VIEWPOINT
POLICY…MATTERS WHAT is the relevance of domestic policies when we operate in the global supply chain network? While we ponder over this question, it’s a reality that firms all over the world, including the emerging markets, are forever competing with newer economies & players on cost, quality and compliances…there...we found the answer to our rhetoric. Domestic or national policies enable (and sometimes disable) companies to operate not only within the country but also the policies, norms and compliances that make global trade less painful and more fruitful for companies. Supply chain and logistics companies are no different; albeit, these policies are more crucial given the global playing field reality for the logisticians. The March edition of Smart Logistics is dedicated to Progressive Policies, where we have reflected and analysed policies related to Ports, Rail, Road, Warehouse and Goods and Services Tax (GST), among others. Talking about GST, the government had taken a step ahead to phase out Central Sales Tax (CST) and introduce GST, anticipated to revolutionise the entire warehousing segment. GST, with a consistent and standard tax-rate, is increasing revenue by maximising tax collections. It is also aiding the logistics sector in reorganisation. Then again the implementation of Value Added Tax (VAT) played a momentous role in dipping logistics costs. VAT was initiated to steer clear of the cascading effects of tax as it was being paid at every level. However, a simplified tax system will help logistics players cater to several varied markets and tender end-to-end solutions far more efficiently and at much lower costs. The coming into effect of the Warehousing Develoopment and Regulatory Authority (WDRA) made provisions for the development and d regulation of warehouses. The government commenced the Negotiable Warehouse Receipts (NWR) system to help farmers increase access to loans from banks and perrmit the transfer of ownership of that commodity stored in a warehouse without having to deliver the physical commodity. NWRs are negotiable under the Waarehouse (Development and Regulation) Act and are regulated by WDRA. These receipts are likely to perk up the borrowing capacity of farmers as well as the quaality of the bank’s loaning services in the agriculture sector. Also, it would boostt liquidity in rural areas as well as give confidence to better price risk manaagement in agriculture merchandise. A lot of initiatives are taken to improve the productivvity of the rail sector, for instance, Asian Development Bank (ADB) and the Government of ment Program, which India have agreed to implement Railway Sector Investm nger transport routes. is aimed at improving rail freight services and passen The initiative will further help India improve rail seervices along some of its busiest freight and passenger transport routes, provviding double-track for about 840 km of rail routes and electrifying about 640 km. New signalling will also be installed. ADB will also support accountting reforms to improve operational and financial efficiency at Indian Railwayss. With all this and more, since March is the month of policy, we, at Smart Logistics, present this edition to the progressive logisticians to gauge the prospect, gain from these policies & grow beyond bou undaries!
Archana Tiwari-Nayudu archana.nayudu@network18publishing.com
AUGUST 2012 • SMA MAARTT LOG OGIST ISTICS IST ICS • 5
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CONTENTS
IN CONVERSATION WITH
‘We Are Now Looking At KWEality As The New Way To Define Quality’
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VOL. 03, NO. 12
MARCH 2013
STRATEGY
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Transport Control Towers Simplifying Transportation Complexities
Chitra Shinde, President, Gati-KWE
TIPS & TRICKS
SPECIAL FOCUS: POLICY INITIATIVES Port & Shipping Policy Framing Goals & Guidelines Are Not Enough
Rail Sector On The Track To Prosperity
Road Projects Driving India’s Economic Growth
Air Cargo All Set To Take Off!
‘Excise Functions Including EOUs & SEZs Should Be Linked Online And Should Promote E-processing’
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6 Ways To Optimally Generate Business
EVENT REPORTS Engineering Expo Aurangabad 2013 Exhibiting Aurangabad’s Unparallel Potential
Panel Discussion: Aurangabad Gauging Aurangabad On The Critical Parameters
Smart Measures Are The Best Policies
GST Implementation Future In Doldrums?
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NEWS ANALYSIS
Consumer Electronics & IT Products
TECHNOLOGY & INNOVATIONS
SCM TRENDS Supply Chain Variety Diligently Dealing With Diversity
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WAREHOUSING & DC Investment Opportunities In India Venture Speculation: A Way Out For The Future
Showing Some Stark Emoticons
Rendering A New Definition To Indian Warehousing
Cutting-edge Solutions
PRICE TRENDS EVENT CALENDAR TENDERS PRODUCT UPDATE PRODUCT & ADVERTISERS’ INDEX PRODUCT & ADVERTISERS’ INQUIRY FORM
17 19 54 58 59 64 65
Cover Design: Sanjay Dalvi
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START-UP STRATEGIES GOR Butler System
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GOVERNMENT POLICIES Rail Budget
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Latest Happenings In The World Of Logistics Dip in the IIP FMCG Bears The Brunt
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5
VIEWPOINT NEWS, VIEWS & ANALYSIS
FMCG Redefining The Role Of Franchise
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ALSO IN THIS ISSUE
Taarek Hinedi, MD (India Operations), FedEx Express
Government Initiatives In Warehousing
53
Reverse Logistics
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WAREHOUSING SECTOR NEEDS A BIG PUSH IN BUDGET: NCML NATIONAL Collateral Management Services Ltd (NCML) has sought a big policy push in Budget 2013–14 for building warehousing and cold chain infrastructure in the country. It also sought service tax exemption for warehousing services and classification of all warehouse receipt financing of agriculture produce as ‘priority sector’ lending. “The government needs to give the right signals to investors in the warehousing and cold chain infrastructure space. The major constraint in such infrastructure projects is the lengthy payback period,” said Sanjay Kaul, CEO, NCML.
He said that the industry has been demanding a special window to finance such projects at a concessional rate of interest, with a loan repayment period of at least 15 years. Stressing that cold chain infrastructure will require the government support in a big way to make it commercially viable, Kaul said, “Existing subsidies for standalone cold stores are inadequate and do not lead to an integrated cold chain across the value chain.” He suggested that large-scale Public Private Partnership (PPP) projects need to be launched on a viability gap funding basis to modernise the country’s food chain.
WMS MARKET CONTINUES UPWARD TREND IN ASIA ACCORDING to ARC Advisory Group’s research, the total warehouse management systems market in Asia is expected to grow at a CAGR of 13.5 percent during the five-year forecast period. ARC’s latest study, ‘Warehouse Management Systems for Asia Market Research Study’ provides an in-depth analysis of the WMS business in Asia. According to Neelam Singh, Sr Analyst, ARC Advisory Group India, and Co-author of this study, “Though the region has experienced above average growth, WMS suppliers have communicated to ARC that low labour costs in some emerging markets have decreased the expected return on investment from WMS purchase and implementation.” The report also highlights the factors that influence the WMS market in Asia and its dynamics.
‘AGARWAL PACKERS & MOVERS’ CELEBRATES 25 GLORIOUS YEARS IN SCM THE logistics brand of DRS Group, ‘Agarwal Packers and Movers’, has completed 25 years of service in the supply chain sector. The grand journey started with a single truck to transport goods under the banner of ‘Agarwal Tempo Transport’. Since its commencement, the company has shifted goods for more than 15 lakh homes. The Group also caters to the requirements of large corporate clients like MRF, Bridgestone, Infosys, Cognizant, JK Tyres, Samsung, etc. It generates a revenue of around `500 crore per annum by rendering highquality and cost-effective services. It is the first company in India to launch new concepts like double door
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carriers, portable home & perfect boxes etc., to enhance the profitability and, at the same time, offers a good quality service experience to its customers. It has also provided the latest options to meet the increasing needs and demands of the customers by introducing plastic crates instead of cardboard boxes, wooden crate packing for electronic items, etc. It also provides hassle-free services to customers with its network of around 100 branches pan-India (including franchises), fleet of about 800 vehicles and a human workforce of around 2,000. The Group has moved on into warehousing business with 3 mn sqft space and has future plans to acquire more lands across the country.
L O G I S T I C S
BLUE DART STRENGTHENS PRESENCE IN JODHPUR BLUE Dart has inaugurated an area office-cum-service centre in Jodhpur, Rajasthan. With this service centre, Blue Dart has strengthened its network in Rajasthan. The service centre is located at Crown Plaza, Transport Nagar and was inaugurated by Sukhwinder Singh, Regional Head, North India. This is Blue Dart’s first owned set-up in Jodhpur and has a direct presence in the city now. This strategic decision is in line with the company’s strong focus on Tier II and III cities, which are emerging as important nodes of production, consumption and distribution. The service centre is strategically located at a distance of 14 km from the airport, 7 km from the railway station, and in close proximity to the industrial areas of Jodhpur. Commenting at the launch, Singh said, “Jodhpur is an important city in the western part of the country. We are more than happy to partner the city in its growth.” “We are glad that the economic development of the city is on a fast track owing to which we foresee good volume of business. Going forward, we plan to position Jodhpur as our base and expand to other peripheral locations like Bornnada SEZ, Balotra, Barmer and Jaislamer so that we cover the entire Jodhpur-Jaislamer belt,” he added. Catering to Jodhpur, the Blue Dart Centre will provide logistics service to sectors like banking, hotels, cottage industry, handicraft and textiles. Additionally, the opening up of reputed hospitals, institutes and educational agriculture processing zone will fan economic growth in the region.
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QUINTIQ EXPANDS TO MEET GROWING DEMAND IN EMEA QUINTIQ, Q a global leader in Supply Chain Planning & Optimisation (SCP&O) software, announced an expansion in Europe, Middle East and Africa (EMEA) operations in direct response to increased demand. The company is expanding its number of Business Units (BUs) and departments to 15 in an effort to maintain focus on key industry and solution areas. The newly expanded BU structure enables Quintiq to maintain a small company atmosphere despite having grown to well over 600 people globally. The new organisation will provide customers the specific knowledge and expertise they have come to expect, focused on the industries or market verticals in which their units specialise. A Quality Management Unit is also being
created to support all the departments in quality assurance and quality improvement. “Based on the current level of demand for our supply chain planning and optimisation solutions, Quintiq has taken steps to meet the exciting growth we are seeing in the EMEA markets,” said COO, Quintiq. “This new alignment will ensure we maintain our small company culture and industry expertise while delivering world-class solutions to customers around the world.” Gearing up for continued growth in EMEA and the rest of the world, Quintiq is laying the groundwork for further geographical and vertical specialisation, including recent investments in its Düsseldorf and Zurich offices, which serve its German-speaking markets.
AMI COMMENCES OPERATIONS IN INDIA AIR Menzies International (AMI) has recently commenced operations in India. The airline started functioning from Mumbai with the induction of air cargo wholesaling to the country for the first time. AMI, the world’s largest trade-only airfreight and express wholesaler, has created this regional division to begin its development in India. Before AMI India, air cargo wholesale activity in India had been limited to co-loading among freight agents. AMI India will direct import traffic from AMI branches in the US, the UK, Europe, South Africa, Asia and Australia to key destinations across India. Trevor Saldanha, the Regional VP, will head AMI India’s operations in the country. Once the business is fully established in Mumbai, AMI India plans to open branches in New Delhi, Chennai, Bengaluru and Hyderabad.
SESA GOA BAGS SUPPLY CHAIN TECHNOLOGY ADVANCEMENT AWARD SESA Goa has bagged the Supply Chain Technology Advancement Award at the second Asia Manufacturing Supply Chain Summit, for the successful implementation of RFID technology across its business operations in Goa and Karnataka. Sesa Goa is the first mining company in India to implement automation using RFID technology to streamline the supply chain, improving productivity by reducing transaction time and human errors. The system, which identifies the vehicle using RFID tags, links all the touch-points, i.e.,
security gates and weighbridges across the operations in Goa & Karnataka and consolidates the information, enabling analysis and reconciliation of a large number of transactions. While interfacing with the enterprise’s central database and ERP solution, it also interfaces with National Informatics Centre and (n)-code websites, linking forest passes and Department of Mines and Geology permits with truck information. The system has been implemented to withstand tough ambient conditions associated with mining operations.
L O G I S T I C S
DHL LAUNCHES DIRECT LCL SERVICES FROM INDIA TO POLAND AND BRAZIL DHL Global Forwarding continues to expand its global network of its direct Less than Container Load (LCL) service with the recent launch of two new services connecting Nhava Sheva in India with Lodz, Poland and Santos, Brazil. The introduction of these weekly direct LCL services not only ensures faster transportation of freight from Nhava Sheva to Lodz and Santos but also enables effective reduction in CO2 emission by 17% and 9 %, respectively, due to shorter distances and reduced cargo handling. By offering a substantial reduction in transit time of 29 days from Nhava Sheva to Lodz and 38 days to Santos, DHL offers a consistent and cost-effective ocean freight solution accompanied by reliable management systems that control shipping transactions and give full tracking visibility to its customers. “Our new services demonstrate our commitment to strengthen our network and support the needs of our customers. By expanding our service offerings geographically, we ensure a timely and controlled delivery of door-to-door services, which include pick up at origin, consolidation and deconsolidation along with customs clearance,” said Thomas Tieber, CEO (South Asia), DHL Global Forwarding. All LCL services are accompanied by DHL’s first-class IT solutions such as DHL Track & Trace and other tools, allowing full visibility throughout the whole supply chain. The company also facilitates insurance services to customers as a value-added service. DHL’s Shippers Interest Insurance (SII) covers losses or damages of all cargo transported by DHL, as well as transportation costs.
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CII ADVISES TO FACILITATE PRIVATE INVESTMENTS THROUGH PPP
ROBOCOM SYSTEMS TO INVEST IN WMS FOR 3PL INDUSTRY
CONFEDERATION of Indian Industry (CII) has called for speedy implementation of key railway projects, such as the Dedicated Freight Corridor, high-speed rail corridors, rolling stock and other capacity enhancement works. “Investments in rail infrastructure are high priority as they add efficiencies to national competitiveness and reduce transaction and supply chain costs,” said Chandrajit Banerjee, Director General, CII. Commending the recent increase in passenger and freight rates, Banerjee noted that higher revenues would offer more opportunities for targeting a zero-tolerance approach to issues in safety.
ROBOCOM Systems International recently announced the release of the latest version of their R-WMS.net WMS with enhanced functionality for 3PL companies. Bryan Wright, VP, Robocom, stated “3PL companies have very complex inventory tracking requirements along with the need to have flexible and configurable process flows for each of their customers. Robocom understands the demands these requirements place on a 3PL business.” Wright added, “We continue to invest in our warehouse management solution to address the needs of the 3PL industry.”
AIR CARGO BOARD TO MEET SHORTLY A second round of meeting of Air Cargo Logistic Promotion Board would be held soon to address inter-ministerial issues and to coordinate with the state governments on handling of air cargo, informed a senior civil aviation official. The first meeting of the Board, chaired by Civil Aviation Secretary, discussed in detail several areas of concern relating to air cargo, especially the missing and non-traceable cargo in domestic airports, said M Kannan, Economic Adviser to Ministry of Civil Aviation. “We will be having the next meeting of the Board shortly. There has been some delay in the second meeting. It is primarily to resolve inter-ministerial issues and to have co-ordinations with state governments,” he informed at an interactive session on the aviation cargo industry organised by Southern India Chamber of Commerce and Industry (SICCI) and Chennai Customs House Agents Association.
HARBOUR AT HALLANIYAT ISLANDS TO OPEN IN 2014 THE new harbour on the Hallaniyat Islands, which will improve the development of the economy for locals and create tourism opportunities for Oman, will be completed in a year’s time, said Bin Hamdoon Al Harthy, Undersecretary for Ports and Maritime Affairs, Ministry of Transport and Communications. Speaking to Times Business on the sidelines of a press conference to announce the Gulf Cooperation Council (GCC) supply chain and logistics conference scheduled for April 15 and 16 at the Al Bustan Palace, Muscat, under the theme ‘Oman’s
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Strategic Role as GCC Gateway and Indian Ocean Rim Hub’, Al Harthy said all ports in the Sultanate are progressing well. He added, “A study on Shinas Port to develop facilities in accordance with international standards is currently underway. The proposed plan is part of the government’s strategy to further develop Oman’s maritime infrastructure and help stimulate economic development.” Talking about the conference, Al Harthy asserted, “The government’s infrastructure prioritisation strategy will provide the country a solid platform.”
L O G I S T I C S
GATI-KWE AWARDED FOR IMPROVEMENT EFFORTS GATI-KWE, India’s leader in express distribution and supply chain solutions, was awarded for its efforts in the category of ‘Achievement in Continuous Improvement’ at the 2nd Asia Manufacturing and Supply Chain Summit in Mumbai. GATI-KWE has been a strong believer in innovation and strives to go beyond conventional boundaries to deliver quality service to its customers. GATI-KWE has also implemented various innovations such as pre-planning tools, customer site process improvements (using mobile platform), Network Monitoring Cells (NMC), etc., to help enhance the customers experience. With these processes, the customer gets live updates about the status of the shipment, which gives the customer a sense of security. These implementations have also helped reduce the process time. The Asia Manufacturing Supply Chain Summit recently held in Mumbai aims to bring together supply chain leaders across verticals with a view to innovate, strategise and uncover strategy and best practices to help one another in today’s complex and challenging business environment. Every year, over 200 leading manufacturers & decision makers across different value chains of prestigious organisations are convened at the summit. The idea is to equip each other with the latest information, impact of economic trends & strategies that can transform your organisation. Various innovations have recently been implemented, which have brought significant process improvements that have helped reduce process times and significantly improve customer experiences.
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TRIANGLE GROUP OFFERS SEAMLESS END-TO-END SUPPLY CHAIN SOLUTION
AMAZON.COM INC. ANNOUNCES A CLOUD DATA STORAGE SOLUTION
US-based logistics service provider Triangle Group and leading multi-channel cloud-based supply chain execution and WMS solution provider LogFire will be leveraging their value in improving businesses’ supply chain operations and flow of goods at RILA Supply Chain Conference: Logistics 2013 at Orlando, Florida. Triangle Group is much more than just a 3PL. With key operations on both the east and west coast of the US, Triangle Group has decades of experience working with leading and emerging companies to help them manage the supply chain operations. Its supply chain solutions and industry expertise have given the company a successful edge over the competition, by understanding the retailer and manufacturer mindset, and proactively providing cost saving solutions designed to achieve better efficiency and save bottom line dollars for their clientpartners. The Group offers a seamless end-to-end supply chain solution that is second to none. From freight forwarding and customs clearance to bonded facilities, as well as warehousing, fulfillment, and transportation to end users, Triangle Group has the assets to provide exceptional supply chain management for manufacturers, wholesalers, retailers and ecommerce companies of all sizes.
AMAZON.COM Inc. recently announced a cloud data storage solution from Amazon Web Services (AWS), thus further expanding its cloud offerings. Amazon Redshift, as this new cloud-based data warehouse service is called, a low-cost solution for managing and automating common administrative tasks like provisioning, configuring, monitoring, taking backups and securing a data warehouse. The company said that any AWS customer can launch a Redshift cluster from within the AWS management console for $1,000 per terabyte, per year. Earlier, companies incurred significant costs to build their own infrastructure for data storage. They had to make a substantial payment upfront, after which they would invest further to purchase additional storage space anticipating growing backup demand. This resulted in under-utilised capacity and unnecessary expenses. With Amazon Redshift, companies will not only be able to lower the cost of a data warehouse but also reduce the workload by analysing large amounts of data very quickly. Currently, Amazon Redshift is only available in the US. Amazon is one of the leading players in the extremely fastgrowing retail ecommerce market. Amazon is expected to benefit in the long term, given significant growth potential in domestic and more so in international ecommerce.
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DAMCO RECORDS SIGNIFICANT GROWTH IN 2012–13 DAMCO, one of the world’s leading freight forwarding and logistics service providers, recently reported a 19% increase in net revenue compared to 2011–12. The net revenue in 2012–13 has increased to US$3272 mn, from UD$2752 in 2011–12. Gross profit saw a rise of 7% to US$807 mn in 2012. “I am satisfied with our solid results for 2012. We continue to grow and develop our business, in spite of continued difficult market conditions. I am pleased that we have taken full advantage of our acquisition of NTS, and that all our products continue to grow organically faster than the market,” said Rolf Habben-Jansen, CEO, Damco. “In addition, we have made a number of strategic changes and
invested a lot in the future, which masks the underlying trading of our business that is better than pure numbers show, and it also gives us a lot of confidence going into 2013–14. This stems from a lot of hard work from everybody across our network,” he added. The volumes are also up for Damco as the company shipped 6% more ocean volumes compared to 2011–12. Air freight tonnage almost doubled, recording a growth over last year of 91%. The rapid growth in air freight was partly due to the full year effect of the acquisition of NTS in August 2011, but also excluding that effect Damco’s growth in Air freight was well into double-digit percentages.
AAI LOOKS AT MASTER PLAN REVIEW FOR CHENNAI AIRPORT AIRPORT Authority of India (AAI) may go in for a new cargo terminal on outsourcing model by revising its master plan for the Chennai Airport, as per the report by Centre for Asia Pacific Aviation (CAPA) on the modernisation of the airport. “In our phase II development, we are open to have a new cargo terminal on outsourcing model in the Chennai Airport,” said GK Chaukiyal, Sr Member – Operations, AAI, while addressing various stakeholders in an air cargo related event titled ‘Aviation Cargo Industry: A vital link in logistics was organised by the Southern India Chamber of Commerce and Industry (SICCI) and Chennai Custom House Agent’s Association, in association with Air Cargo Agents Association of India.
DEMAND WOES, LOW CHARTER RATES HIT SHIPPING INDUSTRY A bleak future is staring India’s shipping industry in the face. Depleting demand growth and lower charter rates have made the sector too turbulent to operate in. The third quarter turned out to be one of the worst for industry players who have either incurred losses or seen profits fall steeply due to supply glut and higher bunker cost. The fourth quarter may turn out to be much worse, say industry officials, as well as analysts. like Shipping Companies Corporation of India (SCI), Mercator, Great Eastern Shipping Company,
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Essar Shipping and Varun Shipping Company are all going through a rough patch. The outlook of their counterparts abroad is similar. G Shivakumar, CFO, Great Eastern Shipping Company, said in a post-result analyst conference call, “The freight rates had been challenging and Baltic dry index had fallen more than 60% year-on-year. The outlook did not look very bright either. There was oversupply of vessels. And still, up to 15% of the vessels were to be delivered in the crude, product and dry bulk segments.”
L O G I S T I C S
LATEST VERSION OF SAP® TRANSPORTATION MANAGEMENT TO DELIVER BETTER SERVICE SAP AG recently announced the general availability of the 9.0 version of the SAP® Transportation Management (SAP TM) application. The latest version of SAP TM delivers important innovations for shippers and freight forwarders. Benefits of the new release include improved ocean & new air freight management, superior manual and automated transportation planning, cost distribution, and additional management transportation analytics & reports. Increased demand for a comprehensive transportation management solution is spurring mass adoption of SAP TM globally, including key high-growth markets such as Latin America, Asia Pacific and Russia. Major transportation and shipping companies are already live on the new release of SAP TM. One such company, Australia-based Linfox, implemented the latest version of SAP TM in record time. Linfox serves as the leading logistics service provider for the Asia-Pacific Japan region, with over 6,000 vehicles and 18,500 employees. In addition to Linfox and including 22 customer ramp-up projects, there are now over 100 customers for SAP TM. “The early availability of SAP TM 9.0 provides us with highly anticipated freight planning capabilities,” said John Ansley, CIO, Linfox, adding, “We are now able to efficiently plan our road trains, leading to better asset usage, for example, cost cutting, and improved customer service through on-time delivery.” SAP TM is part of the portfolio of SAP solutions for supply chain management, which also includes SAP EWM and SAP Event Management.
