CELERITY SUPPLY CHAIN TRIBE NOVEMBER 2022

SUPPLYCHAINTRIBE.COM November 2022 Volume 6 Issue 7 For private circulation only

INSIDE Presenting the INNOVATIONS and ACHIEVEMENTS of Supply Chain Tribe Award Winners – Under-30, Under-40 and Exemplars Insights into this Transformative Landscape of Multimodal Transportation in India

WAREHOUSING INFRASTRUCTURE Bringing Efficiency, Speed, Productivity and Sustainable Development Capturing the India Growth Story on the back of Sound Warehousing Infrastructure

Ambitious Growth Ahead!

Dear Readers, It’s a matter of great pride that Supply Chain and Logistics is not only being taken up at the highest echelons in the government but also being discussed as part of industry and trade agreements.

The 4th meeting of the Logistics Working Group under India-Japan Industrial competitiveness partnership concluded last month. The discussions were on strengthening India’s industrial competitiveness through improving logistics in India. The investment opportunities for Japanese companies were highlighted in the PM Gati Shakti as well as the National Logistics Policy.

According to a report released very recently, India’s e-logistics industry is set to touch $9 bn with the e-commerce boom, with a compound annual growth rate of 35 per cent.

Technology, infrastructure, digital consumption, and data sciences are some of the growth drivers mentioned in the report.

While the government is making huge investments in setting the Infrastructure piece right, service providers and corporates are adopting technology for continuously improving customer experience. Digital technologies have altered the way logistics industry functions today. Digitalisation is being rapidly adopted to become more flexible in processes and operations, implement new initiatives, and even rethink consumer experiences, in response to market needs and changing business conditions.

Talent is the third piece getting its due recognition. Celerity concluded its 4th Annual Awards for exceptional supply chain talents in both individual and corporate capacity.

Like all our issues, this one too packs in many more topics. Hope you enjoy the read and find it useful in your professional life.

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 2022 Volume 6 Issue 7

COVER STORY 10 | Unveiling the Super Stars, the Super Achievers and the Exemplars In continuation with our last cover story, here we present the innovations and achievements of our Under-30, Under-40 and Exemplary Supply Chain companies who have ventured beyond the expected norms and delivered their respective organisations some of the most incredible supply chain solutions, which ultimately ensured their sustained growth in this highly dynamic and competitive global market.

5 | PERSPECTIVE

Multimodal Logistics in India – A Transformative Landscape in the MAKING

23 | Warehousing Infrastructure – Bringing Efficiency, Speed, Productivity and Sustainable Development Our panel discussion on Warehousing Infrastructure unveiled interesting insights on the changing paradigms of this industry in the country and brought forth the opportunities that developers and occupiers in unison can leverage to develop state-of-the-art warehouses and harness tangible gains. Here’s a special report that translates the India Growth Story on the back of a Sound Warehousing Infrastructure…

34 | TRENDING GLOBALLY Supply Chain News & Views from around the globe.

Our recently held panel discussion offered some interesting insights into this transformative landscape of multimodal transportation and recommended ways for companies to be the perfect partners in progress to drive the holistic growth.

20 | INTERVIEW

FINANCE & SCM – The PERFECT ALLIES Mukesh Gupta, Director Finance, RBIS South Asia, Avery Dennison shares the perfect synergies between the supply chain and finance function that ultimately drive an organisation’s success.

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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Multimodal Logistics in India A Transformative Landscape in the MAKING

The Central Government’s drive to encourage integrated logistics and multimodal connectivity is a positive move to ensure the fast-paced development of the logistics industry in India. Not only will this bring efficiencies in domestic logistics, but will also boost EXIM competitiveness, making more international market available for consumption.

Additionally, the government has ambitious plans to develop 100 PM Gati Shakti cargo terminals in the next three years to be located in many states in India. Our recently held seminar, on the sidelines of our annual Supply Chain Tribe Awards event, offered some interesting insights into this transformative landscape of multimodal transportation and recommended ways for companies to be the perfect partners in progress to drive the holistic growth. Excerpts…

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Chetan Kumria, MD, XCELL Supply Chain Solutions (P). Ltd.

Rajat Sharma, VP – ISCM & Customer Service, Hamilton Housewares

What is the main principle behind using multimodal?

Sanjay Desai, Co-founder & Regional Director, Humana International (S) Pte. Ltd.: Multimodal transportation is the physical process of transporting goods using multiple modes or types of transport like Road/Ocean, or Road/Rail/ Ocean for one shipment with one ownership and one source of documentation. In a Multimodal shipment the multimodal operator is Solely responsible for the entire goods, not only its individual parts till the goods are reached to end consumer.

Xerrxes Master, President, Association of Multimodal Transport Operators of India (AMTOI): Multimodalism is the only answer to an efficient supply chain model.

Multimodalism consists of all walks of transportation – air, sea, rail & road.

A Multi Modal Document is a single document showing two or more modes of transportation to ensure a quick timely delivery of goods. It's more or less based on a hub & spoke model as well or it can be via seamless flow of goods from sea to road or via rail. We always talk of the increasing costs of logistics and various figures are being quoted.

NCAER has very categorically stated that the logistics cost is close to 8-9% and this can only be bought about by an efficient supply chain model via multimodalism.

Multimodalism, in essence, is One Vendor One Document.

V Raju, Business Head & Sr VP – 3PL Contract Logistics, Avvashya CCI (All Cargo): The basic purpose of using a multimodal is to ensure cost

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Sanjay Desai, Co-founder & Regional Director, Humana International (S) Pte. Ltd.

V Raju, Business Head & Sr VP – 3PL Contract Logistics, Avvashya CCI (All Cargo)

optimisation, transit time savings and lesser hassles for the importer or user of the multimodal. The importer need not negotiate at every point with the shipping line, with the rail operator or with the truck operator doing the last mile. All these movements can happen on a single document (CTD), which is agreed and signed before start of the movement or journey of the consignment and each leg is taken care by the respective service provider, that is already determined.

What is the current status of Multimodal adoption in India? Are we realising its full potential?

Sanjay Desai: In the last five years, there is a tremendous push towards making India a transhipment hub. India spends about 15% of GDP as logistics costs nationally. A systematic logistics network is crucial to economic growth.

To develop this sector, the Cabinet Committee of Economic Affairs mandated the Ministry of Roads Transport and Highways (MoRTH) to develop Multi Model Logistics Parks (MMLP) across the country under a broader national wide scheme called the ‘Bharatmala Pariyojana’. “The Gati Shakti Programme” launched by Central Government is a part of ‘Bharatmala Pariyojana’. One of the major pillars of Gati Shakti is setting up of (MMLP) Multi Modal Logistics Park in India, which will strategise the way we adopt and implement effective multimodal transportation across major highways connecting multi-city logistics centers at speed and optimal cost.

What are the benefits of Multimodal?

Xerrxes Master, President, Association of Multimodal Transport Operators of India (AMTOI)

Sanjay Desai: Multimodal transport brings along multiple advantages, which make this logistical process one of the widely used systems in the world, especially in international markets covering long distances where there are multiple gateways / ports, etc. Let us look at a few benefits: Reduce congestion in one type of transport: As this process makes use of multiple shipment modes, it helps to decongestion the traffic on one particular mode.

Facilitate easy exports using cross-border multimodal: International multimodal logistics helps a country to be competitive in the international market due to quicker and safer availability of goods for trade.

Optimised use of available modes and capacities: Since multimodal shipping involves more modes, it increases the number of available connections within the supply chain without having to wait for a specific time. It also minimises time loss at trans-shipment points and keeps the cargo moving in right direction.

Centralised documentation: Multimodal transportation reduces the burden of variety of documentation and formalities.

Due to single ownerships, the burden of issuing multiple documentation and other formalities connected with each segment of the transport chain is reduced to a minimum.

Single party ownership: In a multimodal transportation, the consignor needs to deal with only the multimodal transport operator in all matters relating to goods, documentation, and or delay in delivery

PERSPECTIVE of goods during the entire process. This helps to have a focused communication in case there are issues associated with the shipment.

Reduces costs at various stages: The savings in money from costs resulting out of these advantages are usually reflected through freight rates charged by the multimodal transport operator and also in various other allied costs like, cargo insurance cost, destination & port charges.

V Raju: Multimodal currently stands as one of the best means for movement across seas, across the road and land infrastructure and also the best available means to ensure savings and time. Look at let's say about 20 years back, I remember when I used to work for terminals at Nhava Sheva, we used to find it extremely difficult to ensure a cargo that arrived from Europe, offload it at JNPT and then try and catch the train for ICD partly or ICD Garhi Harsaru in Delhi. We used to wait for days together just to get a booking. The main objective then was to transit to ensure that the transit time is the lowest but unfortunately, we could never get a booking because the number of rail services were the least at that point of time and the rates could really be very high at that time because there was no competition. There was only Concor, which used to provide us the rail services and then once it reached ICD, moving it to the factory or to the customers’ godown was another big Herculean task because we never knew when the train is going to reach Garhi Harsaru to plan further route. With multimodal, things have improved drastically. Companies can conclude a deal with the sellers, for instance, in the US., to move the material from his factory in Los Angeles on to the Port of Los Angeles. The transit time is planned. Their agents in India ensure that the goods move straight to Delhi or wherever they are destined through the rail services connected through one single document and ensure that it is reaching the destination mentioned in the single document – Combined Transport Document (CTD) or a bill of lading at the shortest possible time.

Therefore, the advantage is always with a buyer or with a consignee. There are also other parties who can avail of the

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advantages. In essence, you don't have to struggle with every single logistics service provider enroute. Multimodal ensures that there is a rapid service at the shortest possible transit time, the documentation process is quite simple – a single contract entered and either the buyer ultimately must only ensure and check on the transit times and the day when it is going to be delivered to him at the location nominated by him.

Going ahead, I think the Gati Shakti and also the National Logistics Policy are going to be pathbreaking initiatives and hopefully with a speed with which the Indian Government is moving around to bring down the logistics cost from a whopping 14% to about 8% and also with the Government of Maharashtra very keen on opening up multimodal parks across the state, we can expect some dynamic decisions to be taken and multimodal is definitely here to stay.

Rajat Sharma, VP – ISCM & Customer Service, Hamilton Housewares: There are multiple benefits of using multimodal logistics, such as lower transit time; higher confidence level on SLAs; cost saving on freight as well as inventory holding; clarity of responsibilities & ownership between various partners; opportunity to use common integrated IT platforms and create higher visibility, etc.

How does multimodal differ from Intermodal?

Chetan Kumria, MD, XCELL Supply Chain Solutions (P). Ltd.: It has

to be one document, then it becomes multimodal. If you are engaging different carriers, then it's a multicontract and Intermodal. As a shipper, if you are giving it as a multimodal transport, then the whole designing and optimising of the consignment has to be with the multimodal provider whereas in intermodal, the shipper has to do it himself. He has to build in resources, deploy the team and tools and in short, build that capability in-house. We should definitely use multimodal transportation because it is environment-friendly. If we move a cargo by air, per gram CO2 metric ton kilometer, it is about one thousand emissions. If we transport the same cargo through truck, it is 140 and by rail, it is 27, by sea, it is just 7.

Is it an industry agnostic solution or does it apply very specific to a particular industry or a category like biopharma vaccine?

Chetan Kumria: India has a spend of about 220 odd billion dollars on transportation, which by 2025, is poised to grow to about 330 billion dollars.

That's a huge spend. Now out of this 40% of the spend is contracted and 60% is bought, which is largely Freight buying.

If you look at the total landscape out of those 220 billion, only about 40 odd billion dollars would be part load market and the rest is full truckload Market.

Now having analysed all this, Rail and Sea freight holds meagre 15 to 20% market share.

We have a long way to leverage this

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huge multimodal expanse. The good news is that the government has started paying due attention to multimodal and has started integrating ports, airports, highways, -- all under the Gati Shakti program, which I believe, is going to change the landscape of multimodal in India. This is the time where we are now getting into a landscape, which will be built for the future for the next 10 to 20 years and we all have a very key role to play. While the service providers will be getting ready, the infrastructure will be getting ready from the government side and the private players operating in the segment, the shippers will need to have that confidence to move their products through multimodal.

The pros and cons of moving through multimodal is that it can be used only for a longer distance. It cannot be used for shorter distance. Another key element I would like to mention is that the industry needs to engage with the third parties who will provide the multimodal transportation service. I think while we are building for the future, the companies will have to look at inventory optimisation as well because their lead times will increase if they are sending goods from North to South through a truck and a rail combination, the cost will reduce, emissions will reduce. I think these are the parameters that we all have to keep in mind when we are looking at it from an industry specific point of view.

What are the opportunities for multimodal in India now?

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Xerrxes Master: With the Honourable PM’s initiative on Gati Shakti, Multimodalism is poised for a cataclysmic growth in the next decade. For the very first time in our industry’s history has a government taken such keen interest and initiatives to ensure that India is propelled to the top 10 Logistics Performance Indicators (LPI). A slew of projects have been announced including Multimodal Logistics parks across the country coupled with investments in rail, road and air infrastructure. There is no dearth of opportunities in the multimodal sector.

