Smart Logistics - November 2010 by Infomedia18

Vol. 01 | Issue 07 | NOVEMBER 2010

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VIEWPOINT EDITORIAL Executive Editor Archana Tiwari-Nayudu

IN A LEAGUE OF ITS OWN

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ime flew and froze at the same moment…that was October 22, 2010, when leaders met and marked their presence at the very first Smart Logistics Leadership Series. What a breeze of a day it was, and the one that has carved a niche for itself. So much to discuss, deliberate, so many moulded ideas to break and fresh ones to build upon. Many notions were defied and, of course, new connections made…in thought and in person. If it was asking too much from one day, this day gave it all and even more, as the unuttered anthem of this summit was to under promise but over deliver. The task taken upon was quite tough and it started with the chosen theme itself… Competitive collaboration and collaborative partnership, is a nice sounding concept, but how implementable is it was a big question. The bigger question was how receptive will the industry be? Well, demons didn’t have the field day after all, and they turned out to be only imaginary, just like our apprehension about the acceptance of the new collaborative thoughts. The summit was a leader from the word go…what with a humbling industry participation and industry chieftains in full attendance. It is rightly said that the more you sweat the more you shine. The carefully crafted day paid its dividends in the form of developmental discussion, constructive debate and consolidated action plan — the most important link of the success chain. Action plan, incidentally, is the key word which is often missed in seminars and conferences. All the good words sound good to ears but that’s all they do. The practical solutions are always missed, either by design or by default. But staying with

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our theme of ‘looking at things differently’, we wanted this summit to gift the industry some action-oriented ideas and solutions. So what was the biggest takeaway? Apart from the gyan, the biggest takeaway from this summit was the practical step-wise approach to understand the scope, areas & challenges and to devise solutions for collaborative partnership and competitive collaboration. And not wanting to restrict the learnings of this Leadership Summit to only those who attended it, this November issue of Smart Logistics has been designed to be that vehicle, which will ensure that these learnings reach you. The in-depth reportage of this event crystallises the thoughts and present them with the right perspective. Adding a dash of industry analysis, it’s a sureshot recipe for a sumptuous meal. Read it, relish it and imbibe it. The overwhelming response of the industry has prompted us not to limit the reach and relevance to only one part of India. We are pleased to announce that Smart Logistics Leadership Series is now ready to embark upon its leadership journey to Chennai and Delhi as well. And we have kept our promise with the industry; the Smart Logistics Leadership Consortium has been officially constituted, where industry leaders have united for the cause of collaboration. Visit our website www.leadershipseries.in for more details. Will sign off here, but not before we extend a heartfelt gratitude for making the summit a grand success. Wishing all our readers a prosperous & Happy Diwali!

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NOVEMBER 2010 • SMART LOGISTICS • 5

CONTENTS EVENT REPORT: SL LEADERSHIP SERIES 2010 MISSION ‘COLLABORATION’ ACCOMPLISHED

VOL. 01, NO. 07

NOVEMBER 2010

On October 22, 2010, Indian logistics industry witnessed the industry players joining hands of prospective partnership & alliance. This was the day when the industry pledged to work towards collaboration and surge ahead... the day when Smart Logistics Leadership Series witnessed the entire industry standing united to fructify collaboration. The maiden edition of Leadership Series proved to be a rock-star in every aspect be it overwhelming audience response or disseminating knowledge…

Speakers’ Corner Collaborate For Tangible Gains

SMART STRATEGIES Collaborative Partnership: Areas Teaming Up For Success Collaborative Partnership: Challenges Tug Of War Collaborative Partnership: Solutions The Secret Recipe To Success Collaborative Partnership: Scope Paving The Way For A Potent Partnership

LOGISTICS UPDATE

24 27 29 34

WAREHOUSING & DC Advanced Warehouse Management Solutions An Aid To Conquer Costs & Complexities

TECHNOLOGY TRENDS

INSIGHTS & OUTLOOK ‘SCM Will Drive Future Business Growth In The Automotive Industry’

Building India Transforming The Nation’s Logistics Infrastructure

RFID Tagging Enhancing Product Visibility

Kalpesh Pathak, AVP – SUPPLY CHAIN MANAGEMENT, FIAT INDIA

Automotive Logistics Speeding Up On The Growth Curve Auto Components Logistics In The Top Gear

40 44

ALSO IN THIS ISSUE VIEWPOINT

NATIONAL NEWS

8 10

PROJECT UPDATE NEWS ANALYSIS: WAGON MANUFACTURING SURGING AHEAD WITH MASSIVE EXPANSION

PREVIEW

PRICE TRENDS

HiTech Automation Show Taking Material Handling To The Next Level

WORLD NEWS

Engineering Expo Ahmedabad 2010-11 Flying High With Bright Prospects

TECH TRACK

6 • SMART LOGISTICS • NOVEMBER 2010

PRODUCT & ADVERTISERS’ INDEX PRODUCT & ADVERTISERS’ INQUIRY FORM

12 14 16 62 66 67

NATIO AL EWS MORMUGAO PORT LOCKS HORNS OVER IRON

ORE DUTY Government of Goa and the major port of Mormugao are on a disagreement over an administrative order of the Goa Government, which is meant to check evasion of its iron ore duty ahead of exports from the port. Agitated with the Mormugao Port Trust (MPT), a South Goa-based major iron ore exporting port, for failing to comply with its directive to seek a mandatory No Objection Certificate (NOC) from the State Mining Department ahead of allowing exports vessel to sail off the port, the Goa Government has written to the Ministry of Shipping to intervene.

Mormugao port

According to Arvind Lolienkar, Director, Mining, the State administrative order is aimed at ensuring that the exporters clear their dues of duty before exporting the iron ore. The MPT had replied to the State Government, expressing its inability to adopt the procedure, as there was no such provision in the law. Lolienkar further pointed out, “The State Government’s move to issue an administrative order directing that the ships carrying ore consignment cannot leave the port without an NOC from the Mines Department, has worked well for revenue collection. However, the ships leaving Panaji minor port are taking the NOCs, while those using MPT are yet to follow the procedure.” Digambar Kamat, Hon’ble Chief Minister, Goa Government and Sanjay Srivastava, Chief Secretary, Goa Government have recently written to the Union Minister for Shipping and the Shipping Secretary, bringing to their notice the reluctance of the MPT authorities to follow the State Government’s procedure of NOC from the Department to check evasion of revenue. Recalling the State Government’s decision to introduce the mechanism for preventing illegal mining and exports, Lolienkar said, “This will cut down on the export of illegal ore. The ship will have to certify the legality of the ore before it leaves the port.” The illegal iron ore exports, he opined, was a problem predominantly on account of traders who had proliferated in recent years as a direct consequence of volatility in international prices and demand for ore.

8 • SMART LOGISTICS • NOVEMBER 2010

The State Government’s growing concern for revenue leakage is understandable. The Goa Government has collected `377 crore as royalty on ad valorem basis on the iron ore for the current year so far, and the state expects to collect at least another `200 crore by the end of the financial year (2010-11).

INCREASING COSTS AT GMB PORTS WORRY

LINES Ports under the administrative control of Gujarat Maritime Board (GMB) seem to be catching up with some of the Central Government-controlled major ports, which are known for trade restrictive tariffs and lack of adequate facilitative measures, according to shipping line operators and exim trade intermediaries. While the non-major ports in Gujarat have come up and shown the way to other states in matters of privatisation, the increasing cost of calling at the state ports is now coming under the scanner of the shipping lines and operators, who have started taking up the issues with appropriate authorities. According to Container Shipping Lines Association (CSLA), the board is charging ‘water front royalty’, which is unique to Gujarat. “In this, every empty container that is landed or loaded in Mundra Port requires to pay `36 per twenty-foot equivalent unit (TEU) or `54 per Forty-foot equivalent unit (FEU). This amount is `144 per TEU or `216 per FEU in the case of laden containers. The problem here is that the cost is doubled if there is a transshipment container,” CSLA officials said. Another matter that is affecting the lines is the requirement for captains to submit a ‘Letter of Indemnity’ (LOI) before using a port in Gujarat. Such an indemnity is unheard of in foreign ports, and, for that matter, even in ports in other Indian states. Owing to this requirement, the insurance companies (Protection & Indemnity Clubs) are speculating for the need to raise the premium for ships calling at the ports. The latest to add to the list of levies is ‘VTS Fees’ that the board has introduced from September on all ships calling at the 20 ports that fall within the Gulf of Khambat (Cambay). According to the circular issued by the board, a Vessel Traffic and Port Management System (VTPMS) has been installed and operationalised on August 15, 2010, and in order to defray the cost involved, all ships using the ports in the Gulf of Khambat are required to pay the VTS Fees at a rate of `4 per gross tonne per call of the ship. The rate is `6 for ships carrying hazardous cargo. Among the 20 ports that fall in the Gulf of Khambat include facilities like Pipavav and Alang. According to operators, the charge, which has been suddenly introduced, is highly disproportionate to its purpose and increases the overall costs for ships calling at Gujarat ports. One of the ports affected by this is the Port of Pipavav, which currently handles mega container ships of capacities exceeding 40,000 gross tonne. Ships calling at the port are paying an additional `1.6 lakh per call. If they have even

one hazardous container then the cost becomes `2.4 lakh per call. Also, loading hazardous cargoes out of the port has now become an unviable proposition, let alone calling at the ports in Gulf of Khambat. For instance, Mundra has made major investments for vessel management systems but has no additional charges from cargo interests. “On water front, royalty is a sequential arrangement with GMB. According to the agreement, we only collect and pass it on to the board,” said an official of Mundra Port. Captain Dinesh Gautama, Vice Chairman, CSLA, said, “Gujarat Maritime Board needs to do away with charges like VTS Fees, Waterfront Royalty and insistence for irrelevant Letters of Indemnity (LOIs), which are only increasing the cost of ships calling at the state ports. Any delay in taking rectification measures will only cause a shift of trade to other ‘port-friendly’ locations.”

ACCESS GAINED TO CHITTAGONG & MONGLA

PORTS Following the Union Government’s request, Bangladesh Government has agreed to grant access to its Chittagong and Mongla ports. This will increase economic engagements and trade between Bangladesh and the entire Eastern and North-Eastern states in India. Anand Sharma, Commerce and Industry Minister, made this announcement, after conferring with his Bangladeshi counterpart, Muhammad Faruk Khan. Earlier, since Bangladesh was not providing access to the two ports, India was building an alternative multimodal route from Mizoram to Myanmar through the river Kaladan. Thus, India was also helping Myanmar develop its Sittwe port. Delhi and Dhaka have signed a memorandum of understanding (MoU) for establishing Haats (trading depots) along the Meghalaya-Bangladesh border. According to Sharma, India was currently constructing seven integrated checkposts and eight land customs stations under a $125-million scheme. The two sides are also holding discussions to construct a bridge across the Feni to begin trade between Sabroom and Ramgarh.

RITES OFFERS HELP TO KENYA IN

TRANSPORT INFRASTRUCTURE Rail India Technical and Economic Services (RITES) has expressed interest in offering its services in the development of airports, roads, ports, railways and mass rapid transit programmes in Kenya. During the joint trade committee meeting with Kenya in Nairobi, India has proposed that RITES can render technical advisory services for privatisation and concessioning of airports in tourist areas of Masai Mara and south coast of Mombasa. In this regard, RITES can undertake feasibility studies, preparation of bid documents, bid process management and contract management. RITES is also interested in rendering its consultancy services for urban transport projects as well as all types of mass rapid

transit systems in Kenya, including in Nairobi. Besides, RITES can provide services to develop cruise ship facilities at port Mombasa and Lamu.

ALLCARGO GLOBAL LOGISTICS CONTINUES

ON ITS EXPANSION Allcargo Global Logistics, a Mumbai-based logistics service provider involved in multimodal transport operations (MTO), owning and operating containers freight station (CFS) and handling of project cargo, recently announced an acquisition and controlling stake in Hong Kong-based companies engaged in Non Vessel Owning Common Carrier (NVOCC) business. The acquisition valued at approximately $22 million has been undertaken by the company for its expansion plan in NVOCC business. To further expand into the project cargo movement business, Allcargo Global has acquired two vessels with a dead weight of approximately 6,500 tonne through its wholly owned subsidiary company. Shashi Kiran Shetty, Chairman & MD, Allcargo Global Logistics, “This acquisition will further expand Allcargo’s growth organically, strengthening the company’s operating profit by adding approximately $3.53 million annually. The company will save substantial cost on ship chartering and hiring, thus supporting planning and execution of project cargo movements in an efficient manner. This further helps capitalise on opportunities in the Indian sub-continent, including coastal movement.”

GUJARAT LIKELY TO SEE 30 MINOR PORTS

IN NEXT FIVE YEARS Approximately 30 minor ports are likely to be developed in Gujarat in the next five years, attracting an investment of more than `90,000 crore. This would also generate 60,000 direct jobs. At the same time, the ports and shipping industry will see attrition rate of 20 per cent in the next year, according to Associated Chamber of Commerce and Industry of India (ASSOCHAM). Releasing a study on India’s ports, shipping and Maritime Logistics, ASSOCHAM has pointed towards the dearth of qualified people in the port sector. “There are job opportunities, but people with matching skills are lacking. Thus, it has signed an MoU with the State Government to set up 50 skills improvement institutes,” said Sunil Kakkad, Chairman, ASSOCHAM Gujarat. The report has highlighted the capacity constraints in the ports sector that include inadequate draft availability, low level of mechanisation of operations, usage of outdated and inadequate cargo-handling equipment and poor connectivity with hinterland, which are affecting the functioning of ports. Involvement of multiple agencies and complex administrative procedures also seem to hamper India’s overseas trade. This has called for revamping of port management system in the country.

NOVEMBER 2010 • SMART LOGISTICS • 9

PROJECT COCHIN SHIPYARD TO BUILD 20 PATROL

VESSELS FOR COAST GUARD

Cochin shipyard (CSL) has signed a contract for construction of 20 fast patrol vessels for Coast Guard valued at `1,500 crore. It will be the biggest contract executed by the Coast Guard and would go a long way to strengthen coastal security. This order was secured under severe competition from defense and private yards, and has taken the present order book position of the shipyard to 36 ships valued at approximately `6,000 crore. The fast patrol vessels have a speed of 35 knots and are 50 m in length. It is used for patrolling coastal areas and preventing insurgency. Under the contract, the first ship is to be delivered in 20 months time and one every three months thereafter. The company could achieve a total shipbuilding income of `1,012 crore in the year, as against `986 crore in 2008-09. In 2009-10, the company delivered five offshore support ships to various international owners located at Norway, Germany and the US. In 2010-11, the yard has already delivered six offshore support vessels for owners in the US and the Netherlands.

CABINET PANEL CLEARS CHENNAI MEGA BOX

TERMINAL PROJECT

With the Cabinet Committee on Infrastructure (CCI) approving the project, the bidding process for mega container terminal at the Chennai port has got a kick-start. The capacity of the terminal would be four million 20-feet equivalent units (TEUs) annually. To put the capacity into perspective, all major ports in the country handled a total of 6.8 million TEUs of containers in 2009-10. The construction is expected to be complete within seven years from the date of award of concession. The CCI has approved ‘development of mega container terminal at the Chennai port on design, build, finance, operate and transfer (DBFOT) basis’, under the public-private partnership (PPP) with a concession period of 30 years at an estimated cost of `3,686 crore. The mega container terminal will also be able to handle ultra-large container vessels, which are expected to dominate the container trade, and thereby, compete with the other international ports and attract deep-drafted vessels to the Chennai port. The project is expected to boost exports and imports in the region with savings in freight and ship cost to the shippers. Considering the steady growth in the container volumes at the Chennai port, the container throughput demand is expected to outstrip the available capacity of two million TEUs annually by 2017-18.

ADANI GROUP OUTLINES EXPANSION PLANS

FOR MUNDRA

Mundra Port and Special Economic Zone (MPSEZ), a subsidiary of the Adani Group, has outlined expansion plans

10 • SMART LOGISTICS • NOVEMBER 2010

UPDATE

aimed at boosting the port’s cargo handling capacity and logistics capabilities. The port, located along the west coast of India, intends to construct additional berths and engage in rail and airport projects to enhance import and export operations. Captain Unmesh Abhyankar, COO, MPSEZ, said, “The company has plans to set up about 20 new berths at the Mundra Port under its Vision 2020.” He added that three new berths, situated at Mundra port’s western basin facility, will be ready for operations by March 2011. “The first three new berths will add another 1,320 m of berth length to the port,” said Abhyankar. “Subsequently, the company will add and operationalise another 500 m of berth length by December 2011,” he confirmed. He further added that a dedicated liquid berth capable of handling Aframax oil tankers will also be complete by the end of 2011. In addition, MPSEZ hopes to construct an 800 m berth at Mundra port’s south basin to handle additional container cargoes by March 2013.

GDL TO DEVELOP CFS AT KOCHI Gateway Distripark’s 60 per cent owned subsidiary, Gateway Distriparks (Kerala) (GDKL), has been successful in winning a tender floated by Cochin Port Trust for a 2.58 hectare plot in Vallarpadam on a 30-year lease. It was a closely fought tender with six bidders for this prime site opposite the International Container Transshipment Terminal (ICTT). ICTT, operated by DP World, will be one of the largest container terminals in India and is expected to make a significant change in the way maritime trade is conducted in India. GDKL already owns an 8-hectare freehold property at Kalamassery, which together with this leasehold land of 2.58 hectares will enable GDKL to create adequate capacities to handle containers, in sync with the capacities and throughput of the ICTT. GDKL’s total investment at Vallarpadam and Kalamassery will exceed `50 crore, underlining GDL Group’s commitment to Kerala.

CONCOR FOR EARLY LAUNCH OF KOLKATA

PORT-NORTH BIHAR SERVICE

Container Corporation of India (CONCOR) is trying to launch, as early as possible, a container train service between the Kolkata port and Jogbani (North Bihar) to have a slice of the Biratnagar (Nepal)-bound containerised traffic. An estimated 700-800 TEUs of Nepal-bound imports (equivalent of six rakes), on unloading at the Kolkata port, is moved by road into the Biratnagar inland container depot (ICD) located inside Nepal. Once the services of CONCOR are introduced, it will be able to handle 4-5 rakes of the traffic. The proposed operation will be in two phases. In the first phase, CONCOR will take the containers up to Jogbani railway station, where the boxes will be unloaded for seal checking and paper verification by

the customs authorities. After obtaining the customs clearance, the boxes will move by road into Biratnagar ICD. A space of about 1,500 sqm, where the containers will be stacked for customs checking, is needed close to the Jogbani railway station. A joint inspection by the officials and the Indian Railways and CONCOR recently identified the land. It is now for the customs authorities to approve it and notify for the start of the actual operation. In the second phase, there is a proposal to construct a railway line between Jogbani and Biratnagar, the distance between the two being approximately 150 m. After this, the containers unloaded at the Kolkata port will be able move by train straight into Biratnagar. The prospects of JogbaniBiratnagar railway line appear bright because both sides have broad gauge network and, more importantly, the Nepalese trade, on seeing the successful operation of Birganj ICD, sincerely wants this to happen. In August 2003, CONCOR had first started the service between the Kolkata port and Raxaul, the last Indian railway station on the India-Nepal border. Subsequently, it started running services straight to Biratganj ICD from July 2004, on completion of the railway line between Raxaul and Birganj, covering a distance of over a kilometre.

Ports and Logistics (ESPLL), has raised `410 crore to partly finance a cargo terminal project at Paradip Port in Orissa, India. The credit deal was signed last week with YES Bank and L&T Infrastructure finance company, each of whom have loaned out 50 per cent of the finance needed. “Both the banks have underwritten the loan. It will be used for mechanisation of CQuay III terminal of Paradip,” said a company official. According to officials, the financing consists of a term loan of `385 crore and a bank guarantee facility of `25 crore. The loan will be repaid in 36 quarterly instalments following a twoyear grace period. ESPLL signed a 30-year concession agreement with Paradip Port Trust (PPT) in April, 2010, on build, own, operate & transfer (BOOT) basis. This was for the mechanisation of multi-user berth for handling dry and bulk cargo. According to the company, it is investing around `514 crore for mechanisation of Central Quay-III berth, taking the total port sector investment in Paradip to over `1,000 crore. The project is scheduled to be commissioned in April 2011. After completion, the total terminal capacity planned by Essar Group at Paradip will be enhanced to 30 million tonne per annum (mtpa).

FIVE SUBMIT PRICE BIDS FOR JNPT TERMINAL

PROJECT

Five entities - DP World, PSA International-ABG Ports, Mundra Port and Special Economic Zone-Adani Enterprises-Isolux Corsan Concesiones SA, GVK Developmental ProjectsSamsung C&amp;T Corp , and Sterlite Industries-Leighton Contractors - have submitted price bids for the fourth terminal project of Jawaharlal Nehru Port Trust (JNPT). Even though the deadline for receiving the bids was October 15, the port trust can declare the winner only after Supreme Court (SC) gives its verdict on an appeal filed by APM Terminals against its dismissal by the trust from participating in the tender. APM Terminal has appeared to SC challenging rejection of its petition against the bidding process by Bombay High Court. SC is scheduled to hear the case on November 10. According to a port consultant associated with an international consultancy, the bidding could have attracted much more participation from developers had the port and the State Government did the home work required of them. He said the immense potential that the proposed terminal could leverage from the dedicated freight corridor and industrial corridors has not got highlighted. He also blamed the government for its lukewarm response in taking up the projects, which, he believes, could be game changer for the state.