DIP IN THE IIP NEWS ANALYSIS
FMCG bears the brunt
in output, which is certainly not good news for companies operating in the FMCG space. These concerns originate from the manufacturing sector itself. “What is extremely worrisome is the negative growth of the manufacturing sector driven by a sharp decline in demand conditions in the economy. This has happened at a time when the festive season was expected to boost consumption demand. The data indicates that upstream mining industries continues to show a contraction in output which, going forward, would lead to shortage of coal, ores and other industrial raw materials,” adds Banerjee.
Illustration By Sanjay Dalvi
WHAT CAN BE EXPECTED?
The production of durable products, viz., refrigerators, washing machines, air conditioners and conventional television sets, is contracting in India. The Index of Industrial Production (IIP) is an indirect indicator of consumer demand. So, why are consumers not picking up durables like they earlier did? Why are the consumers lying low and why are FMCGs facing speed breakers? Here’s an attempt to find the answers… PRATEEK SUR
THE IIP, the country’s chief barometer of factory output, released numbers for the month of December 2012. These state that the consumer durables output declined by 8.2% over the year-ago period. This is the sharpest fall seen in the 2012 calendar year. Numbers for the previous months were no better. According to Chandrajit Banerjee, Director General, CII, “To say the least, the IIP figures for December are disappointing. With the exception of October 2012, there is a secular trend developing, which is
the most disconcerting.”
A LOOK AT LAST YEAR... Last year in January, February and September, the consumer durables output declined by 7.5%, 6.2% and 1.5%, respectively. The months of March, July, August and November 2012, saw growth in output between 0.8% and 1.3%, which is paltry when compared with the IIP data for 2011 and 2010, respectively. Altogether, eight of 12 months in 2012 saw negative or low-single digit growth
It is evident that the FMCG sector is being adversely affected due to these dipping numbers, but the consumer unknowingly is joining in the stride and adding to it by refraining from spending during the January jinx. Banerjee avers, “Given the situation, under normal circumstances, it would have been natural for the industry to ask for a stimulus package. However, given that the government’s fiscal situation is quite serious, this could be an unreasonable demand. However, the least we expect is that the Union Budget would not consider raising any taxes or duties and would refrain from introducing new taxes. Sentiments are already reflected in the IIP figures and CII does not want to see any announcements, which would hurt the industry’s confidence.” “CII hopes that the Union Budget would take bold decisions to rejuvenate demand and boost investor confidence, which, in turn, would stem the slide in industrial production. CII has already suggested to the Ministry of Finance that the Union Budget should be aimed at reviving growth. This would imply taking measures such as containing fiscal deficit, moving towards GST, providing accelerated depreciation on plant and machinery, abolishing MAT
MARCH 2013 • SMART LOGISTICS • 15
Dip in the IIP, continued
SUPPLYING THE SMART WAY
low-cost split ACs under the brand name Cube. Besides Blue Star and Panasonic, Voltas is another company that has taken the low-cost route, launching stripped down ACs in a bid to boost sales this summer. Last year, the AC market fell 25%, according to industry sources. It currently stands at three million units. Manufacturers of TV sets too are rapidly moving to the more lucrative flat panel TV segment as the larger, conventional TV market simply stagnates. Conventional TVs, pegged at 10 million units, have been de-growing at the rate of about 10–15% in the last few years, thanks largely to obsolescence. But in the WHAT IS BEING DONE? last one year, the fall has been even Durables is one market that the steeper at the rate of 20% as consumers consumer has a hand in. The day-tosimply looked the other way owing to FROM MASTER BLASTERS TO BEARING day consumer can ‘uplift’ the market by a general slowdown. spending, not much, but consciously, This de-growth has prompted THE BRUNT To tide over the above stated issues, players such as LG and Samsung to logically and rationally and thereby help bring the dipping figures back companies have been taking certain take their eye off the category. Both measures. For instance, air-conditioner companies have indicated that they no to something worthwhile. Shantanu makers, who have been the most hit Dasgupta, VP – Corporate Affairs & more intend to invest in conventional TVs, focusing their attention on flat Strategy, Whirlpool, believes, “The owing to both weak sentiment as panels, which, in the present day, twin impact of shrinking disposable well as uncertain weather (the last incomes as well as high cost of goods two summers have been cool hitting constitute one-third of the total TV AC sales) have resorted to desperate market pegged at 15 million units. is what is leading to a deferment in measures such as launching knockedthe purchase of consumer durables.” Meanwhile, Onida is now attempting Typically, durable products are not down split air-conditioners for as low to convert itself into a lifestyle player, perceived to be essential commodities; as `19,000, 32% lower than the price focusing its attention on kitchen they are considered discretionary of a regular split AC. “The attempt is and home appliances, moving away products. therefore from the George Menezes, conventional TV market. Durables is one market that the consumer has a hand in. The day-to-day consumer can ‘uplift’ the market by spending, not Only Videocon COO, Godrej Appliances, much, but consciously, logically and rationally and thereby continues to operate in adds, “When purchases can help bring the dipping figures back to something worthwhile. be postponed, consumers the market with a share of about 33%. According to opt to do just that.” On to provide an affordable option to firstan average, the replacement cycle HS Bhatia, Chief Marketing Officer, time buyers as well as those residing for home appliances has increased Videocon Industries, the company has from two to three years earlier to in small towns,” says B Thiagarajan, no plans to vacate the category despite about four years. “This means that President – Air-conditioning & its de-growth. “As a player, we are Refrigeration Products Group, Blue well-entrenched in the category and the consumers are not going for a Star. have no plans to step out of it,” informs change even four years after the Seconding his views was Suresh purchase of their products. This Bhatia. Besides the flagship brand, the Kumar Bandi, Divisional Deputy Venugopal Dhoot-promoted company naturally impacts sales,” adds Menezes. It does not help that the price of home MD, Panasonic, adding, “When entry also makes conventional TVs under appliances has increased by 15–20% barriers come down, consumers are the brand name Sansui. more likely to sample the product.” in the last one year as the rupee Panasonic has recently launched prateek.sur@network18publishing.com depreciated by 22%. on SEZ, etc. The reform agenda brooks no delay,” Banerjee adds. There certainly have been some reforms done by the government, which might be added by some more rules and sanctions during the upcoming Budget. “Some good has been done by the series of reform measures announced since September 2012; now, the Reserve Bank of India (RBI) has indicated monetary easing. We hope that the RBI would take note of the industrial situation and accelerate the reductions in interest rates. We hope that the calendar year would see at least a 150 bps cut in repo rate,” anticipates Banerjee.
16 • SMART LOGISTICS • MARCH 2013
The maximum hit is the supply chain. The entire supply chain works on the customers’ response. A rise in demand would necessitate an increase in supply—a fact which would ensure that the supply chain companies remain in business. However, it is important to note here that the whole process can be initiated only if there is demand from the customers’ end. The dip in the IIP numbers would call for doomsday, especially as they would throw the third-party logistics service providers out of business. The companies also need to better their supply chains by accelerating their speed of delivery, lessening the number of damages and keeping a check on the ever-escalating delivery charges.
CUTTING-EDGE SOLUTIONS TECHNOLOGY & INNOVATIONS
New Gen Mobile Computer To Optimise Warehouse Operations security and enhanced USPs processing power to support
A broad range of data collection and communication features in a mobile computer enables the adaptation of a variety of in-premise applications. It supports businesses in their pursuit to improve their operational performance metrics, simplify IT support and control operating costs. It packs a breadth of capabilities into a slim case, allowing users to easily and comfortably adapt to the ever-changing data capture and communications needs. Intermec has released its CK3 ‘Next Generation Series’ of rugged mobile computers, claiming one of the industry’s highest performing mobile computing options till date. For use in distribution centres, manufacturing and retail operations, the CK3 Next Generation Series comprises two models—the CK3X and CK3R— which utilise a 1GHZ OMAP architecture to optimise workforce performance through industry-leading battery life, enhanced barcode scanning, device health monitoring and a broad compliance with emerging industry standards, such as HTML5. “For business-critical mobile applications, the need for mobile devices with reliable battery performance, data capture configuration options, robust
• Highly adaptable to meet ever-changing the increasingly sophisticated data capture and communication needs applications in a lightweight, • Built on a robust architecture required to ergonomic, yet rugged successfully support in-premise design, is critical,” said applications David Krebs, VP – Mobile & Wireless Practice, VDC • Latest generation of imaging technology Research. “Intermec’s CK3 for outstanding scanning productivity Next Generation family of • Speech and voice functionality support rugged handheld devices today’s needs for increased productivity delivers these capabilities • Loaded with SmartSystems™ for and is well designed to automatic, remote device management support mobile applications • RFID enabled via snap-on reader handle across a variety of rigorous warehouse, logistics and • Non-incendive option for hazardous retail environments,” he locations (CK3N) added. The CK3X is optimised for popular CK3B for continued best-inclass operations to support customer warehouse operations and is the matching migration option from the needs for increased productivity, flexibility and exceptional workforce current CK3B, while the CK3R is performance,” said Earl Thompson, optimised for light industrial and retail front of store applications. Maintaining Sr VP – Mobile Solutions Business the current CK3B form factor and Unit, Intermec. “Designed specifically rugged design, legacy applications with the future in mind, the CK3 Next and backwards-compatible accessories Generation Series is an exceptional allow customers to seamlessly migrate choice for customers who need to to the latest technology without an support the ever-changing data capture additional investment in chargers, requirements and future-proof their docking stations or scan handles. “The supply chain, DC and in-store retail CK3X and CK3R expand upon the operations,” he added.
New & Improved GeoManager Driver Safety System Effectively Manages Vehicle Safety MONITORING driving safety allows organisations to help mitigate risk by measuring safe driving habits, which can result in fewer crashes and lower insurance rates. The newly improvised GeoManager Driver Safety system allows transport organisations to manage and communicate driver behaviours & vehicle safety more effectively. Trimble has made enhancements to the Trimble GeoManager Driver Safety, enabling organisations to manage driving behaviours by identifying and rewarding good drivers. It also recognises and coaches drivers who put companies at risk. The updates increase visibility for multiple
stakeholders within a business into any risky driving behaviour via new report formats, an improved executive dashboard, driver scorecards, real-time delivery of idling and speeding alerts. Driver safety provides reports on hard braking, rapid acceleration, hard turns
USPs • It manages driving • It recognises and teaches drivers who put companies at risk • The alerts can be programmed for real-time feedback
and excessive speeding. These reports can be configured for daily, weekly and monthly use. “With GeoManager Driver Safety, we are able to configure the safety needs of a fleet better. The latest enhancements, which include the Driver Safety’s executive dashboard, driver scorecards and exception alerts, can allow companies to improve driving patterns and optimise safety while reducing the liability,” said Mark Forrest, GM, Trimble Field Service Management. Driver Safety is part of the Trimble GeoManager portfolio, which includes Fleet Management and Work Management.
MARCH 2013 • SMART LOGISTICS • 17
Cutting-edge solutions, continued
Pedestrian Stacker Ensures Excellent Manoeuvrability In Tight Spaces TO give material handling a new definition, a pedestrian stacker has been introduced for the logistics sector, which is compact, easy to use and highly versatile. The new Mitsubishi AXIA ES Pedestrian Stacker has been developed to deliver exceptional productivity in every setting. This completely newly designed Mitsubishi Pedestrian Stacker comes with an ergonomic tiller arm, extremely compact powerhead and outstanding visibility. The AXIA ES ensures excellent manoeuvrability in tight spaces. The new Mitsubishi Pedestrian Stacker series include advanced and value-added features that deliver real customer benefits, particularly in terms of reliability and value for money. These features include: • A sealed chassis to offer protection against dirt, dust and other particles lying around work site, which can reduce wear of the truck • An incredible water-resistant design that diverts splashed moisture away from key electrical components for
longer truck life • The low centre of gravity aids stability for safe operation • A powerful AC-drive motor, which gives excellent traction and ramp performance. It also does smooth,
USPs • Its design is water resistant • It provides stability for smooth operations • It has lower maintenance requirements quiet and controlled operation, thus lowering the maintenance requirements • It gives convenient extra ground clearance for driving on ramps and loading docks • There are choices of two performance modes via the switch key, which enhances safety, energy, efficiency and productivity • A foldable driver platform offers a comfortable ride over longer distances.
A Premium Solution For End-To-End Logistics With SAP for manual, semi and fully automatic REALISING the growing need for warehouses. “The cumulative knowhigh-grade automation and IT system for the logistics sector across the how of KNAPP and SALT from more world, a newly developed revolutionary than 1,500 logistics systems, more than solution has been recently introduced. 150 WMS projects and more than Hart 100 automation KNAPP projects with bei Graz and USPs SALT Solutions SAP software • It can handle complex Würzburg have allows us to logistics projects intensified their realise complex • It is an optimal integration of collaboration to logistics projects automation solution based on SAP. offer logistics solutions based In particular, on SAP Extended Warehouse our customers profit from the Management (EWM) through optimal integration of the KNAPP their common subsidiary, KNAPP automation solutions, such as IT Solutions GmbH. With about the OSR Shuttle, into their SAP 200 SAP logistics experts, KNAPP informed, system landscape,” and SALT are one of the leading Gerald Lassau, MD, KNAPP IT Solutions. international suppliers of SAP EWM
18 • SMART LOGISTICS • MARCH 2013
New Technology Provides Small Businesses Assistance In SCM A cloud-based resource planning tool is set to be functional to give small businesses a hand with supply chain challenges. Unlike legacy vendors in that sector—including SAP and Netsuite—the technology is specifically designed for departmental stores, retail chains and small boutiques, among others. The technology will soon be launched by New York-based BizSlate. BizSlate is ideal for companies that have ‘outgrown quickbooks’, but do not have ample resources at their disposal for IT, opined, Marc Kalman, Chief Executive, BizSlate. IT behemoths, like SAP, made Enterprise Resource Planning (ERP) tools popular, but they are an expensive and complicated proposition for nontechnical types. These tools bring
USPs • It focuses on small businesses • The technology is less expensive together and manage information about finances, accounting, manufacturing, sales and service, and marketing. Until recently, only large companies could afford the packages and consulting contracts that take a sizable out of an IT budget. BizSlate claims it can offer its customers a competitive advantage. For example, a manager, at a conference or trade show, can view real-time inventory from a tablet, iPhone, or Android device and place orders into a live system that could potentially pick, pack, and ship on same day, which used take up to a week to process traditionally. The company has enlisted about 20 companies to take part in its beta test. The first customers will have an instrumental role in the design and development of the product. Compiled by Devyani P Korgaonkar
PRICE TRENDS IRFI Trend for February 2013
The RFI stood at 177 points in the month of February 2013, which is 3 points higher in comparison to the corresponding period last year.
ZONAL FREIGHT TRENDS The overall freight rates have increased by 0.44% as compared to last month. The freight rates from Kolkata registered the highest increase of 8.16% in comparison to last month because of shortage of vehicles at Kolkata. This was due to less incoming materials like hosiery and agricultural products from the south to Kolkata. The freight rates from Delhi registered the maximum reduction of 5.06% in comparison to last month due to sufficient availability of vehicles and less movement of cargo from the North.
INDEX TREND FOR 5 YEARS: TRENDS FOR FEBRUARY (Y-o-Y) 180 178 177
176
175
174
174
172 170
172
171
168 166 2008-09
2009-2010
2010-2011
2011-2012
2012-2013
COMMERCIAL VEHICLES DOMESTIC SALES: The overall Commercial Vehicles (CVs) segment registered a de-growth of -0.37% in April 2012–January 2013 as compared to the corresponding period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) declined by -21.37%, Light Commercial Vehicles (below 7.5 tonne) grew at 15.48%. In January 2013, M&HCVs’ sales further declined by -38.96% over January 2012.
FORECAST FOR MARCH 2013: The RFI in March 2012 was the same in comparison to March 2011. The freight rates in March 2013 are expected to increase marginally because of the financial closing of many companies.
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
SMART LOGISTICS
APRIL 2010
MARCH 2013 • SMART LOGISTICS • 19
IN N CONVERSATION WITH CHITRA CHITRA H R RA S SH SHINDE H NDE
INDIAN LOGISTICS LANDSCAPE FROM THEN TO NOW… Two decades ago in India, the landscape was very different. Express distribution, courier and 3PL companies were in their nascent stage. We were the generation that introduced systems into transportation. It was a time when supply chain was a term not used in India. Businesses focused on sales and distribution through their Customs House Agent (CHA)/Carry Forward Agent (CFA). The post office was the most reliable way to reach rural India. No one else had any reach beyond the large locations. Back then, businesses were willing to spend additional amounts for speed and quality. Today, things have evolved. distribution Globally, express is maturing. A lot of focus has shifted towards ensuring efficiency optimisation and consolidation of cost centres. Customers today expect speed, information and quality as part of the standard product offering and look for a lot more customisation and working in partnership to drive costs out. Many customers understand supply chain and the value chain a lot better today. They link the physical, financial and information flow and understand well
We are now looking at KWEality as the new way to define quality “They do not expect to see Japan here; however, they expect that we will come close to providing world-class services with best in class process, systems and service levels. They work very closely with our team to take us to the next level of continuous improvement—the Japanese way,” avers Chitra Shinde, President, Gati-KWE, during an interaction with Suprita Anupam. Excerpts... the cost across all three. We also find from experience that it is not possible to completely replace a distributor model. The distributor model provides extensive network and reach without making the investments in assets to access these markets. Some factors have remained same though, for example,
20 • SMART LOGISTICS • MARCH 2013
the policies, permits, challenges in managing transportation, working conditions for drivers and handlers. Besides, the risk levels continue to remain high.
KWE’S MAJOR CONTRIBUTION TO THE JV KWE brings to the table both
financial and strategic partnership. As a strategic partner, GATI-KWE has access to KWE’s global customer base. It is also promoting and increasing its nominated business to India. Japan’s trade and manufacturing interests in India are on the rise. Additionally, Japan is the largest investor in
infrastructure investments in India. We also see a strong cultural alignment between the two organisations. Both are conservative, process oriented, people and technology-driven companies. Perhaps, the largest contribution from KWE is raising the expectations of quality. They do not expect to see Japan here; however, they expect that we will come close to providing world-class services with best in class process, systems and service levels. They work very closely with our team to take us to the next level of continuous improvement—the Japanese way.
is a lot of growth in E-commerce in the ‘B’ to ‘C’ deliveries.
KEY GROWTH OPPORTUNITIES…
RAIL LOGISTICS WITH REGARDS TO ROADWAYS
We see growth opportunities in working with our customers to provide them supply chain solutions across the whole value chain from demand planning & procurement to inventory management, warehouse operations, distribution and reverse logistics.
Rail has certainly been taken over by road transportation. Indian highways, in the last decade, have tremendously improved and rail is fast catching up to become a major ‘mover’ again with the dedicated freight corridors. And with roll-on-roll-off models, we should see railways pickup
Proud projects There are many. The most recent would be the joint venture with KWE within 18 months from initial discussions.
LATEST TECHNOLOGIES @GATI-KWE We take great pride in being ahead in the area of automation. We have some exiting innovations. Recently, we released our new customer interface tool, which has received a lot of positive feedback from our customers; we seek to incorporate their suggestions. The fact that they use these tools creates that close bond with us by going through the cycle of ‘learning to use the tool’. Besides, the tool, the Auto SPR, also gives them a 3600 view of their distribution pattern, service levels, revenue, weight, outstanding, invoices and proof of delivery, among other features. We have also launched our planning modules on pickup, delivery and load planning. These tools help improve efficiency levels so that we can keep the costs low or manage higher volumes of business. These work on mobile apps, which are low cost and work across the country. We are positive that this will improve our customer satisfaction levels as well.
KEY INDUSTRY VERTICALS Automotive spares, after markets and pharmaceuticals continue to dominate. Recently, we have seen a lot of growth in retail and garments. We are also focusing on single brand companies who cater to the upmarket segment. Reverse logistics is on the rise. There
solving and analytics, among others.
UP CLOSE & PERSONAL
What has been your driving force and what inspires you the most? A sense of purpose and a determined will. Creating something of lasting legacy linked to quality and technology fascinates me the most.
As Lady Transport Personality of the Year, your message to the young lady logisticians to deliver better than the most… Today, women are excelling in all spheres of life. They travel in space, fly planes and run banks. The limitations no longer come from external environment, but from those we create for ourselves. In modern India, to the focused and determined, nothing can stop you; certainly, not gender. Logistics is no different to any other specialisation. At GATI-KWE, we offer equal opportunities and encourage women to take on positions of higher responsibility; but we do not find many takers. However, in front line operations, we have a very high number of women supervisors.
AS PER YOUR OPINION, WHICH ARE THE IDEAS THAT ARE YET TO BE IMPLEMENTED BY INDIAN LOGISTICS SECTOR Just like Fed Smith is known globally, our Founder and CEO Mahendra Agarwal is considered as the ‘Father of Modern Express Distribution’ in India. Agarwal has contributed to at least 40 new words relating to logistics that are unique to India and Gati. In the time to come, you will see that these will continue to emerge. We are now looking at KWEality as the new way to define quality. We have also rolled out G-force, which is a great internal tool to upskill our team on principles of lean, sigma, problem
momentum. At Gati, we have a large share of parcel movement on dedicated trains. A number of policies require some modifications. We are closely working with the authorities to permit amendments that facilitate the growth of rail operations.
CHALLENGES ENCOUNTERED The sector faces challenges such as regulatory controls, interstate permit requirements, ever-rising input costs and high interest rates, resulting in lower creation of vendor, margin erosion and shortage of skilled manpower. suprita.anupam@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 21
SPECIAL FOCUS PORT & SHIPPING POLICY
SUPRITA SU S UPR PRIT ITTA AN ITA ANUP ANUPAM UP PAM
including roads, ports, urban transport, etc. In most cases, the government ends up handling only 30–40% of the land and the responsibility of acquiring the remaining portion of the land is left to the developers. This was one of the biggest reasons why a port connectivity project in the southern region suffered delays on account of land acquisition leading to losses in the form of liquidity damages. It also sought assistance from the Shipping Ministry to expedite the process and the Public Investment Board had to approve project cost escalations from `3.95 billion to `5.57 billion. There are many other projects that will meet the same fate. The
Framing goals & guidelines are not enough Though the 13 major and 60 other operational non-major ports handle 95% of the country’s external trade by volume and 70% by value, many of the other figures are not as significant. Also, the targets could not materialise as planned. The insignificant inland water transport, level of containerisation, Custom procedures and insufficient connectivity to their hinterlands all point out either to the lack of right policy initiatives or their execution. AFTER R the successful implementation of many Public Private Partnership (PPP) projects at ports, the government has shown the green signal to a number of similar projects to give the port a face lift and enhance its efficiency while ensuring that the culture of delivery leads from the top. However, the support of government authorities and executive management is a critical requirement to ensure its successful implementation. The recent maritime agenda proposes investments of $25 billion in 424 projects in major ports and $33.5 billion in non-major projects by 2020. More than 80% of the investments is likely to come from the private sector in the case of major ports, while, in the case of non-major ports, the figure is likely to rise to 96%. The target seems to be ambitious and needs thorough key considerations and guidelines considering that the
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initiative has developed from the initial policy concept to avoid any delay. These include risk management, governance implementation, planning procurement and contract management stakeholder management, resources communication and monitoring & review.
