Smart Logistics - July 2010 by Infomedia18

Vol. 01 | Issue 04 | JULY 2010

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VIEWPOINT EDITORIAL

Reaching Out To ‘REAL INDIA’

Executive Editor Archana Tiwari-Nayudu Features Editor Prerna Sharma Senior Features Writer Sumedha Mahorey Senior Correspondent Shivani Mody (Bengaluru) Features Writer Vijay Maha, Sandeep Pai, Sudhir Muddana, KTP Radhika Jinoy (Delhi) Correspondents Desk Geetha Jayaraman (Delhi), Prasenjit Chakraborty, Rachita Jha Copy Desk Marcilin Madathil, Swati Sharma Product Desk Michael Anthony

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ustomers are truly being treated as Kings…and it doesn’t matter anymore where they are based. Spoilt for choices, and with brand loyalty being a thing of the past, companies and brands vie for customers’ attention. It’s as true for urban markets as it is true for the rural marketplace, in fact more for rural markets as it presents itself as a most lucrative and untapped territory as opposed to a mostly saturated urban markets. As the wheels of economy roll, it changes the market dynamics and the destinies. The rural market today accounts for more than 55 per cent of LIC policies; 70 per cent of toilet soaps; 50 per cent of TV, fans, bicycles, tea, wrist watches, washing soap, blades, salt, tooth powder, soft drinks; as well as 38 per cent of all two-wheelers purchased. Most categories are experiencing faster growth rates in the rural and semi-urban regions as compared to the urban region. This fortune changing game compels the companies to push their reach to all possible markets, or wherever their competitors are having a field day. And any push in the need for performance has an equal and compelling reaction on the supply chain and logistics performance. In this scenario, the need to evolve an efficient and practical rural supply chain gains paramount importance. The higher growth rates of rural consumption indicate that companies with an extensive supply chain network will have a better opportunity to serve such growing demand segments and potentially increase marketshare. This would be a challenging task, given the infrastructure, geography

and significant channel fragmentation. Like the highly fragmented trucking industry, the backbone of rural logistics. India has one of world’s largest road networks, yet less than half of the roads are paved and only about 7,0004 kilometre are four-lane roads, significantly lower as compared to China’s over 34,0004 kilometre. These national highways account for less than 2 per cent of the total road network, but carry 40 per cent of traffic. As a result, despite spending more of its GDP on logistics than developed nations, India still faces logistics challenges. And such figures do nothing to boost the confidence of the logistics industry wanting to crack the rural distribution code against all odds. As companies align their fortunes with the rural markets, the success of a brand in the Indian rural market is as unpredictable as rains. It has always been difficult to gauge the rural market, which also faces the critical issues of distribution, understanding the rural consumer, communication and poor infrastructure. Not among those to bow down in front of adversities (read infrastructure lacunae) and a perpetual optimist, this July issue of Smart Logistics is a Rural Logistics special. With 128 million households having an urge to imbibe urban cousins, growing buying power and above all the FMCG, automobile, manufacturing, IT, agriculture, finance & insurance companies queuing up for entry, all we see is opportunity for logistics sector albeit in dusty lanes…do you?

Archana Tiwari-Nayudu Executive Editor archana.nayudu@infomedia18.in

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JULY 2010 • SMART LOGISTICS • 5

CONTENTS INSIGHTS & OUTLOOK EXPLORING RURAL ROUTES

VOL. 01, NO. 04

JULY 2010

With the ever-increasing rural population of India and a wide range of goods required for consumption in these areas, the need for a strong supply chain network in rural markets is now wide and clear. Rural India is fast emerging as the next focal point for large companies to sell their products, with the urban markets reaching a saturation point. In such a scenario, stepping up the infrastructure will go a long way in helping the companies to effectively access and tap the potential of the Indian rural market.

Rural Distribution Approaches Creating Agile & Responsive Supply Chain Rural Supply Chain Innovations Mapping Future Trends With Sustainable Innovations

23 29

SPECIAL FEATURE Perishable Goods Transportation Mastering End-To-End Connectivity Cold Chain Logistics Channelling The Growth Path

SECTOR ANALYSIS

IT IN LOGISTICS

36 40 44

Indian Freight Trains Tracking The Route To Modernisation

SUPPLY CHAIN BEST PRACTICES

Global Outsourcing A Necessity Or An Option?

Chemical Logistics Prioritising Safety In Transit

LEADERSHIP SERIES

SMART STRATEGIES

Logistics @ Lanxess Attaining Equilibrium With Operational Excellence

Co2 Emissions Reduction Small Efforts, Big Gains

TECH TRACK

IT Trends In Logistics

VIEW FROM THE TOP ‘Addressing Difﬁculties & Removing Inefﬁciencies In Transportation Will Go A Long Way In Reducing Costs’ TS Narasimhan, Executive Director, DARCL Logistics

6 • SMART LOGISTICS • JULY 2010

32 ALSO IN THIS ISSUE VIEWPOINT NATIONAL NEWS PRICE TRENDS PROJECT UPDATE WORLD NEWS PRODUCT & ADVERTISERS’ INDEX PRODUCT & ADVERTISERS’ INQUIRY FORM

5 8 13 14 17 66 67

NATIO AL EWS ■

RAILWAY EARNINGS GET A MAJOR BOOST IN APRIL-MAY 2010

The fiscal year 2010-11 seems to have begun on an optimistic note for Indian railways. In April and May 2010, the railways registered a growth of about nine per cent in freight traffic, earning Rs 10,044 crore. During this period, the railways carried 146.41 million tonne of freight traffic, which if compared to 141.63 million tonne carried during the corresponding period last year, indicates an increase of 3.37 per cent. According to an official release, “It generated Rs 10,044.54 crore as compared to Rs 9,216.12 crore during the corresponding period last year, registering an increase of 8.99 per cent.” In April 2010 alone, the railway earnings totaled up to around Rs 7,292.25 crore, which is a rise of 9.69 per cent against Rs 6,648.08 crore earned in April 2009. Of this figure, Rs 4,948.44 crore comprised freight earnings, which if compared to the corresponding period last year, is an increase of 9.57 per cent. In May 2010, the total earnings of the railways were about Rs 5,151.79 crore. Out of this, Rs 1,955.78 crore came from transportation of 33.61 million tonne of coal, followed by Rs 774.22 crore from 9.79 million tonne of iron ore for exports, steel plants and for other domestic uses. The other items, such as cement, food grains, petroleum, oil, and steel, contributed to the growth rate of railways’ earnings during April-May. ■

ALLCARGO GLOBAL LOGISTICS TO PUSH INORGANIC GROWTH PEDAL

The world’s second-largest less-than-container-load (LCL) service provider and Mumbai-based company, Allcargo Global Logistics, is aiming at expanding its footprint through the inorganic route. It is looking to acquire one company, each, within India and overseas, mainly in the LCL segment. The company may explore regions such as West Asia and

the US. Allcargo is also in advanced stages to buy some stake in companies in China, Hong Kong and Brazil. At present, the feasibility study and funding for the acquisition are being worked out. Less-than-container-load shipments are those that are not large enough to fill a standard container. This prompts certain shipping and logistics companies to fill goods from various companies in the same container. In early 2010, Allcargo Global purchased 51 per cent stake in a UK company and it already conducts business in the UK through its subsidiary. The company has plans to raise its stake in Argentina subsidiary to 100 per cent from the current 49 per cent. Explaining the drive behind the torrent of acquisitions, S Suryanarayanan, Chief Financial Officer, Allcargo Global Logistics, said, “We are looking to increase stake in existing subsidiaries. In some, we hold 51 per cent stake, while some are lesser. In some geographies, we are not the leading LCL player, and so we keep looking out for companies that could give us that edge.” Allcargo will use qualified institutional placement proceeds to fund the string of acquisitions and stake buys. In April, it had raised about Rs 100 crore through qualified institutional placement for capital expenditure and acquisition plans. “The companies that we are looking at, I can assure it will not erode our margins...we have enough funds to manage it. We have funds amounting to Rs 200 crore cash, and have internal accruals of Rs 60 crore,” he said. The company’s loan book was at Rs 171 crore as on March end. In fact, margins of its European business, ECU Lines, may improve as the company has been passing on the rise in freight rates to its clients. “We have been passing on the rise in freight rates by 4-5 per cent to customers since AprilMay.” However, in January-March, Allcargo’s ECU Line business was subdued because of its inability to pass on freight costs, leading to erosion in operating margins by 269 basis points. According to Suryanarayanan, ECU Lines will improve operating margins to 32 per cent in the second quarter compared with 31 per cent in January-March. Margins were at 33 per cent in the previous year. ■

DARCL TO ACQUIRE 100 RAIL CONTAINERS FROM CHINA IN 2010-11

As part of its initiatives to increase its focus on the rail container business, Delhi Assam Roadways Corporation (DARCL), a transport and logistics service provider, is now acquiring new containers for its rail transport. The company is in the process of buying around 100 containers from China in 2010-11. “Each of the containers will cost us about Rs 2.5 lakh. We see significant potential in this sector, anticipating a growth of 15 per cent in rail container cargo movement,” said TS Narasimhan, Executive Director, DARCL.

8 • SMART LOGISTICS • JULY 2010

At present, DARCL operates two trains that do about seven trips a month on the Mumbai-Kolkata route. It is one of the 14 companies that have been given licence by the Indian Railways to operate container trains. Narasimhan said that the company is estimating the movement of containerised cargo in India at nine million tonne, which is an increase, from the 7.2 million tonne available three years ago. DARCL, in which IDFC owns a 31 per cent stake, has come up with a plan to invest about Rs 70 crore this fiscal for projects in the logistics sector. Along with buying the rail containers, it also plans to buy about 150 vehicles of different categories. This number will add to its already existing fleet of more than 300 vehicles. “We plan to get into full-fledged third party logistics (3PL) providers in the future. At the moment, we are focussing more on contract logistics,” said Narasimhan. DARCL provides services to companies including ONGC, Reliance Industries, and Godrej. With 190 offices across the country, including warehousing facilities, DARCL has developed the required expertise in the transport of over-dimensional consignments, some weighing up to 300 tonne or being almost 100 feet long. ■

SHIPPING MINISTRY PLANS TO REVISIT NMDP

Shipping Ministry is planning to redraft the National Maritime Development Programme (NMDP) and rewrite it with a new perspective plan for major ports. Moreover, a committee is going to be formed to rewrite the programme and come up with a new plan for ports and will have a deadline of 2020. New targets are to be set and new projects will be initiated giving full liberty to port officials. While, some people believe this step has been taken to increase the efficiency of the Indian maritime programme, others say that it is a regular phenomenon and has happened in the past as well. Out of 276 projects only 50 projects envisaged under NMDP, stand completed as on March 31, 2010. As against a capacity addition of 430.74 million tonne targeted at the end of the programme in 2012, the actual addition as on March 31, 2010, is a mere 55.88 million tonne. Shockingly, a majority of 82 projects are under preliminary/planning stage even as 25 projects stand cancelled. Experts believe that the Shipping Ministry wants to restructure the programme as it is not satisfied with the NMDP’s progress. Irrespective of the name, the programme will involve among other things, projects for rapid expansion of port capacities and modernisation of ports along the east and west coasts as well as development of inland navigation. While lack of efficiency is a major reason, the change of guard at the centre is also cited as one of the reasons behind it. It is not new and has happened in the past as well.

On August 14, 2003, Indian maritime programme was launched for the first time by the then prime minister A B Vajpayee. It was named as Sagarmala project. However, with change in government at the Centre, the Sagarmala project was later renamed National Maritime Development Programme (NMDP) in August 2004. ■

ENFORCEMENT OF RULES FOR ROAD FREIGHT STILL AWAITED

The Carriage By Road Act, 2007, passed by the Parliament, states that the Act provides for the regulation of common carriers, limiting their liability and declaration of value of goods delivered to them to determine their liability for loss of, or damage to, such goods occasioned by the negligence or criminal acts of themselves, their servants or agents and for matters connected therewith or incidental thereto. This act received the consent of the President of India on September 29, 2007. However, till today, the Act has not been enforced. The reason is that though the Act was notified on October 1, 2007, several rules under the Act have not yet been framed. To implement the rules of the Act, a working group, under Joint Secretary (Transport), was constituted to prepare the draft of the Act. The first meeting of this committee was held in February 2009. To make things quicker and easier, a subcommittee was also set up under Advisor (Road Transport) for the same purpose. It seems that the members of the committee, are still not sure if the draft has been prepared at all, or, if prepared, about its contents. Latest information suggests that the draft has been prepared and the necessary approvals, including those of the Law Ministry, have been taken. Sometime around the middle of March, there were speculations that the complete draft would be notified soon. From March to June, however, there seems to be no signs of the notification. ■

EXPANSION OF INLAND WATER TRANSPORT PIVOTAL: PM

Prime Minister Manmohan Singh declared that India is set to expand its inland water transport. “This could have a multiplier effect on economic output,” he said after dedicating the Pipavav Shipyard in Gujarat’s Saurashtra region to the nation. The prime minister said that the Pipavav Shipyard is one of the most modern shipyards in India. He complimented the management of Pipavav Shipyard for their commitment towards the development of the nation as well as the shipping sector and added that like Pipavav Shipyard, the Central Government is supporting the setting up of other shipyards as well. “I understand the National Manufacturing Competitiveness Council is working with the Ministry of Shipping to explore fresh ways to enable faster growth of this dynamic sector,” he noted. “In addition, we intend to take measures to greatly expand inland water transport.” The prime minister said he

JULY 2010 • SMART LOGISTICS • 9

National news, continued

firmly believed that India was destined to be a major trading nation of the world. ■

FUEL CELL TECHNOLOGY TO FUEL THE SHIPS

With the installation of its WFC20 fuel cell unit onboard a car carrier, shipping power major Wartsila Corporation has initiated a major step towards environmentally sound shipping and cleaner seaborne transportation. ‘Undine’, the car carrier in which the fuel cell unit is installed is owned by Swedish Wallenius Lines and managed by Wallenius Marine. Based on solid oxide fuel cell technology (SOFC) and fuelled with methanol, the fuel cell unit produces a nominal output of 20 kW. Methanol is a commonly used liquid in the oil and process industries and can be produced from natural gas, or from renewable raw materials such as gasificated biomass. Being the first-of-its-kind, it is expected to provide auxiliary power to the vessel with negligible emissions. Installation of the fuel cell unit onboard the Undine is the result of a joint project by the international METHAPU consortium. Wartsila, Wallenius Marine, Lloyd’s Register, Det Norske Veritas, and the University of Genoa are the major participants in the consortium. Moreover, the project is also funded by European Union. ■

PSA INTERNATIONAL TO OWN A TERMINAL AT PORT OF CHENNAI

The Singapore-based port terminal operator PSA International acquired a 27 per cent stake from its local partner Sical Logistics for an undisclosed amount. With this, they have taken full ownership of the second container terminal at India’s south-eastern Port of Chennai.

of projects on hand,” Sical said in a statement, announcing the transaction. The build-operate-transfer facility, developed at a cost of about $130 million, began commercial operations in September last year. With 35 hectare of yard space, 10 quay cranes and three berths with a total quay length of 832 metre, Chennai International Terminals (CITPL) offers an annual capacity of 1.5 million 20-foot equivalent units. With operations at four of the country’s major ports including a terminal at Tuticorin operated jointly with Sical, PSA is one of the leading private terminal operators in India. ■

With constant changes in the socio-economic situation in India, the country is now witnessing consumption and retail explosions like never before. This can be underlined by the following facts: • The average age of India’s population is around 25 years and these youths will quadruple their incomes in a decade. • There is an annual shift of almost 3 million Indians with regard to the permanent change in their shopping preferences to organised retail outlets. • An average urban Indian eats out only 6 times a month. In comparison, a Thai eats out 44 times every month. Though the factors for an explosive growth are in place but organised retailing in India – be it via single brand stores, multi-brand stores, F&B chains, hyper markets or departmental stores – is not for the timid and faint-hearted. The reasons for this are that Indian consumers are spread over a large geography with varying preferences and habits. Also, people are becoming quality-conscious and demanding, along with still being price-conscious. In addition, with a number of seasons and festivals in the country, the demand changes almost every 1,000 miles. Considering all these factors, keeping the shelves full with the right products can be tough. To help those, responsible for sourcing, operation and supply chain management of retail companies, Supply Chain Leadership Council with SMART LOGISTICS as the media partner is organising India Retail Sourcing, Operations & Supply Chain Summit ‘10 in Mumbai on July 16, 2010. This summit will explore and analyse real-life challenges pertaining to sourcing, operational and distributional aspects of retailing products in India. ■

“The move to divest our stake in the joint venture has been primarily driven by a decision to completely focus on bulk cargo handling than other areas, and we have a number

10 • SMART LOGISTICS • JULY 2010

INDIA RETAIL SOURCING, SUPPLY CHAIN & OPERATIONS SUMMIT ‘10 TO BE HELD ON JULY 16

IMPLEMENTATION OF SERVICE TAX ON RLY FREIGHT EXTENDED TO JANUARY 1, 2011

The Finance Ministry has once again deferred the implementation of service tax levy on transport of goods by rail. The levy will now come into effect from January 1 next

National news, continued

year. This is seen as a bid to prevent further inflation spiral in the economy. This is the second time this year that the Finance Ministry had declined the proposal. In the Budget 2010-11, the government had proposed to bring transport of goods by rail in the service tax net from April 1, 2010. Its implementation was, however, deferred to July 1 in similar inflationary circumstances. The Finance Ministry has also said that the earlier proposed exemption on certain goods (such as pulses, foodgrains, petroleum products for PDS, organic and chemical manure and motor vehicles) would now come into effect from January 1, along with the 70 per cent abatement. This is besides the postponement of the levy. Justifying its decision during the Budget, the Railway Minister Mamata Banerjee had indicated that the ministry had no choice but to pass on the tax burden to its freight customers. A service tax levy on railway freight would have a cascading impact on coal, cement and steel prices, a section of industry had contended. ■

MAHARASHTRA OFFERS SOPS FOR DEVELOPMENT OF MINOR PORTS

To increase the cargo handling capacity to 254 million tonne a year in the next five years, the Maharashtra Government is expecting an investment of Rs 22,775 crore in minor ports. To achieve the objectives, the government announced a revised minor port policy. The policy offers a number of sops to the sector. After a Cabinet meeting, the CM, Ashok Chavan, declared that ports will be given the status of an industry. Along with the ports, other maritime infrastructure such as multipurpose jetties and cargo terminals will get benefits under a package scheme of incentives for eight years, he added. Further, the Maharashtra Maritime Board (MMB) has been declared as the special planning authority under the Maharashtra Regional and Town Planning Act, making its decision-making process more independent. Apart from all this, the new policy also includes exemption on electricity duty, registration and stamp duty on infrastructure such as road, rail, water and power supply required for running the port, he said. Moreover, Chavan also announced an increase in wharfage from Rs 3 to 4 per tonne of cargo; and for containerised cargo from Rs 36 to Rs 48 per loaded twenty-foot equivalent unit (TEU). Chavan said that under the policy, free right of way would be given on government land for supplying water and electricity to the ports. Construction material such as sand, earth and clay required for building of the ports has been given royalty exemption, he said. ■

RAILWAY MINISTRY PLANS TO DEVELOP USER TERMINALS FOR AUTOMOBILE & ANCILLARY HUB

The Railway Ministry has called for investments for developing

12 • SMART LOGISTICS • JULY 2010

common user terminals for automobile and ancillary hub. For this, The ministry will provide land for seven years on lease. The lease period can be extended every year according to the need. The lease charges will be according to the ministry policy on land. Railways are not charging any extra fee to the user, a ministry official said. To be eligible as a common terminal operator, the railways stated, “The Company has to be a manufacturer of automobile; or a part of Society of Indian Automobile Manufacturers (SIAM) or registered freight train operator having an annual turnover of Rs 20 crore during last financial year.” Without any exclusive right, automobile and ancillary hubs shall be a common user facility for general use of the automobile industry. To increase the modal share of railways in transportation of automobiles, the policy on development of automobile and ancillary hub has been made. The setting up of automobile and ancillary hubs will provide an opportunity for automobile manufacturers to carry their traffic by rail in bulk. This will also help them do secondary distribution for consuming centre in the immediate catchment areas from such hubs. ■

INDIAN EXPORTS INCHES UP BY 34 PER CENT

Indian exports grew by 34 per cent to $16.1 billion in May 2010 for the seventh straight month. It was mainly led by a surge in shipments and prices of iron ore, along with flow of more consignments of engineering goods, gems and jewellery and chemicals from Indian shores. Sector-wise growth – engineering (29.6 per cent), gems & jewellery (37.8 per cent), leather (33.3 per cent), basic chemicals (38 per cent) and petroleum, oil and lubricants (over 70 per cent) – led the growth. In total, during April-May 2010, exports grew by over 35 per cent to $33 billion against the same period last year, while imports were up by 41 per cent to $54.7 billion. “The high level of industrial activity in the economy also meant that imports rose by over 38 per cent to $27.4 billion during the month under review,” according to the data released by the Ministry of Commerce. Part of the increase in exports and imports was credited to last year’s low base. Trade deficit this year so far increased to $21.7 billion from $14.5 billion a year ago. The trade deficit widening to $11.3 billion during May 2010, compared with $7.8 billion a year ago was mainly due to the faster pace of increase in imports. The big worry now for the exporters is the Eurozone crisis and the subsequent erosion in the value of the euro. The Indian rupee has appreciated from around 67 to a euro last June to around 57 today for almost an year now.

PRICE TRENDS Road Freight Index Chart for June 2010 The RFI stood at 174 points for the month of June 2010, registering an increase of 3 points over June 2009.

IRFI TREND FOR JUNE 2010

TRENDS JUNE 2010

For Metros Ex-Delhi rates registered highest increase by 10 per cent and Ex-Chennai rates registered sharpest decrease by 6 per cent.

172 165

174

171

166

AUTOMOBILES The overall production data for April-May 2010 shows production growth of 34 per cent over same period last year with industry producing 2,715,189 vehicles. Passenger vehicles segment in April-May 2010 grew at 34 per cent over same period last year. Passenger cars grew by 35 per cent, utility vehicles grew by 30 per cent and multi-purpose vehicles grew by 39 per cent in April-May 2010 over April-May 2009 For the month of April 2010, three-wheeler sales recorded a growth rate of 15 per cent, while passenger carriers grew by 15 per cent and goods carriers grew at 14 per cent.

