Smart Logistics - October 2012 by Infomedia18

VIEWPOINT

RETAIL REALITIES A wag in the tail for some and a sting in the tail for others, that’s the spectrum of impact being attracted by the latest announcement pertaining to FDI in retail in India. While we will omit the nitty-gritty of the policy shift (there is already an overdose of details and many newsprints have been sacrificed over this), what is interesting to note here is that we are indeed a unique country, in more ways than one! Where else would you get such an extreme reaction to a policy shift announcement, from cheer resounding in some corners of corporates to flag burnings and miffed exits in the power corridors at the other end of spectrum? Possibly, these extremes make us an economy so exciting and vibrant, that the global retailers are all queuing up to enter the land of booming domestic demand. Opening up FDI will not only lead to a greater variety of products for sale and increased consumer choice, but also penetrate deep into the hinterland of Indian economic activity and do much to improve the country’s ‘shunned sectors’—infrastructure and logistics. FDI will be a powerful catalyst to the required growth in the retail industry and, in the long-term, will prove beneficial to all the major stakeholders. The new policy can benefit both foreign retailers and their Indian partners. The benefits to foreign players will be access to local market knowledge and an increased consumer base, while Indian companies will benefit by global best management practices and technological know-how. There will be investment in storage and transportation infrastructure, technology and supply chain operations. Talking about our own sector, the arrival of foreign retail chains has a twofold impact. First, companies set up supply chains and logistical capabilities, spurring significant improvements in the infrastructure needed to source, ship, store and deliver products (covering all aspects of the value chain and supply chain activities, including storage, warehousing, and information-intensive operations). Second, their entry and expansion induce domestic competitors to invest in infrastructure and logistics, as well as greatly speed up the emergence of product standards (especially in perishables and personal consumables), and begin the process of bypassing monopsony buyers and traders that dominate procurement in many product categories today. For these reasons, foreign investment in retail has an impact that goes beyond its direct investment impact. It is a force multiplier that induces even more investment from competitors. Bharti Walmart has recently announced that it will open 10 wholesale stores a year in India, even as the company’s top executives said it may take 12–18 months to open the first retail outlet. All big retailers like Carrefour, Tesco and Metro and Walmart, have together invested less than $500 million in all these years as front-end was not allowed. Now, we can expect big investments from these multinational giants. Logistics and supply chain companies are also expected to grow, as they will be the link between small manufacturers, producers & farmers and the organised retail chains, and thereby help them get higher returns for their supplies. FDI, in the retail sector, is also likely to create as many as 10 million jobs in a span of 10 years, making it the largest sector in organised employment. With this as a retail reality, should we still be resisting this change?

Archana Tiwari-Nayudu archana.nayudu@network18publishing.com

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CONTENTS

OCTOBER 2012

AUTOMATION TRENDS

IN CONVERSATION WITH ‘Indians Are Not Hesitant To Make High-value Purchases Online’

VOL. 03, NO. 07

Cloud-native Transportation Management System Optimising Supply Chain Execution

Muralikrishnan B, Country Manager, eBay India

STRATEGY Innovation And Flexibility In SCM

SPECIAL FOCUS: E-RETAILING SUPPLY CHAIN e-Retailing Enhancing The Online Shopping Experience

Segments To Watch Out For Online Shoppers’ Delight On The Back Of Agile Supply Chain Transporting ‘Trends’: Clothing & Apparel Delivering Emotions: Flowers & Cakes Gizmos On The Move: Electronics & Gadgets A Gift For Someone You Love: Personal Gifting

e-Retailing Strategies Helping Retailers Win Web’s Free Shipping War

Retail In Peak Season Showcasing Brilliance To Meet Demand Variations

Drop Shipping Creating A Niche To Excel

Selection Of LSPs Key To Customer Satisfaction

FDI In Retail Spurring Activity In The Supply Chain?

Retailing Extravaganza 4 Secrets Of Best In Class Direct Store Delivery Providers

Offering Supply Chain A Competitive Edge

24 26 26 28 29 30

31 33 35 38 40 42

TIPS & TRICKS Handy Guide For Online SCM

Energising e-Commerce

EVENT REPORTS Engineering Expo Chennai 2012

Offering A Competitive Advantage

ALSO IN THIS ISSUE 5

VIEWPOINT NEWS, VIEWS & ANALYSIS Latest Happenings In The World Of Logistics

NEWS ANALYSIS FDI In Aviation: Driving India To Achieve Soaring Prospects

PRICE TRENDS TECHNOLOGY & INNOVATIONS Cutting-edge Solutions

TENDERS EVENT CALENDAR PRODUCT UPDATE PRODUCT & ADVERTISERS’ INDEX PRODUCT & ADVERTISERS’ INQUIRY FORM

17 18 19 56 59 60 64 65

RETAIL Asset Protection And Recovery Strategies Using e-Technology To Safeguard Products

Cover Illustration: Sanjay Dalvi

Looking For A Specific Product? WAREHOUSING & DC Strategies For Greater Efﬁciency Bettering The Present For A Bright Future

Searching and sourcing products were never so easy. S Just type SL (space) Product Name and send it to 51818

eg. SL Forklift and send it to 51818

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DANFOSS INDUSTRIES OPENS COLD CHAIN CENTRE IN CHENNAI DANFOSS Industries, a provider of mechanical and electronic components and solutions, has established its new Cold Chain Centre at Frigsales Climate Tech in Chennai in association with Shravan Engineering Enterprises. The centre will be a one-stop destination for cold chain solutions. It will also serve as an engagement centre to key consultants, contractors and end users to select and design Danfoss products as per their cold chain application requirements. The centre plays an important role in Danfoss’ initiative to improve and instigate swift growth of the cold chain industry. “We are pleased to bring forth this centre in India in association with our partner Shravan Engineering

Enterprises Ltd. We believe this centre will help encourage an in-depth understanding of the cold chain industry for the various stakeholders and customers involved. Moreover, this move reiterates our objective of not just offering complete cold chain solutions, but also changing the way cold chain solutions are offered in India,” said Noel Ryan, President, Danfoss India. The centre will also display the complete range of key products like Controls for Ammonia/Freon Cold Store Systems; Condensing Units for Dairy & Cold Chain Applications; Adap Kool Solutions for supermarkets and Variable Speed Drives suitable for the refrigeration industry among others.

TATA MOTORS BAGS ORDER FOR 1,314 TRUCKS FROM SIDDHIVINAYAK LOGISTICS TATA Motors has received an order to supply 1,314 trucks, its largest single order ever, from fleet owner Siddhivinayak Logistics. “We are honoured to receive this prestigious order and are committed to deliver these vehicles this fiscal year,” said Vinod Sahay, Head – Sales & Marketing, Medium and Heavy Commercial Vehicles, Tata Motors. The order also includes two recently launched products—Tata Prima 4923 LX and Tata LPT 3723, the first 5-axle rigid truck in the country. The Tata Prima 4923 LX was launched to extend the Prima advantage to many more transporters who require a lower power-to-weight ratio. Based in Surat, SVLL has a fleet size of more than 4,000 commercial vehicles. The company operates across diverse segments, like steel, cement, tractors, chemicals, machinery and is a pioneer in new segments like commercial vehicle chassis carriers.

LUFTHANSA TO BUILD LOGISTICS CENTRE AT FRANKFURT AIRPORT LUFTHANSA (LH) has announced plans to build a modern logistics centre at Frankfurt Airport (FRA). The centre, which will replace the existing Lufthansa Cargo Center (LCC), is expected to open in 2018. “We are investing in the future and in our FRA base,” said Christoph Franz, CEO and Chairman, LH. FRA will remain the central hub for the LH Group’s cargo business, despite the night-flight ban. The

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airline said it has had to ‘considerably’ adjust the original plans due to the night-flight ban at FRA. “Building of a new logistics centre is a major component of our Lufthansa Cargo 2020 strategy,” said Karl Ulrich Garnadt, CEO and Chairman, LHC, said in a statement. Construction of the main building is scheduled to begin in 2014. LH is investing ‘mid-triple-digit million’ euros in the new logistics centre, it said.

