Smart Logistics - February 2012 by Infomedia18

Vol. 02 | Issue 11 | FEBRUARY 2012 ` 100/-

VIEWPOINT

RURAL REALITY CHECK RURAL India has become the toast of the whole nation lately. Everybody seems to look towards the dusty lanes for fortunes to roll in…and some are even dishing out theories as vast and varied from each other as chalk is to cheese! One of the theories doing the rounds justifying this rural attention is economical in nature, attributing this feverish rural fetish on the growth saturation of urban India and how rural is still an opportunity untapped. The other theory, being social and behavioural, talks about the evolution of human species finally finding its roots in its rural origin. While all these are ‘nice to know’ theories, what is actually desired is the ‘need to know’ things about this rural opportunity for India – a Rural Reality Check of sorts is most desired. As the Indian retail, manufacturing and infrastructure sectors are poised for rapid growth, they are faced with new challenges when it comes to logistics and supply chain issues – particularly in the untapped rural areas for farm produce and delivery of goods & services. Amid this reality, a need to evolve an Indian approach to management has been felt. While learning from the West and East, we should evolve an Indian model based on our social and cultural attributes. With the global market opening up for India, there is an urgent need to have logistics in place to take advantage of these potent opportunities. Adding chaos to the complexity, India had a unique paradox in the world as agriculture contributes only 20 per cent to the economy, but 65 per cent of the country’s population depends on it for their livelihood. As a large agricultural country, the important role of rural logistics in the development of the national economy is self-evident. Although rural logistics is so important for India, the overall development of rural logistics is in low level and low speed. There are some obstacles in rural logistics, such as poor logistics infrastructure, high transaction costs, backward logistics technologies and low rate of the application of modern information technologies. Relative to the development level of overall economic climate, the development of rural logistics is not satisfactory. With the prevalent rural realities, the government should attach great importance to the promotion of logistics infrastructure in rural areas. The starting point of these proposals implies that the development of rural logistics should be supported by other economic departments. This becomes all the more critical as rural logistics is a part of the national economy. The development scale of rural logistics must match with the scale of the overall economy. Adding different dynamics to rural logistics, as able an economist that our PM Manmohan Singh is, in one of the events, he sums up rural supply chain very profoundly. According to him, “Improving logistics is not just improving infrastructure and communication, the greater challenge is to improve rural life in totality. We require more than investing in logistics. We have to invest in the capabilities of people.” Taking a leaf out of this thought, let’s aim for the more capable ‘Real India’ and when we attain that, an efficient rural logistics will be the derived outcome as against it being a desired outcome, which is the case as of now.

Archana Tiwari-Nayudu archana.nayudu@infomedia18.in

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GUEST EDITORIAL

RURAL INDIA: AN EMERGING SOURCE OF OPPORTUNITIES Businesses are increasingly shifting at the total delivered costs, value their focus to rural India as they engineering opportunities and risk consider it a ‘significant source’ of management. This leads to lower business opportunities. Rural incomes costs for the business. are increasing due to rising prices of Some trends that are emerging on farm produce and the increased cost the distribution front are: of land. Hub and spoke distribution In such a scenario, the supply Co-partnering. chain plays an important role in The ‘hub and spoke’ method the success of a company’s journey follows the route to market strategy towards increasing rural penetration. where it leverages on the strengths Both topline and bottom line can be of ‘local distributors’ who understand significantly impacted by designing the rural terrain used. The concept the right supply chain. of super distributors who, in turn, A key ingredient for rural serve smaller distributors brings penetration is a smart portfolio. The in the benefits of both efficient challenge with a rural portfolio is not distribution cost and increased reach. only to make the product affordable, The business gets the advantage of but also to ensure margins are scale while distributing and reach maintained for the business. is achieved through the knowledge Ashu Khanna, Procurement teams across of the local distributor. Founder, VALYOU CONSULTANTS companies work very closely with Companies are also looking at the marketing team to arrive at the concept of co-partnering, which the right mix. is the ‘BOLT ON’ approach across different companies or Some of the paths that companies follow are: individuals in the supply chain. HUL’s rural model, ‘Project - Reduction of multiple entities in the supply chain (Go To Shakti’, is a classic example of how it has been able to Farm Model) increase penetration in the rural market. Companies are tying - Strategic sourcing. up with banks and telecom companies where penetration is The ‘Go To Farm Model’ can impact the company’s significant to tap into the rural market opportunity. bottom line through efficient sourcing of food products. The supply chain will continue to play a significant role Setting up ‘collection centres’ near the source eliminates in the areas of cost and availability in a company’s journey ‘middlemen’ (hence margins) and increases supply assurance towards rural penetration. In my opinion, the two large to businesses. trends that will make this a success will be the involvement Strategic sourcing, on the other hand, encompasses a of the rural population in this journey and the co-partner category lead approach towards key ingredients and looks approach, i.e., building on each other’s strengths.

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CONTENTS

VOL. 02, NO. 11

INSIGHTS & OUTLOOK

SPECIAL FOCUS: RURAL SUPPLY CHAIN Rural Logistics

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Building On India’s Hinterland Capabilities

Overcoming Challenges Improving Rural India’s Economics

Rural SCM Models Augmenting The Rural India Connect

Marico Industries Using Technology As The Strategic Differentiator

LAVA Mapping The Rural Supply Chain

LG Investing In Rural India’s Viewing Needs

Hindustan Unilever (HUL) Opening Doors For Newer Opportunities

STRATEGY

3PL Services Offering Shippers Operational Value

Global Best Practices Ingredients For An Effective SCM Solution

3PLs Changing Roles Building On Expertise To Tackle SCM Challenges

Providing A Futuristic View Of Shipper-3PL Relationships

IN CONVERSATION WITH

Nike Logistics Riding Growth On A Carbon Management Strategy

Oil Field Warehouse & Services (OWS) Providing Innovative Solutions Through SEZ

Pradeep Kumar Nair, Director–Sales, Digi M2M Solutions India

Shielding Vehicles From Electrical Hazards

Latest Happenings In The World Of Logistics

ALSO IN THIS ISSUE 3 TECHNOLOGY & INNOVATIONS 5 Cutting-edge Solutions 10 16

EVENT REPORT Asia Manufacturing Supply Chain Summit: Moving Towards Responsive Supply Chains

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PRICE TRENDS

PRODUCT UPDATE

EVENT LIST

PRODUCT & ADVERTISERS’ INDEX

PRODUCT & ADVERTISERS’ INQUIRY FORM

NEWS ANALYSIS Rail Transportation: Bouncing Back On Track

TIPS & TRICKS 6 Ways To Dramatically Enhance SCM Results

NEWS, VIEWS & ANALYSIS

POLICIES & REGULATIONS

3PL Selection

GUEST EDITORIAL

AUTOMATION TRENDS

Regulating Business In Ports’ Interest?

FACILITY VISIT

Port Regulatory Authority Bill

‘Our Technology Should Become The Decision Support System For Manufacturers'

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CASE STUDY

Vehicle Power Management

Strategic Assessment

VIEWPOINT

FEBRUARY 2012

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LSPs CONTINUE TO INVEST IN CHINA GLOBAL logistics service providers (LSPs) are continuing to invest in China. The past couple of months have seen a particular burst of activity from the likes of Logwin and Kerry, Panalpina, Kuehne + Nagel and DB Schenker as they look to enhance their presence in the country. Of these, Kerry’s strategic development in China is of particular interest. Kerry is a Hong Kong-based company and has had a well established presence in China for some years. However, its latest project in Zhengzhou, Henan Province, illustrates how central and western China’s economy is developing. The 47,000 sqm logistics centre is being built in the newly opened ‘Singapore International Logistics Industrial Park’. According to Kerry’s Managing Director for Mainland China, “China’s coastal provinces have refocussed to attract manufacturers of higher value-added products. There

has been a migration of production to the central and western regions due to lower land and labour costs. We see the potential to transform Zhengzhou into one of China’s manufacturing and processing hubs.” Sited on the Yellow River, Zhengzhou is also at the cross point of two key east-west and north-south railway lines alongside road links and a large airport. This makes it attractive to manufacturers looking to exploit lower cost labour beyond China’s coastal cities, yet who need fast access to both global suppliers and markets. In particular, Foxconn is reported to be using Zhengzhou as both a production location and a logistics platform for the assembly of Apple products. In wider terms, Zhengzhou is looking to position itself as a centre for logistics businesses; in part by establishing a number of logistics parks around the city.

The approach of Panalpina is slightly different, with the forwarder’s new 10,000 sqm Tianjin consolidation centre located approximate to a large container port; complimenting its existing sea and air freight driven operations. Panalpina is looking to use such a facility to drive its ‘value-added services’ businesses. However, it is also acting as a platform for the automotive component business of Bosch in Northern China. Both examples illustrate how the operations of global (as opposed to local Chinese) LSPs are deepening their presence in the country. Although many forwarders, in particular, still rely on a sales-office presence to drive business, the time is approaching when these companies will need to develop a stronger on-theground presence in central China to be sure of gaining a sustainable foothold in the market.

SHOCKWATCH TEMPMARK 8 SELECTED MATERIAL HANDLING, STORAGE & LOGISTICS TOP PRODUCT SHOCKWATCH, a global leader in detecting and preventing damage to the logistics supply chain and storage of products, announced that its newest cold chain temperature monitor, the TempMark 8, has won the ‘Coup de Coeur, Produit Phare’ (Show Favourite) Award for Material Handling, Storage & Logistics at the 2011 Europack Conference. TempMark 8 is an innovative, costeffective and disposable monitor for temperature-sensitive shipments that bridges the cost gap between low

cost go/no-go indicators and more expensive temperature recorders. Jérôme Czap, GM, Tilt-Import, a leading distributor of ShockWatch products in Europe, nominated the TempMark 8 product and represented the company at an awards ceremony held. “Our European cold chain customers have been looking for a specific temperature monitoring device that could be used everywhere where a high-end recorder could not and yet be easy-to-use & field-activated,” said Czap, adding, “This product fits

that need. We are seeing an enormous demand for not just pharmaceutical products, but also for fresh & frozen foods, ink toner and paints.” Angela Kerr, Director – Product Management, ShockWatch, said, “It is truly an honour to be selected the winner of this award. The product has received an outstanding response ever since its inception, but this recognition by an esteemed group of industry experts confirms the innovative approach we have taken to deliver a product the industry needs.”

DAHEJ PORT COMMISSIONS SECOND JETTY ADANI Petronet (Dahej) Port, which operates Dahej Port in South Gujarat, recently announced the successful commissioning of the second jetty at the port. The company is a joint venture between Adani Ports & Special Economic Zone (APSEZ) and Petronet LNG. “This milestone of adding one more jetty at Dahej Port will provide access to the industries and welcome trade for their raw materials

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in central India and the industrialised south Gujarat region,” said Dr Malay Mahadevia, Wholetime Director, APSEZ. The commissioning of the jetty also marks the completion of the second phase of expansion at Dahej Port. The port has an annual cargo handling capacity of 20 million tonne. Dahej Port handles varied commodities such as coal, silica sand, rock phosphate, steel products and project cargo/

machinery items. The coal import terminal at Dahej is equipped with two jetties having a deep draft of 14 mt each, thus enabling berthing of large capsize vessels. Both the jetties are equipped with state-of-the-art Gottwald make Mobile Harbour cranes. Dahej Port has also been connected by railways, a move that will help reducing logistics costs for transporting coal to the region and the rest of India.

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PANALPINA ADDS ADDITIONAL INTRA ASIA LCL SERVICES PANALPINA has announced the launch of six new direct Less than Container Load (LCL) services through its in-house carrier, Pantainer Express Line. The new guaranteed weekly services all run out of Shanghai (China), separately connecting to Keelung (Taiwan), Manila (Philippines), Ho Chi Minh City (Vietnam), Bangkok (Thailand), Singapore and Jakarta (Indonesia). The new services meet the increased customer demand for reliable LCL solutions on the Intra Asia trade. The company said that the six new guaranteed weekly services have been launched to meet increased customer demand especially in the consumer, high-tech and telecom industry and

to strengthen Panalpina’s position in the LCL market on the Intra Asia trade. The services to Bangkok and Singapore have already existed, but have now been upgraded to 2-3 sailings per week, respectively. The new LCL services are part of Panalpina’s long-term strategy to grow business on key Asia trade lanes, especially on the Far East Westbound, Transpacific Eastbound, Intra Asia, Asia to Latin America and Asia to Middle East trade. “Intra Asia plays a pivotal role in our global LCL network and in the Group’s growth strategy. We are committed to deliver new solutions that meet our customers supply chain needs,” commented Frank Hercksen, Global Head – Ocean Freight, Panalpina.

WORLD BANK FORECASTS LESS PESSIMISTIC FOR GLOBAL LOGISTICS THE World Bank revised forecasts of global growth over the next 12 months. Its ‘Global Economic Prospects’ report voiced its opinion that “developing countries should prepare for further downside risks, as Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth prospects”. As a result, the World Bank has reduced its growth forecasts in the developed world from 2.7 per cent to 1.4 per cent in 2012. For developing economies, it has reduced its forecast from 6.2 per cent to 5.4 per cent. Even more importantly for the logistics market, world trade is projected to grow at 5.2 per cent in 2012 as compared with 6.6 per cent in 2011. Indeed, the World Bank is of the opinion that the trade had already begun to slow appreciably in the last quarter of 2011. While these forecast revisions are generally being regarded as a sign of worsening economic climate, a growth rate of 5.2 per cent suggests a continuation of the impressive levels of expansion seen over the past couple of years in global trade. Possibly, the World Bank’s tone of pessimism is driven by its belief that the underlying

‘trend’ growth rate of world trade is even higher. For example, in 2013, the World Bank estimates that growth will compensate for the revised 2012 forecast, seeing expansion at over 7 per cent per annum – a level which the Bank believes ought to be sustained for possibly another four years if the potential of global trade is to be fully achieved. The implication of these forecasts is that logistics businesses with substantial exposure to global trade routes are likely to do much better in the coming year than those who are domestically focussed. A further beneficial factor of lower growth prospects for global LSPs is its affect on the oil price. The International Energy Agency has said that in the last quarter of 2011, consumption fell for the first time since 2009. Growth in demand is generally moderating and despite the tensions over Iran, this may make the outlook for oil prices much softer. In contrast to the outlook for much of the rest of the economy, the prospect of a combination of lower oil prices and continuing growth in demand would suggest that the prospects of many logistics sub-sectors will still be promising in 2012.

L O G I S T I C S

DAMCO STRENGTHENS NORTH ASIA LEADERSHIP DAMCO has appointed two new senior executives to lead the company’s drive for strategic growth in the North Asia region. The company has appointed Henriette Hallberg Thygesen as the CEO of the North Asia Region and Richard Morgan as the Chief Commercial Officer for the region. Both appointments went into effect on January 2, 2012. Thygesen has been with the AP Moller-Maersk Group for 16 years, primarily working in the field of logistics and comes most recently from a role as global Chief Process Officer for Damco. Earlier in her career, she also worked in China both as Shanghai Branch Manager of then Maersk Logistics (now Damco) and later as Operations Manager for the Greater China Area. “North Asia is a key territory for Damco and I am pleased that Thygesen has agreed to take the position as CEO. It is a challenging task as our overall growth ambition is high, but I have no doubt that Thygesen is the right person for the task,” said Rolf Habben-Jansen, CEO, Damco. Reporting directly to the new CEO, Morgan will be responsible for the overall commercial and business development activities in the region. Morgan comes from the position of Chief Commercial Officer in the UK and Ireland and has had other senior supply chain management posts since joining AP Moller-Maersk Group in 2003. “It is a great opportunity to be part of a fast growing region which offers a full spectrum of logistics and supply chain services. I am looking forward to working with my colleagues in the region to further strengthen our commercial performance and drive additional value for our customers across all of our products,” said Morgan.

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NEWS, VIEWS & ANALYSIS L A T E S T

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SUPPLY CHAIN INTEGRITY: COMPANIES MUST LEARN FROM APPLE THE results of Apple’s recent supply chain audit revealed that only 38 per cent of the company’s suppliers adhered to its internal standard of a 60 hour, six day working week. According to Niranjan Nadkarni, CEO, TÜV SÜD South Asia, one of the world’s leading providers of testing, inspection and certification services, “The results of Apple’s supplier audit demonstrate the severity and prevalence of inhumane working conditions within global supply chains and the requirement for immediate action. But they also highlight the pervasive challenge of securing supply chain integrity in today’s global business environment. Unlike 15 years ago, for example, corporations now seek efficiencies not only through direct suppliers, but suppliers’ suppliers, and often, even further down the supply chain. Subsequently, supply chain management has become increasingly challenging. However, complexity is no excuse for negligence and ultimately, brands need to take more control. In this case, Apple has recognised this and is now taking appropriate action.

What’s important now, however, is that other companies learn from Apple’s experience and follow suit. The most effective way for a company to secure supply chain integrity is to ensure their entire supply chain adheres to a relevant and recognised international standard such as SA8000 – a voluntary certification governed by Social Accountability International (SAI). SA8000 certification is based on standards set by organisations such as the International Labour Organization (ILO) and addresses several social issues including child labour, forced labour, worker health & safety, discrimination, discipline, working hours and compensation on an on-going basis. The first step in this process is to conduct robust independent on-site audits to evaluate the factory’s compliance to the chosen standard, as Apple has just done. Necessary corrective actions as well as continuous improvements must then be identified and put into practice throughout the supply chain. Being ‘socially responsible’ is often a very complex challenge in several

developing economies where working at a young age may be essential for survival. The ‘young worker’ ethical dilemma has been debated vigorously among all stakeholders in the supply chain. Standards such as SA 8000 and BSCI have developed into effective tools to address these issues in a balanced and humane manner, thus allowing organisations to educate the young workers and reintegrate them into society. This approach may sound exhaustive and costly. However, compliance to a selected standard not only improves working conditions, but also makes business sense. Supply chain integrity offers a number of social, branding, productivity and risk management benefits. For example, it ensures workers’ health and safety, which helps boosts production efficiency, facilitates further penetration into international markets and protects brands against the often irreparable consequences of a scandal. It is also worth noting that demand for ethically produced products over the last five years has skyrocketed.”

TCIF RECEIVES MAHINDRA NAVISTAR TRANSPORT EXCELLENCE AWARD UNDER THE NGO CATEGORY TCI Foundation, the social arm of Transport Corporation of India, has added another feather to its cap by bagging the first-ever Mahindra Navistar Transport Excellence Award under the NGO category – ‘Accepting No Limits’, for Project Kavach, an endeavour to address the issue of HIV/ AIDS among truckers. Mahindra Navistar Transport Excellence Award is the first-ever initiative taken on such a grand scale to recognise and reward

outperformance, excellence, innovation and leadership in the Indian trucking industry. Receiving the award on behalf of TCI Foundation, Dr Indra Singh, Project Director, TCIF, said, “It is our constant endeavour to make life better for truckers who are the sector’s lifeline. Project Kavach, an initiative supported by Bill & Melinda Gates Foundation, aims to work for truckers who, owing to long absence from

home coupled with tough working conditions, are highly vulnerable to HIV/AIDS and STDs. The project was incepted in 2004 with presence in more than 35 locations across India. Project Kavach’s efforts have also been recognised by NACO, Ministry of Health and Family Welfare. In 2009, TCI Foundation was contracted as technical support group to NACO to upscale & oversee 100+ intervention of the national truckers programme.

SEAMLESS AUTOTECH ENTERS INTO TRAILER MANUFACTURING BIZ CAR carriers manufacturer Seamless Autotech has aggressively entered into the trailer manufacturing business. The company has launched a complete range of trailers from 20 ft to 40 ft, 2/3 axles, skeletal and flatbed trailers. “We have made trailers in the past before we began

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manufacturing car carriers and now, we have begun remanufacturing them. Our trailers are not like regular trailers. They are engineering examples of strength & perfection on wheels. When our customers will use it, they will realise the difference between our trailers and

the trailers manufactured by others,” said JS Ahluwalia, MD, Seamless Autotech, adding that the company will continue to launch & bring different types of commercial vehicle products in the coming years with best quality at reasonable prices.

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INDIA EQUITY PARTNERS ACQUIRES TNT EXPRESS’ DOMESTIC ROAD BUSINESS INDIA Equity Partners (IEP), a leading Mauritius-based, independent, control-oriented private equity firm, through its logistics subsidiary, has acquired the domestic road express business of TNT India (TNT). The sale, which came into effect on December 30, 2011, was sourced on a proprietary basis leveraging unique access through Abhik Mitra – IEP’s Platform CEO for the logistics sector – and IEP’s global relationships. This new entity will be led by Abhik Mitra, previously MD, TNT India. TNT’s domestic road express business is one of the top four competitors in the sector with an outstanding reputation for reliability, customer service and its service offerings. The business has a strong network, resulting in a well-known and diversified list of customers, which includes global players as well as large and medium-sized domestic companies. The addressable market that the acquired road express business serves is the fastest growing segment in the Indian logistics sector, which grew at over 20 per cent last year and was estimated to be Rs21 billion in 2010. The industry is highly consolidated with only four competitors comprising 50 per cent of the market due to the significant barriers to entry as a result of large investments required to build scale and the high fixed costs of running a scheduled network. Commenting on the acquisition, Sid Khanna, Chairman & MD, IEP Fund Advisors, said, “IEP is excited by this acquisition and it is consistent with our strategy of investing in logistics and

infrastructure services. In the logistics sector, we see tremendous growth opportunities for mid-sized companies with the required management and capital, to scale rapidly and become market leaders.” KK Iyer, MD, IEP Fund Advisors, who previously led Accenture’s logistics practice in India, said, “This investment is consistent with IEP’s differentiated investment strategy of control platform investments and portfolio value-add. IEP brings together outstanding management talent, the necessary financial capital, high-quality governance and best in class management processes to build platforms that acquire companies to drive growth and become market leaders. We see TNT’s domestic road express business as a first step in building our logistics platform and intend to pursue other exciting investment opportunities in this sector.” IEP is uniquely positioned to build and grow companies in the logistics sector due to its team’s strong operational experience in the sector and strong consulting and transformation experience, along with sector insight and exposure through its three existing portfolio companies across different segments of the logistics sector. These are Fourcee Infrastructure, a niche liquid logistics rail transportation company, which grew over 100 per cent over the previous fiscal year; Swastik Roadlines (Coldex); and Ocean Sparkle, one of India’s largest private harbour and seaport management services providers, which grew at 30 per cent over the previous fiscal year.

WEST BASIN TERMINAL HANDLES RECORD 67153 MT OF COAL IN LESS THAN 24 HOURS IN NOVEMBER ADANI Port and Special Economic Zone (APSEZ), India’s No1 private multi-port operator, said that its West Basin terminal at Mundra Port had handled a record of 67,153 metric tonne of steam coal per day. The West Basin terminal, Asia’s largest coal import

facility, turned around MV ApostolosPanamax Bulk Carrier in 23 hours, which is their best performance till date, as less than 24-hour berth days were enjoyed by container vessels only. It has a capacity of 1.6 MT per day, which is being expanded to 3.2 MT per day.