EXECUTION DELAYS While many PPP projects are being delayed owing to environmental clearances, the slow bureaucratic procedures at most major ports in pre-tendering and the post-award stages such as delays in dredging, the lengthy tariff-fixing process and poor connectivity to the hinterland, tariff setting is swelling as another big hurdle limiting private sector investments. The Ports Regulatory Authority Bill is yet to address the private sector concerns. Land acquisition is another issue affecting all the infrastructure sectors
Comptroller and Auditor General (CAG) has pulled up the Odisha Government over the loss of nearly `160 crore because of loopholes in resources and revenue sharing arrangement of port projects in the PPP route. In the 11th Five Year Plan, we failed to achieve the target investment by 54% of the target. However, those sitting at the helm are yet to learn from the mistakes. Union Shipping Minister GK Vasan announced, “The government has formulated a perspective plan for the development of the maritime sector, namely, ‘The Maritime Agenda 2010–2020’. This plan has estimated the traffic projections and capacity additions at the Ports up to 2020. The Ministry has decided to take steps for setting up a new major port each in Andhra Pradesh and West Bengal. Steps have been initiated to get the government approval for both
these ports. Development of minor ports comes under the purview of Maritime State Governments. Most of the capacity augmentation at all the major ports is taken up with private participation under the PPP mode.” “To expedite the investment approval of PPP projects in the port sector, the government has recently enhanced the delegation of power to the Shipping Ministry in line with the National Highways Development Projects of the road sector. Steps have also been taken to streamline security clearance procedures to expedite project approvals,” he added. However, the figures suggest something else on ground.
INLAND WATER TRANSPORT POLICY
terminals, navigational aids and fleet so that the IWT mode becomes competitive and attracts cargo dictated by market forces • The government should act as a provider, facilitator and regulator and, at the same time, offer various concessions to the private sector for its effective participation by way of investment for creation of enhanced IWT infrastructure and fleet operations. However, the major loopholes such as land issues, rapid environmental clearance, etc., were yet to be sorted. Umesh Soni, VP & Head – Inland Water Transport Group, IL&FS Infrastructure Development Corporation Ltd, comments, “In view of the nature of IWT projects and the lack of private sector confidence in the sector, there is a need to adopt a comprehensive project development approach. To ensure that the legal/legislative frameworks are in place, the project is thoroughly prepared/evaluated, the technology options are evaluated, appropriate PSP options are selected and the consultation process, involving various stakeholders and institutions and so on, is carried out.”
failed to address the major concerns such as timely approval of documents from government authorities, simplification in contract procedures and so on. As a result, of the 276 projects envisaged for the major ports, only 50, i.e., less than 20% of what was planned, were completed and only 74 were under progress by the end of FY10. After NMDP’s failure, the ‘Maritime Agenda’ was introduced. Under the Maritime Agenda, the government plans to invest `1,280 billion in major ports in 424 projects against 276 under the NMDP and develop non-major ports with an estimated investment of `1,680 billion. This is a 10-year plan; hence, it is difficult to predict the exact figures, but the last two years’ figures again failed to achieve the yearend target.
According to the Inland Water Authority of India (IWAI), the existing A GENUINE ENGAGEMENT FOR availability of vessels for Inland Water Transport (IWT) in the public and IMPLEMENTATION NEEDED private sectors put together is less than PPP projects comprise of local as well as foreign investors. Private firms 400 vessels including tankers, bulk are least willing to tackle the land carriers, dumb barges and other vessels acquisition, security and other infra of average capacity of 600 tonne. To bring life into the transport system, the concerns. Guidelines are not enough. Government of India announced the According to M Gunasekaran, Public Information Officer, Ennore Inland Water Transport Policy under Port, “Indian investors show better which it addressed some of the major issues such as: investment figures when • Actively promoting the compared to foreign (Figure in ` billion) counterparts. If we talk IWT sector for it to Category Major Ports Non-Major Ports take a reasonable share about the policy initiatives Deepening of channels and berths 102 115 based on materials in the intermodal mix Construction/Reconstruction of berths/jetties 659 1,248 of inland transport EXIM stats, then, except Procurement of equipment 62 103 • Increasing the coverage coal, nothing else gains Rail/Road connectivity works 79 93 of national waterways significance on ground.” Other works 379 121 and provision of Thus, the ground stats Total 1,279 1,679 necessary infrastructure lead to the conclusion that for shipping and it is easy to make certain navigation and in augmenting the NMDP INITIATIVES guidelines, but the hardest thing to Due to National Maritime Development get right with implementation is to IWT fleet • Large-scale private sector Program (NMDP, launched in 2005), see whether rubber hits the ground participation for the creation the actual target surpassed the original with rolling out. Sooner or later, the of infrastructure and for fleet authorities will have to engage with target by 63%; however, the 11th Plan operations to supplement the failed to achieve by almost 50% and the management to ensure genuine government efforts the same is likely to happen in the 12th implementation. • To develop waterways for Plan on ground. The reasons behind navigation with the necessary suprita.anupam@network18publishing.com the failure are that the programme did (With inputs from FICCI infra report) not meet the investors’ expectations. It infrastructure such as fairway,
MARCH 2013 • SMART LOGISTICS • 23
SPECIAL FOCUS RAIL SECTOR
ARINDAM GHOSH
INDIA’S overall freight volumes are set to double from the existing 3 billion MT to around 6 billion MT by 2020. The Indian manufacturing sector has been witnessing strong growth, especially in the recent times, and the sector targets 25% share in the country’s GDP. Given such high levels of anticipated growth, there is bound to be a huge opportunity for railways. Over the last few years, rail freight traffic has grown in the range of 7–11% annually. The figure for freight carried by Indian Railways has increased from
in the rail space for the 12th Plan is a whooping `750,000 crore. It will highly difficult for the government to solely raise funds, thus giving a huge opportunity for the private sector to invest in it. Since 2006– 07, when private players were first permitted to enter and operate in the container freight segment by staterun CONCOR, the share of the firm has declined from 100% in fiscal year 2006 to about 77% in fiscal year 2010. Further, the Indian manufacturing sector has seen good growth in recent
However, to encourage such modes of financing, it is crucial for the government to bring in more transparency and clarity along with investor-friendly norms. The government needs to design models where the interests of the private player remains protected; it needs to implement a mechanism for speedy implementation of projects, service quality, create a provision for capacity expansion and give customer interests utmost priority along with investor-friendly norms. If the share of PPP investments has to come
On the track to prosperity Given that today India is one of the fastest growing economies in the world, the country’s logistics sector is expected to witness consistent yearly growth of around 10% during next 10 years. Additionally, India’s international trade is growing annually at 10–12%. Further, rail targets to increase its market share of freight movement in the country from the current 35% to at least 50% by the end of this decade. According to industry players, to support the growth of railways, infrastructure creation, encouraging public private partnerships along with focus on modernisation & safety will come as a boon in this direction. 670 million tonne in 2005–06 to 890 million tonne of freight in 2009–10; by the end of the 12th Five Year Plan period, Indian Railways is expected to carry about 1.5 billion tonne of freight traffic. Since the privatisation of container rail movements in India, the efficiency that has been brought into the system is highlighted by the fact that Indian Railways has achieved a higher growth in rail container freight market, which has grown by 15.8 % in fiscal year 2010–11 as compared to the overall freight growth of 6.6%.
IMPLEMENTED MEASURES The projected investment required
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times. Most of the bulk manufacturing industries like iron & steel and cement, have expansive capacity expansion plans lined up in the near future. As most of these commodities are generally moved by rail, there is bound to be a huge opportunity for the container train operators on the domestic front, which opens up huge scope for business for the companies in the segment. A combination of dearth in investment in the rail space and the capital intensive nature of railways has strongly pushed for Public Private Partnership (PPP) agreements in the sector. It is fast being realised that PPP is a must for the sector to grow.
anywhere close to the targeted onethird of the total plan outlay, then Indian Railways will have to take some significant steps such as introducing investment-friendly policies and maintaining consistency with existing policies. It needs to treat private players as partners & not competitors in order to regain the lost confidence of private investors. Such steps would play a key role in improving the participation of the private sector and may see a rise in the figures for the total number of private firms operating in the railways. According to ASSOCHAM, there is a strong need to focus on safety and modernisation, along with
improvement of existing track and rolling stock and separation of passenger and freight train lines. Speaking on the aspect, Rajkumar Dhoot, President, ASSOCHAM, said, “We have 63,974 route km, 1,31,206 bridges, 9,000 locomotives, 51,000 passenger coaches, 2,19,931 freight cars operating 19,000 trains each day transporting over two million tonne of freight and 23 million passengers everyday touching 7,083 railway stations across the length and breadth of this vast country, yet sadly lack corporate culture.”
POLICY INITIATIVES Dedicated Freight Corridor (DFC) Commenting on the importance of Dedicated Freight Corridor (DFC), RK Gupta, MD, Dedicated Freight Corridor Corporation of India Ltd (DFCCIL), says, “In order to augment the rail transport capacity to meet the growing requirement of movement of freight traffic, Indian Railways has decided to develop freight corridors along its busy trunk routes. These corridors will result in significant addition to the Railways’ transportation capacity and immensely improve the efficiency of rail transport, which will have a major bearing on the logistics costs in the economy.” Countries such as Japan are playing a critical role in establishing these projects. Recently, Japan announced loans of $2.26 billion for the second phase of the ambitious Delhi-Mumbai Freight Corridor and also a third infrastructural project in south India. Elaborating further, Gupta adds that the average speed of movement of the freight would be increased to 70 km per hour from the present figure of about 25 km per hour, showing a three-fold increase; it will dramatically reduce the transit time and the clearances will be much faster. Further, special wagons will be introduced; these will have high carrying capacities with higher asset utilisation. This will open up huge business scope for all the stakeholders. He avers that the implementation of
DFC is expected to generate two major impacts on the freight movement, viz: • Shift of freight from road and low carbon-intensive mode rail transport • Improvement in energy-efficiency of freight rail through adoption of improved technologies. As far as the latest development on DFC is concerned, according to Gupta, RITES will be completing the feasibility study by December 2013 for building four dedicated freight corridors, which is part of the proposed phase 11 of the DFC projects. `95,000 crore has been set apart for the phase 11 project and, from that, `60,000 crore is for investment in the creation of network. Further, referring to the funding pattern of the two corridors, Gupta informs that the eastern corridor is being funded by World Bank and US$2.7 billion has already been committed and the Western Corridor, being funded by the Japanese development agency, JAICO. In addition, India and China have signed an MoU on technical cooperation in the railway sector. Under the agreement, both the countries will enhance mutual cooperation across various areas of rail technology including high speed rail, heavy haulage and station development. The two sides will, inter-alia, undertake exchange of information on policies, training and exchange programmes, site visits, joint symposiums, etc. Schemes to attract private investments To facilitate rapid development of a network of freight terminals with private investment to provide efficient and cost-effective logistics services with warehousing solution to end users, a new scheme—Private Freight Terminal (PFT)—was launched in May 2010 by the government. The scheme facilitates traffic handling at the terminals by private investors, thereby increasing Indian Railways’ market share. Further, in order to increase rail share in the commodities like fertilisers, molasses, edible oil, caustic soda, chemicals, petrochemicals, alumina,
bulk cement and fly ash, etc., where the rail coefficient is traditionally very low, a scheme namely Special Freight Train Operator Scheme has been launched to attract private investment in special purpose wagons required for transportation of these commodities.
CHUGGING AHEAD Several initiatives have been taken to improve the productivity of the rail sector. For instance, Asian Development Bank (ADB) and the Government of India have agreed to implement Railway Sector Investment Program, which is aimed at improving rail freight services and passenger transport routes. The initiative will further help India improve rail services along some of its busiest freight and passenger transport routes, providing double track for about 840 km of rail routes and electrifying about 640 km. New signaling will also be installed. ADB will also support accounting reforms to improve operational and financial efficiency at Indian Railways. The programme will: • Reduce fuel consumption and enhance energy efficiency • Reduce pollution • Enhance railway safety • Increase the line capacity, benefitting consumers and producers of goods and services • Improve staff productivity • Incorporate innovating financing modalities by pursuing carbon credits under UNFCCC. The total cost of the Railway Sector Investment Program is US$1,144.6 million. Railways is trying to improve its performance levels through support from the government, but it continues to face strong competition from the other modes of transportation like road and air. However, special attention must be paid to augment the carrying capacity of the trunk route, which accounts for only 16% of the network, but carries 50% of the traffic. arindam.ghosh@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 25
SPEC SP SPECIAL EC CIIA AL FO FOCU FOCUS CUS S R ROAD OAD PRO PROJECTS OJECTS S
Driving India’s
Economic Growth In Ind In ndi dia ia, fr freiigh ght mo move vem ve ment heavi ment me vilily ly deppen endds ds on road ads ds. s. It ac acco coun coun co unts nts ts for abo boutt 60% of thhe to bout tota tot t al frei eigh igh ghtt vollumes carriiedd in the country, t th thus maki kingg roadd a major j driver i off tradde andd economic i development in the country. However, in such a scenario, the Government of India has taken various initiatives like DMIC, a target for construction of national highways at 20 km per day. Industry players recommend that reducing burden on the road infrastructure by devising an appropriate multi-modal transportation model, along with greater FDI in key logistics infrastructure development areas like dredging, port connectivity, etc., and timely execution of road sector projects will come as a boon for effective logistics and supply chain movement. ARINDAM GHOSH
INDIA h has the h second d llargest road d network in the world; however, it still lags behind the US and China when it comes to paved roads and national highways or expressways. The country’s national highways constitute a mere 1.67% of the total road network, but they carry 40% of the road traffic. National and state highways constitute less than 6% of the total road network, but they account for almost 80% of the road traffic. The shortage of multi-lane highways, poor conditions and stoppage delays lead to congestions, accidents, breakdowns and high maintenance cost of roads and vehicles. India’s road freight volumes and the population of vehicles are increasing at a CAGR of 9.08% and 10.76%, respectively; but the road length is increasing at a CAGR of 4.01%. For
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h l on Indian I d roads d can instance, a vehicle clock an average speed of only 20–25 km per hour covering 250–400 km in a day, while in other developed countries, a vehicle can cover 700–800 km in a day. Annually, a truck on Indian roads covers only 60,000–1,00,000 km in developed countries, whereas a truck in the US can travel up to 4,00,000 km in a year.
POLICY INITIATIVES REQUIRED While the government has been paying attention to the logistics sector and rapid growth of the Indian economy, it is not being adequately attentive to the needs of the road infrastructure. Lack of funding for the development and maintenance of roads has not only hampered the development of new road infrastructure but has also led to the deterioration of existing
d Th The problems bl faced f d by b roads d roads. today are multifarious and the issues and concerns require a multi-pronged solution. Commenting on the current scenario in India, Vineet Agarwal, Joint MD, TCI, says, “Logistics infrastructure covering road, rail, waterways and air network is the backbone of the economy. As the Indian logistics sector is heavily dependent on roads for freight movement; improvement of road infrastructure becomes very important. In India, shortage of multilane highways coupled with poor road conditions and stoppage delays increase logistics costs by causing congestions, accidents, breakdowns and high maintenance cost of roads & vehicles.” Elaborating on what is the need of the hour, he explains, “TCI
recommends reducing burden on road infrastructure by devising an appropriate multi-modal transportation model that not only encourages private participation but is also efficient. We also recommend greater FDI in key logistics infrastructure development areas like dredging, port connectivity, etc., for proper development of multimodal transportation in the country.” He adds, “The government should take adequate measures to encourage investment and ensure timely execution of large projects, including road development projects. Implementation of these projects under the Public Private Partnership (PPP) route should, therefore, be done on a priority basis apart from allocating long-term amount towards road infrastructure development through dedicated debt funds to ensure sustained development of the sector.” He also points out, “Another important issue that needs attention is wastage of time due to stoppages on national highways for cumbersome documentation process. This can be addressed by bringing uniformity in the toll charges through the introduction of a centralised toll mechanism, reducing documentation, checking unauthorised payments through agents and development of access-controlled expressways.”
MAJOR STEPS TAKEN Earlier, the government had set a target for the construction of national highways at 20 km per day, which translates into an annual construction of more than 7,000 km. In the last 15 years, the network of national highways has more than doubled. With increasing importance, plans are on to increase the network by 20% to 85,000 km at the end of 12th Plan. The Plan is expected to see more investment in roads with more private sector participation. Industrial Delhi-Mumbai Corridor (DMIC) DMIC has completed all the master
plans and has got the necessary approvals. The land acquisition process for the project is in various stages; in Gujarat and Maharashtra, the progress has been good. Other states such as Haryana and Rajasthan are also moving in the right direction. It is expected that in 2019, DMIC will be operational, initially in Gujarat and Maharashtra. Stating the effect the project will have on the economy, Amitabh Kant, CEO & MD, Delhi-Mumbai Industrial Corridor Development Corporation Ltd (DMIDC) says that DMIC will double the employment potential in seven years; triple industrial output in nine years and quadruple exports from the region in 8–9 years. He adds that in the case of DMIC, given that this project connects both Delhi and Mumbai—the two most important regions for economic activities in the country—it will come as a boon to attract investments. However, it is important to bear in mind that DMIC and Dedicated Freight Corridor (DFC) projects will lead to enormous amount of traffic, which will require good quality roads, highways and expressways. Highlighting some of the major initiatives taken by the government, Agarwal informs, “The sector started
ASSOCHAM FACTS & FIGURES • Uttar Pradesh, with the highest share of over 33% among states, has 15 road projects worth over `55,000 crore under construction in the PPP model as on August 2012. • Gujarat ranks second with a share of over 8% and has about 22 road projects worth over `13,600 crore under construction in the PPP mode • Tamil Nadu with 21 road projects worth over `12,700 crore under construction has the third highest share of about 7.7% followed by Maharashtra 7.3 % and Andhra Pradesh 5.8 %.
receiving greater government attention since the last decade when steps were taken to increase public funding for the sector in Five Year Plans with the launch of National Highway Development Program, Accelerated Road Development Programme for remote areas like North East region, etc.” “The government is now also financing the development and maintenance of roads by creating a Central Road Fund (CRF). Steps to enhance sector capacity and improve efficiencies through a clear policy directive for greater private sector participation (PPP) are also leading to faster development of roads in India,” he continues. “Despite all the measures taken by the government in the last decade and its benefits, roads in India has a long way to go to meet global standards,” Agarwal concludes.
PROGRESS IN THE PPP MODE According to a study, the highest number of projects under operation, under construction and under bidding in the PPP model in the country during the period is in roads. There are about 115 road projects worth over ``21,600 crore under operation in the PPP mode, besides 219 road projects worth `1.65 lakh crore were under construction and about 98 projects worth over `51,000 crore were under bidding. There are a total of about 881 projects worth over `5 lakh crore being carried out in the country as of August 2012. Additionally, there are about 230 projects worth about `70,000 crore under operation, about 432 projects worth over `3.8 lakh crore under construction and 172 projects worth over `78,000 crore under bidding based on the PPP mode. With a share of almost 65%, roads ranks on top with the highest share in projects under bidding in the PPP mode. arindam.ghosh@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 27
SPECIAL FOCUS AIR CARGO
o t t e All s
! f f O Take
Celebrating 100 years of civil aviation, India has already reached the Top 10 aviation markets in the world; the vision is now to enter into the Top 3. According to AAI, the total freight traffic handled by Indian airports increased at a CAGR of 10.9% (while the international cargo traffic grew by 15%) in last five years to reach 2.33 mmtpa by FY11. In spite of this, the current share of air cargo as compared to other modes of cargo transportation is fairly low in India. To improve the situation with CAGR of 14–16%, the government has introduced some major policy initiatives such as open sky, inter-modal services, routing flexibility and amendments on tariff, security, safety & code share arrangements. SUPRITA ANUPAM
WITH 35% of goods’ value traded internationally, air cargo represents about 10% of the airline industry’s revenue. In time, it has become the
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country’s economic health manometer owing to the kind of goods traded, dependency on economic buoyancy and logistics service. So far, the rapid
growth of international trade has boosted air cargo market prospects in India. With trade growing at over 25.3% over the past five years, increased globalisation, manufacturing firms and IT services, the supply chain market has resulted in an accelerated demand from Indian air cargo services market. But the lack of dedicated cargo airports, infra facilities have been posing a big threat to its growth. According to the Working Group Report of the Ministry of Civil Aviation (MOCA), “There is significant untapped potential for air cargo in India. An indication of the same can be gauged from the fact that the total air cargo volume of 2.3 million MT handled in FY11 by all Indian airports put together is less than that handled by individual airports like those at Hong Kong, Memphis, Shanghai, Incheon, Anchorage and Paris.” To keep up the pace, the government has finally come up with a number of policies such as open sky policy and dedicated cargo airports that have acted as a sanjivani for the Indian air cargo industry. With the policy decision, India has been able to cater to the needs of rising opportunities to the cargo airlines and, at the same time, benefit the consumers emanating from the competitive environment.
MOCA INITIATIVES The proportion of international cargo handled to the total cargo throughput handled is the highest at Chennai airport (76%) followed by Mumbai airport (70.2%). The proportion of domestic cargo throughput to the total cargo handled is the highest at Kolkata airport (65.3%). After measuring air cargo logistics performance in terms of dwell time, transshipment, throughput efficiency, handling efficiency, cargo terminal facility and some other parameters, the Working Group noted some of the major bottlenecks in the cargo logistics developments, such as: • Inadequate and overloaded infrastructure facility
• Gaps in key facility infrastructure at cargo terminals in gateway airports • Bottlenecks in truck docking • Inadequate X-ray screening facilities • Lack of associated trained manpower • Absence of off-site facility such as Air Freight Station (AFS) for cargo processing • Lack of DG-qualified staff leading to high turnaround time • Security arrangements for the air cargo complex, special cargo infra, cold chain facility and so on. The operational hurdles included: • Operationalisation of AFS • Requirement of 100% export shipment examination leads to delay • Duplication of documentation, custom process and lack of interlinkage of agencies. The Working Group has come up with some major initiatives based on those observations, viz: • Need for clear guidelines regarding minimum infrastructure that an airport must mandatorily have for handling such shipment • Enhancing the truck dock area and reducing dwell time by introducing a slot system for entry of goods could also be a solution to reduce or overcome the pile up at the export terminals and ensure that trucks enter the airport with a pre booking and do not un-necessarily congest the airport area. • The number of X-ray screeners needs to be increased so that the machines are manned for longer hours by different personnel. Further, on-site engineers must be introduced so that they can provide immediate solutions and reduce the down time of these machines. • There should be a Central single body clearance system for clearance of all building proposals for air cargo complex. which should clear the proposal The report also indicates that initiatives need to be taken from Central Board of Excise and Customs to solve the custom cost recovery issue, to reduce delay
in processing of export cargo out of cargo terminals and introduction of digital signature to reduce paper work.