PORT NEWARK CONTAINER TERMINAL COMPLETES INSTALLATION OF NEW SURVEILLANCE NETWORK THE Port Newark Container Terminal (PNCT), located in the Port of New York/New Jersey, recently completed the phase two deployment of its new wireless video surveillance network. Following the successful completion of the second phase of the project, the surveillance network will protect PNCT’s terminal operations and facilities, and provide a secure environment for more than 500 daily dock workers, ship crews and visitors that pass through the terminal each year. The video cameras monitor safety violations, provide accident verification, and monitor vehicle and foot access to and from the facility. The new system, installed by Firetide, will also enable security and safety officers to view live indoor and outdoor video feeds of the 180acre port facility and its operations. The network, which saw PNCT and Firetide partner with AFA Protective Systems, currently includes 54 Firetide HotPort 7020 wireless mesh nodes and 70 Bosch VG4 500i series point-tilt-zoom (PTZ) IP surveillance cameras. The cameras are located at multiple locations throughout the facility to enable safety & security staff to centrally capture and monitor live video feeds from a command center 24x7. Depending on activity, video feeds are securely stored for approximately 20 days and can be used as effective evidence in court, reducing time and expense for prosecuting cases. As one of the largest infrastructure projects in New Jersey, PNCT will invest $500 million into facility expansion before 2030 to more than double the number of containers moving through the terminal.

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DAMCO STRENGTHENS ITS ORGANISATIONAL CAPABILITY IN SOUTH ASIA WITH KEY APPOINTMENTS DAMCO has appointed TN Seetharaman as Chief Operations Officer and Pankaj Gupta as Head – Key Account Management for its South Asia region comprising of India, Bangladesh, Sri Lanka, Pakistan, Afghanistan and Nepal. With over 30 years in the logistics industry, Seetharaman brings with him a diverse experience of leading profit centres, managing large teams and has demonstrated success in delivering results while developing strong relationships with customers. He has held several leadership positions at major logistics companies in India over the last couple of decades. Gupta with 25 years of experience in the logistics industry has worked

in multifarious roles, such as sales, marketing, profit & loss management and operational responsibilities on an all-India basis. He has previously worked with different logistics and pharmaceutical companies. “Damco has always been guided by its commitment to keep customers as the focal point. To continue being a trusted logistics service provider of choice, we consistently aim to strengthen our capabilities which, in turn, will help us grow with our customers,” said Lars Sorensen, CEO, Damco South Asia. “The appointment of Seetharaman and Gupta is another step that will help us to get even more closer to our customers and serve them better,” Sorensen added.

PEUGEOT IN TALKS WITH RZD OVER LOGISTICS ARM FRENCH automaker PSA Peugeot-Citroen is in exclusive talks with Russian Railways to sell a majority stake in its GEFCO logistics subsidiary in a deal which could be worth €800 million.The French group is offering RZD the chance to acquire a 75% stake in GEFCO one of Europe largest logistics companies. The company said the sale comes as part of PSA Peugeot-Citroen broader sell-off strategy. To be finalised, the deal needs to comply with international antimonopoly regulations. Russian Railways said in intends keep GEFCO management and current operational structure. The Russian rail giant believes that the deal will boost Europe-Asia transcontinental goods traffic, an area in which it has invested heavily and sees as a priority.

GOVERNMENT TO BRING OUT NEW SHIPBUILDING POLICY TO facilitate the domestic shipbuilding industry, which has been suffering due to the ongoing global economic crisis, the Ministry of Shipping (MoS) plans to bring out a new policy to promote the shipbuilding industry in the 12th Plan period, Union Shipping Minister GK Vasan recently said. The Minister said that the proposed policy would help the country’s shipbuilding yards become competitive in both the domestic as well as export markets. Vasan stressed on the fact that there is a need to create a strong

ship repair industry, world-class research & development facilities, design capabilities and ancillary base for commercial shipbuilding. “The Indian shipbuilding industry has a great potential for growth due to various positive features like cheap labour, well-established steel industry and skilled manpower,” the Minister noted. There are 21 shipbuilding yards in the country, 13 in the public sector and 8 in the private sector, the Minister informed.

L O G I S T I C S

SAUDIA CARGO ADDS EXTRA FREIGHTER FLIGHT FROM HONG KONG SAUDI Airlines Cargo Co, has announced that it is to add a new weekly freighter from Hong Kong, thus increasing the frequency of its flights from seven to eight per week. The decision follows the success of its existing service and is in line with the airline’s current strategy to continue with its fleet expansion and the opening of new destinations in 2012. Already well established in the Asian market, Saudia Cargo will now operate eight freighters per week from Hong Kong using B747 freighter aircraft, thus fulfilling current market demand for additional capacity on this route. The new service will run every Sunday night, taking the weekly capacity up to 800 tonne. “We closely engage with our clients on market developments and their requirements. Considering their requests for greater capacity into the Middle East, Africa and Saudi Arabia, we are pleased to offer this additional service,” commented Vikram Vohra, Regional Sales Director Far East at Saudia Cargo. “The timing of this launch also coincides with the traditional strengthening of export demand from the Far East as we enter Q4,” he added. Saudi Airlines Cargo Co operates scheduled freighter services with 13 freighters and sells the belly capacity on 145 passenger aircraft for Saudi Arabian Airlines spanning a rapidly expanding global network of 225 destinations. The cargo airline also provides cost-effective and practical worldwide charter flight solutions from a growing fleet of dedicated charter aircraft.

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APM TERMINALS MUMBAI THE SAFEST & BEST CONTAINER TERMINAL OPERATOR FOR 3 YEARS IN A ROW APM Terminals Mumbai was unanimously declared the Container Terminal Operator of the Year at the All-India Maritime And Logistics Awards 2012 (MALA 2012), as well as declared the undisputed winner of the Port/Terminal Operator of the Year— Safety & Quality Award, having crossed 500 safe days without a single Lost Time Injury Frequency Rate (LTIFR).

After scrutiny by the eminent jury of the hundreds of nominations received, with more than 150 companies vying for the awards in over 40 categories, APM Terminals Mumbai was adjudged on parameters of operational performance, IT efficiency, hi-tech facilities, yearon-year growth, customer satisfaction, adequate investment in safety measures, and certifications received.

PORT PIPAVAV STARTS WHEAT CARGO SHIPMENT FOR GOVERNMENT THE first consignment of wheat this year, on behalf of the Government of India, was recently exported from Port Pipavav in Gujarat. The vessel MV Spar Canis sailed from the port with 36,750 tonne of wheat onboard, on way to the receiver, Pt Indofood Sukses in Jakarta, Indonesia. Port Pipavav has undertaken the handling of wheat as a new bulk cargo commodity. For this, the port had tied up with Food Corporation of India (FCI) to handle part of its wheat exports. The cargo was stored at Central Warehousing Corporation warehouses. The channelising agent on behalf of FCI was MMTC and the trading partner was Louis Dreyfus. Despite heavy rains at the port, the operations team achieved a much higher rate of loading than committed and reduced the turnaround time for the vessel by 26 hours. Port Pipavav handles coal, fertilisers, iron ore, scrap and other bulk commodities. New storage space and equipment have been added to the port’s facilities to handle wheat henceforth. The port is expanding its infrastructure facilities.

KERALA TO PROMOTE COASTAL SHIPPING, WILL CREATE `3,000 CRORE FUND THE Kerala Government is serious about the development of the state’s coastal shipping, for which it plans to create `3,000-crore fund to finance the initiative, according to K Babu, the State’s Minister for Ports. Recently, he announced a new subsidy scheme for the segment, under which coastal shipping operators would get a soft loan of up to 40% of the cost of the vessel and up to 80% at 10% rate of interest for seven years. Shippers would be incentivised through a direct subsidy of `1 a tonne per km of cargo, and coastal vessels would also attract lower port charges.He said that the objective of the scheme was to encourage increased movement of cargo by sea and reduce congestion on roads. It aimed at diverting at least 20% of the

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cargo from road to coastal shipping by 2015 and 14% by 2020. Coastal traffic potential through the non-major ports in the state is estimated at 4.64 million tonne in 2012–14 and 7 million tonne by 2019–20. Babu disclosed the State Government’s plans to establish a State Maritime Board to oversee the development of the maritime sector. The Board would act as a single window of facilitation for investors and operators in the port, shipbuilding and logistics sectors. The government also plans to develop ports in Kollam, Alappuzha, Kodungalloor, Ponnani, Beypore and Azhikkal, the Minister said, adding that these facilities already have cargo and passenger handling capacity to commence initial operations.