L O G I S T I C S

OWS ACQUIRES RAAMNS SHIPPING & LOGISTICS OIL Field Warehouse & Services (OWS) has acquired major stake in Raamns Shipping & Logistics (RSL) at undisclosed price. RSL is a Kakinada-based shipping and logistics company providing steamer agency services, C&F, logistics support & marine services. With this acquisition, OWS has extended its reach into the oil and gas activity centre at Kakinada, where it can serve its clients for extended services of rig clearance, OSV clearance, supply and services to marine sector, thereby supporting exploratory drilling in the east coast of India. M/s Raamns was promoted by a group of professionals, led by Murthy Adiraju who has 13 years of experience of working in various shipping and CHA companies, particularly in Vizag and Kakinada. The company was floated in 2009 and has been providing good support services to many oil & gas service companies as well as operators, directly or indirectly, like Reliance, ONGC, Cairn, GSPC, etc. With this acquisition, OWS Group will strengthen its activity and base in the east coast, particularly in Kakinada, Vizag & Chennai. “This acquisition will add value to the existing innovative and cost-effective services being provided by OWS. Now, OWS’ customers will have a wider bouquet of services through a single point of contact,” Vinay R Sharma, MD, OWS, elaborated. Oil & gas services have a niche market and specialised skills are required for providing effective services to clients. Adiraju said, “Being part of OWS, Raamns will have extended reach not only in India where OWS has their own offices, but also overseas like Dubai, Oman, Houston & Genoa (Italy).”

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NEWS, VIEWS & ANALYSIS L A T E S T

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DHL LAUNCHES LANDMARK GLOBAL CONNECTEDNESS INDEX 2011 DHL, the global logistics leader, released the first DHL Global Connectedness Index (GCI), a detailed country-by-country analysis of the flows that connect the world. The GCI ranks 125 countries and examines the depth and breadth of a country’s integration as manifested by its participation in international flows of products and services, capital, information and people. The study documents that global connectedness has enormous room to expand, even among the most connected countries and that continued economic integration could spur global

clearly indicates that the opportunity for future growth among countries that promote globalisation through public policy and business strategies is huge.” India has moved up significantly in its ranking from 110 in 2005 to 49 in 2010. “Further, emphasis on a more liberal investment regime and creating world-class infrastructure capacity will support India to rise higher in the international landscape,” added Subramanian. India’s increase in overall connectedness came entirely from outward connectedness and the largest

DHL strengthens presence in transport logistics business DHL announced an upgrade to its transport fleet by introducing state-of-the-art, new generation, 40 tonner Mahindra Navistar vehicles in India. “This deployment of new generation trucks is in line with our strategy to bolster substantial growth in India. With the introduction of these vehicles, we expect to bring in better operating efficiency, reduce downtime and focus on safe and secure delivery within agreed standard transit times,” said Vikas Anand, COO, DHL Supply Chain. DHL Supply Chain’s continued investment in a specialised transportation fleet aims to raise the bar for customers’ delivery performance, drivers’ operating standards and to introduce more efficiencies in the Indian transport industry as a whole. The new modernised fleet will help reduce carbon emissions and improve fuel efficiencies, an integral part of the Deutsche Post DHL Group’s global GoGreen Strategy, which has the goal of improving the company’s carbon efficiency worldwide by 30 per cent by 2021. Additionally, on long hauls, these vehicles are expected to increase capacity and reduce cost per unit, thereby allowing DHL to serve customers with sustainable solutions and improved resource efficiency. “These new generation trucks come with GPS, intensive driver training programmes, fleet management systems and a dedicated team to manage the transport fleet operations. We also have established centralised control towers to monitor the safe movement of trucks and customer shipments across India,” said Les Kawoh, Director – Transport, DHL Supply Chain. The first of these Build To Suit (BTS) warehouses, being constructed in accordance with DHL Supply Chain’s global quality standards, will be operational by the end of February 2012 in Bhiwandi, Mumbai. gross domestic product gains of five per cent or more. The overall GCI places equal weight on both depth and breadth. While India was a top scorer its breadth of coverage, ranking 12, in terms of depth the country is far less connected at 110. Overall, India ranks 49 in the study. India is also among the top 10 countries, which most increased its level of global connectedness between 2005 and 2010. RS Subramanian, India Country Manager, DHL Express India said, “The GCI study

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specific source was a surge in outward FDI, reflecting the much greater prevalence of Indian companies investing abroad relative to foreign companies investing in India, contributing to the weaker depth score. This trend of higher breadth than depth scores is prevalent for each of the BRIC countries. Overall, the top 10 most connected countries as per the 2011 GCI study are the Netherlands, Singapore, Ireland, Switzerland, Luxembourg, the UK, Sweden, Belgium, Hong Kong (China) and Malta.

L O G I S T I C S

EMBARQ-FEDEX COLLABORATES TO IMPROVE PUBLIC TRANSPORT IN MEXICO, BRAZIL AND INDIA A new collaboration to optimise city bus operations in Mexico, Brazil and India was announced recently by FedEx Corporation and EMBARQ, the World Resources Institute’s centre for sustainable transport. FedEx will provide EMBARQ $1.4 million over two years to provide technical expertise on sustainable transportation projects that improve quality of life in cities. This grant is a continuation of FedEx’s successful collaboration with EMBARQ’s Center for Sustainable Transport in Mexico (CTS-EMBARQ México), which began in February 2010 with a $5,00,000 grant to help Mexico City’s Metrobus optimise its vehicle operations. In India, EMBARQ and FedEx will increase the technical capacity of city transport agencies to organise their bus systems, advising on areas like vehicle maintenance, procurement and technology, as well as data collection and management. “We are excited to scale-up our work with EMBARQ so that we can have an impact not just in Mexico, but also in Brazil and India, two of the world’s fastest growing economies. We have a lot of expertise to share. FedEx moves packages and EMBARQ helps cities move people. As a company, FedEx sees the benefits that come from better route design and more efficient, cleaner fuels and vehicles. Now imagine if bus operators and passengers could also enjoy those same benefits? You would have faster commutes, safer streets, and cleaner air. That is what this collaboration is all about,” said Mitch Jackson, VP – Environmental Affairs & Sustainability, FedEx Corporation.

NEWS, VIEWS & ANALYSIS L A T E S T

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WFP AND LOGISTICS COMPANIES JOIN FORCES TO PREPARE COUNTRIES FOR DISASTER RESPONSE HUMANITARIAN organisations and the world’s leading logistics companies have teamed up to conduct the first in a series of assessments to help countries strengthen their ability to respond to emergencies. AP Moller-Maersk and UPS joined the Logistics Cluster, led by the UN World Food Programme (WFP), to undertake a logistics capacity assessment in Nigeria, which focussed on potential natural disasters and pandemics. Future assessments around the world will build on the results of this pilot project. The logistics capacity assessment examined standard logistics components such as roads, bridges, ports and airports, as well as issues such as milling capacity, quarantine procedures and telecoms infrastructure. The assessment also mapped out disaster contingency plans, including for the movement of goods & supplies into and throughout the country. The lessons learned from these scenarios could be life-saving in the case of a disaster or pandemic. The Logistics Cluster, comprised

of representatives from UN agencies and NGOs, acts as a coordination mechanism for the logistical response during emergencies. AP MollerMaersk and UPS, along with TNT Express and Agility, are members of the logistics emergency teams (LETs), a cross-company partnership that supports humanitarian relief efforts during natural disasters. “Preparation is key to a country’s ability to manage disasters of any kind. With the data from the assessments, emergency responders will be able to assess and manage better the flow of goods to those in need,” said Eduardo Martinez, chair, LET & Director – Philanthropy and Corporate Relations, UPS. “The LET companies are key players in the humanitarian community, as they can provide experienced local personnel in countries where WFP does not otherwise operate. This allows data collection and verification to take place more quickly and accurately,” said Pietro Terranera, Logistics Officer, WFP, who led the assessment in Nigeria.

INDIAN FLEETS HONOURED AT APOLLO AWARDS CEREMONY ON January 23, Apollo Tyres held its inaugural Apollo Fleet of the Year awards. With the awards, the tyre maker’s aim was to acknowledge the importance of safety, technology, sustainability and customer service initiatives to fleet operators in India. Taking away the large operator award was VRL Logistics, while Sangha Freight Carrier secured the honour in the medium operator category. The two top winners and other awardees were selected from more than 5,140 entries received from fleet operators across India. “These awards are Apollo’s recognition of the best practices that exist within the Indian commercial transportation segment. It is a much more progressive and modern sector of the economy than it gets recognition for. We have found that a vast majority of the operators conduct safety trainings for their drivers, fitters, mechanics and employees, resulting in lesser road accidents. The other surprising area was the high value put on GPS usage, technology deployment and fuel saving. I think we are literally witnessing a silent revolution in this segment, and fleet operators - large or small - should be lauded for it,” said Satish Sharma, Chief – India Operations, Apollo Tyres. “Seventy per cent of the goods transported in India are by road, making it the lifeline of the economy where millions of people and businesses rely on these fleets, and the quality of the nominations and the enthusiasm shown by the nominees show that the sector is truly in good hands,” Sharma added.

L O G I S T I C S

ARSHIYA INTERNATIONAL’S KHURJA FTWZ TO REVOLUTIONISE LOGISTICS IN NORTH INDIA ARSHIYA International announced the operational launch of its 135 acre FTWZ in Khurja, UP near the confluence of the planned eastern and western freight corridors. Arshiya’s FTWZ in the north will empower manufacturers to substantially bring down transactional cost and boost EXIM, facilitate imports through implementation of vendor managed inventory and encourage exports by enabling quality check and consolidation before organised shipment. Overall, FTWZ will substantially bring down EXIM cost through many fiscal, regulatory and operational benefits, thus providing flexibility towards end-distribution through duty deferment, higher inventory visibility, reduced buffer stocks and overall lower product costs. FTWZ in Khurja will enable Arshiya to offer a plethora of benefits to companies with EXIM movement between north-west such as cost effective bonded movement through Arshiya Rail, duty deferred storage of imports, immediate export benefits for companies in the north. Also proximity to planned eastern and western freight corridors will allow convenient access to ports through rail. Arshiya’s Domestic Distripark (DDP) spread over 130 acre, will provide an efficient hubbing zone in northern India for centralised warehousing, value optimisation, consolidation and movement through rail. Arshiya DDP is further benefited by the adjoining presence of the modern rail siding spread across 50 acre with six rail tracks and owned locomotives for consolidation and movement through Rail.

FEBRUARY 2012 • SMART LOGISTICS • 15

NEWS ANALYSIS RAIL TRANSPORTATION

congested; and improves air quality while conserving energy. We can also say that rail is a ‘green’ answer to congestion on Indian roads.

NEED FOR A DFC PROJECT

BOUNCING BACK

ON TRACK

Skyrocketing fuel prices, maintenance of vehicles and various other transport-related costs have led many companies to opt for rail as the mode of transportation. Owing to connectivity issues, road, over the last few years, was considered the most preferred transportation mode. But now, with the government keen on giving a boost to rail, the sector is all set to bounce back. NISHI RATH

RIDING the waves of economic success, Indian Railways has witnessed a dramatic turnaround and unprecedented financial turnover in the last two-and-a-half years. The factors that contributed to this included higher freight volumes without substantial investment in infrastructure, increased axle load, reduction in turnround time of rolling stock, reduced unit cost of transportation, rationalisation of tariffs resulting in improvement in market share and improved operational margins. Rail, as a mode of transportation, is considered to be very reliable and environment-friendly. Spread over 81,511 km and bringing around 6,896 stations under its purview, Indian Railways boasts of being the second largest rail network in the world. The freight segment accounts for around two thirds of Indian Railway’s revenue. Today, Railways accounts for 35 per cent of freight transportation. Within

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the entire transportation market of about $50.8 billion in India, road and rail together account for around 87 per cent. Of that, around 55 per cent of the total revenue earning freight traffic serviced by the Railways is along the Golden Quadrilateral, which connects Delhi, Mumbai, Chennai and Kolkata and four other major metropolises – a total route length of over 10,000 km. This route caters to the core economic sector, carrying raw materials and finished products, including for international trade.

ECO-FRIENDLY MODE OF TRANSPORT Rail generates only 28 g equivalent of carbon dioxide per tonne km as compared to 84 g for road. A moderate shift in freight from road to rail is estimated to save close to 0.7 per cent of the country’s total commercial energy consumption. In a nutshell, rail improves our environment by reducing carbon footprint; it makes roads less

The Indian Railways’ quadrilateral linking the four metropolitan cities of Delhi, Mumbai, Chennai and Howrah, commonly known as the Golden Quadrilateral; and its two diagonals, Delhi-Chennai and Mumbai-Howrah, adding up to a total route length of 10,122 km, carries more than 55 per cent of Indian Railways’ freight traffic revenue earnings. The existing trunk routes of Howrah-Delhi on the eastern corridor and Mumbai-Delhi on the western corridor are highly saturated with the line capacity utilisation varying between 115-150 per cent. The surging power needs requiring heavy coal movement, booming infrastructure construction and growing international trade has led to the conception of the dedicated freight corridors along the eastern and western routes.

GROWTH IN RAIL FREIGHT Over the last few years, rail freight traffic has grown by 7-11 per cent annually and Indian Railways is expected to carry over 1.5 billion tonne of freight traffic by the end of the 12th Plan. In the medium and long-haul segments, Railways have faced competition for manufactured goods with high valueto-weight ratios, unless reliable and efficient container services have been offered. The competition will increase once the National Highways project to six-lane the Golden Quadrilateral is completed over the next few years. But, as stated earlier, with more companies affected by the rise in fuel prices and many of them opting for the ‘green’ mode of transportation, Railways is set to witness a boom in the next couple of years. nisi.rath@infomedia18.in (With inputs from Dedicated Freight Corridor Corporation of India Ltd)

ASIA MANUFACTURING SUPPLY CHAIN SUMMIT EVENT REPORT

MOVING TOWARDS RESPONSIVE SUPPLY CHAINS With industry giants devising ways and means to achieve a ﬂexible & agile manufacturing strategy to satisfy the demands of the Indian masses, supply chain honchos are gearing up to adjust their strategies accordingly. To create a discussion platform for the industry giants on their manufacturing supply chain strategies, a two-day Asia Manufacturing Supply Chain Summit, with Smart Logistics as the media partner, was held in Mumbai on January 23 & 24, 2011. A report... SUMEDHA MAHOREY

supply chain. SK Krishnan, VP TODAY, supply chains are – Demand SCM, Automotive gearing up to absorb market Division, Mahindra & fluctuations and build on agility Mahindra India; Rajneesh, VP to remain flexible to respond – Supply Chain, Essar Steel to dynamic market patterns. Global; Anil Kumar Singh, VP In these circumstances, there is – SCM, Valvoline Cummins a growing need for a cultural and P Radhamanalan, transformation in supply chains Divisional Manager – New as well as in the manufacturing Projects, Titan Industries; process. To discuss effective deliberated on the topic under strategies to strike a balance Panelists discussing supply chain strategies to power growth through the moderation of Pranil between cost, quality and innovation and integration for manufacturing companies. Vadgama, President, CHEP delivery time lines, the first Asia sustainable competitive strengths and India. Speaking on the occasion, Manufacturing Supply Chain Summit drive business growth through outward Krishnan discussed strategic volume (AMSCS), with Smart Logistics as its management. planning and the long term plans for media partner, was held in Mumbai on Raychaudhuri, on the other hand, the supply chain. He also elaborated on January 23 & 24, 2012, by Kamikaze highlighted how the use of IT has serving market demands followed by B2B Media. The summit was attended played a crucial role in enhancing supply the MTO & MTA strategy. Rajneesh by 200+ senior professionals from the chain performance. He commented spoke about the reduction of futile SCM & manufacturing industry. on the supply chain problems faced communication between the sales and by manufacturing companies and PPC on capability & capacity, while SESSION BREAK-UP suggested that companies should Singh spoke about the need for supply On Day 1, Pradip Saha, Associate work on the due date performance chains to be responsive rather than Director & Head – Material & and establish availability as the prime only being efficient. Over the two days, Sourcing, Colgate Palmolive (India); measurement for the organisation while close to 45 speakers spoke on various Ramki Ramakrishnan, Director using inventory (Raw Material + Work topics & shared their experience – Demand Chain, SKF India; Arun In Progress + Finished Goods) as the & expertise. The panellists covered Raychaudhuri, Practice Partner secondary measurement. Summarising different subjects on manufacturing as – Business Transformation, Wipro the discussion, Sethi said that a supply well as supply chains like total quality Consulting Services; Rajesh Nigam, chain should be a discipline in itself and management, procurement/sourcing Chief Manager – S&D, Indian Oil should be aligned to the organisation strategies, achieving operational Corporation and Abhik Saha, Director rather than sales and marketing. He excellence, building agile supply chain – Supply Chain, Benetton India, also highlighted that supply chains with flexible manufacturing, supply under the moderation of Jasjit Sethi, need to be agile and ahead of the chain strategy to address distribution CEO, TCI Supply Chain Solutions, manufacturing process to bring about challenges in India, SCM: A necessity discussed issues related to alignment operational efficiencies. or differentiator? of manufacturing and supply chain performance. Saha spoke about the The summit also featured an importance of supplier relationship exhibition wherein logistics companies STRATEGIC TOOLS TO CREATE management. He also deliberated on RESPONSIVENESS showcased their services. The second capacity, cost, capability, complexity, edition of AMSCS would be held around The second panel discussion was sustainability as the major challenges the same time in January 2013. held on strategic tools & techniques to sourcing. He emphasised on the to drive responsiveness, innovation & fact that companies should build on visibility right across the end-to-end sumedha.mahorey@infomedia18.in

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TECHNOLOGY & INNOVATIONS CUTTING-EDGE SOLUTIONS

Powerful And Compact Area-imaging Scanner Offers Superior Performance compromising on the scanning performance. Designed for versatility, Vuquest 3310g can be quickly and easily installed in OEM kiosks or price checking systems. The device is also ideal for use in space constrained environments, including in law enforcement vehicles for ecitations, at airline gates for passenger boarding and in specialty retail stores for under-thecounter point-of-sale scanning. For enhanced product stability and a longer lifecycle, USP Vuquest 3310g is built around The device combines aggressive a custom sensor optimised scanning of virtually any barcode, even specifically for barcode on highly reﬂective surfaces such as reading. This custom sensor mobile phone screens, with a stylish delivers improved scanning design that blends seamlessly across a aggressiveness and supply variety of retail environments. chain stability, as the sensor is HONEYWELL recently announced the availability of Vuquest 3310g, a powerful area-imaging scanner housed in a sleek and compact shell. The next generation Vuquest 3310g is a direct replacement for Honeywell’s Vuquest 4980. It delivers exceptional barcode scanning and digital image capture, plus the integration of industry-leading Adaptus Imaging Technology 6.0. The newly improved Vuquest 3310g also incorporates reduced illumination that minimises the annoyance often associated with the illumination used in area-imaging scanners, without

manufactured specifically for Honeywell scanning products. In addition, Honeywell’s Remote MasterMind for Scanning software option allows enterprises to update and manage Vuquest 3310g devices deployed across a network from one centralised location, resulting in improved efficiency and lower device management & support costs. Shailesh Deshmukh, Country Manager, Honeywell Scanning & Mobility, explained, “I am confident that Vuquest 3310g continues to arm the enterprise with a compact and flexible scanning solution paired with industry-leading Adaptus 6.0 Imaging Technology. With its ability to merge innovative scanning technologies into one versatile device, Vuquest 3310g showcases Honeywell’s position as a global leader in imaging.”

Cloud In Logistics & Shipping Gains Momentum TAKING cue from the growing customers’ requirement for flexibility in the way they have access to their offerings, Four Soft (4S), a global leader offering software solutions for the logistics and transportation industry, has recently announced an increased thrust on cloud offerings. Four Soft’s LogiSaaS cloud application delivers comprehensive functionality combined with flexibility, ease of implementation, competitive edge and seamless integration over the Internet, thereby eliminating the need to install and run the application on the customers’ systems, thus, in turn, simplifying maintenance and support. Biju Nair, COO, Four Soft, said, “At this juncture, the global logistics and SCM market is in need of specialised software that focusses on continued technology advancement and evolving user expectations. Keeping this vision and by leveraging our deep domain resources and expertise, we have developed innovative suite of

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solutions on cloud that offers USP rapid business transformation, 4S LogiSaaS is a powerful, dynamic, flexibility, uses common scalable & flexible shipper and logistics platform for interoperability service providing tool for enhancing across industries and helps operational efficiency and profitability, realise the full potential of through effective management of cloud computing. information flows across all aspects of Krishnan Venkatram, Global the supply chain relevant to them. Head – Marketing, Four Soft, said, “As we continuously strive Four Soft, said, “As a front end contact to be at the forefront to tap the growing with our existing as well as prospect demand for cloud in the market space customers, I have been receiving inputs we operate in, the need for developing on ways of addressing the problems innovative solutions is one the most that SMEs face today. After reviewing important criteria that we have set at the overall scenario, we decided that we Four Soft. We began working on this would offer full fledged solutions on event considering the nature of the cloud, which not only addressed various current market scenario and increasing aspects related to capital expenditure, demand for cloud computing and chose but also provided enhanced operational Mumbai as the best fit as we felt it efficiency, flexibility, competitiveness would provide us with an opportunity and effective management of information to understand the adoption of cloud flow across customers, their associates among prominent market players that and others that are involved in their day are spread across the region.” to day business operations.” MV BalaKrishna, Head – Asia,

Experience A Quantum Leap In Barcode Reading Performance 300, set up and deployment is even easier than before, with modular, controllable lighting options and a unique intelligent tuning system. “It just reads. DataMan 300 can read any code we challenge it with. Besides unprecedented read rates, the DataMan 300 reader is easiest to install and maintain, thereby saving our customers’ time and money,” said Carl Gerst, VP & Manager – Business Unit, ID Products. Strong-performing code-reading algorithms have been advanced, taking a quantum leap beyond the current best in class technology. 1DMax+, with patent-pending Hotbars technology, is a breakthrough in image-based barcode reading. Invented by USP Cognex’s 31-year veteran Bill The DataMan 300 series offers the Silver, Hotbars uses texture flexibility of integrated and controllable to locate barcodes at any modular lighting and optics. The user orientation, and then extracts can purchase just one model and high-resolution 1D signals choose the appropriate lens for their for decoding. With a solid required working distance and field of mathematical foundation and view. The controllable, field-changeable meticulous assembly language lighting modules allow the user to programming, Hotbars create the best possible lighting for combines superior signal fidelity their part, ensuring optimal read rates. with lightning speed, thereby COGNEX Corporation recently announced the DataMan 300 – its most advanced fixed-mount industrial ID reader. DataMan 300 is designed to handle the most difficult ID code-reading applications on even the highest speed lines. These new readers dramatically increase barcode read rates and speed with a new 1DMax+ algorithm, which incorporates groundbreaking new ‘Hotbars’ technology. For 2D matrix and difficult-to-read Direct Part Mark (DPM) codes, reading performance has also been significantly improved from a major upgrade of 2DMax to the 2DMax+ algorithm. With DataMan

giving the next generation of Cognex DataMan readers unprecedented performance. The 2DMax+ algorithm is also an upgrade from the existing 2DMax technology, thus offering tremendous enhancements in handling damaged codes at high line rates and poorly marked or extremely damaged codes. Both algorithms allow for the highest read rates possible. Because 2D DPM code reading is difficult due to the normal manufacturing processes that parts undergo, DataMan 300 adds a new tuning feature to help form the best possible image of each part. This intelligent tuning technology automates the settings of the integrated lighting to find the optimal light setup for the part making DataMan 300 the most advanced DPM reader.