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TRENDS FOR JULY 2010

COMMERCIAL VEHICLES The overall sales of commercial vehicles segment registered growth at 61 per cent in April-May 2010 as compared to the same period last year. While medium & heavy commercial vehicles grew at 95 per cent and light commercial vehicles grew at 40 per cent.

173 167

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FORECAST FOR JULY 2010

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The RFI in July 2009 over July 2008 registered a decrease by 1.33 per cent and 1.29 per cent decrease over June 2008. The RFI stood at 171.06 for the month of July 2009 over 172.35 for the month of June 2008, registering a decrease by 1.29 per cent. The RFI for the month of July 2010 can be expected to decrease marginally.

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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PORT PROJECT UPDATE APEEJAY PLANS TO SET UP LOGISTICS PARKS Apeejay Infralogistics has plans to set up two integrated logistics parks in the country, one at Haldia (West Bengal) and the other at Kalinganagar (Orissa), by the end of this year. Company officials said that while the approvals for Haldia was received earlier, they have recently received the required approvals from the Commerce Ministry for setting up an inland container depot (ICD) at Kalinganagar. The overall estimated expenditure on the Haldia logistics park is approximately Rs 200 crore, covering over a 90 acre spread of land, whereas, the one at Kalinganagar will cost Rs 60 crore covering over 30 acre. The business parks will be created, keeping in mind the industries that are coming up in the respective areas. The Kalinganagar logistics park will be designed and made differently from the one at Haldia as it would cater to the requirements of the steel units currently existing as well as those that are coming up in the area. These include big names such as Jindals, the Tatas, and the Visa Group. The Haldia set-up, on the other hand, will be much larger and more diversified because it would cater to the crosssection of industry. The main reason for considering Haldia is because the company believes that as a port, no matter whether river port or handling the ocean-going vessel, Haldia will never lose its importance due to its linkage advantage. The first phase at Haldia is expected to be completed with an ICD, warehousing facilities – both covered and open, truck terminal and trade facilitation centre, among other facilities. Similar facilities, though on a smaller scale, are being created at Kalinganagar.

constantly growing demand of the port. This new line will be parallel to the existing one and will comprise four crossing stations and 99 bridges. It will have the capacity to handle 25-tonne axle load wagons running at a speed of 100 km/hour. A company official said that the project will be commissioned in two phases. The first phase of 30 km will be commissioned by June 2011 and the rest by the end of 2011-12. Generally, the investment for a kilometre on a private railway line, inclusive of the land cost, is around Rs 4-5 crore. However, the Adanis will be investing at a rate of Rs 2 crore a km, totalling nearly Rs 115 crore, as the required land is already in possession. Earlier, the Indian Railway had already doubled the track between Samkhiali and Adipur section. Therefore, with the doubling of the Adipur-Mundra line by the Adani Group and Samkhiali-Palanpur line by the Kutch Railway Company, the entire route from Mundra Port to northern India will now be double-lined. This double line route will make Mundra Port, the second port after JNPT on the West Coast to be connected by a double-line rail passage. This route will have an annual transport capacity of nearly 60 million tonne of cargo. Also, to the added advantage for Mundra Port, the Ministry of Railways has initiated construction of doubling-line high-speed dedicated freight corridor (DFC) between Delhi and Mumbai. This line will pass through Gujarat and will have connectivity with Mundra Port through the Palanpur-Gandhidham-AdipurMundra railway line. These multiple railway routes, and road routes through branches of National Highway 8 will help to transport cargo from Mundra to other parts of country in a faster and cost-effective manner.

MUNDRA PORT TO INVEST RS 115 CRORE ON

DHL TO SET UP INDIA’S FIRST FREE-TRADE

Mundra Port and Special Economic Zone (MPSEZL), an Adani group company, is investing nearly Rs 115 crore to add a new 57-km-long private railway line between Mundra and Adipur in Kutch district of Gujarat. The reason for the same is the

The freight forwarding division of the leading global logistics player DHL, DHL Global Forwarding, is planning to invest $10 million (around Rs 47 crore) in India’s first free-trade warehousing zone at Sriperumbudur. Construction of the zone will start soon and will be available for operational use by November, informed a company official. DHL Global Forwarding’s new facility will operate within the Free Trade Warehousing Zone. This zone will offer customers the benefits of a duty free zone combined with a high quality infrastructure. Till date, DHL Forwarding has invested around €300 million in India. In 2009, it handled 1.22 lakh tonne of air shipment and 55,000 twenty foot equivalent units (TEUs) of ocean freight. It has a strong customer base in India with 15,000 customers out of which, some of them are located within the vicinity of the new facility. DHL is part of the Deutsche Post DHL group which generated revenue of over €46 billion in 2009. This is quite a substantial part of the total Indian logistics market revenues of $75.19 billion in 2009. According to the

IN BENGAL, ORISSA BY END OF 2010

NEW PRIVATE RAILWAY LINE

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WAREHOUSING ZONE

report on Strategic Analysis of Indian Logistics Market by Frost & Sullivan, this Indian market is expected to reach revenues of $120 billion by 2014, a 9.9 per cent CAGR between 2009 and 2014. “We are well-positioned to capitalise on this fast growing market and strengthen our market leading position in India. China and India are the two key markets for us,” said Amadou Diallo, CEO, South Asia-Pacific, DHL Global Forwarding. In the first phase of the construction, out of the 2.6 lakh-sq-ft plot area, the built-up area will be 1.30 lakh (ground + 7 high rise racking,); 25,000 sq. ft open storage facilities and 10,000 sq ft to provide for special value-added services. Also, there is a provision to double the capacity in the next couple of years. Setting up the free-trade warehousing zone at Sriperumbudur is a major advantage as there are seven industrial clusters within a 30-km radius and also, the region has India’s largest telecom cluster and two of the largest auto clusters at close proximity. A major benefit of the zone is that it will help to reduce logistics cost and the time consumed in processing individual export entries.

CMA CGM JOINS MAERSK TO LAUNCH NEW

SERVICES TO LINK ASIA TO INDIA

CMA CGM, a French company, and world’s No 3 container line, has joined hands with Maersk Line of Denmark to launch the new CIMEX 2 services linking Asia/China to India and Pakistan. “The Asia to India/Pakistan trade, linking the two economies with huge population, is currently expanding and this trend is likely to continue and we, therefore, decided to develop the new CIMEX 2 to keep pace with our customers’ needs and support these growing markets,” said Ludovic Rozan, VP – in-charge of Asia, CMA CGM. The port rotation of the proposed service will be: Kwangyang-Busan-Shanghai-Hong Kong-Da Chan Bay-Tanjumg Pelepas-Colombo-Pipavav-Nhava Sheva-Port Qasim-Port Klang-Tanjung Pelepas-Singapore-Hong Kong-Kwangyang. The services that initiated from Kwangyang on June 13, 2010, and that will start from Shanghai on July 8, 2010, will be operated with six vessels of 5,500 TEUs each. It will complete the existing coverage of CMA CGM Group in the Asia, West Asia Gulf and India markets. Thus, the transit time between Shanghai and Pipavav will be around 15 days, which will be the fastest time taken. Also, the service will connect the inland container depot at Dadri and other inland destinations in India.

ECO CLEARANCES AWAITED FOR PARADIP

PORT PROJECTS

Though the concession agreements were signed several months ago, the work on two BOT projects at Paradip port – construction of deep draught berths, one each for handling

coal and iron ore – could not be started due to uncertainty over environment clearances. Both the concession agreements were signed in the second half of 2009. The iron ore berth was signed between Paradip Port Trust (PPT) and Blue Water Iron Ore Terminal, a special purpose vehicle of Noble Group, in July last year, and the coal berth with Essar Paradip Terminal, the special purpose vehicle of the Essar Group, in November last year. Now, even after the stipulated 180 days have passed, the port authorities are still in the dark about the availability of the clearances. This matter has resulted in distress among the private firms responsible for the execution of the projects. The environment clearances comprise several steps before the final approval is made. It starts with the coastal area clearance that has to be obtained from coastal zone regulatory authority, which is a state government agency. This is then followed by forest clearance. Finally, an approval has to come from the Union Ministry of Environment and Forests. In the mean time, PPT is hoping to open price bids for the multipurpose berth shortly. “We’re waiting for the security clearance, which hopefully should be available soon,” said K Raghuramaiah, Chairman, PPT. He added that “Once the selection of the bidder has been finalised, it would take another month or so to sign the concession agreement”. There were 10 bidders for the RFQ (request for qualification) – nine in consortia and one single entity. Those shortlisted for price bids include Mundra Port SEZ, JSPLSimplex-Srei, Gammon-Sara International, IL&FS Maritime Infrastructure-Punj Lloyd, Sew Infrastructure-Pembinnan idzer sdn BHD, IMC-ITD Cementation and Sterlite-Leighton.

CABINET PASSES FOUR HIGHWAY PROJECTS Four new highway projects, estimated at a value of Rs 2,536.16 crore, have been passed by the Cabinet Committee on Infrastructure (CCI). These projects would span five states in the country including Bihar, Gujarat, Madhya Pradesh, Uttar Pradesh and West Bengal. The CCI has approved a four-laning highway in West Bengal, which will cover a total length of the 78-km from Krishnanagar to Bahrampore section of the NH-34. The total project cost is estimated at Rs 702.16 crore. The concession period is 15 years with an included 30 months for construction and the best bidder shall be eligible to receive 25 annuities of the lowest amount quoted, which is payable semi-annually. For Bihar, the CCI has approved the two-laning highway of the Muzaffarapur-Sonbarasa section of NH-77. The total project cost is estimated at Rs 512 crore. Other approvals made by the CCI include the four-laning of the Jetpur-Somnath section of the NH-8D in Gujarat and two-laning of the Jhansi-Khajuraho section of NH-75 in Madhya Pradesh and Uttar Pradesh. The total costs for the two projects is estimated at Rs 828 crore and Rs 494 crore respectively.

JULY 2010 • SMART LOGISTICS • 15

Port project update, continued

MARG TO SET UP RS 400-CR PORT NEAR

CHENNAI

Marg, the Chennai-based infrastructure company, proposes to set up another port at Mogaiyur, about 30 km south of Chennai estimated at a cost between Rs 300 crore and Rs 400 crore. This plan came up after the huge success observed at Karaikal. Taking a look at the first quarter performance of 2010, the Karaikal port’s throughput is set to cross 1.3 million tonnes. Also, BHEL has become one of the prime customers. In addition, Chennai Petroleum Corporation has decided to use the port to bring in crude to its Cauvery-basin refinery. The port is also being used by several cement companies to bring in raw materials and ship out cements. The port currently has a capacity of five million tonne, which is being expanded to 21 million tonne at a cost of Rs1,600 crore. This performance encouraged Marg to promote the new port at Mogaiyur. However, compared to the Karaikal port, which can be expanded to a capacity of 21 million tonne, the Mogaiyur port will be small in size. The Mogaiyur port will be designed for vessels that require minor repairs and inspections. At present, Marg is in the process of acquiring the required land for the same.

KoPT TO SET UP BARGE JETTIES ON THE

HOOGHLY RIVER

The Kolkata Port Trust (KoPT), in partnership with Inland Waterways Authority of India (IWAI), is planning to set up barge jetties at Sagardighi and Jangipur on the Hooghly River. This project has been planned to assist movement of imported coal to cater to the requirement of power plants located in the area. “We’ve already had preliminary discussion with IWAI in this regard,” said ML Meena, Chairman, KoPT. He also informed that the plan was to handle 15,000 tonnes of coal a day in each jetty. The proposed jetty at Sagardighi will be made to handle coal for West Bengal Power Development Corporation’s (WBPDCL) plant located in the same place. Similarly, the Jangipur jetty will be used to handle for Farakka plant of NTPC. The present capacity of the WBPDCL’s Sagardighi plant is 600 MW (2x300MW), which is proposed to be raised to 1,600 MW through addition of another 1,000 MW (2x500MW).Simultaneously, the present capacity of NTPC’s Farakka plant is said to be increased to 2,100 MW from 1,600 MW (2x500MW, 3x200MW) through addition of another unit (1x500MW). Due to this, the coal requirement of these plants will increase at a constant rate. This rise can only be met through an increase in imports. At present, however, apart from additional transportation cost, the constraint in rail movement from the present unloading ports such as Haldia, and Visakhapatnam is a matter of great concern. With the proposed barge movement, as explained by Meena, the

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imported coal would be unloaded from big bulk carriers into barges by way of transloading operation that will be undertaken closer to the sea. Then, the loaded barges would traverse upstream a distance of over 300 km or so along the river to call at the proposed jetties. Being unsure if there would be enough traffic for the return journey, he said “We can even consider floating special purpose vehicles, also with participation of NTPC and WBPDCL, to undertake the proposed barge movement”.

TUTICORIN PORT GETS GOOD QUOTE FOR

DREDGING CONTRACT

With the slowdown in the number of dredging projects globally in the recent months, especially in the Gulf region, the Tuticorin Port Trust managed to get a good rate for its dredging contract. This contract will help the port remove 3.8 million cubic metre of material, mostly in the form of rocks. Jan De Nul Dredging India., a Dutch company, submitted a bid for Rs 465 crore to deepen the port’s channel and basin to service 12.80 metre drought vessels. Though the rate is 15 per cent more than the reserve price of around Rs 400 crore, the price still seems to be good. However, the Shipping Ministry feels that the rate should not be so high. The expected time to complete the project is estimated to be 18 months after it has been awarded. Rao said that the project is critical for the port’s future development to handle large size ships. “This is the best quote we can get for the project thanks to the slowdown in requirement for dredgers for some of the major projects in the Gulf region. We may not get this kind of a price in future when the demand for dredging picks up” averred GJ Rao, Chairman, Tuticorin Port Trust. Apart from Jan De Nul Dredging India, companies like Dredging International NV-Van Oord dredging and marine contractors and Boskalis International also bid for the project. With regards to the eco clearance, the Ministry of Environment and Forest accorded its environmental clearance for this project in May 2006 while the Planning Commission had accorded in-principle approval on February 1, 2007. Also, the Shipping Ministry conveyed the sanction of the project at an estimated cost of Rs 538 crore. It stated that 65 per cent of the estimated cost has to be borne by the Tuticorin Port Trust and the remaining will be given by the Government of India. Finally, the port trust’s board awarded the project to Jan De Nul Dredging India at a cost of Rs 465 crore. This amount did not include the service taxes to be applied, which was charged extra. For the year-ended March 31, 2010, the Tuticorin port handled 237.85 lakh tonne of cargo, an 8 per cent growth as compared to the last year’s figures of 220.11 lakh tonne. It also handled 4.39 lakh twenty foot equivalent units during the year.

WORLD ■ STRATEGIC GAINS FOR CHINA China has replaced India as Bangladesh’s biggest import destination, with trade between the two nations standing at $4.58 billion. However, it is heavily skewed in favour of Beijing with Bangladesh imports being $4.4 billion. Over the past few years, China has emerged as the largest supplier of military hardware to Bangladesh. This forms an important part in the overall trade between them. Improved trade has come as a major boost for the logistics companies in the two countries. Moreover, the recent proposal of China to help Bangladesh build a deep-sea port in Chittagong is expected to enhance the trade relationship between the two nations even further. It was declared when the Chinese Vice President Xi Jinpeng and Bangladeshi Prime Minister Sheikh Hasina met during Jinpeng recent visit to Bangladesh. Earlier, Hasina had travelled to China, seeking closer cooperation in a number of areas, including building a road link from Chittagong to Kunming in eastern China. Also, last month, China had offered duty-free access to some 5,000 Bangladeshi products in a ‘goodwill gesture’. It is estimated that the bilateral trade between Bangladesh and China is expected to increase to $5 billion by the end of 2010 from $4.58 billion in 2009. Experts believe that the current offer of port development in Chittagong is part of China’s strategy to secure sea lanes that cross the Indian Ocean and link its industrialised eastern seaboard with the energy resources of the MiddleEast. Apart from Bangladesh, China has also been developing ports in Gwadar, Pakistan, and Hambantota in Sri Lanka. In recent years, its influence in Myanmar has also increased significantly.

■ US LOGISTICS POISED FOR REBOUND Total logistics costs in the US fell to 7.7 per cent of the US Gross Domestic Product (GDP) in 2009, as compared to 9.3 per cent the previous year, revealed the 21st Annual ‘State of Logistics Report’ by the Council of Supply Chain Management Professionals (CSCMP). Last year, inventory-carrying costs continued to decline due to a 4.6 per cent drop in inventory and a further plunge in interest rates. Transportation costs were also down in 2009, 20.2 per cent lower than in the previous year, with all modes of transport badly affected. The ocean sector also saw a sharp decline. Trucking in particular, which comprises a large percentage of the transportation component, saw a 9 per cent decrease in the tonnage carried. The only sector that proved to be somewhat resilient is the air cargo sector and had a stronger showing in the latter part of the year. Rick Blasgen, President & CEO, CSCMP, said, “The economy is beginning to recover, and although time will tell how the logistics sector deals with the recovery, those companies that use the statistics and industry insights contained in this report will be better prepared for the business activity ahead.”

EWS

The ‘State of Logistics Report’ has tracked and measured all costs associated with moving goods through the US supply

chain since more than two decades. The report benchmarks key metrics in US logistics such as transportation and inventory-carrying costs, freight volumes, and revenues, giving practitioners a big-picture view of the performance of the US supply chain process.

■ DEFICIT IN CONTAINERS AS DEMAND RISES Asian exporters are in for a crisis as only few containers are available for exporters in the upcoming busy season. Experts believe that there has been a growth of 23 per cent in Europe-Asia trade and containers are not just enough to meet this rising demand. The rebound in shipping trade comes after a trade slump of about 10 per cent in 2009, making it the worst year in the industry’s more than five-decade old history. One more reason because of which there has been dearth of containers is that the traders had expected only single-digit growth, and none had ordered enough containers to cope with this year’s peak season, which traditionally runs from June to October. The peak is a result of shops’ stocking up ahead of northern hemisphere summer holidays and the run-up to Christmas. Other factors that have contributed to this are the labour shortages in Chinese container factories and the slowing down of most ships in the past two years to save fuel. To counter this crisis-like situation, Maersk Line, part of the AP Møller-Maersk Group, which is the world’s biggest container shipping group, had ordered new containers and has also started leasing them out to other companies. It had also reactivated previously laid-up ships – including a series of super-fast ships moored on Loch Striven in Scotland – to rush empty containers from consumption areas back to Asia. Many container shipping and container leasing companies stopped sourcing and producing containers during 2008-2009 because of the sharp fall in the exports. CL Ting, MD Corporate Planning, OOCL, warned that the Asian exporters may have trouble due to the shortage. “Equipment shortages certainly will have an impact on

JULY 2010 • SMART LOGISTICS • 17

World news, continued

booking acceptance in the months ahead, should trade volume stay strong,” he said.

■ ACS&T LOGISTICS PARTNERS WITH EDGE

WORLDWIDE LOGISTICS

ACS&T Logistics, UK’s leading frozen food logistics provider, has partnered with Edge Worldwide Logistics (EWL), a specialist in global frozen logistics, to offer a complete end-to -end supply chain service. The new partnership will enable food businesses in the UK to have complete control and visibility throughout the supply chain, right from overseas supplier to their own factory door. The service promises to benefit customers through enhanced information flow, and greatly improved operational efficiencies. Moreover, the new service has been designed to unlock savings throughout the entire supply chain for all those who source their frozen food products globally. It is the first-of-itskind in the industry and will save an average of 15-20 per cent of the total shipping costs. Carl Robinson, Sales & Commercial Director, ACS&T said, “We are absolutely delighted to have formed this partnership with EWL, and believe that together, we have created a new service that will benefit every food business that imports product to this country. EWL’s pricing structure on importing guarantees immediate savings, and when combined with our industry leading production support service, this is something that can offer improvements and savings to any supply chain.” Philip Edge, Director, Edge Worldwide Logistics, said, “EWL focusses on working in partnership with our clients to cut costs, reduce lead times and offer deep sea shipping expertise. Working with ACS&T, we are allowing our customers to take back control of their entire supply chain and offer them a complete service. It is a worthy partnership for our two businesses, but more importantly, for our customers who will reap the benefits.” It is believed that Edge Worldwide Logistics will handle shipping, paperwork, and track-and-trace services. Once goods arrive in the UK, ACS&T will take them to one of its 12 cold stores, and handle the UK logistics.

■ GLOBAL AIR CARGO SURGES 26.5 PER CENT Air cargo traffic has surged 26.5 per cent globally in February 2010 from a year ago, according to the International Air Transport Association (IATA). Several experts believe that in two to three months this sector will be back to pre-recession traffic levels. However, they cautioned citing that it is still not a full recovery and will take some time to adjust to two years of lost growth. In the global air traffic, North American and Asian carriers recorded a stronger growth. North American airlines booked a 34.1 per cent increase in cargo shipments in February. Freight traffic for Asian airlines increased by 39 per cent during the month of May as compared to last year, during the

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same month, according to the recent report by Association of Asia Pacific Airlines (AAPA). This is significant as May is considered as the busiest month for cargo traffic. The 5.71 billion freight metric-tonne kilometre flown is the highest during a strong recovery in the region and the most the airline group has on record for freight traffic since 2003, according to AAPA. Moreover, it was also noted that the freight traffic in this region for the first four to five months of 2010 was 34.1 per cent ahead of the depressed year-ago figure, and it was even 14.1 per cent better than the cumulative figure in 2008 for the January-May period. The month-to-month improvement is more significant to carriers than the gain over last year. Apart from these two regions, even the Latin American carriers increased freight tonnage by 41.9 per cent from February 2009. “The strong global air freight upturn has been largely driven by the business inventory cycle,” IATA said. “We can expect this part of the cycle to wear out in the second half of the year when inventories reach normal levels. From that point, we can expect slower growth as air freight will be driven by consumer spending and world trade growth,” the association added. While other airlines are on recovery mode, European airlines growth has been stagnant with just 7.2 per cent in February and remains a major cause of concern.