L O G I S T I C S

TRIMBLE ACQUIRES LOGICWAY TO FURTHER EXPAND ITS TRANSPORTATION AND LOGISTICS CAPABILITIES TRIMBLE has recently acquired privately held Logicway of the Netherlands, a provider of software for automating payroll and expenses with a specific focus on the transportation and logistics (T&L) industry. Logicway’s flexible reporting tools enable customers to pre-calculate salaries and expenses, track hours, monitor key performance indicators & improve report-building capabilities in the back office. “T&L companies are faced with increasing complexity in complying and reporting with the changing laws and regulations in and outside Europe. With its open and collaborative platform, Logicway has a rich solution that addresses these challenges, making compliance more efficient and automated,” said Michel Van Maercke, GM, Trimble’s T&L Group for EMEA. “Logicway’s software currently integrates with Trimble’s T&L solutions. It is an ideal fit to expand our back office capabilities to add even more value to our customers. In addition, Logicway’s open platform allows for collaboration with other vendors in the T&L space.” “The acquisition enables us to broaden our footprint with a global team that shares our passion for innovation in the T&L industry,” said Heino Van Der Gugten, Co-founder, Logicway. “The combination of technologies and resources allows us to improve the performance and functionality of our product offerings. As part of Trimble, our commitment to our customers remains unchanged as we continue to deliver best in class products and services.”

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PANALPINA WITH NEW DIRECT LCL SERVICES FROM ASIA TO EUROPE PANALPINA has launched three new direct Less than Container Load (LCL) services from Asia to Europe. Operated by Pantainer Express Line, the weekly guaranteed services from Singapore to Prague (Czech Republic), Singapore to Budapest (Hungary) and Shanghai to Graz (Austria) cut transit times and CO2 emissions. “There is a growing demand in the automotive and hightech industries for direct consolidation services from Asia into the Czech Republic, Hungary and Austria,” said Christian Kruse, Regional Head – Ocean Freight LCL Europe and the

Middle East. Panalpina offers a dozen LCL services from Mainland China, Hong Kong and Singapore into these countries. Singapore to Prague, Singapore to Budapest and Shanghai to Graz used to run via Hamburg by rail to Linz in Austria where the cargo was loaded onto trucks. “In order to cut transit times and CO2 emissions we have decided to take the Linz stop out for these services and route cargo for Budapest and Graz via Koper, Slovenia’s port on the Adriatic Sea,” explained Kruse.

DP WORLD ORDERS ADVANCED TECHNOLOGY TO DRIVE EFFICIENCY IN NEW TERMINAL JEBEL Ali, the award-winning flagship container port operated by DP World, UAE Region will install state-of-the-art technology to run its new mega container terminal currently under development, as part of plans to expand container handling capacity at the port to 19 million TEU by 2014. An agreement has been signed with CyberLogitec, a Seoul, Korea-based IT company specialised in maritime and logistics industry, to provide its OPUS Terminal Operating System (TOS) for Terminal 3, which when completed will add 4 million TEU in additional capacity to Jebel Ali. OPUS TOS has modules to support the sophisticated operational requirements of the new terminal as well as interfaces to other existing systems at the port to provide seamless services to customers. Container Terminal 3, with a quay length of 1,860 metre, a draft of 17 metre, and a 70 hectare storage yard, will be equipped with 19 Ship to Shore (STS) quay cranes and 50 Rail Mounted Gantry (RMG) cranes.

SAUDI AIRLINES CARGO TO SERVE 9 NEW DESTINATIONS VIA ITS LAGOS HUB SAUDI Airlines Cargo has announced that it will provide access to nine additional destinations in West Africa via its hub in Lagos, Nigeria. With a daily B747 freighter to its Lagos hub and through interline partners, Saudia Cargo will now be able to serve the cities of Abidjan, Accra, Cotonou, Douala, Libreville, Lome, Malabo, Niamey and Ouagadougou. “We are extremely excited to be introducing this new service to West Africa,’’ commented Peter Scholten, VP – Commercial, Saudia Cargo.” By entering into cooperation with our interline partners, we will be able to offer greater connections to our

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customers as well as further expand our activities in this region, which has seen steady economic expansion over the last decade,” he added. With frequencies of up to five times per week on many of these new destinations, Saudia Cargo will be in a position to provide customers with timely solutions to meet their growing requirements. Saudi Airlines Cargo operates scheduled freighter services with 13 freighters and sells the belly capacity on 145 passenger aircraft for Saudi Arabia’s flag carrier Saudia spanning a rapidly expanding global network of 225 destinations.

PEPSICO EXPANDS COOPERATION WITH DB SCHENKER LOGISTICS IN POLAND DB Schenker Logistics provides comprehensive warehouse logistics and support in the distribution system for PepsiCo. As part of the warehouse & distribution operations outsourcing maintained by PepsiCo, DB Schenker Logistics was selected as the operator of the four Regional Distribution Centres (RDCs) located in Warsaw, Łódź, Kraków and Kielce, with a total area of approximately 25,000 sqm. The contract also covers management of about 50 transshipment platforms and transport from factories to the RDC and then from RDCs to the transhipment platforms. “Our company focusses on continuous improvement and progress. We make every effort to ensure added value in the supply chain of our customers and strengthen their market position through our solutions,” said Janusz Górski, CEO, Schenker Sp. Through the combination of the distributed network of warehouses for various products of the customer into a single distribution system, PepsiCo will be able to use its resources much better and respond to the changing needs of the market faster, yet optimising the costs throughout the supply chain. At the beginning of July, the first RDC was opened in Łódź, and next locations will be implemented in the coming months. Dariusz Doroś, Head – WarehouseLogistics, Schenker, said, “We are glad that we could make a contribution to the preparation of the optimal supply chain model for the combined business of PepsiCo and that we can support the business development of this customer in Poland with the potential of DB Schenker Logistics,” adds Dariusz Doroś.

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CH ROBINSON WORLDWIDE TO ACQUIRE PHOENIX INTERNATIONAL CH Robinson Worldwide, Inc, has reached a stock purchase agreement to acquire Phoenix International, Inc, for $571.5 million in cash and approximately $63.5 million in newly issued CH Robinson stock. The agreement is subject to certain customary closing conditions, including regulatory approval. Closing of the acquisition is expected to occur in the fourth quarter of 2012. CH Robinson will use the existing cash and plans to enter into a revolving credit facility with major banks to finance the cash portion of the purchase price. The acquisition is expected to be modestly accretive in the first year. Phoenix is a privately held international freight forwarder. In its most recently completed fiscal year, Phoenix generated gross revenues of approximately $807 million, net revenues of approximately $161 million and adjusted operating income of approximately $48 million.

CH Robinson to acquire Apreo Logistics SA CH Robinson Worldwide, Inc, has agreed to acquire Apreo Logistics SA, a leading freight forwarder based in Warsaw, Poland. Founded in June of 2007, Apreo provides truckload services including dry van and temperaturecontrolled and liquid and dry bulk capabilities. To complement their truckload offering, the company also offers additional warehouse, air and ocean services. Apreo has shown significant growth over the past several years, with current gross revenues over $100 million while servicing more than 2,000 customers. The company has over 300 employees in 21 offices in Poland and one office in Germany. Current CEO of Apreo, Arkadiusz Glinka, will continue in a similar role going forward.