Unified Communication To Simplify Logistics booming shipping and logistics industry LOGISTICS companies in India are in India. The new range of ICT solutions presently in the early stages of adoption offered to the logistics industry will help of Information and Communications simplify the complexities of logistics Technology (ICT) solutions. Actis operations, which include warehousing Technologies sees the clear early mover and distribution management. advantage in this sunrise industry. The Apart from video conferencing, steady transition in the logistics industry towards the organised sector – currently 85 per cent of the logistics USP space is with the unorganised sector Unified Communications enables – offers huge potential for ICT seamless flow of communication with solutions. ICT will also play a major all forms of communication modes like role in reducing logistics overspend, telephony, chats, video conferencing which is bleeding the economy to and mobile phones under a single the tune of $65 billion annually. interface. Unified Communication Keeping this in mind, Actis Solutions uses the power of software to Technologies, pioneers in designing streamline communications between and building communication & people and organisations, regardless of collaboration solutions, has launched medium, platform, device or location. ICT solutions catering to the

telepresence and mobile video conferencing, Actis will also be providing Unified Communications to the logistics community. Abhimanyu Gupta, Director, Actis Technologies, said, “Undoubtedly, ICT is playing a critical enabling role in logistics. It offers a whole new range of opportunities to build on existing customer relationships and to gain insights into their needs that help build a more profitably longterm relationship.” The new set of technologies address firms’ needs to be able to manage information flows effectively and to integrate several logistics activities. Collated by Prerna Sharma prerna.sharma@infomedia18.in

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PRICE TRENDS ROAD FREIGHT INDEX CHART FOR JANUARY 2012 IRFI TREND FOR JANUARY 2012 The RFI stood at 175 points for the month of January 2012, which is the same in comparison to the corresponding period last year.

ZONAL FREIGHT TRENDS The overall freight rates have decreased slightly by 1.99% as compared to the previous month. The freight rate from Delhi has registered the highest decrease of 4.13% as compared to the last month due to over capacity of vehicle for all routes.

TRENDS FOR DECEMBER (Y-o-Y)

175 169

171

175

171

COMMERCIAL VEHICLES DOMESTIC SALES: The overall commercial vehicles (CV) segment registered a 2007-08 2008-09 2009-10 2010-11 growth of 19.28% during Index trend for ﬁve years April-December 2011 as compared to the corresponding period last year. While medium & heavy commercial vehicles (M&HCVs) registered a growth of 9.34%, light commercial vehicles grew at 27.97%. However, in the month of December 2011 over December 2010, growth in the sales of the overall CV segment was 14.50%.

2011-12

FORECAST FOR FEBRUARY 2012: The RFI in January 2011 over January 2010 had registered an increase of 4 points. The freight rates will remain strong in the months of January-March 2012.

Indian Road Freight Index (IRFI), a service introduced by Transport Corporation of India (TCI), is an index of weighted average lorry freight rates across various routes, calculated based on the route density and the dynamic freight rates of routes across the country. Knowledge Partner: Transport Corporation of India (TCI); website: www.tcil.com; e-mail: irfi@tcil.com

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STRATEGIC ASSESSMENT STRATEGY

Providing a

FUTURISTIC View Of Relationships In supply chain, change is the only constant. Overall rise in outsourcing of logistics, followed by the growing use of supply chain control towers – both indicators of the increasingly complexity of managing today’s supply chains – are some of the trends constantly changing global dynamics. This strategic assessment examines several such trends spurring more change and innovation in the supply chain world. STATIC: It is one word you do not hear in supply chain circles very often, and for a good reason. Logistics is synonymous with movement, both in goods and information, and in the design and evolution of supply chains that make that movement possible. Constantly changing economic and political dynamics necessitate continual reevaluation of supply chain decisions. The job is never dull and challenges supply chain professionals to think creatively & strategically.

GLOBAL TRENDS IN OUTSOURCINGINSOURCING OF LOGISTICS SERVICES Outsourcing of logistics activities is on the rise, according to 2012 16th Annual Third-Party Logistics Study findings. Nearly two-thirds (64 per cent) of shippers report an increase in their use of outsourced logistics services, and

76 per cent of 3PL respondents agree that this is what they are seeing from their customers. At the same time, 24 per cent of shippers are returning to insourcing some of their logistics activities – a trend confirmed by 37 per cent of 3PLs. So overall, there is a greater momentum for shippers to outsource logistics activities and processes than to insource them. Is there a tipping point? The point at which outsourcing reaches saturation? Possibly there is, but it has not yet occurred. Shippers in Asia-Pacific (76 per cent) and Latin America (73 per cent) are leading the way, with shippers in these regions much more likely to increase their use of outsourcing than those in North America (58 per cent) and Europe (57 per cent). This suggests that shippers in developing regions of

the world have a greater inclination to increase their use of outsourcing than those in the more developed economies in North America and Europe. One possible reason is that 3PLs’ functionality has developed to the point that the 3PL sector is considered a useful alternative for companies in regions that are trying to build out logistics capabilities and infrastructure to support supply chain activities. Or, it may be that shipper decisionmakers in more mature markets have become more defensive when making outsourcing-insourcing decisions, opting at times for an insourcing strategy they consider to be less risky. This rationale may also help to explain why many shippers appear to be risk-averse, and generally not very adventuresome, when making decisions as to what activities and processes they

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Strategic assessment, continued

are willing to entrust to 3PLs. Given all that, it might be surprising to hear that shippers in Asia-Pacific and Latin America also report they are returning to insourcing some of their logistics activities to a greater extent than their counterparts in North America and Europe. While this could be viewed as contradictory to the findings above, it also could suggest that shippers in these regions are more likely to make changes to their outsourcing-insourcing strategies than shippers in the generally more developed regions. Overall, these results support the assertion that the markets for outsourced logistics services in AsiaPacific and Latin America can be very attractive, and are clearly targets

A well-designed supply chain control tower enables a company to measure and control the effectiveness of the supply chain in terms of agility, resilience, reliability and responsiveness. This delivers beneﬁts across inbound and outbound logistics processes as well as operational beneﬁts. for globally focussed 3PL operations. Considering the increasing complexity of supply chains and the growing challenges of managing global business activity, there is a strong argument that shippers should be looking carefully at bolstering logistics capabilities with services and processes available from 3PLs & 4PLs.

CREATING SUPPLY CHAIN CONTROL TOWERS SCM is becoming ever more complex. Globalisation trends such as offshoring, nearshoring and outsourcing of manufacturing & logistics, together with increasing customer demands and competitive pressures, have made visibility even more critical for effective decision making within and across

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organisations. A growing number of companies are addressing this need via supply chain control towers. A supply chain control tower is a central hub with the required technology, organisation and processes to capture and use supply chain data to provide enhanced visibility for short- and long-term decision making that is well-aligned with strategic objectives. Once this is in place, every product ordered; every shipment shipped; every document created; every cost accrued; and every event generated in the flow of product from order to final delivery is captured, organised and stored in the tower. A well-designed supply chain control tower enables a company to measure and control the effectiveness of the supply chain in terms of agility, resilience, reliability and responsiveness. This delivers benefits across inbound and outbound logistics processes as well as operational benefits. For example, a pharmaceutical manufacturer used its supply chain control tower to realise increases in transit time consistency, efficiency in handling of insurance claims, customer service levels and increased focus on critical service issues while reducing safety stock. Such results do not come without challenges. One common mistake in implementing is underestimating the amount of IT collaboration needed with trading partners to obtain the messaging and data. Companies also tend to want to track the movement of goods at a level that is challenging in terms of granularity, resulting in excess cost and over-saturation of information. Inadequate transportation management, such as mismanaged spend and use of non-integrated carriers, means that those shipments will not be tracked effectively. Apart from the need for careful and capable planning and implementation of the control tower concept, this trend should be viewed as a giant step forward in terms of better understanding and managing overall supply chain activities

and processes. Correspondingly, it is natural that the development of these capabilities will be accompanied by the further emergence of logistics providers who establish a core competency in assisting shipper-customers with refining and implementing capable supply chain control towers. Some 4PLs are already offering such services. Although this concept may seem to be more applicable to shippers having complex global supply chains, steps in this direction can help enhance the efficiency, effectiveness and professionalism of the supply chains of firms of all types.

RECONSIDERING EMERGING NEARSHORE MARKETS The term emerging markets often brings a list of countries to mind – Russia, India, China and so on. But what if those emerging countries are not in proximity to the markets where a company intends to sell its goods? As companies begin to reconsider the long and thin supply chains that have chased the lowest prices for key input factors, many are taking a second look at emerging or somewhat-moredeveloped countries near their target markets whose proximity makes up for somewhat higher factor costs. When it comes to production outsourcing, the right decisions are growing less and less clear. As the cost differential for factors such as component price and transportation costs narrows among production locations, metrics such as total landed cost become critical information necessary to fuel decision making, alongside factors such as market pressures for agility, speed and increased capability. Another key decision point is the value 3PLs can offer in enabling production in near or offshore markets.

LEVERAGING SOCIAL MEDIA Social media are weaving themselves into our personal and professional lives. Among the benefits of social media such as LinkedIn and Facebook

are a high scalability and ease of use combined with a low level of investment. It allows more self-reliance while providing greater visibility and more real-time information. Social media has already found an important role in many businesses. A survey by Econsultancy and Adobe found that 31 per cent of European businesses believe social media marketing is a highly significant trend for them; 53 per cent rated it as quite significant. According to Gartner, by 2012, spending on social software to support sales, marketing and customer service processes will exceed $1 billion worldwide. Popular business functions include marketing and advertising (i.e., crowdsourcing), speed to customer feedback (real-time insight) and recruiting. These concepts can easily be adopted by supply chain managers. For example, crowdsourcing – leveraging the mass collaboration enabled by Web 2.0 technologies – can drive

forecasting by amassing insights into purchase intent or price elasticity. Transportation carriers could tap social media for real-time insight into traffic issues. Social media is already serving as a rich venue to locate new talent with the right skills for a particular position, or generate interest in supply chain internship programme. But those are not the only possibilities. Other potential uses of social media include: • Collaboration to solve problems, innovate solutions and set benchmarks • Industry-focus groups • Procurement and sourcing • Personalised product offers from social media sites linked to an order entry page • Background checks • On-demand training. Of course, logistics will be heading up a steep learning curve alongside other industries, working out the best

ways to leverage social media’s power. Companies will need to develop rules, formats, policies, training programmes, case studies and proof of concept cases and must learn to manage user experimentation & expectations. Issues of concern likely to emerge include liability, inter-generational conflict, pockets of non-users, emerging hacker risks and a tendency to overweight the value of chatter compared with other sources of information. “Rate negotiations and contracts are currently being freely discussed on blogs,” noted eyefortransport participant Peter Starvaski, Director – Product Management, Kewill, calling attention to one of the trends occurring in social media. Such struggles are inevitable with any new paradigm. This article is an excerpt from the whitepaper ‘2012 Third-Party Logistics Study – The State of Logistics Outsourcing’ Results and Findings of the 16th Annual Study.

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IN CONVERSATION WITH PRADEEP KUMAR NAIR

Our TECHNOLOGY should become the

DECISION SUPPORT SYSTEM for MANUFACTURERS “I think it is very important for people not to merely look at cost when it comes to new technology adoption,” avers Pradeep Kumar Nair, Director–Sales, Digi M2M Solutions India, during a brief interaction with Sumedha Mahorey. Excerpts…

Digi International is a 25-year-old US company and a global leader in the field of wireless technology. It has been consistently demonstrating innovation in the field of technological development. The company’s services range through different sectors providing products & solutions that work by connecting and securely managing local or remote electronic devices over a network, or via the web. Digi focusses particularly on developing leading edge machine to machine (M2M) technology, which can be used to automate and enhance industry processes, thereby enabling greater operational efficiency and cost savings. In short, we connect devices to networks. Our India operations started after the acquisition of a company called MobiApp about three years back. MobiApp was one of the pioneers in providing vehicle tracking solutions using GPS in India. They have been in this field for almost a decade now and have been selling these solutions not only in India, but in many parts of South East Asia, Middle East and Africa. As far as our present focus in the Indian market is concerned, we are targeting those manufacturing industries where the number of shipments from the plant is very large. For example, a steel company has a shipment of almost 100-150 truck loads everyday.

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Image By Sumedha Mahorey

YOUR SOLUTION OFFERINGS...

LATEST TECHNOLOGY PORTFOLIO Digi’s products are manufactured mostly in Thailand and the US. We sell these products in India through a network of distributors and also to direct customers. The whole purpose is to connect a remote device through wireless technologies, cellular, zigby and low power RF radios. One of our products is Digi m-Trak, which is a web-based vehicle tracking system that is available in India and certain parts of South East Asia, the Middle East and Africa. It is a mobile asset tracking solution that uses GPS to track a vehicle in real time, thereby providing essential information including location, distance travelled and speed. Through a wireless, web-based application combined with GPS, fleet companies are provided with a consistent and effective system for track assets in transit, anywhere and at any time. The information provided through Digi m-Trak is dynamically updated and can be accessed upon demand. Through the use of an invehicle transceiver, essential information is fed back to the Digi m-Trak web application and stored in a database. The data is sent over a GSM or GPRS wireless network and can be used by fleet managers for a range of functions and tasks, including improving driver safety, route management & fuel monitoring and assessing the overall productivity of the fleet. If there is no wireless network available at a given time, the information provided by mTrak can be stored until a connection is made. The Digi m-Trak is a userfriendly, complete fleet management system that provides asset location, mapping, messaging & alerts and also offers reporting & replay functions. This application can be accessed for replay at any time and Management Information Service (MIS) reports can be generated for analysis of data around fleet performance by vehicle, driver, route, etc. The insight into specific areas of the fleet performance, provided by the m-Trak technology, means managers are better equipped

to minimise delays, protect assets and enhance customer service.

TECHNOLOGY ADOPTION IN INDIA In India, the transportation sector is highly fragmented. If we look at manufacturing, almost 85 per cent of the movement of manufactured goods from plants to warehouses and other distribution nodes is done by hired vehicles sourced through third-party contractors. Presently, in the Indian market, technology is used to make our plant perfect, but a key segment of the supply chain, i.e., transportation has not adopted technology so far. There exists zero visibility after the goods are loaded from the factory and dispatched to its destination. The manufacturing company does not have control over this fact, neither does it have visibility, and this is the biggest challenge in the Indian market. So, how do we technologically empower the transportation segment to deliver information to the manufacturers regarding their finished goods? With the use of technology, how do we improve efficiency as well as productivity? The answer lies in GPS – a technology, which has been around for nearly a decade in India, but has not yet achieved the kind of penetration required primarily because of the very fragmented nature of the industry. Track and trace technology has been present in the market for quite some time. The first phase of this technology was when the industry said that they have had it for about five years. The second phase encompassed the functioning of the technology. In the third phase, the industry has started talking about the technology and its workability in the Indian market. They are also increasingly using this technology to leverage on the benefits. It is not enough to have a GPS-based track and trace system, the information, which comes in should be effectively used to make the supply chain more efficient. From this point of view, when we looked at the products

UP,

CLOSE &

PERSONAL What motivates you? I have been working in the vehicle tracking domain for quite some time now. When I joined Digi International, I realised that I had come to a company which not only has the foresight to see that this is a long race, but also had the vision and the patience to make long-term investments in this particular market and industry. The company’s belief that this industry has a bright future ahead, is what keeps me motivated going forward. Five years down the line… I am looking at this industry which is tagged non-technological. In whatever small way I can, I would like to contribute to make it more technologically able. I would like vehicles to be smart vehicles. Message to competitors The prime message that I would like to give is that there is enough room in this market for all, and all of us together should make sure that the education of the industry happens. Reducing productivity losses should be our prime focus. that we wanted to release in India, we were keen to bring in products that are tailor made to meet the needs of the manufacturing industry. But what could these products be? The Indian manufacturing industry uses third-party vehicles, and so, we thought about products that could work on a trip basis. Thus, we have come out with a battery-powered device. The idea behind this product is that it can be fit on the vehicle and can be removed at the destination and reused for the next trip. This also gives that particular consignment visibility.

FEBRUARY 2012 • SMART LOGISTICS • 25

Pradeep Kumar Nair, continued

Another benefit is that the company does not need to invest in capital expenditure of owning those devices. Instead, we manage it for them and charge only for the service to deliver.

TRAINING AT THE OPERATIONAL LEVEL We believe that the onus of training lies with us. At the CEO level, everybody understands the importance of technology, but as we go down to the operational level, some amount of hand holding is important initially, especially when using this type of technology for transportation activity. We also hold reviews and refresher courses to make sure that, at the operational level, the technology has been completely adopted.

TECHNOLOGY INVESTMENT I think it is very important for people not to merely look at cost when it comes to new technology adoption. The simple mandate of reducing cost is not going to work in the long run. A cost-benefit analysis needs to be done for the supply chain. If a company is paying for something, it needs to focus on aspects like what kind of benefit it is getting and how it is leveraging on these benefits to ensure a sustained increase in its bottom line.

INDIAN MARKET & ENTRY BARRIERS One of the biggest entry barriers in the Indian market is the nature of the transportation industry. There is resistance to change and implementing any new technology happens only when the person who is implementing it sees some real tangible benefits arising from it. In the kind of business that we are into, the corporate tends to see the benefit first, while the transporter sees it later on. Another barrier is the adoption of this technology by transporters. From their point of view, cost becomes very important. In today’s world, a cheap device becomes something to look forward to. We have a got number of instances where people have imported a number of devices from China, at a cheap rate, tried, failed and again come back to look at companies which provides more durable solutions. Also, unless the benefits come in, this just becomes a conceptual exercise. If the technology is termed as an additional advantage, lesser priority is given to it. Having it thus is not enough. Using the technology, leveraging on it and getting the benefit out of it, is actually an entry barrier. Thus, our role is to make sure that people are educated about it. Our technology should become the decision support system for manufacturers.

COMPETITION AND YOU What we provide is not just the technology, but the complete end-to-end application. At the same time, there are a number of system integrators in the market and large IT companies like Wipro and Infosys, which provide a whole suite of solutions to manufacturing companies. Our product is a small part of that technology. The information about location of the vehicle can become a plug in the total system. We are open to even do business in this way, as we have a wide range of products, which provide the full end-to-end application and solutions where we have the hardware to meet the specific needs of a customer.

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DEMAND TRENDS IN LOGISTICS Our product is based on derived demand. Simply stated, the number of vehicles plying on the road decides the demand for this kind of technology. In India, the commercial vehicles population as per the RTS statistics is about 4.5-5 million. So, logically speaking, all those 5 million vehicles should be our target market. But, of course, this cannot be covered as we have short haul vehicles – some of which are operating in different sectors. Primarily speaking, we are looking at long distance movements as being the first target market, which can benefit from this technology. Since the manufacturing segment is one such

market where road is the preferred mode of transportation, we have identified and targeted this segment.

TECHNOLOGY FOR RURAL MARKET In any industry, most companies tend to first penetrate into the urban markets and then move into the rural markets. So is the case with us. In fact, our first priority was to be able to achieve the same. In the present situation, we have managed sufficient penetration into the main market. And with the government taking major initiatives to develop special industrial zones in rural areas, we too are focussing in those areas.

MANUFACTURING CAPACITY OF DIGI Digi is one company which does everything. We do not buy out devices, but instead design them at our Bangalore headquarters. We also have a complete R&D Division there. Our devices are designed in-house and manufactured in Indonesia at present. From India, we service markets in India, South East Asia, the Middle East and Africa.

KEY ATTRACTION TO ENTER INDIA China and India are the two countries, which have been labelled as the fastest growing economies. China is ahead, but for Digi, India has been chosen as the primary market. We have identified India, China and Brazil as the three focus markets as we feel that the potential to grow here is immense.

TECHNOLOGY-ENABLED SERVICES I think it will take a long time in the Indian logistics and supply chain arena because of the industry’s fragmented, labour intensive nature and the status of the people who matter (like drivers, etc.). I think technology will be adopted, but the speed will be slower because there will always be a human element that will be required to handhold and bring this industry up to the level where it can use technology to actually improve productivity. sumedha.mahorey@infomedia18.in

RURAL LOGISTICS SPECIAL FOCUS

Building On India’s

Hinterland Capabilities India is readying for an even more impressive era of economic growth and the country’s rural markets are becoming a powerful economic engine. India’s rural markets offer unprecedented opportunities for global and local companies to experiment with approaches and business models. Chronicling the business sector’s growing conﬁdence in India’s rural markets...

INDIA’S rural markets present opportunities that companies seeking to become high-performance businesses cannot afford to ignore. But the size and scale of those markets have been offset by concerns about the profitability of these markets and the durability of rural demand. Although, there is abundant evidence to indicate that businesses are now seeing more promise in India’s hinterland. There are several strong regional and macroeconomic reasons for greater confidence. And, there is a growing body of statistics to demonstrate that rural markets, fuelled in part by rising purchasing power, hold real prospects for profitable growth across a wide range of industry sectors.

DISTINCTIVE CAPABILITIES A growing number of companies, large and small, are steadily transforming their rural operations into viable profit centres. They have been successful in selling to unsophisticated buyers in geographically dispersed locations

using appropriate ‘reach strategies’. Essentially, the rural market leaders have mastered product development and pricing, arrived at an optimal channel mix and set up local partner networks that work well and generate revenue. They have been able to accelerate the adoption of their products and ensure consistent availability by investing in comprehensive market development and by making their supply chains as efficient as possible. Moreover, they have effectively utilised technology and social networks to achieve the scale necessary to reach diverse consumer segments across rural India. And, in some cases, they are taking lessons learned in India and applying the same successfully in other emerging markets. To unlock long-term value from rural markets and become a high performance business, a framework was proposed. The framework is headed by a market focus and position involving the selection of rural markets – a combination of products and geographies, which can

best generate long-term value for the company. This decision to invest in rural markets is intrinsic to the core strategy of a company and is best guided by the company’s long-term vision and strategic fit. At the base of the framework are the organisational imperatives that sustain high performance over the long term. And, at the core of the framework is a set of three distinctive capabilities – the capabilities that customers value highly and which competitors cannot easily copy. The leaders’ ability to create markets is foremost; it involves highly effective market analysis, leading to product localisation and innovation. Their ability to set up and extract value from supply chains enables them to adapt to the varied and volatile demands of rural markets. And, their understanding & mastery of the enablers of supply chain efficiency is their third key capability. All three distinctive capabilities are underpinned by the need for organisations to become part of the social fabric of the

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Rural logistics, continued

communities in which they work and to build social networks using local participation. A closer look at the three distinctive capabilities…

LEADING COMPANIES EFFECTIVELY CREATE, SHAPE AND DEVELOP MARKETS

Creation and development of markets in the hinterland involves building consumer understanding, product customisation, relevant pricing, value engineering and innovative modes of advertising & promotion – all designed to increase consumption and open up new markets. In this scenario, the following activities stand out: Creating new categories

Businesses may need to develop new products tailored to the unique needs and circumstances of rural consumers. An example: BP Energy India saw an opportunity to offer a cleaner fuel alternative for the traditional charcoal- and wood-fired stoves used in the countryside, a move that the company believed could convert 3.6 billion potential consumers to more environment-friendly energy solutions. Customising products Rural consumers typically define value in terms of the functional focus of a product or service – its durability, affordability and fit for multiple uses. Nokia translated this perspective into customised mobile phones for the rural

Reasons for greater business confidence in rural India • Rural spending is now less dependent on farm income, which now constitutes less than 50 per cent of the total rural income. Income remittances from migrant rural populations and increases in non-farm activities, such as trading and agroprocessing, are boosting non-farm income. • The increase in procurement prices (the minimum price that farmers earn on produce sold to the government) is putting more money into the hands of the rural population. A series of good harvests, on the back of several good monsoons from 2005 to 2008, has accelerated rural employment in agricultural and allied activities. • The government has increased spending in rural areas, from US$9 billion for the financial year ending March 2007 to an anticipated US$16 billion for the financial year ending March 2010. Improved access to finance and institutional credit has brought greater cash inflows to rural households. Institutional credit to the agriculture and allied sectors increased from `695.6 billion (US$14.5 billion) in 2002-03 to `2.6 trillion (US$55 billion) in 2008-09. • Policy measures such as the US$13.9-billion waiver of agricultural loans and the National Rural Employment Guarantee Scheme (NREGS), which guarantees 100 days of employment to one member of every rural household, have helped reduce rural under-employment and raised wages. The official minimum average per-day wage paid under NREGS has increased from `65 in 2006-07 to `84 in 2008-09.