MECHANISATION OF CQUAY III TERMINAL OF

PARADIP PORT

Essar Bulk Terminal Paradip (EBTPL), part of Essar Shipping

NOVEMBER 2010 • SMART LOGISTICS • 11

NEWS ANALYSIS

WAGON MANUFACTURING

SURGING AHEAD WITH

MASSIVE EXPANSION Wagon manufacturing in the country has received a fillip, as a result of the increased freight traffic and rail transport activities. Taking this into account, the Ministry of Railways has recently passed a proposal to establish a wagon manufacturing unit through a public-private partnership. With the entry of private players in infrastructure development, the Indian logistics industry will be better equipped to tackle transportation cost issues in the future. PURNA PARMAR INDIAN Railways traverses the length and breadth of the country, covering a total distance of 63,332 km. As the principal constituent of the nation’s transport system, Indian Railways owns a fleet of 8,025 locomotives, 50,080 coaches and 207,176 freight wagons, running approximately 8,707 passenger trains on a daily basis. Indian Railways carries approximately 183 lakh tonne of freight traffic and about 156.8 lakh passengers, covering 6,974 stations daily. Considering

12 • SMART LOGISTICS • NOVEMBER 2010

the growing demand for infrastructure and transport in the country, a robust rail transport network is the need of the hour. Moreover, the exponential growth in infrastructure has put the wagon manufacturing industry on the road to rapid growth.

WAGON MANUFACTURING SEGMENT At present, approximately 10 companies in the wagon manufacturing business are operating in the country, meeting

the infrastructural requirements as laid down by Indian Railways. Of these, four companies are in the public sector domain under the Ministry of Heavy Industry and Public Enterprises (Department of Heavy Industries). Further, companies such as Titagarh Wagons, Texmaco, Hindustan Engineering Industries, among others, come under the private and joint ventures. Indian Railways is one of the biggest customers of these wagon-manufacturing

companies. Wagon acquisition by Indian Railways is a need-based activity, dependent on the traffic needs and availability of funds after taking into account the replacement of wagons. Wagon building, of late, is receiving considerable attention. Steel Authority of India (SAIL) recently announced its plan to form a joint venture (JV) with RITES, a public sector unit of Indian Railways for setting up a wagon unit at Kulti, West Bengal. The Ministry of Railways has acquired two wagon-manufacturing Public Sector Undertakings (PSUs) – Burn Standard and Braithwaite – from the Ministry of Heavy Industries. Moreover, the Parliament has recently approved the Railway Ministry’s proposal to set up wagon manufacturing units at Guwahati and Haldia by way of public-private partnerships (PPPs). The request for qualifications for these units is expected to be issued soon. A number of private wagon manufacturing companies exist in the country, some of which have begun diversifying into specialised wagons. The Railways has its own wagon manufacturing units at Jamalpur and Amritsar. The total capacity of wagon production in the country is estimated at 18,000 per year, though the production is less, as it is largely dependent on the volume of orders placed by the Railways. According to a vision document prepared by the Railways, wagon capacity needs to be stepped up by 2020 to meet the projected demand growth. The JV agreement between SAIL and RITES comes as the fulfilment of the announcement made by Mamata Banerjee, Minister of Railways, in the Railway Budget 2010-11. Hon’ble minister had announced the setting up of state-of-the-art wagon manufacturing factories throught JV/PPP at five locations, including Bardhaman. The other locations are Secunderabad, Bhubaneshwar/Kalahandi, Haldia and Guwahati. Referring to the Vision-2020 document released by Minister of Railways, Vivek Sahai, Chairman, Railway Board, said, “There are numerous opportunities for collaboration between SAIL and Railways. There would be huge requirements of investments in wagon & axle manufacturing as well as other rail infrastructure projects, and Railways will welcome such collaborations to achieve future goals.”

PROJECT UPDATE In May 2010, SAIL and RITES had signed

a memorandum of understanding (MoU) for setting up the proposed JV wagon manufacturing factory. Both organisations had conducted a feasibility study as well. Accordingly, SAIL will provide land measuring 12 acres inside SAIL Growth Works (SGW), Kulti. The plant is expected to be erected and commissioned within 14 months from the date of incorporation of the JV company. The factory would be equipped to handle 1,500 wagons per annum (manufacture of 1,200 wagons and rehabilitation of 300 wagons). It can manufacture Bogie Open Type (BOXN type) wagons, including specialised high-end wagons. The factory can also undertake manufacturing modern Stainless Steel wagons, with marginal investment in plant and machinery. The project cost is estimated to be Rs 85 crore in PhaseI, which may reach Rs 120 crore in Phase-II.

INDUSTRY SPEAK The wagon industry, which is mostly concentrated in West Bengal, is pleased with the Railway Minister’s emphasis on capacity creation, especially the thrust on the dedicated freight corridor. However, the JV between SAIL and RITES for setting up a new wagon manufacturing unit at Kulti has evoked mixed response, as industry people believe that such projects are best left to the private sector. Texmaco, a leading wagonmanufacturing company under the K K Birla Group, sees itself as a major beneficiary of the initiative taken by the ministry. Ramesh Maheswari, Senior President, Texmaco, said, “Moving freight by railways was the best way to combat the economic slowdown, especially when prices of crude oil were increasing and a fuel price-hike had been announced.” He, however, thought that the Railways’ loading target might have to be revised upwards, as it seemed conservative. Maheswari opposed the idea of the Railways becoming involved in setting up coach factories. “The government is already under a huge fiscal deficit and, at this juncture, this does not seem an advisable step,” he opined. Meanwhile, Umesh Chowdhury, ViceChairman and MD, Titagarh Wagons, explained, “The increased orders for wagons are a welcome sign. Under its rolling stock programme, the Railways is planning to buy 18,000 wagons, as

against 11,000 in 2008-09. Moreover, the Railway Minister had, in her previous tenure, encouraged the PPP model of growth, which not only ensured easier funding but also a more disciplined implementation.” Chowdhury further elaborated on the minister’s proactive efforts for stepping up the rail infrastructure, “The Railway minister’s statement about constructing stations, logistic parks and a host of other infrastructure around the PPP model is definitely a step in the right direction. This would help boost rail logistics in a big way. She had rightly decided to leverage on the huge resources of Railways’ unutilised land and physical accessibility by way of tracks for building physical and communication infrastructure.” According to Pawan Ruia, Chairman, Jessop, the Railway Minister had shown a vision by emphasising on the PPP model in the Rail Budget 2009-10. From the proposed electric multiple unit (EMU) coach factory at Kanchrapara to upgradation of the important stations to international standards, or developing multi-functional complexes, she has opened a new vista for utilising the resources and expertise of the private sector. Jessop, which is into wagon manufacturing, sees over 60 per cent increment in the wagon procurement target as a boon to the industry. Ruia believes that the proposed railway land bank was yet another reflection of Banerjee’s keenness to address the pressing problems of the manufacturing industry. He also stated that this would further boost the rail transport and logistics industry in the country, as more number of wagons would lead to increase in the capacity of good transport, thus making it a win-win situation for all.

THE GROWTH TRAIL The growth in the wagon manufacturing segment has also ignited fuel for better freight management system in rail transport and, subsequently, a smooth logistics process. Although this is just a small step towards progressive improvement of rail transports, the industry will definitely benefit from the surge in attention that the wagon manufacturing industry is now receiving in the country. However, it is of paramount importance to see how this upswing in the wagon manufacturing industry helps build a strong rail transport and smooth logistics operations.

NOVEMBER 2010 • SMART LOGISTICS • 13

PRICE TRENDS Road Freight Index Chart for October 2010 The RFI stood at 175 Points for the month of October 2010 registering an increase of 3 points over September 2009. For Metros Ex – Chennai rates registered on an average highest increase by 6%, Ex- Mumbai registered an average increase of 3% & ExKolkata registered and increases of 1% where as Ex – Delhi the rates were stable from last month.

TRENDS FOR OCTOBER (Y-o-Y) 172

172 168

175

166

INDEX OF 6 YEARS: 140

AUTOMOBILES: The overall production data for April-September 2010 shows production growth of 31% over same period last year. Passenger vehicles segment in AprilSeptember 2010 grew at 33% over same period last year. Passenger cars grew by 34%, utility vehicles grew by 21% and multi-purpose vehicles grew by 49% in April-September 2010 over April-September 2009. For the period of April-September 2010, three wheelers sales recorded a growth rate of 20%, while passenger carriers grew also by 24% and Goods Carriers grew at 3%.

2005-06

2006-07

2008-09

2009-10

2010-11

TRENDS FOR NOVEMBER (Y-o-Y)

169

COMMERCIAL VEHICLES: The overall sales of commercial vehicles segment registered growth at 42% in April-September 2010 as compared to the same period last year. While medium & heavy commercial vehicles grew at 62% and light commercial vehicles grew at 27%.

2007-08

171 168

172

147

2005-06

2006-07

2007-08

2008-09

2009-10

FORECAST FOR NOVEMBER 2010: The RFI in November 2009 over November 2008 had registered an increase of 1% and stability over October 2009. The RFI stood at 172 for the month of November 2009 and same in the month of October 2009. The RFI for the month of November 2010 can be expected to increase marginally.

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

14 • SMART LOGISTICS • NOVEMBER 2010

WORLD

EWS

GLOBAL AIR FREIGHT RECOVERY SLOWS Global air freight traffic grew at the slowest rate in nearly a year in September 2010, expanding 14.8 per cent over last year but falling 2.1 per cent from the month before. The International Air Transport Association (IATA) said that September marked the second consecutive month-tomonth decline in overall air freight traffic, following the one per cent slip in August. This has left the freight volume six per cent lower than the 2010 peak set in May. General Giovanni Bisignani, Director, IATA, said, “The air freight numbers are distressing. What we see in air cargo markets is inevitably reflected in the broader economy.” In Asia for instance, air cargo growth slipped monthto-month in September for second consecutive month. Cargo traffic carried by Asian airlines grew 18.5 per cent in September over the same month last year, but new figures from the Association of Asia Pacific Airlines (AAPA) showed a sharp decline in the upturn in the region’s air freight demand. September’s freight traffic slipped 1.1 per cent from August, reaching the lowest level since June. Further, freight capacity grew 19.3 per cent in September over the same month last year. This showed that the first-time capacity expansion has exceeded demand growth since the air freight recovery began a year ago. The Middle East was the only region that bucked the trend toward deceleration, expanding its air freight traffic by 24 per cent over that in the last year. The smallest year-overyear growth was witnessed in Europe, with traffic up 11.1 per cent, while North American air freight grew 13 per cent. Carriers still are adding capacity at a strong pace, with available freight space growing 11.9 per cent in September 2010 compared to that in September 2009. Capacity was almost straight in Latin America, while freight traffic grew 21.3 per cent year-over-year.

US, JAPAN SIGN OPEN SKIES PACT The US and Japan have signed an aviation treaty, which turns a once highly restricted airline services market into an ‘open skies’ trade lane with no limits on flights for cargo carriers. Signed in Tokyo, the formalised draft treaty agreed upon by the countries last year, gives the financially troubled Japan Airlines freedom to set up agreements with American Airlines. The treaty comes at a time when Japan is expanding its tight airport capacity, adding slots at the famously crowded Tokyo Narita International Airport, ranked fourth on the JOC list of Top 30 International Cargo Airports, and opening the domestic Haneda Airport near Tokyo to international flights. The treaty lifts flight limits for FedEx and UPS freighter operations. And, for shippers, it lifts limits on flights for freight airlines. FedEx and UPS have struggled for years to expand their services to Japan, and FedEx had put such a premium on the market that it bought the Flying Tiger Lines about 20 years

16 • SMART LOGISTICS • NOVEMBER 2010

ago, largely because the freight airline had a highly coveted flight authority to Japan.

NORTH AMERICAN RAILCAR OWNERS SPEED

RETURNS TO ACTIVE FLEET

North American railroads, lessors, and shippers have reduced the number of idled cars by 17,638. September was the strongest month since springtime for North American railcar owners who were reducing their lists of idle equipment. This happened when gains in both carload and interposal traffic prompted operators to activate more equipment left idle from the recession. According to Association of American Railroads (AAR), car owners among the fleet leasing firms, railroads and shippers took 17,638 cars out of storage last month. This has been the fastest drawdown of the parked fleet since April and the fourth-largest total this year. The remaining 3,31,074 units that idled on track sidings and other storage areas across the continent on October 1, accounted for 21.6 per cent of the total car fleet. However, this number is less by 22.7 per cent of the total fleet a month earlier. The stored fleet topped 5,00,000 units and was nearly 32 per cent of all cars in North America last year before rail traffic began to rebound from the economic downturn. The AAR counts a railcar as stored if it operated in revenue service in the past five years but has not hauled a paying cargo for 60 days. The trade group does not track the number of cars taken out of storage to carry freight again versus those sold to scrap dealers. However, industry specialists say that most equipment coming out of storage will go back into the active car fleet after inspections and repairs, if any. Observers also say that a number of remaining stored railcars are obsolete or require too much work to reactivate and will eventually be scrapped, so the remaining total does not just reflect cars available to haul freight. However, in the past month, some car owners have placed orders for equipment manufacturers to refurbish older railcars, such as lengthening unused 48-ft intermodal well cars to match growing demand for platforms to carry large domestic 53-ft containers. Before September, monthly drawdowns from the parked car fleet this year have been 10,759 units in August; 5,808 in July; 3,064 in June; and 747 units in May, when rail traffic weakened as the recovery slowed down.

HORIZON LINES ADDS 12,500 CONTAINERS

FOR CHINA SERVICE

Senior officials of Horizon Lines have recently declared that they will add about 12,500 new containers to it’s international and domestic shipping network. This will support the launch of its new weekly liner service between China and the US, as planned in December.

Brian Taylor, Sr VP – International Services, Horizon Lines, avers, “The new Five Star Express service is already 45 per cent booked for its first sailing on December 13. We believe that we are entering the market at an opportune time. Moreover, US importers are diversifying their ocean shipping contracts to adjust to the ongoing capacity fluctuations in the trans-Pacific.” The new route, which will serve Shanghai and Ningbo in Central China, and Los Angeles and Oakland in California, will use five Hunter Class vessels, each having a capacity of 2,824 20-ft equivalent container units. Horizon Lines completed its first live test of the service last month with the eastbound voyage of the Horizon Enterprise, stopping in Shanghai on its return from a dry-dock in Asia. As planned, the Five Star Express will provide a transit time of 11 days from Shanghai to Los Angeles, with Monday morning cargo availability every week at the nation’s busiest import gateway. Five of Horizon Lines’ vessels currently call ports in China under its space charter agreement with Maersk Line. After the expiry of the agreement on December 1, Horizon Lines will begin transporting general cargo to the US from Ningbo and Shanghai on behalf of its own commercial customers.

SHIP OPERATORS, FREIGHT TRADERS IN

DEMAND IN EUROPE & ASIA

Demand for ship operators and freight traders remains strong in Europe and Asia, according to the annual maritime employment review for the commercial shipping market. The review looked at the growth of commercial shipping activity in Singapore and the way this activity is translating into more jobs. The report found that mid-level chartering managers in Singapore are commanding average salaries of $1,14,158, compared to $92,905 in Europe. The report further states that mid-level ship operators are being hired on average for $94,143 in Singapore, compared to $77,814 in Europe. Mark Charman, CEO, Faststream Recruitment Group, said, “Although we may face many unknowns as we move into 2011, one certainty is that good candidates are still not walking the streets.” According to him, as long as there are no market shocks, the post-Christmas and post-bonus period should be a busy one for freight traders, shipbrokers and chartering managers looking for new challenges. As part of the review, Faststream also surveyed shipbrokers, chartering managers and freight traders and found that nearly half of them believed that London would continue to be the world’s leading chartering centre in the next 10 years and sustain the number of shipbroking positions it currently does. The survey also found that Singapore was the most popular location to move to if the right job opportunity arose, with 60 per cent of the 85 respondents saying that they would consider moving there. This was closely followed by London

(52 per cent), Geneva (50 per cent) and New York (45 percent). Only 28 per cent of respondents said that they would consider moving to Shanghai.

JAPANESE EXPORT GROWTH SLOWS Japan’s exports to the rest of the world grew for the 10th month on a year-on-year basis in September, rising 14.4 per cent to $72.14 billion, according to preliminary figures released by the Finance Ministry. However, the year-on-year growth slowed down for the seventh month in a row since the 45.3 per cent increase in February. September’s smaller increase comes, as the yen gains strength and the pace of global recovery weakens. On the other hand, Japan’s imports from the rest of the world grew for the ninth consecutive month on a year-on-year basis in September, increasing 9.9 per cent to $62.30 billion. The year-on-year pace of growth slowed after increasing to 17.9 per cent in August from 15.8 per cent in July. Despite the slowdown in exports, the country’s shipments to the US rose at a faster pace in September, increasing 10.4 per cent to $11.39 billion. It was the ninth straight monthly rise. In August, Japan’s exports to the US had increased 8.8 per cent from a year earlier. Japan’s imports from the US also rose for the ninth consecutive month on a year-on-year basis in September, growing 2.9 per cent to $5.88 billion. The year-on-year pace of growth sharply slowed from 11.3 per cent in August. As a result, Japan’s trade surplus with the US widened for the ninth successive month in September, expanding 19.8 per cent to $5.51 billion.

TNT ADDS WESTERN CHINA CITY TO

EXPRESS NETWORK

TNT Express is launching a direct scheduled 747 service between Chongqing, a fast-growing high-tech manufacturing centre in Western China, and Europe, through TNT’s Liege hub. In its first phase, the service to Chongqing will operate three times a week. TNT said that it is the first express company to offer dedicated flights between Europe and Chongqing in response to growing demand from the region’s high-tech industry. The Chinese Government’s western China development strategy has boosted the economic development in the region, which has created huge market opportunities for air cargo service. In the first eight months of 2010, exports from Chongqing rose 62.1 per cent to $4.2 billion. The city’s GDP increased by 17.6 per cent in the first half of 2010 to $54.51 billion. Since September 2010, TNT has increased its flight frequency to Shanghai and Hong Kong to seven and six times a week, respectively. TNT informed that it is also strengthening its Chinese domestic road delivery services and particularly its national day-definite road distribution network.

NOVEMBER 2010 • SMART LOGISTICS • 17

EVENT REPORT

SL LEADERSHIP SERIES 2010

MISSION ‘COLLABORATION’ ACCOMPLISHED On October 22, 2010, Indian logistics industry witnessed the industry players joining hands of prospective partnership & alliance. This was the day when the industry pledged to work towards collaboration and surge ahead... the day when Smart Logistics Leadership Series witnessed the entire industry standing united to fructify collaboration. The maiden edition of Leadership Series proved to be a rock-star in every aspect be it overwhelming audience response or disseminating knowledge… PRERNA SHARMA VISITORS upbeat & confident speakers, the message was loud and clear that the entire logistics industry is united for the cause for collaboration. An overwhelming visitors’ crowd right from the word ‘go’, inspiring speakers and a whole host of activities would best describe the Smart Logistics Leadership Series, which was

18 • SMART LOGISTICS • NOVEMBER 2010

recently held at Taj Lands End, Mumbai. Though B2B in its true sense & spirit, the event turned out to be no less than a show-stopper with each one of the attendees being involved in the knowledge dissemination session. The event began with an inspiring welcome address by Senthil

Chengalvarayan, President & Editorial Director, TV18 Business Media. Providing refreshing insights on the need for collaboration, he mentioned that connectivity was yesterday’s buzzword. Today, it is important that you are smartly connected — and no where is that more true than in the connections

you make while building your supply chain. In a globalised world, zeroing in on the right connection can make the difference between success and failure. You have to throw out old notions and sometimes adopt new ones that could seem completely counter intuitive. You may have no choice but to sleep with the enemy for instance….we call it Competitive Collaboration, where you and your partners compete with the same people at times. Does that sound surprising? You will find out that it is often the only way to survive!! With such fascinating thought, Senthil set the ball rolling for collaboration. Session one started with the inspiring opinion of SV Sukumar, Executive Director, Operations Consulting Practice (Manufacturing & Services Sectors), PwC, wherein he gave a brief overview of how logistics is being perceived in the industry today. Revealing striking stats & facts about logistics, Sukumar, projected, “India is ranked 47th in the logistics competitiveness worldwide, which is not a good position to be in. Roughly US$ 45 billion is lost due to wastage during logistics. We spend 13 per cent of GDP on logistics, which is 30 per cent more than developed nations. Amidst all these complexities, the good news is that there is only one direction in which we can go and grow and make a complete difference and there’s no choice for that. This criticality points towards collaborating with partners as well as with competitors to attain excellence.” Leaving too many questions unanswered for the audience and speakers to emphasise upon, Sukumar set the tone of the conference. Jasjit Sethi, CEO, TCI Supply Chain Solutions vouched for the fact that no organisation in such heightened competitive landscape can work in silos. Companies need to adopt collaborative approach to surge ahead. Pranil Vadgama, President, Chep India, averred, “Collaboration within the supply chain will become a norm in the industry to drive out supply chain costs.” Terming pooling as the source of collaboration, he further said that the time is now…let’s start to collaborate and reduce all our supply chain costs collectively – through pooling! Giving a global perspective, Oscar De Bok, CEO, South Asia & South East Asia, DHL Supply Chain, said, “We should think of 3PL & 4PL players as the catalysts

for collaboration. If you use an entity that separates the interests of different parties, in order to bring in optimisation for different parties, then I think collaboration will move much faster and in a smooth manner.”