ESTABLISHING AIR CARGO LOGISTICS PROMOTION BOARD The Civil Aviation Ministry has set up an Air Cargo Logistics Promotion Board with objectives to resolve interministerial issues that affect the air cargo operations in the country. The Board will review, on a continuous basis, the general and sectoral policy regime governing air cargo logistics operations and remove the bottlenecks to efficiency. The Board has been constituted to match up with need to handle increased demand for air cargo transportation and ensure rapid delivery of goods. According to Civil Aviation Minister Ajit Singh, the 17-member Board with representatives of the level of Joint Secretary and above from various Central Ministries and Departments will have the following broad framework of functions: • To resolve inter-ministerial issues that affect the air cargo logistics operations in the country and achieve better efficiency • To review, on a continuous basis, the general and sectoral policy regimes governing air cargo logistics operations with a view to remove bottlenecks to efficiency • To review and monitor the functioning of Cargo Facilitation Committee headed by Airport Directors of AAI and other private/ JV airports with a view to review the effectiveness of these bodies • To lay down policy guidelines for setting up of air cargo facilities at airports, air freight stations/cargo villages including guidelines for public private partnership model of development of these facilities • To act as a coordinating agency to ensure expeditious clearance of the proposals for setting up of air cargo facilities at airports, AFS/cargo villages in the country
subject to fulfillment of all statutory requirements • To lay down performance standards relating to quality of service in the air cargo logistics supply chain to be monitored by the Airports Economic Regulatory Authority (AERA) for implementation • To review the progress on development of major gateway airports as cargo hubs through facilitating transshipment • To review periodically implementation of the proposals cleared by the Board.
APAO RECOMMENDATIONS Appreciating the required initiatives indicated by the Working Group Report, the Association of Private Airport Operators has further submitted some concern over some of the initiatives. Some of which are: • The Board and MOCA’s decisions are bound to affect the risk factor and operationability of air cargo operators. The roles of each member within the Board must be well-defined with a meaningful and comprehensive functionality; otherwise it will dilute its essence and objective • Setting up AFS outside the airport is bound to increase the requirement of resources of customs, other regulatory agencies as well as facilitatory agencies. Hence, before taking up such decisions, a comprehensive analysis must be done based on its present capacity and future requirement whether separate AFS is required. • The proposed ground handling policy is contradictory in nature. • The issue of whether express cargo is aeronautical activity or ancilliary is a contentious issue. Policies should not be based on such opinions that go against the letter and spirit of OMDA and concession agreements. suprita.anupam@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 29
OPINIONS & MORE TAAREK HINEDI HINED
CUSTOM DUTY CHALLENGES The existing Customs Duty structure in India is very complex due to the multiple components of various duties involved. The layered tax structure is a challenge that adds to the cost and delivery time in the distribution of goods. Another aspect that is a challenge with regards to Customs is the frequent alterations in the Customs notifications. Many a times, this creates confusion for importers/CHAs. This can be avoided if the Board for Customs Duties publishes a master notification/circular comprising all the notifications issued during the financial year. The master notification shall supersede all previous notifications issued on the subject in past. This will greatly aid importers/ CHAs and hence, avoid confusions.
THE SOLUTION There is an urgent need to modernise rules and regulations to cope with changing times. Inefficient use
clearance operations at the gateway in Delhi. This system includes automated conveyor belts, supported by scanning devices that can produce clearance type information on a label used for efficient sorting. The introduction of this system has led to considerable savings in costs and time.
MORE INITIATIVES THAT NEED TO BE TAKEN INTO ACCOUNT FedEx Express works with the Customs authorities & various regulatory bodies to improve and streamline customs clearance. The Customs authority should continue to be the facilitator. Procedures must be simplified so that they do not add to transactional costs and delivery time. There should be no differentiator between import-export express shipment. Most shipment in the express industry are door-to-door, time definite and therefore, should undergo the same express clearance processes. Exceptions could always be considered. Currently, for imports-exports in India, there are a high number of shipment currently forced to undergo a non-express clearance mode (cargo), leading to delays and increased costs.
Excise functions including EOUs & SEZs should be linked online and should promote e-processing Taarek Hinedi, MD (India Operations), FedEx Express, highlights the policy initiatives desired in the Indian air cargo industry. of technology and inadequate infrastructural support are major issues faced by express service providers. Frequent Customs system outage at the various airports across India is an example. The system outage impacts the clearance dwell time, resulting in an increase in transaction cost. System updates could take place during the night and not in the day. Excessive detentions and examinations also drive up the costs & dwell times and defeat the purpose of the express. When compared to slower cargo movements, the express has to be handled speedily since it is intended for time definite transactions that enable commerce globally. To overcome the issues currently faced, advancements in infrastructure and technology are extremely crucial. At FedEx, we believe that technology advancement can play a huge role in overcoming some of the challenges that the air cargo industry is faced with. Our various technological investments have enabled us to automate many processes to save time, increase productivity, improve operational efficiencies, customer relations and reduce cost. For example, FedEx has introduced automation at the
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Some of the efforts, which will hasten the clearance process and reduce the clearance dwell time and transaction cost substantially are: • Support regulatory functions like Additional Drug Controller (ADC), Wild Life Range Officer (WLRO) and Archaeological Survey of India (ASI) being made available on all working days • Maintaining a record of additional documents, which is a mandate for certain industries like pharma, chemicals, leather and textiles will help duplication of efforts • Customs should promote and encourage e-clearance and e-paperwork in all major transactions • Customs should adopt the e-freight and e-DO concept and follow international best practices • Decision on permissions from importers/exporters/ airline/custodians need to be revisited by the Customs authorities • Excise functions including Export Oriented Units (EOUs) & Special Economic Zones (SEZs) should be linked online with the Customs system through the e-trade platform. This will prevent manual interventions and therefore, delays with regard to submission of export proofs to respective excise zones of EOUs & SEZs.
GOVERNMENT INITIATIVES IN WAREHOUSING SPECIAL FOCUS
PRATEEK SUR
WE, as individu uals, always complain about the government not taking proper measures and creating policies for controlling inflatt ion and helping t he common public. But this assumption is ue. not completely tru The government is always on its toes. With respect to warehousing and n tres, distribution cen the government helps by aiding in the forrmation of Free Trade Waarehousing Zones (FTWZs)) , logistics parks, etc.
FREE TRADE WAREH HOUSING ZONES FTWZs were esstablished by the government to build infrastructure to facilitate import and export of goods & services with the liberty to accomplish trade dealings via free currency. These zones are located close to seaports, airports or dry ports, so that they can be effortlessly accessed by road, rail, air and water. The Special Economic Zones Act 2005 pronounces a FTWZ to be a special kind of Special Economic Zone (SEZ) that is governed by the necessities of the SEC Act. FTWZs are foreign territories to continue business and are predicted to be integrated zones to be used as global trading hubs. The minimum area of development under an FTWZ is 0.1 million sqm, with 100% Foreign Direct Investment (FDI) approved. With FTWZs, the government anticipates to spawn more employment prospects as a consequence of enlarged organised warehousing activity due to better competitiveness among industries, sequentially enhancing the economy.
The General Elections are knocking on the door and this Budget might be the last Budget that this Cabinet would formulate. If they want to win hearts and hold the reins, then they would want to put their best foot forward. So, while taking cautious steps, they would want to look before they take leaps towards glory. Warehousing might be a small segment, but it forms a major chunk of the entire industrial sector vote bank. There have been some good policies and regulations that have come up for this sector and there are some more that would help better the profits for the farmers, ease the inflation on the common man and fill the banks while satisfying the national state treasury. LOGISTICS PARKS A logistics park is a predetermined area that smoothens the progress of native and overseas trade by providing services such as warehousing, cold storage, multi-modal transport facility, Container Freight Stations
(CFS), Inlan nd Container Depot (ICD), ettc. Logistics parks facilitate loading & unloading of carggo for distribution, redis tribution, and packaaging & repackaging. Theey are developed in the environs of budding ind dustrial hubs. Specialty loggistics parks are being ereected for industries succh as automobile, pharmaceutical, agricculture, electronic hardw ware and aero industrry. These parks are linked th hrough well-laid rail links and m multi-modal transport facilities. Loggistics parks are similar to FTWZs; how wever, unlike FTWZs, they also cater to the indigenous market.
WAREHOUSING (DEVELOPMENT AND REGULATION) ACT In spite of the significance of agriculture in the financial system, no sufficient steps have been taken to safeguard the agricultural produce of the nation. The coming into effect of the Warehousing Development and Regulatory Authority (WDRA) made provisions for the development and regulation of warehouses. The government commenced the Negotiable Warehouse Receipts (NWR) system to help farmers increase access to loans from banks and permit the transfer of ownership of that commodity stored in a warehouse without having to deliver the physical commodity. NWRs are negotiable under the Warehouse (Development and Regulation) Act and are regulated by WRDA. These receipts are likely to perk up the borrowing capacity of farmers as well as the quality of the bank’s loaning services in the agriculture sector. Also, it would boost liquidity in rural areas as well as give confidence to better
MARCH 2013 • SMART LOGISTICS • 31
Government initiatives in warehousing, continued
price risk management in agriculture merchandise. The provisions of WDRA also lead to amplified efficiencies in the lending portfolios of banks, as well as further enhance the interests of lending institutions in ensuring credit with reference to goods in warehouses. The NWRs will enable the transfer of ownership of agricultural commodities stored in warehouses without having to deliver physical commodities to the financial institution. This, in turn, is likely to lessen the wastage/pilferage of goods during their transport from the place of production to the custody of banks/financial institutions. The implementation of warehousing receipts under the supervision of WDRA ensures the effortless functioning of the system to promote the development of warehousing in India.
NEW TAX POLICIES TO REDUCE SUPPLY CHAIN COSTS The government has launched good tax structures to lessen supply chain expenditure and also to egg on the partaking of private players in the system. Octroi was one of the traditional taxes initiated by the government. This was established with a view to develop warehouses and transshipment hubs outside octroi/ state boundaries. However, it got stiff opposition from logistics organisations since they tolerate delays at the octroi checkpost as they guarantee that only goods which require to enter the octroi zone do so. Further delays are also implicated in pre-paying octroi on other goods and accumulating the refunds later. The implementation of VAT played a momentous role in dipping logistics costs. VAT was initiated to steer clear of the cascading effects of tax as it was being paid at every level. However, a simplified tax system will help logistics players cater to several varied markets and tender end-to-end solutions far more efficiently and at much lower
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costs. Private sector participation plays an imperative role in the emergent path of the warehousing sector swiftly. Illegal warehousing can be restricted by the government by putting forward stricter and clearer rules. This will facilitate deeper diffusion by global and indigenous players into the warehousing sector. The traditional tax policies to promote this proved futile as they had a cascading effect on the downstream industry, which, in turn, led to higher cost for such industries. The government had then taken a step ahead to phase out Central Sales Tax (CST) and introduce Goods and Services Tax (GST), anticipated to revolutionise the complete warehousing sector. GST, with a consistent and standard tax rate, will increase revenue by maximising tax collections. It will also aid the logistics sector to reorganise itself. Additionally, it will facilitate manufacturers to store and distribute goods across the country. This tax structure will integrate the country economically and also make cheaper goods available to the common man.
INDIAN WAREHOUSE IN THE GLOBAL MARKET Indian warehouses are not in a very ‘worldly prepared’ state; they are still disaster prone.
FEATURES OF FTWZs • Customised categorised warehouses for industries such as chemicals, food, electronics and oil, among others. • Sophisticated freezer/cooler facilities • Break bulk, containerised and dry cargo storage facilities • Controlled humidity warehouses • Enhanced transportation facilities • World-class information system for cargo tracking, etc. • Office space • Support facilities and amenities like medical facility, canteen services and business centres
According to Devdip Purkayastha, President, CHEP-India, “Indian warehouses are not disaster proof. In fact, only an estimated 15% of warehousing space is categorised under organised players, the remaining 85% is a mix of unorganised players, food grain warehouses and other private players.” Elaborating on where Indian warehouses stand in the global market, Purkayastha adds, “Frankly speaking, we are not in the best position to provide an answer on where warehouses in India stand compared to global standards. In India, we have seen the best in class and worst of warehouses. We are convinced that we have the capability to achieve the best standards. Currently, it is driven by market forces that dictate the price, quality and other parameters of warehouses.” To achieve the standards of a globally renowned warehouse, India still needs to go a long way. The rules and regulations formulated by the government should be addressing the roadblocks present in front of the industry. Purkayastha adds, “The biggest roadblock right now is ‘who will pay the cost?’ The investor/ developer/3PL is concerned about whether they will get customers who will pay for a ‘state-of-the-art disasterproof warehouse’ or will it end-up as a high cost unviable ‘white elephant’? It is surely a thin line between having world-class facilities and still managing costs to remain competitive.” The government needs to be mindful of such obstacles in the path and thereby uplift the sector. There are some things that should be done with utmost importance. “There is a need to elevate our status—create an environment where the industry starts talking on storage norms, warehousing standards, food handling laws, safety norms even before they think of cost. There is a clear need to shift in focus and priorities, which has to be driven by the industry,” says Purkayastha.
PLANS, STRATEGIES AND HURDLES TO TAP THE RURAL POTENTIAL The government is not the only responsible for the upliftment of rural parts; the working class should also better themselves—as and when they improve, the sector would improve. Purkayastha opines, “India is a lucrative business destination for most global companies; its vast rural markets actually attracts them to a country which is not very high on various performance indexes. Most organisations have specific rural focused business strategies in play as this is a very large market at the bottom of the pyramid. The peculiarity of this segment is the price sensitive play, which defines success and hence, cost control is the key performance indicator.” There are several factors that drive the rural warehouse industries. Making a warehouse requires huge space and thus the shift from cities to rural areas. There are many driving factors, which boost this shift and the government should makes rules and policies that would help the smooth transition of the same. “Rural markets are driven by volumes and thus warehousing, transportation and monsoon protection plays a pivotal role in ensuring lower product damages & shrinkages helping in lowering overall delivery costs. These huge volumes require bigger warehousing facilities with the ability for fast turnaround times. Modernised and automated warehouses with mechanised material handling facility, multi-tier racking and palletised loads will effectively address the problems to ensure faster time to market, avoiding stock outs and the ability to ensure product freshness on the shelves. All these factors will lead to cost controls and hence, competitive price advantage for success,” avers Purkayastha. The prime hurdles faced in the sector would have to be well exposed by 3PLs so that it comes to the
REQUIREMENTS/ STIPULATIONS FOR FTWZs • Minimum area to be developed under an FTWZ is 40 hectare with a built-up area of not less than 0.5 million sqm • Minimum outlay for development is over `9 billion • Supply of material into FTWZ to be treated as physical exports for the Domestic Tariff Area (DTA) suppliers • 100% FDI allowed for the development of these zones • Duty-free import/domestic procurement of goods • Packing or re-packing without processing and labelling as per customer or marketing requirements to be undertaken within the FTWZ • Principally governed by the SEZ Act 2005 and SEZ rules 2006 • Free foreign exchange currency transactions notice of the governing authorities and therefore, required rules and regulations can be formulated over the same. “While we have focused on inbound goods movement, the biggest problem in the rural sector is outbound logistics. Movement of fresh produce including foods, fruits and vegetables from the rural sector to the urban areas is a huge challenge with an estimated 30% wastage,” explains Purkayastha “Ironically, most of this waste is due to rotting caused by water contamination, a resource which is the very lifeline of this sector. The focus has to be on proper packaging in Foldable Plastic Crates, palletising the load, proper cold chain warehousing and efficient handling systems. Improvement in this rural end-to-end distribution environment will drive out the huge amount of wastage and inefficiencies, elevating rural prosperity leading to economic & social development of the country,” adds Purkayastha.
TAX RECOMMENDATIONS The 13th Finance Commission had recommended the following measures for 2010–15: • It categorically stated that the tax on vehicles and tax on goods and passengers levied by the state governments should be submitted in the GST. • The task force felt that all transport equipment and all forms of services for transportation of goods and services by rail, air, road and sea must form an integral part of the comprehensive GST base recommended by the task force over which both the Central and state governments would have concurrent jurisdiction. • The tax regime for transport equipment and services should be the same as in the case of any other goods. • The task force stated that it is not necessary to levy a higher rate of tax on vehicles as is the existing practice since it is proposed to subject the use of these vehicles to tax at higher rates through excise on emission fuels.
PANDEMONIUM OVER GST GST will make the Indian manufacturing sector internationally competitive and will encourage entrepreneurial initiatives and economic activity throughout the sector. A majority of manufacturers have put up regional warehouses of their own to circumvent interstate taxes. GST allows them to restructure, simplify and streamline their operations. Also, it helps outsource their operations to 3PLs to save up to 20%. This is also expected to encourage the creation of centralised warehouses at prime strategic locations that can operate on the hub-andspoke model, in turn outsourcing logistics activity to the organised segment. prateek.sur@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 33
SPECIAL FOCUS GST IMPLEMENTATION
e r u t u ? F s m u r ld in do
otice. much n ver, k o o t e . Howe , no on tilil 2009 way, at the time ties with n u t u B ths a certain 2010. nted in just a few mon rounded by un e m le p s r to be im een su that wa ally said ut this reform ibly, GST has b in ig r o . Poss T) was ed abo Tax (GS xtremely excit next two years rrent term. s e ic v r the got e nd Se its cu Goods a 009, ever yone d in 2010, or in f years left in 2 e o t Then, in not implemen arely a couple b s of Central Sales Tax (CST) and the GST wa rnment having e v final design of GST—were originally o g e th NISHI RATH H
ACCORDING to t the Ministry of Finance, if Value Added Tax (VAT) is considered a major improvement over the pre-existing Central excise duty at the national level and the sales tax system at the state level, then the Goods and Services Tax (GST) will be a significant breakthrough— the next logical step—towards a comprehensive indirect tax reform in the country. Keeping this overall objective in mind, an announcement was made by the then Hon’ble Union Finance Minister Shri P Chidambaram in the Central Budget (2007–08) to the effect that GST would be introduced from April 1, 2010. But this is yet to materialise. According to the government, the introduction of GST at the Central level will not only include comprehensively more indirect Central taxes and integrate goods and service
34 • SMART LOGISTICS • MARCH 2013
taxes es for fo the purpose of set-off rrelief l but may also lead to revenue gain for the Centre through widening of the dealer base by capturing value addition in the distributive trade and increased compliance.
WHAT LED TO THE UNCERTAINTIES? The two committees—set up to look at the debatable issues of compensation to states for loss of revenue on account
expected to submit their reports by December 31, 2012, but it was extended till January 21, 2013. This left the Ministry of Finance with very little time to consider the recommendations and discuss them with the State Finance Ministers before the Budget. Further, by seeking a review of the final design itself, the Ministry of Finance may have to make major changes to the Constitutional
GST ADVANTAGES FOR INDIA • It will boost India’s economic unification, assist in better conformity & revenue resilience and evade the cascading effect in indirect tax regime • In GST system, both Central and state taxes will be collected at the point of sale. Both components (the Central and state GST) will be charged on the manufacturing cost • Reduce the tax burden for consumers • Result in a simple, transparent and easy tax structure, merging all levies on goods & services into one GST • Bring uniformity in tax rates with only one or two tax rates across the supply chain • Increase tax collections due to a wide coverage of goods and services • Reduce transaction costs for taxpayers through simplified tax compliance • Increased tax collections due to wider tax base and better conformity
Amendment Bill. After the constitutional amendments are approved, the government will then be required to introduce another Bill to provide for a GST law. According to experts, first, the Constitution of India has to be amended to provide a legal basis for the new law. Therefore, irrespective of what is being done, GST implementation cannot progress beyond the drawing board until the Constitution has been b am mended. This does not end here; GST implementation requires not GS
exports tremendously. According to an expert, “Under GST, the taxation burden will be divided rightly between manufacturing and services, through a lower tax rate by increasing the tax base and minimising exemptions.” Implementation of the much awaited GST is also expected to help build a transparent and corruption-free tax administration. Here are the benefits: Benefit to the Centre and states: It is expected that India will gain $15 billion a year by implementing
IMPLEMENTATION OF GST IN THE BUDGET? Hon’ble Union Finance Minister Shri P Chidambaram is likely to announce a broad outline of the GST in Budget 2013–14. An empowered group comprising State Finance Ministers broadly agreed on the central sales tax compensation issue at a meeting recently held in Bhubaneswar. The empowered group, headed by Bihar’s Deputy Chief Minister Shri Sushil Kumar Modi, has set up three committees to deliberate on other aspects of GST, such as threshold limits for exemption, administrative control and GST rates. The proposed tax reform that seeks to replace all the indirect taxes like central sales tax, state-level sales tax, excise duty, service tax and Value Added Tax (VAT) with a single and uniform tax rate across the country has missed several deadlines. If implemented, GST will be a game changer for the economy and will act as a permanent stimulus, enhancing competitiveness of both the manufacturing sector and exports. As per the data recently released by the Central Statistics Office (CSO), India’s GDP is expected to grow at 5% in the financial year ending March 31. This will be the worst performance of the Indian economy since 2002–03 when growth was recorded at 4%. only amending the Constitution but also enactment of a state GST law by each of the states in India. Therefore, even after the Constitution has been amended, the enactment of a law by a number of states is likely to be a process that would take a minimum of 2–3 years, say experts.
HOW GST IMPLEMENTATION CAN HELP? The implementation of a well designed GST could stabilise the field of indirect taxation and mitigate, to a large extent, the complexities under the existing indirect tax regime. Introducing GST will help the GDP grow as almost all indirect tax evasion will cease to exist. GST will also boost
GST as it would promote exports, raise employment levels and boost growth. Further, it will divide the tax burden equitably between manufacturing and services. Benefits to individuals and companies: In the GST system, both Central and state taxes will be collected at the point of sale. Both components (the Central and state GST) will be charged on the manufacturing cost. This will benefit individuals, as the prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.
GST EFFECT ON LOGISTICS Logistics re-arrangement: GST will
allow manufacturers to aggregate every 4–6 small state-level warehouses into one large, regional warehouse and adopt the hub and spoke distribution model that will offer proven cost and operational efficiencies in large markets. Apart from this, it will incentivise logistics companies and 3PL service providers to invest in scale, service focus & technology and align their service offerings to the widely changing supply chains of their customers. Inventory costs: If GST is implemented, it would come across as a major benefit to FMCG and consumer durables companies. The implementation would lead to reduction in the inventory costs. At present, the Central Value Added Tax (CENVAT) is included in their inventory costs, which has to be financed by them. But under the new structure, GST paid on inventory would be fully recoverable immediately as input tax credit, thus reducing the inventory financing costs.
