additionally, the sellers’ focus has also shifted from making the website appealing to now delivering the goods to the consumers in the shortest span of time. They are also investing heavily into offering unique delivery experience to their consumers. Companies are using data analytics to get information useful for logistics companies to deliver happiness to consumers. Because at the

end of the day, you are not just working to deliver just another parcel, you are actually bringing smiles on their faces by delivering them the desired goods they want and, in the time frame they desire.

Consumers are becoming more mobile-dependent thanks to a host of technological advances making it easier to shop online. As m-commerce becomes the future for a complete online shopping experience, it is no secret that businesses are investing in this next big trend. From browsing products online, to going through the check-out process, to final-mile delivery to the doorstep, it’s important to create a fluid shopping experience across multiple platforms in order to keep customers coming back. The logistics companies are driving a big part of change in making this happen and that’s what our tagline says, “Delivering the Smile in the Last Mile”.

That brings us to our next question… How do you aim to live up to the tagline of “Delivering the smile in the last mile”…

Culture and people make a massive difference. Technology is just an enabler in allowing the couriers to orchestrate a great delivery experience. If we create

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LEADERSHIP

LEADERSHIP

There are still some gaps in the market for the consumer: in the last mile, the goal would be to reduce undeliverables and increase the first-time successful delivery rate, for instance. This can be done through dynamic rerouting, offering alternative delivery pick-up locations, pre-delivery alerts, etc. Businesses who fill these gaps in the market and offer a great customer experience will win in this space. happy employees, they will be able to deliver the smile in the last mile. We work really hard to create a great place to work for our employees because we believe great people, with the right tools and a culture of customer centricity win the game.

How is the growth of e-commerce fueling the logistics industry globally and what significant role does DHL intend to play?

E-Commerce is one of the fastest growing industries with growth rates forecasted domestically of more than 9% and cross-border of over 27% by 2020. It’s hugely embryonic and still enormous. To offer you stats, e-commerce holds a mere 2-4% of India’s retail sector. But the dynamics are soon going to catapult if we go by the recent Morgan Stanley study which predicts that online retail in India is estimated to grow over 1,200% to $200 billion by 2026, up from $15 billion in 2016. That will be 12% of India’s overall retail market. One can imagine the kind of business opportunities it will generate for logistics players. Crossborder ecommerce is also growing exponentially globally.

DPDHL Group sees e-commerce as a significant opportunity; as such we will play a hugely important role in the growth of e-commerce, and e-commerce will play a hugely important role in the growth of DPDHL Group. E-commerce as a subject sits very squarely in our Strategy 2020. The Group envisions to be the leader in the e-commerce related logistics activities.

India’s booming e-commerce market, coupled with the government’s implementation of GST and greater ease of claiming benefits like MEIS for

cross-border shipments, has made e-commerce exports more attractive and business-friendly than ever before.

We are positive of the growth and are hugely committed to enable Indian e-tailers to fully capitalize this exciting e-commerce market.

In this regard, establishing Distribution Centers allows DHL eCommerce to provide e-tailers with its extensive portfolio services tailored for the e-commerce industry, such as Packet and Packet Plus will enable economical shipments worldwide and DHL Parcel International Direct that offers a favorable transit time from four to seven days for deliveries to the US, UK and Australia.

How do you enhance the customer experience and what are the innovative initiatives you have taken to amp the same globally and in India?

In e-commerce, the consumer will lead the way and drive the way businesses operate. Earlier a 3-5 days delivery window would seem incredible to consumers, but the same proposition today would be a big no-no for them as they are seeking on-demand delivery.

If you need to be sustainable and fast paced, you need to quickly fill up this void by making things available to consumers when they want and where they want. Having said that, omnichannel wave is here to stay because there would be days when consumers would like to go for the ‘touch & feel’ therapy too. Coexistence of online & offline platforms will be a big thing going ahead and how exceptionally well you as logistics service provider manage it, will decide your share in the market.

India has been identified as a key market for DPDHL Group and we are

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leveraging our experience and successes globally and customizing our services to meet the needs of the Indian market.

We are confident that our new crossborder solutions will provide an added boost to the growing e-commerce industry in India. We are investing in our people, network and service to ensure we win this market and remain the market leader through our divisions Blue Dart – part of DHL eCommerce, DHL Express, DHL Global Forwarding and DHL Supply Chain. We see huge potential in India, and we announced last year that we will invest more than EUR250 million in India by 2020. We are a global company with a very strong local presence, leveraging our global capabilities.

We are aggressively expanding our network to reach every Indian home by December 2018 to enable fast, efficient and reliable deliveries for both B2B and B2C customers. We are well on our way to cover all pin codes in India. The initiative is one of the biggest drives undertaken to expand Blue Dart’s reach to every corner of India and aims to reach 19,100+ pin codes by December 2018. As part of the expansion, Blue Dart has opened over 939+ new facilities to cater to the large consumer base in rural and remote locations.

India presents a huge growth opportunity for us as it’s still a very nascent stage and as I said, we have just started… we have many more miles to achieve.

How is your company looking to ace the digital world?

We started our digital journey in the year 2014, the same year our Group’s Strategy 2020 was announced. Since then, digitization and innovation are big focus areas for DHL globally and we will

leverage technology and digitization to stay the market leader. This includes ‘small’ innovation initiatives for productivity gains (e.g. automation, robotics) and ‘big’ innovation ideas such as new business models.

Big innovations are the things that disrupt what we do. For instance, StreetScooters – we currently operate more than 6,000 StreetScooters in Europe. We operate electric vehicles and alternative delivery vehicles in most major cities around the world. We are slowly and surely taking vehicles off the road to realize our Zero Emission vision.

We believe that if we don’t wake up to the cause, someone else will disrupt the space. Rather than being a laggard, we aim to be the leaders and the disruptors in the space.

Small innovation is about process, performance and customer expectations improvement. Technologies like big data, artificial intelligence, robotics, all fall under this category. Our fulfilment centers globally deploy robotics to enhance visibility and efficiency.

DHL has also successfully run a pilot test including robot technology for collaborative automated order picking in a DHL Supply Chain warehouse in Unna, Germany. The robot called EffiBOT, from the French start-up Effidence, is a new, fully automated trolley that follows pickers through the warehouse and takes care of most of the physical work. It is specifically designed to work safely with and around people. The warehousing staff highly appreciated the option to work hands-free and not having to push or pull heavy carts.

We have also successfully carried out a pilot project testing smart glasses in a warehouse in the Netherlands as a first step in the Augmented Reality journey. In collaboration with DHL customer Ricoh and leading wearable computing solutions expert Ubimax, we implemented ‘Vision Picking’ in warehousing operations. As we speak, we have successfully completed our global augmented reality pilots and are expanding our ‘Vision Picking’ solution in more warehouses around the globe, establishing a new standard in order picking for the industry. The smart glasses provide visual displays of order picking instructions along with information on where items are located and where they need to be placed on a cart, freeing pickers’ hands of paper

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PATH BREAKING INNOVATIONS Drones for delivery

Revolutionizing the delivery of medicines to remote areas using drones – the pilot project Deliver Future proves that it's not science fiction. Three experts in their respective fields are making it happen: DHL, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the German drone manufacturer Wingcopter. Over a six-month period, they successfully tested the delivery of medicines using a drone to an island in Lake Victoria. During the trials, the autonomous DHL Parcelcopter 4.0 completed the 60 km flight from the mainland to the island in 40 minutes on an average. A total of 2,200 km was flown and roughly 2,000 flight minutes recorded during the pilot project.

A key feature is that the DHL Parcelcopter 4.0 does not need any infrastructure as it takes off and lands vertically. After delivering its cargo, it can easily be loaded with blood and laboratory samples to take back to the mainland. In future, the Parcelcopter could therefore not only improve logistics in the public health sector: it has the potential to help prevent crises worldwide, for example allowing an early response to slow the spread of viral diseases like Ebola.

StreetScooter Work XL Ford has begun production of the StreetScooter WORK XL electric van at its European headquarters in Cologne, Germany.

StreetScooter has been a subsidiary of Deutsche Post DHL Group since 2014. WORK XL is the largest delivery van in the StreetScooter portfolio, with a load volume of 20 m3, room for more than 200 packages, and a payload of up to 1,275 kg.

Ford will manufacture the van with a range of electric motors and lithium-ion batteries. Compared with diesel models, each electric delivery van will offer a reduction in CO2 emissions of 5 tons each year and a saving of 1,900 ltrs of fuel. Deutsche Post DHL Group is using the WORK XL to support its urban parcel delivery service in Germany.

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LEADERSHIP instructions and allowing them to work more efficiently and comfortably. The international trials have shown an average improvement of productivity by 15% and higher accuracy rates. The user-friendly and intuitive solution has also halved onboarding and training times.

Big data helps us in predicting the right time to deliver parcels & goods at a place to actually deliver last mile satisfaction to our consumers. We are using data more and more to improve the efficiency of our operations. We use chatbots for enhanced customer service, which is on time, quick, automated and faster. Such small yet significant innovations make a massive impact in customer satisfaction.

How is the DHL Group working on reducing carbon emissions?

Sustainability has long since become one of the most important issues of our time. Our new climate protection target is to reduce all logistics-related emissions to ZERO by the year 2050. To help realize this vision of zero emission logistics, we have established a number of ambitious interim goals across the main action areas of our sustainability strategy.

By the year 2025, we want to: ◆ Increase our carbon efficiency by 50% compared to 2007 levels. This new target is based on the approach taken by the Science Based Targets Initiative. ◆ Reduce local air pollution emissions by operating 70% of our own first and last mile services with clean pick-up and delivery solutions, such as bicycles and electric vehicles. ◆ Have more than 50% of our sales incorporate Green Solutions. In this way, we also make our customers’ supply chains greener. ◆ Certify 80% of our employees as GoGreen specialists and get them involved in our environmental and climate protection activities. This includes joining partners to plant one million trees every year to protect our forests.

becoming faster, more efficient, more automated with more options for the consumer. Companies have to constantly keep challenging themselves in order to disrupt tomorrow’s futurist solutions before anyone else does that.

Believe it or not, we have just heard an innovative architectural firm pitching the idea of building a ‘drone-ready’ condo tower in Japan or Dubai in the future. Drone Tower, which would look like a futuristic condo building, will have large balconies built to accommodate small electric aircraft or shipping drones.

So yes, we are living in very exciting times and space and we have to make place for ourselves to deliver smile in the last mile.

What is your strategy and expansion plan?

We continue to focus on becoming a leader in e-commerce logistics.

We would continue investing on our people, processes and products. We are planning to penetrate into the tier II & III markets. We are also investing on our road transportation such as DHL SmarTrucking. We are also looking out for avenues to support e-tailing giants such as Amazon and Flipkart to enhance delivery mechanism because collaboration will be the mainstay for companies to prosper. Additionally as part of our Zero Emission drive, we have started testing the scope of electric vehicles in India but the problem of accessing adequate charging stations remains to be the key concern. Once the government starts taking cognizance of the matter and push the fossil fuel operated vehicles off the road, we will be better placed to take the green steps.