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market. Sold as a part of the ‘bundled offers’, the phones are priced at less than `2,000 and are feature rich, with multilingual keypads, a built-in flashlight and FM radio. Setting the right price points The rural market leaders usually address their customers’ price perceptions in two ways: by offering low-priced products in the first place, with a range of even cheaper variants; and by selling products as discrete units rather than in multiunit packs. Many FMCG companies, selling products ranging from biscuits to shampoos, have introduced smaller pack sizes to increase category penetration. Generating awareness through media Since rural consumers typically lack the product awareness of their urban counterparts, consumer education and generation of interest are mandatory first steps for market creation. Nonconventional and interactive media such as puppet shows, and live demonstrations in haats and rural fairs have proven effective. Capturing & analysing data Detailed information on the rural consumer continues to be elusive because of the dearth of mechanisms for capturing and analysing data. Organised retail units provide such mechanisms, but they do not operate in out-of-the-way communities. But now, small focussed initiatives, such as using consumer feedback as an input for crucial marketing factors such as product design, price points and positioning in the right distribution channels, are underway.

MARKET LEADERS ADAPT AND OPTIMISE THEIR SUPPLY CHAINS

Given the nascent character of the rural market, businesses need to view profitability there in terms of low margins and high volume. They must focus on building their market infrastructure properly from the start, with the right sourcing and procurement features and with supply chain linkages and structures that act as

growth multipliers over the long term. Here are some of the most important supply chain activities: Optimising sourcing processes The transformation of farm-to-market linkages holds particular appeal given that India boasts the world’s secondlargest farm output. Corporations can improve their sourcing processes by using the following initiatives: Replacing middlemen with direct manufacturer-to-producer linkages: By replacing the middlemen who had acted as its procurement agents, ITC forged direct links with producers through its e-choupal network, thus eliminating brokerage costs, better controlling end supplies and developing its producer base for the long term. Process outsourcing: Contract farming has been steadily expanding in India. A relatively new phenomenon, the practice uses forward contracts between buyers and producers to reduce the risks involved in agricultural activity, guaranteeing timely raw materials at a fair price. Since large corporations dominate contract farming, professional help is readily available to provide seeds, fertilisers and free technical guidance, raising the quality bar and performance levels. Reaching the customer Translating customer segmentation and analysis into strategies and tactics for reaching them is especially challenging in India’s fragmented and unfamiliar rural markets. Any logistics problems spell additional costs for both supplier and retail outlets. The following approaches can help overcome the distribution obstacles: Leveraging feeder towns, adopting a hub and spoke distribution model: Under the traditional dealer-distributor chain model, companies have a direct presence in certain towns, with a distributor/dealer at the district level, and, sometimes, sub-distributors or stockists at the tehsil headquarter level. To increase penetration further, companies have historically relied

on wholesalers. Yet within the rural distribution structure, small retailers and consumers use feeder towns (usually large villages) or mandis as sourcing and replenishment points. Most large companies lack a direct presence in the feeder towns. A possible solution would be to increase subdistributor and sub-stockist presence lower down the chain, a model that has worked very well for the FMCG industry. Infrastructure-sharing among non-competing companies: By collaborating with companies that already have a well-entrenched reach, new entrants can quickly scale up and expect quicker returns. The infrastructure provider gains a steady source of revenue at no additional cost. For instance, Samsung has partnered with the Indian Farmers Fertilizer Cooperative (IFFCO) to market its handsets using IFFCO’s broad presence in rural areas. Using mobile retailing and distribution options: Delivery vans and sales vehicles can reach the rural interior. Nokia makes contact with its customers in remote villages through its ‘Care-onWheels’ programme, providing after sales service, building loyalty and supplementing the company’s rapidly growing distribution network in rural India.

HIGH PERFORMERS CO-CREATE VALUE THROUGH INNOVATIVE USE OF TECHNOLOGY

The ability to create and nurture new markets & adapt and optimise supply chains are essential hallmarks to serve the rural markets. But high performance businesses go beyond this – they employ technological platforms and solutions innovatively to cocreate value by actively involving local resources. By utilising technological platforms to gather authentic data on the customer base – companies actively find ways to improve their reach and scale as well as share the benefits. Using technology as a differentiator

In many instances, companies have already adopted knowledge-based systems to streamline their logistics processes, increase efficiency and lower costs. These companies use a variety of tools to select the best delivery routes and reduce the number of vehicles needed to transport goods. During the next decade, as multinationals begin using the same sophisticated tools in India that they use elsewhere, their international and local suppliers will follow suit.

FRAMEWORK FACTORS CRITICAL TO NURTURING DISTINCTIVE CAPABILITIES Being a part of the local community To succeed in rural markets, it is important for companies to engage local communities as partners. It has to be a collaborative model with long-term horizons. Rural market leaders such as HUL, ITC and Hero Honda have moved beyond traditional vendor roles to partner with local communities. If companies are to build and retain public trust and confidence, particularly in rural regions, they must

FEBRUARY 2012 • SMART LOGISTICS • 29

Rural logistics, continued

consistently demonstrate that they are genuinely interested in helping solve some of the major issues affecting socioeconomic development. For instance, there is no point in businesses waiting for governments to figure out how to fix the region’s infrastructure deficiencies, they must make many of those investments themselves. Building social networks with local participation Since rural consumers are unfamiliar with many commercial products, they often look to trusted sources such as friends and family for advice in making purchase decisions. Many companies have developed innovative communication pathways, often borrowing from social marketing models to use word-of-mouth advocacy. Effective social networks build partnerships among NGOs, self-help groups (SHGs), microfinance institutions (MFIs) and local rural populations. These relationships have a business and social use.

DEVELOPING THE RIGHT CAPABILITIES AND ACTING ON THEM It is one thing to exhibit appropriate capabilities from time to time, or in certain circumstances. But doing so as part of normal working behaviours is a different matter entirely, and is a hallmark of true high performance. Here is what is required to promote this mindset: Integrate rural markets into the core strategy Treating a rural market foray as an experiment or an exercise in image creation is unlikely to bring positive results. “The entire organisational philosophy has to be geared towards treating rural markets as a key part of the business,” said one executive whose energy company has succeeded in India’s hinterland. The company’s leadership team must closely match the organisation’s core growth strategy with the drivers for growth in the rural market. As a senior executive of an FMCG company that now thrives in

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rural markets notes, “Any organisation wishing to grow in rural India must be willing to invest and be patient. It has taken us many years to build this edge.” Secure top-down commitment and advocate constantly Following the strategic commitment, the management must develop clarity on how to proceed, including mapping organisational capabilities and market conditions. Top managers must continue to advocate for rural initiatives, visibly and vocally. Even hugely successful initiatives like e-choupal and ‘Shakti’ have reached the critical mass of volume only after many years of investment in scale and reach. Reshape your operating model and mindset Organisational priorities may need to shift to meet the rural mandate. A business model that has leaned towards higher margins and lower volumes may need to adapt to a low-margin, highvolume approach for the rural business operations, thus substantially affecting financial planning and organisational culture. Invest in the future workforce A long-term rural strategy requires strong capabilities in talent creation, planning and management, both at the top and the bottom rungs of the skills pyramid. A key challenge is that the trained staff is reluctant to move to villages, while the local labour is unqualified for most jobs. This capability gap requires innovative talentcreation models that tap the intrinsic strengths of local labour. It also calls for strong leadership commitment. Top managers can convey the seriousness of their organisation’s rural commitment by personally serving stints in the hinterland. The top-down message conveyed is that professional growth lies in helping to drive rural market growth. At the same time, the organisation must build its rural workforce carefully. Different skills and competencies, such as cultural congruence and adaptability, are needed; employees do need to be

willing to live in rural areas and do need to show empathy and sensitivity towards rural consumers and their needs. They also require knowledge of the local language, the ability to handle several product lines, and of course, the creativity and enthusiasm to carry it all through in often adverse circumstances.

LONG-TERM GROWTH STRATEGY A large number of businesses merely scratched the surface of the potential for profitable growth in rural India. And, they have made only a dent in the social infrastructure challenges that keep so much of India’s population in the shadows. But now, there is real momentum on both the fronts. There are abundant stories to demonstrate that businesses can and should make rural markets a central plank of their long-term strategy for growth. This article is an excerpt from the whitepaper Accenture Research Report ‘Masters of Rural Markets: The Hallmarks of High Performance’

Illustration By Sanjay Dalvi

OVERCOMING CHALLENGES SPECIAL FOCUS

Improving Rural India’s Economics Given the fact that about 65 per cent of India’s population still resides in rural areas, the presence of more than 6.30 lakh villages in the country with not many having better connectivity and infrastructural facilities due to India’s huge geographic diversity makes the implementation of an efﬁcient supply chain highly difﬁcult. But this scenario has not deterred companies from trying to tap the tremendous potential that lies in rural markets. Instead, companies have come up with innovative strategies, which have helped them increase their products’ visibility and thus strengthen their reach in the markets of rural India. ARINDAM GHOSH

COMPANIES from a diverse range of industries – FMCGs, telecom, pharmaceuticals, banking and retail – are devising and formulating strategies to tap the enormous potential of rural areas. Owing to its wide range, nature and usage of product offerings, FMCG companies have a comparatively stronger network. However, with the entry of new players and increased marketing and advertising campaigns by companies to capture the rural market, FMCGs are facing intense

competition. Given the rising importance of the rural space, companies today are busy developing strategies to deal with various challenges faced in rural areas, especially infrastructural challenges. Other challenges would include creating a smooth supply chain model and implementing an efficient distribution network for better product visibility apart from having proper back end facilities, like storage infrastructure, warehouses, cold chains,

for various goods and commodities, among others. Despite these challenges, leading companies, like Hindustan Unilever (HUL) and ITC, have used technological advancement to generate awareness about their products’ usage and availability and thus penetrate into the rural market. These companies, through their diverse and innovative product range along with intelligent pricing, have certainly led the way for other companies to follow.

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Overcoming Challenges, continued

ACT

RAILWAYS CARRY ABOUT 30-32 PER CENT OF TOTAL GOODS TRAFFIC, WHILE THE ROAD SURFACE TRANSPORT CARRIES NEARLY 65 PER CENT. THE INDUSTRY BODY SAYS THAT EVEN IF ALL THE HIGHWAYS IN INDIA ADOPT CONCRETE PAVEMENTS, FUEL SAVINGS PER KM WORK OUT TO `6.7 LAKH PER KM. MAJOR CHALLENGES FACED Notwithstanding the complex nature of India’s rural market, it is steadily emerging as one of the most important and robust markets within the country. And with the 12th Five Year Plan (201217) approaching, and the government increasingly focussing on ‘inclusive growth’, the development of rural infrastructure is sure to receive a boost. Further, with the private sector seeing huge opportunities here, rural logistics is steadily gaining prominence. However, penetrating into rural markets is not an easy task. Amid this enormous potential lie major challenges, some of which include creating and implementing an efficient and organised SCM for their products. Additionally, given the fragmented nature of India’s markets, there exists a

Creating efﬁcient transportation infrastructure connecting all corners of the country is highly imperative. If better rural logistics services are in place, it will not only improve product visibility, but will also generate employment for the local masses. huge disparity in terms of preferences and tastes. As a result, companies find it difficult to put in place an efficient and agile supply chain model or distribution network that will give their products visibility.

OVERCOMING THE CHALLENGES The rural sector is highly lucrative

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across all sectors in the country. For instance, according to research reports, the FMCG sector in rural India is expected to touch $100 billion by 2025. The country’s rural market is expected to become a $100-billion opportunity for retail spending in the next 15 years. Besides, the rural segment also holds huge potential for the pharma sector in India. According to industry body, Associated Chambers of Commerce and Industry of India (ASSOCHAM), national losses due to inefficiencies in logistics infrastructure could amount to `7 lakh crore per year by 2020 as compared to over `2 lakh crore at present. Economic losses due to bad roads are conservatively estimated at over `30,000 crore per year. A potential annual saving of `800 crore can be made by merely shifting the movement of goods through multiaxle and trailer trucks. Companies are hiring the services of third-party logistics (3PL) service providers, which have high expertise in logistics and related services. Apart from ensuring that companies’ products get maximum visibility, 3PLs allow well organised and efficient endto-end logistics solutions, which gives companies more time to focus on their critical activities like advertising and manufacturing, etc. Elaborating on the growth trends of the logistics sector, an ASSOCHAM report states, “Railways carry about 30-32 per cent of total goods traffic, while the road surface transport carries nearly 65 per cent. The industry body says that even if all the highways in India adopt concrete pavements, fuel

savings per km work out to `6.7 lakh per km.” “Over half of the motorised traffic is carried by 2-axle trucks that constitute 30 per cent of vehicles on the highways. Truckers ignore the real negative economics of overloaded vehicles in search of short-term gains and add to inefficient fuel & road usage all along,” the report adds. These factors contribute towards keeping logistics activities in India high.

UPGRADE EXISTING INFRASTRUCTURE The fast-paced growth of the country’s manufacturing sector has opened up huge opportunities for the logistics market in the country to flourish and grow. This trend is likely to gain pace with India emerging as one of the major economies globally. This calls for the need for supply chains to get more efficient and facilitate smoother movement and distribution of goods & products. Creating efficient transportation infrastructure connecting all corners of the country is highly imperative. If better rural logistics services are in place, it will not only improve product visibility, but will also generate employment for the local masses. To increase focus on improving and developing infrastructure of rural India, investments along with initiatives like tax breaks, incentives or concessions need to be taken. This will help create a more flexible and conducive environment for attracting investments from private players. At the same time, these initiatives will also create new and better infrastructure for the country along with improving existing facilities; thereby ensuring better connectivity between rural and urban areas. It will also facilitate companies to serve the rural areas on a much better level and, in some cases, even at par with metros and other bigger cities. arindam.ghosh@infomedia18.in

Illustration By Sanjay Dalvi

RURAL SCM MODELS SPECIAL FOCUS

Augmenting the

RURAL INDIA CONNECT

As companies realise the importance of creating an integrated relationship with suppliers and customers in rural markets, SCM has become a major concern for many industries in the rural region. In order to improve their competitiveness by reducing uncertainty and enhancing its services, companies tapping rural markets are using supply chain models like opting for specialists in logistics services like 3PLs and are opening up a large number of outlets for their ‘intelligently priced’ products. ARINDAM GHOSH

AFTER tapping urban markets, companies are now increasingly shifting their focus to explore the vast potential of India’s rural markets. According to reports, rural markets account for about 55 per cent of LIC policies, 70 per cent of toilet soaps, about 50 per cent of television, fans, bicycles, tea, wrist watches, washing soap, blades, salt, tooth powder & soft drinks and 38 per cent of all two-wheelers. Further, it has been found that over a period, rural markets are growing at a faster pace than markets in the urban space. It has been estimated that there would be approximately 800 million people living in Indian rural areas around 2040-50, who would consume

a diverse range of industries. Such data speaks volumes of the tremendous potential that the rural segment holds for companies from various industries. In fact, various countries have already undertaken and implemented strategies and initiatives

For companies like Coca-Cola and Pepsi, opening a large number of distribution outlets along with intelligent pricing of their products has been key to their success in the rural areas. This not only enhances market presence for their commodity, but also leads to higher demand.

to improve the economic conditions of rural areas and generate high levels of revenues. For instance, in the US, the agricultural prospects of different regions have been identified and a cluster mechanism has been adopted. While Thailand and Japan have worked on the concept of ‘One Village One Product’ and Micro Credit, Bangladesh has implemented the business model of Grameen Banks.

RURAL SUPPLY CHAIN MODELS The Indian logistics industry is one of the fastest growing sectors in the country due to the ambit of services it offers customers. An organised supply

FEBRUARY 2012 • SMART LOGISTICS • 33

Rural SCM models, continued

chain model is key for the success of any logistics company. However, in rural areas, supply chains need to be developed or designed such that it is equipped to handle the challenges posed by inefficiencies and constraints faced due to the absence of adequate and proper infrastructure and the existing economic environment. Moreover, the rural market in India is highly price sensitive. To tackle these challenges, companies are opting for the services of third-party logistics (3PL) service providers and other logistics experts & consultants. These ensure that a robust supply chain for proper distribution of their products is in place. At the same time, it also offers companies time to focus on other aspects like advertising, promotion, innovation in product pricing and manufacturing. Companies operating in the textile, automotive, pharmaceutical, manufacturing, retail and FMCG industries are increasingly opting to outsource their logistics requirements to specialised logistics service providers. As per various industry estimates, it is expected that 3PL solutions in India would grow at a CAGR of more than 20 per cent during 2009-15. Companies, in India, are fast realising the importance of their supply chain network and are increasingly calling on logistics managers for their professional inputs into their own corporate and marketing strategies. For companies like Coca-Cola and Pepsi, opening a large number of distribution outlets along with intelligent pricing of their products has been key to their success in the rural areas. This not only enhances market presence for their commodity, but also leads to higher demand. Also, such supply chain models lead to higher rates of expansion of the company’s business and high competitiveness in the market.

MODEL SOLUTIONS FROM GLAMS The Centre for Global Logistics and

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Manufacturing Strategies (GLAMS) has prescribed some solutions to create a better supply chain model. GLAMS has suggested the development of an integrated rural supply chain network (IRSN), which calls for an alliance to be formed by a group of independent companies, often located in different regions, having a common objective of designing, manufacturing and delivering right-quality products & services to customer group, faster than others. Operationally, IRSN has four core value-delivery processes, which need to work in harmony for the entire supply chain to be competitive. The core business processes in a rural production organisation are as follows:

It has been found that over a period, rural markets are growing at a faster pace than markets in the urban space. It has been estimated that there would be approximately 800 million people living in Indian rural areas around 2040-50, who would consume a diverse range of industries. • Procurement (farm inputs, fresh produce) • Production of basic agricultural products (farming and nonfarming) • Processing (fresh produce – grains, fruits, vegetables) • Retailing (rural and urban retailing). The ISB Kisanbandhu (IKB) model has been developed by the GLAMS faculty. The primary function of IKB is to enable farmers to sell their produce at a fair price. It consists of a cyber intermediary (information and business exchange), a commodity exchange & logistics provider, quality grading teams, finance and insurance agencies. The cyber intermediary maintains an updated database of registered farmers,

logistics providers, brokers, retailers, mandi managers, food manufacturers and exporters. It also has real-time market information, commodity exchanges information trading different goods and other marketing information useful to the farmer. The IKB is a sophisticated exchange, with natural language processing capabilities. It offers farmers scope to transact in their native language and directly deal using a cell phone. The farmer can also get feedback on processing of the transaction on TV channels at prescribed timings. The IKB can also be used for procurement of inputs for farming. Another solution suggested by the body is the usage of the distribution network of post offices to deliver perishable and FMCG goods. All consumer durables can be delivered by post office mobile vans. Perishable and FMCG goods can be delivered by road transport to the post office, who can distribute it to the village retail group. The payment for goods will be handled by the post office. Using IT, post offices will not only act as a delivery channel, but would also act like a bank, thus providing the much needed supply chain visibility in rural supply chain networks, in general, and retail networks, in particular.

NEED OF THE HOUR Logistics, thus, plays a critical role in supporting the flourishing trade activity and high levels of infrastructure development. With more and more companies realising the potential of the rural markets and the increasing focus of the government to improve rural infrastructure, rural logistics in India is bound to receive a boost. This, in turn, will not only help companies capture the huge potential of the rural market, but would also ensure that they survive and are sustainably able to expand their businesses in the long run. arindam.ghosh@infomedia18.in

MARICO INDUSTRIES SPECIAL FOCUS

USING TECHNOLOGY AS THE

STRATEGIC DIFFERENTIATOR A complex portfolio of over 200 stock keeping units across over 6.6 lakh retail outlets in the country, servicing rural markets with key measures & technologies in place to ensure timely deliveries at all nodes are some of the star characteristics of Marico’s rural supply chain. The efﬁciencies of the supply have ensured its brand presence year after year and created a market position that is hard to compete with in the present consumer-driven market. SUMEDHA MAHOREY

ESTABLISHED in April 1990, Marico Industries was formerly the consumer products division of Bombay Oil Industries. Over the last two decades, Marico transformed from a traditional commodity-driven business into a leading consumer products & services company. From a turnover of Rs50 lakh in 1971, Marico’s products and services generated a turnover of about Rs3,128 crore during 2010-11. With its portfolio of trusted brands such as Parachute, Saffola, Nihar, Kaya, Mediker and Revive, among others, today, Marico touches the lives of one out of every three Indians. Every month, over 70 million consumer packs from Marico reach approximately 130 million consumers in about 23 million households, through a widespread distribution network of more than 3.3 million outlets in India and overseas. Reaching out to the remotest of markets, rural and geographical hinterlands, Marico has one of the most complex supply chains in the Indian market with an extensive distribution network extending to 7,50,000 outlets. Deciphering its rural supply chain, supported by the apt use of technology has been the task at hand.

THE RURAL SUPPLY CHAIN NETWORK With a supply chain based on the push-pull model, Marico has a different distribution set up for the

rural market. There is an additional stocking point. The stocks move from the depots to the super distributors who then send it to the stockists. The stockists then distribute it to retailers and wholesalers. The consumers buy the brands from retailers. Elaborating on the same, B Sridhar, EVP and Head – Sales & Supply Chain, Consumer Products Business, Marico, explains, “The flow of goods from the factory to the C&F agent happens in a structured manner. After the C&F agent, the entire supply chain is demarcated into two halves – urban and rural. In the urban market, the stocks move from the C&F agent to the distributors, who wholesale it to the retailers and wholesalers from where the stocks reach the end consumers. In the rural market, there is an additional entity, i.e., the super stockist & super distributor. Herein, the stock is delivered to super distributors and from there, it is distributed to the rural stockists. The stockists do the retailing in their respective towns. Basically, they do the retailing to the wholesalers & retailers.” Commenting on the supply chain model, he says, “The availability of the stock at the depot is driven fundamentally by forecast, but availability of stock at the distributor and the super distributor point, stockist and the retail is driven completely by pull.” Thus, the stocks dispatched from the depots are first

Logistics best practices • Presence of super distributors in the rural distribution set up • Optimal cost structure of servicing rural markets. consolidated at super distributor points. From there, the stocks are moved to stockists. Thereafter, secondaries from stockists to rural retailers take place. Consolidation at super distributors helps in reduction of maldistribution of stocks at stockist points. This structure also improves effectiveness and efficiency of the supply chain in rural markets. The urban-rural linkage is thereby created at the depot level. So, the demand variations within the state between the various distributors are handled with stock norms at the depot. When it comes to 3PLs, all services including warehousing, transportation and C&FA services are carried out by independent parties. “In Marico, a typical depot has three independent parties handling 3PL functions. These functions are best handled by their respective domain experts,” Sridhar says.