■ DAMCO INTRODUCES NEW CROSS-BORDER

TRUCKING SERVICE

Damco has introduced a new cross-border trucking service that links Thailand and Vietnam to Cambodia. The service had been designed to meet the needs of the growing trade between Thailand-Cambodia and Vietnam-Cambodia, the company officials said. Narin Phol, Country Manager, Damco, Cambodia and Vietnam, said that it will definitely be a faster and more reliable alternative as compared to sea freight, and a value-formoney solution compared to airfreight. Thus, the cross-border trucking service can significantly reduce the lead time from Thailand to Cambodia by at least three days. “We expect to see a growing volume of cargo on these corridors, particularly between Vietnam and Cambodia. Vietnam is Cambodia’s second-largest trading partner and is fast becoming a transshipment hub connecting Cambodia to international markets via the Cai Mep terminals,” said Phol. “We have created this service to meet the high standards of our customers in the FMCG, food and automotive industries, which demand short and reliable lead times. Transportation and customs clearance are handled by Damco staff at both origin and destination to ensure smooth operations from end to end,” Phol added. Apart from leading international FMCG and automotive companies, Damco’s key clients in the region also include domestic retailers as well as export manufacturing factories in Cambodia.

INSIGHTS & OUTLOOK

RURAL DISTRIBUTION & SUPPLY CHAIN

EXPLORING

RURAL ROUTES

SUDHIR MUDDANA TODAY, India is one of the fastest growing countries in the world. As known by most, India is the second most populous country, the second fastest growing economy, and geographically, the seventh-largest in the world. As a result of this, there are large and diverse demands for goods in the country. The potential of India can also be confirmed by the statistics provided by Novartis. Anuj Pasrija, Country Head, Arogya Parivar, Novartis India, says, “Economy-wise, India is the fourth-largest economy, has the second-fastest growing

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gross domestic product (GDP) after China, and is set to overtake Japan by 2014 to become the third-largest economy, if the current rate of growth continues.” With respect to industry and services, India is considered an information technology (IT) hub, providing IT solutions to 70 per cent of the Fortune 500 companies. By 2020, it will become the fifth-largest auto manufacturer, and the number of mobile users has increased from 0.1 million per month in 1999 to 10 million per month as of today. The statistics also show that the literacy rate in India has increased

from 17 per cent in 1950 to 69 per cent in 2009, and which is expected to reach 80 per cent in 2020. Also, there has been a decline in the population rate to 1.3 per cent, with average life expectancy increased from 47 years in the 1950s to 69 years in 2005. Above all, the level of poverty has also decreased from 56 per cent in the 1950s to 26 per cent in 2009. With the current pace of growth in India, the demand for products and other facilities in the near future is said to see a phenomenal growth. More so, rural

markets are poised to generate healthy demand trends.

WHY TARGET RURAL INDIA?

In addition, about half the households have a TV and refrigerator. “The rural economy is growing at a rate similar to that of the urban economy. Also, the rural economy is no longer an agriculturedominated economy. With the non-farm

say officials from Yes Bank. They also inform that the current size of the rural retail opportunity is estimated at Rs 1,800 billion in 2010, and is likely to reach and even increase to Rs 2,400 billion by 2015. With the demand for goods increasing in rural areas, companies that can build an operationally successful supply chain network across this market will gain a better opportunity to serve the enthusiastic demands of this market for all types of goods. This will help increase their marketshare and hold over the entire supply chain industry in the country. “The potential that lies in providing a good logistics support to rural areas is estimated at $100 billion,” says N Viswanadham, Executive Director, Centre for Global Logistics & Manufacturing Strategies (GLAMS), Indian School of Business (ISB). He further adds, “The future belongs to rural supply chains. With more than four billion people living in rural areas, there is a tremendous need to focus attention on issues of product designs, production, marketing & retail of food, and other electric & communication items in rural areas at affordable prices. India has a huge opportunity to become a leading global food supplier, as well as global garment suppliers, if right strategies are put in place and encouraged.”

The rural populace accounts for almost two-thirds of the total Indian population that resides in approximately Rural occupations 1970-1971 1980-1981 1993-1994 1999-2000 seven lakh villages Agriculture 72% 64% 57% 51% across the country. Industry 11% 15% 16% 20% Specifically, of the Services 17% 21% 27% 29% 1.13 billion people residing in India, 72 Table 1: NCAER statistics for the Indian rural market per cent (about 742 million) people live in rural areas. Hari sector fuelling half of the economy, rural Goyal, GM, Reliance Retail, Mumbai, said India has diversified over the past two “India will continue to live in its villages. By decades,” said Venkatesan. Table 1 shows 2025, 62 per cent population will still live statistics from 1970 to 2000 provided by in villages. So rural markets will remain NCAER. important for marketers.” With respect to the employment Even today, people in rural areas face lift in rural areas, Rahul Sharma, Head lack of basic amenities such as food, - Centre For Rural Information & Insights, drinking water, health and housing facilities. M&M, states, “About 8.3 per cent of rural With such a high percentage of people males are now employed in trade, hotels being deprived of such facilities, rural India and restaurants. Also, construction is the can certainly be considered an emerging fastest growing segment in rural areas, and large consumer community. employing 6.9 per cent of rural males. “The Indian rural market with its vast Current employment in the manufacturing size and demand base offers immense domain comprises 8.0 per cent of the opportunities to marketers. Two-thirds of rural male labour pool, and some farmers the country’s consumers live in rural areas, diversify into agri-support activities like generating almost half of the national transport & storage, which accounts for income. The rural-urban ratio with regard 3.9 per cent of rural males.” He further to consumer spending stands at 9:11, adds that with the Indian economy now ROADBLOCKS with rural India accounting for private maturing, the job market offers more Today, companies are facing several retail consumption of $145 to $150 opportunities for qualified rural workers challenges in the way to development, billion. With the urban market reaching in fast-moving industries like IT. making it difficult for them to create a a saturation point, India looks at the rural Another reason for considering supply chain network that serves the market to spur its economic growth,” says rural areas is the manner in which it R Venkatesan, Senior Advisor, National Council of Applied Economic Research (NCAER). The biggest challenge of rural marketing is product The rural market accounts for more delivery to rural locations in a cost effective way. In than 55 per cent of LIC policies, 70 per India, 2.2 lakh villages with population less than 500 cent of toilet soaps and about 50 per persons have hardly any shop. 17 per cent villages with cent of TV, fans, cycles, tea, watches, population between 2000 to10000 persons account salt, tooth powder & soft drinks, all of which highlight the importance of this 50% of the rural population. So it’s the selective market for marketers. Also, rural people approach which will help us to unlock rural market purchase approximately 38 per cent of potential. all two-wheelers sold in the country. A Hari Goyal, GM, Reliance Retail, Mumbai recently released report from Associated Chambers of Commerce and Industry rural population. Lack of sophistication in of India (ASSOCHAM) states that by has developed over the years. “The rural areas is the main reason for this 2011, the total rural incomes will be rural revolution is driven by increasing problem. This deficiency in infrastructure approximately 13,00,000 crore, up from purchasing power, changing consumption is visible in the lack of roads, and thus 8,00,000 crore a decade ago. Today, a patterns, increased access to information a viable means of transportation, which prosperous village with a population of and communication technology, improving leaves no option for companies than to about 10,000, has on an average 3,000 infrastructure and increased government utilise a complex network of unorganised, motorcycles, 20 cars and 32 tractors. initiatives to boost the rural economy,”

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Rural distribution & supply chain continued

ACT With the demand for goods increasing in rural areas, companies that can build an operationally successful supply chain network across this market will gain a better opportunity to serve the enthusiastic demands for all types of goods. This will help increase their marketshare and hold over the entire supply chain industry in the country. long & insufficient channels for gaining access to the rural markets. As Sharma avers, “Establishing a rural supply chain poses unique challenges because of poor rural-urban infrastructure, relatively low population density and diverse cultures & languages.” Some of the key challenges in operating a supply chain network in rural areas are as follows: Inferior road infrastructure: With roads leading to the rural areas not readily accessible, others lacking proper maintenance poses significant challenges to the transportation of goods. This drawback can result in damage as well as loss of the goods carried. Fragmented transportation service:More than 86 per cent of India’s truck owners own at least one truck each. This makes transportation difficult and cumbersome,

High wastage and breakage of goods—Owing to the poor connection between the rural and urban areas, there is massive wastage of perishable goods moving outwards from the rural to the urban market. Also, factors such as poor transportation and inadequate maintenance of roads can lead to high damage to items being distributed in the rural areas. Lack of third party logistics (3PL) focus: With urban markets gaining momentum fast and 3PL having a better foothold in the urban market, the 3PL players are still concentrating on the infrastructure and marketing set up in these areas. This has resulted in 3PL negligence towards the rural areas and companies are therefore finding it difficult to curb costs. Seasonal demand: Because agriculture is

The Indian rural market with its vast size and demand base offers immense opportunities to marketers. Two-thirds of the country’s consumers live in rural areas, generating almost half of the national income. With the urban market reaching a saturation point, India looks at the rural market to spur its economic growth. R VENKATESAN,

SENIOR ADVISOR, NATIONAL COUNCIL OF APPLIED ECONOMIC

RESEARCH (NCAER)

as the fragmentation leads to multiple vendors, co-ordination challenges and service delivery challenges. Lack of warehouses: Lack of warehouses, required to store the transported goods, can make it difficult to store large quantities of goods, thus resulting in clustering and damage of goods. Distribution: An effective rural distribution system requires several intermediaries right from the village-level shopkeeper, taluka-level wholesaler or dealer, districtlevel distributors and the consignment distributors at the state level. With almost 5-6 mediators in the distribution system, the complexity and cost of the distribution is set to escalate significantly.

22 • SMART LOGISTICS • JULY 2010

the main source of income for villagers, the demand for goods tend to depend on the agricultural situation in the village. Agriculture largely depends on the monsoons, and therefore, the purchasing capacity of villagers is not stable throughout the year. This irregularity often results in the failure of demand forecasters to be prepared in case of a sudden huge demand for goods. These factors prevent companies from building a productive and well-utilised supply chain network. Apart from these challenges, Goyal said “The biggest challenge of rural marketing is product delivery to rural locations in a cost-effective way. In India, 2.2 lakh villages with population less than 500

persons have hardly any shop. Around 17 per cent villages with population between 2000 to10,000 persons account for 50 per cent of the rural population. So it’s the selective approach, which will help us to unlock rural market potential”. He suggested that companies should adopt a selective approach and determine potential rural markets on the basis of population distribution and sales opportunities in those markets. Citing an example, Onida faced some obstacles in setting up the supply chain network while carrying out its IGO project. These challenges were broadly categorised in the areas of product, network, promotion and supply chain. products should be cost-effective, benefit people, fit into the lifestyles of people and meet the targets set by the company. The setting up of a network had issues like the size of the network that needed to be created and the scale of investments needed in case retailers already existed in the villages. With respect to the promotions for the companies and their products, there was a low reach and a high cost for the involvement of mass media for the project. Finally, the basic issues in the supply chain were the freight costs involved, and the time taken for transit.

RESHAPING RURAL INDIA The challenges discussed can have an adverse effect on a company, in terms of cost and operations failures. Thus, to set up a strong supply chain network in rural areas, a company needs to create a plan with an operationally stable network. As Viswanadham says, “With an expected population of 800 million people living in the rural India by 2050, the markets for commodity supply chains will scale up and thrive. Thus, there is a need for transforming rural India into a group of sophisticated vibrant activity centres. Innovations at every layer– products, processes, business models and service models–are fundamental to this transformation process. Businesses need to be reinvented with high-technology tools that can provide employment and services for millions of rural dwellers at an affordable cost.” With inputs from N Viswanadham, Executive Director, Centre for Global Logistics and Manufacturing Strategies (GLAMS), Indian School of Business

RURAL DISTRIBUTION APPROACHES INSIGHTS & OUTLOOK

CREATING AGILE & RESPONSIVE

SUPPLY CHAIN Developing supply chain networks for rural areas is certainly a gruelling task, with numerous opposing factors. However, understanding of the challenges involved, and applying appropriate distribution strategies, can help companies to carry out distribution of their products to and from the rural areas of the country. To succeed in the rural market and survive in the long run, it is essential for a supply chain network to be agile, lean, and responsive.

SUDHIR MUDDANA

CHALLENGES, encountered in the way to development need to be accepted, dealt with and then overcome. This is underlined by the fact that several companies, like Coca Cola, Hindustan Unilever, ITC, Bajaj and Hero Honda, have taken a step forward to establish supply chain networks in rural areas across the country. Though the challenges remain of great concern to these companies, the opportunities available for growth by creating supply chain networks in rural areas cannot be denied. Companies, therefore, are now using new and

successful distribution approaches for proper management of the supply chain in these areas. Currently, the rural distribution approach followed by most fast moving consumable goods (FMCG) companies involves a super-stockist and multiple sub-stockists that operate between the supplier and the village retail outlets. The super-stockist is generally based in the district headquarters and provides services to sub-stockists. Subsequently, the sub-stockists provide services to a cluster of villages. “For rural supply

chains, an additional link exists, wherein each super-stockist provides services to 25-30 sub-stockists in a district who then provide services in their respective small towns and villages. Almost all main districts have a super-stockist, who provides services to more than 600 substockists in the country,” says Dr Rakesh Sinha, COO-Marketing & Operations, Godrej Consumer Products. Here, the profit margin between the super-stockist and sub-stockist is approximately 7-9 per cent, which when compared with the 4-5 per cent earned by those in the urban

JULY 2010 • SMART LOGISTICS • 23

Rural distribution approaches, continued

Key considerations to be kept in mind while establishing a rural supply chain network Since the rural areas, in terms of buying and selling, follows a completely different path as compared to the urban, the key factors that definitely needs to be thought through are: • The rural supply chain should follow the segmentation approach, building a network based on viability and access to population • Consumer behaviour and location of purchases,eg, haats naturally cater to rural daily need items and creating alternative would not be prudent • Proper link to the local supply chain system • Tracking and monitoring mechanism. Benjamin Mathew, Senior Partner, MART

talcum powders is the latest trend.” The various approaches that can be used to develop a distribution model, making it cost-effective and competitive are as follows:

DEDICATED RURAL ENTREPRENEUR In this approach, a rural entrepreneur (RE) forms the link between the superstockist and village retail outlets. The RE is an individual who is local to a district and is well versed with the geography of the villages that he services. The RE must own a two-wheeler and have a minimum level of education such as higher secondary. The RE replaces the multiple sub-stockists that previously provided the services to villages located in the radius of approximately 30-40 km from the super-stockist. The use of this approach is costeffective, as the RE does not incur administrative expenses like rent, salary and electricity, and earns a semi-variable income.

market is substantial. Hence, this serves as This means that to adjust to a particular a major cause of concern for companies, buying pattern, a company should take which results in the companies being approximately one week and not 45hesitant to grow the current model in 60 days.” Dr Sinha also discussed the rural distribution. product range and the manner in which For clarifying this issue, some of the it differs from those in an urban market. leading FMCG companies have established He considered an example of the fashion new rural distribution models. The sense, saying, “Today, people in the urban Hindustan Unilever (HUL) Project Shakti, markets use high-level cosmetics to build Tata Tea Gaon Chalo and ITC e-choupal up their fashion sense, whereas in rural are some examples of new models being areas, using products such as hair dyes and DISTRIBUTOR CONSOLIDATION used in India. FOR URBAN AND RURAL Sunil Kapoor, Senior MARKETS Sales Executive– The rural supply chain stakeholders This approach aims to combine an urban Rural, HUL, while distributor, super-stockist and a subgiving insights on the and researchers can learn from the stockist into a single entity that services important aspects that well developed industrial goods supply retail outlets. This entity covers markets should be considered chains. The idea is to transform the way in a local town as well as the cluster of by an FMCG before agriculture works and create a business villages around the town. establishing a supply orientation among farming community. This arrangement also offers savings chain network in rural areas, avers, “The company should know about where to go, whom to sell and the price factors, Information Network basically keeping the profile of people in mind. For instance, how do you sell a water purifier in a place where the water Food Manufacturer supply is scarce? One can sell a water purifier only where the water supply is regular, and drinking water is available for Farmers Distributor people.” Logistics Network To this, Dr Sinha adds, “The most important aspect is the mindset of the Logistics Hub company. The rural population should never be considered inferior, and their Farmers Retailer choices should be respected. Today, many rural people have higher disposable Service incomes than their urban counterparts.” Provider He further adds, “Because estimating the buying pattern in rural areas is more Financial Network difficult than in the urban areas due to Banks lack of organised rural consumer data, only those supply chains that are agile, lean and Figure 1: Integrated Rural Supply Chain Network responsive, will survive in the long run.

ACT

24 • SMART LOGISTICS • JULY 2010

in the administrative costs and lower inventory requirements, thus resulting in lower margin outgo of 0.7 per cent for the company for rural distribution.

CONSOLIDATED DISTRIBUTION WITH TELE-BOOKING With the increasing mobile penetration in the rural areas, the collection of orders is now possible using a phone and the following servicing of the market can be done through an order delivery system. This helps save transportation costs, as the vehicle space is utilised in a better way

5 factors to succeed in the rural marketplace • Be focussed • Think of long-term gains • Remember that time spent in ideation is 20 per cent and time spent in execution is 80 per cent. • Be passionate and not obsessed • Learn when to reduce losses. Benjamin Mathew, Senior Partner, MART

compared with the ready-stock system. Also, as orders will be tele-booked, the frequency of visits by salesmen will reduce, thus saving on manpower costs. The staff can rather be used to make tele-calls at a much smaller addition to the total cost. This arrangement will reduce the margin outgo by 1.3-1.5 per cent for the rural distribution.

UTILISING THE REVERSE LOGISTICS TREND Another approach that can be considered for rural distribution is to partner with low-margin, high-reach players in rural markets. For example, as the dairy industry is much dependent on the rural areas, a large number of dairy vehicles travel to rural areas, collect milk and return. Here, the dairy vehicles travel empty to the rural locations and then return filled. This is opposite to the functioning of rural FMCG distribution, wherein vehicles travel to the village filled with goods and then return empty. This has given the idea for a distribution synergy between FMCG and dairy players. Here, the FMCG distributor can be located at areas from where the dairy vehicles originate. The village retail

We need to reinvent rural supply chain networks using high technologies, keeping in mind the inefficiencies and constraints imposed by the infrastructure and economic environment. N VISWANADHAM,

EXECUTIVE DIRECTOR, GLAMS AND CLINICAL PROFESSOR–

OPERATIONS, INDIAN SCHOOL OF BUSINESS (ISB)

outlets can be serviced with the dairy vehicles, which will first offload the FMCG stocks in a village, and then on their way back, collect milk from the same village. This arrangement helps reduce the logistics cost for the distributor, as there is no empty return of vehicles. Also, as milk collection is a daily activity, it will increase the frequency of servicing the villages. This approach lowers the delivery cost, thereby resulting in lower margin outgo of 1.2-1.4 per cent for the company. Several distribution models can be established based on the abovementioned approaches. However, the choice of approaches depends on the nature of the product, its sales potential in rural markets and its value-volume ratio. When asked about the approach for creating awareness of products among the rural people, Kapoor says, “We first sell our products at a price lower than that in the urban market. Then, we can try to attract people by providing additional schemes, for example, on purchase of a particular product that is above a particular value, an item will be given as a gift. Another approach is to educate the rural population. For example, to create awareness for the use of a shampoo, a

van can go to the village, and describe the benefits and uses of a shampoo instead of multani mitti and other soaps manufactured in non-organised sectors. Thus, the first step will be to educate them, and then carry out the required sampling via a third group. Also for children, contests such as drawing competitions can be organised, with prize distribution for winners of best drawings.” To achieve success in the rural markets, MART also adopted innovation strategies based on few key factors. Elaborating on the same, Benjamin Mathew, Senior Partner, MART, said “MART believes that the population is dispersed according to the census. The top 17 per cent (100,000 in number) of the villages contribute to 50 per cent of rural population and 60 per cent of rural wealth. The best approach would be to tackle this part first and then look at the next.” He gave insight on the key approaches that include: • Use platforms and mediums within the rural areas with access to population – SHG Groups’ Project Shakti (Incidentally MART conceptualised and implemented the model for Unilever) • Use of local market and locations – Haats (Redistribution to villages)

Planning, Coordination and Overall Responsibility Orders

Orchestrator

End Customer Payment

Plans

Material Flow

Operational Status Supplier

3PL

Contract Mfg

3PL

Supplier

3PL

Contract Mfg

3PL

Execution Figure 2: Orchestrator model

JULY 2010 • SMART LOGISTICS • 25

Rural distribution approaches, continued

ACT With the increasing mobile penetration in the rural areas, the collection of orders is now possible using a phone and the following servicing of the market can be done through an order delivery system. This helps save transportation costs, as the vehicle space is utilised in a better way compared with the ready-stock system. • Creating livelihood for the people who can partner and create channel.