What will be the biggest trends in last mile over the next 5 years?

The last mile as the final touchpoint with the customer will only get more important. We will see the last mile

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UP, CLOSE & PERSONAL What quality do you look for to be an efficient leader?

I look for ‘whole’ leaders, leaders who demonstrate ‘Head’, ‘Heart’ and ‘Guts’. In particular, I look for solid IQ and EQ leaders who are results oriented, can leverage strengths, are able to provide purpose, have and create trust, focus on clear priorities, and importantly stay positive regardless of what is happening around you – be THE CHIEF ENERGY OFFICER for your teams.

Who is your biggest inspiration in the supply chain industry?

I think both Frank Appel, the CEO of DPDHL Group and Ken Allen, the new CEO of DHL eCommerce Solutions are both excellent role models, mentors and inspire me to achieve more.

A recent book you have read, which has helped you in making better business decisions Many, but ‘Good to Great’ is a regular read!

What’s your leadership style?

Enquiring – I like to understand why.

Your success mantra The Devil whispers “You can’t withstand the storm, and the Warrior replies “I am the storm”.

Your passion beyond business…

My family – any available downtime is with my beautiful wife, and forever challenging children.

PERSPECTIVE

infra

woes & wows

When we asked the industry veterans the one immediate supply chain concern that the government needs to address, the unanimous answer was speeding up of the infrastructure development. While this may sound as quite an obvious response, read ahead to know what exactly each respondent said and how a collaboration between the government and the industry can be the way forward to drive the CHANGE!

Nidhish Kuchhal, GM – Demand Chain Management, Mahindra & Mahindra Ltd. I think infrastructure bottleneck is one of the most immediate concerns that the government must focus on to take the growth story ahead. Having said that, infrastructure development has been gaining momentum in the last couple of years, but the pace needs to be faster. Now we are past one year of GST implementation but still the time taken for transporting goods remains a big challenge. While the check posts have gone, the flying squads have taken their place, consuming the same amount of time taken by check nakas earlier. Because of this, we are not getting the desired benefits of GST, which we were supposed to get. Secondly, I would want the government to think from a long-term strategy perspective. If we want to become the manufacturing factory for the world, we have to adopt global best practices such as what China has adopted.

Government has to spend money on infrastructure, as well as create an environment to gain efficiency. Today in India, the trucks are not plying more than 300-400 kms per day whereas in China the figure stands at 700-800 kms a day, which itself talks about the immense magnitude that China is displaying to the world.

L Prakash, VP & Head – Hydrocarbon SCM Platforms, Reliance Industries Ltd To me, infrastructure and road development are still greater woes for the industry at large. Yes, the government has been on the right direction to offer a growth momentum, yet there needs to be speed in the development, which will enable faster turnaround across the country. We would like to appreciate the way certain projects such as Golden Quadrilateral is shaping up, but again it’s about time that the government hastens the development process. We would like to see fastpaced development of the much-anticipated projects Sagarmala and the Dedicated Freight Corridors. Once that happens, the supply chain industry would actually be transformed in a big way, resulting in faster turnaround and efficiency boost. In short, multimodal transportation is the need of the hour.

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PERSPECTIVE

PERSPECTIVE

Atul Barve, GM – Supply Chain (B2B), Philips Lighting India From a supply chain perspective, one of the major concerns that exists today is the recently introduced e-way bill implementation. Many bottlenecks exist in the smooth implementation and those need to be resolved on an immediate basis to fructify the desired impact. E-way bill is creating teething issues for courier and the overall transportation industry. Rather than decreasing, documentation it seems to have increased, which has become a major cause of concern for us. Not only supply chain, but the finance department also is feeling the heat because of the GST compliance issues.

The good thing is that the ministry is taking cognizance of the matter and is working in unison with the industry and has been taking our suggestions to streamline the process. The GST implementation wave is more or less settled, we need to be little more receptive in deciding its impact as such reforms take their own course to reflect the desired impact. There are other facets of transportation such as the mobile check posts which are being created and the impact is yet not seen by the industry and the intent of the ministry for deploying such measures are still not clearly understood by the industry at large. For me, these are bigger issues, and once these get resolved, we will be witnessing supply chain renaissance in the country.

Sudhir Kadam, Head – Warehouse & Logistics, Bombardier India The slow pace of infrastructural projects remains undoubtedly the most immediate concern for us as an industry. While the government has started activating major projects, I feel that they are not integrated with the industry requirements. Collaboration is the key and the government needs to involve the private sector in key decision making.

This will essentially result in the desired pace of development and would catapult into major boon for the industry at large. The government also needs to focus on the longterm business strategy so that we can actually see the dream of ‘Make in India’ become a reality in the future. I would also like to divert your attention on the constant debate between the WANTS and the REFORMS. For instance, while the government rolled out GST a year back, some of the industry verticals are still feeling that it is not pro-industry.

Yes, we agree that there are pros & cons of each policy reform, but that should be skewed more towards the positives rather than the negative side of it. In order to achieve this, the government really needs to take the industry along to percolate the desired impact of each policy initiative in the right direction.

Anirudha Karnataki, Head – Logistics, Asian Paints The government needs to set the infrastructure right be it road or any support that is required to develop the warehousing industry. Apart from this, the government needs to have a solution in place for some of the IR related issues pertaining to the contract labor, which is the larger workforce in warehousing and transportation operations. A lot of agencies have talked about this but the way this entire workforce needs to be dealt with in terms of training as well as social inclusiveness of the drivers and laborers with, is industry. In order to achieve the desired result, the government can have an incentive mechanism in place. We as industry stalwarts need to empower these most crucial partners of growth. More than employment and training, social inclusiveness is what they are seeking for with the support of the government and the industry. We believe that the industry on its own will not push towards the cause till the time the government doesn’t pass any regulation and incentivize them. There needs to be a major thrust towards CSR initiatives towards the cause and the government needs to play a bigger role in bringing the taskforce to a certain level of productivity as well as inclusive development.

Vivek Gaurav, Heading – Planning, Customer Service & Logistics, General Mills India Business I strongly look forward to the supply chain community & the government coming together to take initiatives towards a seamless engagement. One key step in this direction would be that the government should facilitate the creation of a National-level Supply Chain Forum with the following members: Members from Logistics arm of Ministry of Commerce; Members of Skill Development Cell of Ministry of HRD; Supply Chain representatives from Industry, ideally a mix of various industries like FMCG, Pharma, Auto, E-Commerce, etc.; Independent Supply Chain Professionals like Consultants, Trainers, etc.; and Supply Chain Service Providers from areas like Real Estate, Transportation, Warehousing, Shipping, Tech-companies, etc.

The key objective of this forum would be to envision, drive partnership, policy making and implementation with respect to priorities like talent creation and skill development across the logistics sector, right from drivers to data scientists, making policies which are business-critical for supply chain and business at large, ensuring continuous improvement in ease of doing business, and finally striking a right balance between the government’s priorities and companies’ business goals.

Basavraj Biradar, GM & Head – Supply Chain, Siemens The one concern that is unanimously coming from all the industry peers is the infrastructure in terms of land & road development and additional infrastructure requirements related to warehousing development. While we are bullish about the prospects of Indian economy and it becoming the toast of manufacturing to the world, if we can’t support that growth with the development of necessary peripheries such as state-of-the-art warehousing facilities and road network, we will not be in a position to actually gain the title of manufacturing magnet of the world. Agreeably this must be the most talked about subject across the podiums, yet this still remains the reality and the more we harp on the issue at the right forums, the more are the chances of getting it developed sooner.

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Jasjit Sethi, CEO, TCI Supply Chain Solutions A key factor in a country’s growth is productivity and avoiding wasteful activity. A very simple element that can go a long way is to improve the Road transport efficiency while addressing the traffic issues also by removing Tolls and adding it in Road tax of all vehicles; allowing Fitness of a commercial vehicle at any RTO in the country removing empty miles and allowing National Permit vehicles to also load within the state for anywhere in the country, thus giving a free market economy within India.

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SPECIAL STORY

Grounded at the

highest altitude

SPECIAL STORY On May 16, 2018, Venkatesh Maheshwari also known as Venki, stood on the summit of Mt Everest, the highest peak in the world at 29,000 feet. It took him 50 days from Mumbai and he spent 35 nights above 5000 meters.

Working as Sr Vice President, Supply Chain, Aditya Birla Fashion and Retail Ltd., Venki has accomplished his dream while managing a very high work pressure job. Here is what his climb teaches us on the ground.

How did this dream of climbing Mt Everest come about?

I had first seen Mt Everest in a TV documentary of an expedition in the early eighties. I had an immediate connect with the mountain and ever since childhood, I have been attracted to the mountains. Even the smallest of hills would excite me. However, while I felt the connect, I never thought I would be able to climb Mt Everest in this lifetime. While I have been trekking for many years and been to Everest Base Camp twice before, I had no mountaineering skills. Being in a senior position in the corporate world, it was difficult for me to take time out to do the required basic and advanced mountaineering courses. I would then also have to scale a few high-altitude peaks before I could attempt Mt Everest. I was also not sure if I had the courage and whether my family would agree to support my dream. But the call and invitation from the mountain was growing stronger by the day and I realized that if I do not make an attempt now, it would be too late, and I would only regret not attempting the same.

So finally, in Nov. 2016, I decided to attempt the summit and researched it for 6 months. I understood in detail the training requirements and the physical preparation to transform my body from that of a 45-year-old to that of a 25-year-old.

Also, I had to align my seniors about my plan as it would mean substantial time off. I had to develop my team who could run the show while I would be gone for training. I started to prepare on both aspects and had told myself that I would go ahead only if I felt I was fully prepared.

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What challenges did you face initially in the preparation?

The risks of climbing Everest or any other high-altitude mountain are well documented. I simply learnt that I could not and should not take any shortcuts to the TOP. Having explored the mountains for over 2 decades and understanding them, my preparation was not only physical and mental, but also spiritual. It is very important to know your variables, the known as well as unknown in a project like Everest. I researched a lot on blogs, YouTube, and spoke to many climbers who had summited before to understand what I needed to prepare for. I then put together a detailed training plan. My challenge was to find good private trainers to teach me on my schedule in

the Indian mountains.

Again, having researched about various incidents on the climb, I had decided to not discuss my Everest plans with anyone other than my wife and a few close friends and that was one of the best decisions I made. There would be a set of doubters who would put questions on your capability and the other set who would build so many expectations, that you would land up taking the wrong calls on the mountains. One big learning for me from this in hindsight is that it’s often better to keep a low profile on many initiatives till they actually manifest.

It was not easy for my wife to accept my decision and it took her a long time to finally accept it. I had to regularly convince her that I was

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SPECIAL STORY

SPECIAL STORY 6 cylinders. Can there be any better lesson in time management and risk management? It teaches you to know your strengths, gauge the scenario, evaluate your resources and make a well-calculated decision.