INSPIRING SESSIONS The theme was divided aptly on the issues that require urgent attention from the industry players to come together and reach on a consensus. One of the sessions on ‘initiating & developing trust’ proved to be an eye-opener for the industry at large. While the spellbound presentations were eye-catching, thought-provoking insights of speakers established trust among partners as well as intrigued the attendees to look at their counterparts differently and develop a long-term relationship. The session chair, Lloyd Sanford, Founder & Director, Applied Logistics India, established the relevance and the criticality of developing trust among partners. He avowed that companies these days have slowly and steadily started realising that they must

change the way they manage their supply chain. They seek to improve bottom line and drive increased revenues and market share. In order to achieve this, there is a need for improved levels of consensus, cooperation, coordination, collaboration and co-opetition. Collaboration can go a long way in addressing existing need gaps. With such a headstart, the session highlighted various need gaps that exist in the way of collaboration. In his awe-inspiring presentation, Juzar Mustan, CEO – Logistics, AFL, affirmed, “Collaboration and other win-win alliances require trust between compatible partners to succeed. Trust requires a degree of faith and propensity to risk. Companies need to identify and work on trusting behaviours and actions to quickly acquire relational trust capital.” While establishing trust has been one of the biggest concerns for the industry players, determining risk and how to overcome them is also an important aspect in the way of collaboration. Detailing on the risk factors that may arise on the way

Industry leaders busy charting out the solutions for the many challenges towards collaboration

(L-R): N Sukumar, Sr VP – Supply Chain, Reliance Industries; Lloyd Sanford, Founder & Director, Applied Logistics India; Arif A Siddiqui, Director, Coign Consulting; Jasjit Sethi, CEO, TCI Supply Chain Solutions; Juzar Mustan, CEO – Logistics, AFL; Vivek Sarbhai, VP – Logistics & Customer Operations, Cadbury India; and Suneel Aiyar, Associate Director, Consulting (Supply Chain), PwC during a panel discussion on paving the way for collaborative partnership

NOVEMBER 2010 • SMART LOGISTICS • 19

Event report, continued

approach towards collaboration is the necessity, the session was successful in driving the spirits of industry people towards collaboration.

AN INSIGHTFUL BREAKAWAY SESSION To bring in interactivity, an out-of-the-box breakaway session was designed to involve all the delegates in crafting solutions for successful collaboration. Moderated by the leading industry expert, Arif A Siddiqui, Director, Coign Consulting, this brainstorming session probed critical insights into the areas of collaboration, challenges that may arise in the way of collaboration and finally mutually decide upon the probable solutions towards successful collaboration.

The overwhelming visitors’ response at the registration desk

to collaboration, Howard James-Scott, Chief – SCM, Gati, averred that the bottomline is to never over-promise and under-deliver for collaboration in order to ensure successful partnership.

THE USER PERSPECTIVE User fraternity holds a special place when it comes to collaboration. Providing a user perspective on collaboration, Vivek Sarbhai, VP – Logistics & Customer Operations, Cadbury India voiced his opinion on the critical need for internal collaboration. While Sougato Shome, GM – Big Bazaar Supply Chain, Future Supply Chain Solutions presented success stories on how collaboration helped in creating an icon called Big Bazaar in retail. He cited that the company was able to bring down import time lines from 60-75 days to 1722 days from shipping to warehouse in collaboration with its import partners.

Audience engaged in brainstorming activity

20 • SMART LOGISTICS • NOVEMBER 2010

This helped import TTMs to be brought down from 100-50 days from import ship dates to store inwards. This success story speaks of the dire need of collaboration in Indian logistics. An interesting session dedicated to the user industry completed the collaboration loop. While all the industry players agreed that there is a need to collaborate, they also threw open the areas of potential collaboration in the future. The eminent speakers in the session included N Sukumar, Sr VP – Supply Chain, Reliance Industries; Yogesh R Antad, GM – Supply Chain Functional Excellence, Cummins India; Anil Devli, CEO, Indian Shipowners’ Association, Sriram Venkateswaran, Director – National Supply Chain & QA, McDonalds India and was chaired by Suneel Aiyar, Associate Director, Consulting (Supply Chain), PwC. Leaving a clear message that a very concerted

& NOW THE GRAND FINALE… The grand finale to the event proved to be a winner of sorts by calling the entire logistics fraternity to collaborate. Moderated by Jasjit Sethi, CEO, TCI Supply Chain Solutions, a very intriguing panel discussion on paving the way for collaborative partnership provided a crystal clear roadmap for collaborative partnership. The panelists included Suneel Aiyar, Associate Director, Consulting (Supply Chain), PricewaterhouseCoopers (PwC); Arif A Siddiqui, Director, Coign Consulting; Juzar Mustan, CEO – Logistics, AFL; Vivek Sarbhai, VP – Logistics & Customer Operations, Cadbury India; Lloyd Sanford, Founder & Director, Applied Logistics India; and N Sukumar, Sr VP – Supply Chain, Reliance Industries. After having engaged in such an inspiring day of sharing ideas and insights, it was time for the formation of consortium wherein the real problems will be solved by the core team members and a common consensus will be achieved to harmonise the supply chain of tomorrow. The core team members as well as the attendees pledged to work towards achieving collaboration to transform the Indian logistics industry. This is not all, the 8 hours thought provoking session got over with the muchawaited spirited evening for the attendees as well as the hosts. The maiden edition of Smart Logistics Leadership Series in its very essence proved to be a rock-star. The series continues – Chennai in March 2011, Delhi in June 2011 and Mumbai in September 2011.

India Inc. Spearheading Ecological Balance Participate in the Siemens Ecovatives Awards 2010 TM

In Association with

Process Advisors

Corporate India has been making its mark in the global market. Now, it aims to make another, very positive one, on the environment. Maintaining ecological balance is high on its agenda and India Inc. is willing to walk that extra mile to achieve it. If you believe that your company has deployed innovative processes to ensure a positive impact on the environment, please nominate for the Siemens EcovativesTM Awards 2010. Visit http://ibnlive.in.com/siemensecovatives/ to participate and let the world know of the change that you managed to bring. Your effort will go a long way in inspiring others. Last Date for Nomination 25th October 2010.

EVENT REPORT

SPEAKERS’ CORNER

COLLABORATE For The maiden edition of Smart Leadership Series 2010 witnessed plethora of opportunities to collaborate and gain a committed landscape in the globalised world. The awe-inspiring knowledge sessions proved to be thought-provoking and an eye-opener for many in the industry at large. Here is a reminiscence of the opinions expressed during the summit...

Collaboration and other win-win alliances require trust between compatible partners to succeed. Trust requires a degree of faith and propensity to risk. Companies need to identify and work on trusting behaviours and actions to quickly acquire relational trust capital. In India, there is a cultural context for not trusting our partners. We are susceptible to strangers and generally try avoiding any kind of risks. Moreover, in particular, the logistics players don’t know enough about the practices and deliverables of the other party. This makes them pessimistic about taking risks. JUZAR MUSTAN, CEO – Logistics, AFL

India is ranked 47th in the logistics competitiveness worldwide, which is not a good position to be in. Roughly US$ 45 billion is lost due to wastages during logistics. We spend 13 per cent of GDP on logistics, which is 30 per cent more than developed nations. Amidst all these complexities, the good news is that there is only one direction in which we can go & grow and make a complete difference and there’s no choice for that. This criticality points towards collaborating with partners as well as with competitors to attain excellence. SV SUKUMAR, Executive Director – Operations Consulting Practice (Manufacturing & Services Sectors), PwC

Connectivity was yesterday’s buzzword. Today, it is important that you are smartly connected and nowhere is that more true than in the connections you make while building your supply chain. In a globalised world, zeroing in on the right connection can make the difference between success and failure. You have to throw out old notions and sometimes adopt new ones that could seem completely counter intuitive. You may have no choice but to sleep with the enemy for instance – we call it competitive collaboration, where you and your partners compete with the same people at times. Does that sound surprising? You will find out that it is often the only way to survive!! SENTHIL CHENGALVARAYAN, President & Editorial Director, TV18 Business Media

22 • SMART LOGISTICS • NOVEMBER 2010

TANGIBLE GAINS Companies lacking in internal collaboration find it difficult to form an external collaboration, due to the absence of basic attributes like building trust and having a transparent system or develop futuristic thinking and working in co-ordination with each other. Hence, companies must have collaboration between various internal departments that further paves the way to external collaboration, finally leading to competitive collaboration. VIVEK SARBHAI, VP – Logistics & Customer Operations, Cadbury India

Managing supply chain of retail has always been a challenge, especially during the festival seasons. During these high pressure times, it is important to keep pace with the growing sales in the stores. In collaboration with our import partners, we were able to bring down import time lines from 60-75 days to 17-22 days from shipping to warehouse. This has helped import time to market (TTM) to be brought down from 100 days to 50 days from import ship dates to store inwards. SOUGATO SHOME, GM – Big Bazaar Supply Chain, Future Supply Chain Solutions

Collaboration among all key supplier partners and sharing of best practices between them has significantly helped in reducing system redundancies and enable speed to market of several initiatives. We believe that sustaining and fostering this collaboration among suppliers will help in generating unique competitive advantage and long-term wealth from the system as a whole. SRIRAM VENKATESWARAN, Director – National Supply Chain & QA, McDonalds India

Companies these days have slowly and steadily started realising that they must change the way they manage their supply chain. They seek to improve bottom line and drive increased revenues and market share. In order to achieve this, there is a need for improved levels of consensus, cooperation, coordination, collaboration and co-opetition. Collaboration can go a long way in addressing existing need gaps. LLOYD SANFORD, Founder & Director, Applied Logistics India

NOVEMBER 2010 • SMART LOGISTICS • 23

SMART STRATEGIES

COLLABORATIVE PARTNERSHIP: AREAS

TEAMING UP FOR SUCCESS A carefully crafted supply chain network will be a differentiating factor in establishing a distinct lead for a company. Changing business dynamics and increasing competition today necessitates a partnership to have the winning edge. The success mantra lies in evolving a collaborative partnership among the entire spectrum of the value chain, and exploring all the areas of collaboration for mutual benefit. PURNA PARMAR LOGISTICS and supply chain is one of the core elements of a company’s competitive advantage. Designing a seamless supply chain as a standalone entity is becoming difficult, considering the growing competition and high pressure on cost reduction. Here, competitive

24 • SMART LOGISTICS • NOVEMBER 2010

collaboration and partnership plays an essential role in building a robust supply chain system and attain optimal customer satisfaction. Competitive collaboration and collaborative partnership are all about opportunities for greater coordination, integration and collaboration between

logistics service providers(LSPs) and service users. Various areas of collaboration that can shape up the future of logistics industry in India include:

INFRASTRUCTURE SHARING Lack of infrastructure has always been an

issue for service providers as well as service users. Collaboration in infrastructure among competing industry players through service providers or consultants will not just help companies solve this imperative issue, but also help in cost reduction. The motive of infrastructural collaboration is to reduce the overall space occupied and consolidate warehouses in appropriate locations to achieve cost-effectiveness. Companies can also install shared warehouse management systems (WMS) and equipment managing systems. “Market growth is driving up volume challenges in capacity and supply chain cost management issues. Many companies are rapidly moving towards supply chain modernisation to keep pace with the level of market growth and cost pressures. The Indian supply chain suffers inherent inefficiencies and infrastructure challenges on a day-to-day basis. Several organisations across India face these challenges and all are working towards developing their own solutions through collaboration,” points out Pranil Vadgama, President, CHEP India. A large multi-user facility offers strategic benefits, which calls for key market players to come together to reap the benefits of collaboration in warehousing. Outsourcing of specialised logistics activities helps companies save costs, allowing them to focus on their core competency. “Collaboration in warehousing allows for customer expansion in a growing economy. Companies can pay for the space they use, and customers can expand their business & focus on demand and supply planning, while the downstream supply chain can be completely flexible,” said, Oscar De Bok, CEO, South Asia & South East Asia, DHL Supply Chain.

FREIGHT EXCHANGE At an operational level, this may mean effective utilisation of logistics assets. A simple case may elucidate the opportunity: In a traditional user (shipper) and logistics service provider (LSP) relationship, both parties would be working on to improve their efficiencies for enhanced profitability. However, the approach would benefit only business processes that can be controlled independently by each party. There is enormous opportunity to improve on hidden costs. One such hidden cost is associated with asset repositioning. Sharing information about freight schedules and exchanging freight

information can help companies leverage on the transport services of one another. According to industry players, a common body should be formed where companies can share and access freight information and collaborate to save costs, and hence establish an efficient supply chain system. Juzar Mustan, CEO, AFL Logistics, said, “Collaborating through freight exchange would help companies find logical and simple solutions for their transportrelated challenges. This can be explained with an example; if company A wants to transport goods from one location to another, information obtained from freight exchange would help company A opt the best possible rates and routes that company B operating in the same location would offer. This would help company A negotiate and plan the whole transport process in a better way. Company A can also opt for collaborating with company B operating in the same location and share vehicles and transport.” Freight exchange provides far-reaching benefits. This is not only a cost-effective solution but will result in lesser traffic congestion, and hence reduced lead times.

KNOWLEDGE SHARING Sharing of knowledge, eg technical know-how, is also a critical area of collaboration. For instance, if a company has deployed a new technically advanced system for managing its warehouse or even fleet tracking systems, it can share this information with other companies. A company can also share the best practises it follows that has helped it design a seamless supply chain management system. Besides, companies can share success stories and alert other companies on the various mistakes they made and which can be avoided in future. “The need of the hour in the logistics industry in India is skilled labour. Hence, LSPs should come together to train the manpower collaboratively through institutes or vocational training courses,” points out Chaitanya Prabhu, AVP, Integrated Solutions, Arshiya. Another key component for competitive collaboration in the area of knowledge sharing is to have effective information at all levels about the status of a particular item, at any time. This is essential for coordinating the collaborative logistics streams for knowledge sharing. “Collaboration allows hiring of better qualified operations management personnel and provides

consolidation synergies for transportation. It also increases space utilisation and facilitates process standardisation or improvements through knowledge sharing, which further leads to a better planned customer growth,” explains Bok.

EQUIPMENT POOLING Apart from infrastructure, logistics equipment such as crates and pallets is another area where companies can collaborate. For instance, fast moving consumer goods (FMCG) companies that have common problems across the entire supply chain, can be approached with common solutions of equipment pooling. Equipment pooling is the shared use of standard packaging across various entities. At present, environment has become a ‘top of the agenda’ item for companies. “Pallet pooling reduces burden on the world’s lumber supply and waste streams through responsible use of wood in products designed for repeated use. Controlled end-of-life management and a clear sense of ownership in a closed loop pool helps ensure that wood recovery, reuse and recycling efforts are maximised to keep waste out of landfills,” adds Vadgama. According to Vadgama, good quality packaging is essential for a flexible, responsive and efficient supply chain. Standardisation will be the key for all parties in the industry to enable costsavings in the supply chain. Packaging should be considered along with product configuration and design, and not as an afterthought. Shared use of standardised returnable packaging equipment by multiple entities reduces costs significantly and is expected to become the norm in the industry to drive out supply chain costs.

INTERNAL COLLABORATION Internal collaboration forms the basis of competitive collaboration; however, it is one of the most difficult attributes to comprehend. Internal collaboration is centred around the culture and work environment of a company. A company looks forward to two behaviours – competitiveness and collaborativeness – and these work in contrast to each other. According to Vivek Sarbhai, VP, Logistics & Customer Operations, Cadbury India, companies lacking in internal collaboration find it difficult to form an external collaboration, due

NOVEMBER 2010 • SMART LOGISTICS • 25

Collaborative partnership: areas, continued

ACT Internal collaboration forms the basis of competitive collaboration; however, it is one of the most difficult attributes to comprehend. Internal collaboration is centred around the culture and work environment of a company. to the absence of basic attributes like building trust and having a transparent system or developing futuristic thinking and working in co-ordination with each other. Hence, companies must have collaboration between various internal departments that further paves the way for external collaboration, finally leading to a competitive collaboration.

COLLABORATIVE PLANNING Planning and strategising are critical and most confidential aspects of any company. However, if companies learn to collaborate and involve each other right from the planning stage, it would help them build a robust supply chain and improve the bottomline. Suneel Aiyar, Associate Director, PwC, says, “There are international forums where

executives of various companies gather and discuss about the issues they face and how they can be solved. These forums also have competitive companies that not just address challenges but also share their strategies and future plans. As an industry, we must have the maturity to handle such critical information. We must learn to adopt these strategies, rather than aping them blindly or applying against the competitive company, which will encourage unhealthy competition. This would help the industry to plan and strategise in a better way and avoid downtime.”

COLLABORATION AMONG VALUE CHAIN PARTNERS Collaboration among the value chain partners is the key to success of an

organisation. Relevance of logistics for competitiveness makes the LSP an important partner for present-day businesses. Companies may collaborate with their LSPs and trading partners to bolster capacity to support growth as well as add capabilities to enhance customer service. This will improve efficiencies by drawing on the expertise of the partner as well as planning accuracy by improving information visibility. Collaboration between shippers (users) and LSPs can be across a range of areas including sales & operations planning, manufacturing planning, sourcing logistics, warehousing and distribution logistics.

THE WAY FORWARD The collaboration continuum extends across the ecosystem of players, with the type of collaboration and maturity of collaborative relationship affecting the scope and impact of collaboration on the participating players. While these are some of the areas of collaboration, there are a number of challenges that companies face in each of these areas.

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26 • SMART LOGISTICS • NOVEMBER 2010

COLLABORATIVE PARTNERSHIP: CHALLENGES SMART STRATEGIES

TUG

WAR Ever wondered what stops logistics companies from collaborating with each other knowing that it springs up benefits for all parts of the value chain? Undoubtedly, inherent cultural and industry-specific barriers are holding it back. Find out how… SANDEEP PAI “IT is the long history of humankind; those who learned to collaborate and improvise most effectively have prevailed.” This famous statement by Charles Darwin deliberates the need to collaborate in the modern day world. The need intensifies when the industry is as fragmented as the Indian logistics industry. Consider these numbers…The share of organised logistics players is less than 3 per cent of the entire logistics fraternity in India, compared to their counterparts in the US and Japan, which stands at 58 per cent and 80 per cent respectively. Because of this disparity, it is quite apparent that the available resources remain underutilised. The resultant impact is that logistics cost in the country is one of the highest in the world. Apart from costs, the skill gap in the logistics industry is also one of the major hurdles faced by many logistics service

providers (LSPs) today. All these factors call for the need to think differently…in a nutshell the need to collaborate! Justifying this very fact, Jasjit Sethi, CEO, TCI Supply Chain solutions on the aegis of SL Leadership Series 2010, avers, “Apart from cost effectiveness, benefits of collaboration include ecological benefits, collaborative learning and reduced lead time.” Thus, it is clear that collaboration between competitors or otherwise can bring in mutual benefits and make the industry more mature. While collaboration is indispensable for the growth of Indian logistics industry, it is important to identify the associated challenges, obstacles, hurdles in the way of effective & successful collaboration. The challenges are more diverse, when the collaboration is between the competitors. “Benefits

definitely outweigh the barriers when it comes to competitive collaboration, but there is a need to build up trust and alliances amongst various stakeholders in order to materialise these benefits,” Sethi adds. But trust does not come as easy as it sounds. Juzar Mustan, CEO - Logistics, AFL, says, “In India, there is a cultural context for not trusting our partners. We are susceptible to strangers and generally try avoiding any kind of risks. Moreover, in particular, the logistic players don’t know enough about the practices and deliverables of the other party. This makes them pessimistic about taking risks.” Apart from cultural context, there is industrial context to it as well. Mustan lists them down • Unsatisfactory past experiences: Several bad contracts in the past have made companies skeptical about

NOVEMBER 2010 • SMART LOGISTICS • 27

Collaborative partnership: challenges, continued

collaboration. They fear for skill development is found Barriers towards collaboration of losing out to better to be in the road freight and established players. This warehousing segments. • Decision making for short-term vs. long term creates a serious hindrance But the road transport sustainability to collaboration in the Indian industry is so fragmented that • Customised requirements for individual site logistics industry. it does not understand the locations as opposed to standards • Industry in nascent stage: benefits of collaboration. Oscar • Over-reliance on cheap packaging materials that: - Fragment service De Bok, CEO, South Asia & – Are not environmentally friendly provider base South East Asia- DHL Supply – Have very little shelf life requiring recurring - Lack of known, Chain estimates, “Eighty per capital investment established players cent operators own less than • Archaic leadership mindset of not trying something - Insufficient benchmarks 5 trucks. Moreover, operators new for ‘good practices’. are lane specific and there are • Concerns about sharing resources with competitors • Lack of understanding of very few regions wide or paneven though all parties benefit from the “pool” business requirements: India players in this industry.” • Cultural mindset of ownership vs. leasing. Several companies do not Nonetheless, smaller companies have proper understanding fear that the workforce will Inputs by Pranil Vadgama, President, Chep India that collaboration can help tend to move towards big their businesses grow. They companies after getting the from coming together. It has been seen function in traditional manner and are training. The fear of losing out prevents that in most of the cases the companies reluctant for any kind of a change. As small players from collaborating. are not satisfied with others infrastructure a result, they have TAXATION facilities, be it warehouses or any other - Limited experience and exposure As different states have different taxation thing. Moreover, to establish a new - ‘Still developing’ talent base. and road permits, the idea of collaboration infrastructure facility in collaboration While lack of trust results in nonbetween different players becomes even results in high cost, which companies are collaboration, there are other factors more convoluted. Apart form taxation, generally reluctant for. as well, which prevent companies from there are different regulatory requirement collaborating with one another. These SKILL GAP at each state check post. are mainly attributed to the nature and The skill gap in the logistics industry character of the Indian logistics industry. THORNS IN THE WAY is one of the major hurdles faced by Consider a few hurdles: Market growth is driving volume challenges many LSPs today. So there is a need for LACK OF KNOWLEDGE in capacity and supply chain cost issues. these LSPs to come together to train Because of the fragmented nature of the In such a scenario, many companies the manpower collaboratively through logistics industry, the companies do not are fast moving towards supply chain institutes or vocational training courses. understand the scope of collaboration. modernisation to keep up with the level A KPMG India report on “Skill gaps in Moreover, despite several companies of market growth and cost pressures. the Indian Logistics” states that while running businesses for generations, they The Indian supply chain is inherent of skill issues exist in varying degrees in all lack knowledge about the areas where in-efficiencies & infrastructure challenges segments of logistics, there are areas they can collaborate and benefit. In fact, on a day-to-day basis. Logistics costs are where the gaps are not only wide but it has been seen that smaller players one of the highest in the world and the also widening at a relatively fast pace. The fear that the larger partners will benefit lack of standardisation drives higher costs. most severe and immediate requirement most and they will lose out. These challenges are faced Aiming For Collaboration They also fear that they will by many organisations across be bought out or absorbed by India. The problem is that they Area of Challenges Solutions collaboration larger players eventually. are all working in developing their own solutions. The need Collaborative • Fear of losing • Building trust internally and planning competitive externally INFRASTRUCTURE of the hour is to collaborate. advantage • Leveraging on cost and quality The motive of infrastructural The benefits of collaborative factors collaboration is to reduce the distribution are far reached. • Lack of • Setting up of a logistics council overall space occupied and This will not only be a costknowledge for sharing knowledge about the areas consolidate warehouses/DC effective solution but will result of collaboration in appropriate locations to in lesser traffic congestion and Infrastructure • High cost of • Clarity on sharing of achieve cost-effectiveness. hence, reduce lead times. establishment infrastructure right at the However, there is a difficulty However, there are several agreement signing level in sourcing for quality facilities reasons because of which • Outsourcing to 3PL • Equipment pooling with a sizeable space in key companies are reluctant to strategic areas. Thus, lack of collaborate. It’s about time to • Need for skilled • Providing vocational training staff/training in collaboration with the good infrastructure among the take the next step forward to Government of India logistics players prevents them reach out to others.