V Raju: Multimodal is different from what it was few years ago. We now have various services, at different locations, various service providers running to different locations pan-India, and the services are available on all days. Ease of booking is available with shipping lines, and agents help the cause of the importers. Thus, the importers can always avail of the facilities which by the day is increasing all over the country with better facilities at both the loading and unloading points. In addition, the transit times are brought down from what used to be with dedicated freight corridor also being developed at various important cargo hubs and consumption centres that support these multimodal movements.

Rajat Sharma: In a country like ours where the distance is something that you cannot ignore, we're moving goods

thousands of kilometers across the Indian state borders. There is a fair amount of possibility even in the inland waterways, there's a huge possibility on the coastal waterways and there's shipment going on across the globe. Unfortunately, we have not seen a lot of speed and momentum in this direction. Let me take a recent example. We all are hearing a lot about this project in Varanasi, which is connecting the Eastern Freight Corridor, and is slated to offer a huge opportunity to people who are moving a lot of goods to East to North. As a matter of fact, manufacturing bases in the East have grown 250% in the last four years, imagine the kind of impact that we are creating and there is obviously a significant saving that everybody is looking at when they go and manufacture in that sector, whether it is for consumption in that sector or not but there is a chance to multiply that saving, which we are unable to capitalise on, owing to the fact that the freights are fairly higher. There are multiple benefits of using multimodal as there is time and cost saving for every industry vertical whether it is pharma or whether it is manufacturers or traders.

I would say organisations and supply chain professionals must refer to “Design for Multimodal Transport” usage to multiply benefits, when re-configuring their distribution networks.

How are the responsibilities aligned if there is damage of goods or if it is a loss? How do you decide that?

Xerrxes Master: Multimodal transport is governed by the Multimodal Transportation on Good Act 1993 (MMTG). It provides a regulation for multimodal transportation from any place in India to any place outside India involving two or more modes of transport on the basis of a Single Multimodal Transport contract. Thus, any untoward incident thereof, has to be as per the Law of the Land.

V Raju: Damage to consignment is a very important aspect in multimodal movement. The basic responsibility in multimodal movements for damages lie with the party issuing the CTD / Bill of Lading. However, this document always has a clause, which mentions the details

PERSPECTIVE on Limitation of Liability on behalf of the CTD issuing party. The location or point where the damage has occurred, how the damage occurred, when it got damaged, etc., becomes very important and then the survey report that shows the condition of the consignment becomes very important. Once this is done, the different service providers need to meet along with insurance service provider to discuss the damages and liabilities on each one of them.

Rajat Sharma: This is really a fairly complicated situation every time it occurs.

With all the contracts and partnerships in place, when it comes to losing a couple of lakh rupees because of a particular consignment damage, there is always a lot of stress. I think erstwhile when we were operating intermodal, it used to be a fair amount of challenge: because to decide whether this damage has happened with partner A or partner B, used to be the biggest conflict. With multimodal, this challenge has been solved because now we have only one vendor taking care of the entire shipment from the start to finish, which is the biggest advantage that multimodal offers. A single multimodal way bill enables single point ownership and all concerned parties are clear on responsibilities during times of conflict.

How can the government play an enabling role or is playing the role of a catalyst in boosting multimodal in the country?

Xerrxes Master: The government plays a crucial role in promoting Multimodal transport. The government should ensure that the projects announced are completed well within the time limits and delivered as per the commitment.

With the development of Multimodal Logistics parks, it is vitally essential that the hinterland is also developed to support the same simultaneously.

It would also help if the government enables a tax-friendly regime for MTOs, thus propelling the growth of the logistics sector in India, thereby reducing the overall logistics cost and enabling India to propel to the top of the charts in the LPI.

to encourage integrated logistics and multimodal connectivity is definitely a positive move towards the progress of Logistics sector in India. In line with this, recently, in the Budget for financial year 2022-23, Government of India has announced the ‘PM Gati-Shakti National Master Plan’. Under this plan, multi-million dollar contracts will be awarded to quality players to develop Multi Model Logistics Parks (MMLP) across the country. The MMLP project is poised to develop state-of-the-art large scale warehousing facilities for different types of commodities, to become a one stop solution for all services related to cargo movement like warehousing, custom clearance, parking, maintenance of trucks, etc.

It will focus on a technology driven implementation for a state-of-the-art freight management system. It will have all the facilities like warehouses, railway siding, cold storage, custom clearance house, yard facility, workshops, petrol pumps, truck parking, administrative building, boarding lodging, eating joints, water treatment plant, etc. Many value-added services like packaging, repackaging, and labelling will be available in these projects ROAD: The Road Transport Ministry intends to take the road building capacity from 32 km to 60 km. This will provide thrust not only to the development of the sector, but also the spin-off that will come to the economy.

RAIL: The railways is developing a new dedicated freight corridor which will ensure goods trains move faster and carry large amount of goods. The Kaladan Multimodal Transit Transport Project has also now been expedited.

V Raju: Multimodal movements can be ship-rail- road, road- coastal – road, road – rail-road, etc. In there comes the government support in ensuring rail services availability, improvement of transit time, loading and unloading facilities at both ends of the movement, coastal service development, roads and highway route development, dedicated freight corridor that helps movement of multimodal, encourage the multimodal through various practical measures, ease in settlement of insurance claims for the importers, etc.

Chetan Kumria: The government is all committed to enable the multimodal transport model and they have already, as a part of PM Gati Shakti program, started the integration and upgradation of Waterways with Railways and Roadways and also started to invest in Highways and waterways infrastructure to enable the multimodal transport in India.

WAY AHEAD “As the government heightens the focus towards planning for recovery of the economic growth in the country, the need for developing an integrated, modern, and responsive logistics infrastructure has become more important than ever. The MMLPs can support greater regionalisation or glocalisation of the supply chain, prepare for volatility and unpredictability, and augment rather than replace the workforce through the adoption of modern technology. The development of MMLPs can be expedited by removing the complexities involved in its implementation, greater coordination for building multimodal transport infrastructure, and adopting a simplified model for private participation,” concluded Sanjay Desai.

WATERWAYS: There are 111 National Waterways of which 23 (5,200 km) have been identified with a potential for mechanism crafts and 16 are currently operational. The new waterways will play a significant role in overall growth and is expected to reach 140 million tpa by 2030. If we stack all these similar initiatives, India is going to be a wellconnected / network countries in the next 8-10 years.

Sanjay Desai: The government's drive

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COVER STORY

UNVEILING THE

Stars, Achievers and the Exemplars In continuation with our last cover story, here we present the innovations and achievements of our Under-30 Super Stars, Under-40 Super Achievers and the Exemplary Supply Chain companies who have ventured beyond the expected norms and delivered their respective organisations some of the most incredible supply chain solutions, which ultimately ensured their sustained growth in this highly dynamic and competitive global market. These innovative solutions will not only enthuse the young supply chain cadre to achieve the unconventional but will also prepare them to be futureready to face any eventualities. As we embark on a new year, these remarkable success stories will serve as true guiding lights for supply chain professionals…

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COVER STORY

30 UNDER 30 SUPPLY CHAIN SUPERSTARS 2022

Sakshi Hingorani, Team Lead – Social Impact and Community Partnerships, Freight Tiger

Satyasom Sahoo, Senior Data Scientist, AB InBev

Venkatesh Hiriyanna, Plant Procurement Manager, Reckitt Benckiser India Pvt. Ltd.

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Truck drivers face harsh and unsafe working conditions – 90% exist in the informal sector with no fixed pay or opportunities for upskilling. This has led to a 22% shortage of truck drivers, which requires real solutions for driver empowerment. Freight Tiger’s focus is on building an end-to-end logistics platform to transform B2B Commerce. We have leveraged our technology with on-ground partnerships with industry experts to build a customisable and impactful program for our customers.

Our driver empowerment program integrates our existing product offerings like trip visibility and control tower with on-ground training and the adoption of highway facilities to push for increased road safety. The program is also set up to foster collaboration between logistics stakeholders, as shippers and transport companies can invest in it together to ensure more drivers gain access to these resources.

By making drivers part of the solution, companies can see an improved bottom line through reduced accidents and insurance claims, smoother delivery of goods to customers, and better working relationship with the drivers themselves. We recently launched a Driver Empowerment Facility in Godhra, Gujarat in partnership with Saint Gobain Gyproc and Indian Oil. It is open to all drivers for free and provides the necessary facilities to ensure they can recuperate mid-journey. We are continuing to expand the reach of the program to 50 locations and want to partner with shippers and transport companies across the country to improve the working conditions of truck drivers in India.

We envisioned to help the maintenance team increase the life span of machines in analysis and increase the efficiency of the lines in packaging department by detecting anomalies in the behaviour of the machine using real time sensor data such as Temperature, Current, Speed of Servomotors. During this phase, we faced many challenges such as real-time data capturing mechanism, which was present only in some of the breweries and the quality of the data was not consistent. We had to increase the adoption of the solution across the sites due to non-technical background of the users. We focused on a couple of sites where real-time data is captured for the machines. We performed quality check on the data and implemented LSTM (Long Short-Term Memory) model to identify anomalies in the sensor data post correlation study across different sensor data. The solution was implemented in two sites with scalable architecture in the form of a dashboard, which processed 8 hours of data and generated alarms for the sites with anomalies.

Energy is required to run the daily factory operations. However, the sourcing of energy has been from government entities. Our vision was to make factory to run 100% on green/renewable energy. During this project, we explored options to move towards green energy, setting up own solar panels on the roof top was one among the options, however, it was not fetching cost benefits as it requires huge CAPEX investment apart from low return on investment. Similarly other options were also not favourable.

Fortunately, we came across a private supplier who generates energy through renewable source like solar and sells it to the firms. We had multiple discussions with the supplier to understand and finalised the ways of working. Later, we proposed the case to the India Leadership team, which received a positive response. We had a negotiation with the supplier on the commercial terms & conditions. We implemented the project after all the necessary legal documentation and a pilot run for two months, which was smooth and beneficial. Now ~70% of factory’s energy requirement is met through renewable energy, and we are still exploring to make it 100%. Apart from having a significant cost benefit, a decent step has been taken to meet the Supply Chain Sustainability initiative.

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COVER STORY In my previous stint at HUL, Kandla factory was the only dedicated exports units for HUL with 70 customers across 100+ countries having different secondary packaging formats and different legal requirements. Inefficient Job work activity at Kandla factory for personal care jars, tubes, and bottles, resulted in huge job work cost for the factory. Besides, there were quality defects being generated at job work, with inadequate handling, resulting in damage of finished goods. I took up a personal target of eliminating Job work in totality and moving to in-house packing of all formats and packs. As the project progressed, we realised that the machines deployed had limited flexibility and in-house packing can result in the factory having low efficiency of lines.

But, with consistent efforts we insourced 100% Bottle Volumes from co-packer by debottlenecking own bottle-line, without affecting factory’s efficiency.

This was achieved by loss prioritisation, breakdown elimination, basic condition restoration and continuous improvement (kaizen). We aligned various stakeholders like R&D, customers, marketing team to modify the single sleeve packing format of Lifebuoy Hand Wash into a 4-bundle pack to unlock speed on inhouse conversion, Clinic Plus bundling format changed from 3 to 6, and other changes for pack harmonisation.

We also insourced Lifebuoy shampoo, Fair & Lovely and Dove Cream 75 ml final pack in spite of complex EOL formats and modified shrink wrap machine and change-parts with zero capital investment. We were able to achieve the desired savings through job work cost reduction. Lead time crunched from production to dispatch from 10 days to 4 days (6 days reduction due to job work lead time elimination). We were able to maintain topmost quality standards since all the packs are handled in-house with own employees. With this initiative, defects reduced from 8% to 0.75%.

AB InBev is the world’s leading brewer by both volume and revenue; with hundreds of breweries and distribution centres. The stock has to be moved in this complex network of Breweries & DCs by the inventory deployment team, but due to demand variability, production issues, and fleet unavailability, the company occurs losses due to service level hits and obsolescence on excess stock pile up, leading to an imbalance in the stock positions across the depot. This is a common supply chain issue across the industry.

Logistics Analytics Team ensures seamless planning and delivery of beer in this complex network of DC-Brewery using advanced analytics and Machine Learning based optimization algorithms to suggest redeployment of stocks based on demand, production plan, inventory, and fleet position.

An inventory optimization engine, an AI-powered MILP optimization algorithm that recommends most cost-optimised stock movements driven by out-of-stock and obsolescence has been developed, automating the earlier manual and inefficient processes. This is further facilitated with a global product enabling cross-functional teams to collaborate and take decisions based on output from the optimization model.