REINVENTING THE RURAL SUPPLY CHAIN There is a need to reinvent rural supply chain networks using high technologies, keeping in mind the ineffi ciencies and constraints imposed by the infrastructure and economic environment. To do this, there are two value-delivery processes in the food supply chain for re-engineering: the production and sale of commodities by farmers, and rural retail network as stated by ISB. The proposed models in this direction are as follows: Integrated Rural Supply Chain Network Integrated Rural Supply Chain Network (IRSN) is a distribution model that can be used by groups of independent companies that are often located in different regions,

their destinations. An extranet – a secure and reliable communications network linking all companies of the enterprise – provides information integration that enables efficient logistics and effective decision making. There is also a secure financial network that connects financing, insurance and credit rating agencies, as well as all other stakeholders and financial institutions. Thus, the ecosystem that enables an agile rural supply chain also involves players from the farming, manufacturing, retailing and financing segments as well as from the customers. This is an ideal rural supply-demandfinancial chain, and the current state of the Indian rural supply chains is far from it. Figure 1 depicts the IRSN. Operationally, the IRSN has four core value delivery processes. It is imperative that all four processes function in harmony to enable the entire supply chain to be

The rural population should never be considered inferior, and their choices should be respected. Because estimating the buying pattern in rural areas is more difficult than in the urban areas due to lack of organised rural consumer data, those supply chains that are agile, lean and responsive, will survive in the long run. DR RAKESH SINHA, COO-MARKETING & OPERATIONS, GODREJ CONSUMER PRODUCTS and that form a strategic alliance with the common goal of designing, manufacturing and delivering the right quality products and services to customer groups, at a faster speed than others. The IRSN is an integration of three different welldesigned sub-networks for handling transfer of goods, information and funds – a logistics network, an information technology network and a financial network, respectively. The logistics network provides a streamlined material flow among all partners, cutting down lead time and cost of moving raw materials, sub-assemblies and finished goods to

26 • SMART LOGISTICS • JULY 2010

competitive. The core business processes in a rural production organisation include the following: • Procurement (farm inputs and fresh produce) • Production of basic agriculture products (farming and non-farming) • Processing (fresh produce – grains, fruits and vegetables) • Retailing (rural and urban). The support processes assisting the above-mentioned core business processes can be identified as follows: technology, transportation including cold chain, mobile communications

technology, knowledge processes along with pre- & post-harvesting techniques, handling, packaging, processing techniques, resource management and marketing, rural supply chain – flow of goods as well as financial services. Orchestrator Model Several garment manufacturing and export centres in India – Ludhiana, Tiruppur, Bengaluru, Mumbai, Chennai, Jaipur and Delhi – export to the US, UAE, UK, Germany, France and other countries of the European Union. The major competitors for the Indian export centres are China, Bangladesh, Indonesia, Sri Lanka, Pakistan and other Southeast Asian countries. There is a huge opportunity – both in exports and domestic markets – for textile small & medium enterprises (SMEs) in Punjab, provided attention is given to supply chain aspects like knowledge and information, services like logistics & finance as well as resource management. The Orchestrator model is a popular model, based on the supply chain practice of several multinational companies (MNCs), with a stronghold on the businesses of export sourcing, distribution and retailing (Figure 2). In this model, groups of SMEs, with competencies in various production activities necessary for manufacture of garments, fabrics, etc, partner and coordinate with the product cycle. The supply and demand sides are bridged by an orchestrator, who will pool the customer requirements and also monitor production activity, ensuring that market needs and supply correspond to each other.

TAKING A STEP-BY-STEP APPROACH Having known these approaches, it’s now clear that proper planning is required while designing a distribution model for a rural supply chain network. This includes the mix and match of the many available distribution approaches. To make a lean and responsive model, it is essential to keep factors such as where to go, whom to sell and the price factors, basically keeping the profile of people in mind. With inputs from Professor Viswanadham, Executive Director, Centre for Global Logistics and Manufacturing Strategies (GLAMS), Indian School of Business

RURAL SUPPLY CHAIN INNOVATIONS INSIGHTS & OUTLOOK

Rural India is providing tremendous market opportunities for companies in different segments to grow. While some companies have successfully explored the potential with their innovative business models, others need to join the race by bringing in unique value propositions. Adequate infrastructure being a major restraint, innovations are called for in the areas of product development, supply chain and distribution network to revolutionise the growth of rural areas as well as the companies.

JULY 2010 â&#x20AC;˘ SMART LOGISTICS â&#x20AC;˘ 29

Rural supply chain innovations, continued

“New and creative approaches are needed to convert poverty into opportunity…” Management Guru, Late C K Prahalad

THE growth story of India is one of the highly discussed issues in the last few years. And Indian economy’s strong resilience in the face of the global downturn has proved that this growth is not superficial. While much credit has gone to all and sundry, the real heroes were busy in their daily activities and were not even aware of the important role they played in keeping the economy afloat. The transition of rural India from being a poverty-ridden market to economic growth engine was slow and humble. The economy of rural India has undergone considerable modifications from the time India embraced liberalisation. The earning pattern in India has changed dramatically and what was once an agribased economy, today earns more than 40 per cent of its income from non-farm activities, e.g. food processing, trading, remittance from migrant workers, etc. This, combined with government schemes like national rural employment guarantee scheme (NREGS), has ensured a steady income flow for the rural population – 70 per cent of India’s total population and increase in disposable income. The rural market today accounts for more than 55 per cent of LIC policies; 70 per cent of toilet soaps; 50 per cent of TV, fans, bicycles, tea, wrist watches, washing soap, blades, salt, tooth powder, soft drinks; as well as 38 per cent of all two-wheelers purchased. Most categories

T IS IMPOSSIBLE TO IGNORE A MARKET OF 700 MILLION PEOPLE AND THE ONE THAT IS GROWING AT A STEADY RATE WHEN THE URBAN MARKET IS SATURATING. HENCE, INNOVATION IS THE ONLY WAY FOR MARKET PLAYERS TO PROFITABLY PENETRATE THE RURAL MARKET.

30 • SMART LOGISTICS • JULY 2010

are experiencing faster growth rates in the rural and semi-urban regions as compared to the urban region. This scenario describes the new-found interest of companies – Indian and multinational companies (MNCs) alike – gearing up for the next big initiative into the hinterland. However, the progression of the companies into this highly unexplored territory has been slow and replete with challenges, with supply chain and distribution infrastructure at the top of the list. While the entire India is marred by the lack of logistics infrastructure, the rural market scenario is dismal. Lack of roads, power and conventional distribution channels make movement in the hinterland a costly endeavour. Besides, rural markets are widely dispersed and thinly populated, resulting in low per capita purchases. Considering this situation in isolation, entering rural markets may seem a commercially unviable option. But in totality, it is impossible to ignore a market of 700 million people and the one that is growing at a steady rate when the urban market is saturating. Hence, innovation is the only way for market players to profitably penetrate the rural market. Innovation distinguishes between a leader and a follower Steve Jobs Companies in India have experimented and are still researching on various options possible, though most innovations have been on the product design front. Some of the notable examples are shampoo sachets, Nestle’s smaller packs of Maggie, LG’s customised TV sets ‘Sampoorna’, Godrej’s ‘Chotukool’, etc. However, the critical part is to take these products to the market. Further, not much innovation is happening in the areas of supply chain and distribution for the rural market. Two companies with their products – ITC’s ‘e-Choupal’ and HUL’s ‘Project Shakti’ – have revolutionised the way in which rural trade is carried out in India. Several new approaches being used today have their origin in the above-mentioned projects. Thus, it is imperative to understand ‘eChoupal’ and ‘Project Shakti’ before we look at some recent initiatives.

E-CHOUPAL ITC’s e-Choupal initiative began as an experiment to connect with farmers to directly procure Soybean from them

UICK TAKE Strategies to tap rural markets • Companies can tap rural markets through tie-ups with institutions like Indian Postal service. • Indian Postal service is essentially present throughout India and even in the remotest of places. • They can use Logistics Post to deliver products into the hinterland and then distribute to village retailers. • They can even use the post offices as retail shops, making it an extremely profitable situation for both • Already, few banking and insurance companies are distributing their financial products through post offices, which needs to be further explored. without engaging any intermediary. It started as an experiment primarily to cater to in-house requirements, but has now become a case study for many more companies to connect with the rural market. Through e-Choupal, ITC connected with rural farmers via Internet for direct procurement of farm produce. e-Choupals are small ‘kiosks’ consisting of personal computers connected to Internet, which are managed and maintained by farmers themselves. Soybean farmers could access this kiosk for information on prices, but had the choice to sell their produce either at the local market or directly to ITC at their hub locations. A hub location services a cluster of e-Choupals. By purchasing directly from the farmer, ITC significantly improved the efficiency of the channel and created value for both the farmer and the company. The e-Choupal network was initiated to facilitate more efficient and effective procurement of produce. However, the connectivity – physical as well as informational – between the farmer and market facilitated by this network has

allowed ITC to use it for distribution of goods & services from the market to the farmer, thereby creating a two-way distribution system. Over the next decade, the e-Choupal network is expected to cover more than 100,000 villages, representing one-sixth of rural India, and create more than 10 million e-farmers.

PROJECT SHAKTI This was the first initiative in India to create an alternative distribution channel of rural entrepreneurs (RE). Shakti distributors are rural Indian women who partner with Hindustan Unilever to receive training in micro-business skills, which includes a personal digital assistant to access product prices. They purchase HUL products and sell them in their villages for a profit, thus introducing HUL products to areas beyond the reach of HUL’s distribution networks. This helped HUL tap the large unexplored and highly inaccessible markets of rural India, which was beyond the reach of HUL’s already extensive rural distribution network. In addition, a social objective was to provide sustainable livelihood opportunities for underprivileged rural women. Project Shakti faced three major challenges. First, while the aggregate rural potential in India is massive, the target market is scattered over a vast area and the per capita consumption levels are low. Second, most villages and townships are not connected to urban centres by air or rail and road connectivity is poor. And the third challenge was the affordability of products. The latter challenge meant not only the price point alone but also the unit size. This is an issue that CavinCare of Chennai tackled by launching 1-Rupee Velvette shampoo sachets, which was quickly emulated by Unilever. Today, 44,000 Shakti distributors cover lakhs of villages across India, discussing matters of personal health & hygiene and recommending a product from the HUL stable. HUL expects to have 100,000 distributors by the end of this year.

CREATION VERSUS COLLABORATION Creating an efficient rural infrastructure is an expensive and time-consuming affair. So what will be better than taking assistance of infrastructure built by other non-competing companies? Many argue that this will result in loss of operational control of the supply chain, while some

argue that they will be at the mercy of the company whose infrastructure they are using. These are mainly trust issues and can be clarified through discussion. The major requirement is an initiative on part of the companies and some predictability on volumes. There exist examples of such partnerships operational in the Indian market, but these are one-off cases. Another way for companies to reach rural market is through tie-ups with institutions like Indian Postal service. Indian Postal service is essentially present throughout India and even in the remotest of places. They can use Logistics Post to deliver products into the hinterland and then distribute to village retailers. They can even use the post offices as retail

This network can be used effectively by third-party product manufacturers to penetrate deep into the hinterland. For example, SKS Microfinance, India’s largest microfinance company, with a membership of 5.3 million people, distributes a variety of products like water purifiers and mobile phones. There is a huge scope of distributing products to rural market in partnership with microfinance companies. For instance, initiatives like Hariyali Kisaan Bazaar and Godrej Aadhar are involved in setting up rural-focussed retail chains that, besides facilitating trade with farmers, also render farm advisory services, credit facility to farmers as well as information on weather, price, soil & water testing facility.

ACT

It is essential to keep in mind that innovation is a continuous process. With the aspirations of rural consumers matching those of their urban counterparts, product innovation will slowly become defunct and supply chain as well as distribution efficiency & innovation will gain momentum. In the near future, the efficacy of the supply chain will determine the success of a company in rural markets. shops, making it an extremely profitable situation for both. Already, few banking and insurance companies are distributing their financial products through post offices, which needs to be further explored.

AGGREGATOR-DISTRIBUTOR This is another form of unconventional channel partnership. In nearly all villages, there are people who aggregate vegetables & other farm produce, and deliver to the nearest agri-market, which is generally a Tehsil or Taluka. The vehicles then return empty to villages. Such an aggregator can be made a sub-stockist directly under the control stockist/superstockist at such Tehsils or Talukas. This will save the company’s expenditure on creating transportation infrastructure and, at the same time, reaching to villages that were beyond limits. This will also help companies to build a strong bond with village community.

OTHER INNOVATIONS Microfinance institutions (MFIs) in India have gained a strong foothold in rural India. These MFIs have a wide rural network and a strong community bonding.

Tata Khet Se is an example of a rural-to-urban supply chain focussed on providing sales opportunities to farmers at the point of their farms as well as training and advice on growing certain key products with strict controls that they in turn market to restaurants, hotels, flight kitchens and retail chains. Further, Tata’s Ace and Mahindra’s Gio, rural-focussed mini-trucks, represent the willingness of the manufacturer to customise its product largely according to the needs of small and rural India.

INNOVATING FOR RURAL SUCCESS It is essential to keep in mind that innovation is a continuous process. With the aspirations of rural consumers matching those of their urban counterparts, product innovation will slowly become defunct and supply chain as well as distribution efficiency & innovation will gain momentum. In the near future, the efficacy of the supply chain will determine the success of a company in rural markets. Amit Joshi, Founding Member & Gagan Seksaria, Partner, Supply Chain Leadership Council

JULY 2010 • SMART LOGISTICS • 31

VIEW FROM THE TOP EXECUTIVE DIRECTOR, DARCL LOGISTICS

“Adequate market intelligence of load availability based on feedback from distribution network is an important element, which can reduce logistics costs to a considerable extent,” avers TS Narasimhan, Executive Director, DARCL Logistics, in an interview with Prerna Sharma. Excerpts...

DIFFICULTIES & REMOVING INEFFICIENCIES IN TRANSPORTATION WILL ADDRESSING

GO A LONG WAY IN PERFORMANCE OF LOGISTICS INDUSTRY IN 2009-10 & BEYOND Logistics is among the few industries that have consistently shown a positive growth in the last few years. This trend can be attributed to the introduction of innovative offerings by various players and the restructuring of the sector to transform it from a highly fragmented segment to an organised one. Going by the trends that have been witnessed in the past, the logistics industry is poised to soar at the rate of more than 10 per cent. This growth seems realistic with the accelerated focus on the infrastructure

32 • SMART LOGISTICS • JULY 2010

REDUCING COSTS

sector. Transportation as a segment is also positioned to grow by more than 15 per cent. Not only this, the rising interest of private equity firms in the segment is also a sign of increasing investors’ confidence. All in all, this sector is poised to take a big leap in the years to come.

CHALLENGES FACED AND WAYS TO OVERCOME THEM About 75-85 per cent of the sector is highly unorganised even today, and transportation constitutes 50-60 per cent of the entire logistics industry. This has brought with it a series of issues that have

been instrumental in impeding the growth pace of the segment. The primary issue affecting the transportation segment is the lack of trained manpower. Training the existing manpower and capability building to attract human resources at various levels and aligning them to dynamic customers’ needs are of paramount importance today. However, the scenario seems changing with the shift in the mindset of people. Earlier, professionals were hesitant to enter this sector, but now logistics is recognised as a sunrise sector and an increasing number of people are taking an interest in this area.

Another area of concern revolves around drivers whose problems need to be addressed, as they are an integral part of the value chain. Health, safety, security & environment (HSSE) issues need to be considered by organisations in the sector. The situation can now

earlier, operational efficiency needs to be augmented. Trucks move around 350 km per day in India compared to 1,200 km in the Western countries. Transit halts, traffic delays, no entry hours, etc further contribute to inefficiency. Addressing these difficulties and removing inefficiencies

GST will address the issues of multiple taxes that mar the logistics industry today. Introduction of GST will help proceed towards integrated logistics solutions, 3PL and others, as manufacturers will reduce the number of warehouses. be eased by conducting regular training programmes, attracting talents, raising the level of consciousness and understanding the changing customer requirements. Technology will play a major role in mitigating these hurdles like ensuring cashless transactions and paying vendors through online banking system.

FACTORS ADDING TO THE INCREASE IN LOGISTICS COST The average cost of logistics in developed economies is 7-8 per cent of the gross domestic product (GDP), whereas in India it is as high as 13-14 per cent of the GDP. The main factors contributing to this increased cost are as follows: • Lack of world-class highway infrastructure • Delays at check posts en route the journey resulting in increased transit time • Inadequate warehousing infrastructure leading to high wastage • Defective tax regime resulting in suboptimal distribution network design for most companies • Extremely fragmented nature of market, leading to inability in leveraging economies of scale to improve efficiencies • Lack of certainty in transit times due to infrastructure and regulatory delays. Inefficiencies, delays, lesser capacity utilisation, untrained manpower add to costs in addition to absence of economies of scales. For transporters, back loads or return loads are important for better capacity utilisation. Adequate market intelligence of load availability based on feedback from distribution network is an important element, which can reduce logistics costs to a considerable extent. As stated

in transportation will go a long way in reducing costs.

IMPROVING EFFICIENCY THROUGH REVERSE LOGISTICS Reverse logistics is a pheonomenon related to product returns or unsold products that are returned to their origin. It is defined as ‘the process of planning, implementing and controlling efficient, cost-effective flow of raw materials, inprocess inventory, finished goods and related information from the pointof-consumption to the point-of-origin in order to recapture value or proper disposal’. This concept is fast catching up in the industry. Boost in consumer spending, increase in technology adoption, government regulation on controlling ewastes are some of the factors that trigger the growth of reverse logistics in India. Looking at the present scenario, most companies do not consider outsourcing as an option, and thus reverse logistics is largely an in-house activity. It is expected that in future, the requirement will further escalate for specialised reverse logistics, which will allow companies to concentrate on their core business areas and this activity will then be outsourced to the specialised service provider. Following are some industries where reverse logistics are in operation: • Publishing industry – for taking back unsold books (more than one-third of the sales) • Beverage industries – for collecting and reusing empty bottles • Heavy industries – for recycling wastes • Consumer goods industry –electronics • Pharmaceutical industries –transporting expired pharma goods for disposal, in keeping with environment laws

• Automobile industries, and so on. So far, forward logistics is our major focus area (i.e. from manufacturer to customers). We do not operate much in the reverse logistics space, as the segments we cater to do not have product returns. However, we will consider this opportunity when we plan to venture into those segments.

HURDLES FACED IN EFFICIENT SUPPLY CHAIN MANAGEMENT Various issues hamper the efficiency levels of a logistics company. The most important among them are inadequate logistics infrastructure, including highways; logistics hubs; defective tax regime, which are expected to be addressed with the introduction of GST. Inadequate availability of talent and shortage of drivers are other problem areas. Given the fragmented nature of vehicle supply, it becomes extremely difficult to exercise strict quality and ensure committed service levels to customers. Because of seasonal fluctuations in demand, production & market dynamics, coupled with occurrence of natural calamities such as floods, etc, disrupt the operational performance. Studying the market before quoting and thorough understanding of customers’ needs are important aspects that lead to efficient logistics operations. Supplydemand dynamics result in fluctuations in lorry hire, and thereby locking the cost for a particular period with agreement from vendors is crucial for timely placement, lifting & delivery for efficient logistics.

IMPACT OF GST ON THE LOGISTICS LANDSCAPE IN INDIA We hope that GST will address the issues of multiple taxes that mar the logistics industry today. Introduction of GST will help proceed towards integrated logistics solutions, 3PL and others, as manufacturers will reduce the number of warehouses.

TECHNOLOGY ADOPTION IN LOGISTICS Technology adoption seems growing, and in certain segments, it has been faster than expected. Players in the organised category are moving into this segment by enhancing their in-house capabilities or outsourcing. Today, the companies follow e-tendering while calling for quotes for contract logistics. Further, logistics managers depend on mailing their requirement

JULY 2010 • SMART LOGISTICS • 33

View from the top, continued

for seamless execution, for which they have received proactive response. We are planning to implement a tool that will allow logistics managers to enter the request for quote from anywhere in India. This system will automatically send the customers an estimate quote, which they can use for their budgeting and decisionmaking process. Thus, information technology (IT) is an important and inevitable tool for stepping into the enormous logistics space. We have been focussing on deploying the latest IT tools since late mid-90s, and with sustained efforts of the team, we have computerised almost 95 per cent of branch networks. Next, we have implemented SAP. IT has thus played a significant role in strengthening our market base and improving our operational efficiency.

in Maharashtra, Gujarat and the Northern hinterland. The Eastern DFC will be from Ludhiana in Punjab to Dankuni (1,806 km) near Kolkata to be extended in future to serve the new deep seaport proposed in Kolkata and will largely serve coal and steel traffic. All these are most likely to be beneficial, with a promise to catalyse growth by 2016-17.

ENHANCING CONNECTIVITY BETWEEN VARIOUS LOGISTICS MODES Consolidation of warehouses, with a scope for development of multi-user facilities and a better opportunity for outsourcing logistics to 3PL providers call for logistics parks & terminals with welldesigned infrastructure. This will facilitate efficient trans-shipments.

Studying the market before quoting and thorough understanding of customers’ needs are important aspects that lead to efficient logistics operations. Supply-demand dynamics result in fluctuations in lorry hire, and thereby locking the cost for a particular period with agreement from vendors is crucial for timely placement, lifting & delivery for efficient logistics. On the tracking front, global positioning system (GPS) will play a major role. We have GPS installed in fleet of heavy vehicles that are largely owned by us. In the light asset model, which has been our base business model, tracking is done through cellphone and swipe cards. We are also exploring a possibility of cell phone triangulationbased low-cost vehicle tracking solution in association with telecom service providers, which will provide tracking services to all our customers.

ROLE OF DEDICATED FREIGHT CORRIDORS With passenger and freight traffic on one corridor, the freight traffic obviously takes a backseat. Separating passenger traffic and deploying a dedicated freight traffic will provide a fillip to the industry and save on carrying costs. On the same lines, dedicated rail freight corridors (DFCs) on the Western and Eastern trunk routes can be developed. The Western DFC (1,483 km) will be from Jawaharlal Nehru Port (JNPT) in Mumbai to Tughlakabad and Dadri near Delhi and would cater largely to the container transport requirements between the existing and emerging ports

34 • SMART LOGISTICS • JULY 2010

Integration of 3PL is the way forward towards multimodal logistics, eg, linking road-rail and similarly seaport and airport.

PROMISING TRENDS Trends like 3PL, integrated supply chain management, single-window service, tracking and reporting add value to logistics chain. Introduction of innovative products like reverse logistics, containerisation and customised products to suit individual customers has opened new vistas of growth in the segment.

GOVERNMENT SUPPORT FOR PROVIDING FILLIP TO THE INDUSTRY The government is aware of the issues hampering the growth of the logistics sector. The apex bodies of industries have been raising the problems and government has been quite enthusiastic in resolving most of these issues. The Unified/National Permit system for trucks was a welcome move from the government. It is important for the government to ensure support to logistics companies, continue investing in infrastructure and

encourage more public-private partnership (PPP) projects. The government must facilitate introduction of various measures that will help build a strong base for heightened growth in the long-term. For example, driving licenses and truck numbers with chassis & ownership should be made on-line and installation of vehicle tracking device should be made mandatory. Number plates should be tamper-proof for enhanced security and prompt action should be taken if an FIR is lodged in case of theft or hijacking or missing consignment, followed by strict action from lawenforcement agencies. While restriction of overload is a healthy sign, the government should also consider actual/practical loading capacity and the age-old fixation of same rule should be dispensed with. Also, there is a need to review the time taken at state/commercial tax check posts and adopt technology and improve processes to reduce these delaying factors. There should be a consideration for privatisation of railways, which would act as a regulator and try to replicate the model of telecom in India, which has become a huge success story. Further, development of inland waterways will also boost the performance of the sector.