28 • SMART LOGISTICS • NOVEMBER 2010

Illustration By: Sanjay Dalvi

COLLABORATIVE PARTNERSHIP: SOLUTIONS SMART STRATEGIES

THE

SECRET RECIPE TO SUCCESS

‘To every problem, there is a solution’, and finding one that solves the miseries of a logistics player would be like witnessing a Eureka moment. But the real catchword here lies in devising that solution, implementing and executing it, to achieve a collaborative aim of taking the Indian logistics industry to a new high. Taking a cue from this, the Smart Logistics Leadership Series 2010 breaks through the many challenges the industry faces to derive solutions that are realistic and implementable. SUMEDHA MAHOREY MODERN transport & logistics landscape is a highly distributed interbusiness activity spanning across vast expanse with each of the involved business partners aiming at optimising their individual, commonly complex

supply and production chains. With such complexities in hand and brains working the world over, is it actually possible to solve the many, though sometimes common, challenges that this industry faces? Yes, it is…

Issues such as less than truck load (LTL), infrastructural bottlenecks, unskilled manpower, inappropriate technologies, mistrust, breach of intellectual property rights (IPR), competition, non-availability of professional transporters, increasing need

NOVEMBER 2010 • SMART LOGISTICS • 29

Collaborative partnership: solutions, continued

for a freight exchange, questions like who will claim liabilities, can all be dealt with. One step can make way to overcome all these hurdles, and that is collaboration. But how exactly does this work? Does one just shake hands and say, “Now I can trust you,” or is there another way to build strong relationships between companies? Can there be a solution that will actually lead to sharing of business information, confidential but necessary details, transportation capacities and reduce the most important ‘cost’ factor for both the partners. Delving in-depth to find the ultimate answer, Smart Logistics Leadership Series 2010 was held recently to zero in on solutions that can be readily implemented and executed.

BUILDING TRUST The fundamental step towards collaboration is building trust that can only be developed by taking a stepby-step approach towards initiation, establishment and maintenance. Many issues, which threaten the business by moving it in a fundamentally undefined direction resulting in loss of control, IPR, process visibility and the dilution of brand image due to stock-out, high lead times, poor performance, etc can be nullified by building trust right at the start. It also resolves many operational risks, which encompass a range of servicerelated, staffing and governance issues. Juzar Mustan, CEO – Logistics, AFL, says, “Logistics companies should show willingness to trust the other entities in the value chain. After collaborating, logistics service providers (LSPs) as well as manufacturers should be sure of their strategic objectives. Also, they must be ready to take smart & informed risks.” Both the partners need to demonstrate their ability to understand and share the concerns to strengthen their relationship. This initiation needs to be supported by a trusting behaviour, which includes charting out common mission, shared values and goals, and accepting vulnerability. Once trust has been built, both the collaborators need to minimise ambiguity and incorporate conflict resolution procedures by way of contracting. Measures like frequent exchange of quality information, calibration of transaction costs,

30 • SMART LOGISTICS • NOVEMBER 2010

from this, on the operating level, the industry needs technicians who have a sound understanding of the latest technologies emerging on a daily basis. The need for good drivers, material-handling equipment operators, people adept at shipping and transport activities, goods handling and ports can only be satisfied through technical training programmes. Once these institutes start functioning efficiently, another issue that may crop up is that if a leader in logistics opens up a skill development institute for the blue collar workers, would it be open to accept people from competing companies to be trained in their institute? To this, industry veterans promptly reverted that they will be more than keen to educate and train people on the emerging trends & technologies shaping up in the supply chain domain.

ETTING UP OF VOCATIONAL TRAINING INSTITUTES BY MAJOR PLAYERS IN THE LOGISTICS INDUSTRY IN COLLABORATION WITH THE GOVERNMENT WILL SUFFICE THE MANPOWER DEMANDS OF THE INDUSTRY AND PROVIDE FOR WELL-TRAINED AND FOCUSSED HUMAN RESOURCES AS WELL.

transparency in decisions, responsiveness to critical situations such as misdirected communications and claims would help in maintaining this relationship in the long term. Other measures, apart from building trust, that need to be taken to develop a collaborative relationship include: • Manage proposal process (structured Intellectual property approach, outcome modelling, process One challenge that always hampers reviews) sharing of knowledge is the IPR. There is • Transfer insurable risks a concern that sharing of an idea that has • Negotiate agreement been floated internally with an external • Manage key performance indicators via company will breach the IPR, though there robust relationship model is no patent to that intellectual thought. • Assess existing arrangements The solution lies in figuring out whether (renegotiating contract, identifying new value-added services) • Re-evaluate outsourcing The Trust Equation approach (changing strategy, extending scope, in-sourcing or spinning off). TQ = C+R+I S While building trust is a crucial factor, other equally important Where aspects of a collaborative C = Credibility (Ability) relationship include the following.

KNOWLEDGE SHARING

R = Reliability (Intent) I = Intimacy (Integrity) S = Self-orientation (Internal Focus)

Need for a common platform With the absence of a knowledge Source: The Trusted Advisor, Green, Maister & Galford, 2000 sharing platform within the logistics industry, ideas remain limited to one company. To overcome that idea actually falls under the definition this, a logistics council should be formed of IPR. A lot of ideas believed to come to share the best practices/knowledge under the intellectual property do not with the industry. A social communication actually fall under this premise. Such ideas networking group needs to be formed can be shared with the industry, as they within the logistics industry, right from the may help in the progress of the industry. service provider to the user for sharing best practices. Fear of competition A rampant fear that exists among the Skill development industry players today is that whether The industry has realised the need for collaboration will take away my a logistics management course that can competitive edge? Whether sharing of generate the requisite manpower. Apart knowledge will take away my USP? In

this scenario, the answer lies in sharing historical case studies, as they have already been implemented by the logistics provider/manufacturer/vendor. For example: In the US, there exists a supply chain executive board, which is a group of industrial organisations that share very detailed case studies with each other. But another challenge that arises here is that not many Indian companies actually record the best cases they have dealt with successfully. Some of the most complex terrains may have been

be developed overnight. For developing trust, one needs to build in the culture within the logistics industry itself. The culture of trust needs to be built on the foundation of OTTT – Openness, Trust, Transparency and Teamwork – between logistics players and manufacturers, from the top to the lower level management, including shopfloor workers as well. Apart from this, a company can gain competitive advantage by leveraging on other factors. Highlighting on these factors, Oscar De Bok, CEO, South Asia & South East Asia,

Aiming For Collaboration Area of collaboration

Challenges

Solutions

Knowledge Sharing

• Breach of intellectual property right

• Sharing ideas, which do not fall under IPR • Documenting success stories • Sharing historical case studies

• Fear of misuse of information

• Agreement for sharing of information & resources

• Claim liability for damages

• Need for transparency

• Non-availability of professional transporters

• Starting up advanced post-graduate course in logistics management

Freight Exchange

encountered and overcome by logistics managers. These include extreme climatic conditions, socio-political issues, etc, but generally they are not documented. So, it becomes difficult for companies to actually share such success stories. To solve this issue, whenever a major breakthrough is achieved, it needs to be documented and stored in a library. These can be referred when the need arises. For instance, when a request for qualification (RFQ) needs to be sent, the client asks to provide an interesting case study, at this time the document can be used.

DHL Supply Chain, points out, “The industry should focus on six specific levers to achieve competitive advantage.” These include: • Cost lever: Become more cost competitive through procurement • Cost lever: Leverage joint return loads • Cost lever: Leverage GST consolidation • Cost lever: Use commercialisation/coloading as a strategic lever • Quality and cost lever: Use joint IT as a strategic and operational advantage • Quality lever: Differentiate through reach.

Technology Today, the entire logistics industry is collaborating unconsciously, as the application service providers remain the same and provide the same software to several competing companies. Collaborating on the technology front would enable companies to better understand the bottlenecks in the whole process and make the program as close to reality as possible.

INFRASTRUCTURE

COLLABORATIVE PLANNING Fear of losing competitive advantage Mistrust within the organisation or within the logistics community gives rise to such fears. The key to this lies in developing the trust factor both internally and externally over years of functioning, as trust cannot

Tackling high cost of establishment Warehouses, logistics parks as well as highend technology are the major cost centres in any supply chain. For warehousing bottlenecks, a major solution lies in third party logistics (3PL) companies, which cater to different customers and are blind towards competing players in the market. Thus, a multi-user warehouse facility, run by 3PL service would drastically reduce the high cost of establishment. Additionally, the costs involved in managing fleet can be reduced with the use of the right IT solution. For example: An aggregator like makemytrip.com for cargo movement can reduce transportation costs drastically, and better manage the movement of fleet from one area to another.

FREIGHT EXCHANGE A freight exchange enables freight haulers and companies offering cargo loads to explore emerging business avenues with freight and freight forwarders. This system provides a platform that allows carriers to communicate freight traffic information to fellow operators such as transporters, forwarders and logistics companies. In India, TCI has been mooting the idea of creating a national freight exchange across the country since 2002. However, this system has not been established as yet because of several challenges that include trust issues, skills, IT, connectivity across the country and the non-willingness of several transporters to get together to share the load and capacities. Jasjit Sethi, CEO, TCI Supply Chain Solutions, believes that the logistics industry does not work on transparency. According to him, constant attempts are being made since 2002-03 to make the system functional; however, the very nature of online system, ie, transparency, poses threat to brokers. Thus, concerted efforts are required to make brokers understand the importance of freight exchange. Non-availability of professional transporters Here, the solution is three dimensional in nature. • Education: Setting up of vocational training institutes by major players in the logistics industry in collaboration with the government will suffice the manpower demands of the industry and provide for well-trained and focussed human resources as well. • Incentive-based performance: A rewardbased system can be put in place for the best transporter. These rewards depend on the timing and the perfection with which they transport the cargo. • Planning & technology: Traffic planning based on tight slots can help truck drivers manage their routes and optimise on the cost factor.

IMPLEMENT, EXECUTE AND LEAD THE FUTURE With so many options to tackle with varied challenges emerging at a single common platform of the Smart Logistics Leadership Summit 2010, it is evident that solutions lie within the industry. The need of the hour is to implement these solutions, and execute them smartly with collaboration as the keystone to transform the Indian logistics landscape.

NOVEMBER 2010 • SMART LOGISTICS • 31

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COLLABORATIVE PARTNERSHIP: SCOPE

SMART STRATEGIES

PAVING THE WAY FOR A

POTENT PARTNERSHIP With the Indian logistics industry opening up for experimentation to reduce overall costs through the use of collaboration as a strategy, time has come to explore the potential of collaborative logistics and develop innovative and unconventional methods to lead the industry towards a bright future.

SUDHIR MUDDANA RECENT statistics reveal that India ranks 47th worldwide in terms of logistics competitiveness. Also, about $45 billion is lost due to the wastage occurring in the logistics industry. In addition, logistics contributes to about 13 per cent of the country’s gross domestic product (GDP), which is 30 per cent more than that of developed nations – 10 per cent of the GDP. With the contribution of logistics being so high to the country’s GDP, it is now time for companies to think beyond traditional methods, and innovate, to cut down on these costs. With the known benefits of collaboration, be it with competitors or customers, companies can now share services, thereby avoiding wastage in terms of space, cost, etc. Not only will this help in the development and growth of the companies involved in the partnership, but it will also provide a facelift to the overall Indian logistics industry. Arif A Siddiqui, Director, Coign Consulting,

34 • SMART LOGISTICS • NOVEMBER 2010

avers, “In today’s business, collaboration and working together is the fundamental aspect of any organisation’s development and growth.” Until recently, the industry worked around a notion that ‘One has to work around logistics and not on logistics’. They did not pay much attention to logistics, but changed other processes to work around logistics. In other words, logistics, being the backbone of most industries, did not receive the attention it deserved. However, the logistics scenario has changed dramatically in the last two years. Increasing demand and changing customer profiles have now become a matter of concern for the industry. Also, a number of organisations in India are going global, but the expectations of global customers are significantly different from those in the country. In order to overcome these issues and provide customer satisfaction, the industry needs to collaborate, and

no other option seems to be available. “We have to collaborate because we do not have a choice, considering the limited scope of our markets, transportation industry, the number of small & regional players and limited warehousing & small facilities. Today, a number of vehicles are moving within the country on a daily basis, returning almost completely empty or half full. Such a scenario demands that we as players need to do better, ie, collaborate,” asserts Juzar Mustan, CEO Logistics, AFL. Attempts for collaboration were unsuccessful in the past. Jasjit Sethi, CEO, TCI Supply Chain Solutions, explains, “Earlier, a movement called Efficient Consumer Response (ECR) was carried out. This was based on how companies can collaborate together because retailers would want to have shelves of the same dimension. They will not want to waste space. This movement was visible the world over; however, it did not actually take off.

Lack of standardisation is a reason for this failure.” Citing the need for collaboration, he added that no company carries out the entire logistics of any user. They too need to collaborate with other companies to fulfill customer requirements. Today, the term ‘Collaboration’ is the latest buzz in the logistics industry. Even though it has been done in the past directly or indirectly, it was never done consciously. Service users have always been collaborating with service providers. However, in recent times, not only this trend has strengthened, but collaboration with competitors is also seen as the most favourable option in logistics. Today, with increasing costs and growing demands, the need for collaboration is clear. “Collaboration among all key supplier partners and sharing of best practices between them has significantly helped in reducing system redundancies and enabled speed to market of several initiatives. We believe that sustaining and fostering this collaboration among suppliers will help in generating unique competitive advantage and long-term wealth from the system as a whole,” explains Sriram Venkaswaran, Director National Supply Chain & QA, McDonalds India. Companies are realising the need to collaborate and are showing utmost interest in doing so. However, many companies find a lack of support from the government. Lloyd Sanford, Founder & Director, Applied Logistics India, says, “There are diverse players having the ability to start collaboration, and demonstrate to the government authorities what can be done, and how the government can incrementally step in and facilitate and help. I believe that the Indian Government, when approached correctly, will take action in this regard.” This was recently witnessed in the Smart Logistics Leadership Series 2010 organised in Mumbai. What came as a

Myths about Collaboration With collaboration being the way out for the logistics industry, it is time to clarify a few myths about collaboration and examine what does, and does not work. Collaboration is a strategy: It is not a strategy, but it can add value to a strategy. Collaboration is the output of a culture based on trust and openness, where individual requirements are overall met better by partnering with others rather than by striving to meet it individually. Companies with inefficient supply chains will benefit the most from collaboration: This is a wrong belief. Rather, companies having the most efficient supply chains benefit more from horizontal collaboration, as they are aware of their costs. Such efficient companies have squeezed out all the costs possible internally and need to look outside the business for future big savings. They have overcome the problem of internal collaboration, secured significant benefits from vertical collaboration with suppliers and customers and, most importantly, have the time and senior management endorsement, which is vital to making horizontal collaboration work. Companies fall out over sharing of savings: This might happen, but can be avoided by benchmarking the respective supply chain costs of each collaborating party before commencing the project. Collaboration leads to loss of control and reduction in customer service: In fact, if done properly, the opposite can be true. Collaboration enables more economic and frequent shipments, which can increase delivery frequency to customers. With most industries looking for this facility, collaboration is a good step. For suppliers, the benefits of higher on-shelf or in-stock availability can reduce loss in sales. learning for the entire logistics fraternity is that collaboration holds immense business prospects for one and all. The time has now come to collaborate and excel. The panel discussion towards the end of the event involved users, providers and consultants, who discussed in depth the opportunities in collaboration and the potential it holds for the industry at large in the years to come. The user community, present at the discussion, showed interest in sharing their vendor assets with their competitors. They opined that since at the end of the day, retailers will have their own as well as their competitors’ products in the same store, at some point in the supply chain, both companies still co-exist. Also, with transportation being a major contributor

Components of Competitive Collaboration Collaborative The benefits of collaborative distribution are far reached. This is not only Distribution a cost effective solution but will result in lesser traffic congestion and hence reduce lead times. Shared Learning

The need of the hour in the logistics industry in India is skilled labour. Hence LSPs should come together to train the manpower collaboratively through institutes or vocational training courses

Environmental Competitive collaboration between logistics players could really help in solving the ecological issues, LSPs should come together to solve these Issues issues that would impact the supply chains of the future Courtesy: TCI Supply Chain Solutions

to the overall costs of logistics, and also with the growth of organised retail in the country, only few entities will manage the supply chain unlike today. “With the maturation of organised retail, the way we carry out transportation is going to change. All small service providers will no longer be there and the country will see true third-party logistics (3PL) service providers at that time,” confirmed N Sukumar, Sr VP - Supply Chain, Reliance Industries. The panelists concluded that there are several areas of collaboration between different industries that have not yet been tapped. Therefore, it is important to study the specifics in each industry, in order to have the collaboration. Also, what came out from the discussion is that there is a great merit in having long-term contracts between entities, as it decreases the complexities in supply chain. This shows unlimited opportunities and benefits in collaborating with competitors and customers. However, to facilitate collaborations, it is imperative for the industry to be transparent with the partners and have trust in them. With a vision to improve the Indian logistics industry, and thereby the overall Indian economy, it is clear that collaboration is the future of logistics.

NOVEMBER 2010 • SMART LOGISTICS • 35

VIEW FROM THE TOP FIAT INDIA

SCM WILL DRIVE FUTURE IN THE AUTOMOTIVE “For staying ahead in competition, companies will have to work on making their optimal cost,” avers Kalpesh Pathak, AVP – Supply Chain Management, FIAT

INDIAN SUPPLY CHAIN SCENARIO VIS-À-VIS OTHER COUNTRIES The supply chain scenario in India is fast changing, although there is still a huge gap in comparison to that in developed markets. These include overall visibility of order management process to each stakeholder in the chain, delivery reliability in inbound as well as outbound, consolidated pick up & distribution of the cargo, multimodal transportation solutions for reliable, cost-optimal and damage-free delivery, standardisation of supply chain resources like transportation solutions, vehicles, containers, etc.

CRITICAL LOGISTICS NEEDS FOR FIAT INDIA Being in a dynamic industry like automotive, every company will have unique logistics requirements. For FIAT India, management of both inbound and outbound logistics is of immense importance. Inbound logistics include delivery reliability and visibility from domestic and overseas suppliers, reduction in transit damages (especially in overseas imported air consignment) and accuracy & management of documents for inbound deliveries. Further, it involves timely delivery of domestic air shipments and higher cube utilisation of cargo from domestic suppliers through consolidation. As far as outbound logistics is concerned, it is managed by our distributor TML. This mainly comprises timely availability of car carriers, transit time compliance, visibility of consignments

36 • SMART LOGISTICS • NOVEMBER 2010

in transit and zero transit damages.

CHALLENGES FACED Today, the biggest challenge before us for distribution of our offerings is a gap in the supply-demand situation of car carriers. Currently, more than 95

per cent of cars in India are distributed through road transport. Owing to the geographical spread of our country and supply-demand gap across four major zones (East, West, North and South), there is always a shortage of car carriers at any given instant in different zones.

BUSINESS GROWTH INDUSTRY supply chains smarter, leaner and responsive to customer needs at India during an exclusive interaction with Prerna Sharma. Excerpts…

ENSURING SUPPLY CHAIN EFFICIENCY TO ENHANCE CUSTOMER SATISFACTION

alter the stocking norms to prevent any stock-outs.

With regard to inbound logistics, suppliers control our logistics network, and most of our supplier base is located in close vicinity. Transit times and window delivery reliability are regularly monitored. In case of issues with a particular service provider, a joint meeting is called to understand the underlying reasons and corrective actions are taken instantly. For in-plant logistics, we have a service provider with whom we have defined and agreed upon key performance indicators (KPIs). Close monitoring of their activities helps us ensure high level of efficiencies. We have a unique business model for the outbound side, wherein our joint venture (JV) partner Tata Motors handles our distribution logistics. As a result, we have a huge advantage in terms of sharing the distribution load, which gives us good efficiencies inspite of challenges faced by this segment across all original equipment manufacturers (OEMs).