The solution was operational in Africa & Europe Zone, leading to a 1.5% reduction in stock-outs volume annually and a 33% reduction in average monthly write-off volume for 90% of the redeployed SKUs. Historical redeployments serve as feedback for the demand forecasting team to improve accuracy and to Re-frame inventory policy for the warehouses and breweries. This solution will be implemented in all 6 zones across multiple countries across the globe in 2023. The product has transformed the entire process and decision-making on how redeployments are prioritized in the organization and fulfils the goal of our digital transformation.

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Aarti Jain, Senior Manager, Nestle India Ltd.

Ishan Shrivastava, Analytics Manager – GAC (Growth Analytics Center), Ab InBev

COVER STORY

40 UNDER 40 SUPPLY CHAIN SUPER ACHIEVERS 2022 I was the project strategic lead for building the complete supply chain ecosystem for a greenfield plant in Gujarat in 2017. With no industrial set up in the nearby areas, there were pressing challenges around supplier development, logistics distribution, manpower availability & training, setting up of warehousing facilities and the ecosystem needed for manufacturing. I led the entire planning and implementation strategy covering estimate projections of suppliers needed, calculating the requisite capacity needed, logistics framework development, capacity building with auto-ancillaries, manpower training strategy and others, and most importantly, designing the pricing strategy for the location. I led all strategic stakeholder discussions across levels and geographies between the Gujarat team, Japan & Indian teams.

The project spanned across 3+ years that covered the development of implementation strategies and action plans across phases. Right from factory set ups to manpower training in both locations to meet stringent quality standards, local stakeholder buy-in and involvement, I built a phase-wise systemic plan to integrate them all.

A large part of this integration focused on suppliers. I had to prepare a strategic roadmap that included supplier negotiation and onboarding, highlighting the commercial benefits of investing in the region, supplier-OEM partnership model development and much more. The success of the project was defined by achieving peak production capacity for the new plant at the end of these three years. My contribution to the project was highly appreciated by Maruti Suzuki India and Suzuki Japan, which led to my promotion later.

As Cummins expanded the footprint, its customer & supplier network became complex.

MRP system were not capable to support the level of complexity in efficient manner.

MRP system had lot of manual intervention & dependency on individual person’s competency. Health of supply planning is hidden; leaders do not have full visibility of if the demand & supply plan hygiene is maintained at expected level or not. Orders are received daily, however MRP runs weekly, hence response lead time was high. MRP had built-in constraints that restricted users to utilize the system efficiently. This project was major initiative in BU supply chain transformation journey to strengthen planning and scheduling processes. ASCP and APCC solution was designed to provide priority based exception management capabilities, user friendly interface and BI capabilities for process effectiveness visibility.

Major deliverables for this project were pre-launch activities to ensure system data accuracy and controlled order life cycle management processes; process alignment on moving from weekly planning cycle to daily planning cycle; identifying key user requirements, perform fit gap analysis and develop a solution design; robust change management to go live on time and no impact on business continuity; synchronised efforts between global supply chain and IT team and Supply Chain Team. Major success of the project was that this entire project was managed remotely during pandemic.

We developed ML driven end-to-end tool to bring centralised visibility of inventory and intelligence for taking proactive cost avoiding decisions. We automated the order releases for obsoletes avoidance based on latest production plan, inventory on the floor and freshness of the stock. This tool will completely transform the way orders are released by making real time visibility and intelligence, better than any human can, thus delivering immense EBITDA value. Effective prioritisation ensures freshness and Service levels are maintained at optimal level which and lead to increase of NPS score. Proactive Re-allocation of excess inventory to new export demand and upsell the inventory avoids Stock Obsolescence and Destruction Cost. This tool creates 100% centralised visibility of stock across different sites. With the help of SIM, business is able to achieve 95% automated order release on daily basis. The tool has realised 4 million EBITDA in 2021 and 2022 (March) by avoiding Obsolete stock in EUR and MEX zone.

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Mainak Bhattacharya, Senior Manager – Supply Chain, Maruti Suzuki India Ltd

Nizamuddin Sayyad, General Manager – Central Supply Chain, Cummins Inc.

Suresh Revani, Manager – Data Analytics, AB-Inbev

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COVER STORY

Anil K Mishra, National Logistics Head South Asia, pladis global

Akshay Arora, Sourcing for a Global O&G Company

Jaison Jacob, General Manager – Supply Chain Management, Tata Play Ltd.

14 CELERITY November 2022

While supplying pan-India 17 depots from one location, our freight had gone very high, owing to the distance from North, higher fuel prices, shortage of vehicles, etc. We had to manage the concern of high primary freight approx. Rate Per Ton (RPT) was going 6500 per tons. High freight rates cast a shadow over EBITDA / profitability of company.

Freight is not structured, and industry is unorganised. Order cancellation, High product cost & low demand, Sales /DB have put strains on the logistics department.

We understood current process and plot as is process, then after some months, we did some pilot to considering business impact such as exploring multimodal operation like rail and road; consolidation and route planning due to low load; utilisation of 32MXL in place of 19 ft vehicle; develop new supplier with help of friends and social media; negotiation of rates with common carrier representatives; small Hub developed near plant. We overcame from sessional impacts through long-term agreement. As a result, we were able to reduce RPT/ freight cost. Since last four years, freight is under control, and has met annual budget of logistics. We are able to constantly monitor Dashboard.

There has been timely payment to our supplier, sometimes even advance payments are being made.

As a procurement professional, it is imperative to be cost conscious and deliver savings to the organisation. The savings are a net impact on the bottom line. I have been leading high value CAPEX procurement across categories and organisations. I help them add value to their procurement process and deliver savings. During the pandemic, we developed a category-based cost model relying on the TCO. The model was adjusted for the commodity fluctuation to arrive at a realistic baseline cost. This model helped us achieve the organisational objective of attaining substantial cost reductions in the targeted categories.

The nuances & strategies to deliver value in procurement also require an intensive study on the impact of various clauses. A bespoke concession trading plan was conceptualised to identify the right mix of tradeable. The plan helped us go the extra mile and add further value. A collaborative approach at difficult times led to a win-win outcome for partners and organisation.

Conventionally, partner registration was a manual process, a potential partner would fill a physical registration form and send it for verification and code creation. In some instances, this resulted in incomplete documentation, causing delay for weeks. The registration process was completed by our inhouse team and evaluation was done on merits of documental evidence. I was the project lead for digitization of partner registration process along with engaging with a Third-party due diligence (TPDD) agency for partner evaluation. For this, we evaluated multiple tools and shortlisted a P2P tool capable for end-to-end partner management, right from partner evaluation to final payment and performance management. The partner registration module was customised as per our company policies. Currently the partner registration is a paperless online process, where a potential partner receives a link; and all mandatory documents are to be uploaded. Once all documents are submitted, it flows to an independent agency for TPDD. The objective of TPDD was to review risk before onboarding. It involves identification, assessment, evaluation, and continuous monitoring of all the potential risk like Operational, Management, Financial, Legal & Compliance, Regulatory, and Reputational risks. To mitigate the risk, we introduced partner evaluation of two stages: Level 1 (Partner background check based) & Level 2 (Physical site visit, Onsite Interview with partners). Partner registration is now a seamless activity, as all the approvers right from the Finance teams, TPDD agency, partner code creation team is configured on a single approval workflow.

Additionally, all strategic partners are scanned under a continuous monitoring tool to red flag concerns as it arises. We also launched a potential partner registration link and displayed on the Tata Play portal wherein any partner interested to work with us can click on the link and submit relevant details.

COVER STORY As the Lead for Packaging Sustainability for South Asia Region, I was responsible for forming roadmap for sustainability in Packaging Materials. The projects, which I led, resulted in the reduction of Virgin Plastic by moving promo packs from virgin plastic to metal and glass. I worked on various Fit for Purpose projects. These projects focussed on optimising the plastic usage per pack. Plastic consumption was optimised across packs to reduce usage. I worked on implementation of mono materials to convert our plastics into Recyclable Plastic. Various brands from confectionery business were first to move. I also worked on projects on plastic neutrality and end of life projects. Paper straw implementation for our Ready to Drink business was a key project executed. I was responsible for setting up end to end value chain for importing paper straws, followed by trials and finally commercial implementation. When the regulation around paper straws was finally implemented, Nestle India Ltd., was ready for the same.

As part of building up supply chain efficiencies, we are exploring and developing an alternative multimodal transport model for our bulk liquid movements from port to factory, which needs to be eco-friendly, energy-efficient and sustainable. The current model for inbound bulk liquid products totally depends on surface transport as we are far away from the ports, while procurement is being done in bulk and break-bulk vessels. In the same connection, while aggressively exploring the possibilities, we recently hired an entire train, loaded 90 ISO containers with liquid cargo at Mundra Port and transported them to Ludhiana in Punjab. A train carrying about 2000 MT can potentially replace about 100 tanker trucks plying on the road, helping clearing up congestion apart from increasing efficiency and reducing pollution. This multimodal transport system will prove beneficial to the industries situated far away from seaports and inland logistics centers. The concept can definitely help many industries to secure supply of raw materials in time, with end-to-end cost-optimisation while mitigating seasonal constraints in road transportation.

PepsiCo has embarked on PO1 strategy effective 2014 to bring together the foods [Frito-Lay] and beverages [PepsiCo] business to take advantage of economies of scale.

It was a prestigious project and I was chosen to lead the supply chain design and accordingly was expected to revamp the warehousing and logistics processes. Vehicle loadability was a challenge for combining the Food- Frito-Lay SKUs (restricted by stack height and voluminous) and beverage SKUs which were weight heavy.

We have designed the load optimization algorithm with stack height restrictions, exact dimensions for each SKU and hired an external agency to design the UI which was user friendly for Loading supervisors. The algorithm was designed to work for Club loads as well. This algorithm was lauded to be innovative and made the visualization in 3D feasible to enable the supervisors to load the vehicles to the maximum percent possible while referring the load pattern on their mobile screens. This effectively reduced the freight per case substantially besides appending value along the chain by delivering both Food and beverage SKUs in the same vehicle.

We also got the vehicles modified such that Frito-Lay SKUs get loaded in the space above beverage SKUs, thus improving and utilising the pay load available. Thus, there was an improvement in loadability by 12.4%, which resulted in effective savings of more than 60 lakhs annually.

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Jaikishan Gianani, Head – Factory Supply Chain (Nanjangud and Choladi), Nestle India Ltd.

Bhupendra Kumar, Head of Logistics, IOL Chemicals and Pharmaceuticals Ltd.

Rayapati Srinath Reddy, Vice President – Supply Chain, NourishCo Beverages Ltd. (Wholly owned subsidiary of Tata Consumer Products Ltd.)

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COVER STORY

Single use plastic was a major challenge in packaging. Hence major task was to identify the sustainable packaging. We identified bagasse and developed bagasse container to replace plastic container. We switched to wooden spoons from plastic spoons and Paper carry bags from plastic bags and same way switched to paper buckets and glasses and removed approx. 450MT of plastics from FOH packaging. We managed the compliances and sustainability without major cost difference.

Vikrant Srivastava, Associate Director – Supply Chain, Yum Restaurants India Pvt Ltd.

Anurag Verma, Head – Demand Planning, Pidilite Industries

Hanuman Swami, Global Planning & Fulfillment Manager – Industrial Automation Division, ABB

16 CELERITY November 2022

During my previous stint at Reckitt, we were tasked with warehouse productivity improvement through Picking Path Optimization in WMS Algorithm. It was identified that the supervisor while picking the stock goes in sequence presented on the picklist, covering the first row A, followed by row B and so on. This was identified as a further scope of optimisation by asking the supervisor to travel on shortest path as per picklist. This is being used by Zapp, a UK-based Qcommerce firm and is yet to become mainstream in the industry.

To achieve this goal, we performed As-is analysis of the current process and benchmarking of picking practices across industry; negotiated with WMS vendor to develop the algorithm to provide pre-printed picklist with the shortest path (travelling salesman problem). We got the layout of the entire warehouse with bins numbers, aisles and distances mapped in WMS. We identified the global shortest path, which covers all the bins in the warehouse, using travelling salesman algorithm as base, hence any picklist that comes in actual, will be a subset of this global shortest picking path.

Pilot was implemented in Hassangarh and eventually has been successfully rolled out in other warehouses. During this project, the challenge was to map the entire warehouse distances in WMS and modifying the algorithm as movement could be done only across aisles. After the successful completion of the project, we were able to achieve ~9% improvement in picking across multiple warehouses in Reckitt and around ~50 lakh of annual savings through manpower reduction across multiple warehouses.

We set out to predict the correlation among a set of external variables with respect to the demand of a particular product line in ABB’s PAMA Division and attain the best forecast for the product line by using a mix of statistical and deep learning extrapolated models. For this, we used Forecasting & Analytics Engine. We decomposed the data series to find the respective cyclical or trend component and correlated the same with external market factors such as Crude Oil prices (WTI/Brent), & global macroeconomic parameters to find the best fit. We then used an ensemble of extrapolated models statistical & AI based along with XGBoost and a multilayer LSTM to forecast for the external predictors in case of a correlation and then arrived at the underlying derivative.