How has mountaineering influenced your skills as a leader?

No matter how successful a person you are, mountaineering teaches you the very simple and basic quality of humility. When you have to survive on canned food, limited water and oxygen supply for days, humility is one of the crucial factors that keeps you going with all the gusto. preparing seriously and was taking care of every detail like equipment and training. I worked very hard on strength and endurance, practicing cardio training and breathing techniques to strengthen my lungs. At the peak of my training, I was climbing 10 rounds of 50 floors in five hours with 15 kg weights added to his ankles. I invested in the best of gear and it was something I’ve practiced in my corporate life which has always paid off- Invest in the best.

Please explain the concept of acclimatization.

People often ask me how long it takes to climb Mt Everest. The climb is not a one-way ascent and descent. Your base camp is at 16,500 ft. and the summit is at 29,000 ft. There are 5 camps in between. So, one goes from the base camp to Camp 1 at 23,000 ft without oxygen and comes down again. This is done twice. This process is called rotation. You go up and down twice without oxygen and unless you can do that successfully, you will be

told to abort the expedition. During this process, your body acclimatizes to the low oxygen in the atmosphere. Our body is a very intelligent creation. It recognizes that you are in a survival zone with low oxygen and so it produces a higher number of Red Blood Cells so that your oxygen carrying capacity increases. This is a very essential process in the entire climb without which, if one goes higher, it becomes risky. It is very difficult for the mind to acknowledge that you have climbed half way up the mountain and then must come down. But this is what we have to do- Backing up and Not Backing down. It is very essential to go back down to come back again much more adapted to the environment.

The climb is as much about mental preparation as it is about physical strength. A climber has 6 oxygen cylinders and he must manage his climb and pace it as per his strengths as also the weather conditions, so as to reach the summit and return to the higher camp before he exhausts those

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No matter how successful a person you are, mountaineering teaches you the very simple & basic quality of humility. When you must survive on canned food and limited water and oxygen supply for days, humility is the only thing that keeps you going with all the gusto. The whole expedition has made me extremely humble as a person and an approachable leader. I have learnt to accept situations which may not be as per my preference; I have learnt to see the bigger goal and don’t sweat over small details anymore.

I never shut the door of my cabin and I’m always approachable for any kind of communication. I believe, while we scale up the corporate ladder, we need to become better human beings and mountaineering has inspired me to be one. My passion for mountaineering keeps me in complete harmony with my inner self, because of which my energy level at work is very high and I also manage to rub it off on colleagues and team members. While grooming budding leaders, I always believe in leading by example.

No matter how much you’ve researched and done your home-work, at 29,000 feet up there, your faith in the Almighty and your Sherpa (your guide throughout the expedition) as a team, pulls you through. In the corporate space too, I’ve learnt to empower people and trust them with responsibilities, out of their comfort zone.

overcome any challenging situation; and surprisingly these are the same values which have helped me in my mission to scale the Everest. We read this on our office walls every day. But up in the mountains, I truly felt and understood each of these values and how it makes us perform better at the workplace.

Take for example the first two.

Without a passion and commitment towards a dream, one cannot endure the pain and the extremities one encounters during the journey. On the descent after the summit, I was fully exhausted and had developed blisters on both of my feet. Every step was extremely painful. Yet my sheer passion for the mountains helped me bear the pain and continue the descent. My commitment to my training ensured that I could pull myself through on even a low energy level.

Speed is of the absolute essence as you have to summit and come down to Camp 1. Speed isn’t about being fast or faster than others, it’s about pacing yourself just right to peak when necessary. Seamlessness, another virtue, clearly felt during the expedition when everyone has to trust each other.

Why is it important for business managers/business leaders to pursue a passion apart from work?

Passion is ingrown, something that you nurture with a determination; it’s a call from within. For me, it was the call of the mountains. Passion gives you a reason to go beyond your comfort zone.

While you’re rigorously training and gearing up for the climb, you also have to mentally prepare yourself to accept failure. These days, we hear stories of people unable to accept failures in various spheres of life, who eventually succumb or have a nervous breakdown.

As a leader, while you prepare yourself and the team for a goal, you also need to inculcate the right sensibilities in the event of failures and ensure that the system doesn’t crumble. Having a passion teaches you to love and pursue something up to a point, and also prepares you to cope with failure.

There are times you need to take a tough call and stand by it, like in the event of a storm you need to abort

the climb and retreat if you have to survive. While you face such challenging situations in the business world too, the kind of mental strength you acquire in an expedition, is something you cannot learn behind the closed doors of a corporate office.

Moreover, while you pursue a passion in the outdoors, you learn to interact with complete strangers and end up making some really wonderful connections without any vested interests. Thanks to mountaineering, I have a strong network of friends across the globe. Apart from your professional success, I believe the kind of relationships, networks and memories you have created, define the person you have evolved to become as you go along in life.

What’s next for Venki? ‘’Mat pucho meri manzil kahan hain, abhi to safar shuru hua hain.” Don’t ask me where my destination is, the journey has just begun. And that’s how I want to take it forward. The mountains inspire you to push the boundaries and bring out the best in you in the most challenging scenarios. My passion for the mountains remains strong as ever and I want to continue to climb.

Putting up the next goal now is helping me continue my fitness regime. I also want to share a few learnings to fellow corporate citizens on work-life balance, living a healthy lifestyle and physical fitness and I am actively talking about it these days.

What has been your Everest at the workplace and how did you scale it?

In my role as Head of Supply Chain in the retail industry, I am constantly challenged with tough deadlines, demanding project deliverables and work in a high-pressure environment.

Passion, Commitment, Speed, Seamlessness and Integrity are the 5 core values of my organization which I use in my daily work life to

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COVER STORY

COVER STORY

INJECTING A

booster shot As a global pharma player, India has been experiencing interesting times. Companies today have fearlessly embarked on a growth trajectory aspiring to become a hub for low-cost manufacturing and R&D, and yet they are also facing unique set of local and global challenges that are creating significant pressure to tighten the endto-end operations. While the companies are looking at the next phase of growth, they need to efficiently elevate their supply chain and gear up for the e-commerce wave that’s slowly hitting this sector.

T

HE Indian pharmaceutical industry has contributed immensely not just to Indian but to global healthcare outcomes. India continues to play a material role in manufacturing various critical, high quality and low cost medicines for Indian and global markets. It supplies 50—60% of global demand for many vaccines (including ARVs), 40% of generics consumed in the US and 25% of all the medicines dispensed in the UK. Over the last 5 years, 35—38% of total ANDAs approved (including 25— 30% of total injectable ANDAs) have been filed from Indian sites. Affordable anti-retroviral (ARV) drugs from India were a major factor in AIDS patients getting greater access to treatment.

India supplies 60% of global ARV drugs and 30% of the annual UNICEF requirement. All these figures present a rosy picture for the Indian pharma industry globally, states a recent report

by FICCI. Going by such stupendous performance, analysts predict that India will become one of the Top 3 pharma markets globally by 2030.

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On the promising dynamics, Vickram Srivastava, Delivery Head – Supply Chain, GDSO, Zydus Group, said, “Indian Pharma industry is overall in a very healthy state, registering double digit CAGR in the last 5 years. The Indian pharma industry driven mainly by generic drugs is expected to touch $85 bn by 2020. Domestic contribution is expected to be higher than exports as urban spending and insurance coverage is expected to improve healthcare expenditure. Supporting this growth rate must be a strong backbone of supply chain. Moving forward, it will get increasingly difficult to differentiate products on quality. Generic drug makers are catching up to competition and technology/manufacturing advantages are being negated. Cost, which will be driven by effective supply chain management, is expected to be at the forefront to drive the next wave of growth in the industry.”

Reflecting on his years of experience in this very industry, Rajasekhara Reddy, VP – Global Demand Planning & Logistics, Glenmark Pharmaceuticals Ltd., shared, “The Indian pharma supply chain is evolving from a past of unorganized small holding businesses.

This has been aided by GST as well as due to the consciousness of the

company to extract value and bringing more value out of supply chain in terms of service and cost efficiency to the business. Currently the supply chain cost ranges between 4—8% with largely unintegrated and undifferentiated service levels.”

Talking about transformation, B Raveendran, CEO, LBW Consulting Pvt. Ltd., says, “The Indian pharma supply chain is going for a major transformation primarily due to GST. All companies are engaged in optimizing the supply chain network, which will lead to huge cost savings and speed to market. The new trend is to de-layer the supply chain, which means cutting across channels and connecting with the customer directly because the pharma business is divided into 3 buckets – chronic, acute and specialty products.

Hence, most of the companies are working on supply chain activities based on the nature of their products. Eg., the focus of chronic products is direct to customers since this must be consumed life long. Similarly, specialty products also work on the same line.”

E-Pharmacy As the competition is fierce, the focus is shifting towards developing an integrated supply chain to improve

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COVER STORY operational performance parameters such as service level and cost to deliver.

If we assess health of Indian pharma supply chain on key performance indicators like customer service, inventory levels and supply chain costs, there is a huge room for improvement.

Every company strives to ensure that products are available across the supply chain with good quality and ample shelf life. Best-in-class pharma companies operate at a 95% service level, this is 3 percentage point lower than bestin-class Indian FMCG companies and 4.5 percentage point lower than global best-in-class pharma companies. Supply chain costs for best-in-class pharma companies in India are 8% higher than best-in-class pharma globally.

In such scenarios, new trends like modern retail and e-commerce are paving way towards better supply chain management and delivering products directly to the consumer. E-commerce has integrated technology to enable better management of inventory levels across stakeholders and reduced cost of supply chain by dividing the products demographically.

Offering perspective into the emergence of e-commerce players, Vikas Chauhan, Co-founder, 1mg, elaborated, “India is becoming a global pharma player with companies aspiring to become low-cost manufacturing and

COVER STORY

VIKAS CHAUHAN, Co-founder, 1mg India still lags in established cross-country cold chain logistics compared to other global powers.

Many modern trade and e-commerce companies manage multiple temperature-controlled warehouses to store time sensitive medicines, but transportation cost through refer vans is still on the higher side in the country. Following points should be considered while transporting temperature sensitive medicines: » Suitable rigid containers should be used all the times to reduce damage to medicines during transit. » Temperature should be maintained based on the cool box and type of gel pack used; some commercial icepacks/gel packs contain a chemical product ensuring that icepack remains colder than normal water-filled icepacks. Nowadays, ice boxes with sensors and temperature logger are also available that accurately records the temperature within the ice box and should be considered whenever feasible.

R&D hub, but still they are facing a unique set of local and global challenges that create a significant pressure on end-to-end operations. Currently, India’s pharma supply chain is highly fragmented and unorganized.”