CHALLENGES FACED IN TERMS OF SUPPLYING CRITICAL COMPONENTS AT A DISTANT LOCATION IN THE SHORTEST TIME

SPARE PARTS MANAGEMENT - A DAUNTING TASK? We have set up a spare parts warehouse strategically in close proximity to port, airport and domestic supplier base. Our new offerings (Linea, Grande Punto) are manufactured with extremely high level of indigenisation. This helps us efficiently manage inventory of critical spares. We have few spares that are not yet indigenised and we keep safety stock of such components depending on movement trends, which we have monitored and established over time. Our spare parts team continuously monitors the trends of spare parts sales according to seasonal trends, vehicle life trends, etc, in order to review and

Our spare parts distribution is being handled by the best of service providers in India, with a wide network and reach up to the length and breadth of the country. Because of this strong network and wide reach of our service provider, we are able to execute all our demands in defined transit times. In case of critical customer emergency requirements, we use the premium mode of transport (air freight) and in case of super-critical customer emergency, we also fly the spares with an escort.

MANAGING A DISTANT LEAD The way Indian automotive industry is shaping up, it is an efficient supply chain management (SCM) that will decide the competitive edge for any manufacturer. We have a solid foundation due to the nature of our organisation (JV), which helps us manage a lead in the market due to synergies and strengths of our partners. For example, our distribution model (collaboration with our JV partner) is the only one and unique model in this country. We have strong IT tools to gauge customer demands in the

For FIAT India, management of both inbound and outbound logistics is of immense importance. shortest possible time. We also have a world-class manufacturing plant, which is sufficiently flexible to adjust any demand changes emerging at short notice. Further, we have a huge advantage in

distribution logistics in terms of sharing the loads with our distributor, which helps us maintain deliveries in stipulated transit times.

TECHNOLOGY TOOLS DEPLOYED TO ENSURE EFFICIENT SCM We have a demand management system handled by CRM, FIAT legacy system for production planning and control, SAPERP for material planning and inventory management at the macro level. At micro level, we use all proven tools and techniques to manage the supply chain, eg, LOM, Kitting, Sequencing, JIT, KANBAN, KAIZAN, window delivery concept, SRM, etc.

ADOPTION OF SUPPLY CHAIN BEST PRACTICES Fortunately, automotive industry in India has graduated much faster in terms of using world-class best practices as compared to those in other industries. We use almost all proven best practices to manage our supply chain by modifying them according to the needs of Indian customers. Best practices adopted in our supply chain are based on theory of integration, collaboration and co-operation. We involve our stakeholders in the supply chain right from the beginning of the project to work out the best and costoptimal solutions, depending on the facilities and constraints at both ends of the chain.

CRUCIAL ROLE OF 3PL The concept of third party logistics is still in its infancy in the Indian automotive industry due to the nature of our market and fragmented logistics industry. There are good service providers offering the solutions, but they are specific and not comprehensive. The role of third party

NOVEMBER 2010 • SMART LOGISTICS • 37

FIAT India, continued

in the automotive industry. For staying and delivery of damage-free products to logistics providers is crucial and, looking ahead in competition, companies will customers in the shortest possible time. at the growth projections of the Indian have to work on making their supply automotive industry, this role will be even CRITERIA TO BE KEPT IN MIND chains smarter, leaner and responsive to more crucial in the future. Because of WHILE SELECTING A LOGISTICS customer needs at optimal cost. infrastructure bottlenecks in our country, PARTNER complex tax administrative regime We have comprehensive assessment IDEAL SUPPLY CHAIN and fragmented nature of the logistics INFRASTRUCTURE THAT INDIA tools to analyse different criteria ranging industry, solutions offered are not efficient SHOULD ADOPT from the understanding of business and cost-optimal. This directly affects According to me, with the customer satisfaction in the way of delays and higher costs. Also, The role of third party logistics providers is crucial diverse geographical nature of our country, there can one more dimension that needs and, looking at the growth projections of the Indian never be an ideal supply to be considered is availability automotive industry, this role will be even more crucial chain infrastructure. However, of skilled manpower in SCM to some things can certainly help handle complexities and growth in the future. India in moving closer to a of business. In order to take care needs by service provider; experience in good supply chain infrastructure. of this aspect, we started outsourcing inhandling similar business needs in Indian • Coastal shipping for domestic cargo plant logistics activities for our car and market condition. In addition, resource movement powertrain plants right from the inception. availability and investment capabilities; • Dedicated rail freight corridors This has brought in excellent results. We ability to recruit, groom & retain right • Inland waterways did encounter some obstacles during the talent; technical capabilities in designing • Centralised warehousing, which can initial phase of implementation, but over SCM solutions; overall organisational support consolidation/de-consolidation a period of time, the operations stabilised depth and talent pool are some of the of cargos and are continuing efficiently. parameters that are considered before • Decongestion of existing sea ports KEY PILLARS OF FIAT INDIA’S selecting a logistics partner. by enhancing/expanding current SUCCESSFULL SUPPLY CHAIN… infrastructure The pillars of our success include makeIMPORTANT LESSONS LEARNED • Dedicated air cargo terminals at SCM will drive the future business growth to-order, lean and flexible supply chain strategic locations.

Our search for authentic and informative articles… solicits original, well-written, application-oriented, unpublished articles that reflect your valuable experience and expertise in the logistics industry. You can send us articles, case studies and industry updates. The length of the articles should not exceed 2000 words. The article should preferably reach us in soft copy (either E-mail or CD). The text should be in MS Word Format and the images in 300 DPI resolution and JPG format. The final decision regarding the selection and publication of the articles . shall rest solely with Rs

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INSIGHTS & OUTLOOK

AUTOMOTIVE LOGISTICS

SPEEDING UP ON THE GROWTH CURVE The Indian automotive industry in recent times has witnessed tremendous growth, attracting numerous international companies, to set up and expand base in India. With promises to bring in huge opportunities for the domestic automotive industry, it also demands an integrated and efficient logistics system that ensures a seamless supply chain. GEETHA JAYARAMAN

40 • SMART LOGISTICS • NOVEMBER 2010

IN tune with the growing competition,

automotive supply chain can be quite a daunting task.

the auto and auto components industry across the world is increasingly focussing on innovative supply chain and logistics practices to balance out costs, improve service levels and increase product diversity. Worldwide, auto components logistics was estimated at approximately $51.38 billion in 2006, which is 2.45 per cent of the sales, and is likely to increase to $91.58 billion by 2015. In India, logistics cost in the automobile industry accounts for 23 per cent of sales, whereas in auto components industry, it is about 3-4 per cent. Moreover, approximately 90 per cent of the auto components industry outsources its logistics requirement to third party logistics (3PLs). Prashant Badagi, Senior Manager – Automotive Packaging, Goodpack India, says, “Since the automotive industry is growing at the rate of about 18-20 per cent per annum, the logistics segment has evolved at a much faster pace than expected. Global players have ventured into this segment, offering their sophisticated services in order to provide better solutions to the industry.”

GROWTH JOURNEY India is currently emerging as a global production hub for international car manufacturing companies. Here, the role of SCM is not just that of an enabler but a differentiator as well, as it can enable India to become a stronger production hub. VS Raghavan, Senior Consultant, Global Freight Consultants, says, “The Indian automotive industry has witnessed tremendous growth in the last 10 years as a result of the surging demand for logistics services. The vast geographic expanse of the country is fuelling the growth momentum. Additionally, extensive urbanisation in the last two decades in India has resulted in setting up of auto hubs in large numbers, eg, Namakkal and Trichy, which manufacture large numbers of auto spares that have to be moved to production centres for further processing. Similar trend has been observed in the northern region of the country — Ghaziabad and Ludhiana, which have come up as manufacturing hubs for automotive gears and brake systems.” With a majority of global manufacturing companies setting up their base in India, tier 1 companies have also moved into India to exploit the domestic market. Many of such companies have made India a production hub for auto components. “The need for an agile supply chain in the automotive industry is more pronounced in the auto industry in comparison to any other industry, owing to its complex network and the requirement of large number of parts/components. The philosophy behind this is vertical integration

THE CRUCIAL LINK The auto components segment is one of the most crucial links of the supply chain. Highlighting this fact, Jasjit Sethi, CEO, TCI Supply Chain Solutions, says, “The automotive components industry is important, but a component is only as good as the weakest link of a supply chain. Therefore, an integrated supply chain management is needed to provide increased value to customers through freight execution, integrated SCM comprising strategic supplier management, planning & forecasting, etc. This also includes programme management/operational excellence, packaging design, tax & fiscal compliance, inventory management, control tower operations, landed cost studies, materials management, strategic career management, global event visibility as well as connectivity to OEM systems.” Characterised with factors such as quick time to market, shorter lead times, spare parts availability, and strong dealer network, safe & secure handling, managing an

and horizontal differentiation, ie, reducing the gap between the point of production and the point of consumption,” points out Srinath Manda, Program Manager – Transportation & Logistics, F&S – South Asia, North Africa & Middle East.

SPEED BREAKERS Automotive manufacturing is an industry that assembles hundreds of components from across the world to make the finished product. Logistics plays a significant role here. Thus, the service provider needs to ensure that the components are delivered to the manufacturer on time and that the finished product (vehicle) is delivered to the customer on the exact delivery date. Automotive logistics service providers encounter a number of challenges in the way to meet these requirements. Raghavan says, “Inadequate transport facility, little or no support from Indian Railways, high transportation costs, carriers space to transport or accommodate finished goods are some of the challenges faced by service providers today.” Further elaborating on the issue, Manda informs, “In India, port logistics is not utilised to its fullest, which is required for better logistics movement. With the coming up of dedicated freight corridors, all modes of logistics (rail, road and sea) are expected to be properly and optimally utilised.” Infrastructure: The biggest hurdle Infrastructure remains a key area of concern. A recent McKinsey report on ‘Transforming the Nation’s Logistics Infrastructure’, informs that India loses about $40 billion of its gross domestic product (GDP) due to its poor logistics infrastructure, which is approximately 4 per cent of the GDP. According to the report, this problem will only get bigger 10 years from now, with the losses going up to over $100 billion, which is more than 5 per cent of our GDP. This is expected despite the whopping investment that India makes in logistics infrastructure in the country. “Judicious and purposeful investments in infrastructure would reduce waste and excess fuel consumption. This will also improve the outcomes and opportunities for industries, thus paving the way for India to become a global leader,” avers Sethi. Experts believe that to

VEN THOUGH THE LOGISTICS INDUSTRY IN INDIA IS HIGHLY FRAGMENTED, THE INDIAN AUTOMOTIVE LOGISTICS INDUSTRY HAS EVOLVED RAPIDLY AS COMPARED TO OTHER SEGMENT. DUE TO THE COMPLEX NATURE OF THE AUTOMOTIVE SUPPLY CHAIN, 4PL SERVICES ARE UTILISED TO BRING IN A PROPER MIX OF IN-HOUSE AND OUTSOURCED SERVICE COMPONENTS TO EFFECTIVELY MANAGE SUPPLY CHAINS.

NOVEMBER 2010 • SMART LOGISTICS • 41

Automotive logistics, continued

overcome all the challenges, the existing infrastructure needs to be optimally utilised. For instance, India has roads, but not enough investment has been made for their maintenance. Similarly, the rail network is also not properly utilised. “India has huge capacity in rail lines, which is not fully utilised because of lack of automatic block signalling. Hence, only 10-20 per cent of the infrastructure is utilised in India,” points out Manda. India needs to change the way it is spending money. Of the total expenditure, India spends 50 per cent on roads, 40 per cent on railways and 10 per cent on airport and shipping. This need to change, and a bigger share of the expenditure should be given to the Railways. Further,

which constraints any initiative towards consolidation. • People and technology issues: Warehouses are still not been technologically updated due to perceived high costs associated with tools like bar coding/ RFID/ conveyor systems, information systems, etc. The use of technology in transportation is also very low. Also, most of the existing manpower in the industry is unskilled, untrained or uneducated. This leads to poor service levels, low efficiencies, damage and incorrect shipments. With all these bottlenecks, India still possesses substantial opportunities for growth in the logistics sphere in the coming years. The growth of large-scale

The need for an agile supply chain in the automotive industry is more pronounced in the auto industry in comparison to any other industry, owing to its complex network and the requirement of large number of parts/components. The philosophy behind this is vertical integration and horizontal differentiation, i.e. reducing the gap between the point of production and the point of consumption. SRINATH MANDA,

PROGRAM MANAGER – TRANSPORTATION & LOGISTICS,

FROST & SULLIVAN – SOUTH ASIA, NORTH AFRICA & MIDDLE EAST

more of the government spending should be on Railways, on the network, and on the maintenance of the infrastructure to increase its operational capability. Sethi says, “An integrated approach is the need of the hour. The accomplishment of the integrated logistics policy will help India save on costs of transport fuel, lower the carbon footprint and driving India towards becoming a global leader in the near future.” The other issues currently affecting the logistics industry in India are: • Procedural issues: Each state has its own rules & regulations and a set of documents to be carried with the cargo leading to delays at inter-state barriers for trucks en-route, with different declarations, entry-exit forms, and customs and excise documentation being required. • Industry structure issues: Logistics industry is highly fragmented and unorganised. There is no uniform standard and grading system, thus leading to poor quality and low reliability. Warehousing and transportation have not been recognised as an industry,

42 • SMART LOGISTICS • NOVEMBER 2010

foreign operators in India is also likely to get affected due to the fragmentation in the industry. Although there is no doubt that the outsourcing trends and widespread economics development will lead to impressive growth in the Indian logistics industry, these mitigating factors may curb the rate of growth to a small extent.

NEED OF THE HOUR Even though the logistics industry in India is highly fragmented, the Indian automotive logistics industry has evolved rapidly as compared to other segment. Due to the complex nature of the automotive supply chain, 4PL services are utilised to bring in a proper mix of in-house and outsourced service components to effectively manage supply chains. However, the challenges driven by the complex nature of the supply chain are resulting in inefficiencies and hence, an increase in costs. To achieve excellence in logistics, organisations need to lay down stringent criteria. Automobile manufacturers should aim at achieving logistics excellence by investing in processes and technologies,

to drive continuous improvements across their supply chain and ultimately aim for a lean supply chain. A recent development by the car manufacturers is the use of special containers and trucks designed to maximise the number of automobiles transported within the country. It is expected that in the future with the increase in the volume, the cost of multimodal transport would be very less as compared to road transportation. At the same time, the Indian Railways has also come up with rail transport for the automotive industry and is trying to increase its share of the vehicle transport business. Private players are also investing in rail-based multimodal facilities in a number of cities like Ahmedabad, Bangalore, Nagpur, Pithampur, Chennai, Delhi, Mumbai, and Hyderabad. Government is also encouraging multimodal logistics by initiating tax reforms, particularly the implementation of GST. With the coming up of dedicated freight corridors, one can expect to see regional warehouses in few strategic locations across the country and operate on a hub-and-spoke transport model.

ON A SMOOTH RIDE A few other big potential game changers in the Indian logistics industry, such as rectification in rail freight rates (capability to change rail-road freight mix), introduction of coastal shipping, rationalisation of port charges, end-of-life vehicle policies, reforms in warehousing policies, creation of expressways and dedicated freight corridors and introduction of a freight community system will radically transform the logistics landscape in the country. Moreover, saving in packaging cost can reduce the total cost. Badagi says, “There is a need to reduce wastage in terms of packaging materials (eg, wood, plywood, plastic, corrugated paper, etc). Also, optimisation of logistics, eg, optimised use of packaging design, will help the service provider to reduce the total cost.” At the end, the challenges of managing complexity and costs (including packaging cost) for the automotive logistics industry are likely to increase, given the positive movement of the driving factors. While Indian automotive players have already charted out their growth bandwagon, it remains to be seen as to how they are going to manage a flawless supply chain infrastructure.

INSIGHTS & OUTLOOK

AUTO COMPONENTS LOGISTICS

IN THE TOP GEAR Auto component manufacturers are placing special emphasis on their supply chains to become globally competitive. Thus, they are on a constant look out for logistics service providers (LSPs), for whom, it is a great opportunity to grow. However, small size of majority of auto component units, infrastructure issues and government policies are some of the obstacles hindering their growth. By modifying operational structures, deploying innovative practices and reducing their dependency on roads, the service providers can overcome these hurdles. SANDEEP PAI POST liberalisation, India has witnessed a remarkable increase in the number of automobile manufacturers. While Maruti Suzuki, Tata, Hyundai, Toyota, Ford, Fiat and GM already have a strong presence in the Indian market, Nissan, Volkswagen and BMW are the new entrants. With the automobile manufacturing increasing at a robust pace, India’s auto component segment has shifted to a high growth trajectory by providing volumes for economies of scale, new markets to explore and the scope to expand its range. Experts believe that because of the increased production of cars in India, component manufacturers are getting orders of production in huge volumes. This has helped them produce not just for the

44 • SMART LOGISTICS • NOVEMBER 2010

domestic market but for the global market as well. The benefit arises when component manufacturers have the scale to invest in technology and processes to produce parts of a high quality at a lower price. Projecting the Indian auto components

industry, Srivats Ram, President, Automotive Component Manufacturers Association of India (ACMA), and MD, Wheels India, says, “In 2009-10, the auto components industry grew by 20 per cent to $22 billion, with exports constant

There are cases where tier-1 suppliers follow a milkrun method to handle logistics of parts of their tier-2 to tier-3 suppliers. However, this is at a nascent stage and there is an opportunity for logistics providers to step in and improve logistics cost for managing the lower rungs of the supply chain. SRIVATS RAM, PRESIDENT, AUTOMOTIVE COMPONENT MANUFACTURERS ASSOCIATION OF INDIA (ACMA), AND MD - WHEELS INDIA

While the milk-run method helps the auto components units, which are directly associated with the OEMs, suppliers making their own logistical arrangements depend on service providers. In both cases, this is a boon for the LSPs. This is because third party logistics (3PL) operators have a 15 per cent share in the automotive logistics industry, which is higher than their average 10 per cent share in the overall logistics industry. The 3PL industry receives almost half of its revenues from the automotive sector, and marketshare is expected to grow by about 24 per cent annually to reach 60 per cent by 2012. The opportunities for 3PL players are promising, with the Indian automotive industry set to grow at a robust annual average of 13 per cent over the next five years and global companies increasingly sourcing components from India.

EXPORTS Moreover, Indian auto components having increased global acceptance for at $3.8 billion and imports at $8 billion. Further, in 2010-11, the domestic industry is expected to grow to $26 billion, with exports close to $5 billion. Moreover, it is expected that the demand for auto components in India for both domestic and export markets is likely to grow from $30 billion in 2009 to $110 billion by 2020.” The factors that are considered by car makers in contracting parts include price, timely delivery and logistics. In fact, all the three are interlinked and demand the Indian automotive components companies to have an efficient logistics management system. Having an efficient logistics management system in place is no longer a choice but a necessity for companies that are considering the global opportunities available for this industry. The more competitive the Indian automotive components industry becomes in the global arena, the more inseparable will the principals of logistics management become for its success and future growth. Nitin Gupta, Marketing expert says, “Although a number of leading automotive components manufacturers in India have a certain logistics management system in place, there are still many problems that the auto components industry is facing on the logistics management front. In order to make a mark on the global arena of automotive components, these problems

Strong logistics support and the market for providing services to this segment is growing fast and becoming increasingly competitive. Solutions such as vendor managed inventory (VMI) services need strong logistics competency and the components manufacturers are looking for providers with global experience to provide the required support. EDWIN PINTO, HEAD - AUTOMOTIVE SECTOR, DHL GLOBAL FORWARDING have to be addressed and solutions need to be implemented at the earliest.

AUTO COMPONENTS LOGISTICS Currently, different auto components units follow different ways to manage their logistics. Explaining this, Ram avers, “Logistics is either handled by suppliers making their own logistical arrangements or by vehicle manufacturers having their logistics partners pick up material from the suppliers end. In the event of the supplier handling the shipping of goods, it often happens that there is an additional warehousing near the original equipment manufacturers (OEMs) to facilitate justin-time (JIT) supplies to the line. There is an increasing trend, especially for smaller components manufacturers, where OEMs pick up material from several components in the same truck through a milk-run method. ”

their quality and global auto components manufacturers like Bosch, Cummins, Delphi, etc, continue to invest in India for supplying components to their global factories. Edwin Pinto, Head - Automotive Sector, DHL Global Forwarding, says, “Strong logistics support and the market for providing services to this segment is growing fast and becoming increasingly competitive. Solutions such as vendor managed inventory (VMI) services need strong logistics competency and the components manufacturers are looking for providers with global experience to provide the required support.” With opportunity comes concerns. Several factors, including insufficient infrastructure and lengthy bureaucratic procedures associated with the shipment of components, can hamper the growth of this export market. Most of the sea freight in India is handled by only two of its

NOVEMBER 2010 • SMART LOGISTICS • 45

Auto components logistics, continued

12 ports, while the others are not utilised completely. It has also been observed that the long shipment approval time of 3-5 days and other prolonged documentation processes inflate the average cost per shipment in India compared to those in other countries. The government needs to resolve these issues immediately and formulate a faster clearance policy. This will encourage the logistics providers to expand their services to auto components exports as well.

3 safety measures to be kept in mind for auto component logistics • Robust packaging to survive international transportation • Adherence to stacking norms based on the packaging strength • Proper forecasting of the production schedules and demands of the buyer.