With the right & best set of forecast numbers, we are likely to identify and enact faster to trend changes, which will help us stay ahead. It displays critical parameters of a part at a hawk’s eye level to mitigate unforeseen circumstances and take suggested actions briefly. Optimum forecast will help in better cashflow management & improved customer service level and on-time delivery.

COVER STORY House of Spices India is a leading South Asian Food manufacturer & distributor across 30+ categories - rice, snacks, spices, frozen, flours etc. 85% of our products are imported into the USA. Frequent stock-outs were common due to long transit times. We also faced inventory pile-up due to a long tail of slow moving products. We used to bring containers directly to each warehouse, due to high cost of local distribution. Planning and purchase were done traditionally and were ineffective.

In the last two years, TOC based replenishment and a control tower mechanism have been pivotal to bringing stakeholders together for agile decision making. We automated DC to DC transfer with several metrics – availability, stock in transit, transfer cost, full truck load – evaluated in real time. We also integrated container visibility with our system through Tradelens, and GPS enabled trucks. For secondary distribution, we use our own GPS enabled trucks, providing real-time updates to our customers.

These interventions have resulted in strong impact – 40% growth, 14-days of inventory reduction, freshness index up by 18%, fill-rate up by 2100bps. Upon reflection, our biggest learnings have been: Effective change management and galvanising the team towards new ways of working; and Unleashing the power of data analytics onto everyday decision making.

Harish Kumar, Director – Supply Chain, House of Spices India

EXEMPLARY SUPPLY CHAINS 2022 (CORPORATE AWARDS)

Ingram Micro India Pvt Ltd. Presenting interesting insights on how the implementation of temperproof packaging led to reduction of shortage & damage cases, reduction in increased insurance claim ratio & premium, and ultimately better fill rate and customer satisfaction by Ingram Micro India Pvt Ltd.

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n-transit shortage is a major challenge faced by all companies & problem becomes more critical for the companies dealing with IT and Mobility products (especially high-end phones). Being Ingram IT & mobility-based company, the main challenge in front of Ingram Micro India Pvt Ltd. was to control and reduce in-transit shortages & pilferages cases which was showing increasing trend year-on-year.

While financial loss due to in-transit shortages / damages could be recovered through insurance, but it was blocking working capital till claim settlement happens and led to increase in premium ratio during next renewal cycle.

The team have to control in-

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transit shortages and pilferages by taking various precautionary measures or corrective measures.

SOLUTION PROPOSED After analysis of different packaging methods, it was decided to use temper-proof bag as outer packing above corrugated box, temper proof bag having Ingram log with security warning not to accept if bag tempered, need to demand open delivery and verify the contents in front of courier. Deepak Khullar, Deputy General Manager Operations, Ingram Micro India Pvt. Ltd., informed, “Temper-proof bags were designed in such a way that if someone opens the bag, they need to tear the bag, and once opened, it is not possible to seal

it again. So, any tempering of bag is easily identifiable and can raise alarm both at courier’s network and customers’ end. After implementation of temper-proof bags, cases of in-transit shortages and pilferages have been reduced to zero.”

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AB InBev This Exemplary Supply Chain feature documents Ab InBev team’s innovative solution where they designed a stock-deployment optimization tool, which uses state-of-the art optimization techniques to provide recommendations to move stock at-risk between DCs in the most optimal and cost-effective way.

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nventory deployment is considered to be the backbone of the responsive supply chain. At ABI, we have a wide and complex network of breweries and distribution centers (DCs) in our key markets which makes the inventory deployment planning very challenging.

Along with this, the demand variability

inventory deployment teams in planning re-deployments is that it is impossible to manually analyse thousands of DC-SKU combinations each day and decide the cost-effective way of re-deploying stock between DCs. Due to this in most of the markets, planners plan redeployments for only top SKUs and on top routes.

and gaps in transport execution leads to scenarios where certain DCs have excess stock than the projected demand and at the same time other DCs have shortage of the same SKU. The DCs with excess stock are constantly at the risk of obsolescence while the DCs with shortage face out-ofstock scenarios. Such unbalanced grid due to deployment issues leads to a loss of millions of dollars each year in form of destruction of obsolete stock and service level hits. To solve this problem, AB InBev designed a stock-deployment optimization tool, which uses stateof-the art optimization techniques to provide recommendations to move stock at-risk between DCs in the most optimal and cost-effective way.

The main challenge faced by

This leaves a long tail of products which are never analysed for the risk of obsolescence and out-of-stock. Due to this the excess stock reaches closer to expiry and needs to be destroyed with additional cost. In absence of a tool to plan re-deployments and due to manual efforts involved, many markets never even analyse the need for re-deployment and never had visibility on the potential loss that can be avoided.

18 CELERITY November 2022

APPROACH & METHODOLOGY The inventory re-deployment optimization model functions in three stages. Explaining these three phases, Pratik Bhombe, Analytics Manager, AB InBev, stated, “In 1st stage, we consolidate

various data inputs such as inventory data, transit volumes, production plans, demand forecast, out-of-stock volumes, relocation costs, repack, etc., and create an analytical data set. In the 2nd stage, the model estimates projected stock over next few days for each DC-SKU and compares that with demand or nation average to determine depots with excess or deficit stock which then are used as source depots and destination depots pairs respectively in next stage.

In the 3rd stage, a multi-integer linear optimisation model evaluates all possible redeployments based on profitability and cost of movements and recommends most optimal re-deployment plan, which will yield maximum profitability and minimum transport cost. It recommends number of trucks and number of pallets that needs to be re-deployed from one depot to another under all business constraints. The optimisation function also gives higher weightage to the source depots, which have obsolescence risk and destination depots which have outof-stocks, thus providing maximum benefit at minimum costs.” The highly scalable framework is developed as a webtool on Microsoft Azure platforms and is automated end-to-end from data extraction and integration to end recommendations and insights.

OUTCOME & IMPACT The inventory deployment and planning teams across zone are using this global re-deployment tool to manage the risk of obsolescence and out-of-stock in their region. The redeployments recommended are validated by the planning experts and the loads are created in the system for execution. This has led to significant decrease in obsolete stock and reduced the stock write-offs. The algorithmic decision making has reduced time significantly and now more redeployment opportunities are identified and executed by the team leading to savings for the company. The tool also tracks execution and provides insights on the depots & SKUs where frequent re-

COVER STORY deployments are required. This improved visibility enables planning teams to make systemic fix in their processes to avoid the problem in long term.

The inventory re-deployment optimization, which is an AI-powered optimisation algorithm to re-deploy

stock at risk of obsolescence, has been operational in South Africa for almost a year now. It has led to significant reduction in the risk of obsolescence volume and the stock-out volume. The solution helps us avoid the destruction cost of the stocks going obsolete and

assists in suggesting where to sell the product in the market by relocating it at the right time to right place. The solution is already deployed in Europe zone and in pilot in North America Zone, South America Zone and Middle America Zone.

Coign Consulting Learn the art & craft of designing immaculate warehouse spaces that can even cater to the changing needs of the business and serve as the future-proof solution from the expert’s team at Coign Consulting as they have designed one of the most exceptional scalable Multi-Tier Storage System and a Column Supported mezzanine structure to utilise the maximum cube capacity of the distribution centre for the client to serve their customers better and expand their horizons…

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ith the vision of having a ubiquitous physical presence in the Eastern Region of India, one of Coign Consulting’s Client "Baazar Kolkata" a Value Retail Chain, currently serves to their 120 in-house stores and plans to cater to 200+ stores by 2026 in West Bengal, Uttar Pradesh, Bihar, Jharkhand, Tripura, Assam & Odisha.

Having faced challenges such as fixed prices and low margins reducing the ability in making capital investments in infrastructure, technology, developing skilled resources, last Mile distribution capability and with a vision to service more stores, the company reached out to Coign Consulting for a scalable solution.

Talking about the challenges, Coign Consulting team faced during the execution phase, Arif Siddiqui, Founder & Director, Coign Consulting, stated, “We had to identify ideal storage system, which could optimally accommodate more than 40 lakhs pieces of volume per Day. The project also warranted identifying the ideal pedagogy of storage of the SKUs such that they can be efficiently put away

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and picked, at runtime. We also had to work towards finding new and effective methods of picking, sorting, consolidation and dispatch to fast pace the order fulfilment rate. Basis all these, our job was to discover an optimal mix of human efforts, mechanisation and automation to complement the dynamic nature of the business and the fast-paced backend operations. The project also needed to seamlessly integrate the various processes, related to man, material and equipment movement, inside the warehouse to new infrastructure, such that the intra-logistics layout complements the business at the time of peak season; and make the environment human friendly for maximum productivity from the human resources.”

APPROACH & METHODOLOGY By examining the problem areas, Coign Consulting team designed a completely automated transfer of materials picked from multi-levels to a particular point of sorting, consolidation and dispatch. It was a scalable Multi-Tier Storage System and a Column Supported mezzanine structure to utilise the maximum cube capacity of the distribution centre. “We studied and evaluated all the processes in order to make them mechanised / automated / human effort driven, from the point of view of feasibility, viability and most importantly – Necessity. The

transfer of Material was mechanised using inclined motorised conveyor belts and the sorting area was equipped with swivel wheel sorters to incorporate and conduct dynamic destination wise sorting operations. we standardised storage bins and pallets and ergonomically designed process trolleys and workstations.

We designed an end-to-end material storage, unilateral movement and returns management system. We seamlessly integrated physical process with warehouse management system, explained Arif Siddiqui. The executive staff was equipped with corporate-like office facilities. We suggest the use of Barcode readers to reduce strain & fatigue. This entire system is designed to service more than 8,500 cartons per day.

OUTCOME The project helped in substantially improving order fulfilment rate from current standards. The Dock-to-Stock processing time was reduced to the target time. The consolidation and packaging capacity was increased considerably to process more orders per day. The packing capacity per packer also enhanced due to the new packing station design. The cube capacity utilisation of the warehouse also improved a lot. The effort per resource per order pick was also reduced substantially due to an appropriate mix of human and mechanical effort in the pick-sort-consol solution. All the solutions were designed with completed transparency & visibility of the processes and thus, scalable for any future system integration or capacity increment.

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COVER STORY

Warehousing Infrastructure

Bringing Efficiency, Speed, Productivity and Sustainable Development

The logistics infrastructure has evolved on the back of Retail & E-Commerce growth. It is now time for Big Box and Mega Box to be embraced by other industry verticals. Occupiers are showing a marked preference for Grade A sustainable properties due to inherent operational efficiencies, adherence to safety standards and better contingency planning for global events. Our panel discussion on Warehousing Infrastructure unveiled interesting insights on the changing paradigms of warehousing infrastructure in the country and brought forth the opportunities that developers and occupiers in unison can leverage to develop state-ofthe-art warehouses and harness tangible gains. While the road to success seems long and complex, the initial steps are already proving worthwhile for the segment’s all-encompassing development and the government’s recent policy measures and the concerned thrust on bringing standardisation is further amplifying the speed of development. Here’s a special report that translates the India Growth Story on the back of a Sound Warehousing Infrastructure…

20 CELERITY November 2022

COVER STORY

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COVER STORY

O

VER the years, the warehousing industry in India has evolved from storage space to highly sophisticated warehousing and logistics systems. Buoyed by the e-commerce sector and the expansion of the Indian manufacturing industry, the Indian warehousing segment emerged as one of the most attractive investment propositions for institutional investors in 2021, at a time when the Indian real estate market was facing challenges due to the persistence of the pandemic.

A Knight Frank report revealed that the investments in logistics and industrial segments witnessed a robust growth in 2021 on the back of strong demand for this asset class supported by rise in automation, and increased demand led by third-party logistics. The annual investment volume increased by 55% YoY to US$1.3 bn compared to US$848 mn received in 2020.

This transformation has resulted in the increase in average size of Grade A warehouse by 2x and volume by 3x in India. According to JLL India research, the warehouse real estate market in India is witnessing a steady growth and expansion from ~170 mn sqft. in 2018 to 307 mn sqft in H1 2022 and this is likely to continue in the upcoming years.

The Grade A share in the stock has also increased from 39% in 2018 to 48% in H1 2022 showing increased interest from developers and institutional investors for quality spaces with higher storage handling capacity as well as shift in occupiers’ preference towards compliant spaces. The warehousing market is expected to record the highest ever absorption this year. The report states that the net absorption in 2022 will grow to a record 42.5 million sqft.

– up 17% from the pre-Covid highs of 36.3 million sqft. in 2019. Remarkably, the sector has established itself as one of the most resilient asset classes.

In addition to the increase in quality warehouse spaces, there have been other notable trends in the Indian warehousing market: • Increase in global investors in India’s evolving logistics and industrial sector • Warehousing demand from 3PL

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and e-commerce sectors shifting towards larger storage space with advancement of technology and automation • Urban logistics sector emerging as attractive sector in tier I cities as the market is shifting towards ondemand solutions • Omni-channel retailing transforming traditional warehousing into fulfillment centers with higher optimisation.