Rajeshh Rao, Head – SCM, Rossari Biotech Ltd, remarked, “Lot of new age companies are mushrooming in this space lately because it’s a volume game more than a price game. Surely, there is a challenge of delivering goods to the final consumer because of the time lag in taking the order or the medicines are not in stock. The same

challenges might not be there when you walk into a pharmacy and ask for the desired medicine. There is a lot of work that need to be done in the back-end for online pharmacy. They are not able to predict the demand-supply gap, which needs the intervention of data analytics. These online companies need to be thoroughly technology intensive to gain customer traction, which I think is still missing. Having said that, they are progressing well and have also deployed doctor-on-call who actually interacts with the consumers placing the order online and validate

YOGENDRA M BHATT, COO – Pharma Division, Zytex Biotech Pvt Ltd There are ample opportunities to improve SCM efficiency from cost and service point of view. To enhance the efficiency, we need to have» A recognized academic course like any degree course, which qualifies individual to handle pharma goods. It makes a lot of difference when skill and educated people handle the operation. » Standard certification accreditation needs to be awarded to SCM operators who are qualified to operate pharmaceutical goods. This will ensure smooth function and reliability of the operators increases. » Considering the extra cost incurred on regulatory compliance, the government may give some relaxation to truck and warehouse operators in GST or other tax relaxation so that the burden of cost can be minimized, which finally gets passed on to public. » Currently supply chain is fragmented with lack of co-ordination and symmetry. A government supported national association needs to be brought in place which can educate these companies on different global standards to be followed and help them get training on various new techniques. » Adoption of automation and digitization enable companies to offer quick, correct and real time information. It enables them to generate effective analytics to predict for proactive decisionmaking. It reduces operating time, resulting in cost saving with high efficiency of SCM. Moreover, it enhances visibility of end-to-end activities, reducing error rate to bare minimum.

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the prescribed medicines. This factor will immensely benefit these companies in this domain. These calls are also recorded, so if tomorrow there is any audit by the regulatory authority to cross-check the authenticity, they have the proof to show. In fact, they have gone a step ahead, if a diabetes patient has dosage of three pills a day and he is taking it regularly, there is an auto-replenishment system where one doesn’t need to upload the prescription every time. In this highly competitive environ, these people are not looking at profits in the initial stage, they just are focusing on customer acquisition by offering staggering discounts. While this model will not be sustainable in the long run, but that’s how these channels function to gain traction.”

According to Ryan Viegas, Head of Logistics – Asia Pacific, Teva Pharmaceuticals, “Although there has been some resistance from certain quarters, I would like to bring about the experience with private taxi aggregators like Uber and Ola, where there was a lot of resistance from the existing public transport operators in the past. However if we look at the current situation, there is space for all to operate and the end result is better quality cabs, rates and services where the customer is benefited. Similarly, in pharma, the objective of the industry and governments is to provide genuine products, affordable healthcare for all and compliance with regulations. All these aspects can be fulfilled by online aggregators; hence online e-tailing is one of the distribution channels that is getting popular in the country. It also

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provides better compliance, track and trace and historical data.”

For Yogendra Bhatt, COO – Pharma Division, Zytex Biotech Pvt. Ltd., “Currently e-pharmacy business is less than 0.5% but it is growing at a 100% rate, which is a remarkable feat and we cannot ignore it. Online pharmacy business has been compelled to rework supply chain system to fulfill the regulation and the need of e-commerce compatibility. It requires to set up omni-distribution channel model where the role of distributor and retailer is eliminated. Here the role of large-scale transportation does not exist and is replaced by courier services and operators who have wider and prompt distribution system to cater promptly.

They all have to have digital compliance in place.”

The online supply chain has to be agile and highly responsive as the time factor is important to deliver the drugs; hence prompt order processing and availability of product is imperative.

Packaging of product requires a

thorough relook as it needs to be courier worthy to accommodate safe and informative packaging to handle small parcels. At warehouse level, it needs to maintain separate cell to keep account of e-commerce transaction, billing, GST formalities, packaging of product, shipment of product with special skills to create online information channel to co-ordinate with e-commerce agencies till customers’ end.

There is also a growing need to train courier service providers to handle pharmaceutical consignment, maintaining temperature and humidity with providing safety and counterfeit proof services. Online pharmaceutical business relieves from long channel of distribution, eliminates extra cost of supply chain, which ultimately results in consumers getting products at better price points.

Challenges There are multiple challenges that any supply chain faces in today’s uncertain

RAJASEKHARA REDDY, VP – Global Demand Planning & Logistics, Glenmark Pharmaceuticals Ltd Companies can use supply chain to their advantages by creating ‘Horses for Courses’ kind of a supply chain. It means that they could segment the product by service expected and cost incurred, which will let them choose what cost they can afford and what type of service they can provide. It will help in providing the right service to the customer based on their expectation that would create more happy & satisfied customers.

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VICKRAM SRIVASTAVA, Delivery Head – Supply Chain, GDSO, Zydus Group In today’s VUCA business environment, it’s ‘Supply Chain vs Supply Chain’. A robust yet agile supply chain is going to give companies a distinctive advantage in the generic pharma industry. Whether it is speed to market or releasing cash through effective and innovative inventory management, , supply chain plays a larger role in business management. Risk mitigation is vital as global supply chains can come under new threats driven by macro/micro concerns. Many of these threats can be effectively mitigated with comprehensive supply chain planning.

and vulnerable global environment and pharma industry is no exception.

From spiraling logistics and distribution cost (driven by rising fuel cost) to key material supply continuity and cost pressures on procurement, the list would be endless. With Regulatory Authorities becoming increasingly stringent, compliance is becoming a big challenge. Delivering cold chain medicines in temperature-controlled condition especially in the last mile poses a big challenge. The other challenge is cost pressures. With more and more drugs being brought under NLEM (National List of Essential Medicines) by the government, the margins are getting adversely impacted.

This in turn is putting pressure on supply chain to reduce the costs. It is expected that supply chain works on ‘More for Less’ principle. SCM heads have to work out innovative methods to make available the drugs in the most cost effective manner, highlighted SG Rao, Former Head of Supply Chain, Novartis India Ltd. For Rajeshh Rao, the challenge starts right from the forecasting process given the criticality of the business. Inaccurate forecasting leads to shelf life issues, which indirectly puts the burden on the reverse logistics. Secondly, medicines & injections that need less than ambient temperature through the movement, takes a major hit when transporting to the tier II & III cities as the companies don’t have temperature-controlled transportation infrastructure in those parts of the town. This again raises a question of reliability. Eventually when it reaches the patient, it may not reach in the right conditions, which have been

prescribed by the pharma companies. If there is a temperature variation, then the drug is useless. In short, reach and network are still not up to the mark specifically in a country like ours, which is hugely diverse.

Giving a global perspective, Srivastava added that recently, pharma companies throughout the globe have been impacted by the Chinese government’s crackdown on polluting industries disrupting the supply of Key Starting Material (KSM) and API for drug substance and drug product manufacturing. This has impacted drug availability, leading to acute market shortage and driven procurement costs northwards.

Another challenge exports are facing is consolidation of business in the US. Historically, the US has been the biggest export market (both by value and by volume) for Indian pharma companies.

US, over the years, has seen increased competition (buoyed by faster ANDA approvals) and channel distributor consolidation, which is directly impacting margins and profits for the companies operating in the US market.

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Supply chain for Indian companies are now under pressure to keep delivering as margins in both domestic and export markets are shrinking.

Raveendran highlighted that currently, the upstream is completely disconnected from the downstream.

Hence, companies have to maintain a high inventory level. The last mile connectivity from the distributor to retailer is still not fully captured hence, the product visibility is poor.

Fragmented approach in this area of supply chain is leading to poor customer service. For 1 mg, challenges were multi-fold, especially when they started.

Chauhan reminisced, “Regulatory understanding was very poor, even amongst the regulators. They did not know where the regulatory standing of our platform was and we had to explain to them how this model operates.

Because there was a doubtful perception in their minds about the legitimacy of e-pharmacy as a business, given the prevalence of international smuggling of medicines through online trade. We had to explain to them that this is a simple marketplace model – a consumer gives us the prescription and we pass it on to a third-party pharmacy. We are not even technically an e-pharmacy, just a platform connecting the consumer to the pharmacy.”

For 1 mg, the second challenge was from the consumer perspective – getting them into the habit of getting and sharing prescriptions.

In an offline world, people often did not bother getting prescriptions and they could get any medicine they wanted – on the phone or through a pharmacy. “Consumers used to get upset with us, while we were merely following the law when asking them to upload prescriptions. This really hindered our growth at that stage. As

RAJESHH RAO, Head – SCM, Rossari Biotech India Pvt Ltd Post-GST, warehousing dynamics have changed completely because invoicing can happen anywhere. However, it’s not easy either as your products need to reach the stockists in the shortest possible time and in the most efficient manner. There needs to be constant dialog with the stockists to ensure the systematic structure in place. Today post GST, we also see that lot of 3PLs have become organized, which is good news for the industry.

RYAN VIEGAS, Head of Logistics – Asia Pacific, Teva Pharmaceuticals As far as the pharma supply chain is concerned, there appears to be two sets of standards for domestic and international supply chain and transportation. For exports to regulated markets, companies need to prove that the temperature requirements stated on the label are complied with throughout the supply chain, whereas sadly for domestic products no such control exists. We have regulations like Good Distribution Practices in Europe and we need similar specific regulations here. As an industry, we cannot differentiate between the healthcare of patients across the world. Secondly, post GST, pharma companies need to rework their storage and distribution network strategies in India and move outside the comfort zone.

an e-commerce player, we have to maintain best-in-class service levels and pharma being a highly regulated sector, should comply with all the regulations,” added Chauhan. Predictive analytics has played a huge role in improving its service levels and reducing delivery time to the consumer.

Bhatt enlists some of the major challenges marring the growth of pharmaceutical supply chain: ◆ Quality of Infrastructure: Our infrastructure is not so well equipped to cope up with the load and the stringent requirements of transportation. It requires the development of highways of international standards. Even the interior part of roads in India is in pathetic condition. The present government has taken up the development of Infrastructure on

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the highest priority. The running mileage can be improved per day if roads are in good condition. ◆ Unorganized Transport Sector: 90% of transport business is governed by the unorganized sector.

Their approach is short term limited to one-time trip, therefore they can offer low cost. It makes it difficult for the organized operator who has higher overheads. They spend on regulatory compliance and on other system-oriented expenses, which increases total cost. Ignorance and careless approach leads to legal glitch with authorities on road and resulting in a huge loss to supply chain movement. ◆ Poor Condition of Vehicles: Unorganized and myopic vision leads to poor condition of vehicle as it is neither maintained nor kept

cleaned. For pharmaceutical goods, no other goods are permissible for transportation owing to the contamination issue. The vehicles currently used are all not qualifying for transport worthiness for pharmaceutical goods. ◆ Lack of Shipment Visibility: Once goods leave C&F or Mother Depot, it becomes difficult to track them.

Moreover, there is a complex system of distribution with more than 6,00,000 retailers, hence once it leaves distributors’ end, it’s a challenge to locate the goods. ◆ High Inventory Level: It currently stands at 180 days of inventory of finished goods whereas good performer maintains at 100 days, which puts tremendous burden on the working capital. Expiration and reverse logistics drain substantial profits. It needs to be taken up seriously.