DOMESTIC SUPPLIERS For logistics providers to supply to even domestic suppliers is challenging. This is mainly because of the small size of the auto components units, which are unable to provide scale to LSPs to maintain their profitability. Agreeing to this, Pinto, says, “Scale does matter and it is not easy to meet the needs of small unorganised manufacturers, especially when they are supplying to a global OEM.” The Investment Commission of India, recommends projects and investment proposals on its web site describing the sector as highly fragmented, with 500

LSP can look at providing shared logistics services in geographies having automotive clusters. For example, automobile manufacturing units that populate the landscape of Pune can be served through shared warehousing facilities and transportation infrastructure.” Thus, collaborative partnerships between small-scale auto components manufacturing units will enable the fragmented industry maintain an effective supply chain management. Some of this is already in place, as Ram explains, “There are cases where tier-1 suppliers follow

It is always better for an LSP to handle bulk volumes from a few manufacturers than to handle smaller volumes from a highly fragmented customer base. HOWARD JAMES-SCOTT, CHIEF - SCM, GATI organised and 5,000 unorganised players. The logistics providers face enormous challenges because of the small size of these units. Howard James-Scott, Chief - SCM, Gati, believes, “It is always better for an LSP to handle bulk volumes from a few manufacturers than to handle smaller volumes from a highly fragmented customer base.”

CORRECT COURSE OF ACTION However, the LSPs can overcome this problem by focussing on the larger organised players. Scott explains, “The organised players usually derive a big part of their business by acting as tier-1 suppliers to OEMs. Hence, they would follow certain quality and technology standards mandated by the OEM. Also, these organised players have sufficient scale and volumes to make investments into outsourcing its logistics needs to an LSP. In case of smaller fragmented players that are mostly tier-3 or tier-4 suppliers, the

46 • SMART LOGISTICS • NOVEMBER 2010

a milk-run method to handle logistics of parts of their tier-2 to tier-3 suppliers. However, this is at a nascent stage and there is an opportunity for logistics providers to step in and improve logistics cost for managing the lower rungs of the supply chain.” Moreover, Railways and inland waterways should be used by the LSP for reducing the cost. Currently, in India, most auto components are transported by road. This implies that intermodal transportation like railways and sea/ inland waterways are not used to their full potential. However, Railways and inland waterways are less costly than the conventional road services. On an average, transporting goods by rail is one-fourth the cost of transport by roads. Furthermore, with approximately 14,500 km of waterways in India, there is an even more economical way of transporting freight. Thus, LSPs should pioneer the use of more than one mode

to bring down total transportation costs to a considerable extent.

TECHNOLOGIES AND INNOVATIONS Further, to reduce cost and effective management of auto component logistics, several innovative practices are required. Pinto explains, “Along with VMI, Vendor Owned Inventory (VOI), part level visibility, materials management, etc. are some of the innovative practices that are becoming more and more relevant in auto component logistics.” Scott lists down some of the innovative practices and technologies used in the logistics of auto components. Demand Based Supply Network: This is a system of operation wherein the entire process of satisfying customer needs is based on pull from end customer rather than pushing the manufactured product in the market. This involves identifying the demand triggers as close to the customer as possible so that the inventory is not build-up due to the bull-whip effect. In the above system, the end customer demand signals at the end customer level is picked up and these act as inputs for the entire manufacturing and logistics planning exercise. This ensures that unwanted inventory is not pushed into the system which would bring down the profitability of the entire supply chain Supply Chain Visibility: Supply chain visibility both from the inbound and outbound perspective, is one of the major areas of focus for the auto components logistics. Companies are today looking at using latest technologies like RFID and other intelligent systems to improve visibility across the supply chain partners.

LEVERAGING OPPORTUNITIES With the unprecedented growth of auto component industry in the future, the LSPs are getting remarkable opportunity to expand their base. However, the biggest challenge that LSPs are confronted with is balancing between the high expectations of a global OEM and the local requirements of the component manufacturers. Additionally, infrastructure problems in India pose as major threats to their expansion. To overcome these, collaboration between smaller auto component units and innovative practices is required. The focus of LSPs should be on exports and alternate ways of transportation to reduce cost. This will make them globally competitive.

LOGISTICS UPDATE

BUILDING INDIA

Transforming The

NATION’S LOGISTICS

INFRASTRUCTURE

Infrastructure development is a critical enabler to economic growth. Logistics infrastructure, covering the road, rail, waterways and air network of a country, is the backbone on which the nation marches ahead. Although the urgency to develop India’s logistics infrastructure has been realised in the past decade, the task at hand is daunting. Learning from the past and adopting global best practices, India should pursue a logistics infrastructure strategy that minimises investment, maximises cost efficiency, reduces losses for users and is energy efficient. In short, the country needs to build its freight infrastructure to create an integrated network across modes and prioritise high-return programmes. LOGISTICS infrastructure is a critical enabler of India’s economic development. Recognising this pivotal role, logistics infrastructure spend has been tripled from about $10 billion in 2003 to a planned amount of approximately $30 billion in 2010. Despite this increase, the country’s network of roads, rail and waterways will be insufficient, as freight movement is expected to increase about threefold in the coming decade. This shortfall in logistics infrastructure will put India’s growth at risk. Since a large part of India’s

48 • SMART LOGISTICS • NOVEMBER 2010

future logistics network is yet to be built, the country has an opportunity to build infrastructure optimally, to meet the growing demand. Doing so requires an integrated and coordinated approach in which the development of each mode – railways, waterways and roads – is matched to the needs and existing assets are better utilised. In particular, India needs to increase its use of rail, and realise the potential of its waterways. For example, in the normal course, India’s rail share in freight would

decline to 25 per cent from the current 36 per cent. This is relative to almost 50 per cent rail share in China and the US, two similar continental-sized nations. A concerted approach can increase India’s rail share to 46 per cent. In case India fails to achieve this, the waste resulting from poor logistics infrastructure will increase from the current $45 billion (equivalent to 4.3 per cent of today’s gross domestic product [GDP]), to $140 billion (or more than 5 per cent of the GDP) in 2020. If tackled

• Allocating more investment to rail and reallocating within roads and rail. Based on current trends, $500 billion is estimated to be spent on logistics infrastructure in the next decade, with roads accounting for more than 50 per cent of the spend and rail for 40 per cent. However, this investment will need to be re-apportioned to support the changes required. The allocation to railways, for instance, needs to increase to more than 50 per cent with large sums spent on building high-density traffic corridors, connectors and last-mile links. If these shifts are implemented, India’s waste generation in logistics in 2020, estimated at about $100 billion would decline by almost one-third. This amount can be reduced further to about $70 billion (3 per cent of expected GDP) by increasing the investment to about $700 billion. Further, India’s commercial energy consumption would reduce by approximately 1 per cent. In order to implement these four major shifts, India will require a National Integrated Logistics Policy (NILP). Such a policy should target a greater share of rail, reduce economic waste and improve energy efficiency. Implementing a new logistics infrastructure strategy is a complex task, given the multiple stakeholders within the Central and State Governments. An empowered cross-ministerial group will be needed to drive this effort, define programmes, allocate budgets, monitor implementation and ensure continual coordination across ministries.

A High Level National Transport Policy Development Committee recently set up by the government to develop policy recommendations is the first step in this direction.

CURRENT INFRASTRUCTURE PLAN

The country’s road, rail and waterways network is a legacy of colonial rule, historically developed to transport troops, agricultural products and raw materials. Thus, India’s logistics infrastructure is not adequately equipped to meet rapidly rising freight traffic, changing consumption patterns and increasing numbers of production centres. Over the last 60 years, limited planning and investments in freight transport have resulted in numerous inefficiencies. Further, India’s economic growth will only put greater pressure on an already stretched network. The four aspects outlined below characterise India’s logistics network. 1. Highly concentrated logistics flows: Three components of India’s logistics network account for over two-thirds of total freight traffic flow in the country. • Seven long-haul corridors that in an integrated and coordinated manner, connect 15 high-growth clusters this wastage can be reduced by half and form the backbone of India’s logistics India’s transport fuel requirement reduced network: Seven corridors accounted by 15-20 per cent. for about half of the total freight Achieving this will require four major traffic in 2007. Thus, freight routes shifts: through these corridors witness the • Building the right network and ensuring highest traffic volumes in the country flows on the right mode, comprising an and will continue to do so. National integrated mesh of seven high-density highways along these corridors handle long-distance corridors (rail & coastal 40 per cent of road freight traffic waterways), 150 medium-distance rail even though they are less than 0.5 and road connectors and per cent of the Indian road about 700 last mile links network. Similarly, rail links Graph 1 • Creating enablers to on the corridors account for Freight transport in India is dominated by roads maximise the efficient use 27 per cent of the Indian rail of the network, which network but handle over 50 Mode share1 (per cent of tonne-km) includes developing 15-20 per cent of rail freight traffic Emission per tonne-km 100% = 5,275 billion 5,930 billion 1,325 billion g CO equivalent 2 tonne-km tonne-km tonne-km logistics parks, providing in the country. >1,000 <1 <1 <1 Air standards for containers • Over 150 medium6 ~14 15 & pallets and upgrading distance connectors that Water 302 the skilled workforce link the corridors: These 36 28 48 • Extracting more from connectors include rail links, existing assets, for state & national highways 47 Rail example, by increasing the as well as major district share of toll plazas with roads that account for a 57 64 37 electronic tolling, using disproportionate share of 22 Road stainless steel wagons intra-state traffic. These are with higher load-carrying 100-300 km in length, branch China US India capacity and increasing out from the corridors and spend on maintenance of carry 10 per cent of freight roads in tonne-km. About 30 per 1 Share estimated for 2007, excluding pipelines 2 Two-thirds of this is from coastal shipping and one-third of this is on inland waterways mainly the Yangtze river

SOURCE: World Economic Forum; China Statistic Yearbook; Planning Commission India; NHAI; Indian Railways; DG Shipping; Bureau of Transportation Statistics US; McKinsey

NOVEMBER 2010 • SMART LOGISTICS • 49

Building India, continued

cent of freight volumes pass through Inadequacies in India’s logistics logistics infrastructure is inefficient. For these connectors at some point. infrastructure could constrain India’s growth instance, rail and coastal shipping costs • Over 750 last-mile links of up to by adversely impacting user industries. in India are approximately 70 per cent 100 km form a critical component of India’s exports for example, could be higher than those in the US. Likewise, India’s logistics network: These links rendered less competitive on account of road costs in India are higher by about 30 connect key production, consumption higher transit times and lower reliability. per cent. This not only results in higher and transit points such as ports, mines prices and lower competitiveness but SHIFT TO A BALANCED MODAL and industry clusters to the corridors & also hampers economic growth. Analysis NETWORK connectors. They are not the focus of suggests that poor logistics infrastructure Based on the profile and quantum of India’s efforts to build the country’s logistics costs the economy an extra $ 45 billion freight flows, a systematic and efficient infrastructure. Also, poor quality of or 4.3 per cent of GDP each year. Twodevelopment of logistics infrastructure these links or their absence altogether thirds of these costs are hidden, ie, not calls for a major shift along four important is often the cause of bottlenecks and generally regarded as logistics costs. These dimensions. These include concentrating poor service levels. hidden costs include theft and damage, flows along the right mode, building 2. Excessive reliance of freight transport higher inventory holding costs, facilitation enablers, increasing asset efficiency and on roads: India’s roads account for a and transaction costs. re-allocating investments (Table 1). higher share of freight traffic compared 4. A 2.5 times increase in freight The shifts towards a balanced network to other continental-sized countries like traffic in the next decade will put design could enable the railways to the US and China (Graph 1). India’s further pressure on India’s logistics recapture a share of more than 45 per reliance on roads is more than three infrastructure: India’s current cent of freight traffic by 2020, relative times that of China. This is despite infrastructure is already over-stretched. to the current trajectory, under which the fact that a large part of India’s For example, most of the national its share will reduce to 25 per cent. This freight traffic comprises bulk material highway network and rail links along balanced network will also reduce losses and moves over long distances that the Golden Quadrilateral and Northto 4 per cent of the GDP, in comparison can be more economically served by South and East-West corridors are to an increase to over 5 per cent of rail and waterways. congested. Many large ports are already the GDP, if the current trajectory is Further, the higher dependence operating at high utilisation rates. pursued. And, if investments in logistics on road transport is adverse for the Further, even at a conservative annual infrastructure are increased to $700 billion environment, as emissions from road growth rate of 7.5 per cent, India’s freight from the current level of $500 billion, transport are higher than emissions traffic is likely to more than double from losses could further decrease to lower from rail and waterways. Road transport current levels by 2020. Also, investments than 3 per cent of the GDP. emits 84 g of CO2 equivalent per tonnein the current network design will only km compared to 28 g for railways and Building the right network and ensuring lead to increased inefficiencies and in 15 g for waterways. Yet, India continues flows along the right mode: Today, road losses as established earlier. Recognising to transport a majority of its goods via is the dominant mode of transport for these challenges, the Eleventh Five-Year roads including bulk materials like steel, India’s freight traffic. Current plans earmark Plan proposed a large increase in logistics cement and coal. A moderate shift from half of the planned investment for roads infrastructure spend from $65 billion or road to rail can help India save close to even as capacity on rail and waterways 1.5 per cent of GDP in the Tenth Plan 0.7 per cent of its total commercial energy (including last-mile connections) remains period to $160 billion or 2.3 per cent consumption. inadequate. However, to meet the of GDP. 3. Loss of about $ 45 demands of growing billion each year due to freight traffic, a shift to Table 1 inefficiencies in India’s more economically as well An efficient logistics infrastructure strategy requires a shift along logistics network: as environmentally suitable four key dimensions by 2020 SHIFT While in absolute modes, ie, waterways From current … to balanced trajectory … modal mix terms, industry spend and rail is vital. Besides a 7 ~4 Corridors (rail & water) Network on logistics in India is greater emphasis on rail Network Connectors (expressways) 5-7 20-30 1 components structure low – the relative spend and waterways, the right and mode Last mile links (road & rail) ~750 NA is high. India spends 13 mode of transport has Illustrative enabler to per cent of GDP on to be used. Ideally, rail Logistics parks NA 15-20 2 Enablers support network logistics, which is more and waterways should be than what the US (9.5 prioritised for long distance Per cent of toll booths Asset Illustrative shift 3 <50% >90% per cent) and Germany transport, rail for medium with electronic tolling efficiency (8 per cent) spend. distances and roads, ~10 ~10 Water InvestThe purchasing including expressways, Share of spend Rail ~40 50 4 ment (per cent ) allocation Road 50 power parity (PPP)for shorter stretches. This ~40 adjusted benchmark balanced modal approach of transportation costs would lower transportation by mode with the US costs, achieve greater demonstrates that India’s efficiency and be more 1

1 No focused last mile programme in current plans 2 Expressways only 3 Two rail Dedicated Freight Corridors (DFCs) planned, plus coastal corridors 4 Assuming all current manual toll booths not upgraded, whereas all new toll booths created have electronic tolling lanes 5 100% = ~USD 500 billion over the next decade SOURCE: McKinsey

50 • SMART LOGISTICS • NOVEMBER 2010

environment-friendly. An efficient network will have five rail dedicated freight corridors (DFCs), namely, Delhi-Mumbai, Delhi-Kolkata, Mumbai-Chennai, Delhi-Chennai, MumbaiKolkata and two coastal corridors, namely, Kandla-Kochi and Kolkata-Chennai. These corridors will need to be supported by 20-30 expressways, road and rail links across the 150 connectors and 700 lastmile links. Thus, a structured network design is vital to develop effective and efficient logistics infrastructure, particularly if the funds are limited and freight flows are concentrated. Investments need to be targeted and initiatives focussed to connect growth clusters. Creating enablers to maximise network efficiency: This shift predominantly refers to improving interfaces. It includes constructing last-mile links and 15-20 logistics parks to ensure interconnection between modes. Additional initiatives include standardising equipment, containers & pallets and upgrading skills. Extracting more from existing assets: Our work posits that India needs to use its existing logistics infrastructure and equipment better. Measures to achieve this include better maintenance of roads, rail tracks and rolling stock; unlocking the capacity of the rail network by accelerating the implementation of automatic block signalling, moving to lower tare load wagons, improving the efficiency of scheduled rake maintenance operations; and enhancing road efficiency through electronic tolling systems on highways. These measures could unlock 5-10 per cent of freight capacity with much lower investments than required for new infrastructure creation. Allocating more investment to rail and reallocating within road and rail: According to the current trajectory, over $500 billion is likely to be spent on developing logistics infrastructure in the next decade. Current trends suggest that about half of this will be spent on roads, approximately 40 per cent on rail and the remaining on waterways, mainly for ports to facilitate trade. To support the changes described earlier, two simultaneous actions are required for India to build economical and environment-friendly logistics infrastructure. First, more funds need to be apportioned to rail. Second, funds within rail and road need to be spent differently.

Reallocate spend within railways: The increased investment in railways needs to be used to create rail capacity on high-density corridors and support the movement of a greater volume of traffic on existing track infrastructure. This means more spend on DFCs, rolling stock and other additions such as new tracks, rail line doubling and gauge conversions. The current plans are to complete two DFCs by 2020, whereas five are needed. Thus, spend on DFCs in the overall allocation to railways should be doubled from 7 per cent to almost 15 per cent. This increase in investment needs to be supplemented with the development of logistics parks and last-mile road and rail links, which can facilitate better integration across modes. Redirect investments within roads: Targeted deployment of the $200 billion investment in roads on the high-density traffic stretches could increase the road length of national highways by 60 per cent, and state & major district roads including expressways by 15 per cent by 2020. In particular, there are two areas in which higher spends are recommended. One, an increase in the number of planned expressways from 6 to about 30 by 2020 will improve service quality and fuel efficiency. This will require an increase in spend from $3 billion to $16 billion by 2020. Second, spend on last mile stretches should be increased substantially to about 10 per cent of the total spend on roads. However, at present, there is no focussed programme and measurement of last-mile links.

MOVING FROM STRATEGY TO IMPLEMENTATION Achieving the four major shifts outlined above will require a concerted effort by multiple stakeholders and pose several challenges. An integrated policy defining a new vision, launching 10 priority programmes and governance that spans across ministries will improve India’s ability to achieve its economic growth aspirations, while reducing energy consumption. NILP: The policy shapes the vision for India’s logistics infrastructure in 2020 and beyond, which would be a critical enabler for such efforts. NILP could help the government reduce recurring losses to the economy and improve capital efficiency in three ways. First, it could define the blueprint for the most effective and efficient logistics infrastructure to support a balanced

modal mix, based on the anticipated increase in freight flows by 2020. Second, it could ensure better coordination between multiple national and state-level bodies responsible for developing logistics infrastructure. Third, it could facilitate easier access to and optimal allocation of scarce resources such as investments, equipment and people. Such a policy should have tangible objectives to build logistics infrastructure that keeps pace with India’s economic growth. It should be able to define a set of programmes that can help realise these goals and ensure a governance structure that enables efficient and timely execution. Following are the objectives of NILP: • Implementing a balanced modal mix by increasing the share of rail in freight carriage to more than 45 per cent • Limiting the economic losses attributed to logistics to less than 4 per cent of GDP ($100 billion) • Reducing energy consumption by 10 MTOE in 2020 (approximately 1 per cent of total commercial energy consumption), and hence freightrelated greenhouse gas emissions by about 20 per cent from expected levels under the current trajectory • Achieving on-time and on-budget delivery of infrastructure projects, which requires an improvement in project implementation relative to current performance. NILP should propose and launch the 10 targeted programmes to meet its objectives: Rail dedicated freight corridors: This programme should have a dual focus. First, accelerating the special purpose vehicles (SPVs) for the two planned DFCs – Delhi-Kolkata and Delhi-Mumbai – and simultaneously incorporating SPVs for three additional DFCs (Kolkata-Mumbai, Delhi-Chennai & Mumbai-Chennai). Coastal freight corridors: The objective of this programme must be to strengthen the West, ie, Kandla to Kochi, and East, ie, Kolkata to Chennai coastal freight corridors, through integrated projects that include last-mile rail and road programmes, transshipment hubs, proactive marketing and accelerated port development. National expressways: This includes constructing expressways of 100-300 km stretches that factor in expected increases in traffic by 2020. While currently, 5-7 expressways are likely to be built by 2020, the number of expressways should

NOVEMBER 2010 • SMART LOGISTICS • 51

Building India, continued

ideally be increased to over 20 by 2020. Expressways should include hightraffic routes such as Nasik-Shirpur and Ghaziabad-Bareilly. Last-mile roads: Creating a dedicated last mile programme with over 750 lastmile links to particularly connect port and railway terminals to production and distribution centres. Last-mile rail: This should ensure last-mile rail infrastructure in many of the last 750 mile links. It will include developing track and rail head infrastructure to support 8-10 critical coal corridors in mineral-rich states such as Jharkhand, Chhattisgarh and Orissa. Multi-modal logistics parks: This programme will predominantly focus on demarcating land for logistics parks at 15-20 key points where different modes overlap, near major cities or along proposed DFC routes. These should be equipped with the necessary infrastructure to ensure the seamless movement of freight across modes. Roads maintenance: This comprises creating long (eg, 10 years) annuity-based maintenance contracts for 400-500 km stretches. The current practice is to issue contracts for shorter distances of 50-100 km. Clear commitment to maintenance could also encourage the participation of more private providers. Extending both the duration of contracts and increasing the road stretches to be maintained could act as an incentive to providers to achieve scale and invest in better technology, thereby reducing costs. Technology adoption: This entails standardising technology for nationwide electronic toll collection (ETC) in future contracts and establishing a nationwide clearing house with set norms and service standards to facilitate transactions, thus reducing waiting time and improving service levels. Logistics skills development: Adopting a balanced modal approach will increase demand for requisite skills. In particular, demand for four types of personnel will grow – warehouse managers, logistics managers, coastal seafarers and truck drivers. This, in turn, will require upgrading the training infrastructure and collaborating with institutes of technology, engineering colleges, marine training institutes and driver training institutes to help meet the growing demand. Enabling access to better equipment and setting common standards: This refers

52 • SMART LOGISTICS • NOVEMBER 2010

to acquiring access to better equipment such as larger trucks and higher tare load railway wagons and developing common standards to aid inter-modal transport to ensure consistency in containers, pallets and cranes.