IS GST POSSIBLE AFTER NEXT GENERAL ELECTIONS? The government has billed GST and the Direct Taxes Code (DTC) as top priority for several months now. After Shri Chidambaram returned to the Finance Ministry on September 1, there has been some attempt to push for the two legislations. When it comes to GST, while BJP-ruled states are not onboard on the design, compensation for the loss of CST has proved to be a major bone of contention on which the Centre has changed its stance. It is expected that talk of GST would possibly start again after the next general elections. At some stage, the Constitution would be amended. Though many say that the Constitution is amended in 2015, we can possibly expect GST to become reality in 2016. nisi.rath@network18publishing.com (With inputs from the Ministry of Finance)
MARCH 2013 • SMART LOGISTICS • 35
FMCG CONSUMER ELECTRONICS & IT PRODUCTS
DEVYANI P KORGAONKAR
PLAN, source, make, deliver & returnthese are the five basic components of Supply Chain Management (SCM) adhered to by top Indian franchises. The growing retail operation of electronics and computer parts across India is forcing the franchises to play a highly proficient role in the SCM. The domains of warehouse management, services and logistics are already outsized. And hence, most leading distributors across the world including India, have either established a separate entity to handle SCM activities, else have outsourced it entirely to an efficient SCM firm.
EFFICIENCY AND EFFECTIVENESS OF PRODUCT HANDLING A recent study on the existing supply chains shows that distributors have been strongly focusing on constant improvements in terms of efficiency effectiveness. and improving Distributor firms handle all ranges of products including monitor, CPU to high-end servers, storage racks, networking equipment, system peripherals and telecom equipment etc. Dr R Arunachalam, GM, ProConnect, the outsourced SCM company of Redington India Ltd— one of the top three distributors in India—informs that his company handles products varying from 50 gm to 5 MT. “We handle products that are shock sensitive. We deal with digital printing products, IT hardware & software, mobile phones, telecom equipment, consumer durables such as washing & cooling appliances of various kinds & ranges. Capital goods manufacturers both in India and abroad have leveraged on our expertise,” Arunachalam adds.
EXEMPLARY INVENTORY OPERATION India’s numero uno distributor in terms of revenue, HCL Infosystems has a network of over 30 state-of-the-art warehouses pan-India inter-connected
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VNA Racking System
Redefining the
Role of Franchise Franchises-cum-distributors, currently are the key route between the manufacturers and consumers in the capital goods industry of India. Though, mostly unknown to the end-user, it is the distributor, whose role is reckoned as the most significant one. With an aggressive approach, powerful success mantras and strategies, they add value to the products and its services. Here’s a functional analysis of few ace Indian franchises dealing with consumer electronics and IT products to understand the change in the supply chain dynamics of our country. through their ERP systems. HCL’s inventory norms, however, are very stringent. The company sources reveal that their Digilife Distribution and Marketing Services (DDMS) connect with 136,000 retail outlets across India for consumer products. The business has warehouse operations across 33 states in India including the North East and Kashmir that handle complex logistics of seven million units every month. DDMS has the widest channel reach across modern trade telecom, IT, TV shopping and online. ProConnect, on the other hand, uses
one of the best of breed Warehouse Management Systems (WMS), which provides online real-time inventory visibility. Automated customised inventory reports flow back to clients, while operational tasks are performed through handheld devices. ProConnect enhances its operational efficiency through Automated Distribution Centres (ADCs) which have stateof-the-art Very Narrow Aisle (VNA) racking systems and materials handling equipment, according to Dr Arunachalam. ProConnect’s unique operating process enables handling as
many as 12,000 Stock Keeping Units (SKUs) with transactional accuracy and 100,000 MT with on time delivery to 30,000 customer locations. Giving safety as prime importance, ADCs are equipped with fire detecting and fighting systems. All operations are done under CCTV surveillance.
HANDLING THE SPARE PARTS DISTRIBUTION In the electronics & IT service industry, the importance of Spare Parts Management (SPM) cannot be underestimated. SPM is one of the most essential component of an efficient service organisation to ensure timely resolutions. The activity involves balancing inventory levels with Service Level Agreements (SLAs). “We ensure a great deal of high-precision forecasting and high infrastructure capabilities to manage SPM more effectively. Unpredictable demand and infrastructure conditions coupled with exacting SLAs make precision forecasting extremely important for us,” informs Sanjay Pandita, GM, F1 Info Solutions and Services Pvt Ltd, the erstwhile aftersales arm of Neoteric Infomatique Ltd, while commenting on their SPM services. “Out of a pan-India network of more than 100 service centres, F1 has 40 of its own. There are 77 Application Service Provider (ASP) locations for keeping spare parts to take care of present IT service needs,” says Pandita, adding, “We have two centralised national hubs—one in Vasai (an Octroi-free zone near Mumbai) and the other at Okhla in Delhi.” The company has deployed integrated online-based CRM software, which ensures great transparent visibility of inventory across pan-India service centres for cost-effective and efficient SPM. “On a continuous basis, we have a dedicated team, which works on SPM to analyse the failures on a monthly basis, based on which the SPM process takes place. Sufficient spares
parts are distributed to pan-India locations to take care of the warranty & post warranty services. Also, we import spare parts from the principle companies of countries like China & Taiwan, as part of SPM process to garner maximum customer satisfaction in this competitive environment.” On the other hand, according to Nassar Abdul, GM – SCM, Redington Service, the company has an end-toend solution for their clients, which deliver a high level of customer satisfaction with an optimised cost. According to Abdul, the key strengths that differentiate Redington from its competitors are: • IT system • Online integrated system that provides complete visibility
effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. With the increasing volumes in electronics and related industries, reverse logistics now plays a crucial role. Dr Arunachalam declares, “In a market where reverse logistics had not evolved, we were the earliest to venture successfully into the space. We have a customised end-to-end single window solution. Our system ensures collection of defective units across India, consolidation and ‘return to manufacturers’ centres abroad.” The logistics solution service of F1 Info Solutions and Service’s reverse
Figure 1: Redington Service’s Supply Chain Management Flowchart
• Data integrity • Customised reports for analysis & decision making • Highly skilled manpower. Radington India, like, one of the top distributor companies in the world has facilities like state-of-theart warehouses and collection hubs, identification and traceability through auto binning system and 100% insurance coverage.
EFFICIENT REVERSED LOGISTICS SERVICES Reverse logistics stands for all operations related to the reuse of products and materials. It is the process of planning, implementing and controlling the efficient, cost-
is also organised. The company has set up several segments to execute it. These include: Defective Return Management: It has a set of processes to collect defective products from pan-India service centres, get them converted into working units/parts by repairing them and slotting them into inventory for further use. Warehouse Repair & Refurbishment: The company converts all the defective products that it receives into working units/parts and then, transfers the same to working inventory management. Before transferring the same, the company tests each product at different stages (viz., visual inspection and functional testing). After
MARCH 2013 • SMART LOGISTICS • 37
Consumer Electronics & IT Products, continued
TOP 5 NATIONAL DISTRIBUTORS OF INDIA (IN TERMS OF EXPERTISE) HCL Infosystems Ltd has a long-standing history of being involved ever since the inception of the IT industry in the country. Today, HCL Infosystems has become one of the leading System Integration companies in the country, implementing several turnkey System and Networking Integration projects nationwide and across most of the vertical business segments. Ingram Micro’s global regions provide distribution of technology products and services, market development services and supply chain management services to nearly 170,000 technology solution providers and 1,400 manufacturers. Redington India Ltd along with its subsidiaries is in the business of end-to-end supply chain management of IT and non-IT products in various potential geographies of South Asia, Middle East and Africa. With a large distribution network and a market penetration of more than 18 countries, Redington is amongst the largest supply chain solution providers to over 75 leading manufacturers of Information Technology, Telecom, Lifestyle and Consumer Electronics Products, worldwide. Neoteric Informatique Ltd has been a trendsetter and always strived to bring tomorrow’s technology today. The vision, reach, go-to-market strategy, performance-driven innovative initiatives ensure a unique experience, a feeling that is truly neoteric. Savex Computers Ltd, with over two decades of expertise and experience in distribution, Savex offers its vendors access to more than 5,000 Channel Partners, Retailers, Corporate Resellers, VARs and System Integrators. qualifying, the product is transferred to the working inventory. Three is a process called Quality Monitoring Cell (QMC) in place to test each and every aspect of the product, hence qualifying the same. Part Cannibalisation: When a product cannot be repaired or refurbished, the company works to maximise its value economically by extracting valuable parts. The part is then reused for repairing other products. A transparent visibility CRM platform enables the firm to track these parts and manage logistics to bring them back into the spare parts cycle for field repair activity. Resource Management Act (RMA) Activity: The company also manages the process of returning high-value products or parts to the vendor for credit RMA activity. E-waste Extraction & Disposal: At the last stage of value extraction, the company also manages e-waste extraction and disposal process. Before transferring any product or part to e-waste, the company has a dedicated team, which works on the products
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at an advance level to make them functional by repairing or taking out all valuable running parts.
AFTER SALES SERVICES After sales service makes sure that products and services meet or surpass the expectations of the customers. HCL Infosystems goes an extra mile to offer customised service solutions to its customers through quality service processes, infrastructure and technically skilled resources. HCL Infosystems offers a 24X7 service support. According to company sources, HCL Care along with Life Cycle Services (LCS) has its reach to over 4,000-plus cities. With as many as 505 HCLowned and manned service locations across the country, the service provides multilingual remote support in 11 different languages. While, according to information given by Abdul, Redington India is an authorised service provider for various leading brands in the IT, telecom and lifestyle products. “We provide warranty & post-warranty services,
onsite & return to bench support. Redington has presence in around 200+ cities across the country through a network of 70 own service centres and around 220+ partners,” he informs. On the other hand, F1 Info Solutions and Service provides services to ODM/OEM and direct & indirect customers. It has a dedicated team of over 300 trained professionals, a pan-India network of 117 service centres covering 230 locations, 500 field support locations through its 40 branches and 77 ASP service centres. F1 Info Solutions and Service is aligned with an endeavour to become the globally preferred service provider by bringing global expertise, new technology, knowledge, processes and industry best practices. “F1 Info Solutions and Service’s vision is to be the customer‘s most trusted choice for service through continuous improvement, ethical practices and commitment towards achieving the highest levels of customer satisfaction,” informs Pandita. The services encompass IT repairs, electronic security, managed services, terminal business and helpdesk services, among others. The company’s target markets comprise SMEs, large corporate and individual users of IT, telecom, security equipment or gadgets. From the service industry, its target groups are channel partners, system integrators, corporates and end customers.
ON A PROGRESSIVE PATH The performance of the supply chain is determined by the achievement. The franchises, indeed, have developed techniques engaging the capabilities and enthusiasm along the supply chain to enhance the value of the final consumable. As the activities and performance suggest, the National Distributors (NDs) of capital goods in India are a few of the key drivers to build and transform India into a powerful economy. devyani.korgaonkar@network18publishing.com
SUPPLY CHAIN VARIETY SCM TRENDS
WORKING with fashion companies has made it evident that even the colour black is not one shade! There are at least 10 different types of black shades. On the face of it, it appears crazy, but once you place all the shades (of a product category like fabric) before a customer, who prefers black colour, he will understand the nuances and select the one he likes. Simultaneously, he will be able to identify the shades which do not match his preference. This means that if he had not seen the 10 different shades of black, he would not have known his own preferences. Similarly, there will be other customers, who prefer black and will zero in on a different version of black. This means that exposure to variety creates new niche need-based segments in the market. But, at the same time, the demand for black, which would have aggregated under one shade, now gets disaggregated across 10 different shades. The explosion of variety is causing what can be seen as ‘disaggregation of demand’. Such demand disaggregation is seen in almost every product category bitten by the variety bug. With competition reacting with more variety, consumers are now seeing an explosion variety in many product categories such as garments, shoes, furniture, consumer durables, automobile, electronics, books, music and even some industrial products. Demand disaggregation leads to the formation of what Chris Anderson calls the ‘long tail’ of demand. Anderson, in his bestseller, ‘The Long Tail’, identified the problem across product categories. It is no longer the rule of Pareto where 20% of Stock Keeping Units (SKUs) are supposed to cover 80% of sales. Now, 20% of SKUs cover just about 30–40% sales and the remaining 60% of sales comes from addition of small volumes of sale, each from many SKUs, thus creating a long tail of demand.
CHALLENGES FOR PRODUCTION AND
Diligently dealing
with Diversity
Henry Ford once remarked; “You can have any colour of car, as long as it is black”. The statement highlighted what Ford had to offer, as a choice set, to its customers in the early 20th century. The Model T was produced in only black colour. Today, no marketer can dare make such a statement; they know that the customers of 21st century are already spoilt for choice. As more & more categories and products are moving away from being mere utility products to being a differentiated, preferred brand, marketers of competing brands are trying to beat each other, while trying to overwhelm the customer with choice. DISTRIBUTION Desegregation of demand offers a huge challenge for both production as well as distribution. With a large variety increasing over the years, production facilities are being loaded with less and less volume per SKU. At the same time, with more variety, the demand for individual SKU also becomes erratic. The tussle between marketing and production is growing over the years, as production would want to meet their efficiency targets and prefer bigger batches per SKU,
but marketing would want less volume per SKU to meet the requirement of channel partners since the total volume sold by the company does not increase dramatically. In distribution, the issue of erratic demand multiplies, as the disaggregated variety is further ‘pushed’ to the downstream side to channel partners like distributers and retailers. With increasing variety, and regular push of SKUs to the downstream links, demand becomes even more erratic (multiplier effect of disaggregation of
MARCH 2013 • SMART LOGISTICS • 39
Supply chain variety, continued
demand). This results in deterioration of inventory turns of the channel partners. With time, and increasing variety, the turns are bound to deteriorate. With reducing inventory turns, the purchasing power [Open To Buy (OTB) Budget] will deteriorate over a period of time.
movement? Is there a way to move the inventory downstream to the point of sale without suffering from problems of deterioration of inventory turns?
THREE-PRONGED STRATEGY TO DEAL WITH VARIETY
The best place to hold and sell a wide variety is a central warehouse, which can serve not just as a warehouse location but also as a selling location. This means that if we cannot stop the demand disaggregation due to variety,
The way to deal with variety at point of sales has to be a combination of a three-pronged strategy depending on the type of product and industry. Supply Chain Strategy: From Push To Pull If one has to have variety and suffer from desegregated demand, the least one can do is stop taking actions
we can prevent the deterioration (the multiplier effect) by holding it at one place. If by a magic wand, we could get all customers of a country to visit the warehouse and buy from it, they would not only get the best variety but the inventory turns of the manufacturer will also be the best, due to aggregation benefits. However, there are many product categories where buying decisions involves the actual ‘look’, ‘feel’ or ‘trials’ with the physical product. Most customers would prefer to buy many products after experiencing it in terms of ‘look’, ‘feel’ and ‘trials’ like garments, consumer electronics, etc. So, producers of many such categories will have to depend on channel partners to reach out to the retail counters. So, these industries have to send the variety to the downstream links of the supply chain. But, can we prevent the multiplier effect of demand disaggregation with this inventory
that could deteriorate the situation further. So, if inventory has to move downstream, we should move as less as possible and hold more at the central location. This means that companies have to shift from a push mode to pull mode. The lead time of supply has to come down and we should develop capabilities to replenish frequently and small quantities per SKU. This is the only pragmatic approach, as with increasing variety, most forecasting tool will fail miserably, trying to forecast desegregated and erratic demand patterns. So, instead of forecast, push inventory based on forecast. We should move inventory only based on consumption, while ensuring that the replenishment lead time is shortened dramatically from the current levels. However, with implementation of perfect pull systems, we do not expect the problem to disappear. At a retail point, the inventory of even one unit of an SKU can turn out to
STATISTICALLY SPEAKING…
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be the inventory for many months! This means that we need to not only have fast replenishment but also rapid replacement to take back what is not selling at the desired frequency. Taking back slow moving inventory at one store provides an opportunity to make it available to another store where it can be fast selling. The extra freight costs will be more than compensated with increased sales and reduced inventory. Bounded Creativity: Differential Supply Chains Now comes the million dollar question: Do we actually need so much variety to excite the customer? On one hand, we know that increase in variety creates new niche segments, which gets formed only after the customer is actually exposed to variety. This definitely helps in beating competition and diverting demand to one’s products. But the pressure to add more and more variety also leads to situations where more variety does not create more niche segments or, even worse, the customer becomes indifferent to the variety. This means that the variety beyond a point does not create new niche segments, but just desegregates the demand. Today, most designers are under pressure to display variety. Hence, they are also churning out designs in masses, just to meet the numbers. So, there are designs that create disaggregation without creating new niche customer segments. At the same time, it is also difficult to predict which designs will be a hit or a flop. Nobody knows the point where increase in variety becomes irrelevant to customers. The best way out of the conflict is to take the intuition of designers and integrate design strategy with the supply chain strategy. Most fashion products have plants, which are ‘V’ types (many end items are created from few common raw material and as we progress in the manufacturing flow, each step in manufacturing creates more variety
using the WIP sent from the previous department), or ‘T’ plants (where variety is created at the assembly point in manufacturing as a mix and match of common components). The way to integrate designs with supply chain strategy is to limit the boundary of creativity of designers by limiting the pallet of designs from the divergent point of ‘V’ plant or the common component pallet of the ‘T’ plant. Awareness of designers of the supply chain advantages will help them take better decisions on how to use the ingredients for a final product. However, they are also allowed to create new designs from the start of the manufacturing process, fully aware that this adds to the lead time of supply. Our experience shows that sheer awareness of supply chain impact on decisions helps designers make effective choices. The same strategy of differential lead times can be implemented with the decision of different stocking points of SKUs in the supply chain hierarchy. Some items can be stored and replenished only at the central warehouse, while others are available not just in the central warehouse but also at downstream points. The rule of consumption-based ‘pull’ replenishment (instead of forecast based push) is implemented for any stock movement between any two points in the supply chain. In case of books/retailing, the differential lead time can be implemented with some items stored at the central warehouse and replenished to the shops, which the customer can pick up instantly, while for others, which are only at the central warehouse and sold directly through the Internet, the customer has to wait for a period. The differential lead time should help in aggregation of demand into a ‘meaningful’ variety, which always enjoys the best service. The other additional variety is available but only with a higher lead time of
delivery. This approach also requires the ability to move products between the two categories based on which items sell more and an ability to exit from products based on sale rates. Managing Merchandise: Selling without the inventory The decision to offer differing service levels to different products offers a challenge in selling, particularly in cases where the product is stored only at the aggregated location. The problem gets aggravated, particularly in cases where the product has to be experienced before the actual sale. The buying experience usually consists of the following three components for decision-making: Look: The customer prefers to have a physical look at the product before buying. The look has to help him understand how the product will fit in his environment. Feel: The customer prefers to touch and get a feel of the product before buying. Sample: The customer wants to use the product as a sample before deciding. Buying a consumer product involves one or more combination of the above three factors. In many products, the actual inventory of the SKU is used to provide the experience. If we are able to provide the above three experiences without having the specific inventory, then we can afford to keep the inventory at the central location, while having effective props to provide the experience to the customer at the time
of the purchase decision. Our work with furniture retail companies has shown that such props can be easily developed. For example, in case of furniture, the retail point has one furniture type, but the variety of different upholstery options is shown to customers by having fairly large fabric pieces, which can be placed on the sofa, which the user can look and as well feel. This prop is different from a catalogue because a catalogue may not be able to provide the ‘real’ experience. Not only do we have to have props but the retail store sales people also have to be trained to sell such items. They have to be confident of the availability of such items at the central location. Remember that a retail sales man is always wary of selling items whose availability is not reliable. He is always the first point of contact for any immediate bad experience of the customer. The sales team should be confident of availability of such items; else it is impossible to expect the sales of ‘virtual’ variety at the retail point. The supply chain has to be tuned to ensure high availability all the time regardless of SKU’s designated storage location. Once the salesmen are trained to sell ‘virtual’ variety, we will get to know the true demand of such items. If they pick up volumes, we can decide to move the items physically to the retail point. The variety war between marketing and supply chain managers is chronic in many supply chains. The way out of this conflict is not a unilateral decision to trim SKUs. The only way to trim SKUs is to allow it complete opportunity to stand the test of the market. The opportunity is provided to the end customer to experience the product at point of sale. The above approaches help provide the experience while preventing the problem of high inventories. Kiran Kothekar, Founding Director, Vector Consulting Group Email: kiran@vectorconsulting.in
MARCH 2013 • SMART LOGISTICS • 41
WAREHOUSING & DC INVESTMENT OPPORTUNITIES IN INDIA
Venture Speculation:
A way out for the future Imagine if someday you go to a market and find that there are no vegetables available? The reason: Unavailability of warehouses to store farmers’ produce. This scenario could actually be harmful for both customers as well as producers of the goods. So, an effective warehouse is of primeval importance. Warehouses are scarce in India and there is a need for significant investments in this segment. If this situation is not repaired any sooner, the day is not far when every household would be forced to grow its own food. PRATEEK SUR
INVESTMENTS in Indian warehouses have become a priority for any logistics player. Investments are required in the warehousing sector in India to offer organised capital to attain a top-notch infrastructure platform and to prop up superior sophistication in services. Credit Rating Information Services of India Ltd (CRISIL) Research projects investments amounting to $170–190 billion in warehouses by 2013–14 in India. This amount would be invested not only in the existing warehouses but also in the building of new warehouses. A noteworthy share of investments in warehousing is envisioned in the Free Trade Warehousing Zones (FTWZs) and logistics parks. Emphasis is being laid on building numerous logistics parks spread across the nation. The development will be motivated by organised warehousing, changing tax structure and potential savings in carrying costs.
PERFORMANCE INDICATOR The warehousing segment’s performance meter takes into account its intensification and escalation prospects and returns. This considers the probable investment in warehousing, given the investment strength, development phase and venture cycle. These, if well predicted, will give the exact amount of venture capital that needs to be spent in this sector. The segment has witnessed
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a Compound Annual Growth Rate (CAGR) of 10–12% in the past few years. Moving ahead, it is anticipated to post a CAGR of 8–10% in the years to come. Along with this, revenue and net profits of key players are additionally projected to rise over the medium term due to superior intensification in Fast Moving Consumer Goods (FMCG) sectors and projected implementation of the Goods and Services Tax (GST). The principal cost to build a warehouse unit of 0.15 mn sqft is $140–150 million (including land cost). The whole cost will, however, differ depending upon accurate location, immediacy to the port/industrial hub, road/rail infrastructure, etc. CRISIL Research estimates the capital cost of a typical warehousing player, with a pan-India presence, to be in the range of $700–750 million.
FUNDING SOURCE The last few years have seen substantial increase in investments through the Public Equity (PE) and Mergers & Acquisitions (M&A) deals in logistics, ports, warehouses and Container Freight Stations (CFS) in India. FTWZs, freight stations and cold chains are gradually being seen as striking targets in the present day. Asset-heavy investments in the Indian logistics sector have mostly been pragmatic to be PE investments and asset-light have frequently been tactical M&As.