Anand Garg, Senior Director – Head India Supply Chain, Dr Reddy’s Laboratories, stated, “Over the last few years, Indian pharmaceutical industry has been grappling with various compliance challenges like never before: increased regulation, harmonization push and data integrity concern to name a few, which is not only impacting revenue stream and cost escalation for the current business but also hampering the ability to get approval for new drug applications. To address some of the concerns, industry has started gearing up quality and compliance capabilities through: ◆ Making regulatory compliance part of their corporate strategy ◆ Enforcing the culture of quality and imparting adequate periodic training to employees ◆ Attracting & retaining best talent in an increasingly competitive market ◆ Automating systems and infrastructure to reduce manual intervention (LIMS, DMS, DAS, SCADA, etc.) ◆ Practicing quality by design in early stage of product development ◆ On-boarding right suppliers in network (Raw materials, packaging material, logistics service providers), who understand evolving regulatory requirements and proactively institutionalize the change with timely communication to manufacturers.

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COVER STORY Strategies With the passage of GST, the emerging model requires all cold chain products to be stored at the regional zones of India – South, West, North and East, and material to move to ‘junction boxes’ (Strategic cold chain nodules) placed across the country. This serves the purpose of product availability close to the market and ensures integrity of the product, shared Raveendran.

Seconded Srivastava, “Logistics management tools and real-time data update helps companies track and trace their shipments. Data loggers and active RFIDs help companies monitor temperature sensitive shipments on real time basis. As organizations grow, Cost to Serve (CTS) becomes critical to keep a check on supply chain efficiency and minimize complexity in production management. New SKUs adding to the planning portfolio, increase the complexity of planning and drive up the operational costs. It is very important for any organization to periodically look at low performing SKUs and cut the tail. We have undertaken this exercise in close co-ordination with sales & marketing and were able to reduce up to 20% of non-performing/under selling SKUs improving the overall supply chain speed and agility.”

Deepak Patkar, Director, Patchems (Sical Supply Chain Solutions), stressed that pharmaceutical supply chain has to come to a level where e-commerce stands currently. They also need to follow the just in time method to live up to the consumers’ demands. The entire supply chain should become lean so that people aren’t investing heavily

into stocks rather they look at investing more into services. 3PL companies need to think decisively on implementing automation in their warehousing facilities.

Selecting 3PLs Logistics is the core area of expertise of 3PLs, which makes them more efficient in terms of both cost and delivery.

“Most of our products are shipped through pharmacies by their delivery persons, but still a significant number of orders are processed through 3PLs, mostly in II & III tier cities. For us, basic criteria for selection of 3PLs involves cost, delivery TAT, reliability in delivery and customer experience caused by the delivery agents. Reliability in delivery becomes even more important when it comes to pharma,” highlighted Chauhan.

Srivastava added, “Basic facets like fleet strength and global reach are a given which cover transportation and warehousing needs. Apart from this, additional key aspects companies look at before partnering with any 3PLs are what value-added services they can give in addition to logistics and warehousing support such as forecasting and inventory management, production and procurement support. All this coupled with useful MIS and accurate information visibility for client can give a 3PL an edge over competition.”

The expertise that the 3PLs bring onboard needs to translate into speed with effective cost management for companies lowering working capital cost and also ensuring that top line and bottom line growth is sustained and

augmented with seamless collaboration.

For Rajeshh Rao, 3PLs are the companies who specialize in the efficient handling of products and pharma companies can focus on their core business. There are pros & cons of appointing a 3PL. While they take care of warehousing, storage, transportation, invoicing, etc., which comes as a relief for pharma companies but at the same time, the management of 3PL is very important because at the end of the day, if something goes wrong with your product, the entire onus would come on the pharma company. So, one needs to critically examine what areas of operations you want to outsource and to which partners. Once you outsource those processes, you should have a control process in place. Companies need to strike a balance to gain the desired results. One must select a 3PL based on his experience in the healthcare sector because it is always advantageous to deploy someone who has the technical expertise in managing requirements of such a complex sector.

A 3PL should have sufficient financial muscle and a reputation in the market.

Their networking with the regulatory authorities needs to be good. Lot of these nuances need to be carefully ensured when you select a 3PL. Agreeing on the same, Viegas said, “3PLs are our partners and are an extended arm of the manufacturer’s supply chain.

However, the ownership to ensure the quality and integrity of the products lies with the manufacturer throughout the supply chain.”

“It is expected from 3PL companies that they are well equipped for handling

SG RAO, Former Head of Supply Chain, Novartis India Ltd There is a move towards consolidation. Distributors are joining hands to form a large distribution services providing entity. This helps one in pooling resources both finance, infrastructure, competencies, etc., and makes it more cost effective, With increasing pressure on margins, this is the most desirable model. GST has also acted as a catalyst as there are no more restrictions on interstate movement. There is also an increasing focus on modern trade and e-commerce as alternate distribution channels. In my opinion, they are still in the nascent stage and will take some time to really reach the masses. They also face stiff challenge from the conventional trade channel.

Of course, this development has resulted into the neighborhood retail chemist becoming more innovative and customer focused to retain his customers.

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Patchems is part of Sical Supply Chain Solu ons. It’s all-in-one award-winning warehousing and distribu on capabili es in both, ambient and temperature-controlled, makes it a unique partner for all your needs.

With ISO compliant services they have been providing solu ons to leading MNCs in vision care, diagnos cs equipments, reagents, pharmaceu cals & IV solu ons and consumer healthcare, to name a few.

Their best-in-class solu ons are designed by an expert team that understands the complexi es of the pharma and medical devices industry and collaborates with clients to be er understand cri cal requirements.

Contract Logis cs | Cold Chain I Transporta on

COVER STORY

DEEPAK PATKAR, Director, Patchems (Sical Supply Chain Solutions) Transportation segment in India is lagging in many ways. While infrastructure is just one critical link, we are also having difficulty in training drivers on the need for safe handling of medical products. Pharma industry is yet not ready for the vehicular load, which makes things very challenging, as no transporter would like to forego his own profit margins and would aim at consolidating his onward journey with other products such as automotive, chemicals or FMCG, putting safety of medical products in jeopardy. Things are going to get complicated from here as the government is soon going to roll out Good Distribution Practices draft. Once that gets implemented, there will be a lot of regulations that would need to be followed. If you don’t possess the right knowledge, things will only become more complicated.

pharma products, having understood its regulatory compliance and standard for operating. They need to maintain strict vehicle conditions and hygiene. 3PLs need to avoid any contaminated stuff with the consignment. It is advisable to have exclusive vehicle for caring pharma product. 3PL operators are expected to be prompt and rapid responsive as it is highly service oriented function and the success lies in timely and safe delivery.

3PL operators are required to adhere to warehouse arrangement in line with Drug and Cosmetic Act. The change is required by inculcating a sense of responsibility and ownership of work by training and guiding them,” remarked Bhatt.

Offering 3PLs’ perspective, Patkar stated, “3PL companies are gaining tremendous traction in the pharmaceutical space. If you are at the right space at the right time and have the right capability, you are bound to get business. People who lack the right capabilities to cater to the pharma critical requirements are going to lag behind their counterparts. If you want to serve the pharma clients, you need to adhere to stringent quality parameters, compliance, cold chain norms, and offer them utmost safety while handling medical products be it medicines or injections. We should be geared to meet very challenging demands of the industry. 3PLs need to work aggressively on the training of the people in handling such critical products. Also, they need to critically examine the scope & efficacy of automation in their warehouses and strike a perfect balance so that it is not capital intensive.

Yes, it’s a challenging market but not difficult to serve. You should have a

regular assessing mechanism in place, which can help you in scrutinizing yourself as per the stringent market requirements and prepare for the tough times ahead.”

Technology For companies, technology adoption is no longer a choice. Industry leaders and even smaller companies have embraced ERP systems to manage production, inventory and procurement.

With growing complexity and scope of business, technology support is a must. Next generation tools for supply chain finance, procurement tools like ARIBA and advanced planning tools have made way into supply chain function of pharma companies. Rajeshh Rao is of the view that technology is there, what is desired is that people need to be flexible to adopt a new technology. Viegas also agreed that like all industries, the pharma industry has little option but to adapt to the tech changes shaping up in the world, there cannot be exceptions. Several pharma companies have already initiated 2D barcoding to support track & trace and overcome counterfeit products to an extent.

Bhatt revealed another side of the story and stated that adoption of high technology is being quickly adopted by large scale manufacturers who have no constraint of finance and volume to justify spending whereas small manufactures are finding it strenuous to spend on technology where value of implementation is very high. Highly automatic machines from making to packing need substantial investment, which SME finds difficult considering to their revenue. Our major manufacturers

26 CELERITY November - December 2018

are following under this category.

Considering above fact, we are far behind developed countries. They have regulatory norms, which force them to have automatic process that do not allow any human touch.

Innovations The new development that is taking place in supply chain is a single point contact for servicing the entire country.

“We have implemented a ‘Plug & Play’ model. This model helps the company to be completely flexible and get cost benefit since it is based on a ‘pay as per usage’ policy,” shared Raveendran.

Logistics being a key driver, Srivastava avowed “With good scope and potential for supply chain consolidation in Indian pharma domain, I see tremendous growth prospective lined up for the logistics industry in the country. In the domestic market, C&F network consolidation and better resource/ infrastructure utilization will mean better operating cost for companies.

In export, with newer geographies being explored by Indian companies for business, will mean logistics service providers will have to up their game to compete with global players. IT enabled MIS and tracking will mean better decision making for service providers and more transparency for customers.”

Digitization, optimization, Blockchain technology, introduction of Integrated Business Planning are some of the key things that will boost the efficacy of pharma supply chain. The real impact will be seen when the supply chain is treated as a profit centre instead of a cost centre.

FEATURE

FOR THE HEALTH-CONSCIOUS

Soul

Eyeing opportunities in the nascent organic millets market which is bursting with burgeoning potential, Kottaram Agro Foods, kept its first foot forward in the year 2011 and there’s no looking back post this. In a span of 6-7 years, they have brought out 20 strikingly innovative organic healthy breakfast products on the back of a strong distribution network and tight sourcing strategy. Here’s a low down of what goes behind creating an up & coming food brand in the retail world, which is already overloaded with wide & varied competing brands…

R

AGI, which was always considered a so-called boring food, has finally found its much needed place in the kitchens of India. In a refreshing avatar, it has entered the retail and departmental stores of the country as breakfast cereals and instant dosa and idli mixes.

The credit for this goes to Kottaram Agro Foods, which has brought its brand ‘Soulfull’ for the Indian consumers.

Incidentally it has been featured among top 15 innovative organic products category globally by a research firm.

So, what interested the founders in launching such a super food into the Indian markets with so much conviction?