DHL EXPRESS ANNOUNCES ANNUAL GENERAL PRICE INCREASE FOR 2013 DHL Express, the world’s leading international express services provider, has announced its annual general price increase for 2013. The adjustment will be effective from January 1, 2013 and will amount to around 5% on average globally. “The price increase that DHL Express is putting in place globally for 2013 is aimed at offsetting rising costs, including external costs that are out of our direct control and cannot be compensated through productivity improvements or economies of scale,” said Ken Allen, CEO, DHL Express. “Our annual price increase is an important factor in maintaining the significant investments we make in our global network.”

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UPS SCORES OVER US FIRMS ON CARBON DISCLOSURE LEADERSHIP INDEX FOR the second consecutive year, UPS has received the highest score in the 2012 Carbon Disclosure Project’s ‘Carbon Disclosure Leadership Index’ of S&P companies, receiving 99 out of 100. UPS is one of only two US companies to achieve the high score, reflecting the company’s commitment to transparency and leadership with regards to carbon reporting and performance in mitigating environmental impact. UPS is the only company from the Standard & Poor’s 500 (S&P) industrial sector to receive the highest score. Only nine companies in the world received scores of 99 or higher. According to the Carbon Disclosure Project (CDP), companies are scored on their climate change disclosure and high scores indicate good internal data management and understanding of climate change related issues affecting the company. Results from the 2012

Carbon Disclosure Project indicate that S&P 500 companies are making significant strides with regards to transparency and progress on carbon goals, narrowing the gap with Global 500 companies. “Companies that make the Carbon Disclosure Leadership Index have shown a strong awareness of the business issues related to climate change including climate-related risks and opportunities,” said Paul Simpson, CEO, Carbon Disclosure Project. “UPS’s commitment to sustainability and transparency in reporting is a guiding principle to our strategy,” said Scott Wicker, Chief Sustainability Officer, UPS. “Being recognised by one of the world’s most respected organisations evaluating environmental performance is an affirmation that our programmes are on the right path to creating a better environment for our employees, our customers and our communities.”

L O G I S T I C S

PTA HOLDINGS INC ACQUIRES KINGSLEY LOGISTICS GROUP PTA Holdings, Inc, completed the successful acquisition of Kingsley Logistics Group, Inc. Concurrent with the transaction, Leonard Lewensohn of Kingsley Logistics Group has been named President of PTA Holdings, Inc. Lewensohn said, “The Kingsley Logistics Group business model adds real and measurable value throughout a customer’s supply chain and helps customers to create a business advantage in the marketplace. Kingsley’s mission is to provide a broad array of traditional transportation services that include LTL & truckload, inter-modal, rail, warehousing & distribution, equipment leasing, brokerage and 3PL, as well as retail & special projects logistics services.”

250+ participants | 17,000+ business visitors expected 10,000+ products on display | Business transactions worth ` 85 crore expected | Spread over 3500 sq mtr | Showcasing more than 30 diverse industry categories.

Exhibitor Profile

PU N E

2 - 5 November 2012

Auto Cluster Exhibition Centre 10 am - 7 pm

16 • SMART LOGISTICS • OCTOBER 2012

FDI IN AVIATION NEWS ANALYSIS

ARINDAM GHOSH

IN India, air cargo represents about 10% of the airline industry’s revenues and plays a crucial role in facilitating international trade. Air cargo services play an important role, particularly for high-cost & high-value products as well as products that fall under the category of perishables and pharmaceuticals & mandate time-definite delivery. Over a period of time, India’s emergence as one of the fastest growing economies and the country’s impressive growth in international as well as domestic trade have opened up huge business opportunities for the air cargo industry in India. Commenting on the impact the FDI move will have on the air cargo segment of the logistics industry, Amber Dubey, Partner, KPMG, explains, “With the government approving FDI in the aviation sector, in the next few years, we may actually see more airlines coming and more routes being developed in the country, which will, in the process, increase the capacity of air cargo. Further, the move will create access to capital, global connectivity, technology and best practices followed globally. It will also open up significant opportunities for international transshipment cargo to be served by Indian airports, which is negligible at the moment. The move will open up huge business scope for companies operating in the segment and allow them to earn more revenue in the process.”

OTHER INITIATIVES TAKEN The total cargo handled at Indian airports has grown 3.5 times in the last 15 years—from 0.68 Million Metric Tonne (MMT) in 1995–96 to 2.39 MMT in 2010–11, i.e., a CAGR of 8.7%. The proportion of international cargo handled to the total cargo throughput handled is highest at Chennai airport with 76%, followed by Mumbai airport with 70.2%. The proportion of domestic

Driving India To Achieve

Soaring Prospects With an aim to ensure access to capital, global connectivity, technology and best practices for the growth and development of the Indian aviation sector, the government has recently allowed 49% FDI in the industry. The step holds immense signiﬁcance, especially for the air cargo division, amid the fact that India’s freight industry is expected to grow at 10% per annum by 2014 and the country’s air freight sector is set to expand to 8.5% per year for the next ﬁve years. cargo throughput to the total cargo handled in that airport is the highest at Kolkata airport at 65.3%. Earlier, custom operations were available for only eight hours a day at the air cargo terminals. This was a big hurdle, given that the services of aviation are available 24x7. Realising the importance of air cargo services in promoting trade, the Prime Minister’s Office (PMO) has started a pilot project. For six months, the custom authorities are handling cargo throughout the day at select large airports. If the project is a success, it can be developed as a standard procedure. Pointing out some of the other initiatives that can be taken to strengthen the air cargo segment in the country, Dubey opines, “Since air cargo services contribute a significant share to overall airport revenues, the cargo should be given a higher level of importance during infrastructure creation at airports. Further, various cargo consolidation and processing facilities can be created in hinterland. Most of these activities are currently done at

the airport itself leading to congestion. Also, paperless transactions need to be introduced. This will speed up operations.”

FEW YEARS DOWN THE LINE… Currently, the penetration of air cargo in India is very less—it is about 2.3 million tonne. This figure seems insignificant in comparison to other global airports, which alone handle more cargo than India does. This clearly shows the scope for growth in air cargo in India. Offering a futuristic perspective, Dubey explains, “In the next few years, I see air cargo playing a very important role in driving the growth of the logistics industry and in improving India’s competitiveness in global trade. The FDI move will come as a boost in this direction. Further, air cargo not only allows for rapid movement, it also cuts down on the inventory cost.” Given that the government is actively supporting the growth of the industry, the day is not far when India will be able to handle more volumes. arindam.ghosh@network18publishing.com

OCTOBER 2012 • SMART LOGISTICS • 17

PRICE TRENDS IRFI Trend for September 2012

The RFI stood at 176 points in the month of September 2012, which is 1 point higher in comparison to the corresponding period last year.

ZONAL FREIGHT TRENDS The overall freight rates have increased by 1.23% as compared to last month. The freight rates from Mumbai registered the highest increase of 2.07% in comparison to last month due to greater supply and the diesel hike in mid-September. However, the same had a minimal impact on the freight rates of Chennai with an increase of just 0.04%, the reason being very low dispatch, which has increased the availability of the vehicle.

INDEX TREND FOR 5 YEARS: TRENDS FOR SEPTEMBER (Y-o-Y) 179 177 175

175

176

174

173 171

172 171

169 167 165 2008-09

2009-2010

2010-2011

2011-2012

2012-2013

COMMERCIAL VEHICLES DOMESTIC SALES: The overall Commercial Vehicles (CVs) segment registered a growth of 4.57% in April–August 2012 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered negative growth at (-11.94%), Light Commercial Vehicles (LCVs) grew at 17.05%.

FORECAST FOR OCTOBER 2012: The RFI in October 2011 was the same in comparison to October 2010. The freight rate in October 2012 is expected to increase significantly because of the recent hike in the prices of diesel by around 14% and the upcoming festival season.