The strong institutional interest in logistics, warehousing development and operations in recent years has transformed the sector from being just a large storage space into a facility with value addition in terms of inventory management, packaging, product extraction, etc.

This transformation is happening on the back of advancing technology and automation infrastructure, focus on efficient last-mile deliveries, resulting in a growing demand for urban logistics, the rise of omni-channel retailing, etc.

Furthermore, India’s position in various indices has improved from the previous years due to various initiatives by the Government such as Make in India, Digital India, infrastructure upgrades as well as rising skilled professionals under Skill India campaign.

Talking about the changing warehousing infrastructure paradigms, Arif Siddiqui, Founder & Director, Coign Consulting, elaborated, “It's been very inspiring to witness the

pace at which our country is growing and especially not only because of the pandemic but I think overall we had already seen an acceleration in the overall economy in the country and not only acceleration by spend but acceleration by manufacturing, acceleration by the supply chain and the way supply chain has evolved over the years, thanks to all the great supply chain leaders – the transport managers, the warehouse managers, the warehouse executives and the IT support system who has been a bedrock to this entire supply chain evolution. To me, the pandemic was only a way to show our CEOs our CFOs, what supply chain managers actually are capable of doing.

We've been able to make a very strong position and a very strong case of the department and the importance of the department especially when it comes to connecting customers.”

He adds, “Infrastructure plays an equally important role in the overall delivery experience to the customer and here I'm not talking about delivery experience only from an e-commerce point of view, it could be a B2B or B2C or D2C. The warehousing and distribution infrastructure has evolved over time on the back of especially the industrial and the retail or e-commerce growth that we have seen in the past 10 years wherein customers are served while riding on the B2B and the B2C channel.

Retail and e-commerce have been the catalyst to the development of the new

COVER STORY age infrastructure and the buildings that are sprouting all around the place.

The occupiers and service providers are showing a marked preference for fit to purpose or fit for purpose quality and sustainable properties due to the inherent operational efficiencies, adherence to safety standards, compliances, and better contingency planning for global events. From connected infrastructure or smart infrastructure or smart factories to the mobile workforce, organisations are applying technology to solve the complex problems that stand in the way of sustainable and efficient operations.”

Seconding his thoughts, Gopinath Deshpande, SCM Infrastructure Head, Reliance Retail, shared, “Infrastructure definitely is a very key function in the entire supply chain.

Within the company, there are many infrastructure opportunities to develop.

External infrastructure is something, which is beyond the control of the company like the logistics related infrastructure. At Reliance, the focus has been to improve the infrastructure and build a stateof-art warehouses and we have been spending lot of time to understand the requirements. When I moved to supply chain in the infrastructure division in 2018, at that time, all the Reliance formats were having their own supply chain function and were managing the infrastructure coordination activities by themselves. They did not have specific requirements of the specifications.

When we moved into a Central Supply Chain platform, the focus shifted to building state-of-art-infrastructures, to operationalise our warehouses in a quick time and also improve efficiencies. We have got several connected functions within supply chain of Reliance. Our role starts at the network planning itself. Every department has got its own requirements and we try to consolidate the requirements by developing the network plan. We have engaged several consultants to do a network planning and we are reviewing the locations where we want to put all the formats into that location so that we get an advantage in co-locating and consolidating those spaces. We have also reviewed various processes with a view to improvise our operational efficiencies. We are having separate designing team who are looking

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When we moved into a Central Supply Chain platform, the focus shifted to building stateof-art-infrastructures, to operationalise our warehouses in a quick time and also improve efficiencies. We have GOPINATH DESHPANDE engaged several SCM Infrastructure Head, consultants to do a Reliance Retail network planning and we are reviewing the locations where we want to put all the formats into that location so that we get an advantage in co-locating and consolidating those spaces. We have also reviewed various processes with a view to improvise our operational efficiencies. We are having separate designing team who are looking deep into refining the processes.

We have done various template designs and have formalised the designs, which is more optimum to us in improving the efficiency of our warehouses.

We are looking at defining specifications for large, automated warehouses. We have standardised our designs such as racking and shelving designs with all the suppliers and now we are able to really get our storage system as per our requirements, which has helped us improve our efficiencies and turnaround time of setting up the infrastructure.

With all these measures in place, we have moved ahead in last three years by having developed large state-of-the-warehouses and by the end of 2022, we have huge target to meet the business requirement.

It’s an exciting period for us. deep into refining the processes. We have done various template designs and have formalised the designs, which is more optimum to us in improving the efficiency of our warehouses. We are looking at defining specifications for large, automated warehouses. We have also started working on the various

infrastructure equipment like storage system, MHEs, etc. Earlier we had limited vendors and they were giving the storage equipment as per their availability and their own designs. We have standardised our designs such as racking and shelving designs with all the suppliers and now we are able to really get our storage

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Increasing productivity, reducing waste, and driving sustainable performance has become the key performing index to any invested infrastructure.

Optimising entire asset value and operational life cycle by contextualising ARIF SIDDIQUI asset performance will be the key for a very long Founder & Director, Coign Consulting time. Therefore, selecting the correct specification or writing the correct specifications in case you are hiring a facility or otherwise if you are building one, carefully designing your warehouse building, looking at the vehicles’ docks, aprons, yards and roads determining the flows and Quantitative analysis of 3Ms – Material, Man and Machine movement – is going to be the bedrock of infrastructure logistics.

system as per our requirements, which has helped us improve our efficiencies and turnaround time of setting up the infrastructure. With all these measures in place, we have moved ahead in last three years by having developed large state of the warehouse and by the end of 2022, we have huge target to meet the business requirement. It's an exciting period for us.”

Reminiscing his stint at Future Supply Chains, Prashant Bopardikar, Head – SCM & Warehousing, Bestseller India, highlighted, “I remember in 2008 when the company was formed, we had 150 warehouses across India in every city.

In whichever city, Central used to open, there used to be two warehouses. After some time, we realised that we need to consolidate the warehouses and bring in efficiencies into the system. By 2010, from 160 warehouses, we brought the number down to about 25 warehouses. In 2011, we decided to further reduce it, so we created a Mihan, which served as the

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mother DC and with Mihan, we realised the kind of technology and processes we need to adopt to bring in efficiencies into the system. With Mihan, we used to churn out almost five lakh pieces per day and the costs reduced from 4% to 3% for the group.”

“Coming back to my current organisation, Bestseller, my prior experience helped me devise an efficient strategy. With the company growing at a CAGR of 30% having five warehouses across different parts of the country, we decided to invest into new age technological solutions because the primitive processes and technologies could no longer support the growth graph that company has been registering yearon-year. We decided to develop a worldclass warehouse with an investment of over Rs25 crore. While designing this warehouse, we have taken into consideration even the minutest details that add to the efficient operations of warehouses, be it shelvings, docking

space, height, flooring specifications, so on and so forth. Then we have deployed an advanced WMS system at the warehouse to enhance visibility. To tell you instance, before the pandemic, our market share through e-commerce was just about 5-6%. During the pandemic, it went up to 15-16%. Our channel partners such as Myntra started demanding reduced fulfilment timeline. From 48 hours, they reduced it to 12 hours and now they ask fulfilment to happen every two hours to their LSPs. This is where automation plays a key role. We have also implemented Labor Management System (LMS), which informs us about the real-time activity taking place at the warehouse against the set timelines.

If in case, we see any deviations in the benchmarks, we are able to immediately take corrective actions. The particular department is notified about the lapses, which enables them to correct the processes at the earliest,” he added.

According to Prashant Bopardikar, customisation is the key in implementing any such big bang automation tools. “For instance, after the implementation of WMS at our warehouses, we have brought in over 55 customisations into the processes to enable efficient operations.

We are continuing on this path because we believe that all these incremental changes only bring transformational benefits for the organisation in the long run and ultimately improve productivity, which eventually results in significant cost savings in the supply chain. This is how infrastructure whether it is physical or informational, plays a major role in companies’ profitability,” he explained.

According to Balbirsingh Khalsa, Executive Director – Industrial & Logistics and Branch Director, Ahmedabad, Knight Frank India, the government has given Infrastructure status to Warehousing and logistics sector and this has helped in availing cheaper finance at longer tenures from Banks/FIs. This has been the most important support provided by the government post introduction of the GST. Many states like Haryana, UP, etc., have announced their independent Warehousing and Logistics policies while some states have given Industrial status to Warehousing properties so that warehousing developments can avail

COVER STORY benefits accrued by the manufacturing/ industrial developments post the introduction of GST. Like Grade A specification of PEB warehouses, incity standard specifications also need to be defined. e.g Minimum land size, Floor height of 5-6 m, G+3/4 floors, Lift number and size, Floor strength of 7-ton, slab strength of 1.5-2-ton, Fire sprinklers, fire protection, Fire hydrants and other safety measures, etc. All these will enhance efficiencies and productivity for logistics of goods to and from these urban warehouses.

BRINGING WAREHOUSING AT THE FULCRUM OF CHANGES Warehousing and related assets are an important segment of the overall logistics sector in the country. In the past two decades, warehousing has started becoming a very prominent activity in the overall supply chain, which organisations started feeling it to be make or break proposition. With the warehousing industry becoming a multi-billion-dollar investment market, especially with the growing interest from foreign equity players and private equity players, the quality of warehouses needs to be top-notch. There needs to be a sharp focus on the industry from all the stakeholders. Warehouses are not about aesthetic appeals; they need to deliver functional supremacy.

Highlighting the challenges faced in finalising the warehouse, Prashant Bopardikar, informed, “I was recently scouting warehouses for my North distribution center and we were looking for A-Grade properties. Because we have built A-grade warehouse in Bhiwandi on our own built-to-suit system, we realised that developers are not looking into small aspects such as docking space, flooring specifications, air changes, and the list is endless. The basic design parameters are being compromised in all these warehouses. We believe that the built-tosuit design specifications have to be very clean & clear, and developers need to be educated on these aspects because the moment you enter inside the building and realise something is amiss, you can't do anything about it. I think the first feedback should be given to the people who help us hire these warehouses.”

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Arif Siddiqui agreed that there have been various challenges facing the warehousing industry, including land parcel approvals from various authorities starting with the local municipalities, which warrants warehouse developers run from one authority to another to receive the desired approvals, which is a highly time-consuming process.

That’s why small developers shun away from building such warehouses as they don’t have the wherewithal and the ability to lock-in huge capital for long time. If the same scenario continues, then the private equity players will get disinterested one day. Additionally, as the industry is getting huge traction from international players, there needs to be a greater thrust on adopting global

warehousing standards right from the development stage, which makes it even more challenging. Moreover, once the warehousing infrastructure quality goes up, we are able to attract better talent into the system, which further enables efficient operations. Currently, there are numerous standards for warehousing and related assets.

Industry veterans and specialists have been in constant dialogues with the government in making them understand the crucial importance of warehousing industry, its economic impact and formulating a coherent regulatory policy.

Earlier the government considered warehousing activity as a miniscule part of the logistics ocean, but the constant discussions have finally started

While designing this warehouse, we have taken into consideration even the minutest details that add to the efficient operations of warehouses, be it shelvings, docking space, height, flooring specifications, so on and so forth. Then PRASHANT BOPARDIKAR we have deployed an Head – SCM & Warehousing, advanced WMS system at Bestseller India the warehouse to enhance visibility. Customisation is the key in implementing any such big bang automation tools. After the implementation of WMS at our warehouses, we have brought in over 55 customisations into the processes to enable efficient operations. We are continuing on this path because we believe that all these incremental changes only bring transformational benefits for the organisation in the long run and ultimately improve productivity, which eventually results in significant cost savings in the supply chain. This is how infrastructure whether it is physical or informational, plays a major role in companies’ profitability.

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COVER STORY

While policies are being put in place across some states, others are yet to toe the line and acknowledge the tremendous potential this market holds in terms of boosting local businesses and generating GST revenues for the state, BALBIRSINGH KHALSA ie., more warehouses, Executive Director – Industrial more stocks, more trade, & Logistics and Branch Director, more GST collection for Ahmedabad, Knight Frank India the states. If a state stock of warehouses grows from 10 mn sqft to 20 mn sqft., the state could well see a similar growth in GST revenues along with a significant boost to local supply chains, job opportunities and better access to a wider variety of products. Each 1L sqft of warehouse can add 100-500 direct/indirect jobs. It could prove to be a significant enabler for the states’ economy. If state wants to support manufacturing growth, they also need to develop more warehousing parks to support trade and logistics and this, in turn, supports growth of GDP of the state and the country.

fructifying, though we have miles to go before we achieve the desired results, stated Arif Siddiqui.