The warehousing segment’s exceedingly patchy nature is said to draw PE funds, which have played an imperative role in industry consolidation by focusing on amassing smaller players and building scale through acquisitions. Discussing the strategies to increase warehouse efficiencies, Atul Agarwal, CEO & Co-Founder, www.teesort.com, says, “Our kind of business does not need distributed offices and hence, we operate out of our single office based out of New Delhi. We will, however, have distributed warehousing to further reduce delivery times.” Such distributed offices help logistics players plan their start-to-finish product line in a smoother and more sophisticated way. Such distributed offices require better M&As and PE funding from the investors.
PRESENT SCENARIO
ESCALATING THE MAGNETISM FOR POTENTIAL INVESTORS Some PE funds are still wary of investing in warehousing because of the small size of companies, which result in lower investment ticket sizes. Concerns linger over the stamina of the economic recovery in many developed markets. The complex ownership organisations of warehousing companies in India and weak commercial governance principles also act as hinderances for latent investors looking for investments in the Indian warehousing sector. Elaborating on the global preparedness of the Indian warehouses for disasters, Asim Behera, GM, Swisslog-India, discusses, “Even globally, warehouses are typically not designed to be disaster proof unless you are storing radioactive materials, or ammunitions. But the warehouse design is very region specific. In Europe, many warehouses are 20+ metre high—a 1,000,000 sqft warehouse is not uncommon in the US; in the last decade, in China, we witnessed significant demands for automated warehouses. When you compare India, we have a long way to go before we truly understand what a warehouse is; we are still in the godown mode.” “Necessity is the mother of invention; soon, sufficient environmental factors such as multi-brand Foreign Direct Investment (FDI) and hopefully, GST
will force us to relook at how we do business today and make planning and foresight a habit rather than an option. I sincerely believe automation in warehousing will leapfrog us to global standards,” Behera adds.
PRIME LOOKOUT
The key to more investments in this sector is, thus, to let loose the remarkable scope for development in Indian warehousing. Most of this will be driven by infrastructure upgrades. As investments into India’s infrastructure sector gain pace, investors will also look to put more money into warehousing and freight transport. Investments in agri-warehousing are perilously lacking in India. The knowledge and input from the fund management team will help additional expansion of the investee company’s agri-warehousing and collateral management actions. The investment will help intensify the commodities market in India while also facilitating the liquidity of warehouse receipts and spiraling price risk management abilities of diverse stakeholders across the value chain, right from farmers to processors. Healthier capital markets, which carry on to recuperate from their post-leverage bubble hangover, enhanced credit market conditions and a superior environment for financial investors indicate that many large What Indian Warehousing Players strategic investors will be in better Need To Concentrate On position to engage in new deals in The focus on liquidity 2013–14. • Acquiring clarity on the vision and growth and de-leveraging throughout the strategy of the acquirer has resulted in better recession • Standardising and streamlining processes with lessened debt balance sheets within the warehouses and considerable increases ratios • Ensuring appropriate tax planning • Enhancing the use of appropriate technology in middling cash positions. Thus, • Entering new and untapped target customer by focusing on these improvement segments prospects, Indian warehousing • Building synergistic products and services for players can be better positioned to integrated solutions across the value chain draw the right investors that can • Innovating operating models further help them in maximising • Offering value-added services their competitiveness.
Logistics parks and FTWZs are still in a nascent stage in India. Investors in these sectors will have to bring in the suitable savoir faire from more mature markets. Moving ahead, investors in the warehousing segment and cold chains in India will have to aid players in reshuffling operations, building business plans, increasing technical proficiency and obtaining skilled manpower, to become more viable. logistics International companies have come to the Indian market; most international port operators are operating terminals across the Indian coastline and PE investors have made investments across infrastructure and services categories. The logistics sector, on an expansion drive, suggests strong and free cash flow coupled with low capital expenditure for possible investors. Moving forward in this direction, YES Bank and National Collateral Management Services Ltd (NCMSL) have united to • Providing shorter lead times & differentiated provide security management and services and products warehousing services.
prateek.sur@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 43
GOVERNMENT POLICIES RAIL BUDGET
Showing some stark emoticons Keeping voters’ backlash in countt ahead of the General Elections 2014, Hon’ble Railway Minister Shri Pawaan Kumar Bansal continued to let people think that travelling by rail at affordable prices was their right, with partial deregulation of fair. The Fuel Adjustm ment Component to be imposed on freight tariff from April 1, 2013, would aloone fetch additional revenue of Rs4,200 crore. However, there might be a neegative impact on many industries, such as cement & coal, with a reasonablee price hike on the products. While in the 11th Plan, Railways fell short of targget for doubling and gauge conversion, it would be interesting to see the impllementation of the 2020 plans instead of the proposals the Rail Minister has made.
Illustration By Sanjay Dalvi
linking tariffs with the movement of fuel prices; the prices will bee revised twice a year depending upon n the diesel/electricity unit price • Proposal for setting up a Railwayy Tariff Regulatory Authorityy formulated and at an inter--
ministerial consultation stage • Indian Railways enters the 1 billion tonne Select Club joining Chinese, Russian and the US Railways • Indian Railways joins Select Club running freight trains of more than 10,000-tonne load
S
TION
RAIL SUPRITA ANUPAM
WITH freight g tariff as the primary p y milch cow plus `600 crore Public Private Participation (PPP) investments, Hon’ble Railway Minister Shri Pawan Kumar Bansal has shown a balance of `12,506 crore to be generated in 2013–14. While he announced Indian Railways’ entry into the 1 billion tonne freight club of China Russia and the US, the Rail Budget failed to impress the share market and the Sensex reeled by 319 points the very same day. However, apart from the Fuel Adjustment Component (FAC) and the revamped policy initiatives for PPP investments, the Rail Minister has proposed a 5.79% increase in rail freight as per Railway Budget 2013–14 along with some green policies, electrification and dedicated freight tracks.
MAJOR ACHIEVEMENTS & INITIATIVES • FAC concept to be implemented
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EAC GET R
BUD
CII welcomes the Railway Budget. Under the given economic conditions, the Minister has presented a very balanced set of proposals for the Railways. The emphasis of the Railway Minister on financial viability and fiscal discipline of the Railways is the most reassuring. Financial discipline, safety and passenger amenities are inherent to the health and condition of this mode of transport, which is availed by the common man and the Minister has paid due attention to each. With fuel prices getting deregulated, linking of freight rates to increase in diesel prices is the correct direction to take and CII commends the government for taking this step. Lower operational ratio announced by the Minister would help provide for the much needed funds, which can help modernisation. The prioritisation of 347 projects with assured funding is a very credible move. CII looks forward to a clear roadmap on PPP for taking forward some of the more capital-intensive projects. Chandrajit Banerjee, Director General, CII While linking of freight charges to the fuel prices seems logical, at the same time, the government must also improve the operating ratios and resist from affecting the competitiveness of India Inc by passing on its inefficiency. It would have been better had the quick corrective action in the capacity addition and tariff areas been taken with the required pragmatism considering the current slowdown of the domestic economic activity. The effective monopoly enjoyed by Indian Railways in moving loose bulk commodities (like coal, iron ore for export) over long distances has contributed to supply constraints. However, there could have been more focus on the implementation aspect of stronger policies, as policies that are already in place to address this issue are not seeing much progress. Rajkumar Dhoot, President, ASSOCHAM
• `1,000 crore has been fixed for Rail Land Development Authority and Indian Railway Station Development Corporation separately to be raised through PPP in 2013–14 • A new Forged Wheel Factory to be set up at Rae Bareli in collaboration with Rashtriya Ispat Nigam Ltd. Among the others are greenfield Mainline Electrical Multiple Units (MEMU) manufacturing facility at Bhilwara (Rajasthan) in collaboration with the State Government and BHEL, a coach manufacturing unit in Haryana’s Sonepat district in collaboration with the State Government, Bikaner and Pratapgarh workshops to undertake POH of BG wagons, and a workshop for repair and rehabilitation of motorised bogies at Misrod in Madhya Pradesh.
GREEN INITIATIVES • Setting up of Railway Energy Management Company (REMC) to harness the potential of solar and wind energy • Setting up of a chair at The Energy and Resources Institute (TERI) promoting railway-related research to reduce carbon footprint • Setting up of 75-MW capacity windmill plants and energising 1,000-level crossings with solar power • Additional usage of agro-based & recycled paper and ban on the use of plastic in catering
TECH-INITIATIVES • Rail Time Information System covering a large number of trains • Provision of announcement facility & electronic display boards in trains • Provision of free Wi-Fi facilities on several trains • Implementation of Train Collision Avoidance System • Introduction of 160/200 kmph Self Propelled Accident Relief Trains • Introduction of Train Protection Warning System on Automatic
Railway Budget 2013–14 has been a mixed bag for both passengers and the logistics sector. The Minister deserves special kudos for continuing with the modernisation drive despite the Finance Ministry clearly hinting spending cuts across various sectors. The move, we believe, will go a long way in reinstating the faith of passengers and India Inc in the Indian Railways as a safe, comfortable and reliable mode of transportation. We welcome the Ministry’s decision to appoint a Freight Regulator to decide on freight rates. This will lead to justified freight rates, thus giving a boost to PPP projects by encouraging investment by private players in the logistics sector. No announcement to introduce high-speed trains has come as a disappointment for the logistics sector. We hope that the continuous push to electrification, gauge conversion and new lines will make the railways and the logistics sector efficient. Vineet Agarwal, Joint MD, Transport Corporation of India
The Railway Budget marked a departure from the recent past as it was a shrewd balance between populism and pragmatism, though overall, it lacked insight to improve Railways’ revenues as there was no clear roadmap to augment its capacity and overall rail infrastructure. No doubt the paradigm shift in freight tariff as from now on it will be fuel-linked freight charge revision, 5% increase in freight rates from April 1, 2013, will generate higher revenues to railways, but it also runs the risk of losing its already dwindling market share to roads & highways. As far as rail infrastructure is concerned, though land acquisition for the Dedicated Freight Corridor is almost complete, construction contract will only be awarded by the end of next fiscal. Also, there is no clear mapping on how the private investment will be utilised for some PPP projects announced. While improvement of connectivity to mines is a welcome step, increase in freight will not only push up steel prices it will also add to inflationary pressures. Overall, there is hardly any initiative in the Budget that could bring a smile on the faces of either the passengers or the industry. Dilip Oommen
The key to moving forward will be execution of the projects announced by the Minister in his Budget speech. This year’s Rail Budget reflects the difficult economic scenario and contains several proposals which, if implemented, would set a growth multiplier in motion. Even though the record of PPP in railways has been far from encouraging so far, it is imperative that greater private investments are infused into this sector. In order to realise the target of Rs1 lakh crore through PPP route during the 12th Plan, it is necessary that specific project-wise targets be set up and monitored. Dr A Didar Singh, Secretary General, FICCI With inputs from Arindam Ghosh, Prateek Sur and Devyani Korgaonkar
Signaling Systems
BUDGET ESTIMATIONS 2013–14 • Freight loading of 1,047 MT, 40 MT more than 2012–13 • Gross Traffic Receipts: `1,43,742 crore, i.e., an increase of `18,062 crore over RE, 2012–13 • Ordinary Working Expenses: `96,500 crore
• Appropriation to DRF at `7,500 crore and to Pension Fund at ``22,000 crore • Dividend payment estimated at `6,249 crore • Operating Ratio to be 87.8% • Fund Balances to exceed `12,000 crore suprita.anupam@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 45
START-UP STRATEGIES GOR BUTLER SYSTEM
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DEVYANI P KORGAONKAR
ACCORDING to the latest global trends, automation and digitalisation are impacting every aspect of the industrial supply chain. And highly developed warehouses, in terms of technology, is the need of the present ‘industrial age’. Though on the growth path, the Indian logistics sector is experiencing a dearth of efficiency on many fronts. An observation of the current Indian warehousing scenario, brings to the fore the fact that it is almost impossible to scale back-end operation to match the growth rate. About 90% of the worker’s time gets wasted in searching and fetching goods, resulting in decreasing overall efficiency. Moreover, a worker, on an average, picks 11 products per hour. And then there are other factors such as increasing inventory, labour theft
46 • SMART LOGISTICS • MARCH 2013
and wrong shipment that have taken a toll on the company’s balance sheet. Today, every company wants to have a centralised operation to minimise inventory cost. However, it is not possible because human labour cannot support such high-volume warehouses. In such a scenario, the GOR Butler System offers a ray of hope. Instead of wasting time in searching and fetching, GOR Butler System offers a much efficient solution. It helps in delivering world-class productivity, accuracy and flexibility by multiplying the capacity of work, reducing labour cost and efficient space management, thereby eliminating the possibilities of product shrinkage.
THE BIRTH OF ‘BUTLER’ There is a huge requirement for
automation facilities in Indian warehouses. This is one of the major reasons why Samay Kohli, the Creator & CEO, GOR (Grey Orange Robotics) and Akash Gupta, CTO, GOR (Grey Orange Robotics), decided to intervene and make a valuable contribution to Indian warehousing. According to Kohli, “We have been into robotics for about 10 years and have observed warehouses and storage, car manufacturing plants, etc., during our stay in the US, Germany and South Korea. During this time, we always felt that warehouses were normal and just like the ones we saw in the movies and on YouTube videos. But when we returned to India and visited a couple of warehouses, we were shocked to notice the big difference. We observed that the efficiency levels
of warehouses in our country are very low. Many were actually looking for solutions in warehouse automation. That’s probably why we planned to create ‘Butler’.”
WINNING @ ROBOLYMPICS Earlier, Kohli and his partner Gupta led their team at Birla Institute of Technology & Science (BITS), Pilani, to design & develop India’s very first indigenous humanoid robot, which won numerous robotic competitions around the world at universities like Stanford, Berkeley and other peer institutions across in seven n countries. “We have beeen participating in competitions all ll around the world and worked in a coouple of developed countries. The biggest bigge event where we have been bee awarded was Robolympics (Olympics for robots), held in the US every year. After bagging sixth prize (out of 30 countries), we managed to win the bronze prize; it was only in 2009 that we actually got a gold medal there. It was India’s first gold medal in Robolympics. We have also won similar prizes in Turkey, Germany, South Korea, etc.,” Kohli adds.
INVESTING WITH A LONG-TERM GOAL IN MIND Leaving a promising career abroad, the two young robot engineers decided to serve the country with their invention. “While staying abroad, we were offered good jobs in the US and South Korea; however, we decided to stay closer to home. Robotics has a very good opportunity abroad; in India, it has huge scope for expansion. That is why we started Grey Orange Robotics,” Kohli explains. As a capital investment, Kohli and
Gupta had put in their savings for the venture. “We invested `10–12 lakh from our own savings to start the company and we began churning profits in the first six months itself,” says Kohli, adding, “We have started raising venture capital to grow our company faster.” Kohli believes that a business should have long-term goal. Affirming the same, Kohli avers, “Investing in short-term goals or making quick money will not help a business sustain for long. I think a new business should have a long-term vision and goal and a start-up business should have a vision for at least 5–10 years.”
WINNING TRUST OF THE INVESTORS GOR’s innovative approach has
helped it attract investors from across the globe. The company has raised a venture capital from Blume Ventures and BITS Spark Angels as part of the investment. Abhinav Khushraj will be a Board Observer representing the BITS Spark Angels Group. Elaborating further, Sanja Nath, Managing Partner, Blume Ventures, India, explains, “GOR systems has changed the traditional methods of trade. Our investment in GOR follows the ‘first cheque’ investment thesis of Blume, whereby we invest between $50,000 and $250,000 in our first cheques and upto $1 million in a follow on cheques to portfolio winners. Our faith in the team was vindicated by investment into the company high-quality angels
Meet The Innovators’
Akash Gupta This 23-year-old is the CTO of GOR Previous Experiences: Team Leader of Project Acyut, Centre for Robotics and Intelligent Systems Education: Bachelor of Engineering (BE), Mechanical Engineering from Birla Institute of Technology and Science (2008–12) Interests: Gadgets, robotics and engineering.
Samay Kohli This 26-year-old is the CEO and Co-founder of GOR Previous Experiences: • Project Lead, Team BITSIMO, Centre for Robotics & Intelligent Systems, (2006–07) • Core Member, Tecnology Team, Center for Entrepreneurial Leadership (CEL), BITS Pilani (2005–06) • Project Lead, Stimulus: Center for Entrepreneurial Leadership (CEL), BITS Pilani (2005–06) Education: BE (Hons), Mechanical, from Birla Institute of Technology and Science (2005–09) and Birla Institute of Technology and Science and MSc (Hons) in Economics Interests: Gadgets, cutting-edge technology, movies, robotics, simulation, management, crisis management, planning and team building
MARCH 2013 • SMART LOGISTICS • 47
GOR Butler System, continued
such as Dr Wolfgang from Hoeltgen Germany and the BITS Spark Angels.”
INSPIRATIONS The duo does not have a single inspiration, but are inspired by people who have been into product development like Steve Jobs, late Founder Chairman of Apple Inc. “We want to be a product company focused on warehouse automation and will be coming up with products. In fact, we are researching on a couple of products and will soon create complementary products so that we can be a holistic supplier for warehouse segment,” highlights Kohli.
BENEFITS ACCRUED BY WAREHOUSE AND LOGISTICS GOR keeps a close watch on the warehousing and logistics sector. Samay opines, “I foresee a lot of consolidations and investments in technology and strongly believe that we have had uncontrolled and unimaginable growth till date. Probably, that is why people are not concentrating on generating good efficiency.” Inspired by the e-commerce boom, Kohli believes, “In a couple of years, online and offline retail will manage a majority of the shipment and logistics. This is going to be the driving force to regularise and improve their courier and material handling system.” According to Kohli, ‘Butler’ has a lot of benefits to offer. These include: Wide applicability ‘Butler’ is useful in other segments apart from warehouses. GOR has been approached by a couple of car manufacturing plants for application in material handling on the shop
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shores. According to Kohli, “We have been approached by some key car manufacturers here and are also exploring this option. The robots are highly flexible as long as their weight
capacity is in control. These are very useful whenever a repetitive and complexed material movement is required.” High-level efficiency ‘Butler’ helps a worker pick 500 products per hour as compared to 40 products in the normal course. The system indicates the right items to be picked in the correct order, thus enabling the worker to process orders 16-plus simultaneously. Cost-effective solution The initial investment for a company is about ``2.7–Rs4 crore depending upon the number of robots bought. “We actually provide an entire package deal. The only infrastructure we need is an empty floor space as
The Technology GOR Butler system is a unique high-tech material handling system that simultaneously improves speed, accuracy, productivity and flexibility. Every distribution centre strives to attain flexible and efficient order fulfillment, but struggles with the limitations of traditional tools. GOR Butler creates innovative order execution solutions that eliminate the constraints of existing warehouse automation and puts you back in control. It can pick faster, pack correct and ship on time! Inward Process GOR Butler has three components, viz., small-wheeled retrieval robots, tall upright racks and human workers. The human worker stands in the designated area and scans the new inventory. The GOR material handling system selects an appropriate empty rack/shelf location for storing this inventory. GOR Butler rolls in with the designated rack and a laser pointer points to the location at which these items need to be stored. Once the worker has scanned and stored the inventory, GOR Butler stores the rack at an appropriate location based on the product’s previous demand. Once the system receives an order to process, it designates a pick station based on availability. Outward Process A fleet of GOR Butler robots roll in with racks containing the correct products and a laser points to the correct items to be picked (every pick/put process is doubly confirmed by scanning barcodes and the system ensures that the wrong products are not picked or put). After the GOR system determines that the correct item has been picked, it illuminates the correct pick-put-to-light unit corresponding to the order and GOR Butler robots takes the racks to a new storage location.
per the stocking requirements,” informs Kohli. A similar product – 15 crore. imported costs around `12–` Comparatively, GOR is 3–4 times less expensive. The quality of being Indian Realising the need for an enhanced efficient technology, a large number of Indian warehouse management companies are opting for the product. Apart from the cost benefits, GOR has a major advantage of being an Indian company. “We can support our products very well in India. On the other hand, imported products do not have a good support base in India.” GOR boasts of a significant customer base from some of India’s largest e-commerce players including Flipkart, Flipkart Logistics and Yebhi, among others. A number of automobile manufacturers such as Mahindra Navistar, Tata Motors and companies like Lenskart have sought GOR’s help for their spare parts distribution warehouses, reveals Kohli.
EXPANSION PLANS & MARKETING STRATEGIES GOR has no expansion plans for now. “We intend to remain a concentrated company for some time and do not have plans to spread our wings beyond logistics and warehouse management,”
About Grey Orange Robotics Set up in 2009, Grey Orange Robotics is a Birla Institute of Technology and Science (BITS)-ian start-up by young engineers Samay Kohli and Akash Gupta. They invented India’s first indigenously developed humanoid robot ‘Butler’. The company has established itself in the field of humanoid robotics in India as well as abroad. It has won numerous international accolades. The company assists some of India’s largest online retailers to automate their warehouses and set to work with the major car manufacturers as well in this regard.
Butler’s USPs • Supports dynamic bi-directional growth space to store more inventory, add racks • Very high rate of accuracy and reliability • Fast and efficient product flow resulting in no wastage of time [dispatching up to 600 items/ hr/per picker (worker)] • Reduction of labour and operational costs, guaranteeing prompt return on investment (1–2 years payback) • Eliminate theft and damage to product from multiple handling, location errors and shrinkage • Order traceability resulting in better customer service • Highly flexible and fully upgradable in real time • Flexibility to work in multiple shifts with same infrastructure, pace and flow • Helps to increase response time to customer demands, especially in peak periods • Maintains up-to-the-minute inventory records at the storage bin level using real-time continuous inventory techniques • Shift from one warehouse to another bigger/different warehouse without shifting down states Kohli. The company expects to build its clientele in the short run, this year. In 2014, GOR plans to go global and sell its robotic solution in the international market. Divulging the details, Kohli informs, “We intend to focus on Germany and other EU countries. While we will have a different market, we might face some kind of completion abroad.” Presently, GOR is not investing much in marketing. “We are satisfied with our achievements and do not believe in quick sales; we are positive about responses. Simultaneously, our marketing strategies are more core to referrals at the moment. We are concentrating on one customer, getting good referrals, and moving on from there.”