CAPITALISING ON THE IMMENSE GROWTH OPPORTUNITIES We are augmenting fleet, maintaining our dominance in full truck load (FTL), focussing on project logistics, as well as strengthening in-plant logistics movement lines on specific requirements of customers for better efficiencies. We plan to integrate with vendors in the logistics value chain for synergised working towards reducing logistics cost.

FACTORS THAT WILL BOOST THE GROWTH OF LOGISTICS IN INDIA • Transparency, infrastructure support with security and safety of men & materials that are carried, trained manpower • Adoption of latest technological solutions, integrated supply chain solutions – containerisation – customised or end-to-end solutions under one roof • Faster implementation of goods & services tax (GST) • Seamless movement of goods at state border points, etc. All these factors combined would help in improving the logistics landscape in India.

SPECIAL FEATURE

PERISHABLE GOODS TRANSPORTATION

MASTERING

END-TO-END CONNECTIVITY For transportation of perishables, time is the essence, as a delay of every minute in transit reduces the value of the product for the customer. Despite being the second-largest producer of fruits and vegetables worldwide, India faces considerable hurdles when it comes to ensuring the best-in-class supply chain system. Eliminating these obstacles by putting in place an efficient and seamless supply chain will go a long way in making India ‘the food basket’ of the world in the near future. GEETHA JAYARAMAN LOSS and wastage of food occur at all levels of the food system, right from farming, processing and wholesaling, to the end consumers. In developing countries, the estimated losses along the entire value chain of food products are 30-50 per cent. Moreover, losses of about 40 per cent during pre-harvest occur mainly because of attacks from rodents and/or insects, which result from inadequate storage facilities. “An adverse climate with a high humidity & temperature along with inefficient harvesting, storage, transportation and processing methods

36 • SMART LOGISTICS • JULY 2010

result in other significant levels of wastage of fruits & vegetables,” states Anil Arora, MD, MJ Logistics. Poor infrastructure for storage, marketing and distribution of food products in India is one of the key reasons

for low processing levels. It is estimated that, about 25-40 per cent of the agriproduce is lost during the post-harvest season. This loss occurs primarily due to inadequate supply chain management systems in India.

An adverse climate with a high humidity and temperature along with inefficient harvesting, storage, transportation and processing methods result in other significant levels of loss of fruits & vegetables. ANIL ARORA, MD, MJ LOGISTICS

Inadequate supply chain from field to end customers leads to loss and wastage of approximately 50 per cent of the food produced for consumption. This also results in massive inefficiencies & loss of opportunities for all stakeholders along the value chain in terms of water, energy and land use as well as a significant contribution to global greenhouse gas emissions. The challenges currently faced by India are on account of differences in consumer behaviour, food storage, distribution infrastructure and packaging & transport practices.

CHALLENGES AND WAYS TO COUNTER THEM The enormous losses of perishables produced in the country result from lack of proper infrastructure for storage and transportation under controlled conditions. This wastage can be attributed to the gaps in the supply chain and/or cold chain due to poor infrastructure, insufficient cold storage capacity, and unavailability of cold storages in close proximity to farms. Also poor transportation infrastructure and lack of quality-consciousness & awareness adds to the problem. These gaps result in price instability, inappropriate remunerative prices to farmers, and rural impoverishment, thereby causing worry to farmers. Adding to this, Tarun Goyal, Head –Logistics, Radhakrishna Foodlands, avers, “Lack of infrastructure for value-addition through adequate storage and processing adversely affects the perishables market. Infrastructure like refrigeration and deepfreeze facilities right from the production stage needs to be strengthened, as any negligence on this part leads to rapid deterioration of perishable goods such as fruits and vegetables.” Further, a comprehensive quality system is another important aspect to be considered for maintaining the quality of produce throughout the export supply chain. For this purpose, fruits and vegetables should be stored at appropriate temperatures. Arora observes, “Defects and deterioration in the quality of fruits and vegetables occur due to temperature differences from the time of harvest. Quality deterioration increases with a delay in the onset of cooling. This is particularly valid for Indian conditions that have high ambient temperatures, and where cold storages are located at considerable distances from the fields.”

Proper management of perishable goods will help realise significant costsavings and other benefits, including: • Less damage to perishable goods, resulting in fewer customer complaints and lower costs due to a reduction in replacement of broken items • Lower expenditure on shipping due to fewer returns and fewer replacements • More efficient use of packaging material • Maximising space in containers placed on ships and trucks.

LOGISTICAL ADVANTAGES Of late, globalisation has increased the demand for a proper logistics/supply chain in India. The dynamic lifestyle and open economy have also forced the manufacturers to produce and/or supply quality products to the customer on a continuous basis. Several factors emphasise the need for a proper supply chain management system for fruits and vegetables. Arora says, “The cost and availability of information resources between entities in the supply chain allow easy linkages that eliminate time delays within the network. Also, the level of competition in domestic as well as international markets requires organisations to be fast, agile and flexible. Further, customer expectations and requirements are becoming more stringent. Hence, to satisfy consumers’ needs, the supply chain management system has to operate with two main objectives, i.e. timeliness and quality.” Achieving these objectives with minimum wastage

Gopalakrishnan, MD, Yeti Refrigeration, avers, “The lifecycle of a perishable product after harvesting depends on the right temperature and environment at which it is preserved. Preservation in a cold storage is the perfect solution for this, and investments in this infrastructure by collective farming will add to the profits of the farmer.” The other major benefit of maintaining a proper supply chain is that the end customer will receive a produce with better quality and guaranteed additional returns at a nominal price. Goyal opines, “This will ensure the availability of a fresh and better nutritional product, more choice for food items and better health standards at all times for the consumer.” Moreover, the farmers will receive an assured return in the form of additional revenue due to extended shelf life of the product, reduced loss of moisture content, fewer incidences of pilferage and lesser wastage. Goyal affirms, “India is largely an agrarian country and will benefit from a

Lack of infrastructure for value addition through adequate storage and processing adversely affects the perishables market. Infrastructure like refrigeration and deep-freeze facilities right from the production stage needs to be strengthened, as any negligence on this part leads to rapid deterioration of perishable goods such as fruits and vegetables. TARUN GOYAL, HEAD - LOGISTICS, RADHAKRISHNA FOODLANDS of perishables is possible by constantly pursuing sustainability in the value chain. This will help accelerate the demand for fruits and vegetables by addressing issues of under- and over-nourishment as well as mitigating the potential for increased wastes. Wastes can be reduced by using refrigerated containers to transport harvested products from farms to cold storages. Refrigerated containers should be used to supplement the existing conventional cold storages. C

proper supply chain management system. This will lead to increased revenue in the form of taxes for goods sold and greater export potential, especially in keeping with the stringent standards imposed recently. It will also encourage intellectual and technological awareness among citizens.”

NEED OF THE HOUR At present, the food supply chain in India is extremely fragmented, which has resulted in a large number of intermediaries and

JULY 2010 • SMART LOGISTICS • 37

Perishable goods transportation, continued

absence of economies of scale. The main constraint within the supply chain is the logistical vacuum, particularly with regard to the cold chain. The estimated cold storage capacity of India is 19.5 million tonne – less than 15 per cent of the annual horticulture production – which is

for achieving this target. Arora notes, “An efficient supply chain is integral to the overall strategy of all players in the agri-business. The increasing focus on horticulture, large-scale corporate participation and the establishment of mega food parks will open up new vistas

The lifecycle of a perishable product after harvesting depends on the preservation of the product at right temperature and environment. Cold storage is the perfect solution for this, and investments in this infrastructure by collective farming will add to the profits of the farmer. C GOPALAKRISHNAN, MD, YETI REFRIGERATION dominated by potatoes (80 per cent). Moreover, by 2012, the marketable surplus in India is estimated to increase from 350 to 870 million tonne per annum. Of this, 40 per cent of the incremental production (approximately 150 million tonne per annum) would be accounted for by perishables such as fruits and vegetables. An efficient logistics support for the fruits and vegetable segment is crucial

for cold chain logistics in the country. The food parks will span two or three districts in each location, and each park will be equipped with a cold storage facility, in addition to facilities for sorting, grading, food processing, packaging & quality control.” The need of the hour is to have an adequate supply chain system in place, which implements all requirements, starting from the basic farm level.

GEARING UP FOR THE FUTURE A farmer who is capable of meeting the challenges of quality preservation from field to the end-customer will be able to expand marketing opportunities and compete better in the market. Gopalakrishnan asserts, “India has a large farming community and a tropical climate throughout the year. Thus, the demand for a variety of perishable vegetables will be high and the present framework of supply chain will continue. The changing lifestyle of consumers and increasing demands for value-added products could lead to a future with new technology.” If a product is damaged while still in the distribution chain, often, the farmer is blamed for having an inadequate and inefficient logistics & storage system. “Proper refrigeration of the product at various levels of supply chain is highly recommended, as it ensures minimal wastage or deterioration of fruits and vegetables,” says Goyal. With growing awareness regarding an efficient logistics system, one can say that there will be no looking back in the efforts to make India ‘the food basket’ of the world in the years to come.

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38 • SMART LOGISTICS • JULY 2010

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SPECIAL FEATURE

COLD CHAIN LOGISTICS

CHANNELLING THE

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India is gearing up to develop its cold chain logistics to prioritise food safety, security and sustainability. Factors like on-time delivery, appropriate storage temperatures, strong supply chain networks across the country, will help define the future of cold chain logistics. However, with more private players and technology upgradations, the growth of this segment is definitely moving upwards. RACHITA JHA INDIA is counted among the largest producers of food items in the world today. Demographically, with a population of over 1.18 billion, the country is also one of the highest consumers of food. With the blurring of the gap between the rural and urban India’s consumption pattern, food & food products sector is leap-frogging. Statistics indicate that India is the world’s largest producer of milk and dairy products, with more than 90 million tonne of milk flowing within the country every year. Taking into account the growing food production in India, the country can easily become a food basket for the world, only if it travels seamlessly from farm-to-fork throughout the supply chain network. The recent growth trends in the food processing sector, greater participation from private players, coupled with improved infrastructure in connectivity have resulted in faster movement of food and food products. This has also led to the need for integrating cold chain systems into the food supply chain networks. In India,

COLD CHAIN SYSTEM Of the 320 million hectare of land in India, total arable land is nearly 184 million hectare. With the wide range of food and food products offered by the country,

40 • SMART LOGISTICS • JULY 2010

moving perishable food items from producer to consumer markets is a challenge. These items usually include fruits, vegetables, milk products, and many processed food products and items in the ready-to-eat category. The changing consumption patterns of the Indian population and the need for availability of all major food products throughout the year have prompted the expansion of the cold chain network in the food logistics industry. This network forms an important link in the supply chain of perishable food products. “With food processing in India growing at 11 per cent, there is huge scope for further development in the country. More than 30 per cent of produce worth $10.63 billion goes waste due to lack of cold chain facilities. The cold chain industry is estimated at $2.12-3.19 billion and is growing at a rate of 2025 per cent. This growth is expected to reach $8.5 billion by

cold chains are used primarily for fruits and vegetables, meat and marine products, dairy products, ice creams and confectionery. Nutraceuticals is another major emerging category where cold storage is critical. SANJAY SETHI, VP – SUPPLY CHAIN, ARSHIYA SUPPLY CHAIN MANAGEMENT

2015. However, India being the second With food processing in India growing at 11 per cent, largest producer of fruits & vegetables and largest producer of dairy products, there is huge scope for development in the country. is ready to take the next step towards However, India being the second-largest producer new global marketing opportunities,” avers of fruits & vegetables and largest producer of dairy Atul Khanna, Director, Global Cold Chain products, the country is ready to take a leap towards Alliance India. With respect to facilities new global marketing opportunities. in the food industry, a cold chain offers transportation, storage, distribution and ATUL KHANNA, DIRECTOR, GLOBAL COLD CHAIN ALLIANCE INDIA sale of temperature-sensitive food usually complex, and includes perishable goods and numerous small in frozen condition. This also includes the required equipment stakeholders. In India, the infrastructure connecting these partners used to maintain frozen food products at an appropriate is weak. Currently, the cold chain in food logistics is evolving temperature. “In India, cold chains are used primarily for fruits & gradually, according to the specific needs of the industry, export vegetables, meat & marine products, dairy products, ice creams opportunities and viability. “Indian cold chain market is worth and confectionery. Nutraceuticals is another major emerging $2.6 billion, and is expected to grow to $12.4 billion by 2015. category where cold storage is critical,” informs Sanjay Sethi, VP The annual growth rate of food consumption is 4.1 per cent, and – Supply Chain, Arshiya Supply Chain Management. is expected to reach $344 billion by 2025,” informs Sethi. Talking THE NEED TO OPTIMISE FACILITIES about warehouses, India’s cold chain warehouses are largely With the consumption trends in India undergoing a change, which standalone facilities with poor infrastructure as compared to the are in line with the Western model of consumerism, demand and Western markets and other developed markets. Currently, only preferences for food have also shown drastic changes over the few options are available for refrigerated transport and storage years. Increasing income, purchasing power and changing lifestyle in the country. Also, the evolution of a robust cold chain system are the factors leading to the demand for food items throughout in India has been slow because of the fragmented supply chain the year. These factors have emphasised the need for cold chain network in the food sector and absence of a planned post-harvest facilities for farm produce and processed food products. “Some storage & transportation of food products at the farm gate level. trends are largely driving the demand for cold chain facilities in Elaborating on the current losses incurred by the industry due to India. One of these is the emergence of organised retail, where lack of such facilities, Sethi says, “Against a requirement of more Indian consumers now have the option of selecting milk products, than 31 million tonne of cold storage capacity, India has over processed foods, fresh vegetables and fruits from the large-sized 5,101 cold storage units with a cumulative capacity of nearly 21.7 retail chains. This, combined with the emergence of fast-food million tonne, leading to a loss of about 40 per cent of the agrijoints, has increased the demand for a cold chain infrastructure produce post-harvest.” in India,” says Lars Sorensen, MD, Damco – South Asia. Besides CURRENT TECHNOLOGIES the domestic demand, India also has a large export market that is Integrity of the cold chain is the most critical model in perishable significantly dependent on a temperature-controlled environment. food distribution. It refers to a continuous supply chain with “The current state of food supply chain in India is sub-optimal. It a constant temperature, through which temperature-sensitive is estimated that about 25 per cent of food and vegetables go perishable goods are transported from processors and waste as a result of inadequate cold chain infrastructure in India. manufacturers to retail outlets. Some of the leading technologies This hampers the growth potential of the country in export for cold chain logistics in India include wireless, sensor and Internet markets for numerous commodities like bananas wherein India is technologies, radio frequency identification (RFID) devices, bithe leading producer. For domestic distribution of food products, the Indian cold chain infrastructure is not well-equipped to support the exponential growth that the country will witness in the consumption of products that require refrigerated transport and storage in the near future,” adds Sorensen.

CURRENT TRENDS AND BUSINESS POTENTIAL The food habits of people are now changing, with people going up the value chain and consuming more processed and international products. “The primary driver for fresh foods comprise the rising consumer demand for food products throughout the year. Thus, we need to preserve the products from in-season to out-of-season to ensure a continuous annual supply of food products,” says Anil Arora, MD, MJ Logistics. The food supply chain is

JULY 2010 • SMART LOGISTICS • 41

Cold chain logistics, continued

directional smart container, GPS, data loggers, insulated shippers, pre-cooling – vacuum storage, refrigerated doors, etc. “For most domestic perishables, precooling is a method in which the temperature at which the products are picked, produced, or processed is rapidly decreased to the temperature appropriate for storage and transport. The modern cooling systems in this field are advanced enough to keep huge perishable loads fresh almost indefinitely,” says R Kannan, CEO, Snowman India. The use of mobile pre-coolers in fields & farms, especially for exports and high-value products and commodities is an upcoming trend along with the use of multitemperature vehicles for perishable food products. Traceability is important from various perspectives, with the primary one being food safety & ability to identify food source, which facilitate rapid recall in case food contamination occurs. On the use of RFID technology for perishable goods, Pankaj Shukla, director - RFID Business Development, Motorola Enterprise Mobility Solutions, states, “In the US alone, despite better transportation and logistics capabilities, over 56 per cent of perishables go waste because they are not delivered to grocers under optimal condition or in saleable window. RFID coupled with temperature-sensing capability will allow food industry to not only track shipments but also conditions in which the food is transported.” This enables users to predict the remaining shelflife of the product and provide timely information to help aid real-time business decisions on operational actions to effectively manage these stocks.

infrastructural support is the key in driving the export of food products from India. “Indian farming and production technologies are still in the developmental stage, barring a few players who have the latest technology, compared with the developed markets. This means that the Indian products have a lower shelflife than those from other global markets that have adopted latest technological methods at the production and packing stage,” says Sorensen. These technologies include pre-cooling facilities, cold storages, refrigerated transportation, refrigeration facilities at the port, and the capacity to handle refrigerated ocean carriers & airplanes along with port facilities. He further adds, “Transportation of refrigerated cargo meant for export can show remarkable improvements, if we can develop a robust network of rail, road, short-sea infrastructure to be used for transportation of refrigerated cargo from production centres to gateway ports.”

HE INDIAN LOGISTICS INFRASTRUCTURE NEEDS TO BE DEVELOPED TO FOSTER GROWTH IN THE EXPORT OF FOOD PRODUCTS FROM INDIA. TODAY, THE COUNTRY EXPORTS SIGNIFICANT QUANTITIES OF COMMODITIES LIKE SEAFOOD, MEAT, MANGOES, BANANAS AND GRAPES. TRADING OF SUCH COMMODITIES REQUIRE A COLD CHAIN INFRASTRUCTURE THAT ENCOMPASSES STORAGE AND TRANSPORTATION ACROSS LARGE GEOGRAPHICAL AREAS

LAST MILE REFRIGERATION

The last mile logistics is critical for maintaining the temperature of perishable cargo, which is crucial for commodities like essential food products transported through the cold chain. Although the ‘last mile’ of a company’s supply chain is the final & critical link between the company and its customers, it has historically been a neglected segment of a corporation’s supply chain strategy. At the last mile, merchandise is delivered from regional distribution centres to local branches or directly to end-customers. While most companies have optimised their supply chains up to the store front, surprisingly few have focussed on last mile deliveries. This scenario is changing in food industry, especially for perishable foods. “On an The food habits of people are now changing, with average, 28 per cent of transportation costs people going up the value chain and consuming are incurred in the last mile, according the Council of Logistics Management, more processed and international products. to which greatly impacts the net profit of a The prime driver for fresh foods comprise the company. Though many new technologies rising demand for food products round the year. and services have come up in the last 10 Thus, we need to preserve the products from years, promising to streamline the supply in-season to out-of-season to ensure that the supply chains of companies, only few solutions have specifically addressed the last mile,” continues annually. informs Kannan. The last mile refrigerated ANIL ARORA, MD, MJ LOGISTICS transportation ensures that perishable products are safe and of a good quality EXPORTS SCENARIO at the point of consumption. Cold chain facilities that can The Indian logistics infrastructure needs to be developed to handle diverse cargo and are well-connected and integrated to foster growth in the export of food products from India. Today, a transport network via road, rails & short-sea until the last mile the country exports significant quantities of commodities like remain a much desired facility from the cold chain industry. “We seafood, meat, mangoes, bananas and grapes. Trading of such also need to have enhanced last mile logistics facilities that involve commodities require a cold chain infrastructure that encompasses road transport in refrigerated trucks. Currently, the capacity of storage and transportation across large geographical areas. Besides such trucks on a national level is a challenge,” observes Sorensen. considerable technological innovation and implementation of Failure in keeping these products at appropriate temperatures cutting-edge farming processes at the production end, the logistics can result in introduction of various negative attributes including

42 • SMART LOGISTICS • JULY 2010

textural degradation, discolouration, bruising and microbial growth. “If the farmer community processes the food at the farm gate level, it will provide a great upswing for the food processing industry to leverage on the agricultural produce and supply chain network in India,” says Arora.

BOTTLENECKS AND STEPS TO ELIMINATE THEM

In US alone, despite better transportation and logistics capabilities, over 56 per cent of perishables are wasted because they are not delivered to grocers in optimal condition or saleable window. RFID coupled with temperature sensing capability will allow food industry to not only track shipments, but also conditions in which the food is transported. PANKAJ SHUKLA,

DIRECTOR-RFID BUSINESS DEVELOPMENT, MOTOROLA

ENTERPRISE MOBILITY SOLUTIONS The integrated cold chain logistics in India is still at a nascent stage. Moreover, the network of suppliers providing cold chain infrastructure at various 5,000 refrigerated transport vehicles for all the other categories stages of the cold supply chain is unorganised. “There are only taken together,” says Khanna. Thus, there is a growing need to few players who can offer a nation-wide network of cold chain further expand this fleet of refrigerated transportation in order warehouses, e.g. refrigerated trucks. Again, there are only few to provide quality food products throughout the country the players who can offer a nation-wide network of refrigerated year round. “Besides, a much wider and better network of cold trucking options. Further, other infrastructural challenges in port chain facilities is needed in India with the right technology at the facilities, roads and rail network also hamper the movement of production stage to ensure a longer shelf-life of the produce. refrigerated cargo in India,” says Sorensen. Moreover, with cold The subsequent crucial step would be appropriate packaging and chain demanding high cost, introduction of cold chain logistics in handling of the cargo,” opines Sorensen. Cold chain is an important food supply chain becomes challenging due to the capital-intensive link, demanding immediate attention to boost the food supply and nature of the industry. He adds, “Land, modern technology & catch pace with the consumption demands for domestic & global other cold chain investments require considerable amounts of markets. With more private players and technology upgradations capital, and these investments tend to have a longer repayment in the overall supply chain, especially cold chain logistics, the period. Hence, only a few players are able to invest in this sector. processed food industry is definitely making a headway to the The government is currently supporting the cold chain industry growth highway. by providing various subsidies & tax benefits for investors in this industry; hence, we should see an improved investment environment for this key industry.” The government has been pro-active in supporting cold chain logistics in India. “The Vision 2015 paper has clearly focussed on the need to adopt a strategy, whereby cold storage facilities are provided collectively to production centres as ‘Cold Storage Centres’ with potential strengths for storage of primary and processed agricultural products during most parts of the year,” says Sethi. Besides the government initiatives, the current situation demands increased investments in cold chain infrastructure, post-harvest technologies and installation of food processing plants for food supply chain. “Value-additions or process addition at the farm gate level are comparatively easy to set-up, but a basic gap remains, which is absence of an organised front-end retail for selling a cold chain product. Co-ordinated efforts are needed from farmers at the farmgate level, retailers at the front-end level and the logistics service providers to ensure fast and safe routes of transport of perishable goods,” opines Arora.