To start with, the stats resonate with the company’s evolving interest into this stream as India is the largest producer of millets in the world, and accounts for more than 40% of the global consumption. Millet cultivation is the mainstay of rainfed farming which provides livelihood to nearly 50% of the total rural workforce and sustains 60% of cattle population in India. The

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perception of ragi (finger millets) as food of the poor is changing mainly among those with lifestyle diseases.

Tapping such a lucrative market, Bengaluru-based Kottaram Agro started its experiential journey in the year 2011.

Backed by extensive research, they turned ragi into an exciting and tasty food under the brand name ‘Soulfull’.

The company aims to bring India’s traditional millets in a convenient and nutritious forms while keeping the

tastes and preferences of the modern consumer at the forefront. Soulfull has a range of products that suits different sets of consumers and has worked closely with nutritional scientists to ensure that honesty and good health are the two strongest pillars.

According to Prashant Parameswaran, MD & CEO, Kottaram Agro Foods, “Grains like quinoa are celebrated across the world today and Kottaram wants to bring back ragi and

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FEATURE other traditional staples as part of the millet revolution. Millets are good for the farmer, good for the environment and good for consumers – truly a smart product that needed to be adapted to the global consumer.”

Soulfull has conceptualized innovative products that address the need for nutrition and convenience in a wide range of tastes and textures such as ‘Ragi Bites Choco Fills’, ‘Desi Muesli Chatpata’, ‘Oats Millet Masala’, etc.

On capturing the growing potential of such nutritional grains, Parameswaran, says, “The tangential outcome of Soulfull products is increase in demand of ancient grains that will address problems of marginal Indian farmers and reduce environmental stresses on land since these grains can grow in arid areas, are pest resistant and need minimal fertilizers.” The company is a Department of Industrial Policy and Promotion (DIPP)-recognized start-up that works with state governments and leading research institutions to promote Smart Foods, which are good for the consumers, the planet and the farmers.

THE ULTIMATE USP Staying true to the vision was extremely challenging for Soulfull amid the highly growing competitive space.

As Parameswaran highlights, “Our challenges have been in constantly innovating while understanding consumer requirements, educating the consumer about the products (most of Soulfull’s products have also created the category they are in), ensuring a seamless distribution and scaling up operations and production with our accelerated growth in the consumer market.”

On defining USP, Parameswaran quips, “Global giants have introduced

FEATURE

The nutritional value and health benefits of consuming millets have created a surge in the organic market for a variety of millets. They are low cost crops and can be grown well even in marginal lands with minimal water. No millet attracts any pest hence they have no or low fertilizer usage and are pest-free.

product itself and appeals to its target consumers. “Our superior packaging quality ensures freshness; our innovative reusable tins and shakers make our packaging collectibles in their respective segments and the essential information is presented in an interesting format since we believe our consumers need to have full access to all essential information. So, while our competitors might reduce the font size of the sugar they carry, we highlight the nutritional benefits of the jaggery we might have added in a particular product.”

AGRI-SOURCING NORMS ‘me too’ products in some of the categories we have introduced. Making consumption of ragi exciting is our USP (delicious millets). Currently the market potential for this category has not yet been fully realized. Our aim is to increase the market size exponentially and benefit from the support by modern retail as well as traditional retailers, aggressive introduction in tier II cities and a deeper penetration into the homes in the metros.”

To drive growth, data analysis and constant feedback from its retail partners, channel partners as well as sales personnel have ensured a healthy inventory level. Placing tremendous trust on retail partners, by helping them plan inventory levels and setting up reorder systems that ensure the consumers get their products at the right time and at the right place, has been our biggest strength in enhancing expanse.

Each product that has been introduced in the market is truly different from products that existed before but is inspired by understanding the consumer better. The Soulfull Desi Muesli capitalizes on the Indian spices

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and flavors to make the traditional muesli more exciting to its audience.

Months of consumer research, going back to the drawing board and market taste test have helped the company create a product line that appeals to a larger audience while not compromising on the nutritional benefits.

KEEPING THE FRESHNESS INTACT The brand needs to adhere to stringent norms and various measures to keep the crispness and freshness alive till the time it reaches the breakfast table.

On ensuring the same, Parameswaran informs, “On the back of this is a comprehensive inventory plan and adopting the latest packaging technology have all ensured that every consumer gets the exact same experience at any date within the shelf life of the product. Our packaging has won international recognition for creating and adopting the Soulfull monster (a friendly monster in various colors that is exciting for our young consumers).”

The packaging of each product line reflects the personality of the

The company’s sourcing norms ensure that the benefits get percolated till the grassroot as he shares, “We work directly with farmer cooperatives to ensure that we get the best raw materials. We are assisting these communities by also educating them on processes they need to adopt to increase the value they provide. A systematic handholding between such cooperatives and organizations like ours will ensure an economic growth to the farmers as well. Government initiatives to encourage such dialogues have been provided to Soulfull both at the regional and at the national level. Noted agricultural scientist and the father of India’s green revolution Dr M S Swaminathan has always been a guiding light for us providing us with invaluable advice on bettering our agro systems.” The Government both at the regional and national level encourages innovation. Support in terms of infrastructure as well as sourcing and visibility is also being provided. “We hope there will be continued support in the years to come,” he adds.

The company does not believe in working with middle agencies who do not add value to the supply chain.

He adds, “We connect directly with aggregators in village taluks who source from the farmers. Through government initiatives, we have worked with millet farmers by backward integrating key processes that need to be followed, which will allow farmers to do the last mile value add to their produce, thereby eliminating the need for middle men agencies. Quality standards are then measured before final procurement.

Government agencies help in collection of high-quality millet produce, which constitutes a major portion of our raw

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material. Other farm produce (like jaggery, pulses, etc.) are procured from registered vendors of Soulfull using just in time (JIT) systems to ensure zero wastage of resources. Packaging material as well as other essentials are procured in a similar fashion, thereby reducing both our cost of capital on idle inventory as well as cost of storage.”

Talking about the distribution channel, he states, “We have a tiered distribution system with all our major production units in Karnataka and a hub & spoke system, which distributes inventory to major cities across the country. We have localized distribution for standalone stores and centralized purchase order systems for some multi location retailers. We continue to service our institutional and online sales directly from our headquarters.”

Giving insights into the entire value chain, he elaborates that raw materials are centrally purchased but shipped directly to the factory that produces specific SKUs. Finished goods are then packed post a stringent quality check.

The machine pack is supervised through

manual intervention and the finished products from various factories across South India are shipped to the Soulfull central warehouse. “Product mixes are then shipped directly to our registered offices or our distributors or large modern retail bulk purchasers across the country. Shipment from the warehouse to the end consumer has been set up for our online purchases. Each product batch has a unique batch code, which allows us to track both primary and secondary sales from retail outlets as well. With a large shelf life of nine months, we use the FIFO (first in first out) process to ensure efficiency in the supply chain. Lastly we also have a system of stock keeping, which alerts us when stock levels at both primary and secondary are below the buffer stock levels, which ensures an automated reorder system, which is followed through with manual intervention,” shares Parameswaran.

OMNI-CHANNEL RETAIL EXPANSE Soulfull today has over 20 products

Organic and Millets: #Next Generation Smart Foods Organic farming primarily aims at cultivating the land and raising crops in such a way, as to keep the soil alive and in good health and is based on the principles of health, ecology, fairness and care. The global quest for nutritious food, security of farmers, sustainable agriculture and conservation of the environment is fueling a revolution in organics and millets. Globally, over 43.7 million hectares are organic, with over 2 million producers from 172 countries. The total area under organic cultivation and the global food market are increasing at 10 & 12% respectively. Global organic trade is estimated to reach 100 billion by 2020.

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FEATURE

Soulfull is driven by the mantra of providing superior nutritious products to the consumer in a convenient fashion. With this in mind, our sourcing mantra has always been to purchase high quality system driven raw materials and use best practices in production to deliver the best quality/nutritional products to the end consumer. Perishable product procurement needs to be closely monitored to eliminate wastage and we are now proud of an efficient system of timely purchase/reorder of raw materials to ensure Zero idle time of machinery/resource as well as very low stock-out situations to our end consumer. launched in just 6 years with the product mix encompassing Ragi Flakes (100% crisp flakes made solely of finger millet), Ragi Bites (ragi pockets filled with delicious chocolate, vanilla or strawberry – a huge hit with its youngest consumers), Millet Muesli (traditional muesli fortified with the goodness of millets), Desi Muesli (muesli with the goodness of millets in exciting Indian flavours), Multigrain Loopies (crunchy breakfast cereal with the power of grains like ragi, jowar, wheat, oat millet meal – Foxtail millet and oats brought in four flavours).

Soulfull plans to enter the beverages category with the launch of ‘Smoothix’, a high protein, healthy drink made from 12 natural grains.

As consumers move seamlessly between various retail options for their purchase, it is imperative that brands like Soulfull have an omni channel strategy. With increased online activity and online shopping in the grocery segment and with a steady growth in both organized retail as well as online channels, omni channel retail is here to stay. The benefits of each need to be accentuated & harnessed and the consumer should get identical brand benefits and communication across channels.

According to Parameswaran, a holistic system is now emerging, which is beneficial to brands, beneficial to consumers and beneficial to retailers. The retail sector today is using information to the maximum, understanding and analyzing both brand and consumer behaviour to

maximize their growth. Recent mergers and acquisitions in the retail space have led to the consolidation of efforts and larger stronger players emerging in the market. The value of small kiranas have not been undermined but are today being remapped to play a holistic system. Product category specialists have now diversified, thereby integrating consumer information across product categories.

ARMED WITH INVESTMENTS Kottaram Agro received an investment by a leading investment house – Aavishkaar recently. This funding is essential to meet the market demands as well as to grow the market itself.

Parameswaran says that investors like Aavishkaar have a clear vision and are able to understand the value of firms and the importance of further funds at the right time. They believe in the growth story of firms like ours and help us realize our dreams.

“We currently are at over 6000 stores across the country and have an aim of reaching 50,000 stores by 2020. As far as the product basket is concerned, we plan to offer cereals

30 CELERITY November - December 2018

with fruits, muesli, and masala upma to name a few, in the future.” The investment scenario is great for entrepreneurs in India who have a clear vision as well as a road map and a commitment to achieve those dreams. Moreover, there are immense opportunities in the packaged foods industry in India which is growing rapidly at 20-25%. The partnership with Aavishkaar will help Soulfull strengthen its product portfolio, accelerate marketing and expand its distribution reach to over 50,000 retail outlets in the next 2 years.

In the end, Parameswaran has a word to share with prospective entrepreneurs… “Though still on the learning curve, I would want to suggest budding entrepreneurs to build a strong team. Do it! Entrepreneurship helps you add value to your nation and create new jobs. Of course, there are ups & downs, it’s important to take both in stride. Do not take short cuts. Trust your instinct but look closely at all data. Always follow Consumer First strategy. These are mantras that we learnt along the way and are now a big part of who we are as a company.”

FOCUS

elements Riding on all

Changing policy paradigms are pushing Indian logistics companies to rely heavily on multi-modal transportation for better business prospects.