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

18 • SMART LOGISTICS • APRIL OCTOBER 20102012

CUTTING-EDGE SOLUTIONS TECHNOLOGY & INNOVATIONS

Retail Sector Supply Chain Boost By Cloud Technology CONTINUING the recent saga of success, cloud computing technology is now going to change the shape of the retail sector market by fusing demand channels. While Amazon, eBay came up with the ultimate coupling of highly efficient supply chain with a variety of products in the 20th century (calling it omnichannel retail), the rise of the e-commerce era continuously pushed up the need for the much-awaited integration of distribution channels. Cloud technology will merge the gap appearing among the distribution channel because of the omnichannel demands and supply. The technology is said to improve visibility, manage the growing data and collaborate with their global trading partners. Software-as-a-Service (SaaS) models can now be easily hosted in the cloud. Earlier, where implementation of new software solutions was a hectic task, cloud operation will make the task

easier, thereby saving much of manual operation, cost and time. It has also been estimated that cloud computation in the retail sector will also help fill the user gap in the industry as the supply chain management will more be local

based on the technology. As per a Citi research in this regard, 2012 IT capital expenditure will increase by a smaller percentage (3.5%) than total capital expenditure (4.9%). While it may, at first, sound like IT is spending less, it

USPs • The cloud technology will merge the gap appearing among the distribution channel because of the omnichannel demands and supply. • The technology is said to improve visibility, manage the growing data and collaborate with their global trading partners. • Software-as-a-Service (SaaS) models can now be easily hosted in the cloud. and cheaper, while, at the same time, merging the difference between online buy and direct buy. GT Nexus has explored the cloud technology application possibilities in the retail sector by developing the possible user-friendly architectures

is illustrating an increase in payment for SaaS, which is included in operating expenses and not as capital expenditure showing the retailers’ fight to balance the increasing supply chain cost with lean inventory and low wage labour strategies via cloud computing.

Invites You To India’s Largest

SME Gathering

OCTOBER 2012 • SMART LOGISTICS • 19

Cutting-edge solutions, continued

New Version Of OneSCM To Manage Extended Supply Chain Operations WITH an aim to constantly innovate and develop more user-friendly systems, TAKE Solutions, a leader in Supply Chain Management (SCM) and Life Sciences domains, has launched a new version of OneSCM, a multi-enterprise collaboration suite for managing extended supply chain operations.

USP The new system offers ﬂexible deployment and integration options to support cloud, on-premise, java, and .NET architectures. The latest version ensures stronger integration of supply chain process for customers and especially for those who operate on Oracle E-Business Suite (EBS). Further, as an added boon for users, the new system offers flexible

deployment and integration options to support cloud, on-premise, java, and .NET architectures. “This new version of OneSCM allows companies to further streamline supply chain execution and manage a greater number of closed-loop operations regardless of their technology platform,” said Young Kim, Director – Product Management, TAKE Solutions. Some of the additional upgrades for OneSCM include: Expanded Label History: Expanded history and reprint from history to printer or pdf allows for a unified location for all label prints at company or trading partner location Web Label Print to PDF: Expanded web print functionality to allow users to select multiple layouts for label printing. This allows users to print labels to multiple types of label stock.

CN Tests Natural Gas-Powered Locomotives CANADIAN National (CN) Railway is testing two locomotives fuelled primarily by natural gas in northern Alberta, a major step in the railroad industry’s determination of whether the alternative fuel is feasible. CN used conversion kits supplied by energy conversions to retrofit two 3,000-horsepower Electro Motive Diesel SD40-2 locomotives. CN said the retrofitted locomotives produce 30% less carbon dioxide emissions and 70% less nitrogen oxide emissions during the lifecycle of the equipment. “Natural gas has a lower carbon content compared with diesel fuel, so that locomotives using natural gas—if the railway technology employing this form of energy ultimately proves viable —would produce significantly fewer carbon dioxide emissions,” said Keith Creel, EVP & COO, CN.

200+ participants | 15,000+ business visitors expected 8,000+ products on display | Business transactions worth ` 48 crore expected | Spread over 4200 sq mtr | Showcasing more than 30 diverse industry categories.

Exhibitor Profile

CHE N NA I

22 - 25 November 2012 Chennai Trade Centre 10 am - 7 pm

20 • SMART LOGISTICS • OCTOBER 2012

IN CONVERSATION WITH MURALIKRISHNAN B

ENTRY INTO INDIA AND THE JOURNEY SO FAR…

Indians are not hesitant to make high-value purchases online “Indian consumers were earlier apprehensive about shopping online and their frequency of purchase was low. Over time, their inhibitions have reduced, making them browse more often and make regular purchases,” informs Muralikrishnan B, Country Manager, eBay India, during a tête-à-tête with Nishi Rath. Excerpts…

22 • SMART LOGISTICS • OCTOBER 2012

eBay globally as well as in India has been an e-Commerce powerhouse. We are known to be the pioneer of e-Commerce & have changed the way people shop around the world. We are the market leader in nearly every one of the 39 markets where we have our own operations. eBay acquired Baazee in August 2004 and thus launched eBay India in March 2005. Since then, the Indian e-Commerce has evolved with a lot of excitement & interest from consumers, merchants, brands & partners. Consumers have evolved from just checking email & news to using the net to book travel or movie tickets, net banking and even shopping online. Today, online shopping has taken mainstream consciousness among consumers. The Internet & Mobile Association of India (IAMAI) has estimated the Indian e-Commerce market to be worth `46,520 crore or $10 billion in 2011, with a user base estimated at around 10 million people. It has estimated that the e-Commerce industry in India is growing at an encouraging pace of 70% y-o-y. eBay India, India’s leading e-Commerce marketplace, is a 100% subsidiary of eBay Inc. eBay India has over 4 million registered users. These users come from over 3,311 cities in India. At any given time, there are over 6 million live listings on eBay India across 2,000 categories of products in electronics, lifestyle, collectibles & media verticals. Our focus is threefold —evangelising online shopping to businesses & consumers, establishing the Indian e-Commerce ecosystem & enhancing the user experience to make online shopping safe & easy.

BEHAVIOURAL PATTERN OF INDIAN BUYERS AND SELLERS ONLINE Indian consumers were earlier apprehensive about shopping online and their frequency of purchase was low. Over time, their inhibitions have

reduced, making them browse more often and make regular purchases. As opposed to the popular belief, Indians are not hesitant to make high-value purchases online and are willing to experiment with their purchases. They appreciate the variety offered by online shopping portals and scroll through to get the best deals that offer value for money. As highlighted in the eBay India Census Guide 2011, the top traded items on eBay India include: • Cell phones • Wrist watches • Solitaire pendants • India Commonwealth stamps • Republic of India currency notes • DVDs • 8GB pen drives • Homeopathic remedies • Headphone with microphone • PC video games.

TARGET CUSTOMERS Our target market is the online shopper and we enable millions of entrepreneurs—be it brands, small businesses or individuals—to sell thousands of products across technology, lifestyle, collectible, media categories, etc., to the online consumer. In India, we provide entrepreneurship opportunities through our unique business model, thereby making it possible for local products to be sold across the country and exported across the globe. Through an excellent online trading infrastructure, we have created the largest online bazaar that is free of middlemen and unconstrained by geographical boundaries, which enables frictionless trade between buyers and sellers. Approximately, 30,000 sellers sell on eBay India, annually.

KEY GROWTH DRIVERS Being the custodian of online shopping, the key growth drivers for eBay India would be: Women shoppers: We foresee growth in the lifestyle category as women are becoming increasingly active in shopping online. This will lead to a

change in the product offerings over the years from gadgets being more dominating at present. Import Buying: Indians continue to get influenced by the west leading to increase in import buying. eBay has the unique ability to connect consumers to global sellers. Our Global EasyBuy service offers Indian consumers an unmatched selection of items available on eBay.com Rural India & Bharat: Rural & Bharat (Tier 2 and Tier 3 Cities) are now firmly on the e-Commerce map & the key driver is access to products not available in their city or town. With further increase in internet penetration, Tier 2 and 3 cities will become large e-commerce hubs. Mobile Commerce: With the growing penetration of mobile internet & 3G network, consumers are now accessing the web on their mobile devices. The Smartphone is the new online store for consumers to browse, compare & buy, leading to shopping on the go, anytime, anywhere. Affordable mobile phones with net connectivity will flood the Indian markets soon boosting mobile commerce. Entrepreneurship: The Indian seller is very entrepreneurial. We foresee the Indian merchants benefitting from our global platforms giving impetus to retail exports.