THE NEED GAPS Sharing important stats necessitating the need for standardisation in warehousing infrastructure, DK Rai, Director, CHEP India, informed, “We have about 20+ government agencies, 40+ partner government agencies, 37 export promotion councils, around 500+ certifications, 1000+ commodities, over 200 – 300 billion dollar market size, 200 shipping agencies, 36 well-defined logistics services, 129 Inland Container Depots (ICDs), 168 CFS, 50 IT ecosystems and various Banking and Insurance agencies and over 25 million people

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employed into the logistics services of the country. These figures themselves make up for a complex maze and if we don’t have standards defined, one can imagine the kind of chaos we will need to manage every time we talk about delivering goods to customers. In that sense, material handling becomes very crucial for overall supply chain. We are trying to promote at least some level of customisations, which are least conflicting in nature and because packaging is the very basic unit of supply chain, if you can have some sort of alignment on that standard, you can further standardise rest of the operations. I think, this itself brings lot of sustainability and lot of environmental benefits and also cost efficiency.”

Arif Siddiqui also highlighted that

the increasing demand for warehousing space has resulted in massive growth of new logistics parks and single unit warehouses led by large and medium sized developers, self-users, and manufacturers who have developed their specifications as per market or self-requirement and constructed as per their understanding.

In the past decade, development of built-to-suit warehouses and large logistics parks has become increasingly common since the advent of domestic, multi-national companies, e-commerce companies and the increasing flow of FDI by international developers in the warehouse infrastructure sector. This also helped improve the warehousing standards in the country since a lot of end users and developers adopted these standards when specifying their warehousing requirements to build or lease. Despite the improvement in the standards and specifications, a need was felt by the logistics and supply chain industry and developers to have a set of guidelines and standards for warehousing space development, which were suitable for India and were written considering the occupiers requirements for storage and efficient operations, local conditions, economic feasibility and regulatory compliance. In the warehousing value chains, ‘standardisation’ is becoming essential for reducing costs, improving efficiency, and ensuring global compatibility as well as competitiveness.

In view of the growing logistics sector, technology advancements and globalisation, the Logistics Division in the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India took up the task of assessing the adequacy of these existing standards and to fill the gaps with additional standards and guidelines. They entrusted Warehousing Association of India (WAI) to update and publish the e-handbook on Warehousing Standards, which was officially released during the Launch of The National Logistics Policy recently. In consultation with experts and various stakeholders, including industry, users, interest groups, standards organisation and governments, the present draft guidelines for standardisation of warehousing and related assets for seamless and efficient logistics are issued.

COVER STORY The E-handbook defines the best practices in Warehouse construction & maintenance, Palletisation & Racking Standards, Standards for material Handling, transportation, Product Specific standards as well as trends in Warehouse Automation and Artificial intelligence. “We firmly believe that this e-handbook will benefit all the stakeholders of the industry and go a long way toward standardisation and facilitate the development of worldclass warehousing infrastructure in India. Modern Warehouses that deploy automation and mechanisation will achieve improved productivity and throughput, thereby helping reduce the warehousing and logistics costs. We will continue to update this document annually and it will be our endeavour to include the latest developments, practices, and technologies in the Warehousing Industry from time to time,” affirmed Arif Siddiqui.

TRANSFORMING THE URBAN LOGISTICS SECTOR The constant need to reduce delivery timelines had always made the entry of in-city warehousing in the Indian market just a matter of time. With the pandemic vaulting the e-commerce sector on a high growth trajectory and the entry of players such as the Tata Group and the Reliance Group in this highly competitive space, multi-storey warehouses could become mainstream phenomena much earlier than expected.

Besides facilitating optimum land utilisation in congested cities such as Mumbai, multi-storey warehousing will effectively reduce delivery timelines and transportation costs. Such solutions are already in place in Asian markets such as Singapore, Hong Kong and Tokyo.

3PL players have been scouting for incity development opportunities across Mumbai, Delhi and Bengaluru. The high real estate costs in these cities, however, make it a challenging venture, and turnkey opportunities such as defunct mills, factory units or shuttered malls are also being considered.

Urban Logistics Sector is highly attractive in tier I cities primarily in grocery & agricultural products, pharmacy, fashion & retail (clothes and garments) and FMCD. The market

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is shifting more towards on-demand solutions, which has further increased the demand for faster delivery. Hence, the last mile distribution of goods and urban logistics spaces attain critical importance by developing warehouses close to cities. A more recent format within the ambit of in-city warehousing that has been gaining prominence is the dark store. As highlighted in a recent Knight Frank report, a dark store is generally a warehouse that can either be used to facilitate a “click-and-collect” service such as that provided by D-Mart

Ready, where a customer collects an item, they have ordered online, or as an order fulfilment platform for online sales, generally in the grocery segment.

These could be shuttered retail stores or basement premises that can be effectively converted into last-mile order fulfilment centres.

Dark stores have risen in prominence in the past two years especially in the grocery segment, with e-commerce players such as Instamart, Dunzo, Blinkit and Zepto maintaining these premises at urban consumption

We have about 20+ government agencies, 40+ partner government agencies, 37 export promotion councils, around 500+ certifications, 1000+ commodities, over 200 – 300-billion-dollar market size, 200 shipping DK RAI agencies, 36 well-defined Director, CHEP India logistics services, 129 Inland Container Depots (ICDs), 168 CFS, 50 IT ecosystems and various Banking and Insurance agencies and over 25 million people employed into the logistics services of the country. These figures themselves make up for a complex maze and if we don’t have standards defined, one can imagine the kind of chaos we will need to manage every time we talk about delivering goods to customers. In that sense, material handling becomes very crucial for overall supply chain.

We are trying to promote at least some level of customisations, which are least conflicting in nature and because packaging is the very basic unit of supply chain, if you can have some sort of alignment on that standard, you can further standardise rest of the operations. I think, this itself brings lot of sustainability and lot of environmental benefits and also cost efficiency.

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COVER STORY centres. These businesses could take up good properties in urban centres as the retail industry has been under significant stress during this period. The dark stores have been instrumental in pushing sales and claiming market share from traditional retail formats with their unique proposition of delivering groceries within the hour at discounted prices. While the discounts are a focused customer acquisition strategy, the rapidly increasing customer demand for this format is expected to continue to push demand for dark stores. The growth of dark stores in international markets fuelled by the fast growing demand for online fulfilment and increasingly favourable unit economics also support the growth of this format in Indian markets.

Occupiers are moving towards dark stores because higher space optimization and stock management can be achieved with lower delivery times and reduced shipping costs. FMCG/ FMCD sector have higher requirement of StockKeeping Units (SKUs). Dark stores focus primarily on click-and-collect functionality, thereby optimizing SKU management. Dark stores are efficient as they do not require dedicated space or cost for the shopping experience.

They cater to multiple online retailers simultaneously, facilitating retailers to save real estate expenditures.

Offering the nuances into the urban logistics infrastructure, Balbirsingh Khalsa averred, “Urban infrastructure has been grabbing eyeballs post pandemic because pandemic warranted people to order from home. But if you see the urban centers, it is a very complex structure because the cities are getting massively congested with no scope of futuristic development. This is where the government has to play its part of defining the development plan and drive the change. Big urban cities simply can’t afford to have godowns spanning over 2000 to 50000 sqft and serve each and every PINCODE in the shortest timelines of 10-30 minutes delivery. This will only add to the complexities and prove to be logistical mess.”

“Logically, I feel we can just have 6-7 pockets within each big city where you can create such warehouse Parks, which are fully compliant in nature.

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Additionally, it also remains to be seen how sustainable these constricted delivery timelines are in long run. As cost of labour increases and service cost for delivery within city increased this model may not be profitable,” he added.

To create a good in-city warehouse, developers need least 5-6 acres of land, that too inside the city where residential and commercial development will likely prove to be more viable. The land itself will be worth Rs100-200 cr and it is unlikely that prevailing business dynamics in the warehousing market will support viability of such a project.

“Realistically, I believe some industrial clusters within cities will get converted into warehousing formats and the industries may get shifted outside city limits for cheaper rentals,” expressed Balbirsingh Khalsa.

More and more retailers are now providing home delivery to neighbourhood societies with 3-5 kms radius to compete with these emerging e-commerce platforms. Over a period of time, these retail stores will have both models of offline shopping and online shopping within radius of 0-5 kms from the shops, only dark store model may not be sustainable in long run as it’s currently burning money model and not on profit model to grab market share from others unless they have some unique products and proposition to sustain for longer period, Balbirsingh Khalsa emphasised.

Regarding in-city multi-tire

distribution center, Gopinath Deshpande avowed, “The movement of vehicles becomes an important criterion to consider. Layout of such in-city warehouses needs to be factored into before arriving at the specifications. We are seeing a greater compromise on the height, the floor loading capacities of such warehouses, load bearing capacities of mezzanine floor, which really needs a thorough think-through from the developers’ and our design requirements’ side. Currently, we are not focusing on multi-tier warehouses because we take large warehouses little away from cities.

But going ahead, we would definitely like to consider this option considering its proximity to the city and it will give added value to us provided we are able to design the right specification for this.”

DEVELOPERS’ APPROACH TOWARDS IN-CITY WAREHOUSES/DARK STORES Although urban logistics is gaining popularity in the Indian market, it has a relatively higher cost component for the e-commerce player to develop multiple in-city warehousing or dark stores in the city neighbourhoods. Moreover, the size of these spaces ranges from 5,000 to 25,000 sqft. for which availability of land is difficult in the city area. Developers are now reinventing and repositioning usage of their existing assets in the city. Developers are more aware of the

COVER STORY real estate market than the e-commerce players in tier I as well as the under explored tier II cities. They facilitate the players to carve out spaces in the city.

E-commerce players also could explore the defunct, stressed assets as well as alternate use of the existing assets of the developers. These types of assets also help in reducing the rents and hence, overall cost of the in-city warehouses.

To reduce the cost component of dark stores and address the seasonality of the demand, new models such as temporary lease of 6 months are being adopted.

The delivery time is reducing from 1-day delivery to 1 hour to 30 minutes. This reduction in delivery time from days to hours to minutes demand for multiple warehouses near to the consumption hubs (in-city).

Currently in most cities, in-city warehousing is being carried out through existing retail, commercial or industrial properties retrofitted for warehousing.

Warehousing / Logistics is not well defined in most Urban Development Plans across India as it is across developed and dense markets such as Singapore and Japan. According to Balbirsingh Khalsa, currently demand should be approx.

3-5% of total absorption of each city, which can go up to 8-10% in next five years. Talking about the complexities of the same, he added that the typical cost of construction for in-city warehouse is Rs3000 to 4000 per sqft for international specifications. Additionally, there are high approval cost within city and high land cost. Rent typically is from Rs.50 to Rs.200 per sqft. based on city, location, and specifications. The near prohibitive costs can only be reduced if the government recognises the need of the urban consumer and makes adequate allowances in the DP for this purpose.

Putting it bluntly, Arif Siddiqui stated that for a long time, it will remain a challenge. “There are two aspects to it – one is on the demand side and the other is the supply side. Firstly, the demand for quick commerce or instant delivery is consistently going up. We have already moved from 4-5 days delivery to 15 minutes delivery window. This creates a huge challenge to the infrastructure and when we especially talk about major markets such Mumbai, Delhi NCR, and Bengaluru as it might be easier to

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manage such delivery promises in cities such as Indore, Jaipur or Surat. Now as far as the supply side is concerned, the biggest challenge is of occupying space for developing warehouses as it might not be a financially viable option at first to invest such a huge sum on land and even occupying land of such a size is a far-greater challenge. Currently these quick commerce companies are operating from a backyard with just about 200300 sqft space, which is not a great proposition either. The extra low margin game also doesn’t add up to the initial investment required. The cost viability is a greater question mark before arriving at a tangible solution,” he avowed.

He further stated, “If the government authorities decide to allot land parcel in old industrial areas of these major cities, the problem of huge land acquisition cost gets solved to an extent. Additionally, having just one of such clusters in a big city like Mumbai or Delhi also doesn’t justify the 15-minute delivery promise.

In short, companies need to thoroughly figure out the best possible alternative to strike demand-supply equilibrium while fulfilling all the regulatory requirements of developing a new age warehouse. I believe in-city warehouses are a matter of intense discussions between municipal corporations, government bodies and the private players. Government will need to specify rules & regulations for in-city distribution centers. They need to assign planning regulators for such centers, else operational viability will be amiss. Special rules need to be laid out for multi-tier warehouses as they can’t just be the same as any other commercial building.”

THE BALANCING ACT Explaining the economics of building a warehouse, Balbirsingh Khalsa stated that on one acre of land where you can make maximum leasable 24000 to 25000 sqft, with typically 55% of ground coverage, the land cost per square feet is approximately Rs800-1000 and the construction cost for a grade A warehousing park would be around Rs1800- 2000 per sqft including 18% GST, which comes down to about Rs 2600-3000 per sqft. If a developer targets a 10% ROI, he needs to rent out the Grade A warehouse at around Rs 24-25 per sqft per month on rent. The

only way to make things cheaper is to go farther from city limits to find cheaper land parcels.