Though there are last mile connectivity issues especially for the air freight segment because of lack of hinterland connectivity in port freight that affects operations, but companies are ready to take the plunge in order to reduce the logistics cost and streamline the entire value chain, writes Prashant Bhatmule, Head-Outsourcing, JK Paper Ltd.

I

was travelling to a new location around 3-4 years back and didn’t know relevant routes. While using Google, I was surprised to learn that the usage of multimodal transport is possible to this extent, leading not only cost optimization but also time optimization to the maximum. Of course, it goes without saying, the multimode acceptance is possible only with synchronization of various modes being used and the same is possible with discipline in all sectors. Today it has become a part of life for personal travel through Google Maps.

The Indian logistics industry spends around 13% of the GDP on different types of costs incurred in logistics operation. Logistics as a function is being increasingly outsourced by manufacturers even though the logistics spend is quite high in India compared to other countries. We are having the second largest spend in the logistics sector next to China. China’s spend is much higher compared to us.

However, the Indian logistics sector in many ways still lacks the global standards of performance. This is

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evident from the fact that India ranked as low as 44th among 160 countries in the World Bank International Logistics Performance Index. Adequate road and rail infrastructure are still required to support the growth as these are the two major modes of transportation available in the country.

Policy level changes are also necessary to turnaround other modes

like inland waterways and coastal shipping. Investing in and using multiple transportation modes not only brings efficiencies in the chain but also goes a long way to reduce pilferage as well as overall transportation costs.

The transportation industry has changed a great deal over the years. While the evolution of the transportation industry has been

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FOCUS difficult for many of those who work in the field to adjust to, it has been beneficial for businesses who have been able to greatly reduce their shipping and transport costs. Implementing new technological innovations is an expensive business. Reducing the costs of shipping and transport is clearly of great benefit to any business.

Transportation costs represent an expense which cannot be eliminated entirely, but which can be dramatically reduced, not only by technology but also by using more efficient methods. One of the more efficient methods of transporting goods is to use Multimodal transportation, which involves combining different methods of transportation to reduce costs and to maximise the efficiency of operations.

FOCUS FREIGHT MODEL SHARE IN INDIA

Waterways 7.60%

Rail 32.10%

RAILWAYS Carries about

1.1 billion

tonnes of freight annually It accounts for 26% of total freight

Road 60.20%

AVIATION Air Freight accounts for 2% of logistics movement in terms of volume and 30% in terms of value

Benefits Businesses which have a large amount of material to transport on a regular basis can make considerable savings by choosing a multimodal transport procedure. Multimodal transport policies tend to be far more cost-effective. They also allow for cargo to be transported to and from areas that would otherwise present something of a logistical challenge. Not only this but by making more efficient transportation routes viable for all, multimodal transport can be considered much greener than other alternatives.

Trucking has traditionally been the most common means of transportation across the world. There are few professions or vocations which are as quintessentially Indian as trucking.

However, conditions over the last decade or so have not been kind to truckers. Policies should have been

COMPARITIVE COST OF MOVING FREIGHT Road: `2.50/Km

Rail: `1.50/Km

introduced which restrict the number of hours that a trucker can be expected to work. This is on top of the challenges of having far fewer applicants for vacant driver positions and increases in fuel prices, both of which have proven to be existential threats to many existing companies.

The lower costs that result from using multimodal transport remains its biggest selling point. It is the ability to move large quantities of goods for relatively less money that makes the concept of multimodal transport so appealing and worth pursuing. Not only can multimodal transportation help to reduce the immediate shipping costs by defaulting to the best value option,

32 CELERITY November - December 2018

Waterways `.25/Km

it can also help reduce costs by other means. For example, the different shipping methods on offer mean that businesses have more flexibility and control over the loading and unloading processes. These reduced handling costs can then be passed on to the consumer.

In today’s climate, a business cannot be too environmentally friendly.

Switching to a multimodal transport policy can dramatically reduce your business’s carbon footprint and the impact that it is having on the environment.

To understand just how much of a difference multimodal transport can make to the rate of greenhouse gas emissions that a business is responsible for, consider the example of a truck versus a train. A truck emits something in the region of 19.8 pounds of carbon dioxide for every 100 ton-mile that they travel. A train, on the other hand, emits a mere 5.4 pounds over the same distance. As one of the fresh initiatives by the Indian Government, Rail transport has been started from Kolad to Suratkal, which was a threeday journey, reducing time to one day by carrying trucks on rail wagons.

WAREHOUSING It accounts for 5% of the Indian logistics market (excluding inventory carrying costs)

Implementation Even if your current shipping and transport routes really are best served by a single transportation method or route, it is still worth investigating the potential of multimodal transport.

In making such an analysis, the first thing that you need to do is to establish the exact shipping routes.

Work out what is being shipped, where it is coming from and where it’s going. As a general, although by no means all-encompassing, rule, it is the longest and most varied journeys that stand to benefit the most from going multimodal. When you think about it, this makes sense. The longer and more varied the terrain, the more transportation options there will be. Therefore, greater opportunities available for savings.

Once you have a detailed map of your current shipping and transportation

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routes, it is time to check how the rates for the various modes of transport compare. And this is nowadays easily available on various Vehicle tracker modules. Once you look at the different methods and pricing options, you may well be surprised at just how much variability there is. For many businesses, until they seriously investigate the possibility of multimodal transportation, they remain blissfully unaware of just how dramatic a difference it can make in determining the overall costs of transporting cargo.

The premise of multimodal transport, using different methods of transportation for different parts of the journey, can, in fact, have massive repercussions, especially in terms of affordability. When the principle of multimodal transport is fully embraced and pursued to its optimal conclusion, it can dramatically improve the efficiency

that businesses operate at, while also greatly reducing the cost of shipping for consumers.

Restricting businesses to a single method of transportation means that they don’t have the flexibility and space that they need to formulate a more efficient and effective policy. As the options available to businesses looking to transport cargo expand, multimodal transport becomes an increasingly attractive way of doing things.

Management and Challenges Ahead Multi–modal Transport System is fragmented due to » Multiple agencies » Multiple jurisdictions » Multiple modes, and » Multiple disciplines being responsible for various aspects.

Hence integrated, well designed and

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FOCUS co-ordinated Multi–Modal Transport System (MMTS) is required. Having said that, management of system integration is one of the challenging tasks for MMTS. System integration has three levels viz., institutional, operational, and physical. i. Institutional integration is an organizational framework in which joint planning and operation of transit services are carried out. ii. Operational integration involves the application of management techniques to optimize the allocation of transit resources and to coordinate services. The techniques of operational integration are elimination of wasteful duplication of transit service by competing systems, higher utilization of capacity, long haul modes on high density corridors, establishment of unified fare structure, subsidy in freight, verification of bookings of different cargo and coordination of public information system. iii. Physical integration is the provision of jointly used facilities and equipment.

Techniques of physical integration are inter-modal transfer, provision of weather protection structures at stops/ stations/transfer points, provision of symbols and display techniques, provision of parking facilities and comfort and safety of pedestrian movements.

MMTS is a composite system and management of transfer time, waiting time, seamless travel, etc., are top priorities. The business satisfaction is possible only when proper integration of different modes is provided with minimum waiting time at stops/ stations during peak hours. The various aspects of modal integration in terms of connectivity, unified freight system, information integration, physical integration, network integration, etc., require proper planning and highly skilled management techniques.

Connectivity: The two ways mass transfer of cargo from road-based transit to rail-based transit are possible only if the connections between truck station and railway stations are available through feeder services.

Unified freight system: A single freight system can be a unique advantage for a cargo to reach from origin to destination. It reduces the travel time from origin to destination. The single freight system attracts customer to

use buses, train, flights, etc., because of the comfort and also saving time in buying separate bookings for transport of goods.

Information integration: A common guide booklet with complete information regarding various services should be available to a business at every major transfer location. The information should be properly advertised through various information agencies, radio, TV, etc.

Physical integration: Adequate space needs to be provided at the ground for interchange facilities around stops and stations for smooth transfer of cargos from different travel modes via route to destination. Park-n-Ride facilities need to be provided at various stations to promote the transit rider for parking of personalized vehicles to further economize.

Network integration: Restructuring of routes to reduce wasteful duplication of services between truck routes and railways, or sea transport, etc., are essential at network level. The surplus can be utilized for feeder services to other stations.

Hi-tech surveillance and management of development along MMTS corridors having influence zone of 500 mt wide belt on both sides must be planned as intensive development zone and accordingly development control norms must be formulated. It is important to integrate these places of importance and connect through proper development of MMTS corridors for smooth and convenient movements.

A well-developed multimodal transportation system uses maximum application of ITS. Management of Intermediate Paratransit (IPT), Non-motorized Vehicles (NMVs) and their parking areas near MMT stations are a challenging task.

The planning response to NMVs is closely associated with the delivery mechanism of urban basic services to the growing number of inhabitants by the urban local bodies. It follows that urban services and activity centres need to be distributed in conformity with the characteristics of these modes in both new settlements and in the redevelopment of the older part of the existing cities along MMTS corridors.

The security of massive capitalintensive projects like MMTS need special provisions of safety and security

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both at the stations and routes.

Transport Security sometimes called transit security, is a scientific method of understanding realistic adversaries and designing systems to prevent them from doing harm. The aim of designing the system is to prevent, protect, prepare and to implement a recovery mechanism. However, fiscal base of transport security should support the cost of security measures and consequences of security failures.

Hence a separate “Transport Security Regulatory Authority” must be created to bear responsibility and costs for carrying out security measures.

Expertise is the key Multi–modal Transport System (MMTS) explores the use of multiple modes of transport for safe, convenient and efficient movement of cargo. Generally, MMTS has been characterized essentially by increased capacity, efficient access and better location of both interchange and integration nodes. Additionally, presence of MMTS in metro region enhances accessibility, economic growth, public health, environmental protection, security & safety, social cohesion, etc.

In this connection, it is desirable to establish a single authority for planning, development, implementation and enforcement of the policies.

Multimodal transportation system demands better synchronization among various modes of transport for better, advanced and efficient service. Further, it requires need based traffic circulation plans to integrate various modes and improvement of major road stretches and intersections to facilitate smooth movements. Hence, management of such mega projects requires expertise of both traffic engineering and transport planning.

Prashant Bhatmule has over three decades of experience in the supply chain in various industry verticals such as consumer durables, auto, home appliances, EPC projects, etc. His expertise lies in imports and domestic purchasing, pan-India warehouse management, SAP implementation, creative supply chain creation. He is a Mechanical Engineer with an MBA in marketing.

OPINION

Seven Up It’s a well-known fact that the supply chain revolves around 4 key elements – infrastructure, technology, process and the people. While yet to achieve the desired results, supply chain leaders need to imbibe the seven steps inspired from the pathbreaking strategist of ancient times, Kautilya’s Arthashastra, writes Rajat Sharma, Head – Supply Chain, Hamilton Group.