ULTIMATE SOLUTION FOR INDIAN WAREHOUSES Today’s warehouse activities include cross docking, palletising, kitting, tagging, identifying products as well as efficiently storing them in
quick time and limited space. As a result, warehouse automation, now, has a direct bearing on a company’s supply chain efficiency. Lack of real estate space for logistics hubs and warehousing companies is also a concern. Herein lies the scope for a product like GOR Butler to enter the market space. GOR provides companies key solutions to utilise their warehouses in a more efficient manner, thereby saving time and real estate costs. Butler helps in delivering world-class productivity, accuracy and flexibility by multiplying capacity of work, reducing labour cost, ensuring efficient space management, eliminating possibilities of product shrinkage (like breakage or theft of products), improving control capacity & productivity, facilitating material flow, while ensuring operational safety, increased reliability and reduced running & low life cycle cost. devyani.korgaonkar@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 49
STRATEGY TRANSPORT CONTROL TOWERS
Simplifying
Transportation Complexities Transportation in India will continue to grow and offer significant opportunities. However, rising transportation costs will put additional pressure on organisations, which will lead to the evolvement of MTS providers. MTS provides will bring in local know-how, global methodologies and best in class optimisation & collaboration tools to help companies cut costs across the supply chain. These MTS providers will not only provide shippers and carriers a common platform for interaction but will also facilitate the setting-up of standard transport benchmarks in the industry. TRANSPORTATION is complex business. Large companies need to support the complex distribution networks of multiple manufacturing locations, warehouses, distributors, supplier and customers. The network may include inbound moves from suppliers to the plants, outbound moves to distribution centres, re-packers, co-packers, secondary movement to regional warehouses, distributors and shipment to direct customers. This network can have thousands of lane combination options and shipment to be managed on a daily basis. Each lane or shipment can use multiple modes and carriers, creating infinite feasible combinations that make managing transportation in an optimal way highly complex. Additionally, lack of world-class infrastructure, carrier performance variability and unavailability of updated & accurate data further complicates transportation management. This inadvertently leads to ad-hoc exception management and high maverick spends, contributing to high logistics costs.
LOCALISED OPERATIONS LEAD TO HIGHER COSTS Most Indian organisations manage transport operations at the local/ regional level. Managing and controlling operations at the local level
50 • SMART LOGISTICS • MARCH 2013
reduces the complexity of the problem by dividing the more complex problems into comparatively simpler ones. It makes the operations handling manageable and provides scope for implementing localised solutions; but there are multiple limitations to
TRANSPORT CONTROL TOWER
this approach. Localised operations management does not provide an enterprise-wise visibility for control or risk management. In terms of cost management, any optimisation at a localised level will lead to higher local optima rather than lower global optima. There are multiple opportunities such as centralised high-volume sourcing or managing continuous move routes within wider geographies, which cannot be exploited in such an environment, thus leading to leakages and higher logistics costs. Additionally, communication gets layered in localised operations and exceptions management is provisional rather than being business-rule driven.
TRANSPORT CONTROL TOWERS A centralised transport control tower approach is essentially driven from air traffic control towers, which are set up to organise and expedite the flow of traffic, to prevent collisions and to provide information and other support for pilots when required. Transport control towers enable organisations to centralise planning into a single physical or virtual planning hub. A transport control tower may have few or all of the following components: Strategic Planning • Supply Chain Network Design: Though supply chain n e t w o r k
design extends to other act as a lead provider in a strategic factos as well, consistent manner • Implement a platform for this enables organisations to look cost-to-serve as a continuous innovation whole and plan sourcing and improvement • Rigorous compliance matrix and transportation management and network, which is in best real-time basis KPI strategic interests. Tactical Planning management • Transport Planning RELEVANCE TO INDIA • Transport Spend Analysis • Transport Sourcing Infrastructure constraints: Operational Planning The low average truck speed • Load Building of 30–40 kmph against the • Freight Allocation global average of 60–80 • Transport Route & kmph can be attributed to Schedule Planning the constrained and poor quality of the country’s • Dock Scheduling • Transport Execution road network, which, in Source: ISEIndia research report on logistics update by MsSandhyaTungatkar. Management turn, increases the overall • Track & Trace transportation costs. Additionally, may include: • Rapid what-if scenario/simulation poor access to roads and infrastructure • Invoice & Payment Management • Freight Collaboration Management capability in rural areas necessitate that • Aggregate carriers spend through • Analytics Driven BI System collaboration & innovation is required A transport tower, in its true sense, to penetrate this market. centralised procurement • Improve vehicle utilisation and High level of fragmentation: About 75% takes control of the shipment while of truck operators in India own less enabling & ensuring delivery with therefore, reduce fleet size minimum logistics cost with accepted • Reduce empty miles (multithan five trucks and make up 80% customer consolidation, backhauls) service levels. Additionally, it provides of the revenues. This fragmented • Reduce miles travelled to lower real-time visibility and strong analytics ownership structure triggers intense price competitiveness and impacts the costs and support the company’s to ensure continuous improvement. Transport control towers are built green policies overall economics of transportation. • Enable the logistics organisation to Rising fuel prices: Fuel is estimated to through several integrated IT systems, which bring together best in class optimisation technology with centralised execution management systems and strong analytics layer.
HOW CAN TRANSPORT CONTROL TOWERS HELP? Drivers for the setting up a transport control tower such as cost reduction, service level improvement, risk management, market penetration, etc., vary from one organisation to the other. Transport control towers can help develop and implement standard contract management practices, implement centralised freight bill audit and payment system. These command centres support the implementation of centralised planning and execution. Other objectives for a control tower
MARCH 2013 • SMART LOGISTICS • 51
Transport control towers, continued Statement about ownership and other particulars about newspaper/ periodical, namely Smart Logistics, as required to be published in the first issue of every year after the last day of February. Form IV (See Rule 8) (Press and Reg. of Books Act, 1867) 1 Place of Publication: Ruby House, ‘A’ Wing, JK Sawant Marg, Dadar (West), Mumbai - 400 028 2. Periodicity of Publication: Monthly 3. Printer’s Name: Mr Mohan Gajria Nationality: Indian Address: Ruby House, ‘A’ Wing, JK Sawant Marg, Dadar (West), Mumbai - 400 028 4. Publisher’s Name: Mr Lakshmi Narasimhan Nationality: Indian Address: Ruby House, ‘A’ Wing, JK Sawant Marg, Dadar (West), Mumbai - 400 028 5. Editor’s Name: Ms Archana Tiwari-Nayudu Nationality: Indian Address: Ruby House, ‘A’ Wing, JK Sawant Marg, Dadar (West), Mumbai - 400 028 6. Names and addresses of individuals who own the newspaper & partners or shareholders holding more than 1% of the total capital: Network18 Media & Investments Limited** is the owner of the publication, namely Smart Logistics, having its registered office at 503, 504 & 507, 5th Floor, Mercantile House, 15, K G Marg, New Delhi - 110 001. Details of the shareholders of Network18 Media & Investments Limited who hold more than 1% of the paid up equity capital of the Company as on 20-02-2013 are given below: a. RRB Mediasoft Private Limited, 403, Prabhat Kiran, 17, Rajendra Place, New Delhi - 110 008 b. RB Mediasoft Private Limited, 403, Prabhat Kiran, 17, Rajendra Place, New Delhi - 110 008 c. RB Media Holdings Private Limited, 403, Prabhat Kiran, 17, Rajendra Place, New Delhi - 110 008 d. Watermark Infratech Private Limited, 403, Prabhat Kiran, 17, Rajendra Place, New Delhi - 110 008 e. Colorful Media Private Limited, 403, Prabhat Kiran, 17, Rajendra Place, New Delhi - 110 008 f. Adventure Marketing Private Limited, 403, Prabhat Kiran, 17, Rajendra Place, New Delhi - 110 008 g. Shinano Retail Private Limited, 4th Floor, Court House, Lokmanya Tilak Marg, Dhobitalao, Mumbai - 400 002 h. Nexg Ventures India Private Limited, C-157, Industrial Area, Phase - V VII, Mohali, Punjab - 160 055 i. Arizona Global Services Private Limited, 1204, 12th Floor, Hemkunt Chambers, 89, Nehru Place, New Delhi - 110 019 j. Acacia Banyan Partners, Citibank N A, Custody Services, 3rdd Floor, Trent House, G Block, Plot No. 60, BKC, Bandra (East), Mumbai - 400 051 k. Independent Media Trust (held in the name of its trustee), Empire Complex 1stt Floor, 414, Senapati, Bapat Marg, Lower Parel, Mumbai - 400 013 l. Network18 Media Trust (held in the name of its trustee), 503, 504 & 507, 5th Floor Mercantile House, 15 Kasturba Gandhi Marg, Delhi - 110 001
m. Network18 Group Senior Professional Welfare Trust (held in the name of its trustee), 503, 504 & 507, 5th Floor Mercantile House, 15 Kasturba Gandhi Marg, Delhi - 110 001 I, Lakshmi Narasimhan, hereby declare that all particulars given above are true to the best of my knowledge and belief. Dated: 20th February 2013 LAKSHMI NARASIMHAN Signature of the publisher ** ownership of this magazine stands transferred from Infomedia Press Limited (formerly known as Infomedia18 Limited) (hereinafter “Infomedia”) to Network18 Media & Investments Limited (Network18) in pursuance of the scheme of arrangement between Network18 and Infomedia and their respective shareholders and creditors, as approved by the Hon’ble High Court of Delhi and the necessary approval of Ministry of Information and Broadcasting is being obtained.
52 • SMART LOGISTICS • MARCH 2013
constitute 40–50% of the total transportation expenditure. In the last three years, the cost of diesel has risen by 35%, thus putting additional pressure on logisticians in the organisation to look for alternate methods to contain costs. Investments in technology: In India, specifically for logistics and transport systems, investments in technology are on the rise. Though most Indian companies are still in the Phase I & II of the evolution curve, the potential of such technologies is now well recognised. Lack of transporter benchmarking: India lacks an accepted model of benchmarking transporters in terms of various KPIs such as cost, reliability and service levels. Unfortunately, most of this data remains buried within an organisation. Moreover, lack of common benchmarking models or indices obstruct the evolution of this data into invaluable information. Growth of 3PLs: The need to focus on core competencies and keeping logistics costs in control is driving the growth of 3PLs & 4PLs in India. The contribution of 3PLs in the overall logistics market is likely to increase from ~1.5–2% in 2008–09 to ~3.5–4% by 2013–14 as per an ISE India research report. Growth of 3PLs in the organisation adds multiple layers of control. This necessitates the need to collaborate to create a single layer of visibility for logistics operations efficiency & cost control. Due to some of the factors mentioned above, logistics costs in India (as part of GDP) are much higher than in many developed countries. This is driving organisations to adopt best in class practices across the world to manage the costs.
WORKING WITH AN MTS PROVIDER Realisation of the benefits of a transport control tower has led to the growth of Managed Transport Services (MTS) providers across the globe. These providers invest in IT & infrastructure and have extensive know-how of transportation to offer a unique value propositions for the industry. MTS providers may offer the following benefits to organisations vs. setting up an internal control tower: • Low upfront investment • Pick & choose relevant pieces: Pay as you use model • Multi-company collaboration • Access to cost & performance benchmarking • Strong carrier network • Shift from management of information to govern of information • Faster and non-disruptive implementation • Creation of virtual think-tank Yuvnish Dhamija, Senior Consultant, ThinkLink SCS Ltd. Email: yuvnish.dhamija@thinklink-scs.com
REVERSE LOGISTICS
6
TIPS & TRICKS
ways to optimally generate business
SCM in rreverse logistics may pose new problems to the sector and needs some new or frresh approaches. The problems like end-of-life products, their numbers and finding specific time period to fulfil the demand of various components are among the few factors that must be programmed based on an entirely different model. Here H are some ways to optimise reverse logistics… SUPRITTA ANUPAM
1
UNDERSTAND THE REVERSE LOGISTICS SPECTRUM
Many companies compare the essential parameters such as time & money and conclude that reverse logistics is not a ‘crème service’ that could yield good results with greater Return on Investments (RoI). However, the fact files highlight that for most companies, reverse logistics costs are less than 4% of the total supply chain costs. Hence, it is important to consider all the essentialities of reverse logistics that form the spectrum of the business. The products that fall in this business include recalled products, end-of-life products, seasonal returns & parts, their valuation, inbound returns, visibility accountancy, disposition and sortation, return to stock/OEM/recycle and so on.
2
EVALUATE REVERSE LOGISTICS BENEFITS
Reverse logistics factors can affect more than 5% of the total revenue. It is necessary to analyse these factors to boost overall revenue as reverse logistics complements the main business. After drawing a Reverse Logistics Spectrum (RLS), one must be able to gauge the returns & value on returns, assess the infrastructure accordingly and the commitment that runs on these basis.
3
CENTRALISE THE RETURN OPERATIONS
Unlike the main logistics, which has become hybrid and distributed by nature, in reverse logistics, the returned products must be operated by a centrally managed group, which can improvise the cornerstone for change and success. The data collected in this manner will have foolproof authenticity, providing management the capacity to model any reverse logistics programme accordingly.
4
PROVIDE ONE-MAN AUTHORITY
Returned products are mainly due to “the other person’s fault”. Further, it is comparatively uncertain where the
product should be sent—the factory, for disposal or simply to the warehouse? All these affect the supply chain service. In such a scenario, it is wise to depute a higher authority, who can manage these operations.
5
LEARN TO GENERATE REVERSE LOGISTICS OPPORTUNITY
6
IMPROVE CUSTOMER EXPERIENCE
The experience defines the reverse logistics problem. While the primary objective of the model developed is to provide a cost efficient way to help manufacturers reclaim products for remanufacturing, the supply of products— which have been disposed of at the end of their lives—is finite. Shortages in this supply are eminent which, in turn, lead to possible shortages in the supply of components for remanufacturing. This, in turn, generates a simultaneous need for component supply for the manufacturer and a back window opportunity for the logistics service provider.
The creation of return orders is directly from the original order. This provides a comprehensive history of the order life cycle, thus allowing the customer service representative to provide knowledgeable assistance to virtually all customers irrespective of the channel used to originally purchase the item.
THINK ABOUT THE BUSINESS, INSTEAD OF THE PROCESS A business-oriented staff manages numerous escalated issues rather than handling them. While both are intended to sort the issues and time-consuming customer problems, once you finish the process, the methodology might affect your business. Therefore, it is always suggested to be wise while managing the aspects in reverse logistics even though it can be cumbersome. suprita.anupam@network18publishing.com
MARCH 2013 • SMART LOGISTICS • 53
EVENT LIST TRADE SHOW TRACKER
ABROAD
NATIONAL 4-5 APRIL 2013
16-18 APRIL 2013
21-24 APRIL 2013
APICS ASIA SUPPLY CHAIN & OPERATIONS 2013 Focus: Move beyond better, faster, cheaper Where: Hyatt Regency, Mumbai Tel: +1-773-867-1777 Email: jstults@apics.org
COOL LOGISTICS AFRICA Focus: Perishable logistics Where: Vineyard Hotel & Spa, Cape Town Tel: +44 20 8279 9403 Fax: +44 20 8279 9405 Website: http://www.coollogisticsafrica.com/
NASSTRAC LOGISTICS CONFERENCE & EXPO Focus: Transport and logistics Where: Rosen Shingle Creek, Orlando, USA Tel: +1-615-6961870 Email: register@nasstrac.org
ABROAD 15-17 MAY 2013
21- 23 MAY 2013
29-30 MAY 2013
EUROPEAN SUPPLY CHAIN & LOGISTICS SUMMIT 2013 Focus: Cutting supply chain costs Where: Park Plaza Amsterdam Airport, Amsterdam, The Netherlands Tel: +1 630.574.0985 Fax: +1 630.574.0989 Email: education@cscmp.org
GARTNER SUPPLY CHAIN EXECUTIVE CONFERENCE Focus: Supply chain Where: JW Marriott Desert Ridge, Phoenix, Arizona Tel: +61 2 8569 7622 Email: apac.events@gartner.com
9TH TRANS MIDDLE EAST 2013 Focus: Port authorities, terminal operating companies, shipping lines and logistics companies throughout The Middle East region Where: Phoenicia InterContinental Hotel, Beirut, Lebanon Tel: +60 87 426 022 Fax: +60 87 426 223 Email: enquiries@transportevents.com
ABROAD
NATIONAL 26-28 JUNE 2013
4-7 JUNE 2013
18-20 JUNE 2013
PHARMA SUPPLY CHAIN MANAGEMENT INDIA Focus: Pharma supply chain management Where: Mumbai, India Tel : +91 22 6172 7272 Fax : +91 22 6172 7273 Email: info.india@ubm.com
TRANSPORT LOGISTICS 2013 Focus: Transport logistics Where: Messe München, Munich, Germany Tel: +49 89 949-11368 Fax: +49 89 949-11369 Email: info@transportlogistic.de
REVERSE LOGISTICS ASSOCIATIONS CONFERENCE & EXPO Focus: Reverse logistics Where: Mövenpick Hotel Amsterdam City Centre, Amsterdam, Europe Tel: +31 (0) 20 519 1200 Fax: +31 (0) 20 519 123 Email: doug@rla.org
HYDERABAD 31 May-3 Jun 2013
AHMEDABAD 27-30 Sep 2013
LUDHIANA 20-23 Dec 2013
PUNE 18-21 Oct 2013
INDORE 10-13 Jan 2014
CHENNAI 14-17 Nov 2013
AURANGABAD 31 Jan-3 Feb 2014
JAIPUR 29 Nov-2 Dec 2013
KOLKATA 21-24 Feb 2014
Tel: +91-022-30034651 • E-mail: engexpo@network18publishing.com • Web: www.engg-expo.com
54 • SMART LOGISTICS • MARCH 2013
RUDRAPUR 7-10 Mar 2014
ENGINEERING EXPO AURANGABAD 2013 EVENT REPORT
AURANGABAD February 22-25, 2013 Ayodhya Nagari Grounds
Exhibiting Aurangabad’s unparallel potential Since the last few years, Aurangabad has emerged as one of the fastest growing industrial hubs. The region already has a huge industrial presence with a large number of engineering services, auto ancillary and pharmaceutical research companies setting up facilities here. The ever-evolving industrial scenario and the entrepreneurial spirit of its entrepreneurs have helped Aurangabad grow into an industrial area of repute. Taking it further, Engineering Expo Aurangabad 2013 proved to be the right ‘growth tonic’ for boosting the region’s industrial might. A report... NISHI RATH
IT was in 1960 that the region of Marathwada was merged with Maharashtra. This was the time when the industrial development of Marathwada began. Over time, the Maharashtra Industrial Development Corporation (MIDC) acquired land and set up industrial estates, which provided a boost to the region’s tremendous growth. Aurangabad is now one of the classic examples of efforts towards balanced industrialisation with factors such as availability of labour, comparatively lower cost for setting up base and a developing market attracting an array of industries to the city. Additionally, the presence of renowned MNCs and domestic giants in Aurangabad has further catalysed the city’s industrial growth by offering Small & Medium Enterprises (SMEs) a boost. Reflecting the city’s industrial growth was the second edition of Engineering Expo Aurangabad. Held during February 22–25, 2013, at Ayodhya Nagari Grounds, the fourday Expo was inaugurated in the presence of an esteemed set of Guests of Honour including Kala Ojha, Mayor, Aurangabad; Sanjay Shirsat, MLA, Aurangabad West; Pradeep Jaiswal, MLA, Aurangabad Assembly GM Ambhore, Constituency; Director, MSME Development Institute; P Udayakumar, Director, The National Small Industries Corporation; Sudhanva Jategaonkar,
Dignitaries unveil the Exhibitors’ Directory at the inauguration of Engineering Expo Aurangabad 2013
Associate Vice President, Network 18 Publishing and Vijay N Jaiswal, President, Aurangabad Industrial Suppliers Association (AISA). The inauguration also witnessed the presence of Sunil Raithatha, President, Chamber of Marathwada Industries and Agriculture (CMIA); Dr Uday Girdhari, President, Marathwada Association Of Small Scale Industries and Agriculture (MASSIA); Adesh Chabda, President, Palsingh Aurangabad Zilla Vyapari Mahasang and Mansingh Pawar, Past President, MASSIA, among others.
OFFICIALLY APPROVED Organised by Network18 Publishing with AISA as supporting partners, the Expo played host to various industry giants and market leaders who showcased their best products and services at the trade show. Shri Balasaheb Thorat, Hon’ble Minister of
Revenue, Government of Maharashtra, also graced the Expo. He said, “Engineering Expo Aurangabad has become a platform for new industries developing in the region. It has also proved to be the best platform for students as it gives them exposure to the real industrial world. I feel more events on similar lines should be organised in the near future.” Shri Rajendra Darda, MLA & Minister of School Education, Government of Maharashtra, also marked his presence in Engineering Expo Aurangabad. “The whole experience here was worth the visit. The Expo was well organised and provided a platform for local entrepreneurs. We look forward to many more such events,” he said.
BRIGHT FUTURE FOR SMEs According to experts, the historical background of the place helps attract foreign investors. Aurangabad also
MARCH 2013 • SMART LOGISTICS • 55
Engineering Expo Aurangabad 2013, continued
Engineering and Technology. Speaking at the event, Ambhore informed, “Our main objective is to identify and explore the business opportunities in the highly competitive area. We also encourage benchmarking for meeting the challenges in the best way.” Engineering Expo Aurangabad was not all about exhibitors but it also offered a lot to the visitors. Shri Balasaheb Thorat, Minister of Revenue, Government of Maharashtra, being felicitated with a momento by Network18 Publishing & AISA team
boasts of a very strong brigade of young and enthusiastic first-generation entrepreneurs, who not only implement new ideas but also steer the growth. “Aurangabad has a lot of potential when it comes to the industries. The small scale industries here have a great future. They are keen to grow and play a key role in the growth of any particular region,” said Udayakumar. Engineering Expo Aurangabad focused on providing SMEs an opportunity to demonstrate their capabilities, to offer a platform to industries across the country and enable exhibitors to formalise business alliances for mutual growth. “The trade show truly opened up a new world of opportunities for the small and medium scale industries here. The enthusiasm among exhibitors was very encouraging. It was a good experience to be a part of this grand show,” said Shirshat.
and create our brand visibility.” Another exhibitor, Nitin Bagul, Director, Technovision Instrumentation Solution Pvt Ltd, expressed, “We have participated in Engineering Expo Aurangabad last year as well; it has helped us build good contacts. Aurangabad is an industrial hub and the number of industries is increasing by the day. This is a good place for such an event; only awareness among the masses has to be increased.” Anand Pahade, Proprietor, Chintamani Electricals, who also exhibited at the trade show, said, “We participated in this trade show as we wanted to create our brand image on which customers can bank on. The response we have received has been mixed. Expos such as these should work towards creating awareness among the masses in Aurangabad.”
UPBEAT EXHIBITORS
Engineering Expo Aurangabad saw some great initiatives in action. The ‘National Vendor Development Programme’ acted as a crowd puller both in terms of exhibitors and visitors. Organised by the MSME Development Institute, Government of India, Ministry of MSME, the event became an instant hit. It saw participation from organisations like Western Railways, State Transport, Hindustan Petroleum Corporation Ltd, Indo German Tool Room and Central Institute of Plastics
The exhibitors were overwhelmed by the positive response they received from the visitors. They were looking forward to generating more business gauging from the enquiries that they received at the Expo. Manoj Kumar, Director, Apex Group, who exhibited at the trade show, said, “We have had a lot of enquiries; I cannot gauge how many will turn out to be good business leads, but yes, I am pleased with all the enquiries. It proves that we have managed to attract the target customers
56 • SMART LOGISTICS • MARCH 2013
INITIATIVES IN ACTION…
VISITORS MAKE THE MOST OF EXPO Commenting on how an Expo of this stature acts as a growth catalyst, Mayur Parikh, Sr Manager Marketing, Sah Petroleum Ltd, explained, “Exhibiting companies fully utilised this platform at the Expo. Such trade shows always help the industrial circuit of a particular region. Though we are not exhibiting this year, it was great to be part of the Expo as a visitor.” Another visitor opined that the turnout despite of the recession was commendable. “Taking into consideration the recession, the turnout was good. Engineering Expo is a great platform for small and medium scale industries to connect and understand the market requirements,” averred Abhay Sharma, Director, Extreme Ro System Pvt Ltd. Students too had a great chance to gets hands on experience at the Expo. Starting from market trends to new technology, the Expo turned out to be a helpful lesson for them. “Students can learn a lot here; where else can they find the latest technologies and machines at one place?” said Ojha.