INTRODUCTION OF SHIPPING SERVICE Yes, we have recently introduced eBay India PowerShip service that facilitates shipping service to enhance consumer experience, which will significantly increase the efficiency of managing multiple item shipment for eBay sellers and delivery of items to buyers. PowerShip sellers can avail special courier rates and ship to over 10,000plus locations across 2,500 cities and towns in India. For this initiative, we have engaged with reputed logistics service providers such as FedEx, BlueDart, DTDC and Aramex and sellers can now look forward to attractive rates, item pick-ups from

their doorstep, automated tracking of shipment, faster item deliveries by logistics service providers. The seamless solution will help develop and grow the seller’s core eBay business by sourcing more efficiently and serving buyer needs better. PowerShip also includes air mode, which will enable quicker delivery of items to buyers, surface mode to manage volumetric and large-size shipment and Cash On Delivery enabled through BlueDart in addition to Aramex for buyers who wish to pay for items on delivery.

INITIATIVES IN THE OFFING We will continue to focus on women shoppers, partnering with more brands, enabling mobile commerce so as to allow consumers to access eBay on the go via their smart phones or tablets & encouraging easy price comparison before their shop offline. We have been in India for almost seven years now and have a good understanding of the Indian market. We have managed to carve a niche for ourselves in the Indian e-Commerce scenario. We would not like to comment on any specific competitor as we believe in playing to our strengths.

AMBITIOUS PLANS We globally follow a marketplace model wherein we offer a platform for buyers and sellers to meet and engage in trade. We wish to reach out more to women users and offer products and deals that suit them better. We continue to partner with more brands that cater to women and their lifestyle needs. Going further, we foresee nonmetros contributing significantly to the growing e-commerce space. The absence of physical retail outlets and penetration of the internet are the major contributors to this trend. With high disposable incomes, their need for variety & selection gets satiated through websites such as ours that offer over 6 million products across over 2,000 categories at any time of the day.

OCTOBER 2012 • SMART LOGISTICS • 23

SPECIAL FOCUS E-RETAILING

Enhancing the

Online Shopping Experience

In the last few years, e-retailing has emerged as the growth engine of the retail sector and experts give due credit to logistics. Beyond all the fancy websites and 24-hour delivery promises, providing customers shopping convenience, excellence in distribution, transportation and inventory management are all that lead to the success of e-retailing. Here’s taking a look at how logistics emerged as a vital part of e-retailing success and how e-retailers are using it to the maximum to woo customers online. NISHI RATH

IT can be argued that logistics has been the key to retail success since the earliest days of its inception. Whenever a customer purchases something from a store, he/she usually takes the product home, i.e., it is selfservice logistics from the point of sale onwards. But when it comes to e-retailing, it is more akin to a catalog purchase. Here, the e-retailer ships the product to the customer. As a result, the responsibility and expense for delivery falls on the retailer and its logistics service providers (LSPs). In e-retail, internet logistics managers have to support virtually unlimited product selection. Besides, they must supply accurate information at internet speed, which is consistent with the instant feedback that customers expect from retail sites. Commenting on the evolution of e-retailing, Ashutosh Lawania, Co-Founder & Head – Sales & Marketing, Myntra.com, expounds, “Online shopping has seen a lot of traction in the last 12–18 months with new e-shops opening up every month. With internet penetration expected to cross 300 million by 2015 in India, online shopping will boom as well, providing players in this industry opportunities to prosper. The overall lifestyle category

in India is pegged at approximately $50 billion, growing at a CAGR of 16%. This is one of the largest categories (excluding travel & tourism). The industry is expected to cross $100 billion in 2015 with approximately 5–8% of this being online.” Ishita Swarup, CEO and Co-founder, 99labels.com, however, adds that logistics plays a very significant, if not the most important part, in e-retailing. “From procurement, cataloging and order management, to packaging, shipping, deliveries & returns, the efficiency of each step is a crucial aspect to ensure customer satisfaction and efficient usage of time and resources. Each of these elements is individually critical for any company to succeed. For the industry

at large to be profitable in the long run and to be able to scale up in a viable manner, a strong logistics network is the platform to start with,” Swarup explains. Speaking of strong logistics network, many e-retailers cite the problem of delivery delays and other logistics challenges, which has led them to build their own delivery systems. This, they say, helps raise service quality and build customer confidence.

E-RETAILERS INVESTING IN OWN LOGISTICS According to industry experts, thirdparty logistics players have not scaled up to meet the unique requirements of the evolving online retail industry. While experts believe that e-retail will fully exploit their latent logistics expertise, they are also of the view that logistics professionals must not only recognise their own potential, but also become much more active up & down the supply chain. After all, if organisations do not embrace their logisticians’ initiatives, their competitors will. To this, Lawania adds, “Logistics is one of the most important factors, yet it is a big challenge for any e-commerce player in India, as last mile delivery is still

Illustratio

24 • SMART LOGISTICS • OCTOBER 2012

n By Sa

njay Da

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unreliable and inefficient. To ensure that our customers receive the complete Myntra experience, we are investing in our own logistics network, which currently reaches about 45% of our customers directly.”

ALL-ROUND LOGISTICS PROVIDERS SOUGHT AFTER Even though stores have been eliminated, physical products are still stocked, packaged and shipped. With store-related costs eliminated, logistics expenses have become an even larger part of the retailer’s cost structure.

appeals of online shopping is the nearly limitless product selection. But if customers cannot find something or have to wait, the advantage of such virtual inventory gets nullified. From the online consumer’s perspective, there is less of an excuse for being ‘out-of stock’. In cyberspace, internet retailers can draw on a wide-reaching supply base. At the same time, there is usually little to stop consumers from shopping elsewhere if they do not find what they want on their first-choice website. It is up

Online shopping has seen a lot of traction in the last 12–18 months with new e-shops opening up every month. With internet penetration expected to cross 300 million by 2015 in India, online shopping will boom as well, providing players in this industry opportunities to prosper. Ashutosh Lawania, Co-Founder & Head – Sales & Marketing, Myntra.com

There are three key areas in which logistics managers can add tremendous value. These include: • Network Design: Logistics managers have always played a significant role in the design of distribution networks, especially the location of distribution centres, in order to serve clusters of stores. They evaluated the costs and service capabilities of alternative configurations, often using analytical models to get the general locations right. When it comes to e-retailers, logistics realities drive the choice between pure play and brick-and-click operating networks. Pure-play companies have no physical stores; all deliveries come from warehouses, distributors or manufacturers (for example, Amazon.com), even though some shipment come from other retailers. Brick-and-click retailers display goods and take orders online, offering consumers the convenience of a single point of contact as well as shipment tracking capability. • Internet Search and Inventory Management: One of the primary

to logistics managers, supported by ‘smart’ search routines and ‘fast’ websites, to create the perception that virtual shelves are always full. This is a challenge to their inventory management skills; they have to scale up existing capabilities and take on new roles as the custodians of the virtual shelves. In practice, they have to draw not only on their own inventory, but also on distributors’ inventories and even on partners’ stock, without exposing the customer to all the details. • Physical Delivery: The internet retailer needs to pay attention to certain cost and service issues that physical retailers can ignore. The cost side is relatively complicated. Internet sites typically position Shipping and Handling (S&H) charges as add-ons to the purchase price. Customers have to be convinced that the delay and expense of home delivery, which they perceive as an inconvenience (at best) or a surcharge (at worst), are acceptable aspects of internet buying. Such charges are the main reasons why many online customers abandon their

shopping carts. Another thing that matters while attending to customers is the time in between placing an order to acknowledgement, order to shipment and shipment to delivery. According to retailers, lesser the time, more the customers you attract.