PERFECT FORECASTING THE 1ST TIME An agile and responsive supply chain can help in capitalising on market opportunities. An effective supply chain ensures availability of the right stock keeping unit (SKU) at the right outlet

FEBRUARY 2012 • SMART LOGISTICS • 35

Marico Industries, continued

action for factory to depot in the right town, thereby TO-BE AS-IS replenishment, which aims having a significant impact RM-PM Suppliers • VMI–Pull System for • Order based RM/PM at enhancing depot service on the business. The right Key RMs and PMs Procurement System levels through higher forecast serves as the • 4-6 days of Inventory • 1.2 Days of Inventory Factory at Factory at factory ROI. Marico’s MIDAS initial step towards better and MINET systems have planning. With three• A Pull based Factory to • A Push based dispatch also boosted the sales force month rolling forecast Deport Replenishment RDC system for primary system distribution and eventually, the supply plans, Marico is able to see chain team to plan in a through all the possibilities Depot • New initiatives like • Order based system DDR (Deily Dist for NVMI and much better way. Some at the appropriate time. It Replenishment) for Replenishment system for VMI Metro Distributors of the technological tools helps the company align Distributor Distributors used by Marico include its suppliers/vendors to More Responsive and Conneccted Supply Chain DDR, FDR, MIDAS/ enhance their preparedness MINET/PDAs, VMI and forecasting. as the strategic differentiator, not for upcoming requirements. With Another example of using technology only to drive efficiency, but also increasing competition and more is through churning historical trends to drive effectiveness and growth. turbulent markets, it is vital for any and bringing out good forecasts, which Fundamentally, if we look at the firm to focus on its planning processes. help in preparing the company for any multiple roles that technology plays, it Correct planning ensures that upcoming event like peak seasons. gives us visibility across functions. This customers get the freshest of the stocks helps in taking correct decisions on and the additional cost associated with time. The entire daily distribution and maldistribution is reduced. Marico PREPAREDNESS FOR PEAK SEASON replenishment model, etc., functions has embraced this philosophy and Peak seasons are very critical for any only because we have a tech-enabled constantly works on improving the firm as the business impact of stockouts supply system. The other place where forecast accuracy through improved and late deliveries is very high during technology plays a big role is in the planning processes. this period. Any peak season needs process of forecasting. With a wide to be properly planned in order to SKU range, we need the technology to have the best execution. Sridhar TECHNOLOGY: A STRATEGY? forecast accurately and in line with the explains, “In Marico, we generally Marico’s strength lies in its integration business needs.” have a visibility of around 5-6 months with its distributors through MIDAS Discussing the role of technology in before any peak season. This provides and MINET systems, which help in bringing about supply chain efficiencies, us sufficient room to plan properly, terms of replenishment of distributor Sridhar articulates, “It is fundamentally enhance capacity and pre-produce stocks through Vendor Managed to ensure that the SKU of the right stocks, if required. Peak seasons are Inventory (VMI). This, in turn, helps brand is available at the right time also important for many consumer the company avoid stockout situations in the right place. Not only do we offers and trade offers. Therefore, it is and replenish distributors as and when have technology enabling the entire necessary that these offers are properly required. Marico has recently launched process of forecasting, procurement weighed out in advance against all the usage of Rural PDAs through which and visibility at the nodes, but also the relevant measures. Marico also ensures rural reach and stock replenishments entire vendor management, inventory that all suppliers are properly aligned will be further enhanced. Another and the daily replenishment system. so that they are ready with their important element in maintaining the It is also used as a support to enable respective raw materials at their end. same is RDC models through which scientific sales at the front end.” Peak season also demands higher space SKUs, for which demand fluctuations Technology has always been the requirements at the factory and depots. are very high, are consolidated at backbone for Marico. Technological Therefore, it is important to arrange higher nodes. advantages have made Marico realise for space requirements at right time to One of the path breaking initiatives the potential of the markets in a much avoid any congestion at the depots.” Marico has taken is through Distributor more efficient way. It has helped the Daily Replenishment (DDR) models. company integrate right from retailers This has helped the company achieve MANAGING THE WAREHOUSE till back end suppliers. Technologyhigher service levels and also in terms When it comes to managing the driven replenishment systems, like of improving the returns on investment stocks for the huge Indian market, DDR, have proved to be a major (ROI) of the partner distributors. warehouse spaces are scientifically success in the supply chain field. A Sridhar highlights, “We have always calculated based on historical sales similar model is being brought into believed in leveraging technology trends, skews and various other

36 • SMART LOGISTICS • FEBRUARY 2012

factors. All warehouses strictly follow FIFO practice in order to maintain the freshness of stocks. Highlighting on warehouse management, Sridhar avers, “Inventory control is achieved through scientific norm calculation on the basis of transit time, replenishment frequency and demand and supply variation at the SKU depot level. For SKUs with high demand fluctuations, we consolidate stock requirements at a higher node (RDCs) which helps us reduce maldistribution and enhance service levels. Additionally, appropriate case size & stack heights are calculated on the basis of saleability of a particular SKU and loadability of its case packs. These factors are frequently reviewed and modified in order to increase our warehouse ROI.”

MAKING THE GREEN STATEMENT

at Baddi in an energy-efficient manner. Learnings from this plant have been replicated across all manufacturing locations. While its Pondicherry factory has installed variable frequency drives to reduce energy consumption; its Jalgaon plant has installed a drip irrigation system. The Jalgaon plant, which uses biomass fuel for boilers, has reduced its water consumption by about 36%. It has also taken initiatives like rainwater harvesting across manufacturing sites and reduction in PVC consumption by 90% in plastic bottles. Some of the key initiatives taken at the operational level include sessions for C&FA agents (depots) on the need and benefits of going green, which has led to considerable savings for the organisation. More importantly, it has increased the saliency of the need to adopt sustainable work practices among Marico’s associates. The company’s achievements in the green movement have also been recognised through numerous awards. Marico (Kanjikode) was conferred with the Kerala State Energy Conservation Commendation Award 2010, in the large-scale energy consumer’s category. The company also won ‘Silver’ at the Greentech Environment Excellence Award 2010, in the FMCG sector.

For any company, reducing its carbon footprint is a huge task, specifically when it needs to reach out to diverse regions to ensure sustainable business. Marico works on the philosophy of ‘think fresh, be green’. Sridhar comments, “We have successfully implemented over 50 ideas in the areas of energy and water & paper usage reduction in the last two years. We have gained considerable momentum in our efforts to reduce our carbon footprint. Most of our strategies and processes today undergo a Green filter, as we Deport to Distributor intrinsically evaluate the environmental Plants implications of all Depot the initiatives.” Some Daily Distributor other steps taken in Replenishment SD this direction include DD Distributor/Stockist leveraging on the latest technology to reduce power consumption Retailer in the data-centre; improved truck loading efficiency at factories leading to reduced fuel consumption. In fact, Consumer the company has also designed a new plant Supply chain model

BEING COMPETITION DRIVEN FMCG is a highly competitive domain. Arriving at sustainable business operations in such a market is a continuous process. Highlighting the competition dynamics in this market, Sridhar says, “The availability of products in the rural markets is a function of the tariff coverage in the rural markets, wholesale throughputs of that particular

brand required in smaller towns, and the steps that we take to ensure all of this...one is direct coverage and second is ensuring wholesale throughput in the smaller towns. The most important measure that works in the rural markets is being able to sustain demand for our products and ensuring that we do sustained business. Ensuring one-time availability is one thing, but ensuring sustained business is a completely different ballgame. Thus, fundamentally, we look at a combination of direct coverage, leveraging wholesale and then, work on the demand trends to ensure sustainability of sales.”

THE BIGGEST CHALLENGE With so many strategic initiatives in place for the rural market, what is it that Marico’s supply chain needs to work on for the future? Sridhar points out, “In Marico, we operate in multiple categories and brands. We are also growing larger by the day. We have a very wide category SKU range. Our biggest challenge is to build capability to handle multiple brands, multiple categories and to ensure that we are in a position to deliver service, specifically the right brand, right SKU for the right town in the right marketplace to ensure that we maximise business. Thus, we are aiming at building the capability to handle increasing complexity, business for the future and ensure all this at an optimum cost.”

PERFECTING PERFECTION With its complex network, specific distribution strategies for the rural market, Marico’s supply chain has been the company’s backbone while providing services to the rural Indian market. Going forward, the company’s plans at capacity and capability build up is scheduled to bring about a transformation in the FMCG’s competitive business environment. A price war is in the making... supply chains gear up for tough competition!

FEBRUARY 2012 • SMART LOGISTICS • 37

SPECIAL FOCUS LAVA

MAPPING THE

RURAL Offering quality innovative products at affordable prices has made LAVA International a strong domestic player in the mobile handset industry having the highest number of service centres across India. Faced with issues like delivery on time in ODA locations, geographic conditions and safety of goods, LAVA has hired the services of reputed freight forwarders. With the pace at which the company is progressing, LAVA is heading towards becoming one of the strongest brands in the telecom sector by offering customers a unique proposition unmatched by any other player in the industry. NISHI RATH

FROM a humble beginning to becoming a giant in the domestic mobile handset industry, the journey of LAVA International has been a roller coaster ride. With the motto of ‘Get the Power in Your Hand’ as its guiding principle, LAVA has embarked on an ambitious journey of empowering customers in India’s rural market with quality innovative products at affordable prices. LAVA’s SCM infrastructure has been robust in areas like freight forwarding, warehouse management and reverse logistics. But the road to establishing a seamless supply chain in the rural areas has been one filled with hurdles.

SUPPLY CHAIN CHALLENGES One of the major challenges that the company faced in its rural supply chain is the issue pertaining to delivery on time in ODA locations. ODA locations are mainly those locations where couriers do not go so frequently and the company has to pay some premium freight for the same. In this scenario, the lead time is also high. Another challenge, which the company faced, pertained to the safety of goods. Apart from these challenges, geographic conditions also pose major hurdles in the smooth functioning of

38 • SMART LOGISTICS • FEBRUARY 2012

a supply chain. “Like, for example, in areas that are Naxal affected, the chances of theft and pilferages are very high,” explains SN Rai, Co-founder & Director, LAVA International, while elaborating on the challenges faced.

SOLUTIONS ARRIVED AT To ensure that the products reach the ODA locations on time, the company ensures that it hires the services of reputed freight forwarders. LAVA ensures that its vast portfolio of products gets the right kind of inventory exposure by catering to market demand. “We have to segregate the slow moving, average moving and fast moving models. There are some models that have mass consumption with average margins and then, there are fast moving or slow moving models, which have more margins. So, we have to be extra careful with our supply chain. Speed, flexibility and accuracy of delivery to customer plays a major role in our trade,” adds Rai. LAVA has rejigged its supply chain to cater to rural areas. For example, in hilly areas, the forwarders use road transport buses, which are not only faster, but also cost effective. “For areas, like Naxal affected ones, we have fixed

the timing of transportation during the day and use the best courier companies,” Rai says. To meet the rural demand, the company always strives to ensure that they reduce the total product cycle time. For this, they utilise the services of the best and most trusted freight forwarders. “Our SCM is completely automated in SAP (we use ERP) and the visibility and process capability in the system is very high,” he adds. Expatiating on the procedures involved, Rai comments, “We do a proper mapping of districts, tehsils and towns in India and check our distributor’s presence there. Width and depth are two important factors that play a major role when it comes to coverage. We also check the revenue per population to our strength and market in a particular location.”

PROMISING PROSPECTS The increase in the potential for growth will play a catalyst in increasing competition in the rural market space. The one who provides products, which offer value for money – reliable products with good after sales service – will be the clear winner in the long run. nisi.rath@infomedia18.in

LG SPECIAL FOCUS

Investing in

Rural India’s Viewing Needs Armed with impressive market-creation activities, consumer electronics manufacturer, LG, has found a way to get rural India tuned in to television. The company believes that understanding consumer needs better and strengthening the distribution and after sales service reach will help it capture the largely untapped rural market.

WHO? Based in Korea, LG is the world’s leading manufacturer of consumer electronics. India, the company’s largest market in the Asia-Pacific Region, generated 35 per cent of the company’s India revenues from rural sales.

regional languages, but have little or no understanding of English, making it impossible for them to read instructions written in English or to operate the product. This need had been overlooked for years, ever since television became accessible in rural homes. LG spent close to US$50,000 in developing a unit with on-screen display options in the regional languages of Hindi, Tamil and Bengali. It priced the model with rural affordability in mind at `14,400, still `2,000 more than equivalent products from other companies. But ‘Sampoorna’, with its customised features that gave the rural consumer ease-of-use, was a complete hit, selling more than 1,00,000 sets in the first year of its launch.

BUILDING THE FOUNDATIONS FOR GROWTH UNDERSTANDING MARKETS LG Electronics has seen sustained year on year growth in its India business, largely driven by its aggressive marketing and distribution strategy. The company expects future growth to come from the non-metro market, called the semi-urban and rural market. In the company’s lexicon, all cities and towns, other than India’s seven largest cities, fall into the semiurban and rural category. The company decided to focus on two aspects of the value chain to capture this market – understanding consumer needs better and strengthening the distribution and after sales service reach.

DIFFERENTIATOR LG set up a lifestyle research team to analyse in depth the needs and preferences of the rural consumer. Since the pricevalue tradeoff was a critical purchase determinant and usage satisfier for the rural consumer, the company investigated its various nuances, leading to some innovative product customisation. In 1998, LG developed a television brand specifically for the rural market, christening it ‘Sampoorna’. This region-specific branding was unprecedented for a multinational corporation. Further, the product had features that addressed needs revealed by the research: a majority of the semi-urban and rural consumers are comfortable with

LG also invested early in building a strong district networking system to drive its marketing efforts, thereby creating a hierarchy of 45 area offices and 59 rural/remote area offices. With the infrastructure in place, LG then mounted a campaign for distribution penetration. Today, the company has more than 9,000 sales and service dealers working through different rural sales channels, close to 1,100 distributors and 40 branch warehouses supplemented by an elaborate customer service initiative. Called the ‘211’ initiative or ‘Service When You Want’, complaints are handled within a maximum of 24 hours. The IT infrastructure for the ‘211’ programme currently exists in 100 cities and will soon be extended to 200 more, deepening on the company’s ability to service its semi-urban and rural consumers. This frontal strategy of insight-based product customisation, backed by a strong retail, distribution and service presence, has made the customer’s shelf-to-use journey smooth and satisfying. Volume growth, a further goal, can be driven in line with demand generation, thus creating a strong supply chain backbone for the company. This case study is an excerpt from the whitepaper Accenture Research Report ‘Masters of Rural Markets: The Hallmarks of High Performance’

FEBRUARY 2012 • SMART LOGISTICS • 39

SPECIAL FOCUS HINDUSTAN UNILEVER

Opening Doors for

NEWER OPPORTUNITIES The best businesses not only think in terms of their long-term involvement in and contributions to the rural communities in which they work, but also help uplift the lives of those less privileged. A ﬁrm believer and practitioner in this philosophy is Hindustan Unilever (HUL). While building on the 4Ps of the marketing mix – product, price, place and promotion – to tap the rural markets of India, HUL has provided employment by educating and training rural women to become microdistributors of their products. WHO Hindustan Unilever (HUL) is one of India’s largest FMCG companies. About 30 per cent of its revenues come from rural sales.

Distribution infrastructure has always been the bugbear for Indian companies targeting the rural market. Distribution channels very often must be built from scratch and their efficacy makes all the difference to a company’s success. When HUL identified rural markets as a potential growth target, it knew that success would only come from innovation in product, price, place and promotion – the 4Ps of the marketing mix. The company decided to increase penetration by extending its reach to villages with populations of 1,000, using new marketing options alongside the traditional distributor-led model.

distribution businesses, often using money they receive as microfinance loans. They are specially trained to communicate in social environments such as schools and village get togethers, and to target non-users. They deliver goods right to the doorstep and service nearby clusters of at least three villages and as many as six. A typical ‘Shakti’ distributor sells `10,000-15,000 worth of products each month, earning `700-1,000 a month on a sustainable basis. This translates into financial independence and social change for women who would otherwise live in poverty. Their new income often goes toward educating their children and improving their overall quality of life. The ‘Shakti ammas’, in turn, become consumers of higher value items such as consumer durables.

HELPED BY THE SELF-HELP GROUPS

MAKING A DIFFERENCE TO THE BOTTOM LINE

Launched in 2001, ‘Project Shakti’, a key element of HUL’s alternate distribution strategy, involved working with selfhelp groups (SHGs) to educate and train rural women to become micro-distributors. ‘Shakti’ grew out of the need to strike the correct balance among return on investments, expanding reach and facilitating volume growth for the company’s product categories. The ‘Shakti’ network uses women members of existing SHGs working in villages, appointing them as sales persons called ‘Shakti ammas’. These women then become direct-to-home distributors of HUL products in rural markets that would otherwise be difficult to access through traditional networks. The products distributed include a range of mass-market items; especially relevant to rural consumers, such as soaps, toothpastes, shampoos and detergents.

‘Shakti’ distributors now account for 15 per cent of HUL’s sales in rural India. Initially run as a pilot in 50 villages of Nalgonda district in Andhra Pradesh, the unexpected success of this project has encouraged HUL to expand it to 15 states, creating 37,000 women distributors covering 1,00,000 villages. Because other companies are showing interest in using the reach of HUL’s Shakti network, the company may find that it has generated an entirely new revenue stream.

EMPOWERING WOMEN CONSUMERS

This case study is an excerpt from the whitepaper Accenture Research Report ‘Masters of Rural Markets: The Hallmarks of High Performance’

BRINGING INNOVATION TO THE ‘4TH P’

‘Shakti ammas’ are small entrepreneurs who invest in their

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PARTNERSHIPS BEYOND DISTRIBUTION In addition to the distribution network, the ‘Shakti’ project also includes ‘Shakti Vani’ (or the ‘Voice of Strength’) – a social awareness programme operating in more than 20,000 villages in Madhya Pradesh, Karnataka, Chhattisgarh and Andhra Pradesh.

3PL SERVICES INSIGHTS & OUTLOOK

Offering

SHIPPERS Operational VALUE Over the past 2-3 years, economic volatility and uncertainty have impacted global business markets and, in turn, global markets for 3PL services. However, shippers consider logistics and supply chain management as key contributors to their overall business success and provide new & innovative ways to improve logistics effectiveness, reveals the 2012 16th Annual Third-party Logistics Study. THE results of the 2012 16th Annual Third-party Logistics Study reaffirmed that third-party logistics providers (3PLs) continue to provide strategic and operational value to many shippers across the globe. These results are based on survey responses from 1,561 industry executives and managers representing users and non-users of 3PL services (referred to as shippers or shipper respondents), as well as 697 executives and managers representing firms that provide 3PL services (called 3PLs or 3PL respondents). 3PLs were added to the survey group to capture both sides of the buyer-seller relationship. The number of usable survey responses continues to rise each year, with a significant increase for the 2012 study.

RESETTING THE STARTING LINE The chief reason for conducting the 2012 3PL study is to update our knowledge of 3PL-shipper relationships, and to learn how both types of organisations are using these relationships to improve and enhance their businesses & supply

chains. Many shippers are currently in search of new and innovative global supply chain strategies, suggesting new opportunities for 3PLs to make significant contributions to supply chain efficiency and effectiveness. Many shippers and 3PLs agree that today’s business challenges represent some version of a ‘new normal’, thereby driving the need for both types of organisations to identify and implement new strategies for success. In effect, the starting line has been reset, thus injecting a new, highly invigorated and highly competitive spirit into the logistics business environment. Selected Information Total Logistics Expenditures As A Percentage Of Sales Revenues Percent Of Total Logistics Expenditures Directed To Outsourcing Percent Of Transportation Spend Managed By Third Parties Percent Of Warehouse Operations Spend Managed By Third Parties

“Today’s 3PL marketplace is experiencing significant change. Established 3PLs are recalibrating their business models to provide greater value to their shipper-customers. At the same time, they are looking over their shoulders at emerging sources of competition and the new & innovative offerings they are bringing to market,” noted one prominent 3PL industry observer.

SPENDING ON LOGISTICS AND 3PL SERVICES As seen in Figure 1, shipper respondents to the 2012 3PL study report that the total logistics expenditures represent All North Europe AsiaLatin Regions America Pacific America 12% 11% 11% 11% 14% 42

Source: 2012 16th Annual Third-party Logistics Study

Figure 1: Outsourcing Spending Remains Consistent

FEBRUARY 2012 • SMART LOGISTICS • 41

3PL Services, continued

KEY TAKEAWAYS Current State of the Market The key findings regarding the current state of the market for the 2012 16th Annual 3PL study include: • 3PLs Make Valued Contributions: In 2012, companies across industries and around the globe regard logistics and SCM as key components of their overall business success. Many credit their 3PLs with helping to provide new and innovative ways to improve logistics effectiveness. • Logistics Spending Is Consistent: Across all regions included in the 2012 survey, shipper respondents report that total logistics expenditures represent an average of 12 per cent of sales revenues, and they spend, on average, 42 per cent of their total logistics expenditures on outsourcing. • Transportation Spend Dominates: Overall, survey respondents, who use 3PL services, report that their outsourcing activities account for 56 per cent of transportation spend and 39 per cent of warehouse operations spend. • 3PL Use Is Rising: A majority of shipper respondents (64 per cent) report that they are increasing their use of 3PL services, while 24 per cent are returning to insourcing some 3PL services and 58 per cent report that they are reducing or consolidating the number of 3PLs they use. • Success Rating Perception Gap Remains: Most shipper respondents (88 per cent) and most 3PL providers (94 per cent) view their relationships as successful. In addition, just over two-thirds of shippers say that 3PLs provide them with new & innovative ways to improve logistics effectiveness – whereas 91 per cent of 3PL providers feel this is the case. • Gainsharing & Collaboration Lose Ground: The 2012 3PL study provides insight into several factors that relate to the success of 3PL-shipper relationships – openness, transparency and good communication; agility and flexibility to accommodate current and future business needs and challenges; interest in ‘gainsharing’ between 3PLs and shippers; and interest in collaborating with other companies, even competitors, to achieve logistics cost and service improvements. Interestingly, results from the current study suggest that both gainsharing and collaboration an average of 12 per cent of their companies’ sales revenues. Total logistics expenditures include transportation, distribution, warehousing and valueadded services. Regional differences range from 11 per cent in each of three regions to Latin America’s 14 per cent of company sales revenues. Shippers devote an average 42 per cent of this total to outsourcing. A new series of questions in the

42 • SMART LOGISTICS • FEBRUARY 2012

•

may have lost some popularity due to the recent modest improvements in the global economic picture. 3PL Use Pays Off: Metrics, including logistics cost, inventory cost and fixed asset reductions due to the use of 3PLs, as well as order fill rate and order accuracy, validate the cost and service improvements resulting from successful 3PL relationships. Execution-oriented Activities Still Lead: Logistics activities most frequently outsourced continue to include those that are more transactional, operational and repetitive, while those less frequently outsourced are those that are more strategic, customer-facing and IT-intensive. In future, customers may be more receptive to strategic services that may be available from 3PLs. One observation from this year’s study is that generally, the percentages reported by shippers for outsourcing of individual logistics activities is down slightly from those reported in recent years. As indicated earlier, this is likely due to the fact that this year’s shipper survey respondents included a higher percentage of respondents in the lowest annual sales category than in the previous year’s study – and companies in the lower annual sales categories tend to outsource fewer logistics services. IT Gap Remains: IT remains a key component of 3PL-shipper relationships and the 2012 3PL study results indicate that 54 per cent of shipper respondents are satisfied with 3PL IT capabilities as compared with 93 per cent who indicate that IT capabilities are a necessary element of 3PL expertise. New 3PL Selection Criteria: Fuel efficiency and carbon emissions are becoming a more important part of shippers’ 3PL procurement decision processes. Reasons For Non-Use Persist: Non-users of 3PL services provide reasons why they choose not to outsource to 3PLs. Among the most prevalent, logistics is a core competency; logistics is too important to consider outsourcing; cost reductions would not be experienced; too difficult to integrate our IT systems with the 3PLs’ systems. According to other shippers, these are some of the same factors that are responsible for their decisions to not use 3PLs.