FORMULATING THE POLICY Developing and implementing various initiatives as part of the balanced modal approach will require an integrated approach across multiple stakeholders at the central and state level. The level of coordination required is monumental, as developing India’s logistics infrastructure is the responsibility of a number of state and central government units and infrastructure development agencies. The policy itself can be developed in a manner similar to the Integrated Energy Policy, ie, through an appropriate committee. Such a committee should include representatives from the concerned ministries and departments (eg, National Highways Authority of India [NHAI], Indian Railways, Waterways Authority), stakeholders across ministries (eg, Ministry of Roads, Ports, Railways, Finance, Aviation) as well as from the private sector (eg, user industries, developers, logistics providers). The government has recently set up the High Level National Transport Development Policy Committee to fulfill this role. Adopting and implementing an integrated logistics policy will need an empowered group of ministers, the Cabinet Committee on Infrastructure, the Prime Minister’s Office or an equivalent central body at the highest level to take charge. While the policy execution will be carried out by ministries at the centre and in the states, such a body should ensure an integrated, coordinated, timely and flexible approach to infrastructure development. To ensure speedy implementation, separate well-functioning infrastructure implementation ‘war rooms’ should be set up for high-priority projects at various levels to provide common information, debottleneck and accelerate implementation of projects, under nodal and executing agencies like NHAI, as well as at the centre with the Cabinet Committee on Infrastructure.

efficiently and in an environment-friendly manner will open up new opportunities for the industry. First, user industries need to rethink their logistics strategy under two scenarios: one, where the logistics situation worsens, and another, where a new & more efficient balanced modal logistics network is created, thus opening up new opportunities. Companies that rethink their strategy for modal mix, use of containers, network planning and so on will benefit the most. New opportunities will also surface for infrastructure developers and construction companies, technology and equipment providers. The size and scale of opportunities will also increase. For example, capital and operational expenditure spending on road development till 2020 could be as much as $200 billion. Similarly, expenditure on rail tracks including DFCs could be close to $90 billion. The investment in ports could be as much as $50 billion. Increased demand for rail wagons will benefit equipment providers. Technology providers would also benefit through greater demand for warehouse management software and a common ETC platform across tolling centres. Simultaneously, logistics providers stand to benefit on multiple fronts with the implementation of the new vision for India’s infrastructure. Benefits include a greater demand for third-party logistics (3PL services) such as warehouse management, end-to-end transportation management; and more opportunities for coastal operators to create charter and liner services in commodity bulk materials like coal, cement, iron ore, transport and, increasingly, in container transport.

GAINING GROUND WITH ENHANCED INFRASTRUCTURE

OPPORTUNITIES FOR PRIVATE SECTOR

India stands to gain economically and environmentally from implementing an effective and efficient balanced modal logistics infrastructure system. Economic gains encompass capital savings and reduced waste, both in the freight system and user industries. Environmental gains like reduction in emissions and reduced energy consumption are also likely. Implementing this is imperative but not easy. It calls for strong leadership to facilitate political alignment across the centre and states, rigorous implementation and programme management.

Building logistics infrastructure capable of handling rising freight traffic more

Courtesy: McKinsey & Company

WAREHOUSING & DC

ADVANCED WAREHOUSE MANAGEMENT SOLUTIONS

AN AID TO CONQUER

COSTS & COMPLEXITIES In the face of growing expenses and complexity, manufacturers and distributors are under severe pressure to increase the productivity and performance of their warehouse operations. Some companies, however, are recognising this warehouse management challenge as an opportunity to strengthen their competitive market positions. These best-in-class performers are meeting today’s challenges of warehouse visibility, agility and productivity by investing in advanced warehouse management solutions (WMS). Moving beyond the limitations of existing enterprise resource planning (ERP) systems, advanced WMS position firms to operationally excel and drive profitable growth in today’s hypercompetitive markets. ACROSS the manufacturing and distribution sectors, organisations are forced to reconsider their warehouse management practices, processes and systems, as they confront an increasingly costly and complex array of factors. Trends such as increasing customer compliance demands and global supply chains indicate that companies must enhance warehouse productivity and visibility to remain competitive, protect their profitability and position themselves for continuous growth. Manufacturers and distributors are expected to turn around orders on

54 • SMART LOGISTICS • NOVEMBER 2010

shorter notice than in the past, delivering orders in 12- to 24-hour cycle times that once would have been expected within 36-48 hours. They are punished with fines and chargebacks if orders are improperly labelled, packaged or delivered. Meanwhile, supply chain management has become increasingly difficult, as companies source products, components and materials on a global scale. Manufacturers that once sourced their materials regionally or nationally are now turning to Asia, Latin America, Eastern Europe and other overseas locations. Similarly, they are distributing their goods

more globally, seeking to further penetrate new and growing markets. This means that products must travel far greater distances and be stored at more number of locations, exacerbating the challenges of visibility and threatening perfect order delivery. Moreover, regulatory challenges are looming. With high-profile recalls on all products, from toys to dog food to peanut butter in the news, manufacturers are clearly under increasing pressure to track their products with even greater precision. They must have immediate access to data on everything from lots to

serial numbers to shipping locations if they are to avoid crushing costs – and legal penalties – in case of a recall. Lengthening supply chains, which magnify public safety concerns, further contribute to the risk of expensive recalls. Given these factors, suppliers are faced with escalating costs and complexity, driving demands for greater productivity in warehouse operations. With distribution seen as a cost centre, companies need to find ways to drive warehouse performance to new levels to remain competitive and profitable. However, their existing ERP systems often lack the automated capabilities necessary to increase visibility into operations, enhance market agility and boost warehouse productivity.

CHALLENGE: INADEQUATE ORDER, LABOUR AND ASSET MANAGEMENT UNDERMINE WAREHOUSE PERFORMANCE The limitations of warehouse operations in many companies are manifested along three key dimensions – orders, labour and warehouse assets. In order to drive performance and productivity gains in their warehouse operations that are in line with today’s best-in-class performers, manufacturers and distributors will be forced to confront inadequacies in terms of handling these issues. Let us consider them one by one. Ineffective order management: Today’s customers are more demanding than ever

in that they are increasingly expecting the ‘perfect order’. According to AMR Research, this order includes being delivered complete, on time, accurately and in perfect condition. Best-in-class companies achieve 98 per cent first-time order completeness (reducing rework), 98 per cent on-time rates (reducing delays) and 99.7 per cent order accuracy (reducing errors and mispicks), according to Aberdeen Group. Most companies, however, are falling short on these key performance indicators. They are not only allowing service levels to diminish, they are vulnerable to fines and chargebacks from powerful retail customers. There is strong link between perfect order performance and profitability. More perfect orders mean fewer imperfect orders, and the costs of correcting imperfect orders eat into profit margins. Premium freight costs, excessive over time and extended cash-to-cash cycle times damage the overall profitability of a company. Excessive labour costs: Given the increasing complexities associated with today’s customer and supply chain relationships, companies are struggling to meet performance expectations without raising labour costs. Indeed, 51 per cent of respondents in a recent Aberdeen Group survey said that they were feeling the pressure to manage change without increasing staff. Meanwhile, best-in-class companies are managing the disruptions and uncertainty of supply and demand changes, with less than a 0.25 per cent increase in labour costs over the past year, according to Aberdeen study. Unfortunately, most companies are either seeing labour costs rise far beyond the levels of these best-in-class firms or are allowing performance levels to slip. Irrespective of the case, they are on the risk of being eclipsed by high-performing rivals. Inefficient asset utilisation: Yet another factor limiting the performance of today’s manufacturers and distributors is the tendency to underutilise assets such as equipment and warehouse space. Considering the growing demands they face, the natural tendency is to spend more on warehouse equipment such as forklifts, pallet racks and conveyors. They are also likely to contract for more warehouse space – often at premium rates. Rather than better leveraging the assets

they currently possess, they see costs rise as they acquire still more assets. Again, they are likely to be outmanoeuvred by high-performing competitors with capabilities to generate more from less. One of the key factors undermining productivity and performance on the three dimensions – orders, labour & assets – is the absence of clear visibility into operations. Reliant on existing ERP systems, most of today’s manufacturers and distributors lack detailed inventory tracking capabilities. This results in a difficulty to support the same product housed in different discrete locations within a warehouse. Different pallets become a single bundle of inventory or lot in their systems. Hence, they are unable to track the lots and expiration dates of those pallets. Space optimisation is another problem, as workers fail to put products in appropriate bins or support the proper rotation of products to customers. Principles such as first in, first out (FIFO) and first expire, first out (FEFO) become difficult, if not impossible, to follow. When warehouse employees grab the first product available, products expire in the warehouse and become obsolete. Finally, existing ERP systems lack the capabilities necessary to proactively manage and monitor labour productivity. There is no way to direct activities in the warehouse for maximum efficiency, ensuring that workers are performing in the most productive fashion. One cannot monitor a shift that an individual has performed on a given day, accounting for time and attendance. By contrast, today’s best-in-class companies are turning warehouse management into a competitive advantage. These leaders are setting a new standard in this area, threatening to leave laggards far behind. Manufacturers and distributors that intend to remain competitive and drive warehouse productivity to bestin-class levels, must move beyond their existing ERP systems and adopt advanced capabilities.

SOLUTION: ADVANCED WAREHOUSE MANAGEMENT For reaching new levels of warehouse visibility, agility and productivity, companies are now investing in advanced WMS. These proven systems help manufacturers and distributors maximise product placement strategies, prioritise tasks, implement

NOVEMBER 2010 • SMART LOGISTICS • 55

Advanced warehouse management solutions continued

productivity standards as well as increase logistics efficiency. These systems use criteria such as item, location, quantity and order information to manage stock. However, while conventional warehouse management systems concentrate on merely locating inventory, advanced systems manage the whole process of material flow – receiving, put-away, cycle counting, picking, replacement, packing and shipping. Following are the key capabilities of an advanced WMS: • Inventory Management: This allows identification and tracking of inventory with sufficient granularity to allocate, fill and deliver orders as accurately and often as possible. One can view and monitor the location, condition and amounts of all finished goods, components and raw materials in the warehousing operation, as well as rotate the inventory according to FIFO/FEFO principles and other relevant factors. Lot control, serial number capture, date code tracking, catch weights, inventory aging and expiration dates provide additional visibility and flexibility. • Work and Task Management: This manages the ebb and flow of demand by balancing workloads and tasks with available resources. Multitasking enables increased productivity through the use of common workflows, customer requirements and business processes. Task interleaving allows grouping of work orders and locations with similar or complementary attributes into batches and waves so that orders are received, picked, packed, kitted and shipped in a timely fashion. Individual worker productivity improves by combining complementary tasks to increase output and limit travel time. • Radio Frequency (RF) and Voice Direction: These capabilities help improve the productivity of distribution and fulfillment processes by using hands-free connections and advanced speech recognition technology to voiceenable order selection, replenishments, put aways, transfers and receiving. Workers can operate hands-free without reliance on cumbersome lists, labels and scanners, vastly improving their productivity and order accuracy. • Labour Management: This enables maximise worker performance in the warehouse. It helps attain workforce planning, staffing and execution

56 • SMART LOGISTICS • NOVEMBER 2010

capabilities, along with the ability to monitor direct & indirect labour and provide feedback to workers and supervisors as picking, packing and shipping activities are completed. Realtime performance measurement gives supervisors visibility into their operations so they can identify bottlenecks, labour performance problems and other barriers to productivity and take corrective action. • Slotting: This helps maximise productivity and minimise travel time from one location to another by determining the most advantageous arrangement of stock keeping units (SKUs) within a range of pick faces or slots. It minimises disruptions that result from demand variability by enabling adjustment of product placement according to seasonality, special promotions and changes in customer order patterns. • Kitting and Light Assembly: This enables adopting postponement strategies and mass customising products at the time of distribution and fulfillment to ensure that customer requests are fulfilled correctly at the lowest total supply chain cost. It helps gain greater ability to accommodate changing customer tastes and product requirements. Kitting and light assembly facilitates personalisation and other product enhancements, single- and multi-station kitting and assembly, packaging & labelling operations for existing products and complex final assembly operations for customerspecific products.

BENEFITS Companies can reduce costs, protect profitability and enhance their overall market competitiveness by remaining focussed on the key performance indicators that drive warehouse performance. Through implementation of advanced WMS systems, they can perform the following: • Strengthen order management: With customers now demanding the ‘perfect order’, manufacturers and distributors can leverage advanced solutions to reach 98 per cent plus order completeness, 98 per cent plus order on-time rates and 99.7 per cent plus order accuracy, putting them in the best-in-class performance category. • Increase labour productivity: With

labour cost pressures rising in relation to new demand and supply changes, companies with advanced capabilities can enhance workforce performance and accomplish more with less. Labour cost increases, which otherwise would have risen heavily, will be minimal or nonexistent. Indeed, companies can increase labour productivity by 15 - 40 per cent. • Maximise asset utilisation: Rather than investing more capital in equipment and warehouse space, companies will rely on their advanced systems to fully deploy their existing warehouse assets. • Reduce inventory costs: With most ERP and legacy WMS systems, inventory identification is possible only by location, and not holistically. However, advanced WMS enables one to make inventory buying decisions based on visibility into inventory throughout the entire network, and make intelligent decisions on intra-facility movement of that inventory relative to buying more. Since inventory is a tremendous cost burden, companies can drive clear and compelling return on investment by addressing this area. Advanced WMS promises to reduce direct operating costs and increase overall revenue. As the experiences of best practice firms suggest, these gains are easily achievable.

WINNING IN HYPERCOMPETITIVE MARKETS As the experiences of best-in-class performers clearly demonstrate, implementation of advanced systems results in enormous gains in warehouse performance. Manufacturers and distributors that have invested in advanced WMS are strengthening order management, increasing labour productivity and maximising their use of warehouse assets. With customer demands rising and supply chains growing increasingly global, companies will need to drive gains in warehouse productivity and performance to avoid crushing costs. But, just as important is that these investments promise to pay off in terms of greater warehouse visibility, agility and productivity. They lay the foundations for profitable growth and market success in the hypercompetitive markets of today and tomorrow. Courtesy: Infor Global Solutions GmbH

AUTOMATION ADVANCES EVENT PREVIEW

TAKING

MATERIAL HANDLING TO THE NEXT LEVEL Mumbai | 17-19 Feb, 2011

With fast paced changes taking place in the material handling segment, the need for automation cannot be undermined. With India catching up on the adoption of automation solutions, material handling will soon witness a dramatic change in the way it is being operated today. Aimed at bringing automation solutions for the entire manufacturing fraternity, HiTech Automation Show is designed to provide a fertile ground for GenX manufacturing.

SHIBANI GHARAT WHAT are the few things that a future factory will have and must have beyond doubt? The answer is automation! It is automation that will drive manufacturing, growth, productivity, quality, innovation and technology. “Automation will be vital in helping manufacturing companies achieve economies of scale, global competitiveness and meet stringent quality/safety standards. Automation products, systems, solutions and services are designed to improve customers’ business, centred on increasing industrial productivity, while lowering environmental impact,” avers R Narayanan, Head – Discrete Automation & Motion Division, ABB India. The performance of any manufacturing firm also depends largely on its material handling and storage systems, which cover the entire spectrum of functions such as raw material handling, assembly line management, storage and finished goods transportation. This complexity necessitates adoption of automation solutions in materials handling. Automation in material handling reduces breakage & mishandling, labour costs, as well as enhances efficiency. It greatly improves safety and increases reliability and repeatability.

AUTOMATION TRENDS With the increased popularity of just-intime delivery, automated material handling has become important for the survival

of the business. Automated material handling minimises human intervention, with companies often finding fewer errors, increased productivity and reduced overall costs. Custom engineered material-handling systems, conveyors, handling robots, pick modules and sortation systems, automated storage and retrieval systems (AS/RS), automatic guided vehicles (AGV), etc have a critical role in directing the manufacturing sector towards an efficient future. “Automation is the key to success. The typical automation capabilities, relative to the use of technological interventions such as advanced planning, measurement, robotics and MES, continue to grow. However, new advancements in making supply chain operations and the various stakeholders operate more collaboratively and seamlessly will drive further benefits. The focus of the emerging trends will be on reducing variability, increasing velocity, increasing visibility, guaranteeing full compliance and increasing collaboration,” asserts Frank Khoshnoud, Sr VP & Head – Manufacturing, Retail & Distribution (MRD), Patni. Looking at such promising prospects, Network18 Group will be organising HiTech Automation Show between February 17-19, 2011 in Mumbai in congruence with HiTech Material Handling under umbrella show HiTech

Manufacturing. HiTech Automation is a first-of-its-kind event showcasing latest innovations under one roof. From factory automation, process automation & control systems, field instrumentation and smart sensor, robotics & drives, software solutions to hydraulic and pneumatics, the event will display the best among the new-age automation solutions. “HiTech Automation showcases the best and the latest in the industry. This show is a must attend for all small and medium enterprises. For those who will be a part of this extravaganza, the exhibit will provide tremendous networking opportunities and scope for business generation,” asserts Sudhanva Jategaonkar, Associate VP – B2B Publishing, Infomedia18.

A ONE-STOP AUTOMATION SHOP Displaying cutting-edge technology, breakthrough innovations and interactive demonstrations from the leaders in the automation industry, HiTech Automation Show has been designed to provide an ideal platform for the growth of the automated material-handling industry in India. HiTech Automation will help the entire automation industry converge into a single lucrative platform that will serve as a foundation for the future growth of this industry towards a promising automated future.

NOVEMBER 2010 • SMART LOGISTICS • 57

Engineering Expo Ahmedabad 2010-11

Flying high with bright prospects Known as the ‘state of businessmen’ Gujarat, is never out of business and investments. Supported by excellent road network, railway connectivity, port proximity, and ofcourse, the most proactive government, the opportunities that Ahmedabad provides for companies to set up their base are aplenty. With increase in the number of investments, companies need to spread awareness about their innovative offerings in the relevant segment. Providing such lucrative opportunities to companies, Engineering Expo Ahmedabad, in its 9th edition is all set to break its own records in generating business. SHIBANI GHARAT SINCE time immemorial, Gujarat has been known for its ‘business-friendly’ attitude. Experts have always attributed the growth of Gujarat to its proactive approach towards entrepreneurship and innovations. Its citizens are known for their leadership and entrepreneurial skills, risktaking abilities and aspiration to explore new avenues of growth. Thriving with booming investment prospects, Gujarat is a state that every company would want to associate with. The reasons are many. First and foremost, Gujarat houses a number of multinational corporations, private sector companies, public sector enterprises and medium & small-scale units. This is not all. The business-friendly policies add to the immense opportunities that the state holds.

At the heart of business in Gujarat is the city of Ahmedabad. The city, which pumps in opportunities and growth prospects in the state, has become a commercial hub of Gujarat. According to figures for September 2009, figures, investment projects worth `1,80,000 crore have already been implemented and projects worth `4,90,000 crore were under various stages of implementation. Investments particularly in power, gas, ports and infrastructure has given a boost to the progress of the state. When it comes to providing a conducive working environment, Ahmedabad was ranked fifth after Ludhiana, Hyderabad, Bhubaneswar and Gurgaon in a citywise analysis by the World Bank report ‘Doing Business in India, 2009’.

The presence of several industrial firms like Adani Group, Reliance Industries, Nirma Group of Industries, Arvind Mills, Claris Life Science, Shell, Bosch and many others, justifies the tremendous business potential existing in Ahmedabad. Many investors prefer this region because of the presence of excellent infrastructure, availability of land, and negligible presence of trade unions. Moreover, the government has made all possible efforts to drive the growth of industries here. The proposed Delhi-Mumbai industrial corridor, Dholera (special investment region) and Gujarat International Financial Tech (GIFT) city are also expected to fuel the industrial growth of Ahmedabad.

INDUSTRIAL BASE Talking of industrial base, Ahmedabad

Ahmedabad | 10-13 Dec, 2010 Engineering Expo, organised by Infomedia 18, is one of the biggest engineering events in the country. The 2009-10 edition of Engineering Expo saw business transactions worth over ` 150 crore. Launched in Ahmedabad in the year 2002, the event today boasts of a fabulous visitor turnout. The Expo is a preferred destination for SMEs and manufacturing & engineering companies to transact, network, form tie ups, and exchange ideas. The Engineering Expo 2010-11 is scheduled to take place in four cities, starting off at Pune in November 2010 and proceeding to Ahmedabad, Indore and Chennai in subsequent months. accounts for 21.5 per cent of factories and employs 18 per cent of workers in the state. Of the total industrial productivity of the state, 60 per cent is contributed by the city alone. Ahmedabad is an industrial base for sectors like chemical, textile, drugs & pharmaceuticals, agro and food processing industries. Such promising avenues call for increased awareness about latest product offerings of companies to broader audience. Having been established as an undisputed leader in providing a trade platform to manufacturers and service providers, Engineering Expo Ahmedabad 2010-11 is stepping into its 9th edition from December 10-13, 2010. Abuzz with prospects, the Expo is set to offer a cornerstone for companies that aspire to set up base in and around the city. It would also be an ideal platform for companies willing to strengthen their base in Ahmedabad. Exhibitors are also upbeat on the possibilities that the Expo presents. Talking about the business benefits, Paresh Talsania, Proprietor, Talsania Engineering Works, a Vatva-based company, says, “The return on investment

We exhibited precision measuring instruments aimed at mechanical, piping and fabrication industries and pharma sector during last year’s Ahmedabad edition. In a span of four days, we sold more than 500 units of our products. From the number of inquiries we have received, we are sure to have a 10 per cent rise in our business. Parag Patel, Proprietor, Samruddhi Industries

in Ahmedabad is very good. Not only are short-term gains possible, but the longterm business growth is also achievable.” Talsania is participating at the Expo for the first time and is optimistic about creating awareness about the company and interacting with various prospective buyers. Seconding his thoughts, Kailash Katkar, CEO, Quick Heal Technologies, informs, “We expect good number of enquiries from corporates and SMEs, since clients from these segments are expected to visit the show.” In a similar vein, CB Panchal, Director, Modern Power Semiconductor, a five-year-old company based in Vijapur, notes, “Engineering Expo offers us a platform to advertise and promote our products, and hence, generate more awareness about our company and our diverse range of products.”.