Having said that, rentals in India are still very low compared to the top 10 countries of the world. The typical rentals are $15-25 per annum that boils down to around Rs 100 – Rs 170 per sqft per month. We are still hovering around Rs15 to 25. Only some clusters like Bhiwandi and Taloja in Mumbai, Chakan in Pune, Oragadam in Chennai command Rs25-30 psf.

Hence developers are reluctant to invest in better specifications and amenities as they cannot be reasonably sure of the property fetching higher rentals. “I believe as companies grow and are able to quantify the value that an efficient and high-quality warehousing setup brings in, they will be able to justify investing greater amounts in their warehouses. Developers will then be eager to develop Grade-A warehouses as per their customers’ specifications.

Going forward, things will evolve over a period of time. One thing we need to understand that there is constant demand for upscaling of specifications from tenants to improve on efficiencies and productivity and additional specifications will cost more money for construction,” Balbirsingh Khalsa expressed.

“My worry is that quick commerce companies shouldn’t get comfortable in managing their service from such extremely poor-quality infrastructure that they are currently operating from.

Assuming that there is a demand, there are three factors that add up to the cost of the developer – land, cost of the building and the regulatory framework.

If the cost of the building is low, but at the same if the developer has the low ground coverage approval from the government, then also it is not a feasible proposition. In another proposition, if all the government proposal are intact to build the distribution center the developer intends to build, but if the cost of development is going higher, then also it’s not a great idea. If these two things are in a developer’s favour, but the land cost is obnoxiously high, then also it’s not viable. First of all, companies need to devise balance of cost scenario. Secondly, developers will need

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COVER STORY to deliver the Unique Selling Proposition for the occupier, such as better capacity utilisation, optimised warehousing design that can equip occupiers with an ability to process orders and deliver goods in the shortest timeframe from the DC to the customer’s place. If the developer is able to deliver all of these aspects at a reasonable price point, the market is flooded with enthused occupiers,” Arif Siddiqui highlighted.

SETTING THE GOAL POST Indian warehousing market has the potential to shift towards the multi-storey warehousing on back of the increasing demand from the e-commerce sector to be located close to their consumer base and to efficiently utilise the land area.

This can kickstart the demand for techenabled multi-storey warehousing, which can facilitate maximum land utilisation in cities having limited land supply as well as help companies to reduce transportation costs and time. Cities such as Mumbai, Bengaluru and Kolkata have the potential to attract Multi-Storey Warehouses as they have constrained land supply and higher land rates. The permissible FSI for warehousing is lower than the desired FSI for multi-storey warehousing in Indian cities. Lower permissible FSI restricts warehouses from going higher, which does not allow cost optimisation. But, with growing population, space constraints and increasing land prices, multi-storey warehousing system can emerge in the Indian warehousing market in the near future.

While policies are being put in place across some states, others are yet to toe the line and acknowledge the tremendous potential this market holds in terms of boosting local businesses and generating GST revenues for the state, ie., more warehouses, more stocks, more trade, more GST collection for the states. “If a state stock of warehouses grows from 10 mn sqft to 20 mn sqft., the state could well see a similar growth in GST revenues along with a significant boost to local supply chains, job opportunities and better access to a wider variety of products. Each 1L sqft of warehouse can add 100-500 direct/indirect jobs. It could prove to be a significant enabler for the states’ economy. If state wants

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Investment in Infrastructure like Roads, Railways, Multimodal Logistics Parks, Airports, etc., are critical enablers for the supply chain. Not only do they make efficient transportation of goods possible between manufacturing and consumption locations, such development also unlocks new cheaper land banks. New warehousing/industrial clusters also can be established as old clusters become saturated and expensive. This also helps in reducing cost by moving to newer regions/ clusters with new infrastructure. to support manufacturing growth, they also need to develop more warehousing parks to support trade and logistics and this in turn supports growth of GDP of the state and the country. In many states, warehouses cannot be built on Industrial land, such a policy is hurting the development and growth of warehousing as a sector and overall growth of the state, highlighted Balbirsingh Khalsa.

He asserted, “On the national level, the focus on developing gamechanging infrastructure projects such as the Industrial and economic corridors connecting the length and breadth of the country, projects such as the Bharatmala and Sagarmala along with ambitious plans to create multi-modal logistics parks hold tremendous promise for the logistics and warehousing sector. With such massive infrastructure projects underway, the government’s intent and focus on the manufacturing and logistics/ warehousing sectors is apparent, and the market is closely watching these developments as they unfold. Investors are already poised to take advantage of these projects as they approach fruition.”

Stressing the crucial importance of warehousing infrastructure, Arif Siddiqui shared, “Implementing the right operations efficiency strategy will be crucial to maintain a competitive advantage. Supply chain strategies are increasingly including the significance of operational efficiencies and human productivity. The infrastructure piece in the business pie cannot be ignored as it makes or breaks the plan and we have seen in the recent pandemic that organisations have had to face huge challenges because they did not have an efficient infrastructure in place.”

“Increasing productivity, reducing waste, and driving sustainable performance has become the key performing index to any invested infrastructure. Optimising entire asset value and operational life cycle by contextualising asset performance will be the key for a very long time. Therefore, selecting the correct specification or writing the correct specifications in case you are hiring a facility or otherwise if you are building one, carefully designing your warehouse building, looking at the vehicles’ docks, aprons, yards, and roads determining the flows and Quantitative analysis of 3Ms – Material, Man and Machine movement – is going to be the bedrock of infrastructure logistics.”

“Designing processes that have optimum path, zero errors and integrated to the virtual process so as to automate the data collection will also remain increasingly the key to most of the success. Leveraging the right solutions, warehouse equipment, technology not only in terms of machine technology but also in terms of IT and the technologies that keep evolving, integrating WMS to WCS will also be the key driver to what we see in the future. Implementing a streamlined return process and today we see a lot of return management challenges that are taking place leaving a lot of cost to the operations and the capital that is invested in the business is also becoming one of the key success factors of making or breaking organisations and businesses. Collaborating to drive efficiency from suppliers’ supplier to customers’ customer has as has always been the key, will continue to be the key and will not diminish till the end of time,” he concluded.

INTERVIEW

FINANCE & SCM The PERFECT ALLIES

“Finance and SCM verticals go hand-in-hand to ensure that goods or services are available to the consumer at lowest cost and in process, creating value for the organisation. The finance department plays an important role to partner with the supply chain team in managing these costs. Right from working on vendor selection to the cost negotiation to agreeing on credit terms, finance helps supply chain optimise costs. CFOs and finance departments aid in making sure that we are able to assign the right financial impact to any risk and then work closely with the supply chain team to look at mitigation actions,” highlights Mukesh Gupta, Director Finance, RBIS South Asia, Avery Dennison. During this interview, he shares the perfect synergies between the supply chain and finance function that ultimately drive an organisation’s success.

Having worked with FMCG for most part of your professional journey, how has been your experience in managing adverse times and how do you think that supply chain plays a pivotal role in managing the crisis?

Supply Chain (SC) in general, and in FMCG in particular, plays a very important role in keeping the whole business running.

I see Supply Chain like the blood in the body, which moves the essential nutrients across the organisation.

Especially during adverse times, e.g., an event like Covid or the global container crisis where the normal infrastructure comes to paralysis, it is the Supply Chain which ensures that goods or services from the business are available on time, in full. Just recall the Covid times, where everything was locked down across India; SC functions across the different segments ensured that essential goods were reaching the public. Not only were consumer goods made available, but the whole backend supply chain was working efficiently to ensure that production did not stop. As the demand for garments went down, Avery Dennison’s customer apparel factories quickly geared up to meet the safety gear requirements. This was possible only due to the fact that

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our SC was ready to meet the dynamic requirements.

We have always been constantly hearing the phrase, ‘Supply chain is the cost center’. What’s your take on this? How can it be made a Value Creator?

While we incur most of the cost of the business in Supply Chain, these costs only help the business to earn revenue.

So, it is wrong to call it only the Cost Center. Over time, the role of SC has changed from just creating the goods to creation of value. And efficiency of SC now determines if your business model can work or not. Take the example of e-commerce companies like Amazon or Flipkart, they sell most of the same goods, which were available earlier.

But their supply chain model is now ensuring the goods are available to consumers quickly and more efficiently.

With globalisation, the SC function now creates a lot of value in terms of getting material at the lowest cost, creating scale, which helps to keep the final price for consumers low. If SC is efficient, that efficiency will ultimately pass on to the consumer in terms of lower prices, which will mean more demand at lower prices.

Mukesh Gupta is an experienced finance professional with a total experience of 18+ years in FMCG, Manufacturing and Oil industry. His diversified experience in factory commercial, Supply chain finance, business partnering to supply chain and marketing functions has helped him to contribute positively to the different roles he did in Unilever and HPCL. His passion is to create stronger and capable teams. He is a strong advocate of automation, digitization and sustainability.

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INTERVIEW Thus, an efficient SC can create value in terms of higher demand and higher sales for any company.

leverage your financial strength to get them a bill discounting facility to get early payments.

How well do the two verticals viz., finance and SCM complement each other? How do finance leaders partner with supply chain and procurement officers to make effective strategic financial recommendations?

Please share with us one of the most challenging days for you at work while managing supply chain disruptions?

Finance and SCM verticals go hand-inhand to ensure that goods or services are available to the consumer at lowest cost, and in process and value creation for the organisation. We incur significant costs in the supply chain and the finance plays an important role to partner with the SC team in managing those costs well.

Right from working on vendor selection to the cost negotiation to agreement on credit terms, finance helps supply chain optimise the costs. In one of my previous roles at Unilever, where I was working as Supply Chain Finance Partner for their largest business of Personal Care division, myself and the supply planner worked very closely to redesign the whole manufacturing and distribution footprint as the fiscal benefits (tax incentives) from key sourcing sites were getting over. It was like redesigning the whole footprint strategy for the personal wash category to ensure the least depot delivered cost while reducing the overall lead times from sourcing of material to availability of soap in retail. Another classic example is having the right credit terms for the vendors and ensuring that your suppliers don’t choke down due to liquidity problems and how you can

The initial few months of Covid were really challenging from the supply chain perspective. It was truly a VUCA moment and tested everyone. Overnight, the suppliers from China and other countries were shut, the airlines were no longer moving the raw materials, we had a large order book from customers but were not sure if they would pick up the material and at the same time, many customers moved their orders from China to South Asian countries. It was a herculean effort to manage the whole demand supply network. If I look back, I am sometimes surprised by how well we were able to manage the situation by working closely with our customers and prioritising the critical requirements. I must congratulate the Supply Chain teams at Avery Dennison who made this complex task look easy. It was a well-coordinated effort between the commercial teams, supply chain teams and finance teams to keep the business running and that actually became our competitive edge as well.

Sustainable packaging has been high on the agenda of FMCG companies.

What measures is Avery Dennison taking on this front?

Sustainability is at the heart of everything we do at Avery Dennison. Our company

has set ambitious sustainability targets for 2025 and 2030, and we are making good progress against them. These goals and performance against them are publically shared. We take pride in delivering innovations that advance the circular economy. We work very closely with our FMCG customers as well as global garment brands to provide recyclable labels/branding solutions from the product design stage itself. Our 2030 GHG emission targets are consistent with levels required to meet the goals of the Paris agreement, the binding treaty adopted in 2015 at the United Nations Climate Change Conference. To quote from our Integrated Sustainability and Annual report of 2021, “We innovate not only to reduce our environmental impact, but to go further by improving the planet, industries and communities we serve, helping the world move toward a regenerative future.”

What are the prerequisites that a supply chain finance professional needs to have?

Having worked for many years in Supply Chain finance area, my favorite is to put yourself in the shoes of Supply chain.

Once you know a problem/opportunity in SC well, you can partner with SC to solve them. Open-mindedness, flexibility and strong analytics go a long way in helping a person to be an effective supply chain finance professional. Also, the person should spend lot of time on the ground looking at how the material sourcing works, be on the shopfloor to see that material converting from raw material to finished goods, and then

Having worked for many years in Supply Chain finance area, my favorite is to put yourself in the shoes of Supply chain. Once you know a problem/opportunity in SC well, you can partner with SC to solve them. Open-mindedness, flexibility and strong analytics go a long way in helping a person to be an effective supply chain finance professional. Also, the person should spend lot of time on the ground looking at how the material sourcing works, be on the shopfloor to see that material converting from raw material to finished goods, and then how does these finished goods travel from factory to the customers. I, myself, have spent a lot of time on the shopfloor, including the night shifts, to see how we can reduce waste or increase productivity, or get more data which can provide good insights for effective decision making.

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INTERVIEW how does these finished goods travel from factory to the customers. I, myself, have spent a lot of time on the shopfloor, including the night shifts, to see how we can reduce waste or increase productivity, or get more data which can provide good insights for effective decision making.

What are best practices for finance executives to oversee and support their organisation’s supply chain management?

The top one on the list is to have the capability to generate the right data.

Convert that data into information and the information into insights. Data can be very powerful and many times an eye-opener. The finance team should help do benchmarking, finding the gaps (I call them opportunities) and help set the right targets to bridge that gap.