TOWARDS THE GROWTH HIGHWAY On time delivery, appropriate storage temperature, good network across India for goods supply, more improved and modern logistics, etc will define the future of cold chain for food logistics in India. “The value for reefer transportation in India is worth $ 250 million including both organised and unorganised sector. It includes about 250 reefer transport operators involved in the business of transportation of perishable products. It is estimated that about 25,000 vehicles are involved in the business of perishable products transportation, of which dairy constitutes about 80 per cent. This leaves a fleet of only about

JULY 2010 • SMART LOGISTICS • 43

SECTOR ANALYSIS

CHEMICAL LOGISTICS

PRIORITISING

SAFETY

IN TRANSIT The rapid growth in the chemical industry has opened new avenues for specialised logistics providers to grow. To tap the growth prospects effectively, these service providers have to address a series of issues - from safety to putting in place state-of-the-art infrastructure for smooth movement of goods. Moreover, implementation of latest technologies for ensuring real-time visibility and transparency for customers should be given high priority.

SHIVANI MODY THE Indian chemical industry is currently estimated at Rs 3,50,000 crore and its exports are valued at Rs 70,000 crore. It has a share of 14 per cent in the Indian industry and is the single largest industry segment in the Index of Industrial Production (IIP). The industry is highly heterogenous with countless companies that include commodities and specialities in 20 segments (e.g. inorganic, colourants, textile, pharma chemicals, polymers, leather chemicals, etc), which are growing at a rate of 12 per cent per year. In addition, the Indian chemical industry has an impressive private sector participation mainly in textile chemicals, colourants, and leather chemicals as well as they have an access to a huge domestic market. Talking about the lucrative prospects that the industry holds, Pavithran M Kallada, MD, Unique Global Logistics, says, “The chemical industry in India is picking up, and the country presents huge opportunity for growth. The domestic potential itself offers new avenues for explore. Companies dealing with specialty chemicals, pharma ingredients, petrochemicals and solvents have begun to increase their business, opening up an

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entire gamut of opportunities.” Citing the growth in this industry, S R Venkatapathy, senior analyst & head of research, India, ARC Advisory Group, avers, “The Indian chemical industry is set to reach $ 80 billion and is growing at a rate of 9-10 per cent. This is one-tenth of the rate in the US and shows excellent potential for growth. There is much traction in specialty and fine chemicals in the country.”

CHALLENGES AND ISSUES The Indian chemical industry comprise base, specialty, fine chemicals & fertilisers and petrochemicals segments. The logistics concerns for these chemicals are mostly associated with delivery, storage and packaging. These are handled mainly by road freight across the country. Warehousing, storage and utilisation is better and faster in specialty chemicals segment, which also includes paints. Shelf life of pigments is a matter of concern, which calls for proper handling. The major challenge in the chemical sector lies in handling of hazardous chemicals. Ashish Rathore, MD, Kimberlite Chemicals India, informs, “The chemical

logistics faces many problems in the country. First, there are no specialised service providers. Most of the logistics service providers (LSPs) are based out of the Gujarat and Maharashtra region, and finding a good service provider in the Southern part of India becomes a problem. The other factor is that the volumes of logistics make the services an expensive proposition. Moreover, service providers have only a general idea about the substance being transported, but an in-depth knowledge of such substances is lacking.” With respect to the transportation of hazardous chemicals – liquid and solids, the industry has to follow international

What to look for in an outsourcing partner

standards and rules & regulations. In addition, the supply chain should be efficient enough to keep track of the delivery time. For example, transportation of goods internationally from Singapore to India takes 10-12 days. On the other hand, transporting the same goods within the country, for example, from Tamil Nadu to Gujarat, also takes 10-12 days. The time taken for movement needs to be reduced to improve the operational efficiency. Further, the chemical industry is facing stiff competition from countries like China, Taiwan, Korea and the Gulf. The chemical industry in China, for instance, is five to six times larger than in India. And

currently, huge investments are taking place in the chemical industry in China and the Middle East.

RULES AND REGULATIONS With regard to transportation of liquid chemical cargo, it becomes even more important for exporters to ensure that the safety norms are adhered to and appropriate precautions are taken. Because of the inherently hazardous nature of the business, safety and security becomes a priority for chemical logistics managers. Further, different countries have different safety norms and packaging requirements, which have to be considered while processing the cargo before stacking

Although the list of 3PLs is quite long, only a few specialise in the chemical industry. Key criteria by which a chemical shipper should evaluate an outsourcing partner includes the following: • Extent of experience within the chemical industry • Percentage of chemical shipments managed • Use of on-demand technology that is easy to deploy as well as upgrade • Speed of implementation • Number of successful installations • Financial viability • Proven flexibility. and loading. Countries like China require special license for transportation of hazardous chemicals. Kallada informs, “While transporting hazardous chemicals and minerals, there are several statutory requirements to be followed. There are a set of international rules, visible forms and approvals that need to be cleared before moving any material. Currently, India does not have sufficient regulations for carrying out the

JULY 2010 • SMART LOGISTICS • 45

Chemical logistics, continued

With regard to transportation of liquid chemical cargo, it becomes even more important for exporters to ensure that the safety norms are adhered to

process. Also, when exporting to an international location, each country has their own safety and environment laws that need to be followed.” With regard to compliance to the safety acts, Venkatapathy avers, “We have good safety acts in place, but their improper implementation is a major problem. The compliance rules are not followed appropriately, most of which includes paperwork. The approach

by implementing stringent standards (use of ADR road tanker/IMO tank container) concerned with road transportation of dangerous and non-dangerous goods. This approach is better than that followed by the international or local competitors.” He further adds, “We have also audited the third party logistics (3PL) service providers against Dow’s environmental, health and safety (EH&S) external audit checklist, CDI-T checklist as well as ADR

The LSPs have shown poor customer service level and higher delivery lead time. An important task that the LSPs need to know about and be able to handle is the warehousing storage spill control mechanisms and necessary safety elements for chemical storage. KURT ZETAH, GLOBAL SUPPLY CHAIN EXPERTISE CENTRE LEADER, DOW CHEMICALS followed in the country is reactive and not proactive. Despite the existence of safety directories, people react and take precautions only when an accident occurs. Also, most companies follow selfregulated norms and measures.” Citing customers’ perspective, Kurt Zetah, Global Supply Chain Expertise Centre Leader, Dow Chemicals, says, “The LSPs have shown poor customer service level and higher delivery lead time. Also, the local mindset of the external partner involved in providing the supply chain solution hinders the process. Safety and security are also not emphasised upon. We have overcome this challenge

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regulation, as applicable.”

WAREHOUSING AND STORAGE The other issue that prevents rapid development of the industry is the inadequate infrastructure for warehousing, storage and freight forwarding. To this, Kallada says, “In countries like Singapore, the government encourages warehousing facilities. They have constructed common warehouses, which are managed by the service providers. India too should have such facilities. The lead time to set up such a facility is a big challenge for us and no specific government procedure is in place. Also, there needs to be a single-

window clearance process to realise this goal as quickly as possible.” Besides, the storage requirements for hazardous substances are different. The nature of the chemicals should be known while considering the storage systems. The shelf life of products also plays an important role while considering the storage needs. Logistics service providers might also have to transport solid chemicals, which can be heavy, bulky and difficult to store. Providers use the latest, automated technologies to ensure highest levels of safety for adequate movement and storage of such materials. Adding to this, Venkatapathy says, “In the chemical industry, companies have to employ automation, given the nature of the goods. Same is the case with the service providers. For instance, for transportation of hazardous substances in the petrochemical industry, we use technology that is of global standards. The service providers are also employing equipment to ensure maximum safety and movement. Further, adoption of new technologies depends on the scale of exports.”

LACK OF PRODUCT INFORMATION Most service providers lack information on the nature of the chemicals being transported, which could create major problems if a mishap occurs. In this context, Rathore informs, “Service providers lack knowledge about the nature of the products, which can be a major issue during mishaps. For instance, while transporting CS2 products, the drivers have no idea about the hazardous nature of the chemical. Also, when fertiliser companies transport amines, the service providers handle packaging in such a way that the quantity of the product reduces by the time it reaches the destination. Providers do not consider the volatile nature of the substances. Information such as this is necessary in case of leaks and need to be handled carefully.” Moreover, the drivers and, often, workers in the yard are not fully equipped to deal with accidents that can occur due to the hazardous nature of chemicals. Further, Zetah informs, “An important task that the LSPs need to know about and be able to handle is the warehousing storage spill control mechanisms and necessary safety elements for chemical storage.”

ADOPTING TECHNOLOGY

Chemical manufacturers, distributors and LSPs all operate chemical warehouses, which differ in complexity. At one end of the spectrum, are distributors (or LSPs handling chemicals on behalf of manufacturing clients) who receive containers, usually drums filled with chemicals, from suppliers and then reship them when an order is placed. These distributors are known as factory pack distributors. At the other end of the spectrum, are manufacturers, distributors and, in some cases, LSPs that receive bulk chemical shipments. These shipments are often received in tank cars and then repackaged and/or the chemicals are mixed in a variety of containers. The use of a proper supply chain technology can help the logistics providers to easily carry out the operations and even retrieve information. Gradually, implementing IT solutions can enhance the efficiency and reduce the overall cost of operations. Indicating the IT set-up, Dr Joerg Strassburger, MD & Country Representative, Lanxess India, notes that in developed countries, the logistics processes are well-established. Considering huge volumes and transactions handled with limited number of skilled manpower, these processes are automated and in most cases outsourced with the support of strong IT backbone as a control

HE INDIAN CHEMICAL INDUSTRY IS CURRENTLY GROWING AT A RATE OF 9-10 PER CENT AND IS SHOWING POSITIVE MOMENTUM. FURTHER, THE MULTINATIONAL COMPANIES (MNCs) ARE NOW FOCUSSING ON THE CHEMICAL SECTOR IN INDIA. THE DOMESTIC MARKET IS ALSO GROWING AT A RAPID RATE, GIVING A BOOST TO THE CHEMICAL INDUSTRY.

mechanism. Further, IT implementation is necessary to provide visibility to customers along the movement of the products. The track and trace mechanism is gaining importance and the goods need to be routed and shipped through a number of locations. With exports growing in

to provide shipment visibility to the customer. Companies use technologies such as RFID and satellitedriven global positioning systems to maximise shipping efficiency and cut costs. These technologies provide companies a real-time visibility of goods, which helps them improve supply chain management and address government regulations and security concerns. The other key benefit is improved asset management.” On similar lines, Zetah views, “Tracking and tracing of the shipped goods is also a challenge. Transporters do not use global positioning system (GPS) as the market is fragmented in nature and most transporters do not own a fleet, but borrow it from the market. This situation holds true for packaged solid/liquid.” Further, elaborating about the relevance of adoption of IT expertise in transportation, Venkatapathy states,

The Indian chemical industry is set to reach $80 billion and is growing at a rate of 9-10 per cent. This is one-tenth of the rate in the US and shows excellent potential for growth. There is much traction in specialty and fine chemicals in the country. S R VENKATAPATHY, SENIOR ANALYST & HEAD OF RESEARCH, INDIA, ARC ADVISORY GROUP

this segment, the need to access realtime information and transparency will become all the more necessary in the near future. Kallada says, “Adoption of IT expertise makes the task easier. During the movement of goods, it is important

“Adoption of IT expertise is not up to the mark as required. Most of the IT expertise is being used for customs- and tax-related work as well as for compliance issues.”

USING THE RIGHT MODES OF TRANSPORT Most of the transportation of chemical substances in the country takes place via road freight. Venkatapathy believes, “The logistics for known chemical

Most of the transportation of chemical substances in the country takes place via road freight.

JULY 2010 • SMART LOGISTICS • 47

Chemical logistics, continued

substances does not face any major problems, especially when it comes to transporting raw materials for the cement industry or fine chemicals for the pharma and life sciences industry. These also work on a definitive arrangement. The

raw materials supplied to the plastics industry move through the road freight. The only matter of concern is pertaining to packaging of these materials.” Problems arise during the movement of hazardous chemical substances.

TOP 10 PRACTICES FOR SHIPPING CHEMICALS BY RAIL Safety is crucial, whether you are a chemical shipper, carrier or service provider. The 10 tips listed here will ensure safe rail shipping. 1) Develop and implement a securement policy that includes pre-loading inspections, post-loading inspections and a corresponding safety checklist. • Pay special attention to ensure that railcars are not overloaded, especially in case of hazardous material shipments. 2) Inspect valves/domes for tightness – this is a leading cause of leaks/spills in rail transportation incidents. • After loading, leak-test the car by applying at least 10 psig of pressure over the maximum estimated transportation pressure. Check all valves, packing gland nuts, closures and flanges using a leak detection solution or ultrasonic instrument. • Release or reduce pressure after completing the leak test. • If a pressure test is impractical or unsafe, the railcar in question should be held and re-inspected after 24 hours. Valves and fittings should be re-tightened as needed. 3) Review shipping papers to ensure adequate data. • Promote electronic data interchange for all shipments. 4) Ensure proper placarding for all railcars. • Utilise recto-reflective placards, a requirement for bulk consignments. • Shippers should eliminate using paper placards whenever possible. 5) Ensure that the emergency response plan is correct and updated for plant sites and transportation-related releases. • Conduct an annual drill of the emergency response plan (ERP). • Shippers must show proper ERP number and associated telephone number on dangerous goods. • Ensure that emergency contacts and telephone numbers for the railroad and plant site are correct and updated regularly. 6) Implement key training programmes. • All railroad personnel entering the plant site should be properly trained and/or receive orientation, especially for emergency actions. • Establish, document, communicate and implement a company-wide tank car securement training programme. • Establish, document, train and implement a procedure for tank car customers to report poor securement, hard-to-operate valves and other fitting problems. • Establish, document, train and implement company-wide preventive maintenance practices for tank cars. 7) Ensure that all rail crossings within the plant site are properly marked with warning signs. 8) Ensure that rail lines are clear, switches are aligned properly and car brakes are released before moving the cars. 9) Have plant personnel closely observe rail crews while in operation within the plant site to assure plant and rail safety. 10) Have a documented routine process for providing feedback to rail carriers. Source: Union Pacific Railroad

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Venkatapathy says, “In the petrochemical industry, transportation requires major investments and regulatory needs. This is a regulated segment and mostly government controlled. The railways see traction in this segment. This mode of transportation requires large volumes of substances.” According to Rathore, selecting the mode of transportation depends on the material to be moved, “Most products are transported on trucks and tankers. Railways may be the second choice, but road transportation is mostly preferred for the chemical industry. In the case of exports to foreign locations, air route may be used but it depends on the requirement. The quantity of substance becomes limited in transporting nonhazardous chemicals via the air route.”

POSITIVE FUTURE GROWTH The Indian chemical industry is currently growing at a rate of 9-10 per cent and is showing positive momentum. Further, the multinational companies (MNCs) are now focussing on the chemical sector in India. The domestic market is also growing at a rapid rate, giving a boost to the chemical industry. All these factors are paving the way for specialised service providers in the chemical industry. Kallada believes, “The Indian chemical industry is growing and has future potential. It is vital to create awareness and provide training the chemical companies regarding the market needs. Also, educating the service providers about safety and security issues is needed. These steps will certainly result in better services in the country.” With access to international knowledge and expertise, the LSPs can upgrade the services and even consider global exports. Venkatapathy says, “The potential for exports is picking up and Indian chemical companies can rise up to the requirements of the international market.” Sources from LANXESS, one of the leading companies in specialty chemicals, inform, “A majority of international 3PL service providers have set up their base and footprint in India over past few years and are in a phase of consolidating their position by mergers, acquisitions or partnerships with local players. This is bringing about exchange of international expertise and knowledge sharing, thus taking the Indian logistics industry towards effective systems and work practices followed at the international level.”

SMART STRATEGIES

DHL

CO2

EMISSIONS REDUCTION

SMALL EFFORTS,

BIG GAINS

Reduction in carbon emissions to gain corporate social responsibility credibility has become a thing of the past. Most organisations have begun to realise the profitability in the initiative and are making all efforts to reduce their carbon footprint. DHL is one such company that has made remarkable progress in this direction, and has reduced CO2 load to a great extent. VIJAY MAHA

COMPANIES

worldwide are focussing on reducing carbon emissions. In realising this goal, big companies with large operations, huge processes and countless plants have a significant role. This can be done by identifying the small leeways, analysing their longterm implications and eliminating them in order to achieve effective results. It is thus imperative for large organisations to implement a strategy that has proved

50 • SMART LOGISTICS • JULY 2010

beneficial to other companies of similar magnitude. DHL is one such company whose Express division in Asia-Pacific has improved the overall CO2 efficiency by 19 per cent year-on-year.

STEP BY STEP APPROACH An improvement in the CO2 efficiency by 19 per cent does not seem impressive unless combined with the fact that the revenue saved on the overall energy and

ground vehicular fuel costs amounted to an impressive figure of €10 million. In India, the internal initiatives of DHL Express included optimising delivery routes, switching to clean fuels and consolidating facilities in the country. For DHL, simple measures that are often overlooked in other organisations have been of immense help in consolidating the profits – encouraging staff to switch off lights in areas that are not in use,

DHL. Globally, DHL was among the first companies to offer customers products to offset the carbon footprint generated from transporting their shipments. With DHL Express GOGREEN shipping, the company calculates the carbon emissions generated by transporting each customer shipment from the country of origin to destination. DHL offsets these emissions by reinvesting in certified carbon management programmes such as alternative fuel vehicle technology, solar panels and wind energy.

CSR - A KEY STRATEGY Reduction in CO2 emissions cannot happen overnight. Further, certain

Graph 1: Country-wise emissions reduction by DHL

adjusting the air conditioning to an optimal setting, phasing out excess printers and photocopiers, auto hibernation of PC monitors as well as prudent use of material handling equipment (MHE) to optimise energy consumption and utilisation. Asserting the importance of optimisation of the resources and strategy revival, Malcolm Monteiro, Senior VP & Area Director, South Asia, DHL Express, avers, “Fleet optimisation was one of the key areas for emission improvement in India. DHL Express reviewed areas where we predominantly delivered documents and replaced over 60 vehicles with 75 motorbikes, thereby increasing fuel efficiency. Blue Dart, which operates more than 5,000 vehicles, has worked on substituting air routes with intercity road line haul. Besides, we have implemented pickup & delivery optimisation measures to further enhance our operational efficiency and service levels for customers.” Graph 1 represents country-wise emission reductions achieved by DHL. Complementing the initiatives taken by DHL, its express partner, Blue Dart, a part of the DHL Group, witnessed an improvement in CO2 efficiency by 10 per cent year-on-year. It showed a 6 per cent reduction in its per unit ground transport fuel consumption and 32 per cent improvement in its per unit CO2 emissions from real estate. “As one of the world’s leading express companies, we are committed to sustainability and have a responsibility to address environmental challenges. Across AsiaPacific, we have taken steps to reduce our carbon footprint and improve energy efficiency, optimise delivery routes, switch to clean fuels and consolidate facilities in

As one of the world’s leading express companies, we are committed to sustainability and have a responsibility to address environmental challenges. Across Asia-Pacific, we have taken steps to reduce our carbon footprint and improve energy efficiency, optimise delivery routes, switch to clean fuels and consolidate facilities in the region. The results of our assessment are encouraging. Clearly, with our commitment to sustainable solutions, we can make a difference. JOHN PEARSON,

CEO, DHL EXPRESS, ASIA-PACIFIC, EASTERN EUROPE, MIDDLE

EAST AND AFRICA (APEM)

the region. The results of our assessment are encouraging. Clearly, with our commitment to sustainable solutions, we can make a difference,” said John Pearson, CEO, DHL Express, Asia-Pacific, Eastern Europe, Middle East and Africa (APEM). Initiatives by DHL are truly worthwhile to emulate and they can be termed path breaking in their own right, as they help maintain the ecological balance while climbing the corporate ladder of success. However, implementation of such initiatives needs considerable planning and also demands an overall awareness and a determined vision. “After deciding on the need for implementing such an initiative to improve the overall efficiency, we devised a tool that would give us a measure of our overall carbon utilisation. We then identified the areas where the utilisation can be reduced. After identifying these areas, corrective actions were implemented along with the management support,” says Christopher Ong, VPStrategic Development, Asia-Pacific,

definitive measures need to be undertaken and adopted as a way of life in daily activities. Some of the initiatives taken by DHL in achieving lower emissions and making it a way of life include efficient power usage at every location, switching off lights when not required, prudent use of MHE, improved load factor utilisation through introduction of Capacitor Banks at 10 Ops Locations, 16 retail counters in Mumbai tested for load factor correction and reduced AC power units through optimal room temperature setting. It is noteworthy that simple changes in mundane activities, implementation of simple innovations and application of novel ideas led DHL to reduce the emissions by 13 million kilograms for FY2009 – representing a reduction in CO2 emissions by 9 per cent and generating a savings of €10 million. This is an ideal example for proactive participation of an organisation for empowering a social cause and a profitable proposition for other organisations to follow.

JULY 2010 • SMART LOGISTICS • 51

TECH TRACK IT TRENDS IN LOGISTICS

Alert Mechanism For Food And Drug Recall Expected Soon A new technology that helps consumers and retailers identify food and medicine contamination at an early stage in the supply chain process is expected to hit the markets soon. This initiative has been taken by the Indian division of GS1, a Brussels-based firm. GS1 is the world’s most widely-used supply chain standards system. It has been in constant talks with the Food Safety & Standards Authority of India (FSSAI) to implement Internet and mobile phone-linked standard systems to make the alert and product recall for the foods and pharmaceutical industry possible. GS1 said that it will be able to provide data that can be transferred smoothly between different levels of the supply chain to tackle the contamination problem

immediately and easily. The standards used by the GS1 Systems to track products are mostly barcodes, electronic business messaging and radio frequency identification (RFID) technology. The alerts and recall will be standardised and brought under a common platform to consumers and retailers across the supply chain. The system will be built to instantly identify, trace and inform the person about contaminated foods. This move will provide huge gains for the industries and consumers in the long run. However, the industry experts have said that its implementation could be a challenge as the mobile and Internet connectivity in India has reached only half its potential.