2012 3PL study asked shippers to report the percentages of transportation and warehousing spend that are managed by third parties. As indicated in Figure 1, the overall average for transportation was 56 per cent, but the regional averages ranged from 41 per cent in North America, to over 60 per cent for shippers in Europe, Asia-Pacific and Latin America. The average warehouse operations spend

managed by third parties was 39 per cent, with only modest variation by individual region.

REPORTED CHANGES IN USE OF 3PL SERVICES In recent studies, shippers were asked whether they were increasing their use of outsourced logistics services, or returning to insourcing many of them. The responses represent an interesting

they use and 72 per Results All Regions cent of 3PLs feel Logistics Cost Reduction (%) 13% that customers, Inventory Cost Reduction (%) 9% Logistics Fixed Asset Reduction (%) 25% in general, Changed From 70% are reducing/ Order Fill Rate Changed To 79% consolidating Changed From 80% the number of Order Accuracy Changed To 87% 3PLs they use. Source: 2012 16 Annual Third-party Logistics Study This general Figure 2: Shippers Continue To Experience Measurable Beneﬁts From trend towards Use Of 3PL Services consolidation is consistent with contemporary with new & innovative ways to improve trends in procurement and strategic logistics effectiveness and 91 per cent of sourcing. 3PL providers feel that this statement accurately characterises the services they Interestingly, this year, there is provide. The gap continues strong evidence that the predominant between the ratings that shipper direction among shippers is to move respondents assign to various aspects towards increased use of outsourced of the 3PL-shipper relationship logistics services. and the more positive evaluations provided by the 3PL respondents 3PL-SHIPPER RELATIONSHIPS themselves. CONTINUE TO PROGRESS & IMPROVE Around 88 per cent of shippers view their 3PL relationships as generally SUCCESS FACTORS successful, as compared to 94 per cent According to the survey findings, of 3PL respondents. Shippers’ ratings the following are key ingredients to are consistent across regions – North successful 3PL-shipper relationships: America 89 per cent; Europe 88 per • Openness, transparency and good cent; Asia-Pacific 89 per cent and Latin communication: While 69 per cent America 87 per cent. Around 71 per cent of shipper respondents are satisfied shippers indicate that 3PLs provide them with the openness, transparency and communication received from Percentages Reported By Information Technologies 3PLs, only 62 per cent of 3PLs are Shippers 3PL Providers satisfied with these characteristics in Transportation Management (Execution) 75% 79% their relationships with customers. Transportation Management (Planning) 68 76 So, apparently there is a need for Warehouse/Distribution Centre Management 67 79 both parties to consider the value Electronic Data Interchange (Orders, Advanced Shipment Notices, 66 78 that could be gained by being Invoicing) Visibility (Order, Shipment, Inventory, etc.) 63 75 more willing to share appropriate Web Portals For Booking, Order Tracking, Inventory Management and 55 68 information with their business Billing partners. Barcoding 47 56 • Agility and flexibility: Nearly 98 per Customer Order Management 42 63 cent 3PLs feel that their customers Transportation Sourcing 41 51 expect them to be sufficiently Global Trade Management Tool 37 37 agile and flexible to accommodate Supply Chain Planning 31 54 the shippers’ current and future Network Modelling and Optimisation 25 42 business needs and challenges. But Collaboration Tools (SharePoint, Lotus Notes, Video Conferencing, etc.) 25 38 just 68 per cent of shippers judge Supply Chain Event Management 24 44 their 3PLs as being sufficiently agile RFID 21 32 and flexible. This aspect of 3PLAdvanced Analytics and Data Mining Tools 19 37 customer relationships clearly needs Yard Management 16 26 improvement and deserves careful Source: 2012 16 Annual Third-party Logistics Study watching. Figure 3: Shippers Still Prioritise Execution-oriented 3PL IT Capabilities

record of the shifting use of 3PL services: • Increasing use of 3PL services: Nearly two-thirds (64 per cent) of shipper respondents reported an increase in their use of outsourced logistics services, and 76 per cent of 3PL respondents agree that this is what they are seeing from their customers. Regionally, 58 per cent of North American shippers as well as 57 per cent of European, 78 per cent of Asia-Pacific and 73 per cent of Latin American shippers reported increased use. • Returning to insourcing: Consistent with the churn that occurs each year with some companies increasing outsourcing and others bringing logistics activities back in-house, an average of 24 per cent of shipper respondents are returning to insourcing some of their logistics activities. Around 37 per cent of 3PL respondents observe that some of their customers are returning to insourcing logistics activities. • Reducing/consolidating the number of 3PLs used: Slightly over one half (58 per cent) of shipper respondents are consolidating the number of 3PLs

FEBRUARY 2012 • SMART LOGISTICS • 43

3PL Services, continued

100% 89%

91%

90%

92%

85%

94%

3PLs. Despite this improvement, the opportunity remains to further narrow the gap between these two ratings.

93%

88%

80% IT Gap 60%

54% 42%

40%

42%

40%

42% 37%

35%

33%

54%

27% 20%

0% 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

IT Capabilities Necessary Element Of 3PL Expertise Shippers Satisﬁed With 3PL IT Capabilities Source: 2012 16th Annual Third-party Logistics Study

Figure 4: ‘IT Gap’ Shows Improvement, But Further Opportunity Remains

• Interest in ‘gainsharing’ between 3PLs and shippers: Gainsharing comes up frequently during shipper workshops, and there are mixed signals regarding this form of shipper-3PL collaboration. This year, 56 per cent of 3PL respondents and 42 per cent of shippers, reported engaging in gainsharing arrangements. While many shippers consider gainsharing to be a useful incentive for themselves and their 3PL providers to work toward agreed upon objectives and in keeping with the principles of good collaboration, others seem to feel that the basic agreement with a 3PL should cover all areas where performance is expected, and that it is not necessary or appropriate to engage in gainsharing practices. Interest in gainsharing may be diminishing somewhat due to slight improvements in the global business economy. • Collaborating with other companies, even competitors: Around 44 per cent of shipper respondents and 67 per cent of 3PLs expressed interest in these strategies.

MEASURABLE BENEFITS Shipper respondents experience measurable benefits from 3PL services, as seen in Figure 2. The survey results

44 • SMART LOGISTICS • FEBRUARY 2012

showed that 60 per cent of shipper respondents report their use of 3PLs has led to ‘year over year incremental benefits’ and 88 per cent of 3PL respondents agree. Despite the positive success ratings perceived by both shippers and 3PLs, there appears to be opportunity to enhance the benefits experienced by users of outsourced logistics services.

INFORMATION TECHNOLOGY Figure 3 summarises the IT capabilities that shippers and 3PLs feel are ‘must haves’ for 3PLs to successfully serve customers. Overall, the most needed capabilities are those that relate directly to execution-oriented activities and processes such as transportation, warehouse/DC management, electronic data interchange, visibility, etc. Others that have somewhat lower rankings tend to be more strategic and analytical. Highlighted in Figure 4 is a view of shippers’ opinions on whether they feel IT is a necessary element of 3PL expertise, and whether they are satisfied with their 3PL providers’ IT capabilities, the difference that has become known as the ‘IT Gap’. In recent years there has been a modest increase in the percentages of shippers who indicate satisfaction with the IT capabilities of their

WHAT 3PL USERS OUTSOURCE AND WHAT 3PL PROVIDERS OFFER Provided below are some general observations about this year’s results: • Transactional, operational and repetitive activities tend to be the most frequently outsourced. These include international and domestic transportation (78 per cent and 71 per cent across all regions studied), warehousing (62 per cent), freight forwarding (57 per cent) and customs brokerage (48 per cent). This usage varies across each of the regions. Further analysis of the available data confirmed that the higher the sales category, the higher the average number of logistics activities outsourced. • The percentage of shippers outsourcing international transportation has increased slightly to 78 per cent. Over the same time frame, the reported use of customs brokerage declined from 71 per cent to 58 per cent to 48 per cent and the reported use of freight forwarding services declined from 65 per cent to 53 per cent and then increased to 57 per cent. According to the 2012 survey, many 3PLs provide a wide range of services. The typical model is for 3PLs to offer a substantial number of services to respond effectively to their customers and their logistics needs. The study reveals that 29 per cent of shippers rely on 3PLs to provide visibility to fuel efficiency and carbon emissions information. Around 53 per cent of shippers say that fuel efficiency and carbon emissions have become an important part of their 3PL procurement decision processes. This article is an excerpt from the whitepaper ‘2012 Third-Party Logistics Study – The State of Logistics Outsourcing’ Results and Findings of the 16th Annual Study.

GLOBAL BEST PRACTICES INSIGHTS & OUTLOOK

In India, logistics costs continue to be high in terms of percentage of GDP. While it is as high as 13 per cent in India, it is around eight per cent in developed countries. By following sound and strategic supply chain practices like Vendor Managed Inventory, establishing a governing supply chain council, making technology work & establishing alliances with key suppliers along with engaging in collaborative strategic sourcing, can minimise supply chain costs by about ﬁve per cent. ARINDAM GHOSH

TODAY, the primary objective of all companies in India is to ensure that their products get the highest possible visibility across maximum openings. The same could be achieved through a well organised and efficient end-toend logistics solution, and third-party logistics (3PLs) service providers bring this expertise to the table. 3PLs not only offer companies good logistics solutions for all their products, but also allow them to focus on critical activities like marketing, manufacturing, etc.

Darcl Logistics, says, “They can invest in the best of technologies and implement & adopt them in processes, which may not always be the case for user industry companies as it may not be their core expertise. Nonetheless, opting for 3PLs is a viable option as people specialising in logistics can have the best of experts. Moreover, they can design the best of infrastructure for their clients.”

3PL: A VIABLE OPTION

According to a World Bank report on logistics based on a worldwide survey of ground operators, India ranks 47

The rising growth of the logistics sector in India along with the ever increasing competition among various companies in the market to ensure that their products’ get more visibility has spurred the growth of 3PLs in India. Commenting on why companies are opting for the services of 3PLs for outsourcing their logistics operations in India, Puneet Agarwal, President,

ADOPTING GLOBAL PRACTICES TO BETTER SUPPLY CHAIN MANAGEMENT

on the Logistics Performance Index. To improve supply chain management, SL Ganapathi, COO, NTL Logistics Plus India, feels that there is a major requirement to redesign the distribution network. “While in other countries strategic factors like lead time to market, competition and transport costs versus inventory holding costs trade off would govern the network design, other extraneous factors come into play when considering India. Using of shared warehouses (for distribution) is something which can be quickly put into practice in India with some change in mindset of the industry,” he says.

In other countries strategic factors like lead time to market, competition and transport costs versus inventory holding costs trade off would govern the network design, other extraneous factors come into play when considering India. Using of shared warehouses (for distribution) is something which can be quickly put into practice in India with some change in mindset of the industry. SL Ganapathi, COO, NTL Logistics Plus India

FEBRUARY 2012 • SMART LOGISTICS • 45

Global best practices, continued

Discussing other global practices, Ganapathi adds that the Vendor Managed Inventory (VMI) system can also play a crucial role here. “Though the VMI system does not eliminate inventory, it minimises them and enhances coordination between the vendor and customer,” he says, adding that this practice has been widely adopted by auto companies in India. According to Agarwal, “If we follow sound and strategic supply chain practices, we will definitely be able to minimise the supply chain management cost by five per cent.” Agreeing with his views, Ganapathi adds, “Depending on the maturity of the company’s supply chain, there is scope to save on supply chain costs anywhere from five per cent upwards.”

BEST IN CLASS SUPPLY CHAIN ORGANISATION In order to achieve a best in class supply chain organisation, Agarwal believes that the following suggestions would create a systematic approach to measure the effectiveness of building an efficient supply chain: • Establish a governing supply chain council: Apart from ensuring that the supply chain strategy directly correlates with the corporate strategy, the council can also help eliminate the barriers to success within an organisation. And by overcoming these barriers, members of the council can help to ensure that the supply chain organisation is given the opportunity to perform to its full potential. • Make technology work & establish alliances with key suppliers: The primary objectives of an effective alliance management programme with key suppliers and robust technology infrastructure include: - Providing a mechanism to ensure that the relationship stays healthy and vibrant - Creating a platform for problem resolution - Developing continuous

46 • SMART LOGISTICS • FEBRUARY 2012

improvement goals with the objective of achieving value for both parties - Ensuring that performance measurement objectives are achieved - Controlling overall the relevant operations Ensuring the optimisation of resources in terms of time, minimisation of transit losses and saving the shelf life of product & services. • Engage in collaborative strategic sourcing: Strategic sourcing is a cornerstone of successful supply chain management. But a collaborative strategic sourcing initiative produces even better results. Some of its benefits include: - Elimination of infrastructure investments - Access to world-class processes, products, services & technologies

According to a World Bank report on logistics based on a worldwide survey of ground operators, India ranks 47 on the Logistics Performance Index. - Improved ability to react quickly to changes in business environments - Risk sharing - Better cash-flow - Reduction of operating costs - Exchange of fixed costs with variable costs - Access to resources not available in one’s own organisation. According to Agarwal, “All the abovementioned processes can easily be adopted by Indian companies; only the user industry should be willing to spend and invest time with their chosen partners.”

REASONS FOR HIGH LOGISTICS COST IN INDIA Logistics, supply chain efficiency and

cost savings can provide companies a cutting edge, especially when mass manufacturing has been reduced to a routine activity. However, Agarwal says that there are certain factors which contribute to high logistics costs in India. Some of these include: - A defective tax regime that forces companies to have smaller warehouses in each state, thereby increasing costs - Inadequate road infrastructure and time consumed at check posts that lead to longer transit times - Inadequate rail infrastructure that leads to higher dependence on roads which is a more expensive means of transportation - Inadequate warehousing/cold chain infrastructure that lead to wastages - Logistics industry being highly fragmented and relatively unorganised apart from the relative absence of a large-scale specialist - Lack of information about the available cargos create delays in freight transportation, which, in turn, increases the running costs of the vehicle.

THE WAY FORWARD India’s diverse geographical boundaries; changing consumer patterns, tastes and preferences and the presence of diverse infrastructural conditions across the country undoubtedly poses a major challenge for companies to effectively manage their supply chain. Nonetheless, despite these barriers, the Indian logistics sector continues to evolve and complement the country’s remarkable economic progress. Further, the future of the Indian logistics sector is prosperous. And at US$110 billion, the sector is expected to touch the US$200 billion mark. Following some of the global supply chain practices may play a key role in helping the sector cross that figure along with the improvement in supply chain management solutions. arindam.ghosh@infomedia18.in

3PLss CHANGING ROLES INSIGHTS & OUTLOOK 3PL

NISHI RATH

ACCORDING to a recent research report by RNCOS, ‘3rd Party Logistics Market in India’, India is witnessing an increasing demand for third-party logistics (3PL) business with companies now concentrating more on managing their supply chain mechanisms in a better way and deepening their market penetration. It is also expected that improving infrastructure and rising focus on core business operations will enhance the growth prospects of the Indian 3PL market.

WHY ARE 3PLs DOING WELL? The connectivity and communication requirements of leading supply chains have led to the emergence of a more advanced role for 3PL service providers. With rise in competition, companies seeking to deliver value to customers, have increasingly started focussing on efficiencies in all business processes apart from their core competencies and have started outsourcing functions that can be performed more efficiently by 3PLs. Additionally, 3PLs have been identified as a primary function that can enable companies to cut costs and improve responsiveness. Earlier, 3PLs provided logistics services like transportation and warehouse management. However, due to the increased volume and scope of services demanded, 3PLs are now performing additional roles. As a result, today, many such providers are engaged in coordination of their customers’ supply chain activities. Some of the main reasons for using the services of 3PLs include: • Logistics costs reduction • The need for companies to focus on their core competencies • Improved customer service by using the competencies of the service providers • Increased inventory turns & productivity improvements.

Building on

EXPERTISE to tackle SCM challenges

Third-party logistics (3PL) companies have, over the years, grown to become an important part of the supply chain. With companies realising the need to become lean, reduce their assets and increase their focus on core business processes, 3PLs will continue to witness promising growth prospects.

CUTTING ON TRANSACTION COSTS Cutthroat competition has forced companies to focus on their core competencies and increasingly outsource business tasks perceived as non-core. The basic fact lies within the theory to minimise the sum of its transaction and production costs. The deal here is that outsourcing to 3PLs will give companies an opportunity to reduce transaction costs that include centralised order processing, efficient use of assets and consolidation of overhead by a 3PL. No doubt opting for a 3PL service provider will also incur costs, but according to industry experts, dealing with one cost is better than managing multiple relationships without a 3PL. The transaction costs are further reduced through standardisation of processes as well as improvements in coordination by the 3PL. Outsourcing

logistics to 3PLs is also proven to eliminate infrastructure investments of a company. Apart from this, it also helps generate better cash flow and provides access to all other resources that may not be available in-house.

FOCUS ON CORE FUNCTIONS As a result of the changing business environment and competition from various global players, organisations in India have moved on to concentrate on their core activities and offload the logistics functions to experts in the field. “3PL firms help their clients to focus more on the other important part of the business, thereby strengthening its core competencies,” said an industry expert on condition of anonymity.

TAILOR MADE SOLUTIONS AND CUSTOMER SATISFACTION Outsourcing

enables

the

firm

FEBRUARY 2012 • SMART LOGISTICS • 47

3PLs changing roles, continued

to manage its supply chain as a single entity as well as promotes coordination among the business entity. With the levels of competition on the rise, companies are now yearning for maximum visibility into the flow of goods from their suppliers, and even their suppliers’ suppliers, to help them optimise on inventory management, reduce lead time apart from reducing transportation costs. In addition, they need practical solutions that can be creatively tailored according to the company’s requirements – what better than going in for an expert in this? Outsourcing also helps the company meet customer satisfaction. A 3PL service provider, being an expert, can deliver better customer service and that too at a shorter shipment time with reduced delivery costs.

SECTORS DOMINATED BY 3PLs According to the RNCOS report, the automobile and retail industry will be the largest end user industry for 3PL services, multinationals being the dominant users. FMCG and IT hardware sectors are among the other sectors, which have provided considerable contribution to the 3PL market and have significant potency to grow in future as well. Currently, over 95 per cent of the automobile companies outsource their transportation function to 3PL. The size of the 3PL market in the auto & auto components industry is likely to grow at an impressive CAGR of around 28 per cent accounting to $3,200 million by 2012-14, the report added.

IMPROVEMENT OPPORTUNITIES The demand for 3PLs in India has continued to witness steady growth

EVOLVING ROLE OF 3PLs Growing customer demands have led to 3PLs performing an integrated set of logistics activities. Furthermore, as outsourcing logistics services grew, the role of 3PLs within the supply chain started changing from initially offering transportation services, to warehousing, inventory management, packaging, cross docking and technology management in several cases. Talking about the Indian industry, warehousing, inbound and outbound transportation, custom clearing and forwarding are the most frequently outsourced activities, whereas activities such as packaging, fleet management and consolidation are also growing in demand. More companies are set to use 3PL services in the future as an integrated set of services rather than for just mere transportation. As is evident, the usage of 3PL services can help firms gain substantial results, both in terms of cost reduction as well as customer satisfaction. This, in turn, will help increase the outsourcing of logistics functions in the near future for improved business results and supply chain efficiencies.

48 • SMART LOGISTICS • FEBRUARY 2012

Benefits of using services of 3PLs • 3PL providers help client companies focus more on its main objectives rather than the logistics. It helps strengthen its core competencies. • They can provide more expert and specialised logistics services to improve the company’s competitiveness. • They help companies remain competitive without owning much assets & resources and help reduce company’s operational costs. • The services provided by 3PL companies can be customised according to the market conditions or clients’ demands. • Services provided by 3PL companies help to improve productivity and significantly reduce costs. • Services provided by these companies mostly cost lesser as the resources are not needed to be bought or rent.

over the last few years, taking into consideration the number of domestic players opting for 3PL services. The

Outsourcing logistics to 3PLs is also proven to eliminate infrastructure investments of a company. Apart from this, it also helps generate better cash ﬂow and provides access to all other resources that may not be available in-house. penetration of 3PL and the propensity of customers to outsource have been most pronounced in transportation, followed by warehousing, as these sectors have been easy to implement, historically used, point solutions that can be readily offered to customers. In line with this development, it is expected that improving infrastructure and rising focus on core business operations will lead the future growth of the Indian 3PL market. The market is anticipated to witness a CAGR of around 27 per cent during the forecast period (2012-14), harvesting a total revenue of nearly $5.8 billion by 2014.

BRIGHT FUTURE The demand for 3PL providers has increased dramatically through the years because of their ability to provide various services not just to the company, but also to their customers. India’s huge geographical diversity requiring varied logistics expertise for each region presents the biggest challenge that needs to be addressed by 3PL service providers. To overcome this problem, 3PL companies need to make a good amount of investment to setup a logistics network that would support the flow of products from the client’s manufacturing plant to the end customers. This can be undertaken by building warehouses and distribution centres at locations required by their clients. nishi.rath@infomedia18.in

NIKE LOGISTICS CASE STUDY

RIDING GROWTH ON A CARBON MANAGEMENT STRATEGY Determined to reduce the impact that its global operations have on the environment, the Nike European Logistics Centre teamed up with Damco to assess Nike’s logistics emissions. Using Damco’s SupplyChain CarbonDashboard, Nike Europe now has a complete overview of all its emissions – by activity, product group and trade lane – and can make the changes required to hit its ambitious environmental goal – a 30 per cent reduction in its global carbon footprint by 2020. NIKE sees Corporate Social Responsibility (CSR) as a catalyst for growth and innovation. The company is striving to become a frontrunner in the CSR field. As part of this, and amid growing concerns about the environment, Nike’s goal is to reduce the global carbon footprint of its logistics by 30 per cent by 2020. As a first step, Nike Europe needed to get a detailed overview of the emissions arising from its logistics activities – and that is where Damco came in.

via Nike’s European warehouse, including ocean transport, aviation, trucking, rail, barge, port operations and consolidation. Nike also wanted the reports to display specific details, so the Damco project team developed the SupplyChain CarbonDashboard, which enabled Nike to see its: • Total carbon footprint • Carbon dioxide emissions per activity, per product group and per trade lane.