CHALLENGES E-RETAILERS FACE The biggest challenge for any e-commerce player is to effectively manage its supply chain (inventory & logistics, among others) and the customer experience. The delivery team and customer support being the two main touch points for an online retailer, utmost importance needs to be given to both these aspects. Highlighting some of the initiatives taken at Myntra, Lawania informs, “At Myntra, we are constantly upgrading our processes to provide a hassle-free shopping experience, while strengthening our in-house logistics network. We are also constantly training and motivating our CC teams to imbibe our core values and pass them on to our customers.”

LOGISTICS TO GROW AS THE CORE AREA FOR E-RETAIL As the retail sector becomes competitive with e-retailing stores cropping up every day, the use of supply chain and logistics will enable retailers to become agile & cost-competitive. E-retailing makes the store invisible to the customer and so, logistics has been recognised as a core competence for retailers. Currently, in India, there are 120 million online users, of which 10% engage in online transactions. With the online user base expected to cross 300 million in 2–3 years, experts expect a larger percentage of people transacting online by 2015. This large base provides vast scope for e-retailing business, which will directly bear positive fruits for logistics players and the sector, as a whole. nisi.rath@network18publishing.com

OCTOBER 2012 • SMART LOGISTICS • 25

Illustration

By Sanjay Da

lvi

SPECIAL FOCUS SEGMENTS TO WATCH OUT FOR

Online Shoppers’ delight

on the back of Agile Supply Chain

After the social media boom, it is e-retailing that has attracted attention from the tech-savvy population in India. At present, there are 120 million online users in India, of which 10% are engaged in online transactions. With the online user base expected to cross 300 million in the next couple of years, we expect a larger percentage of people transacting online by 2015. This large base provides vast scope for e-retailing business, especially for categories likes clothes & apparel, electronic gadgets and ﬂowers & cakes, among others, and simultaneously a compounding growth for the supply chain. Here’s taking a look at some of these categories and their supply chain… NISHI RATH

Transporting ‘Trends’: Clothing & Apparel Times have changed and how! Earlier, there was a prevailing belief that shoppers cannot buy any product before checking out at least 10 stores and trying innumerable designs. But now, shoppers have ‘evolved’, they have grown smarter and are gearing up for an all-new e-experience, where one can browse through ‘n’ number of retailing sites and order what they want at very economical rates. All this has been made possible by the strong supply chain. With such smart business propositions, e-retailing supply chain is all set to create a niche for itself. AS per an ASSOCHAM 2011 report, the domestic online retail industry of which the apparel segment occupies a major chunk is growing at a CAGR of 35% and is expected to touch $1.3

26 • SMART LOGISTICS • OCTOBER 2012

by 2015. Clothing and apparel are the most commonly products shopped for, online. The growth in the clothing and apparel segment today is driven by the surge in demand for readymade apparel

in rural areas, rising income levels, growing youth population & increasing preference for branded apparel. According to Ishita Swarup, CEO and Co-founder, 99labels.com, “People

KEY POINTS TO KEEP IN MIND A vital point that needs to be kept in mind when dealing with consumers who shop online is the sharing of complete information regarding the presented product. In the case of apparel, jewellery and footwear, detailed information regarding material, size and suggested care ensures that the customer is fully aware of the purchase he/she is making. Explaining further, Swarup says, “We also have a 3600 view of the product so that the customer is satisfied regarding its look. These efforts reduce the chances of returns and of dissatisfaction with the product. Despite all this, we understand that

customers do not always like what they have ordered, for e.g., in some cases, the fits and sizes may be different from what they wanted. In these cases, we have the Easy Return Policy in place.” Another issue faced is the absence of the customer when the packets are delivered to their homes. This drives up costs and slows down the process. “In order to obviate the need for repeat courier visits, we also do call-outs to customers and alert them by SMS once their orders are dispatched. We also have a customer care number that the customer can call on to get information, raise concerns regarding product or delivery as we understand the need for us to ensure our customers feel secure shopping on our site. As we are a flash sales site, we constantly communicate with our members to keep them abreast of all that is new with the merchandise that we are hosting,” Swarup explains.

FESTIVE SEASON RUSH During the festive season, we have more sales & orders to manage, but our teams plan ahead for this busy time and deal efficiently with the increased traffic. As such, we have not faced major difficulties, barring occasional glitches. Citing examples of the same, Swarup states, “We constantly experiment with fresh looks and themes on our site. Festivals, seasons, events and holiday topics also drive the look of the site, and keep it interesting for members to browse and shop. At 99labels, it is all about communicating a fun-filled brand-shopping experience to our members.” Complementing Swarup’s views, Atul Agarwal, CEO & Co-founder, teesort.com, avers, “We have seen our sales go up by 50% during festive seasons and our logistics partners are well equipped to handle it.”

BANKING ON SOCIAL NETWORKING Compared to other Asian countries, the Indian apparel market is significantly smaller. However, over the past few years, clothing sales have been

increasing steadily. This is supported by a growing market of young consumers. Apart from a few established online stores, most entrants and upcoming e-retail ventures are banking on the rising popularity of social networking within the online shopping domain. There are a number of major international e-stores who initiated the coupling of online shopping with social networking. The online retail has seen a 30% increase year on year from the last few years. “With India poised to have third largest net users by 2013, the growing economy and worsening traffic conditions; we would have more online purchasers in India. Hence, all the largest business houses in India have either entered or are planning to enter the online retail space,” says Swarup.

THE TREND TO GROW A new and rapidly growing retail format, which offers consumers convenience, price benefits & the ability to shop 24 hours a day irrespective of geographical boundaries, is

Illustration By Sanjay Dalvi

mostly buy apparel & accessories on our site…it is our biggest selling category. So, we see a lot of purchases of ethnic & western wear, accessories like bags and sunglasses as well as fragrances.” Unlike 99labels.com, for Myntra. com, it is footwear that gets more business. Substantiating the same, Ashutosh Lawania, Co-founder & Head – Sales & Marketing, Myntra. com, states, “Footwear is still the most popular category on Myntra.com, which contributes close to 45–50% of our daily sales. It is closely followed by clothing for men, women and children, along with accessories such as jewellery, watches, sunglasses & handbags, among others.” Myntra.com has been doubling in volume every six months. To successfully manage this scale of growth, it has planned for future capacity needs. According to company officials, this enables them to manage the sudden surge in demand without hassles, as their systems and process are scalable. At present, Myntra.com reaches over 1,200 towns across the country. To this, Lawania adds, “We have our own logistics network in the top 15 cities of India and have plans of expanding that to around 20 cities in the next 4–6 months. We reach out to the other cities/towns through our third-party logistics partners.”

all set to grow. The growing fashion consciousness will fuel the segment’s growth. According to experts, the next couple of years will see more people shopping online than visiting stores. So, shop till you drop!!!

OCTOBER 2012 • SMART LOGISTICS • 27

SPECIAL FOCUS SEGMENTS TO WATCH OUT FOR

Delivering Emotions:

Flowers & Cakes Illustration By Sanjay Dalvi

Fresh ﬂowers and cakes have become one of the most sought after products online. Sending these seems to have become the best way to convey your wishes to your loved ones without physically being there. Thanks to the advancements and fast changing supply chain network, it is now possible to deliver happiness with just the click of a mouse… NISHI RATH

WHILE online businesses in India are showing a lot of potential and attracting large funds, there is one particular category that has shown a lot of promise—flowers and cakes. Both the items are perishable in nature and need careful handling from its collection to its dispatching. Various e-retailers have cropped up in this category to cater to the growing demand for the same. According to industry experts, increase in spending power and consumers spending more time online have led to the growth of this category. Retailers say that timely delivery of these products is a must; otherwise, it loses its importance. “For example, if a customer wants to wish someone on his/her birthday, he would want the particular cake and bunch of flowers to be delivered at 12 am. But if it is delivered late, the purpose of sending it at the said time is not met. As a result, we, as suppliers, fail,” says a salesperson of an online flower shop, adding, “We do not just deliver products; we deliver emotions of our customers.” According to a retail expert, “Increase in the number of online shoppers, growing internet penetration and time constraints have contributed towards the rapid growth of online cakes and flowers gifting sites. Of

28 • SMART LOGISTICS • OCTOBER 2012

late, florists have provided the facility of delivering cakes. What more could a buyer ask for? No wonder, online stores like Ferns and Petals, FloraIndia. com, Orchidsnroses.com are doing brisk business. This business grows manifold during festivals like Diwali, Rakshabandhan, Holi and Bhaidooj.” Online sites like those mentioned above have been growing at the rate of 60% year on year in the last couple of years. Some online florists have multiple distribution centres across the country from which they ship orders directly. In such cases, flowers are typically sourced from out-oftown flower farms. These flowers are usually not offered in arrangements, but are shipped in boxes designed to minimise temperature fluctuations and light, which might cause the flowers to decay faster. The time taken in transit depends on the destination. Many online flower delivery sites now offer worldwide delivery, which means longer transit time for flowers, unless there is a contracted local florist or it is near the destination city. Similar is the case when it comes to cakes, if they are not present in the city or area, they have contract vendors who take care of timely delivery for them.