Dip Of 0.7 Per Cent Registered In SCM Software Market In 2009 THE SCM software revenue totalled $6.2 billion in 2009 globally, which is an approximate decline of 0.7 per cent from 2008 revenue. However, recurring revenue from subscriptions and maintenance grew at 10.8 per cent and 0.2 per cent, respectively. According to the industry experts, even though there was a slight dip in overall revenue, the market for supply chain applications has withstood the recent financial crisis. In contrast to the dip in the first nine months of 2009, the last quarter sustained 6 per cent annual growth. The reason for this was the growth in subscriptions and the many maintenance renewals that were due in the fourth quarter. During the calendar year 2009, sales of new software were difficult. Therefore, vendors that succeeded transitioned in part or all of their business towards subscription delivery of their solutions. Experts believe, the economic situation prevailing since the last few years along

52 • SMART LOGISTICS • JULY 2010

with the saturation of implemented business applications has been a major area of concern. Due to this, a number of vendors increased the maintenance rates and attempted to explore various channel, delivery and pricing options. They added that there is a fierce competition between enterprise suite and specialist, best-of-breed vendors. Although suite vendors have a good platform within organisations to stall emerging-application purchases, there still seems to be opportunities for specialised vendors that offer differentiating domain and vertical solutions. The specialised segment of SCM software revenue was $3.5 billion in 2009, a 1.6 per cent increase from 2008. The primary business of the specialised vendors is to market supply chain applications within defined markets. Though these vendors offer a suite of supply chain solutions, they do not provide solutions in other markets. Courtesy: www.biztech2.com

Data From Trucks To Boost Infrastructure in USA IN the US, data about speed and location, collected from approximately 6,50,000 trucks travelling all over the country is being used to identify congestion hotspots nationwide. This will help in improving infrastructure planning and funding. The data has been collected by the American Transportation Research Institute (ATRI) since 2002 in partnership with the Federal Highway Administration (FHWA). There has been a recent announcement about a new technology that will make it easier for the trucking industry group and FHWA to provide efficient congestion data that is needed to support spending decisions. This data will be of great use to the federal, state and local governments. The Freight Performance Measures (FPM) plan links FHWA and ATRI with truck operators of all types from all parts of the nation. The required information about trucks comes from communications and tracking systems that are installed by motor carriers to monitor their own fleets and communicate with drivers. Here, the ATRI said that they have data sharing agreements (with fleets) that include nondisclosure clauses. Soon real-time information on congestion that is collected by the system will be available to government, motor carriers and shippers on the Web via a software tool called FPMWeb. This software, displayed on the web, will be available to the general public within a year. The tool measures operating speeds for trucks at any given place and point in time along 25 interstate highways. Through the help of the FPM, the major focus will be on the infrastructural bottlenecks in the country. Experts say that after years of complaints about the highways not getting their fair share of funding, the FPM data will help change this scenario.

Locating Vessels Now Easier ORIENT Overseas Container Line (OOCL) has recently announced the launch of a new technology called ‘mobile vessel tracking’. With the help of this tracking system, shippers can now search and track any OOCL vessel using their mobile devices. The technology displays information such as the vessel arrival & departure dates and the corresponding timings on the mobile screen. To search for a vessel, users will need to type the vessel code or name, after which they will get access to the

information for that particular vessel. The search can also contain optional fields such as the voyage number and port. OOCL said the new service can be accessed by all major mobile systems and smart phones, including Windows Mobile, Blackberry, Symbian, iPhone and Android. It added that the access is not limited to the above mentioned smart phones, but includes a wider range of phones. In addition to the technology, shippers can also access the required service directly from http://m.oocl.com.

Freightwatch Join Hands With Qualcomm To Fight Cargo Theft FREIGHTWATCH, a global cargo security firm, in a joint venture with Qualcomm, the satellite communications and equipment tracking giant, is launching a hidden freight tracking service in the US. The partnership includes Freightwatch’s custom logistics security systems and Qualcomm’s satellite-based equipment tracking technology that is used by many motor carriers. According to Freightwatch, electronics theft has increased by 12 per cent in the US and accounts for almost 23 per cent of all incidents. Also, most of these incidents involve theft from trucks. To put an end to this, Freightwatch’s Geo F1 and F2 location

position devices are some of the devices that can be used for tracking goods as they are small enough to be hidden in hard-tofind locations. This is totally different from the GPS units mounted on many tractors and trailers. Also, in recent cases, Geo F1 were placed in pill bottles to help track stolen pharmaceutical shipments. The Geo devices are powered by GPS technology from Qualcomm, a pioneer in satellite communications and cellular technology. Along with Qualcomm, Freightwatch is also reaching out to other locations in Europe to expand its security services in European Union nations to track cargorelated crime there.

UPS Inc. To Simplify Multimodal Shipments UNITED Parcel Service Inc. (UPS), a leading provider of specialised transportation, logistics, capital, and ecommerce services, is now strengthening its technology to simplify multimodal shipments by giving more control over packages to the importers rather than the overseas exporters. The technology enhancements planned by the company are a part of a broader effort at UPS to involve more of its customers in international trade. In July 2010, UPS will introduce a control system; know as, UPS

Import Control. It is a function for its shipping software, which will maximise the inbound logistics control in the hands of the US importer, rather than the exporter overseas. Businesses will be capable of generating labels & invoices and forward them to partners using the carrier’s CampusShip or Internet Shipping systems. Importers will be able to dispatch UPS drivers to collect incoming shipments as well. Customers that use CampusShip will be able to process air freight shipments as well as LTL ground shipments.

Take Solutions, Reliance Life Sciences Ink Pact RECENTLY , TAKE Solutions announced its strategic alliance with Reliance Life Sciences to supply its unique and innovative PharmaReady eCTD, SPL and PPM modules. With this partnership, TAKE Solutions’ technologically advanced products will not only support Reliance Life Sciences in strengthening their product development services, but will also add a cutting-edge finesse to its present line of business. With a solid background and industry knowledge, TAKE’s Warehousing & Clinical Systems Development and Integration tools will deliver a full range of information management services, leveraging on industry data standards to increase the efficiency of the clinical information lifecycle. “We were looking out for a submission solution that can address the current and future requirements of our organisation. In addition to software solutions, we wanted to partner with an organisation that understands our business dynamics, and could work with Reliance Life Sciences to enhance the business process and solution set over a period of time. After a detailed market research and understanding of the solutions available, TAKE Solutions emerged as a definite choice for us as the solution set offered us flexibility and options for customisation, while meeting the core requirements. TAKE Solutions has the right credentials, industry expertise and resource strength that we were looking for,” said Gopal Rangaraj, VP – IT, Reliance Life Sciences. Ramesh L, VP - Sales, Life Sciences APAC, TAKE Solutions, said, “Our engagement with such a credible life sciences solution major is evidence to TAKE Solutions’ comprehensive understanding of the business, the challenges and proven track record of providing intelligent and innovative clinical regulatory solutions.”

JULY 2010 • SMART LOGISTICS • 53

IT IN LOGISTICS

INDIAN FREIGHT TRAINS

TRACKING THE ROUTE TO MODERNISATION With the Indian freight trains becoming a preferred mode for transportation of goods, it is time for India to deploy better information technology at various stages, be it freight handling, tracking or communication. Accelerated implementation of IT solutions will go a long way in improving every aspect of freight transportation. This will make railway freight lucrative for the user community, which inturn will facilitate robust industrial growth. SANDEEP PAI UNTIL a few years ago, it was impossible to know when a consignment will be delivered once it was placed in a freight train. Companies, in those days, would intermittently send their staff to the registration office to check the delivery status of goods. While this was a tedious process, unfortunately, often even the officers at the registration office would not know the status of the goods that were to arrive. With changing times, it has now become possible to know even the exact location of the freight train. This information can be obtained from the office itself, which hardly requires few minutes. The transformation in the freight service has been unprecedented, which has benefitted the customers immensely. This development can be attributed to the technologically empowered freight

54 • SMART LOGISTICS • JULY 2010

operations information system (FOIS). “It is a good futuristic system, comprising the rake management system (RMS) for handling the operating portion and terminal management system (TMS) pertaining to the commercial transactions,” opines Amar More, VP–Logistics Practice, Kale Consultants. The system utilises information technology (IT) tools and combines them with domain knowledge to obtain

better results. Thus, IT has provided a solution to the long-standing demand of the industry for transparency in sharing of information to give the customers an updated business-like environment. Moreover, it will play a major role to provide better freight services in India even in the future.

RUN-TIME INFORMATION The FOIS technology enables freight

Freight operations information system or FOIS is running successfully currently, but there is a clear scope for further improvement in this system. Deployment of better IT systems can enhance efficiency. IT can help at the loading and unloading stages as well. P K AGARWAL,

GM, CONTAINER CORPORATION OF INDIA

customers to gain instant access to information on the current status of their consignments in transit, for just-in-time inventory. This system is used for management and control of freight movement that also assists managers to optimise asset utilisation. “FOIS provides commodity-wise flow of freight trains for customers like power houses, refineries, fertilisers & cement plants, steel depots and public freight terminals, thus enabling the recipients of consignments to have an accurate forecast of cargo arrivals. This instant information gives them adequate time to complete preparatory arrangements to manage the cargo,” informs Centre for Railway Information Systems (CRIS), the organisation that has designed and implemented the FOIS. To accomplish this, CRIS maintains a web portal wherein if a customer enters the invoice/RR/demand number and date of his Indent/RR, he can retrieve all required information. Thus, enterpriselevel management is also done in a similar manner. This portal has resulted in a visible reduction in the confusion among the customers and operating staff of the railways. The work environment has improved, with significantly simple planning and execution of various business transactions. While customers are more satisfied at present than what they were a few years ago, the time is yet to come when FOIS can produce all the desired results. The project is yet to be fully implemented across the country. As a result, freights currently operating only within the computerised territory are able to receive the tracking and tracing service. V R Sreenivasan, Chief Engineer, Indian Railways, says, “Sometimes tracking of consignments in some areas becomes difficult because the system is not implemented completely as yet.” He further adds that full implementation of this project will require a few more years. In addition, other technologies are also needed that will be able to work simultaneously with FOIS.

OTHER EMERGING TECHNOLOGIES In addition to FOIS, one of the upcoming

OIS PROVIDES COMMODITY-WISE FLOW OF FREIGHT TRAINS FOR CUSTOMERS LIKE POWER HOUSES, REFINERIES, FERTILISERS & CEMENT PLANTS, STEEL DEPOTS AND PUBLIC FREIGHT TERMINALS, WHICH ENABLES THE RECIPIENTS OF CONSIGNMENTS TO HAVE AN ACCURATE FORECAST OF CARGO ARRIVALS. THIS INSTANT INFORMATION GIVES THEM ADEQUATE TIME TO COMPLETE PREPARATORY ARRANGEMENTS TO MANAGE THE CARGO. technologies is satellite imaging for rail navigation (SIMRAN). The project was proposed in 2002 and completed within three years. Further, it was endorsed by the railways’ expert committee on information and communication technology. Currently, the technology has been installed on 70 trains running from New Delhi, including Shatabdi, Garib Rath and Duronto trains. SIMRAN uses the global position system (GPS) technology to track the position of trains and the global system for mobile communication technology to transmit the information. This technology involves creation of a digital map of the railway network. Devices like GPS locator have also been installed on trains. Similarly, radio tags are attached to the tracks and trains. This enables to obtain accurate information on the position of the train.

On Railway Safety & HOD, Mechanical Engineering, IITKanpur.

OTHER ASPECTS

Besides tracking and tracing, there is a need to develop better enterprise-based applications, some of which are already in place. The FOIS portal has facilitated acceptance of customers’ orders as well as billing and cash transactions. Earlier, all this work was done manually. “All these functions have been enabled by using web technology. Companies can now book their consignments online. Thus, IT plays an important role here as well,” says Sreenivasan.

ADVANTAGES OF FOIS There are numerous advantages of implementing the FOIS in the industry, some of which are customer satisfaction due to increased transparency, greater visibility of services, reduced turnaround time, lesser manpower requirement and increased operational efficiency.

UNEXPLORED FACETS Though experts believe that FOIS has the ability to transform the freight landscape in India, it still holds enormous scope for development. Adding to this, PK Agarwal, GM, Container Corporation of India (CONCOR), says, “FOIS is running successfully currently, but there

Initially, satellite imaging for rail navigation (SIMRAN) was oriented towards passenger trains, but now we believe that it can certainly be implemented for freight trains as well. After obtaining real-time information, various algorithms can be developed for better systems. N S VYAS,

COORDINATOR-TECHNOLOGY MISSION ON RAILWAY SAFETY & HEAD

OF DEPARTMENT, MECHANICAL ENGINEERING, IIT-KANPUR

According to experts, this technology can be used for freight trains as well. “Initially, SIMRAN was oriented towards passenger trains, but now we believe that it can certainly be implemented for freight trains as well. After obtaining real-time information, various algorithms can be developed for better systems,” says N S Vyas, Co-ordinator–Technology Mission

is a clear scope for further improvement in this system. Deployment of better IT systems can enhance efficiency. IT can help at the loading and unloading stages as well, so far this area has not yet been explored by FOIS.” Justifying the same, Ashok Verma, Deputy Chief Sales Manager, Central Coal Fields reveals, “Most of the loading and unloading is

JULY 2010 • SMART LOGISTICS • 55

IT adoption in railways, continued

ACT Continuous cargo visibility has always been viewed as the most critical component of any physical distribution system. FOIS enables freight customers to have instant access to information regarding the current status of their consignments in transit, for just in time inventory. It is a system for management and control of freight movement that also assists managers to optimise asset utilisation. still done manually. This can be simplified with the adoption of latest technology.” The company has been using the freight service for a long time.

DEDICATED FREIGHT CORRIDORS Apart from loading and unloading, IT will also play a major role after the proposed dedicated freight corridor comes up in various parts of the country. Dedicated freight corridors are separate routes, exclusively for freight service. The Indian Government has planned to complete

the project by 2017. “The dedicated freight corridors will be at par with similar systems operating in many foreign countries,” says Sreenivasan. Currently, the passenger trains are given more preference than freight trains. Implying, if a passenger train, running in the same route is delayed, then the freight trains are hampered badly. But if these corridors are developed, freight trains will not be at the mercy of the passenger trains. Moreover, role of the IT will become even more important. “When

Advantages of FOIS • Out-bound loaded rakes from the computerised territory are also monitored in the same manner. • Full particulars of detachments from block rakes are recorded and updated, eliminating chances of wagons getting unconnected or missing. • Details of rakes/wagons in various yards, their phase-wise detention in different terminals, eliminating the need for costly manual documentation and tedious retrieval systems and inaccuracies. • Managerial reports regarding availability of rolling stock, i.e. wagons and locomotives, at any point of time to plan for their most efficient utilisation. • With the use of FOIS, there has been a visible reduction in the confusion among customers and operating staff of railways. The voluminous and repetitive exchange of data on telephones round the clock has now been reduced and is gradually being replaced by minimum data input. The improved work environment has significantly simplified planning and execution of assigned tasks. • The system information is being used to club less than train load consignments from different loading stations. The recognition from bulk customers, who are being advised through e-mail the status of their consignments, is a clear indication that the anticipated benefits from FOIS have already begun to accrue to the customers. Interactive web based solutions to give customised reports to Railway Board, Zonal Railways and Divisions are in place. • FOIS provides tremendous opportunities to both the Railways and its customers to improve existing business practices and consequently reduce the operating costs while enhancing the quality of service. A fullfledged domestic terminal management system for CONCOR is already in place. Courtesy: Centre for Railway Information Systems (CRIS)

56 • SMART LOGISTICS • JULY 2010

dedicated corridors come up, IT can be used effectively for better networking and writing better optimisation algorithms,” says More. At present, the scope of writing such algorithms does not exist as freight trains do not have freedom of movement. As a first step towards building dedicated freight corridors, the Ministry of Railways had recently announced that it would allow private players to build railway tracks and earn revenue from freight charges. It will also permit private operators to run special freight trains for a variety of commodities ranging from chemicals to special steel products.

LOGISTICS PARKS Furthermore, these corridors will see a string of logistics parks developing along the dedicated route. “These parks will cater to the customised needs of companies. Freight carriers will certainly get a major boost with such developments. Also, this development will help reduce the cost to a great extent and lead to massive industrialisation,” says Sreenivasan. As cited by experts, the main functions of these parks would be transportation of goods, postponement of manufacturing system, which means that the final assembly of goods will take place in these parks. This system is being successfully implemented in countries such as Singapore and Rotterdam. Packaging of goods, designing, customsrelated work, etc, can also be done here. IT support and value-added services can also be provided. “IT will be required to integrate the entire range of functions in these logistics parks,” says Sreenivasan.

ON A TRANSFORMATIONAL PHASE Rail logistics is a key enabler for the growth of Indian logistics industry. Recognising this, the Railway Ministry has made ambitious plans to enhance its efficiency. But to achieve this ambitious target, mere recognition will not help, fast implementation is the key. For the purpose of logistics modernisation, IT has to play a major role in advancement of positioning technologies such as GPS and RFID, electronic data interchange (EDI) and enterprise level applications. Furthermore, advanced IT systems are required for the effective implementation of proposed dedicated freight corridors and logistics parks along its route.

MAY 2010 • SMART LOGISTICS • 57

SUPPLY CHAIN BEST PRACTICES

GLOBAL OUTSOURCING

NECESSITY OR AN OPTION?

Many large and mid-sized organisations are now moving beyond the boundaries of their country and are sourcing globally. However, it is important to keep in mind that the global procurement scenario is different from the local one. In such situations, to hit a success rate in global supply chain systems, organisations should analyse and address the complexities involved in outsourcing and then create an appropriate SCM system. IN the present times, almost all large and mid-sized organisations are moving towards global sourcing. Although the reasons for global outsourcing may vary for different companies, its main drivers, among others, include reduction in material and labour costs, greater flexibility in supply chain, better asset utilisation, and benefits of tax regulations. With the supply of critical components

58 • SMART LOGISTICS • JULY 2010

and, often, finished products going global, effective management of the supply chain becomes important. Adding to that, if an enterprise sources products across several dispersed networks, the challenge for the individual managing the supply chain gets even tougher. With most companies going global, it’s surprising that only few companies have actually analysed or planned to

address the complexity that is involved in setting up and managing the supply chain networks. This is an important aspect to be considered as moving from a local procurement scenario to a global one can have a major impact on the business. Citing an example, sourcing from China might offer cost advantages, but the business is extremely uncertain. Hence, the inventory carrying costs tend

to increase significantly. Further, in global scenario, handling rejects or supplies that do not meet the required specifications can incur huge cost as compared to the local procurement. In local procurement, the material can be loaded on the next truck and returned. However, in a global scenario, factors such as the refunds in taxes, customs duties and shipping & handling costs make the entire exercise unviable. Such stocks are therefore rejected and generally tend to lie in basements for years, resulting in the deterioration of their value.

SUPPLY CHAIN – TWO-WAY PATH Supply chain not only includes managing of incoming material, but also involves sales, distribution & manufacturing of materials being sent to a destination. After all, purchases and supplies for one company account for another company’s sales & manufacturing. It is seen that more companies give greater importance to supply chain activity with regard to sales and manufacturing vis-à-vis procurement. The reason is that customer is the king and therefore the sales drive the price, the manufacturing, the sourcing, etc, of the goods.

COMPLEXITY PLANNING AND SCENARIO VISUALISATION Though a number of companies are moving towards global sourcing, only few companies have gone ahead and attempted to analyse the complexities involved in the global supply chain systems. Every company, associated with the global sourcing scenario, has a focus on deriving maximum advantage from the same. Hence, it is important to recognise and overcome the complexities involved. To understand the complexities of global sourcing, companies need to do a scenario analysis, and then structure their workflows accordingly to manage it. Only after analysing the scenarios, the tangible benefits of the globalisation can be considered. Based on a scenario analysis, the companies can decide their re-order levels, minimum stocking levels, location and size of warehouses, appointment of logistics partners, etc.

Responsibilities of the SCM team • Evaluate each component of the supply chain (manufacturing, planning and logistics) separately to determine the best course of action. • Assess the activities and business processes that are important and provide the enterprise a competitive edge. • Consider leveraging low-cost offshore resources to perform noncritical/non-core activities. • Evaluate and consider outsourcing shipping & transportation to best-inclass logistics providers. • If manufacturing is not a core competence and market differentiator, then consider outsourcing it to a contract manufacturer. • If supply chain performance and optimisation is an important competitive aspect in the marketplace, then outsourcing the development and maintenance of business rules and solution model may not make sense. • Ensure that the resources responsible for maintaining the business rules and solution model thoroughly take into account the supply chain, transactional systems, organisation issues and business strategy, as the integration of these elements are crucial to optimising the supply chain solution model. (ERP), customer relationship management (CRM), etc, only a few have attempted to focus their IT resources towards the management of supply chain. Most ERP systems focus on streamlining material flow within the organisational boundaries, while CRM systems generally focus on pre-sales data, funnel management and, to some extent, the post-sales servicing.

SUPPLY CHAIN MANAGEMENT– DIFFERENT FROM ERP AND CRM Going back in time, in the 80’s & early 90’s, organisations focussed more on manufacturing efficiencies and inventory management. This led to development of systems based on ERP, material requirement planning (MRP-I) and MRP-

II. Then, the late 90’s and the beginning of this decade witnessed the increase in CRM systems such as funnel management, sales force management, etc. With the focus of the world shifting towards global sourcing, supply chain management (SCM) shall be the key differentiator among the better performers. Supply chain bridges the gap between demand & supply – supplier & customer – ERP & CRM. In the absence of an effective ERP, both CRM and ERP shall perform sub-optimally (Table 1). Differences between ERP & SCM are: • ERP is the transaction backbone of the enterprise. SCM focusses more on planning and is often the communication backbone of the enterprise.