THE RESULTS… AFTER DAMCO INTERVENES… Damco used its advanced carbon footprint calculator to review the emissions from Nike Europe’s supply chain, and, in a 12-month pilot, the project provided quarterly reports on a part of the supply chain. The reports measure the carbon footprint of all inbound and outbound transportation

With the quarterly reports, Nike is now working strategically to reduce its carbon footprint. The reports give the Nike team a detailed understanding of what causes carbon emissions and enables them to closely track the effects of any new reduction initiatives. This means: • An overview of the Nike Europe

With Corporate Responsibility being part of Nike Inc’s business processes, it is important to know and reduce our transportation environmental footprint. Damco’s SupplyChain CarbonDashboard enables us to periodically measure and report our transportation carbon footprint, supporting our continuous reduction processes.

carbon footprint for 2009 • Understanding the specific activities that contribute to carbon dioxide emissions and better project execution with target and KPI setting • Better decision making and complete tracking of new initiatives.

OTHER LESSONS LEARNT… Thanks to this work, Nike learned that air transportation was one of the main hotspots in its supply chain, and has begun to develop alternatives. Its air reduction programme, for example, has already had an impact by using less air transportation and instead using cleaner alternatives, such as ocean transport. Also, working with Nike, Damco developed container utilisation KPIs that have reduced the number of FFEs shipped to bring down carbon dioxide emissions from shipping as well as reducing carbon emissions. The initiatives started by Nike have also helped reduce supply chain costs. This success has led Nike to ask Damco to look into rolling out the solution on a global scale.

Jurgen Goossens, Programme Manager – Strategy Development, Nike Europe

Courtesy: Damco

FEBRUARY 2012 • SMART LOGISTICS • 49

FACILITY VISIT OIL FIELD WAREHOUSE & SERVICES (OWS)

Providing

INNOVATIVE SOLUTIONS through

SEZ

With India’s energy demands set to increase fourfold, the offshore oil & gas (O&G) sector has got encouraging support from the Government, impacting offshore O&G logistics directly with huge demand for transportation of drilling and exploration equipment. Amid this backdrop, a company which has been set up on an innovative business model is Oil Field Warehouse & Services (OWS), with its facilities at Visakhapatnam and Mundra. Banking on the SEZ opportunity, OWS has brought in savings to the tune of a whopping `75 million for its customers, through beneﬁts which were not ever thought about by Indian O&G logistics players. All images by OWS

SUMEDHA MAHOREY

AS per the indications of the Integrated Energy Policy of the Planning Commission, Government of India, the country’s energy demand is set to grow fourfold from 433 MTOE to around 1,856 MTOE by 2032. However, India has to depend on foreign inflow of oil to meet the ever-rising demand. In order to facilitate offshore oil & gas (O&G) exploration, the Centre has come up with a phased auction of seabed plots allotted to both private and public players to encourage offshore drilling. Termed the New Exploration Licensing Policy (NELP), this policy has so far awarded 235 exploration blocks from NELP I to NELP VIII rounds. Thanks to NELP, 50 per cent of India’s sedimentary basin area is under offshore exploration. This, in turn, has resulted in an increase in hydrocarbon reserves equivalent to 600 million metric tonne. As part of the NELP programme, firms are encouraged, via incentives, like tax exemptions on imports, low to moderate royalty rates, concessions for

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deepwater blocks, etc., to explore deep seabeds. Additionally, foreign direct investment (FDI) has been allowed up to 100 per cent in exploration (including offshore), refining (private sector only) and retailing of petroleum products. Thus, gradually, the Indian oil sector is moving from a subsidy and price-controlled environment to a free market, and alongside, paving the way for initiatives in offshore logistics.

AN INNOVATIVE BUSINESS MODEL Exploring the opportunities that lie in this sector, Oil Field Warehouse & Services (OWS) has come up with a unique business model of providing complete support from the Visakhapatnam SEZ and Mundra Port right from picking up of goods/ equipment from any part of the world, storing it in the SEZ to delivering it to clients in India and the subcontinent as per their requirement. Explaining the intricacies of the hierarchical standing of their logistics services, Vinay Sharma, MD, Oil Field Warehouse &

Services, highlights, “There are three layers of functions during exploration & production (E&P) activity in the O&G sector. The first circle belongs to operators like ONGC, Reliance, etc., who have been assigned blocks for E&P. The second circle belongs to service providers, followed by providers like us who offer services to these companies in the second circle. In the third circle, we take care of the complete offshore groundwork.” “If a rig has to operate, 90-95 per cent of the material equipment, consumables and returnable are sourced from outside. The first step here is freight forwarding of major requirements from all over the world. Then follows customs clearances and trucking. Finally, the material goes to the rig as per the requirement. After the job is done, these materials are brought back to the store base. And after the campaign is over, the material or capital goods, which have been hired on a rental basis, are returned. Thus, it is a full chain of services provided by LSPs like us,” he adds.

THE SEZ BENEFIT

the SEZ. Thus, there is no need to have 100 per cent back up Upstream activities in the offshore, quantity. i.e. E&P, includes many agencies Heavy equipment used in offshore O&G drilling and • Operators can save on huge as well as regulatory permissions. exploration is stored at OWS’s facility at Visakhapatnam costs on expired chemicals by Based on the OWS model, O&G and maintenance. On the contrary, sourcing the required quantity as operators benefit at multiple levels. these can be repaired in the SEZ and when needed from the vendors’ Some of these include deliveries facility, thereby saving on downtime stocks in the SEZ. possible even on holidays or late and costs associated with it. Also, with • If a seismic data processing centre night as customs in the SEZ work on the OWS facility in the SEZ, the is established by any company in a 24-hour basis. It is estimated that operator will not be required to provide the SEZ, the operators will benefit Indian operators pay close to US$10 the Essentiality Certificate for spare immensely. million as mob & demob charges to parts to the contractor for servicing/ • There is no need to ask the Ministry contractors for their tools/equipment repairing the tools. The contractor will of Defence (MoD) or Directorate being brought from all over the world be able to bring in their spares into the General of Hydrocarbon (DGH) and sent back only to be re-imported SEZ and be accountable for its use. for nomination of escorts of data to for other operator/block/contract. Thus, a lot of space, use of equipment other countries. By keeping such equipment/tools in and other resources can be saved by • Save huge costs on sending out data the SEZ, most of the mob and demob operators, which they have to provide to other countries and arrangements costs can be saved. Operators can also free of cost to contractors/vendors for to be made for officials of company, export entire returnable equipment/ keeping their material by making them MoD & DGH. tools lying in the present warehouses shift to the SEZ and providing them • Operators with multiple blocks to the SEZ and get all bonds cancelled the same kind of service. need not buy materials like casing for export made into the SEZ and for multi-blocks or for individual reduce corporate exposure. Presently, Also, in case of emergency, blocks and then do book transfers the operator has to provide costly space many tools/equipment need to be or hold excess inventory in one to the contractor to store their backup air freighted at exorbitant costs and block and no inventory in the tools and insurance spares. With this worries. By asking vendors/contractors other. By sourcing such materials facility, contractors can keep such and suppliers to keep emergency backup from the SEZ as and when required stocks in a pool at the SEZ facility, tools/equipment in the SEZ, such kind and for particular blocks, inventory while operators can save on costly space of tense moments can be reduced. The in their shore base. A benefit from this is that drilling operations being time We are planning to set up a fabrication facility at a cost of nearly `500 crore near Visakhapatnam to cater to sensitive, the tools/equipment will be the growing demands of the offshore O&G business. available ex-stock to operators from This facility is slated to come up in the next 2-3 years within the country. and land for the project has been already acquired by Currently, many consumables like the company. With this facility in place, the time taken by offshore vessels for unloading-reloading would be reduced to 3-4 hours as compared to drill bits are imported by operators the present 18-20 hours. on a consignment basis. If used, the Vinay Sharma, MD, Oil Field Warehouse & Services contractor is paid and balance bits have to be exported back to the vendor. A lot of unwanted inventory and space management can be done in a more biggest savings can be achieved, as all is built up at the operator’s end. efficient manner. local procurements of material into However, with the SEZ facility, the • The user can check the contractor’s the SEZ will be free from excise duty, vendor supplies the bits as and when equipment for its operational sales and service tax. This will be the ex-stock from the SEZ and operator condition. There is no need to biggest saving and can be up to 25-35 will not be required to carry vendors’ call for all the equipment to the per cent of the local procurement cost. inventory in their required shore base. shore base and assemble it for The other benefits include: The vendor can offer such bits kept certification. • No need to Block Transfer any in the SEZ to other operators. Loss material. It would be import from of opportunity due to bits not being SEZ and export to SEZ. PLANNING FOR OFFSHORE SAFETY available to others can thus be reduced. • Operators can save on re-stocking Offshore O&G logistics is a critical Saving can be derived as the tools need costs on surplus chemicals by function in this industry. Explaining not be sent to other countries for repair sourcing as per requirement from its role, Sharma elaborates, “The

FEBRUARY 2012 • SMART LOGISTICS • 51

OWS, continued

success and failure of O&G depend on the logistics service provider. In O&G, time is costlier than dollars on two accounts. Firstly, safety, because when we are working in the offshore environment, there is limited space on the rigs and we are working at 3,000 metre water depth, nearly 50-60 nautical miles away from the shore. Secondly, the drilling process is very costly. One rig working in the offshore will cost around $0.5 million a day including the rent of the rig and the peripheral services. So, the losses could be huge. Thus, it is all about right planning, right people, right methods and right systems.” “Our planning is very short term in nature and is dependent on the demand of our clients. We have to be flexible to meet the evolving requirements, as the equipment is large, of odd shapes and needs to be transported and made available within the specified time frame. We provide only inland transportation to the operator site. After that, on sea transportation is taken care of by the service provider,” he adds.

MANAGING THE PEOPLE REQUIREMENT Experience, technical know-how, skill set and right manpower are some of the biggest challenges underlining the Indian offshore O&G logistics business. Sharma elaborates, “The biggest challenge in the Indian market is that there are very few players who have got on hand experience. Even though there are companies providing services, they provide services because there is nobody else to. Internationally, there are companies who are big,

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experienced and who are looking at multiple locations around the world. Another issue is that the skill set required in O&G needs to be raised. This will bring about a safe working culture, which is an utmost necessity in the O&G sector. Then comes improvement in productivity, time and cost savings. New companies are entering this sector, but there is a lack of educational or training institutes in this domain.” Tackling this, OWS recruits people and trains them inhouse in order to suit the specific needs of the O&G sector. Sharma avers, “Three types of resources are required in our operations – material handling, manpower and trucking. We have adequate MHE resources. In case we have more orders, we hire from outside. Today, we have 170 people, who are all trained in-house on the job.”

of drilling. In offshore, a single well can cost anything between $20 million and $40 million, depending on the water depth. To protect its interests, the Government of India has taken bank guarantee from these operators. If these operators do not initiate the activities, the government plans to encash the bank guarantee, and ban the operator from the future bidding process. Thus, to protect their bank guarantee, they will have to initiate the drilling process. This implies that these operators will have to initiate exploration, which, in turn, means business for logistics service providers in the near future.” Discussing the company’s success in this monopolistic market so far, Sharma points out that the company’s turnover grew from `5.5 crore in the first year to `17.5 crore in the second year of starting its operations.

THE NELP OPPORTUNITY

FUTURE PLANS

The offshore O&G logistics business has hit a jackpot with NELP round IX. According to Sharma, “In India, the logistics of O&G is governed by NELP. The NELP IX round has already taken place, but the actual work of E&P has happened up to NELP V only. Work related to rounds VI, VII and VIII is in progress. Also, the number of operators has increased after NELP V. So, many activities, which will create opportunities for service providers in the logistics part of this sector, are anticipated. The operators, who have been allotted the blocks under NELP, have given commitment to the Government of India that they will undertake a pre-specified amount

OWS is planning to set up a fabrication facility at a cost of nearly `500 crore near Visakhapatnam to cater to the growing demands of the offshore O&G business. This facility is slated to come up in the next 2-3 years and land for the project has been already acquired by the company. With this facility in place, the time taken by offshore vessels for unloading-reloading would be reduced to 3-4 hours as compared to the present 18-20 hours. This would immensely benefit the O&G operators and reduce dependence on foreign players for building platforms and rigs. With innovation at the base of all its operations, and a huge cost saving of `75 million for its customers due to its presence in SEZ, OWS’s smart supply chain strategy has created a new market, which was seldom thought by players in the sector. Creating benchmarks one after another, OWS is moving ahead with innovative strategies, supported by apt on ground implementation. What needs to be seen is whether this cost saving business model finds followers in the Indian logistics industry in time to come.

VEHICLE POWER MANAGEMENT AUTOMATION TRENDS

Shielding Vehicles from

ELECTRICAL HAZARDS

Many challenges such as extreme temperature, vibration and shock, RF technologies and so on are faced when designing in-vehicle computers. The most important aspect related to power. Standard IT products are not suitable for use in-vehicles as transient power conditions may damage equipment or even cause explosions. Therefore, the ﬁrst priority for the in-vehicle environment is solving the crucial problems presented by abrupt power failure by including vehicle power management systems to manage the working status of electronic devices. THE automotive environment is fraught with electrical hazards. These hazards, including electromagnetic interference, electrostatic discharges and other electrical disturbances, are generated by various vehicle sub-systems such as ignition, relay contacts, alternator, injectors and other accessories. These generated hazards can occur directly in the wiring harness in case of conducted hazards, or may affect electronic modules indirectly via induction. Hazards can impact electronics in two ways – either on the data lines or on the power rail wires – depending on the environment. In determining the kinds of factors that will cause problems, the first priority for the in-vehicle environment is solving critical problems introduced by power sources. In most present-day motorised vehicles, the DC power source is provided by a lead-acid rechargeable battery, and that battery is charged by the engine and a generator or an alternator. The DC voltage in such an environment is seriously impacted by ignition signals, motor RPMs (speeding up or slowing down), loading devices (audio system, MOD, PND, lamps, horn, etc.).

THE TRANSIENTS The severest transients result from either a load dump condition or a jump start overvoltage condition. Other transients may also result from relays and solenoids switching on & off, and from fuses opening. Some of the transients are: Load Dump A load dump condition is caused from a vehicle battery disconnect. When a vehicle battery is disconnected while

To ease the installation of in-vehicle applications, a wide input range is necessary. This not only reduces risk from installation mistakes, but also improves resistance against cold crank conditions, jump starts and load dump conditions. the alternator is still generating a charging current, the current will raise the voltage to a high level in a short time, thereby causing damage to the electronic equipment. The severity of a load dump pulse is determined by the alternator speed and the level of the alternator field excitation at the moment of battery disconnect. Cable corrosion,

a poor connection or an intentional battery disconnect might lead to a load dump condition. Although load dump conditions do not occur often, they are of concern as their high voltage and huge energy surges are unbearable for most transient protection components and can result in permanent damage to in-vehicle electronic devices. Jump Start A jump start is a condition that occurs when two batteries are connected in series to provide the higher voltage needed to start an engine when it is cranked in cold weather, and the engine oil is very thick. In a nominal 12-volt vehicle system, the jump start voltage would be 24 volts. If the electronic devices are not designed with this in mind, a jump start condition will lead to damage. Cold Crank A cold crank condition occurs when a car’s engine is started at cold temperature. The engine oil’s viscosity is high and thus requires more current from the battery to start the engine. The large current load will cause the battery voltage to drop below 5 volts. For a general vehicle computing device, especially a PC-based one, 5-volt power is a very crucial power

FEBRUARY 2012 • SMART LOGISTICS • 53

Vehicle power management, continued

rail and should remain as stable as possible. When faced with cold crank conditions, maintaining a 5-volt power rail becomes a challenge. Reverse Battery Connection Reverse battery connections are common occurrences in the automotive environment and so, designing electronic devices with protection against this condition is a basic requirement. Inductive Load Switching Transient Inductive load devices are widely used in the automobile environment for warmup devices, air conditioners, wipers,

while the vehicle engine is shut off, and they will consume power without a vehicle charge. If no criterion exists for protection in this circumstance, the vehicle battery will discharge completely. Electronic devices can even consume power while in standby or shut off mode. To avoid battery discharge, the standby and the quiescent current of electronic devices must be kept as low as possible. When facing the problems mentioned above, it is apparent that in-vehicle, electronic device design must include solutions to counteract specific power problems that can occur

Certifications Standards For Electronic Devices Certification standards have been developed to ensure that the power design of electronic devices is robust enough to pass real world trials for different kinds of applications. These standards have strictly defined the test methodologies that simulate the possible hazards in automotive environments. Below are some of the most common certification standards: • emark: A mark of consistency, governed by the European Union Directives for conformity of vehicles and vehicle components. An emark indicates conformity to these standards and directives. • ISO-7637-2: Road Vehicles – a standard test mechanism to measure electrical disturbances from conduction and coupling; Part 2 is concerned with electrical transient conduction along supply lines on vehicles with a nominal 12-volt or 24–volt supply. The second edition is dated 2004. • SAE J1455: Recommended environmental practices for electronic equipment design in heavy-duty vehicle applications. • SAE J1113: Electromagnetic susceptibility measurement procedures for vehicle components (aircraft excluded). sprayers, electrical fans, power doors & windows, and so on and so forth. These devices will generate switching transients on the power rail while they are operating. The type of transient can range from -200 to +200 volts, in hundreds of milliseconds, and exceed the bearable voltage levels for general electronic components. Transient voltage can cause severe damage and failure of electrical devices. Low Power Consumption During Standby Or Power Off For electronic devices that are connected to a vehicle battery and drain power directly, ensuring that there is enough power in reserve to start the engine is important. In some cases, the user will operate the electronic devices,

54 • SMART LOGISTICS • FEBRUARY 2012

in an automotive environment. Transient Protection The first solution is transient protection, designed to handle load dump, inductive load switching, jump start conditions and so on and so forth. The transient protection circuits should protect electronic devices from overvoltage spikes and maintain stable power output to keep the system working even when a transient condition occurs. Power Noise Filtering The switching noise from devices on a vehicle’s main power rail might be too high even after it is regulated by a DC-DC convertor. This might cause an audible hum in audio output, video or display interference, or even lead to

a malfunction of the electronic device. For in-vehicle signage, surveillance, or infotainment applications, this is a critical issue. Power noise frequency ranges are different for different kinds of vehicles and from different power sources.

Since electronic devices will drain power from the vehicle battery directly, ensuring sufﬁcient battery power to start the engine is a top priority. Wide Range DC Input Vehicles power systems supply different voltages with 12-volt, 24-volt and 48-volt being the most common. To ease the installation of in-vehicle applications, a wide input range is necessary. This not only reduces risk from installation mistakes, but also improves resistance against cold crank conditions, jump starts and load dump conditions.

VEHICLE POWER MANAGEMENT Since electronic devices will drain power from the vehicle battery directly, ensuring sufficient battery power to start the engine is a top priority. In the real world, electronic devices might hang or malfunction due to unforeseen conditions. Operating system halts, required responses from application programmes or outright failures, will leave a device powered on, continuously consuming power until the battery is complete discharged. This is one of the most critical conditions in which an in-vehicle device can cause trouble, thus resulting in a huge loss of time and money. Vehicle power management (VPM) systems must be included to manage the working status of electronic devices to respond to user events – like a change in ignition status – or application programmes/operating system activities. Chijen Li, Advantech Corporation, Industrial Mobile Computing

PORT REGULATORY AUTHORITY BILL POLICIES & REGULATIONS

Regulating Business in

PORTS’ Interest Interest?? Driven by the thought of affecting the high performance and growth levels of non-major ports in the country, the Planning Commission has turned down the proposal of the Union Ministry of Shipping to extend the bandwidth of Tariff Authority for Major Ports to non-major ports in India under the draft Port Regulatory Authority Bill. The move has also not got support from certain states and the shipping industry as such a proposal would make functioning difﬁcult for private ports in the country. ARINDAM GHOSH

AFTER various states, private operators, shipping industry and other stakeholders, the Planning Commission has also joined the bandwagon of those opposing the draft Port Regulatory Authority Bill, from the Union Ministry of Shipping. The primary aim of the draft Bill is to regulate all the ports in the country. It is “an Act to provide for the establishment of Regulatory Authorities to regulate rates for the facilities and services provided at the ports and to monitor the performance standards of port facilities and services and for matters connected therewith or incidental thereto,” says the draft of the Port Regulatory Authority Bill.

MULLING OVER THE MOVE Recently, the Union Ministry of Shipping was mulling over the option of introducing the draft Port Regulatory Authority Bill in Parliament. However, after strong opposition from various quarters, the Ministry has planned to temporarily halt the process. States like Gujarat, Maharashtra

The government, needs to devise a strategy, which solves the twin purpose of not only protecting the interest of all the players operating in the private and public sectors, but also performing functions smoothly.

and Tamil Nadu are of the view that their respective state maritime boards are sufficient to handle tariffrelated issues at non-major ports. The Gujarat Government, in particular, has opposed the draft Bill, as it feels that this step would have an adverse impact on the developmental activities of ports in the country, and especially on port activities in the state. Also, contrary to the government’s own Maritime Agenda, which gives ports in the country the liberty to fix their own tariffs, the draft Bill completely goes against this guideline. With an aim to arrive at a solution, the Union Ministry of Shipping has now planned to consult all the stakeholders in the

FEBRUARY 2012 • SMART LOGISTICS • 55

Port regulatory authority bill, continued

The Union Ministry of Shipping has now planned to consult all the stakeholders in the industry before taking a ﬁnal call on the modalities of the Port Regulatory Authority Bill and its way forward. industry before taking a final call on the modalities of the Port Regulatory Authority Bill and its way forward.

THE ROLE OF TAMP

the betterment of the ports and not to further their vested interests. According to the Union Ministry of Shipping, the draft Bill would not only provide government-run major ports a level playing field to compete, but would also help them tackle competition from their private counterparts. But private ports may find themselves on a less happy note as this draft Bill would empower Regulatory Authorities to issue guidelines and prescribe norms of functioning to them. With respect to the draft Bill, ICRA says that it “seeks to bring tariffs and the performance of nonmajor ports under regulatory purview, and these proposals, if accepted, could have an adverse impact on the business and financial risk profiles of non-major ports that have hitherto enjoyed high pricing flexibility and operational freedom.” The state governments might have very little to do, once the draft Bill comes into power. They will be forced to set up state ports regulatory authorities, which shall be completely driven by authorities at the Centre. As a consequence, state governments may have minimum say or no say at all in the activities and issues related to ports.

The Tariff Authority for Major Ports (TAMP) was established in April, 1997, as an independent authority for regulating tariffs, for vessels as well as cargo, and rates for the lease of properties with respect to major port trusts and private operators located in various states. Currently, TAMP is functional only over the 13 major ports that are controlled and monitored by the Central Government, like the ports at Mumbai, Kandla, Haldia, Visakhapatnam and Chennai, among others. It has been observed that these centrally regulated ports have been constantly losing market share to the new private ports that are controlled by the states or are operating in them. The Union Ministry of Shipping is of the view that this draft Bill will Cargo Growth In Indian Ports tackle this challenge. According to • According to ICRA, cargo growth at the the Ministry, the draft Bill would Indian ports was moderate for 2010-11, grant major ports the permission to with an overall increase in four per cent on fix its own rates and compete with a year on year basis. private ports, which already have • Growth in cargo volumes at the major ports the power to do so.