RENDERING SUPPORT TO NEIGHBOURING CITIES Ahmedabad plays a vital role in rendering commercial resources and market access for the economies of neighbouring cities. The city of Ahmedabad, which in itself is a successful industrial hub, has also helped trade and industry to flourish in neighbouring cities like Gandhinagar, Rajkot, Surat, etc. Engineering Expo is thus, a platform that brings together decision-makers and visitors from leading industrial centres such as Vadodara, Rajkot, Gandhinagar among others, who are in search of latest engineering solutions to improve business prospects.

AN IDEAL BUSINESS DESTINATION Engineering Expo is a perfect manufacturing & engineering trade fair to display latest products & services. As proved by 1,000+ companies that participated in the

previous editions of the Expo, it is one of the most preferred platforms to grow business. Confirms Parag Patel, Proprietor, Samruddhi Industries, who participated in the previous edition of Expo, “We exhibited precision measuring instruments aimed at mechanical, piping and fabrication industries and pharma sector. In a span of four days, we sold more than 500 units of our products. From the number of inquiries we have received, we are sure to have a 10 per cent rise in our business,” says Patel. Garnering such positive responce, the company has decided to be a part of this year’s Ahmedabad edition, as well. This speaks of the might that Engineering Expo has been able to harness in its eight years of existence. Highlighting the performance of the Expo in helping the growth of SMEs, Sudhanva Jategaonkar, Associate Vice President - B2B Publishing, Infomedia 18, (a Network 18 company) that is organising this mega industry event, says, “The brand Engineering Expo is a brilliant example of starting humbly and achieving an enviable feat over the years. We celebrate the entrepreneurial spirit of Gujarat and are partners in our customers’ progress. The coming months look promising for the manufacturing sector and we aim to provide more business development opportunities through our Expo.”

OPPORTUNITIES CALLING… Being an all-inclusive engineering show, Engineering Expo-Ahmedabad will provide an ideal opportunity for the exhibitors from allied sectors in engineering and manufacturing to improve their business prospects. The exhibitors are expected to receive an overwhelming response from the visitors, and hence, generate tremendous business leads and forge new partnerships in Gujarat.

TECH TRACK IT TRENDS IN LOGISTICS

New Versions of CDC Supply Chain Introduced CDC Software Corporation, a hybrid enterprise software provider of onpremise and cloud deployments, has introduced enhanced versions of its CDC Supply Chain iSuite supply chain execution and order management solutions. These feature smart client technology, which provides customers with improved usability, reduced IT costs, better interoperability, more flexibility and increased visibility throughout an enterprise. The new versions of CDC Supply Chain include extended warehouse management version 7 (iWMS v7) for extended warehouse & delivery management and advanced order management (AOM) version 10.1 for global order and inventory management. These versions, which feature CDC Software’s smart client technology leveraging Microsoft .Net and other Microsoft tools, offer an advanced and rich graphical user interface, single signon capabilities, click-once deployment and a common menu system. The applications leverage CDC

Software’s collaborative services framework (CSF), its service-oriented architecture (SOA) that promotes interoperability, process integration and user interaction. Alan MacLamroc, Executive VP and Chief Product & Technology Officer, CDC Software Corp, explained, “The new solutions provide users with superior user experience, flexibility and functionality that deliver real-time enterprise visibility and optimise several areas of the supply chain, from improved trading partner collaboration and faster order fulfilment to enhanced customer service.” He added that the CDC Supply Chain offers CDC Software’s SOA framework that provides customers with superior integration flexibility and interoperability between platforms, thus promoting more agile processes. The new products deliver to customers a compelling low total cost of ownership in the form of reduced maintenance costs for integration, protected IT investments and mitigated risk from the changing technology.

In addition, new products include many functional features, especially beneficial for fast-moving distribution operations. iWMS v7: Enhanced vendor rating dynamically determines receiving and quality control workflows to help maximise inbound efficiency of the operation. Optimised reservation logic and pick order generation improve customer service and order fill rates. Further, concurrent slotting allows optimum resource utilisation and product availability, including executing relocations during ongoing picking. AOM v10.1: This version features real-time eCommerce integration for customer and supplier collaboration, including pricing, available to promise (ATP), order validation and delivery notifications, plus enhanced product catalogue and assortment management. It also offers better customer service with automated rationing and reservation of scarce products to handle situations of short supply. Besides, it provides support for mass updates of orders via powerful Excel export/import features.

Axicon Launches Continuous Scan S-Range Barcode Verifiers AXICON , the barcode verification solutions provider, has launched its S-Range of barcode verifiers. These have been designed to provide users with the highest levels of accuracy by giving results averaged over more than 150 scans of a code at different points in the bar height in less than a second. Paul Yarnell, Commercial Director, Axicon, explained, “Printed barcodes can vary considerably in their print quality over the height of the code for various reasons, such as ink-adhesion, dust and print accuracy. ISO/ANSI standards recommend that to obtain the most accurate results, users should take a number of scans at different points across the bar height and average the results. Unfortunately, this can be

62 • SMART LOGISTICS • NOVEMBER 2010

time-consuming and laborious,” He further added, “Many users compromise accuracy to meet time constraints. Axicon’s S-Range verifiers are specifically designed to overcome this problem and provide users with the highest levels of accuracy.” S-Range verifiers have a continuous scan feature: the verifier is placed over

the barcode or slightly above or below the barcode, then the trigger is pressed and the verifier slid over the code. In less than a second, results can be averaged over more than 150 scans of the code at different points in the bar height. Additional S-Range features include ISO/ ANSI verification standards compliance; automatic scan averaging; ideal for barcodes with small bar height and GS1 Databar stacked codes; automatic variable aperture (4, 5, 6, 10 and 20 mil), depending on the model; as well as multilanguage user interface. When S-Range verifiers are connected to the standard Axicon software (version 2.0.25 or above), the verifier will automatically be set to operate in a continuous scan mode as part of an easy-to-use and comprehensive barcode verification system.

New System To Improve Product Tracking DR JAGANNATHAN Sarangapani, Professor, Electrical & Computer Engineering, Missouri University of Science and Technology, recently introduced a new inventory management system, which will eliminate frequency inference in facilities that utilise RFID readers to manage inventories and track products. “Our system reads and manages inventory in real-time with a nearly 99 per cent read rate, which is a drastic improvement when compared to the previous systems that had only a 60-70 per cent read rate,” informs Sarangapani. This improved product readability could save companies considerable money in lost inventory and would help protect consumers and companies by guaranteeing the product is what it claims to be. Sarangapani explains that RFID systems allow goods to be tracked from ‘cradle to grave’, recording the chain of custody from the point of manufacture, to the point where the consumer receives it. RFID technology not only helps in cases of product counterfeits but also in cases of product recalls. Facilities that use RFID systems have a network of distributed scanners that read radio frequency (RF) chips or tags that are incorporated into or attached to products, or materials within them. “When a truck pulls in to deliver goods, the scanner at the dock door can immediately tell whether all the goods are there,” avers Sarangapani. There are a number of factors that can impact the ability of RFID readers to correctly read product tags. These include tag interference, which occurs when multiple readers attempt to simultaneously read a tag; reader collision, which occurs when multiple readers are used and a carrier signal from one reader interferes with that from another. Sarangapani and his associates overcame these challenges by developing software that activates and deactivates adjacent RFID readers within the facility based on the tagged product’s location. The software also queries an inventory database according to information collected from the item’s tag. “If shelves are empty of a product, or if a product is about to expire, it will alert the system,” confirmed Sarangapani. He added that employees can also track when the next shipment is coming. The new system also has an additional benefit – the ability to read tags on frozen goods. Explaining the case of other systems, Sarangapani says, “Other systems cannot read tags on frozen items, so first they have to be thawed to be inventoried. Thawing sometimes makes the product unusable and it must be destroyed.”

Methode Launches U-Track with Nearfield Sensing Technology METHODE Data Solutions Group has expanded its asset tracking RFID technologies with the recent announcement of the launch of its U-TrackSM near-field RFID asset tracking solution for data centres. The U-TrackSM solution enables datacentres to effortlessly and automatically track assets anywhere within the data centre. It can accurately detect the presence, identity and exact location of any rack-mounted asset, providing a wide and robust range of asset management applications for IT organisations and datacentres. Today, several available RFID asset tracking solutions employ UHF-based, Gen2 standard tagging and reading technologies. These systems work well for broad area asset tracking across multiple areabased stages, eg, from a dock door into a datacentre room. The U-Track solution leverages industry standards for highfrequency RFID. It is an ideal solution for next-generation facility installations where smart racking and cabinets are being considered, as well as retrofit environments where smart upgrades are underway to gain datacentre efficiencies. Methode’s U-Track solution is the latest addition to a suite of intelligent automation products for datacentres that include LocktalkSM, a biometrically secured electronic access solution; REMSSM, an intelligent environment monitoring system; and Asset-TrackSM, the original broadfield RFID asset tracking solution.

NOVEMBER 2010 • SMART LOGISTICS • 63

TECHNOLOGY TRENDS

RFID TAGGING

ENHANCING PRODUCT VISIBILITY Excitement abounds regarding radio frequency identification (RFID), today’s hottest technology. Early adopters of RFID are already realising significant improvements in the supply chain, and the technology is rapidly evolving, providing solutions to a wide array of logistics problems. However, it is important to understand that all RFID tag inlays created are not identical. Thus, it is imperative to critically examine capabilities of RFID, and its effective utilisation that can bring about paradigm shift in the way logistics industry functions. THE new excitement in radio-frequency identification (RFID) is about long-range, passive RFID tags that can achieve the required pricing and performance levels for maximum return on investment (ROI). Numerous studies in the past have visualised a future where RFID tags are applied on everything from machine parts to cereal boxes, thus completely automating the supply chain process. It is clear that the future goal is to attain this level of deployment of the technology. However, many companies are finding value in implementing RFID systems in the present time, especially when they are applied to solve more realistic problems coming up in the supply chain. The key factor, as with any new technology, is to understand the capabilities of

64 • SMART LOGISTICS • NOVEMBER 2010

RFID and evaluate how it can be useful in operations today.

FINDING RoI IN RFID In recent times, expensive, battery-driven active tags with a 100 ft (30 m) read range and priced at $10-$150 per tag as well as short-range passive tags with a 12 ft (0.3-0.6 m) read range and priced at $1 per tag have achieved success in niche market applications. Both types of tags have demonstrated the value of providing enhanced visibility for items that include ocean containers, beer kegs, library books and many more. Applications till date are tolerant of the active tag’s expense and the limited performance of shortrange passive tags; however, even with these limitations, successful ROIs have been found to exist. The new frontier

associated with long-range passive RFID tag inlays gives users the best of both worlds — better read ranges (3-25 ft or 0.91-7.62 m) and lower prices. More realistic quantities generally in the price range of $0.20-$0.50 per tag, largely depend on the inlay/label size, performance and volumes. The supply chain presents endless opportunities. Pallets stacked with RFIDtagged cases or cartons are easily read and re-read as they pass from one location to another, within a company’s factory and/or by various partners across the distribution process. Multiple read points feed item and location data to various warehouse management systems (WMSs) and enterprise resource planning (ERP) systems to provide real-time information

about the location of products or other assets. Goods are received in a few seconds with exceptions noticed before the truck leaves the dock door. Routing instructions, even for mixed goods loads, are seamlessly implemented and routinely examined to verify accuracy. RFID continues to evolve and many companies are setting more realistic expectations for the technology. Advancements in ultra-high frequency (UHF) RFID tag inlays have closed the gap between the requirements of supply chain companies and technologically feasible performance. End users now have a new technology that offers an optimal mix of price and performance, including increasingly affordable tag prices and superior performance for gaining comprehensive visibility of pallets, totes and cases. Most large companies view RFID as an important part of their overall enterprise mobility strategy. The key to a successful implementation is to determine the most appropriate places to incorporate the technology.

RFID APPLICATIONS RFID can now resolve many of the logistics problems occurring in companies, despite the challenges in tagging and identification at the item level. The technology currently available can track products at both the pallet and case level. Forklift trucks carry pallet loads of product through RFID-enabled portals at receiving/ shipping internal checkpoints that verify all movements of such items, thus making cost-savings a reality. Returnable container tracking, often thought to be extremely complex to implement, is a reality, as pallets and totes are easily identified when passing through portal doors. Cross-docking, work-inprocess (WIP) tracking, pallet building and quality control are all good measurements for justifying RFID today. Value is clearly the most important metric for a successful RFID implementation. To determine the value proposition of a company, the key questions include: • Does the performance of the RFID technology satisfy the basic asset and inventory visibility needs of a company? • Does it provide the speed, range and reliability to track the product better than the way it is done right now? • What improvements can be gained for the money invested in RFID today.

IMPLEMENTATION ISSUES While investigating RFID for use as a supply chain application, all factors needed for a successful implementation should be considered. Care should be taken to avoid buying an application that is expensive to integrate into the enterprise system; requires excessive coding and data management; is hostile to current business processes and requires significant re-engineering; interrupts instead of streamlining physical operations; and requires one to act as a general contractor for RFID solutions, which shifts the focus away from core business needs. Before implementing RFID in the system, one should clearly outline the goals to be accomplished, the problem to be rectified and how to determine the success of the project.

ALL RFID TAGS CREATED ARE NOT IDENTICAL After identifying the how’s and where’s, RFID can be integrated to the operation and the technology evaluated. New RFID users often make the fundamental mistake of hearing performance claims from one vendor and assuming that performance as standard across the industry. Such an assumption is dangerous because different RFID technologies, e.g. tags operating on the same frequency, often yield varying levels of performance. Some of the factors that dictate performance include the following: Tag sensitivity: It is the ability of a chip to become energised and maximise signal strength to send its identifier back to the reader — the greater the chip sensitivity, the longer the read range. Tag size: A larger size generally means longer range. Tag shape: Different shapes of tag antenna provide remarkably distinct levels of performance. Number of tag antennas: Two dipole antennas attached to a single chip results in tag performance that is less sensitive to orientation, which is important for random reading environments. Speed: It is the rate at which a reader collects tag identifiers. Rapid read rates increase the reliability of tag reads and are less likely to impose burdens on business processes. The EPCglobal Gen 2, Class 1 specification for tags is 1,000 reads per second. However, the read rate is highly dependant on the application, label placement and operating environment.

Interference: Well-designed tags and readers perform effectively in noisy RF environments. ‘Dense reader mode’ (DRM) technology allows multiple readers to effectively singulate each tag response with a unique reader address, which increases individual reader performance within environments where multiple readers are deployed. Materials the tags are attached to: Metaland water-based materials are generally hostile to RFID, which negatively affects read range. However, this difficulty can and has been overcome. A short buffer created between the tag and the asset dramatically improves the performance (range). The most favourable materials used for this purpose are cardboard, clothing and plastic. Because harsh environments and materials can adversely affect RF technologies, it is important to design the system with an extra margin so as to maximise read range and collection speed. Some materials – eg, water-based products like shampoo or beverages – can significantly diminish the strength of the RF signal, negatively affecting system performance. RFID systems designed with extra read range and speed result in better performance in unfavourable environments. In addition, tag readers, antennas and middleware (ie, the software involved) are just as important to the overall system performance as the tags.

ACHIEVING SUCCESS WITH RFID A dedicated staff with the appropriate budgetary authority is paramount to a speedy and successful implementation of RFID. Also, services are available from external sources, which can help understand the application of RFID in the environment. These services help analyse the potential benefits and challenges of implementing RFID in an organisation and examine the specifics of business needs, processes, existing technology infrastructure and environment. The adoption of RFID into the mainstream supply chain is inevitable. A key to achieving success with RFID is found in rational implementations, ie, understanding the capabilities and limitations of the technology, and utilisation of these capabilities in the most effective way within the operation. Courtesy: Motorola Inc Image courtesy: Future Supply Chain Solutions

NOVEMBER 2010 • SMART LOGISTICS • 65

PRODUCT & ADVERTISERS’ INDEX

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

Products

Pg No

Products

Pg No

Custom clearance .......................................................................................................39

Polycarbonate sheets .............................................................................................. BC

DHL Import Express Worldwide ...................................................................FIC

Pre-engineered steel buildings........................................................................... BC

Engineering Expo ..............................................................................................26, BIC

Pre-fab shelters ........................................................................................................... BC

EOT/HOT cranes .......................................................................................................63

Project transportation...............................................................................................39

Exhibition - HiTech Manufacturing Show ...........................................32, 33

Residential steel houses ........................................................................................ BC

Flame-proof hoist ........................................................................................................63

Roof vent ....................................................................................................................... BC

Freight forwarding .......................................................................................................39

Roofing & cladding sheets ................................................................................... BC

Gearboxes .......................................................................................................................63

Self-adhesive tapes .....................................................................................................11

Goliath crane .................................................................................................................63

SME Expo 2010 ...........................................................................................................43

Goods lift .........................................................................................................................63

Structural floor decking sheets ......................................................................... BC

Heavy industrial steel buildings ......................................................................... BC

Transfer trolley .............................................................................................................63

Investment Destination - West Bengal .........................................................47

USS univent .................................................................................................................. BC

Jib crane ............................................................................................................................63

Ventilators ........................................................................................................................11

Monorail trolley ............................................................................................................63

Warehousing ..................................................................................................................39

Motorised chain pulley block ...............................................................................63

Warehouses ..................................................................................................................... 7

Multi-level car parks................................................................................................. BC

Wire rope hoist ...........................................................................................................63

ODC transporatation ...............................................................................................39

Pg No

Advertiser

Tel. No.

E-Mail

Website

ADEA-Automotive Dealership Excellence Awards +91-22-30034650

prachi.mutha@infomedia18.in

FIC

DHL Express (India) Pvt Ltd

+91-22-66789186

girish.meghnani@dhl.com

www.dhl.com

26,BIC

Engineering Expo

+91-9920401226

engexpo@infomedia18.in

www.engg-expo.com

32,33

HiTech Manufacturing Show

+91-9820373804

hitech@infomedia18.in

INIS Enterprises Pvt. Ltd.

+91-22-28763111

swati@inis-enterprises.com

Media Today Pvt Ltd

+91-11-26682045

hortiexpo@gmail.com

MFC Transport Pvt Ltd.

+91-22-40341406

sudip.mukherjee@mfctransport.com www.mfctransport.com

Nina Concrete Systems Pvt Ltd

+91-22-67166000

info-support@ninaindia.com

Search Anniversary

+91-22-30245000

spmktg@infomedia18.in

Sreelakshmi Traders

+91-44-24343343

sreelakshmitraders@gmail.com

www.sreelakshmitraders.com

Techno Industries

+91-79-25830742

info@technoind.com

www.technoind.com

Ultima Media Ltd.

+44 (0)20 8987 0902

elisabeth.quesseveur@ultimamedia.com

www.automotivelogisticsindia.com

United Steel & Structurals Pvt. Ltd

+91-44-42321801

admin@unitedstructurals.com

www.unitedstructurals.com

Vijay Logistics Pvt Ltd

+91-2135-675000

info@vijaylogistics.com

www.vijaylogistics.com

Web 18 Software Services Ltd.

www.inis-enterprises.com

www.ninaindia.com

http://ibnlive.in.com/siemensecovatives Our consistent advertisers

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

66 • SMART LOGISTICS • NOVEMBER 2010

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

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

E-mail: b2b@infomedia18.in

PRODUCT INQUIRY FORM Custom clearance

Polycarbonate sheets

DHL Import Express Worldwide

Pre-engineered steel buildings

Engineering Expo

Pre-fab shelters

EOT/HOT cranes

Project transportation First

Exhibition - HiTech Manufacturing Show

Residential steel houses

Flame-proof hoist

Roof vent

Freight forwarding

Roofing & cladding sheets

Gearboxes

Self-adhesive tapes

Goliath crane

SME Expo 2010

Goods lift

Structural floor decking sheets

Heavy industrial steel buildings

Transfer trolley

Investment Destination - West Bengal

USS univent

Jib crane

Ventilators

Monorail trolley

Warehousing

Motorised chain pulley block

Warehouses

Multi-level car parks

Wire rope hoist

Fold Here

ODC transporatation ADVERTISERS’ INQUIRY FORM

Second Fold Here ADEA-Automotive Dealership Excellence

Search Anniversary

Awards DHL Express (India) Pvt Ltd

Sreelakshmi Traders

Engineering Expo

Techno Industries

HiTech Manufacturing Show

Ultima Media Ltd.

INIS Enterprises Pvt. Ltd.

United Steel & Structurals Pvt. Ltd

Media Today Pvt Ltd

Vijay Logistics Pvt Ltd

MFC Transport Pvt Ltd.

Web 18 Software Services Ltd.

Third Fold Here

GLUE

Nina Concrete Systems Pvt Ltd

Please complete the following & get a quick effective response from suppliers: 1. Your company’s business function is ( one only) Wholesalers Manufacturer Distributor Agent Other, please specify ______________ 2. Your role in your company’s buying process can best be described as: I buy I identify potential suppliers I approve purchases I negotiate contracts I select suppliers. 3. Your line of business 4. Specific product requirement Name: Designation: Company Name:

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11 / 2010

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