Table 1: Differences between ERP and SCM ERP

SCM

Co-ordinate manufacturing

Satisfy customer demand

Objective

Cost reduction

High-quality service, responsiveness

Span of co-ordination

Plants & warehouses

All internal activities, suppliers, distributors, customers

Product

Finished goods

Available capacity

Relationship to customer

React

Anticipate – simulate

Planning goal

Feasible & optimal plans

SUPPLY CHAIN & INFORMATION TECHNOLOGY (IT)

First-cut requirements estimate

Planning breadth

Materials, plants

Although various organisations are running systems like enterprise resource planning

Materials, plants, labour, transportation, constraints, demand, distribution

Planning approach

Serial

Synchronous

Business driver

JULY 2010 • SMART LOGISTICS • 59

Global outsourcing, continued

ACT Developing an effective supply chain solution requires a deep understanding of each company’s competitive advantage, it’s weaknesses, the objectives to be achieved, the supply chain processes etc. Scenario building models need to accommodate real constraints of the company. These are generally specific to the company & cannot be templatised. • ERP considers information within the organisation, while SCM considers information from within and outside the organisation. • ERP focusses on efficient use of material resources within the organisation. SCM focusses more on reducing the effect of inefficiencies that are outside the organisation, and preventing its impact on the organisation. • Planning engines within the ERP are designed to optimise utilisation of the company’s resources within the organisation. SCM planning engines consider the entire scenario outside the organisation.

that the organisation is adaptive and responsive to variations in scenarios. The early implementations of ERP & CRM systems in mid-sized organisations have met with limited success, thereby raising doubts regarding their usefulness to such organisations. On analysis, the successful implementations in mid-sized organisations were often the result of an enthused plant manager (in an ERP) or a zealous marketing manager (in a CRM). In case of ERP, the knowledge required for manufacturing efficiently has been a part of engineering curriculum for decades. Still, it took more than 7 to 8 years to effectively translate this knowledge into meaningful ERP systems. Also, it took CONSIDERATIONS FOR A around 3 to 4 years to develop good CRM SUCCESSFUL SCM engines even though the skills required It is clear that organisations need to for managing a good marketing system understand the global sourcing scenario has been taught in management schools and accordingly work out a strategy for for over 2 decades now. Similar to ERP the global SCM. Careful scenario planning and CRM, the technology & knowledge of and associated workflow planning will effectively managing a good supply chain invariably result in strategies to ensure system have been existing for sometime now. The speed of global sourcing, electrifying growth and Table 2: Data integration for a good SCM penetration of the Internet, and Types of data Location technological revolutions such Demand data Funnel as radio frequency identification Forecasts (RFID) are also less than a Historical trends decade old. Today, only a few institutions offer specialised Emails, faxes, spread sheets, quotations, courses & training material on etc (unstructured) SCM, which is the reason for Transaction data Sales the missing or limited supply Inventory & its movements of the basic resource for good Purchase SCM. Banking & cash flow Processes such as scenario building and designing workflows Master data Lead time for individual products to manage individual scenarios Economic order sizes for the products require an understanding & Location of suppliers experience of various logistics Warehouse details issues related not just to movement of goods but the Transport costs entire management process, Logistics data Stocks in transit both internal and external Shipping frequency to the organisation. Most Likely speed bumpers – holidays, peak governing factors are not under seasons, etc the control or direct influence

60 • SMART LOGISTICS • JULY 2010

of the organisation (especially for a midsized company). Data for modelling and scenario building are derived partly from internal transactional layers like the ERP, emails, faxes, CRM applications & telephonic conversations, and through external sources that directly or indirectly impact the business. Few mid-sized organisations today can and will be able to afford high-quality specialist supply chain managers. A mistake most organisations make is to expect local purchase managers and logistics managers to graduate to become global supply chain managers. The challenge for global supply chain managers is greater than those for purchase and logistics managers.

ROLE OF A SUPPLY CHAIN MANAGER The quality and performance of the SCM systems are critical to the success of most manufacturers. SCM systems augment the abilities of supply chain planners to improve service levels while maintaining or reducing the total cost of delivery. Further, the system needs to be updated on an ongoing basis to reflect changes in the supply chain as well as to adopt new technologies as & when they emerge. This implies that the people responsible for the maintenance of the system need to constantly update themselves of changes happening in the supply chain network and processes of the enterprise as well as the technological advancements in the field governing the SCM network. If the business rules and solution model are not properly complied to, the initial gain of competitive advantages may erode over time.

COMPONENTS OF A GOOD SCM Typically, the components of the SCM comprise supply chain planning, supply chain execution and business intelligence. A good SCM system needs to focus on these critical issues. As the name suggests, supply chain planning involves methods to match supply activities (procurement, production, distribution, warehousing, inventory, etc) with demand-side activities (orders, forecasts, etc). This includes cash flow planning, demand forecasting, replenishment management and vendor management. Supply chain execution is the transactional layer that facilitates the planning. Typically, this will involve

For designing and, often, evolution of a good SCM system, the key is the availability of appropriate data. Data for SCM are generally available in several places (Table 2). Master data and transaction data are normally available within ERP systems of the company. If not, they need to be collected and assembled appropriately. Demand data are generally available in a CRM system as well as in other locations spread throughout the organisation. Logistics information is generally external information.

Demand

Funnel

Needs consolidation from sales force. While the gatherings of this can be in-house, consolidation can be outsourced.

Forecasts

Core activity. While gathering of this can be in-house, consolidation & planning can be outsourced.

Past trends

Transaction

Emails, faxes, spread sheets, quotations, etc

Master Preparation

DATA INTEGRATION–KEY TO SUCCESS

Table 3: Components of an efficient supply chain

Logistics

distribution & order management, warehousing, transport & logistics (tracking stocks in transit), trading partner management and order fulfillment capability. Business intelligence generally focusses on performance analysis, profitability analysis of different sources and individual product sources. It also includes analysis of cost factors & their relevance to the company, analysis of cross-location performance and reporting to top management.

Can be completely outsourced. Difficult. Proper workflow can ensure appropriate data collection. Consolidation possible. need to be studied on a case-to-case basis.

Sales

Documentation & other non-core activities can be outsourced. Core processes related to actual sales negotiations & order finalising cannot be outsourced.

Inventory & its movement

Can be completely outsourced, and also gives maximum benefit.

Purchase

Can be partially outsourced.

Banking & cash flow

Core activity. Cannot be outsourced.

Lead time for individual products

Completely outsourced. Key to effective planning.

Economic order sizes for the products

Completely outsourced. Key to effective planning.

Location of suppliers

Core activity. Cannot be outsourced. But, once identified, the scenario building can be a case for outsourcing.

Warehouse details

Can be outsourced, and often provides greater flexibility to the organisation. Substantial cost saving.

Transport

Can be completely outsourced.

Stocks in transit tracking

Can be completely outsourced.

Shipping frequency

Can be completely outsourced.

Likely speed bumpers – holidays, peak seasons, etc

Can be partially outsourced.

DEVELOPING THE SCM SYSTEM Today, large enterprises, SCM specialists and IT enterprises are creating industry templates for companies to simplify supply chain planning (SCP) implementations. The templates include embedded predefined strategies for common planning issues that might need to be addressed in a given industry. The success of these industry-specific templates presumes that competitors may follow similar SCM strategies, implying that the competitive edge derived from outsourcing will disappear. Developing an effective supply chain solution requires a thorough understanding of a company’s objectives to be achieved, competitive advantage, weaknesses, supply chain processes, etc. Scenario building models need to accommodate real-life constraints of the company. These constraints are generally company-specific, and therefore cannot be drafted as a standard template. If constraints are overlooked or not represented accurately, the plans will not deliver realistic results. Moreover, if the optimisation objectives guiding the solution do not follow the business goals, the plans

will not deliver the expected benefits. The business users of the application must work in synchrony with the developers of the solution to ensure the benefits and results. The systems development process tends to be iterative in nature. It relies heavily on the use of prototype sessions with the business users to validate the accuracy of the design and the technical feasibility of the solution. SCM systems differ from ERP systems in design and objectives. While the lifespan of an ERP system may be 5-7 years, and that of an SCM system might need minor corrections every 12-18 months and a major revamp every 3 years. This is essentially because currently the rate of change in the supply chain systems is dynamic and volatile.

OUTSOURCING – CAN IT BE AN OPTION? Having established that SCM will be the core activity and linked closely to the business processes of the enterprise, it is rather impractical to suggest that it can be outsourced. However, a balance is needed between the core and non-core

activities within the supply chain system. Cost considerations and business acumen recommend complete outsourcing of activities consisting of development and testing of the system. Setting business rules and identification of constraints within the system calls for a joint effort between the organisation and the SCM outsourcing company. The ability to support a system over the long term depends on keeping the personnel that developed the business rules for the solution available to the organisation (Table 3).

TOWARDS GLOBAL SUCCESS It would be appropriate to state that for the SMEs and mid-market enterprises (MMEs) to succeed globally, technology and outsourcing are the essential ingredients required in their supply chain network. Today, global outsourcing is necessary for any company. Proper SCM is likely to enable the company to actually benefit from this. Neeraj Kathuria, Director, Octopus-e International Inc.

JULY 2010 • SMART LOGISTICS • 61

LEADERSHIP SERIES LOGISTICS @ LANXESS

THE logistics operations are subjected to a wide variety of external influences that repeatedly challenge long-accepted dogmas. This situation particularly holds true for chemical companies, which face various complex and unforeseen challenges arising from rising fuel costs, volatile raw material prices, extreme pricing pressures, etc. In such a scenario, creating a perfect supply chain becomes a crucial requirement for chemical companies, where the logistics costs can often constitute up to 10 per cent of

the total volume of business. This has numerous repercussions, as often, each non-delivery can lead to shut down of a plant or loss of customers. Moreover, as the substances being transported are sometimes deleterious to people & the environment, it may thus lead to a damage to brand identity and customer loyalty. A determination to tackle all such challenges and meet the customers’ needs in the shortest possible time and safest possible way lies at the heart of

ATTAINING

Lanxess—a specialty chemicals enterprise. With its extensive portfolio, the company focusses on generating premium business. Its core business comprises development, manufacture and marketing of plastics, rubber, specialty chemicals and intermediates. In addition, it supports its customers in developing and implementing made-to-measure system solutions. A number of forces combine at the 43 production sites of Lanxess worldwide to produce optimal result. This applies both to the products and processes as well

EQUILIBRIUM

Chemical companies face innumerable challenges every day, ranging from volatile fuel prices, increasing raw material costs to mounting price pressures. This is not all, the hurdles escalate with the introduction of a complex supply chain. Challenging these adversities is the supply chain model of Lanxess, which has been developed on the pillars of quality, safety and efficiency to attain equilibrium with operational excellence. PRERNA SHARMA

62 • SMART LOGISTICS • JULY 2010

as the 14,300 employees in 23 countries that are responsible for the company’s day-to-day business. Looking at the huge market that Lanxess serves, the journey of supplying specialty chemicals to its customers was not an easy task for the company, especially on the Indian soil where they encountered huge infrastructural bottlenecks. On the challenges faced by the company, Dr Joerg Strassburger, MD & Country Representative, Lanxess India, avers, “Dealing with faster and

economical movement of products from one location to another is a challenge. Unlike European or other Asian countries, we have a limited number of costeffective and faster alternatives. Coastal waterway systems are still in the primitive stage. Our wide rail network is still unable to provide effective service to the industry. Consequently, the industry is still dependent on surface transportation. The government’s initiative to invest in the development of arterial roads connecting major parts of the country has resulted in

strengthening of the road network with every passing year.”

CHALLENGING THE ADVERSITIES With a vision to capture a huge market in India and become the customers’ preferred choice, the company has continuously been innovating new supply chain models. To this, Dr Strassburger adds, “Our challenge is to optimise freight cost by implementing innovative ideas. Further, our target is to cater to customers’ needs as fast as possible, often

WITH OPERATIONAL EXCELLENCE

JULY 2010 • SMART LOGISTICS • 63

Leadership series, continued

Vertical Storage Solutions at the LANXESS India Thane new warehouse facility

within 24 hours. For this, we have set up third-party logistics (3PL) service provider– operated satellite warehouses closer to our customer base. These warehouses provide service to all business units (BUs) on a cost-sharing basis, thereby offering synergy of operations and cost advantages for Lanxess. We are satisfied with our achievements so far in this direction.” Another challenge faced by Lanxess is to take safety measures during handling and distribution of chemical products. To curtail this issue, the company has employed a team of well-trained professionals who can quickly respond to any eventualities during the product handling and distribution phase. Customs, excise and other tax compliances are key issues while conducting ethical business in India. Supply chain professionals should be well-experienced and competent enough to deal with these unforeseen extremities. Besides, warehouse space optimisation, freight consolidation, faster import and export clearances are some of the critical factors challenging the efficacy of supply chain management. Terming logistics as one of the most crucial links of business, Dr Strassburger claims that logistics plays an important

64 • SMART LOGISTICS • JULY 2010

role in business sustainability and growth of Lanxess. Efficient and cost-effective logistics processes support the company to maintain its cost-competitiveness and customer loyalty.

SUPPLY CHAIN NEEDS With its presence across the world, Lanxess has a fairly good exposure to managing supply chain in extreme conditions.

Criteria for selecting a logistics partner • Professional background • Quality of service • Competency of manpower offered • Cost-competitiveness. SCM essentials • Cautious optimism while planning timelines for a process involving approvals from government agencies • Close watch on the market developments, especially in the field of logistics.

Highlighting the same, Dr Strassburger says, “In developed countries, the logistics processes are well-established. Considering huge volumes and transactions handled by a limited number of skilled manpower, these processes are automated and in most cases outsourced, with the support of a strong IT backbone as a control mechanism.” Comparing the scenario with developing countries, especially India and China, he further elaborates, “China has clearly taken a lead in terms of overall infrastructure development that is conducive for exponential growth in cross-border trade, along with servicing its domestic market.” Setting up base in the Indian market and creating a perfect supply chain model was an arduous task for the company, especially as it encountered several logistics infrastructure hurdles along with other major problems such as rising fuel costs and unstable raw material prices. Although with the advent of 3PL service providers and an increasing share of organised players, this scenario seems to be changing, and is in favour of the company. Justifying the same, Dr Strassburger adds, “A majority of international 3PL service providers have set up their base in India over the

past few years and are in the process of consolidating their position through mergers, acquisitions or partnerships with local players. This will result in an exchange of international expertise and knowledge sharing, which will take the Indian logistics industry closer to effective systems and work practices followed at the global level.”

3PL—A CRUCIAL LINK Transportation services are not standardised products, which is why LANXESS not only considers the price aspect, but also the quality and safety of transport while selecting a 3PL partner. Lanxess selects a 3PL company using an internal carrier rating based on certain certifications and experiences of other companies with the concerned 3PL provider. Emphasising on the role of 3PLs in efficient management of supply chain operations, Dr Strassburger says, “3PL companies play an important role in streamlining and supporting supply chain operations in Lanxess India. They provide a competent support for import and export clearances, licensing activities, warehousing, freight disposition and in many other areas. The quality, efficiency and cost of services rendered by them more or less meet our requirements.”

ENSURING SCM In tune with the market conditions and well-equipped to serve the growing demands of customers, the company is well on its way to achieve excellence in supply chain. In order to accomplish this, the company has established stricter controls over quality, efficiency and value in supply chain processes. All processes are reviewed at appropriate time intervals and prompt corrective actions are put in place. The company has employed a responsive logistics team, which strives to meet customer requirements at its best and ensures customer satisfaction. Some

Majority of international 3PL service providers have set up their base in India over past few years and are in the process of consolidating their position through mergers, acquisitions or partnerships with local players. This is obviously bringing about an exchange of international expertise and knowledge sharing, which will take the Indian logistics industry closer to effective systems and work practices followed at the global level. DR JOERG STRASSBURGER,

MD & COUNTRY REPRESENTATIVE, LANXESS INDIA

of the factors that set Lanxess apart from the rest are as follows: • Well-planned and co-ordinated demand forecasting and effective implementation right from procurement until distribution • Implementation of IT tools to their best for keeping a close control over each process • Formal and informal dialogue with internal customers (BU) • Faster response to customer needs • Putting into use our expertise in tax compliances and import/export/ licensing processes to provide effective business solutions • Focussing on exploiting the talent and competence of 3PL service providers to obtain quality service at optimum cost • Continuous efforts on innovation to optimise and reduce overall supply chain cost. Besides, the company also deploys state-of-the-art technology tools to work in a seamless atmosphere. Further elaborating on the same, Dr Strassburger avows, “We at Lanxess work with a profitcentric (or BU) concept and individual BU teams work in conjunction with the supply chain team to plan the demand, procurement/production and distribution

of products with a clear focus on effective inventory management.”

CREATING A PERFECT SUPPLY CHAIN Envisioning a bright future and creating a perfect supply chain link, Lanxess has plans in place to take the growth story of India to the next level. Deliberating on their plans for Lanxess India, Dr Strassburger opines, “Being associated with a company like Lanxess that has a presence in several countries across the world, I think what we have in India is just not enough for us considering Lanxess’ as well as the country’s growth projections. Taking this into account, I will be pleased to see the development of a supply chain infrastructure in India similar to or even better than those in the developed countries. To accomplish this, we need to increase our pace considering the country’s immediate requirements and strive to overtake our own expectations in the coming years.” With an unmatched dedication and a will to create an unparallel growth story, Lanxess is treading the path that is inherent to its name – a combination of the French verb ‘lancer’, which means ‘to thrust forward’ and the English noun ‘success’. Lanxess represents the determined will to achieve and the zeal to embrace continual change.

“The leader has to be practical and a realist yet must talk the language of the visionary and the idealist.” Eric Hoﬀer

JULY 2010 • SMART LOGISTICS • 65

PRODUCT & ADVERTISERS’ INDEX

To know more about the advertisers in this magazine, refer to our ‘Product Index’ / ‘Advertisers’ Index’ or write to us at b2b@infomedia18.in or call us at +91-22-3003 4640 or fax us at +91-22-3003 4499 and we will send your enquiries to the advertisers directly to help you source better

Products

Pg No

Products

Pg No

Cargo & courier services........................................................................................65

Polycarbonate sheets ................................................................................................11

Cemat India ...................................................................................................................... 4

Port handling ..................................................................................................................35

Cold form C & Z purlins .......................................................................................11

Pre-engineered steel buildings.............................................................................11

Commercial bonded warehousing ..................................................................... 7

Pre-fab shelters .............................................................................................................11

Commercial documentation ................................................................................... 7

Project integrated logistics .....................................................................................35

Containerised transportation .............................................Back inside cover

Project tracking .............................................................................................................35

Customs clearances ...................................................................................................35

Residential steel houses ..........................................................................................11

DHL import express worldwide ................................... Front inside cover

Roof vents .......................................................................................................................11

Domestic after-market service & spares logistics...................................... 7

Roofing & cladding sheets .....................................................................................11

Email marketing ............................................................................................................39

Structural floor decking sheets ...........................................................................11

EngineeringExpo exhibition ...................................................................................19

Super savers ...................................................................................................................49

Heavy industrial steel buildings ...........................................................................11

Supply chain & operation summit - 2010 ...................................................57

International trade ........................................................................................................ 7

Taxation regulatory compliance

IT asset management .................................................................................................. 7

under export promotion schemes .................................................................7

Knowledge process outsourcing .......................................................................... 7

USS univents ..................................................................................................................11

Material handling systems suppliers ................................................................... 3

Ventilators ........................................................................................................................43

Multi-level car parks...................................................................................................11

Warehouses .................................................................................Back inside cover

Onsite management ..................................................................................................35

Warehousing ..................................................................................................................35

Pg No

Advertiser

Tel. No.

E-Mail

Website

FIC

DHL Express (India) Pvt Ltd

+91-22-66789186

girish.meghnani@dhl.com

www.dhl.com

Engineering Expo

+91-09819430607

shamal@infomedia18.in

www.engg-expo.com

Hannover Fairs India Pvt Ltd

+91-22-40050681

umesh.mandpe@hmf-india.com

www.cemat-india.com

Live Wire18

+91-22-30245000

b2b@infomedia18.in

–

M & M Connect Advertising & Promotions

+91-80-40824600

info@indelox.com

www.indelox.com

MFC Transport Pvt Ltd.

+91-22-40341477

sudip.mukherjee@mfctransport.com

www.mfctransport.com

65, BC

Safe Express Private Limited

+1800-113-113

info@safexpress.com

www.safexpress.com

Schaefer Systems International Pvt

+91-22-67410770

schaefer@ssi-schaefer.in

www.ssi-schaefer-asia.com

Sreelakshmi Traders

+91-44-24343343

sreelakshmitraders@gmail.com

www.sreelakshmitraders.com

Super Saver

+91-22-30034650

b2b@infomedia18.in

www.infomedia18.in

Supply Chain & Operation Summit 2010

+91-09819519284

gautami@sclc.in

www.sclc.in

United Steel & Structurals Pvt. Ltd

+91-44-42321801

admin@unitedstructurals.com

www.unitedstructurals.com

BIC

Vijay Logistics Pvt Ltd

+91-2135-675000

info@vijaylogistics.com

www.vijaylogistics.com Our consistent advertisers

FIC = Front Inside Cover, BIC = Back Inside Cover, BC = Back Cover

66 • SMART LOGISTICS • JULY 2010

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.

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PRODUCT INQUIRY FORM

Cargo & courier services Cemat India Cold form C & Z purlins Commercial bonded warehousing Commercial documentation Containerised transportation Customs clearances DHL import express worldwide Domestic after-market service & spares logistics Email marketing EngineeringExpo exhibition Heavy industrial steel buildings International trade IT asset management Knowledge process outsourcing Material handling systems suppliers Multi-level car parks Onsite management

Polycarbonate sheets Port handling Pre-engineered steel buildings First Fold Here Pre-fab shelters Project integrated logistics Project tracking Residential steel houses Roof vents Roofing & cladding sheets Structural floor decking sheets Super savers Supply chain & operation summit - 2010 Taxation regulatory compliance under export promotion schemes USS univents Ventilators Warehouses Warehousing

ADVERTISERS’ INQUIRY FORM

DHL Express (India) Pvt Ltd

Schaefer Systems International Pvt

Second Fold Here

Engineering Expo

Sreelakshmi Traders

Hannover Fairs India Pvt Ltd

Super Saver

Live Wire18 M&M Connect Advertising&Promotions

United Steel & Structurals Pvt. Ltd

MFC Transport Pvt Ltd.

Vijay Logistics Pvt Ltd

Safe Express Private Limited

Third Fold Here

GLUE

Supply Chain & Operation Summit 2010

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07 / 2010

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