IMPENDING IMPLICATIONS In order to ensure that the private sector in the country continues to participate in activities related to the development of ports, it is important to provide them the flexibility and allow them to be operationally independent. However, at the same time, the government also needs to monitor and regulate its powers such that private operators work for

56 • SMART LOGISTICS • FEBRUARY 2012

has been witnessed at a meager 1.6 per cent. • Cargo growth at non-major ports, however, continued to be robust, with volumes increasing by nine per cent on a yoy basis. • In terms of market share, the non-major ports increased their share to 35 per cent in 2010-11. • In Gujarat alone, non-major ports grew by more than 12 per cent and the state presently handles about 73 per cent of non major ports’ cargo.

This can be seen as one of the primary reasons why the state governments are reluctant to open doors to accepting this draft Bill. Further, some of the state governments, which have signed up for developing projects with private port authorities, may also get into legal problems.

LET MARKET FORCES DETERMINE TARIFF India has about 13 centrally controlled major ports and around 200 nonmajor ports primarily regulated by the state government. According to the estimates of the Ministry of Shipping, cargo volumes in India are expected to touch the 2-billion-tonne mark by 2016-17. Given the fact that the government is taking steps to bring in more investments for the industry, Indian ports have a bright future. The proposed draft Bill, if implemented, may not bring about a huge paradigm shift in the way the industry functions in the country, but it would take away the functional freedom of the private operators and other stakeholders with which they operate and handle port functions. This calls for higher and stronger levels of regulations and control by the government in issues like tariff rates, and huge penalties, among others, which, in the process, makes life difficult for non-major ports and privately owned ports in the country. The government, therefore, needs to devise a strategy, which solves the twin purpose of not only protecting the interest of all the players operating in the private and public sectors, but also performing functions smoothly. Instead, the government can consider the option of fixing tariffs based on market forces, rather than involving itself and controlling the entire procedure, thereby further creating a situation of monopoly. arindam.ghosh@infomedia18.in

3PL SELECTION TIPS & TRICKS

6 WAYS TOTO DRAMATICALLY ENHANCE SCM RESULTS

Third party logistics (3PL) companies have become an important facet of today’s supply chain. Many 3PL companies offer a wide range of services including; inbound freight, freight consolidation, warehousing, distribution, order fulﬁllment and outbound freight. The growth of 3PL companies has been driven by the need for businesses to become leaner, thereby reducing assets and allowing focus on core business processes. For businesses to reap the beneﬁts of employing the services of 3PL companies, they have to keep certain aspects in mind while selecting a 3PL company. The global business environment with its rapidly advancing technologies, emerging world markets and vastly extended supply chains has become even more complex. This trend has placed critical decisionmaking demands on logistics professionals, especially since the challenges of providing seamless supply chain solutions across geographical and cultural boundaries

have increased exponentially. Overall, logistical requirements, vendor choices and other dynamic variables can make the outsourced 3PL decision-making process an exercise filled with pitfalls if not conducted carefully and correctly. With these reservations in mind, here are six critical essentials of global supply chain strategy you should weigh, analyse and consider carefully before selecting a 3PL:

Cultural alignment Presently, the major challenge that shippers face pertain to controlling international supply chain visibility, lead times and total landed costs; including inventory carrying costs, obsolescence costs and customer service. Therefore, when selecting a 3PL provider, a company needs to ensure that the 3PL is best suited to meet their specific and unique global distribution needs, both culturally and operationally. Company infrastructure With globalisation and new technologies, it is critical that both parties have the physical resources and accessibility to shipment data to meet each other’s needs. If the two partners do not share common capabilities and company resources, a 3PL will not be able to provide proper supply chain visibility, and the shipper will not obtain the necessary capacity and services when the actual delivery of goods is required. IT capabilities IT capabilities work hand-in-hand with company infrastructure. If the shipper and 3PL service provider cannot communicate on the operating platforms they already have in place, it is likely they will not be a good match. Real-time data sharing and ongoing timely responsiveness is crucial to providing a seamless supply chain. Ease of doing business A supply chain partnership can be defined in terms of the skills and cooperation its participants bring to it. Moreover, if the supply chain is to be optimised, it is important that both partners work together to empower all the participants. An apt 3PL provider will customise services to meet a company’s specific supply chain needs. But it is essential that shippers work closely with their 3PL to share critical shipment and forecast information that will enhance visibility and thus help optimise the total value chain process. Metrics Cost is always critical considering that the success of any supply chain partnership relates back to customer satisfaction. This implies that a company and its 3PL partner must demarcate agreed-upon benchmarks for success, and frequently review measurement data to ascertain if the global logistics process is performing well or if still needs improvement. Partnership intangibles Value-added customer service-related items can be further enhanced if both the parties are able and willing to jointly invest in their common success. It is vital that each partner perfectly understands the meaning of ‘global collaboration’. As global trade & IT capabilities accelerate and trade complexities increase with new cross-cultural regulations, it becomes mandatory that that great caution is exercised when choosing a global 3PL. This is because, selecting the right supply chain partner for specific distribution needs will dramatically enhance a company’s worldwide SCM results. Compiled by Kimberley D’Mello

FEBRUARY 2012 • SMART LOGISTICS • 57

PRODUCT UPDATE

This section gives information about products, equipment and services available in the market. If you know what you want. . . refer to Product Index on Page 64 to find it quickly

CLIP-ON SYSTEM

n the heavy-duty clip-on system, beams are available in three proﬁ les: open, stepped and boxed section. These beams are designed for diﬀerent load requirements. The beams are supplied in standard grey colour. Other nonstandard house colours are supplied as per customers’ requirements, subject to volume and colour availability. Available from 1000 mm to 2700 mm, clear entry beams are clipped to vertical frames and are adjustable at a pitch of 100 mm. Steel shelves with dividers are also available. Ahlada Industries Pvt Ltd Hyderabad - Andhra Pradesh Tel: 040-23094301, Mob: 09866661011 Email: industries@ahlada.com Website: www.ahlada.com

HYDRAULIC ACCESS PLATFORM

his is a hydraulically-operated highrise platform ideal for carrying out installation and repairing jobs of electric ﬁ xtures on poles, streetlights, highrise electric lines and various other jobs at high-rise level. The platform is designed and developed in various types, viz, articulated, telescopic, articulated-cum-telescopic and scissors type with all safety features. Working heights of the platform range from 7 m to 15 m, depending on the vehicle. The hydraulic access platform is developed on trailers, LCVs, MCVs and 3-wheeler chassis. Maniar & Company Ahmedabad - Gujarat Tel: 079-22143344, Mob: 09825012223 Email: maniar@maniar.com Website: www.maniar.com

FLOW STORAGE SOLUTION

low storage consists of two elements, ie, a static rack structure and dynamic flow rails. The flow rail is a track/roller system set at a decline along the length of the rack. It allows loads to move by gravity from the loading end to the unloading end. Each flow lane includes self-energised speed controllers (brakes)

58 • SMART LOGISTICS • FEBRUARY 2012

to gently control the speed of movement within the ﬂow lanes. Flow storage solutions are used in situations where storage density and inventory rotation are priorities. The picking and replenishment aisles are separate. Gravity ﬂow conveying system along with transfer trolleys are also provided. Conmat Systems Pvt Ltd Vadodara - Gujarat Tel: 0265-2647276, Mob: 09898870278 Email: info@conmatindia.com Website: www.conmatindia.com

DERRICK CRANE

he heavy-duty Derrick crane facilitates handling of marble blocks at the quarry. Rational structure, ie, boom, central mast and rafters of the crane are made out of heavy-duty structural steel framework, duly stress-relieved. The base of central mast is ﬁ xed to the hoist unit, which in turn rotates on specially designed thrust bearing, anchored to the central foot by means of bolts, grouted in concrete foundation or rock. Hoist unit comprises of special crane-duty motor, connected to variable speed reducers and helical gearbox, duly coupled to a grooved steel drum. Friends Engineering Works Udaipur - Rajasthan Tel: 0294-2492200, Mob: 09829042424 Email: info@friendseng.com Website: www.friendseng.com

PALLET STORAGE RACK

his pallet storage rack is available in different confi gurations to fit every size and budget. The rack is used for a variety of storage applications. Th is pallet storage system is engineered from ground up. The design takes into account product size and weight, as well as future expansion considerations. Consideration of the pallet rack system when planning a new building or warehouse results in more cost-effective and efficient warehouse operation.

Tek Engineering Works (Regd) Delhi Tel: 011-23922067, Mob: 09810181228 Email: tek_engineering@yahoo.com Website: www.tekstoragesystems.com

ELECTRIC STACKER

he EZI electric stacker is used for moving palletised goods and increasing useful space storing goods on different heights, reducing time and costs of management. Th is stacker is efficient and cost-effective for handling goods. The stacker is used indoors for storage and distribution of all kind of products. It is also built to user standards, with several mast versions and lifting heights of up to 6000 mm. The EZI series range offers versatility from material handling operations inside a store, warehouse, and food sectors. Jay Equipment & Systems Pvt Ltd Thane - Maharashtra Tel: 0250-2481806 Email: nimeshk@jayequipment.com Website: www.jayequipment.com

welded and powder-coated with highest quality standards under stringent ISO 9001-2008 manufacturing and quality management system to ensure highest quality product. The WM series racks have provision to mount racks on wall. These are available from 4RU to 15RU variants with 400, 500 & 600 deep conﬁ gurations. NetRack Enclosures Pvt Ltd Bengaluru - Karnataka Tel: 080-30719172 Email: info@netrackindia.com Website: www.netrackindia.com

WALL-MOUNTED RACKS

he WM series of wallmounted racks are used for small networking, AV, telecom and lab applications. These racks are manufactured out of steel sheet punched, formed,

Vol. 02 | Issue 06 | SEPTEMBER 2011

ELEVATORS

hese elevators are designed to suit Indian conditions. Special motors with high starting torque and rear mounted brakes are provided. Helical gearboxes with high transmission eﬃciency are also provided. Support and reaction wheels are polyurethane coated for soft and noiseless ride. All controls and limit switches provided are of standard companies only. The range mainly comprise of compact and standard range. Compact range is up

` 100/-

SUBSCRIPTION

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FEBRUARY 2012 • SMART LOGISTICS • 59

Product update, continued

to 750 kg (8 passengers) and is mostly used in chimneys or towers. These lifts go normally up to 300 m. Avon Cranes Pvt Ltd Gurgaon - Haryana Tel: 0124-2341026 Mob: 09810068561 Email: avoncranes@airtelmail.in Website: www.avonindia.com

Eddycranes Engineers Pvt Ltd Mumbai - Maharashtra Tel: 022-23522710 Email: eddycranes@vsnl.com Website: www.eddycranes.com

ELECTRO-HYDRAULIC GRAB BUCKET

wide range of equipment and components are offered to fit lifting plants, according to the requirements. The range includes bridge cranes, gantry cranes, lattice jib cranes, etc. Various types are available, such as 7000, 1.7100, 1.7200, 1.7300 range, suitable to feed small incinerators for municipal waste and to handle assimilated materials, for eg, industrial waste, packing waste, wood waste, having specific weight up to 0.7 T/mc. The K6500 range is suitable to feed big incinerators for municipal waste and to handle assimilated materials.

TRANSPORTATION AND LOGISTICS SERVICES

ulti-model transportation and supply chain logistics services are offered worldwide. The diverse service portfolio offered enables to provide quality service from the fi rst mile to the last mile of the supply chain process. International logistics activities cater to the International supply chain solutions by air, sea and land. The air freight, sea freight and land freight activities include warehousing and value addition services at the origin and destination. IAL India Ltd Cochin - Kerala Tel: 0484-2395119 Mob: 09995807064 Email: ialindia@ial.com Website: www.ial.com

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60 • SMART LOGISTICS • FEBRUARY 2012

PLASTIC PALLET

lanned storage helps in proper inventory control, maximum utilisation of space, saving of manpower. Instead of four godowns/stores one can have one godown with Pilco planned storage system and can avoid the cost of maintenance expenses of three godowns and ultimately increasing the proﬁtability of the company. Pilco has introduced plastic pallets for all kinds of industries for material handling and storage in warehouses and racks. Special pallets for food industries for storage of ﬂour, rice, sugar, pulses, have been introduced. Exports cargo pallets are also available for one time use.

for loading/unloading the pallets and stacking the same in godown at diﬀerent levels in two or three layers. In handoperated version lifting eﬀort has been kept to the minimum. Technical Enterprises Meerut - Uttar Pradesh Tel: 0121-2440660, Mob: 09313159058 Email: techent@ndf.vsnl.net.in Website: www.handyonnet.com

ELECTRO-HYDRAULIC GOODS LIFT

he electro-hydraulic goods lift is used for industrial use. With a capacity up to 2500 kgs, the goods lift is better alternatives for conventional goods lift for handling materials up to a height of 11 m, ie up to 3 ﬂoors. The compact and sturdy design enables the lift to be mounted on ground base without the necessity of any special civil structure or additional work. Space occupied is about 450 mm more in width than the platform or car size eﬀectively saving

Pilco Storage Systems Pvt Ltd New Delhi Tel: 011-27110024 Mob: 09810074596 Email: sales@pilcoonline.com Website: www.pilcoonline.com

on space cost.

PALLETS

hese pallets are oﬀered as per GMP & USFDA norms and are used for multifarious applications in diﬀerent industries. Designed for optimal load bearing capacities, the pallets are manufactured on state-of-the-art plants. The pallets have many outstanding features and can also be tailor-made to meet customers’ special requirements. Sintex Industries Ltd Kalol - North Gujarat Tel: 02764-253500 Email: plastic@sintex.co.in Website: www.sintex-plastics.com

Expert Equipments Pvt Ltd Thane - Maharashtra Tel: 0251-2560026, Mob: 09920780445 Email: expertequip@rediffmail.com Website: www.expertequipments.com

COMPACTOR STORAGE SYSTEM

tomat compactor storage system can increase storage eﬃciency. The existing and new shelving units can be mounted on mobile bases, which run on tracks set into the ﬂoor. The shelving unit is opened or closed when required, making it possible to make one aisle do the work of many. Only one aisle is required to provide access to all shelf locations. The system fully utilises the full height, width and depth, allowing the user to maximise storage in the space available.

HYDRAULIC PALLET STACKER

andy hydraulic hand power lift pallet stacker is introduced to meet the growing demand for low priced stackers that oﬀer high quality, reliability and ease-of-operation, particularly, for lifting the load IM high or more. Th is pallet stacker is tailor-made to suit customer’s special requirements for height up to 2-3 m. The stacker is also used

Space Magnum Equipments Pvt Ltd Pune - Maharashtra Tel: 020-24355895 Email: spacemag@pn3.vsnl.net.in The information published in this section is as per the details furnished by the respective manufacturer/distributor. In any case, it does not represent the views of

FEBRUARY 2012 • SMART LOGISTICS • 61

EVENT LIST TRADE SHOW TRACKER

NATIONAL

ABROAD

6-7 FEBRUARY 2012

23-25 FEBRUARY 2012

9-10 FEBRUARY 2012

MILITARY LOGISTICS INDIA 2012 Focus: Defence supply chain Where: Manekshaw Centre, Delhi Cantonment, New Delhi Tel: +44 (0)1753 727011 E-mail: jb@shephard.co.uk

SITL INDIA 2012 Focus: Transport & Logistics Industry Where: Bombay Exhibition Centre, Mumbai Tel: + 91 22 6771 6610 E-mail: quinny.dsouza@reedexpo.co.uk Web: www.sitl-india.com

5TH INTERMODAL ASIA 2012 Focus: Container port and terminal operations Where: Intercontinental Melbourne The Rialto, Australia Tel: +60 87 426 022; Fax: +60 87 426 223 E-mail: enquiries@transportevents.com

NATIONAL

ABROAD

14-18 MARCH 2012

13-15 MARCH 2012

29-30 MARCH 2012

INDIA AVIATION 2012 Focus: Aviation industry Where: Begumpet Airport, Hyderabad Tel: 011 32910417 Fax: 011 23359734 E-mail: indiaaviation@ficci.com

TOC CONTAINER SUPPLY CHAIN ASIA 2012 Focus: Shipping and container cargo Where: Hong Kong Convention and Exhibition Centre (HKCEC) Tel: +852 2582 8888 E-mail: info@hkcec.com Web: www.hkcec.com.hk

6TH INDIAN OCEAN PORTS & LOGISTICS Focus: Ports & logistics Where: Le Meridien, Mauritius Tel: +60 87 426 022 Fax: +60 87 426 223 E-mail: enquiries@transportevents.com

NATIONAL

ABROAD

12-14 APRIL 2012

26-28 APRIL 2012

26-27 APRIL 2012

AERODROME INDIA 2012 Focus: Airport infrastructure, operations, security & connectivity Where: Bombay Exhibition Centre (BEC), Mumbai Tel: 80-25547169 Fax: 80-25542258

INDIA MATERIAL HANDLING & LOGISTICS SHOW 2012 Focus: Material handling solutions Where: India Expo Centre, Greater Noida Tel: 9999164925 E-mail: mayank@manchcommunications.com Web: www.indiawarehousingshow.com

7TH SOUTHERN ASIA PORTS, LOGISTICS & SHIPPING 2012 Focus: Container ports and terminal operations Where: Cinnamon Grand Colombo, Sri Lanka Tel: +60 87 426 022 Fax: +60 87 426 223 E-mail: enquiries@transportevents.com

62 • SMART LOGISTICS • FEBRUARY 2012

ABROAD 6-9 MAY 2012

18 MAY 2012

23-24 MAY 2012

WERC ATLANTA 2012 Focus: Logistics Where: Atlanta Marriott Marquis, Atlanta, Georgia Tel: 281.746.0449 E-mail: cpilbeam@werc.org

5TH GLOBAL LOGISTICS & SCM SUMMIT Focus: SCM Where: UAE Tel: +971 4 3318855 Mob: +971 50 7453002 E-mail: admin@sclgme.org

LOGICHEM Focus: Petrochem logistics Where: Grosvenor House Hotel, Dubai Tel: +44 (0)20 7368 9354 E-mail: paulo.godinho@wbr.co.uk

NATIONAL

ABROAD

1-2 JUNE 2012

3-5 JUNE 2012

26-28 JUNE 2012

CSCMP INDIA 2012 CONFERENCE Focus: Creative Approaches to Supply Chain Profitability: A Global Perspective from India Where: Mumbai Mobile : +91 - 9819669521 E-mail: nbasu@cscmp.org

THE LOGISTICS & SUPPLY CHAIN FORUM Focus: Logistics & SCM Where: Doral Resort & Spa, Miami, FL Tele: +1 212 651 8700 E-mail: logisticsus@richmondevents.com

LOGICHEM ASIA Focus: Chemical logistics & SCM Where: Singapore Tele: + 65 6408 9205 Fax: + 65 6822 7370 E-mail: anna.ju@wbresearch.com

NATIONAL

ABROAD

26-28 SEPTEMBER 2012

17-19 SEPTEMBER 2012

18-21 OCTOBER 2012

INTERMODAL INDIA 2012 Focus: Logistics & SCM Where: Bombay Exhibition Center, Mumbai Direct No: +91-22-66122612 Mobile : +91-9987038330 E-mail : bipin.sinha@ubm.com

WORLD LOW COST AIRLINES CONGRESS 2012 Focus: Air transportation Where: Sofitel London Heathrow, London, UK Tel: +44 (0)20 7092 1000 Fax: +44 (0)20 7242 1508 E-mail: enquiry.uk@terrapinn.com

SCM LOGISTICS WORLD 2012 Focus: Logistics & SCM Where: Singapore Tele: +65 6322 2771 Fax: +65 6223 3554 E-mail: yaling.ng@terrapinn.com

There are no events scheduled in the month of July & August.

FEBRUARY 2012 • SMART LOGISTICS • 63

PRODUCT & ADVERTISERS’ INDEX

To know more about the products & advertisements featured in this magazine, write to us at b2b@infomedia18.in or call us on 022-3003 4640, and we will send your inquiries to the companies directly to help you source better. Products

Pg No

Products

Pg No

Chassis carrier .........................................................................FIC

Hydraulic pallet stacker..............................................................61

Clip-on system ...........................................................................58

Logistics services .................................................................. 7, BC

Compactor storage system .........................................................61 Derrick crane..............................................................................58

Pallet storage rack ......................................................................58 Pallets .........................................................................................61

Electric stacker ...........................................................................59 Plastic pallet ...............................................................................61 Electro-hydraulic goods lift........................................................61 Trailers and truck bodies.........................................................FIC Electro-hydraulic grab bucket ....................................................60 Transportation and logistics services ..........................................60 Elevators .....................................................................................59 Exhibition - Engineering Expo ...................................................8 Flow storage solution .................................................................58 Hydraulic access platform ..........................................................58

Tel. No.

Vehicle tracking solutions ..........................................................23 Wall-mounted racks ...................................................................59 Warehousing.................................................................................6

Pg No

Advertiser

E-Mail

Website

ADEA

Alpha Analytics Services Pvt Ltd

+91-20-40056742

info@alphageomatics.com

www.alphageomatics.com

Engineering Expo

+91-09819552270

engexpo@infomedia18.in

www.engg-expo.com

7,BC

Safexpress Private Limited

+1800-113-113

suyash.srivastava@safexpress.com

www.safexpress.com

Satvik Logistics

+91-9818384703

vaibhav@rathiindustries.com

www.satvikslogistics.com

FIC

Seamless Autotech Pvt Ltd

+91-02135-662431

info@seamlessautotech.com

www.seamlessautotech.com

prachi.mutha@infomedia18.in

Our consistent advertisers

COC = Cover-on-Cover, FIC = Front Inside Cover, BIC = Back Inside Cover, BC = Back Cover

64 • SMART LOGISTICS • FEBRUARY 2012

Use this form for free additional Information on advertisements published in this issue. We will send your inquiries to the advertisers and ask them to send you the details or contact you directly.

HOW TO USE THIS FORM: • Please tick against the box of advertiser(s) you are interested in: • Mention specific product/service you need, against the advertiser’s name • Complete all the details on this form. • Tear the form & mail it to us. (It is a prepaid mail) Tel.: +91-22-3003 4640 • Fax: +91-22-3003 4499

E-mail: b2b@infomedia18.in PRODUCT INQUIRY FORM Chassis carrier

Hydraulic pallet stacker

Clip-on system

Logistics services

First Fold Here

Compactor storage system

Pallet storage rack

Derrick crane

Pallets

Electric stacker Plastic pallet Electro-hydraulic goods lift Trailers and truck bodies

Electro-hydraulic grab bucket Transportation and logistics services

Elevators

Vehicle tracking solutions

Exhibition - Engineering Expo Flow storage solution

Wall-mounted racks

Hydraulic access platform

Warehousing

Second Fold Here

ADVERTISERS’ INQUIRY FORM Safexpress Private Limited

Alpha Analytics Services Pvt Ltd

Satvik Logistics

Engineering Expo

Seamless Autotech Pvt Ltd

ADEA

Third Fold Here

GLUE

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02 / 2012

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