W

E are all witness to the evolution in Supply Chain strategy; from plain cost reduction to service level agreements, from inventory buffers to vendor managed inventories, from statutory compliance to unique competitive strength and much more.

On the sourcing side too, it has moved from contracted and spot rates to reverse bidding, from stocking to hedging, towards strategic sourcing partnerships across the value chain.

IoT and digital revolution have added fuel to fire and the rate of change has accelerated further.

Yet strategy & vision for Supply Chain has always revolved around cost to market Vs time to market, ensuring compliance and quality; and competitive edge in supply chain has always been achieved by paradigm shifts in the approach and execution.

To begin with, the key elements in any Supply Chain are infrastructure, technology, process and people.

Infrastructure and/or Network, whether it is locations for manufacturing & storing, buildings & facilities to suit the operations, mode of movement – carriers, machinery and equipment to supplement the products and processes, not forgetting the IT infrastructure to store and produce information on demand; is critical and may take time and investment to create/change.

Technology is undergoing fairly rapid transformation in most fields of application viz. manufacturing,

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storage, movement within and outside the premises, packaging, tracking, monitoring and now even semi autodecision making using data processing methodologies like machine learning.

We are now seeing a high flux period where software and hardware changes combine to produce IoT, block chain tracking, etc.

People in Supply Chain; right from top notch leaders to daily wage workers, highly skilled to unskilled wage laborers have always posed thought provoking questions and created challenges in talent management including sourcing, training, retention and life cycle management of the manpower across various echelons and diverse needs.

Processes have evolved, not only to match technology & infrastructure but also benchmarks governed by laws,

regulations, competition, customer demand & people operating the supply chains.

While the above framework has always been true and shall stand as the drawing board for all new paintings, the nuances have evolved with time and the changes in the last two decades have been exponential; across the globe but perhaps more pronounced in the emerging markets, so is the case in the Indian subcontinent too.

For example, in the case of infrastructure, GST is a reality and the erstwhile taxation constraints on political state boundaries no more form the basis of Network design. The game is open again for Supply Chain leaders to re-think their distribution network.

That, with a 7%+ GDP forecast has propelled the 3PL industry towards heavy infrastructure investments with a growth expectation of about 15%18%, while we haven’t yet seen the kind of consolidation that was anticipated with the legislative move, a quarter of this is being viewed as ‘time to market’ constraints.

Decision making for SCM leaders is thus not simple, though some may claim such to be the case, pointing to simple optimization algorithms. And yet, the game is ever so dynamic with large and small retail and e-commerce players having set shops and channels that were hitherto unknown, and increased the speed of movement of goods, visibility of data and business decisions surrounding these aspects.

While there is scope for simpler

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OPINION algorithms to stand true for optimization of networks, on the other hand, speed, accuracy and quality of deliveries have become far more important than they were a few years back. To add to the woes of contemporary practitioners, industries such as Food & Drugs are now evolving with tighter transit & storage control mechanisms, pushing larger end-toend cold chains to come into being and the implying costs in maintaining the said constraints over larger spaces or vehicles creating further impetus for collaborative service offerings, thus pushing technology innovations.

The largest target segment today is the new age consumer; the middleclass segment with increased disposable income demanding variety & quality, preferably at the door step or onscreen. If they step out, they now look for unique buying experiences apart from cost & quality of products. And, with digital transformation, also referred to as the 4th Industrial Revolution, most big and small organizations are looking at digitizing processes to reduce paperwork and thus manpower.

Processes must keep pace to be able to deliver these experiences and achieve the expectations.

All the above need people to design, implement and run smoothly. The most critical being the Supply Chain leaders; their importance is underlined owing to the rapid continued evolution and the rising expectations. Also, as the demand increases, the industry needs many more young professionals to dive into this space of Supply Chain leadership, and this takes us to a pertinent question: how are they responding or what could they keep in mind while taking these decisions?

Kautilya, the great master of ancient Bharat, has mentioned seven elements in his work of Arthashastra, called his Saptang: Swami (the leader/s), Amatya (the managers/decision-makers), Janapad (the gamut of customers & stakeholders), Durg (Infra), Kosh (Finances), Danda (Workforce) & Mitra (Allies – service partners and vendors).

Once these seven are wisely addressed and aligned, growth and prosperity will only be a natural progression.

This, hence, is of deep relevance for upcoming leaders in supply chain to be able to create agile, sustainable and effective networks.

Seven

WINNING STRATEGIES

1 2 3 4 5 6 7

A clear understanding of the basics: Ground understanding of organization’s operations, network and distribution needs, their purchase processes and vendor base, pricing techniques and factors impacting vendor costs, the operating fundamentals of the storage and transportation industry and their various modes and models of engagement, etc.

Financial Fundamentals: Impact of costs on top & bottom line, costing & pricing of goods and services, cost of manpower/labor across probable markets, Investment – returns and treatment, cost of talent and cost of not having the right talent.

Setting up of clear Supply Chain vision for the organization: Majorly focusing on creating clear plans across product, channel, network, vendors, manufacturing and sourcing decisions in order to be able to map the right infra, technology and processes. This then needs to be complemented with broad talent maps & people structures.

Breaking the vision into milestones: This is imperative to be able to monitor growth, evolution, performance and even review decisions on people.

Testing & experimentation: Whilst, in this VUCA world, where innovation is imperative, it is always wise for leaders to be able to perform controlled experiments – test processes, technologies & protocols over pilot projects with varied scopes.

Understanding & Managing scalability: Across all the four factors – Infra, Technology, Processes & people – leaders need to understand the needs and ways to manage scalability. The challenges of creation phase are often easier to visualize as compared to growth, sustenance and eventually succession/transformation.

Leadership Development: No one can deny the importance of developing new leaders across the areas of operation, in order to be able to manage phases of transformation or challenges of scalability.

In his present role, Rajat Sharma manages the supply chain for all the verticals addressing the infrastructure, network, logistics and distribution needs, engaging 650 feet on the ground to achieve this. He has worked in various supply chain roles such as demand & supply planning, customer service, logistics, procurement, new product launch & change management, etc. Through Coca-Cola, Samsung, Nokia, Glenmark & Hamilton, he has managed transformational projects in diverse territories across India, Latin America and Global emerging markets.

36 CELERITY November - December 2018

RECAP

Success Story SCRIPTING A NEW

The 12th edition of Express Logistics & Supply Chain Conclave ended with much fanfare. Digitalization took the front seat, offering a glimpse into the future of supply chain and how companies can embrace change to capitalize on the promising prospects. For the vibrant goals to get fructified, the industry needs to condition the latent talent pool in the right direction, which turned out to be one of the major headlines from the event. A report

by Prerna Lodaya & Rishi Kalapi…

T

HESE were the two days of power-packed networking, insightful dialogues, discussing the future course of action in unison for the betterment of the supply chain industry as a whole… Yes, like every year, the 12th edition of Express, Logistics & Supply Chain Conclave (ELSC) met with spellbound success with a larger audience and greater business prospects. Held on October 4 & 5, it was a boiling pot of ideas, innovation, appreciation for the best of the best in the supply chain domain just like the annual IIFA Awards for Bollywood.

Those who missed it may find it an exaggeration, but a very strong and impactful speaker line-up of almost 230 speakers and over 800 attendees made the event a huge success.

With elite speakers such as Jayanta Chatterjee, Director – Supply Chain, Castrol India; Somnath Chatterjee, Head – Procurement & Logistics, ITC; L Prakash, VP, Head – Hydrocarbon SCM Platforms, Reliance Industries; Kiratmohan Singh, Head – Supply Chain

supplychaintribe.com

India, Baxter (India); Manoj Kothari, VP & Head – SCM, Godrej Consumer Products, etc., one can expect the confluence of the best ideas to come.

The opening track started with one of the most intriguing topics that the industry must focus on – developing a customer-centric approach. During the panel discussion, supply chain heads of the leading companies discussed as to how they have transformed their supply chain to being the one close to the customer and deliver the products the way they want and the moment they want it. Speakers such as Devadas Nair, Customer Care Associate & Head – Supply Chain and Mission Control, Shoppers' Stop Ltd.; Udit Kumar, Head – Manufacturing Planning & Supply Chain, Honda Cars India Ltd.; Samir Chaturvedi, AVP & Head of Supply Chain, Patanjali Ayurved Ltd.; Vikrant Tyagi, Director – Supply Chain and Logistics, Schneider Electric.; etc., shared innovative practices their companies have implemented in getting closer to customers.

WHO MOVED MY CHEESE? An interesting session, ‘Who Moved My Cheese? What Can Supply Chains Do NOW to Prepare for the Impending Digitization Wave?’, had very insightful anecdotes and similes from various industry verticals to draw supply chain parallels. By employing the philosophy of the four rats – Sniff, Scurry, Hem and Haw, from the book Who Moved My Cheese, the panel tackled varied questions about the evolution of the industry and its entry into the tech-enabled world. The inevitable digitalization of the industry has helped make monumental leaps in the direction of cost savings and reducing the burden on manpower. Individual experiences and valued pearls of advice were shared during the session and the audience were showered with rich information about the future of the industry.

Uberization of the supply chain and application-based development was also discussed that is sure to aid the supply chain of the future.

Parallel tracks on specific industry verticals were also a great hit among

37

RECAP the audience as they got into the nuances of supply chains in their respective sectors.

The last session, ‘Rules vs. Creativity, Striking the Balance with Next Generation Supply Chain Talent’ had one of the most critical topics discussed with Vinodkumar Nair, Head – Procurement & Supply Chain, Essel Propack Ltd.,

moderating the session. It had brought out the topic of work-life balance and still delivering the best performance at the forefront.

A NIGHT TO REMEMBER …

industry. Performances by standup comedian Sorabh Pant and the Incredible Indians Malkhamb Group left the audience both- happy and enthralled. A packed audience applauded 86 Award winners.

The ELSC Summit is never complete without honoring the best in the

We are looking at the Indian market strategically. Our cutting-edge AI-powered integrated supply chain management solution uses the world’s latest technologies to solve the business problems of fast growing Indian enterprises.

Participating at ELSC has offered us the muchneeded platform to gain access to our prospective customers as well as showcase our expertise.

Koustuv Chatterjee, Global Head – R&D, o9 Solutions

I have been part of the logistics industry for almost four decades.

I have been fortunate to witness the changes that this industry has seen over the years. I have now embarked on an entrepreneurial journey to disrupt the Last Mile Distribution – connecting Urban and Rural markets of India, which is the need of the hour and especially with the growth of e-commerce.

Connect India is working with the government to create skills in the Last Mile Distribution and the technology that support this distribution.

Receiving the Lifetime Achievement Award is extremely fulfilling, and Kamikaze has been a great platform for the supply chain industry to get together and discuss the prevailing issues being faced by the industry.

I wish them luck for their future endeavors and I would continue to associate with them for a long time.

L R Sridhar, Co-founder & MD, Connect India E-commerce Service

38 CELERITY November - December 2018