MARKING A NEW BEGINNING Adding another feather to its cap, Engineering Expo came to an end with a promise to come back with more enthusiasm and better opportunities for Aurangabad. The next edition of Engineering Expo will be held in Hyderabad, Andhra Pradesh, during May 31 to June 3, 2013. nisi.rath@network18publishing.com
PANEL DISCUSSION: AURANGABAD EVENT REPORT
Gauging Aurangabad on the Critical Parameters A panel discussion was organised on the sidelines of Engineering Expo Aurangabad 2013. Held on February 22, 2013, the panel discussion focused on the topic, ‘Trade, Trends and Technologies: Gauging Aurangabad on the Critical Parameters’. A report… NISHI RATH
AURANGABAD has carved a niche for itself among the industrial leaders in the country. In the era of liberalisation and intensive competition, Aurangabad is resolutely addressing the challenge of moving to a higher growth trajectory in the industry. Taking a peek into this growth story, Network18 Publishing with support from Aurangabad Industrial Suppliers Association (AISA) organised a panel discussion on the sidelines of Engineering Expo Aurangabad 2013. Held at Taj Presidency on February 22, 2013, the panel discussion served as food for thought for more than 150 industry leaders and professionals. Some of leading industry experts like Ram Bhogale, Director, Umasons Auto Compo Pvt Ltd; SG Rajput, GM, District Industries Center (DIC) & Superintendent Industries Officer, Aurangabad; Mukund Kulkarni, Director, Expert Global Solutions and Ex-President Chamber of Marathwada Industries and Agriculture (CMIA); P Udayakumar, Director, The National Small Industries Corporation (NSIC) and Maithilee Tambolkar, Director, Sanjeev Auto Parts Manufacturers Pvt Ltd, enlightened the audience on the opportunities Aurangabad can provide. The panel discussion was moderated by Archana Tiwari-Nayudu, Editor, Network18 Publishing.
IS AURANGABAD UNDERRATED? The first non-stick pan came from Aurangabad, one of the best white
(L-R) Maithilee Tambolkar, Director, Sanjeev Auto Parts Manufacturers Pvt Ltd; SG Rajput, GM, DIC & Superintendent Industries Officer, Aurangabad; Archana Tiwari-Nayudu, Editor, Network18 Publishing; Ram Bhogale, Director, Umasons Auto Compo Pvt Ltd; P Udayakumar, Director, NSIC and Mukund Kulkarni, Director, Expert Global Solutions & Ex-President, CMIA, voice their views at the panel discussion
goods brands and electronics is offered by this city, it also supplies the best microfinishing machines, which also compete with the world’s best. However, it seems to lack visibility. “We export to 72 countries and, in the last two years, Aurangabad-based organisations have done acquisitions overseas. But we are still understated because we have been underestimating ourselves. It is high time we move ahead,” said Kulkarni. “We have created brands, but were never given that status. This is because we were overshadowed by major industrial hubs like Mumbai and Pune. But I think it is time for us to come out of that shadow and prove our calibre,” observed Bhogale. Taking the discussion ahead, Tambolkar added, “There is no denying that Aurangabad is underrated as a manufacturing hub, one of the reasons being the presence of various first-generation entrepreneurs. Every business has to go through a cycle and most of them are completing the cycle now. So, this is the time.” Giving the discussion a twist, Udayakumar said, “I look at it in a very positive way. In the age of competition, it can be seen as an opportunity. Entrepreneurs can focus
on their resources and future plans, when no one looks at you as a threat.”
TECHNOLOGY TAKES THE LEAD According to the panelists, investing in technology and innovation will take Aurangabad to a new level. “What we have focussed on is right investment and right technology; investing in the latest technology will always pay back in the long term. This strategy has helped us too,” added Tambolkar. Speaking up for technology, Bhogale added, “Investing in technology is one of the reasons why we have witnessed growth. Aurangabad is a good mix of innovation and tradition. There are people who have innovatively managed their traditional ways. That has given them a competitive edge,” said Bhogale. “Investing in the best technology is key; the short-term costs may be higher, but the long term gain is what people should be looking at. Managing time, quality, productivity and safety will also make us competitive,” added Kulkarni. The panel discussion received an overwhelming response from the industry, who actively participated as the audience. The insightful discussion was followed by a lively question and answer session.
MARCH 2013 • SMART LOGISTICS • 57
TENDERS
Latest Popular Tenders brought to you by www.tendersinfo.com HYDRAULIC MOBILE PICK & CARRY CRANE Org : Central Coalfield Ltd TRN : 14810924 Desc : Supply of hydraulic mobile pick & carry crane of 12 tonne capacity BOD : March 20, 2013 Loc : Ranchi, Jharkhand BT : Domestic (NCB) MOBILE CRANE Org : CCI Du Var TRN : 14809343 Desc : Supply of mobile crane BOD : March 20, 2013 Loc : France BT : Global (ICB) ELECTRIC FORKLIFT Org : Royal Canadian Mounted Police TRN : 14761276 Desc : Provision of electric forklift BOD : March 21, 2013 Loc : Ottawa BT : Global (ICB) DIESEL-OPERATED FORKLIFT TRUCK Org : Ordnance Factory Board TRN : 14502699 Desc : Design, manufacture, supply, erection and commissioning of two nos. 10-tonne capacity diesel operated forklift trucks along with accessories and spares on a turnkey basis BOD : March 25, 2013 Loc : Ishapore, West Bengal BT : Domestic (NCB) CRANE TRUCK Org : Botkyrka Kommun TRN : 14809769 Desc : Purchase of piece crane truck BOD : March 25, 2013 Loc : Tumba, Sweden BT : Global (ICB)
HAAKARMAUTO WITH HYDRAULIC LOADING AND UNLOADING CRANE Org : Gemeente Putten TRN : 14645133 Desc : Purchase haakarmauto with hydraulic loading and unloading crane BOD : March 22, 2013 Loc : Putten, The Netherlands BT : Global (ICB) VEHICLES EQUIPPED WITH HYDRAULIC TIPPER AND CRANE Org : Amiat Azienda Multiservizi Igiene Ambientale Torino s.p.a. TRN : 14409527 Desc : Supply of 7 vehicles equipped with hydraulic tipper and crane 26 t gvw maintenance service full service BOD : April 10, 2013 Loc : Torino, Italy BT : Global (ICB) PROJECTS RAJAHMUNDRY AIRPORT EXPANSION Org : Airport Authority of India PT : New facility Project News : The airport is located on a 366-acre land. The government has sanctioned approximately `80 crore for its expansion. Airport Authority of India had suggested for acquisition of 657 acre of land for the airport’s expansion to facilitate night landing and to provide other amenities for the benefit of passengers. Loc : India Implementation Stage : Planning Project Cost : `80 crore Contact : Airport Authority of India Rajiv Gandhi Bhawan, Safdarjung Airport, New Delhi – 110003. Tel : 08832007838, 0949074205 Fax : 08832487852 Email : apcry@aai.aero
Org: Organisation’s Name, TRN: Tendersinfo Ref No, Desc: Description, DSLD: Doc Sale Last Date, BOD: Bid Opening Date, Loc: Location, BT: Bidding Type.
INFORMATION COURTESY: TENDERSINFO.COM 1, Arch Gold, Next to MTNL Exchange, Poisar, SV Road, Kandivali (W), Mumbai - 400067, Maharashtra, India Tel: +91-22-28666134 • Fax: +91-22-28013817 • Email: parmeet.d@tendersinfo.com
58 • SMART LOGISTICS • MARCH 2013
PRODUCT UPDATE
This section gives information about products, equipment and services available in the market. If you know what you want. . . refer to Product Index on Page 64 to find it quickly
STACK-A-DRUM PALLET RACK
S
tack-a-drum pallet rack is designed ergonomicallyy to store two drums per pallet. It is easy to move and can be moved individually or with the help of stack and a forklift truck. It has a high load-bearing strength and the cradles of the product are made from mild steel pressed channels that can be shipped in knockdown condition. The product can be availed in only standard size with a capacity of 200 litres. The salient features are: stacking up to 4 units high, quickest, easiest, safest method of handling steel drums and easily accessible from all four sides. Stakall Thane, Maharashtra Tel: 250 -2456970, 2452433, 08600047373 Fax: 250 – 2452530 Website: www.stakall.in
ADJUSTABLE PALLET RACKS
A
djustable pallet racking is widely specified in virtually every industry and can easily adapt to the vast range of products to be stored. They are the most popular and widely used of all heavy duty storage systems which incorporate racks. It features low maintenance and easy installability with low down time. They are manufactured using superior quality raw material which is high tensile strength steel and they can easily store large and bulky items. The range can store commodities of different sizes. Benefits of the racks are high levels of storage density, automatic stock rotation. It is useful for pharma industries, warehousing, logistic companies, etc.
barcode readers are unaffected by variations in lighting, marking method, code quality or surface fi nish. “2DMax+ is a proven breakthrough in 2-D decoding. Th is functionality is especially helpful in pharmaceuticals, food, beverage and consumer goods packaging sectors. Barcode reading in these industries are often challenging due to poor print quality, varying part sizes, curved surfaces and labels damaged by environmental factors or supply chain activity. 2DMax+ helps these users achieve the highest reading yields and maximise throughput. 2DMax+ can read Data Matrix codes even when critical elements are missing. It can also locate and decode Data Matrix codes that are over exposed or underexposed, without requiring multiple retries. Th is improves throughput, speed and overall reliability. Cognex Sensors India Pvt Pune, Maharashtra Tel: 2040147840 Email: sisd.support.asia@cognex.com Website: www.cognex.com
PALLET TRUCK
T
he model AGHL-100 highlift pallet truck is specially designed for raising pallets to medium heights up to 800 mm. Th is pallet truck is used for stacking 2 to 3 pallets. Pallet used in the hydraulic hand high lift trolleys is used in various types of work in plant and maintenance shops. Technical specifications include capacity of 1,000 kg, minimum height of 90 mm, overall width of 560 mm, fork width measuring 152 mm, fork length of 1,220 mm, and raised height of 800 mm.
Dewas Techno products Pvt Ltd Dewas, Madhya Pradesh Tel: 7272- 259044,259294 Fax: 7272-259044 Email: rajeev@giraffestorage.com Website: www.giraffestorage.com
Agromec Meerut, Uttar Pradesh Tel: 0121-2440660, 3098766, 09313159058 Email: agromec@vsnl.com Web: www.agromecindia.net
BARCODE READER
U
sing barcode reader with 2DMax+ technology, readers can identify and decode severely damaged or poorly marked 2-D matrix codes. Most importantly, the
WOODEN PALLETS
W
ooden pallets are compatible with existing supply chain infrastructure. It helps achieve greater efficiencies during transport and storage with 2-way MARCH 2013 • SMART LOGISTICS • 59
Product update, continued
or 4-way entry design. It also helps reduce occupational health and safety risks to the workforce through the ability to safely rack and carry heavy loads. Pooled wood pallets are durable, and cost effective environmentally sustainable.
dock-leveler is controlled separately by its own control pad. They can also work simultaneously. Reducing the electric mains supply points to one per consolle instead of one per dock-leveler helps from the economic point of view. There is a 65% reduction in dock-leveler installations and about 75% in dock-leveler and powered sectional door installations. Th is reduction normally results in important economies while installing the mains distribution box. Consequently by reducing the number of motors there is a dramatic saving on electricity costs, as the global mains power engagement is radically reduced.
Chep India Pvt Ltd Mumbai, Maharashtra Tel: 022 - 67839400 Email: salesindia@chep.com Website: www.chep.com
Gandhi Automations Pvt Ltd Mumbai, Maharashtra Tel: 022-66720200/66720300 Fax: 022-66720201 Email: sales@geapl.co.in Website: www.geapl.co.in
AUTOMOTIVE PART TRACKING
A
utomotive part tracking system is self-contained with patented ID Max and ID quick decoding algorithms. It is omni-directional and can read codes presented at any angle even if there are variations in the part position. It integrates directly to the factory network with the Cognex Connect™ suite of supported industrial protocols which ensures that the PC is no longer required between the reader and the factory network. It reduces the overheads of many systems used in the factory and also provides ethernet connection to transfer the data directly to the factory’s server. It has expandable system capacity of 700 units/shift and it provides complete traceability through supply channel. Cognex Sensors India Pvt Ltd Pune, Maharashtra Tel: 020- 40147840, 09881466003 Fax: 020- 66280011 Email: vaggu.sunil@cognex.com Website: www.cognex.com
DOCK LEVELER
T
he dock-leveler has whole drive unit contained in a wall box, which is installed on a wall inside the warehouse, at eye level. It allows for easy and economical maintenance, without the necessity to maneuver under the platform or inside the pit where traditional power packs and controls are usually installed. Depending on the type of installation it can hydraulically power several dock-levelers with only one consolle (drive unit). Each 60 • SMART LOGISTICS • MARCH 2013
HYDRO MECH VERTICAL LIFTER
T
he ATL vertical lifter is a telescopic lifting device for use with an XA workstation crane. It can lift loads up to 1,600 kilos outside the centre of gravity. Th is is available in either pneumatic or electric chain hoist models; this vertical lifting equipment is easily adaptable to one’s lifting needs. The telescopic guides allow sway-free lifting. A smaller cycle time noticeably improves the productivity. Frequently recurring load manipulations can be performed easily, quickly, and with a very high level of precision. Konecranes India Pvt Ltd Pune, Maharashtra Tel: 020-40047470 Email: india.sales@konecranes.com Website: www.konecranes.com
DATA LOGGER
8
/16 channel universal digital process data recorder comprises of user interface module and process interface module. The user interface module is panel mounting unit that facilitates viewing and setting up the process values and parameters. The process interface module is wall mounting unit that accepts process signals from sensors / transmitters and converts them in high resolution digital values. The two modules are connected using 2- wire communication cable. The modular design simplifies process cabling for easy and convenient installation. It has 8 / 16
channel universal process monitoring with alarms. Recording of process values and alarm status is possible. Continuous / time slot batch recording with programmable recording interval date / time stamped records is also possible. Its features are: High data storage capacity upto 2 GB memory, storage of approximately 38,56,000 records, direct data transfer to pc via pen-drive memory stick, CSV (comma separated values) formatted records facility for direct view in excel sheet or notepad. Process Precision Instruments Thane, Maharashtra Tel: 0250- 2391737 Fax: 0250- 2391734 Email: works@ppiindia.net, www.ppiindia.net Website: www.pppindia.com
alarm. It is mounted on patented “FUTURE” floor stand. It has an adopted PVC belt for smooth and efficient conveying. The floor stand is height adjustable. It has an angle adjustable function with a range of 0°~25°. Sidewalls for PNL series is 75 mm respectively. It has a speed adjustor with 0~6 m/min adjusting range. Power supply requirement is 1, 230V, 50/60Hz. Shini Plastics Technologies India Pvt Ltd Thane, Maharashtra Tel: 250-3021166(88) Fax: 250-3021100 Email: india@shini.com Website: www.shini.com
COMPACTOR STORAGE SYSTEM
S
tomat compactor storage system can increase storage efficiency. The existing and new shelving units can be mounted on mobile bases, which run on tracks set into the floor. The shelving unit is opened or closed when required, making it possible to make one aisle do the work of many. Only one aisle is required to provide access to all shelf locations. The system fully utilises the full height, width and
BELT CONVEYOR
P
NL-MS series belt conveyor with metal detector is a device which can detect the metal contained in the material conveying and during simultaneously activate the
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MARCH 2013 • SMART LOGISTICS • 61
Product update, continued
depth, allowing the user to maximise storage in the space available.
CLIP-ON SYSTEM
I
Space Magnum Equipments Pvt Ltd Pune, Maharashtra Tel: 020-24355895 Email: spacemag@pn3.vsnl.net.in
CARGO STORAGE SERVICES
T
he services in storage and handling operations include features like providing customers warehouse as per specifications & size in the required area of operations, providing with material handling equipment, like forklifts, hydras for loading/unloading & proper stacking of materials to be handled, managing the incoming & outgoing cargo as per the DO issued by principals, etc. Shalimar Warehousing Corporation Mumbai, Maharashtra Tel: 022-28724981, 09924355999 Email: info@shalimarwarehousing.in Website: www.shalimarwarehousing.in
n the heavy-duty clip-on system, beams are available in three profi les: open, stepped and boxed section. These beams are designed for different load requirements. The beams are supplied in standard grey colour. Other non-standard house colours are supplied as per customers’ requirements, subject to volume and colour availability. Available from 1000 mm to 2700 mm, clear entry beams are clipped to vertical frames and are adjustable at a pitch of 100 mm. Steel shelves with dividers are also available. Ahlada Industries Pvt Ltd Hyderabad, Andhra Pradesh Tel: 040-23094301, 09866661011 Email: industries@ahlada.com Website: www.ahlada.com
DERRICK CRANE
T
he heavy-duty Derrick crane facilitates handling of marble blocks at the quarry. Rational structure, ie, boom, central mast and rafters of the crane are made
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62 • SMART LOGISTICS • MARCH 2013
out of heavy-duty steel structural framework, duly stressrelieved. The base of central mast is fi xed to the hoist unit, which in turn rotates on specially designed thrust bearing, anchored to the central foot by means of bolts, grouted in concrete foundation or rock. Hoist unit comprises of special crane-duty motor, connected to variable speed reducers and helical gearbox, duly coupled to a grooved steel drum. Friends Engineering Works Udaipur, Rajasthan Tel: 0294-2492200, 09829042424 Email: info@friendseng.com Website: www.friendseng.com
AUTOMATED STORAGE & RETRIEVAL SYSTEM
S
ANTISTATIC PLASTIC PALLETS
T
Ergen Plastic Industries Jodhpur, Rajasthan Tel: 0291-2433737, 09414195707 Email: info@ercon.co.in Website: www.indiamart.com
tomat automated vertical storage and retrieval system is used for making storage neat, clean and efficient. The mechanised shelves rotate in the vertical plane in either direction. An electronic control with keypad to call numbered carrier and bin/compartment makes the retrieval extremely quick. The control is equipped with a memory to store information on the location of code numbered components. Stomat is used storage is an important where consideration, in engineering, electrical and electronic industries, and is also used directly on the shopfloor as intermediate storage as a standalone sophisticated storage and retrieval system. Space Magnum Equipments Pvt Ltd Pune, Maharashtra Tel: 020-24352812 Email: spacemag@pn3.vsnl.net.in Website: htwww.spacemagnum.com
ELECTRIC STACKER
T
Jay Equipment & Systems Pvt Ltd Thane, Maharashtra Tel: 0250-2481806 Email: nimeshk@jayequipment.com Website: www.jayequipment.com
hese antistatic plastic pallets are available in various sizes. These plastic pallets are made from virgin foodgrade plastic materials and are used in pharmaceutical and foodbased industries. Also offered are grain storage pallets, steel reinforced plastic pallets, drum pallets, moulded plastic pallets, rackable plastic pallets, etc.
handling goods. The stacker is used indoors for storage and distribution of all kind of products. It is also built to user standards, with several mast versions and lifting heights of up to 6000 mm. The EZI series range offers versatility from material handling operations inside a store, warehouse, and food sectors.
he EZI electric stacker is used for moving palletised goods and increasing useful space storing goods on different heights, reducing time and costs of management. Th is stacker is efficient and cost-effective for
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PRODUCT & ADVERTISERS’ INDEX NDE DE
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Schaefer Systems y International Pvt Ltd
3
T: +91-22-6111 4710 E: schaefer@ssi-schaefer.in
Pg No
Auto FLC...................................................................................................FIC
Pg No
W: www.ssi-schaefer.in Chemical & Process World
4
Adjustable pallet rackk ................................................................................... 59
T: +91-022 3003 4650
Antistatic plastic pallett ................................................................................. 63
E: cpw@network18publishing.com
Automated storage and retrieval system ....................................................... 63 Automotive part trackingg ............................................................................. 60
Network18
6
Barcode readerr .............................................................................................. 59
T: 1800 200 1010 (tollfree)
Belt conveyorr ................................................................................................ 61
E: mcc@network18publishing.com
Cargo storage service .................................................................................... 62
W: www.yellowpages.co.in
Clip-on system ............................................................................................. 62
Safexpress p Private Limited
7,, BC
Compact storage system ............................................................................... 61
T: +91-1800-113-113
Connecting shippers to transporterr .............................................................. 13
E: vineet.kanaujia@safexpress.com
Data logger................................................................................................... r 60
W: www.safexpress.com
Derrick crane ................................................................................................ 62 Dock leveler.................................................................................................. r 60 Electric stackerr ............................................................................................. 63 Foldable plastic crate ..................................................................................FIC Folding large container (FLC) ...................................................................FIC Hydro mech vertical lifter............................................................................. r 60 Infomedia Yellow Pages .................................................................................. 6 Logistics services ......................................................................................7,BC Pallett...........................................................................................................FIC
Engineering Expo
8, BIC
T: +91-9819552270 E: engexpo@infomedia18.in W: www.engg-expo.com Spider Opsnet Private Limited
13
T: +91-080-42455424 E: ganapathid@spideropsnet.com W: www.opersoft.com Chep p India Pvt Ltd
FIC
T: +91 022 67839400 Pallet truckk ................................................................................................... 59 E: Savio.Pimenta@chep.com Stack-a-drum pallet rackk .............................................................................. 59 W: www.chep.com Wooden pallett .............................................................................................. 59
Our consistent advertisers COC = Cover-on-Cover, FIC = Front Inside Cover, BIC = Back Inside Cover, BC = Back Cover
64 • SMART LOGISTICS • MARCH 2013
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PRODUCT INQUIRY FORM Auto FLC
Derrick crane
Adjustable pallet rack
Dock leveler
Antistatic plastic pallet
Electric stacker
Automated storage and retrieval system
Foldable plastic crate
Automotive part tracking
Folding large container (FLC)
Barcode reader
Hydro mech vertical lifter
Belt conveyor
Infomedia Yellow Pages
Cargo storage service
Logistics services
Clip-on system
Pallet
Compact storage system
Pallet truck
Connecting shippers to transporter
Stack-a-drum pallet rack
Data logger
Wooden pallet
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Schaefer Systems International Pvt Ltd
Engineering Expo
Network18
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Safexpress Private Limited
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