Benchmarking using powerful analytics has helped me throughout my journey to support supply chain management better and more effectively.

Your views on supply chain digitization and the tangible impact it has…

As I touched upon the power of data, digitization is the most effective tool, which helps to provide data to the organisation. One of the recent studies of McKinsey suggests that companies that aggressively digitize their supply chains can expect to boost annual

Your ultimate mantra to excel and sustain the business growth momentum in difficult times Keeping the teams motivated is the most important mantra to excel in difficult times. A motivated and connected team can deliver the best results even in the most difficult times whereas if the team is not motivated or not connected, they can drop the simplest of the opportunity as well. I spend a lot of time connecting with my team on a 1-1 basis as well as a team. These interactions not only help surface the issues but also generate new creative ideas. This helps build resilience, sense of ownership and pride in what we are doing as well. Last but not the least, keep celebrating even the small wins. This will go a long way in boosting the morale of our teams.

growth of earnings before interest and taxes by 3.2% — the largest increase from digitizing any business area — and annual revenue growth by 2.3%.

As the overall business environment is becoming more and more complex, the organisation and SC, in particular, need to be more agile and flexible. If we have to respond to those requirements, we need to understand those trends on time and then quickly adapt ourselves to meet the new requirement. Digitization is the only way you can serve your customers fast. For example, look at e-commerce companies who have been able to digitize most of their operations, generate a lot of data and then use this data to make their processes leaner and faster. In my company too, we are aggressively working on digitization of the Supply chain – right from customer order management to Manufacturing

One of the recent studies of McKinsey suggests that companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2% — the largest increase from digitizing any business area — and annual revenue growth by 2.3%. As the overall business environment is becoming more and more complex, the organisation and SC, in particular, need to be more agile and flexible. If we have to respond to those requirements, we need to understand those trends on time and then quickly adapt ourselves to meet the new requirement. Digitization is the only way you can serve your customers fast. supplychaintribe.com

4.0 to capturing data at each stage, to identifying further opportunities for simplification, optimisation and cost reduction.

Kindly share with us some critical aspects / pointers that aid in managing supply chain risk and inflation with improved resilience.

How are CFOs well placed to mitigate supply chain risks and build financial resilience?

The first step is to manage the supply chain risks. The risks can be external like demand risk, environment risk or it can be internal risks like a manufacturing, quality, or planning risk. There should be a proper three-dimensional framework to look at risks – Probability, Impact and Readiness to mitigate the risk. Once you have that, one can devise the strategy to mitigate the critical risks. This process actually requires cross-functional effort. e.g., we always see plastic packaging as a big risk to the packaging industry as well as FMCG companies. Once you know this is a risk with high probability and high impact, you will start looking for actions to mitigate that. In the VUCA world, we need to keep refreshing the risk matrix so that we are ready for any new risk.

CFOs and finance, in general, again aid in making sure that we are able to put a right financial impact to any risk and then work closely with the supply chain team to look at mitigation actions. With more and more globalisation and interdependencies going up, finance is well placed to map that out, look at political/ economic risks, and help navigate the currency risks through right hedging and lead cost saving opportunities to mitigate any risk and inflation.

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Trending GL BALLY Apple calls on global supply chain to decarbonize by 2030 Apple recently called on its global supply chain to take new steps to address their greenhouse gas emissions and take a comprehensive approach to decarbonization. The company will evaluate the work of its major manufacturing partners to decarbonize their Apple-related operations — including running on 100% renewable electricity — and will track yearly progress. Apple has been carbon neutral for its global corporate operations since 2020, and is laser-focused on its ambitious goal to become carbon neutral across its entire global supply chain and the life cycle of every product.

As the impacts of climate change are increasingly felt around the world, Apple also announced new initiatives and investments aimed at helping decarbonize the global economy and promote innovative climate solutions for communities.

These include significant investments in renewable energy in Europe, partnerships to support businesses transitioning to clean energy, and new support for projects that advance natural carbon removal and community-driven climate solutions around the world.

“Fighting climate change remains one of Apple’s most urgent priorities, and moments like this put action to those words,” said Tim Cook, Apple’s CEO. “We’re looking forward to continued partnership with our suppliers to make Apple’s supply chain carbon neutral by 2030. Climate action at Apple doesn’t stop at our doors, and in this work, we’re determined to be a ripple in the pond that creates a bigger change.”

Mobilizing Supply Chain Climate Action As part of Apple’s supplier engagement, the company is

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partnering with its worldwide supply chain to urge accelerated action to achieve carbon neutrality for their Apple-related corporate operations. The company requires reporting on progress toward these goals — specifically Scope 1 and Scope 2 emissions reductions related to Apple production — and will track and audit annual progress. Apple will partner with suppliers that are working with urgency and making measurable progress toward decarbonization.

Additionally, Apple is encouraging suppliers to address the greenhouse gas emissions beyond their Apple production, prioritizing clean energy. As part of the company’s work to achieve its 2030 goal, Apple has reduced its emissions by 40% since 2015, largely through improvements in energy efficiency, low-carbon design, becoming carbon neutral for corporate operations, and transitioning its supply chain to renewable electricity.

More than 200 suppliers representing more than 70% of Apple’s direct manufacturing spend have already committed to using clean power like wind or solar for all Apple production.

To help suppliers meet their commitments and go even further, Apple offers a suite of free e-learning resources and live trainings through its Clean Energy Program and works closely with its suppliers and local partners to identify effective solutions for renewable energy and carbon removal. More than 150 supplier representatives have participated in live trainings this year alone. Apple plans to donate these resources to create a firstof-its-kind public training platform that is free for businesses across many different industries, ensuring that companies of all sizes — in Apple’s supply chain and beyond — will have access to the resources and advocacy networks needed to speed their transition to 100% clean energy and carbon neutrality.

RECAP Four Ways Chief Supply Chain Officers Can Respond to Inflation As inflation rates rise in economies around the world, there are four ways chief supply chain officers (CSCOs) can prepare their leadership response over the next months, according to Gartner, Inc. “While CSCOs primarily focus on developing strategy and enabling organizational capabilities, the economic headwinds they experience these days call for a steadying influence amid reactive stakeholder tendencies, such as defunding strategic investments and slashing overhead costs,” said Paul Lord, Senior Director Analyst, Gartner Supply Chain practice.

Position Flawless Execution as Supply Chain’s Primary Mission: Most supply chain organizations have already developed plans for improving efficiency to offset a normal inflation rate. CSCOs should encourage their teams to implement these plans while remaining focused on their critical role in fulfilling demand to capture margin. “Uncertain times require steady leadership from the CSCO, particularly to operating functions that are critical for ensuring product availability and service delivery, such as logistics and customer service,” Lord said.

Let the Planning Team Rise to the Challenge: An economically difficult situation is a good opportunity for CSCOs to evaluate and develop their planning teams’ capabilities and processes. For example, higher interest rates and material prices should prompt reductions in production batch sizes, where possible, to rebalance capacity and working capital economics.

Manage Cost Reduction Carefully: Most supply chains already operate with very little overhead costs.

However, periodic checking demonstrates due diligence to the C-Suite. Another way to reduce costs and further improve efficiency is role consolidation. CSCOs can, for example, consolidate functions such as site quality, safety, environmental compliance maintenance and continuous improvement into fewer teams with improved focus and alignment. “It’s important to focus on maximizing the ability of the supply chain to control inventory and optimize the cost of product supply,” Lord said. “The anxiety and fear created by unfocused overhead scrutiny during these times creates the risk of distraction from the primary mission of operating effectively to fulfill demand and serve customers.”

Protect Investment Spending: One learning from the last period of economic downturn was that growth leaders reintroduced capital expenditure after a recession much faster than their peers. That’s why CSCOs should be protective about their planned technology investments to not fall behind their competitors. According to the Gartner survey, manufacturers and retailers are most protective of spending on product innovation, talent development and technology investment for price analytics and operations automation. Service-centric companies are most protective of technology investments such as back-office automation and operational visibility for increased efficiency.

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PepsiCo UK invests in sustainable food packaging innovations PepsiCo UK has recently announced a £14mn investment in new sustainable food packaging innovations that will remove 250 tonnes of virgin plastic from its supply chain annually. The outer plastic packaging on millions of Walkers 22 and 24 bag multipacks will be replaced with a new cardboard design which reduces the amount of virgin plastic the company uses.

“We are constantly exploring new scalable solutions and this investment marks an important step forward, delivering a huge reduction in virgin plastic across some of our best-selling ranges, while also helping to tackle our carbon footprint,” says Simon Devaney, Sustainable Packaging Director, PepsiCo UK & Ireland. “Reducing virgin plastic across our supply chain is a key part of our commitment to creating a world where packaging never becomes waste.”

After a successful trial with Tesco, the new and improved multipack outer packaging will be on-shelves in all major supermarkets in the UK in the coming weeks.

Alongside the new packaging design, PepsiCo has also invested in a new stretch film to wrap around its pallets before these are distributed to retailers. This new film is produced using nanotechnology which puts tiny air bubbles into the film to reduce the amount of plastic used, while retaining the same strength and stretch needed to protect the crisps as they travel to stores across the country.

According to the company, the use of this new technology will lead to a 40% reduction in virgin plastic year on year, compared to the previous film. Reducing the amount of fossil-fuel based virgin plastic in the shrink wrap will also reduce the company’s annual carbon emissions by 465 tonnes. The investment marks a major step towards PepsiCo’s goal of eliminating virgin fossilbased plastic from its crisp and snack bags across Europe by 2030.

Mars, Incorporated announces major packaging innovation for KIND® bars

Mars, Incorporated has reached a key milestone in its commitment to a circular economy where packaging material never becomes waste. The new KIND® snack bar packaging incorporates recycled content made from advanced recycling, meaning it contains less virgin plastic to previous products.

The new material has been completely redesigned for maximum circularity and is produced through the recycling of used mixed plastic that would otherwise be destined for incineration or landfill. This means that the new packaging is eligible for dropoff recycling in the UK, and curbside recycling in Ireland.

This transition to packaging designed for maximum circularity is the latest innovation in Mars, Incorporated’s

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Barry Parkin, Chief Procurement & Sustainability Officer, Mars, Incorporated commented, “At Mars, we want to contribute to a circular economy where packaging material never becomes waste, but is recycled, reused or composted. For this to happen, we need new solutions and infrastructure to change the recycling landscape and to complement mechanical recycling. Today marks another important step in accelerating our sustainable packaging journey and in our collaboration with partners like SABIC that are enabling new opportunities to provide consumers with packaging designed for circularity.”

The project is a unique ‘closed loop’ collaboration, designed in partnership with SABIC®, Landbell®, Plastic Energy®, Taghleef®,

and SIT®. Together, the partnership has created a lighter weight wrapper from recyclable monomaterial polypropylene for KIND®, removing the need to use complex laminated plastic incorporating multi-material layers.

Lada Kurelec, General Manager PP, PET, PS, PVC, PU & Elastomers Business for Petrochemicals at SABIC commented, “We are very excited about this pioneering closed-loop project that demonstrates the feasibility and speed of implementing circular plastic innovations when leading actors from across the entire value chain are closely collaborating. Used flexible packaging has a high feedstock value for new materials, and our TRUCIRCLE polymers and services form an instrumental element in tapping this vast potential.”

This innovation marks a real development in the potential for flexible plastic wrappers to become fully circular, as increased amounts of recycled content become available through investment in advanced recycling infrastructure.

STERIMED launches sustainable substrate for rigid packaging

Polybond CGP 85 adds to a successful polymer-reinforced cellulose-based product range for the healthcare industry – Polybond. Medical device manufacturers, healthcare professionals and end-users are increasingly calling for environmentally friendly, sustainable products and packaging with less plastic content and a lower impact on the environment.

Sterimed has taken up the challenge and is introducing to the market renewable materials and intelligent rigid packaging solutions of tomorrow.

Polybond CGP is mostly composed of materials from renewable resources and bio sourced carbon – and contains 70% less plastic. The innovation lies in its unique fibre mesh structure, which mixes cellulose together with a high content level of synthetic binders. Synthetic binders are used for optimal mechanical characteristic and cellulose contributes to breathability and efficient sterilisation process, bringing

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Polybond CGP closer to polyolefin plastic material capabilities.

This can help reduce your plastic footprint and contribute to reducing plastic waste on the planet.

STERIMED’s 5gsm grid-pattern coating allows excellent sealing performance. The optimal sealing integrity is balanced with an aseptic presentation, not admitting any compromises even at the most challenging opening conditions (180 ̊ peel open angle). The substrate facilitates superior performance in regard with the prevention of the risk of break, puncture & burst.

The choice of a water-based, solvent-free coating technology, in addition to a share of a renewable raw material, makes it an environmentally friendly solution. Even though the substrate does not rely on plastic, it is strong and safe in standard mechanical tests. As a result, the material is recommended to all rigid packaging applications.

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