EFFECT ON LOCAL FLORISTS AND BAKERIES Online florists have the potential to

service a much wider market than local florists. So, there is definitely a larger share of the business going to the bigger online companies. However, as discussed above, many large online companies are making use of local florists to create a virtual network that extends around the globe and is mutually beneficial to the parent company and all of its affiliates. Local florists have the disadvantage of being limited to a local customer base and partnering with online conglomerates may end up getting them a lot more business.

ALL SET TO GROW Online flowers and gifting is a medium of expressing ones emotions. Whether it is a moment of joy, sadness or appreciation; there is no better way to convey the same other than flowers. Today, the disposable income is far too high than what it was around five years ago. Besides, changing lifestyles, use of credit/debit cards and exposure to various cultures have further encouraged the growth of this trend. “Technology has also played a critical role in the growth of this category. Today, customers get an SMS once the order has been placed. In this way, they are able to keep track of the movement of the order placed,” explains a salesperson of an online florist.

SEGMENTS TO WATCH OUT FOR SPECIAL FOCUS

Gizmos on the move:

Electronics & Gadgets Illustration By Sanjay Dalvi

On an average day on eBay India, one of the biggest online shopping sites, a mobile accessory sells every minute, a portable storage device or pen drive every two minutes, a mobile handset every three minutes, a laptop every nine minutes, a home appliance every 11 minutes, a digital camera every 19 minutes, a gaming console every 28 minutes and a Mp3 player every 30 minutes. This alone proves that the demand for electronics and gadgets in e-retailing is growing by the minute. A look at how electronics & gadgets are set to rule the roost! NISHI RATH

AFTER online travel, electronics & gadgets rule the roost when it comes to online purchases. Going by the growing purchases of computer and computer peripherals, cameras, mobiles and Mp3 players in India, the electronics & gadgets industry is pegged to be a `950-crore market. For developing countries, like India, e-retailing offers considerable opportunities. Though it is still at a nascent stage, even the most pessimistic projections indicate a boom in a few years. It is believed that low-cost personal computers, a growing installed base for internet usage and an increasingly competitive Internet Service Provider (ISP) market will help fuel e-retailing growth in Asia’s second-most populous nation. According to Atul Agarwal, CEO & Co-Founder, teesort.com, “Logistics is a crucial part of e-retailing as beyond all the fancy websites and 24-hour shopping convenience, it is excellence in distribution, transportation and inventory management that leads to the success of e-retailing. However, in India, there is much to be done in this field.” “Computer peripherals, camera & mobile and lifestyle segments are expected to hold first, second and third positions for 2012. Together, they account for more than 70% of the total

market share in 2012,” he adds.

Electrical goods are delicate and timecritical. So, e-retailers place high demands with the logistics providers in order to serve online consumers better. Electronic items are also sensitive and need expert handling in order to arrive intact at the consumer’s doorstep. Besides, electronics items are costly and so, e-retailers and their logistics providers exercise tremendous caution when it comes to the security and packaging of the same. Hence, e-retailers, who deal in electronics goods, face the challenge of supporting supply chain security across the breadth of markets they serve. It becomes critical for them to take a structured approach to supply chain security based on the consideration of a product’s complexity and criticality.

goods are costly and people do a thorough research before buying any such good. People look for the latest in this category, which is why having the latest version of these products is a must here. Also, when a customer places an order with us, he expects it to be the same as what he saw online. So, an e-retailer cannot take any chance when it comes to serving customers.” Festivals also come as a threat to some extent for e-retailers in this segment. To this, the executive adds, “The brick and mortar stores often offer huge discounts during festivals; this, at times, has an adverse effect on our business. We cannot afford such discounts and offers, which, at times, change the consumers’ mind. Though many e-retailers are trying their best to woo consumers by some offers and discounts, to match the stores during festive season is difficult for us.”

TIMELINESS AND AVAILABILITY

ELECTRIFYING FUTURE AHEAD

In electronics, timely availability is always a problem that e-retailers face. They have to make sure that the latest products, new launches and most selling products are available; else they may lose out to competition. An executive of an online e-retail firm, on condition of anonymity, expresses, “Electronic

Although it is booming, the e-retailing space is intensely competitive with major players offering the latest electronics & gadgets. The segment is set to see good times according to experts, as the consumer spends more time on the web and can easily get to know about the latest in the category.

AREAS OF RISK

OCTOBER 2012 • SMART LOGISTICS • 29

SPECIAL FOCUS SEGMENTS TO WATCH OUT FOR

A Gift for Someone You Love:

Personal Gifting Illustration By Sanjay Dalvi

Gone are the days when people went to look for the right gift for their loved ones hopping from store to the next. Today, a click does the trick. The growth of e-retail has led to the increasing demand for personal gifting websites. These websites not only offer a variety of gifting options, but also deliver them at the doorstep of your loved ones… NISHI RATH

FESTIVE SEASON RUSH WITH customers getting used to the convenience of buying on an e-commerce website, the growth of these websites has been phenomenal. Additionally, factors such as busy lifestyle, no time to spend at shopping malls or marketplace, the comfort and convenience of shopping online from home and the unlimited choice in terms of style and brands have offered a boost to the growth of e-commerce websites. Commenting on the same, Richa Kar, CEO, zivame.com, says, “E-commerce is all about execution. Therefore, logistics plays a very important role. A transaction is complete only when an order is delivered to the customer. A customer’s delight can be achieved only when orders are delivered on time every single time. Therefore, a robust supply chain is a must.” Zivame delivers to over 20,000 towns in India. It has tied up with reputed courier companies to ensure that the customer receives the product on time. Besides, these partners are also able to provide time-intransit information for the product. Elaborating further, Kar informs, “We get orders from the remotest areas of India, which are currently not serviced by other courier companies. To take care of this, we have tied with up with India Post.”

30 • SMART LOGISTICS • OCTOBER 2012

E-retailers should keep three things in mind while planning for festive seasons, viz., choice of thematic products, product availability throughout the festive season/promotion and timely deliveries. Highlighting the measures implemented to deal with the festive demands, Kar informs, “We gear up for the festive season much in advance. Thorough planning is required in merchandising and stocking. We also prepare our logistics partners for the festive seasons. There are no difficulties if you prepare and forecast in advance.” In fact, many online dealers run festive offers to encourage customers to complete their purchases. They plan in advance, gear up courier partners to work flexibly during festive seasons and give better deals.

CHANGING TRENDS Earlier, most online shoppers used to evaluate options by gathering information on the available products and prices or buying low-value items like gift products, but finally opted for final transactions at traditional retail outlets. However, according to an industry expert, “Today, the trends have changed. Leading companies have gauged the potential of catering to the personal gifting category. People gift their loved ones often with various small presents—be it perfumes, candles

or paintings…it is not always possible to go and shop for it. Here, online retailers come up with various options and offer a variety of gifting solutions to meet consumers’ growing demands.” According to a report by ASSOCHAM, a majority of consumers said that they shop online to purchase products that cannot be found in malls or local markets. Facilities like free shipping, product ratings/reviews, multiple payment options, product demonstration videos and free return policy largely influence the purchasing decision of consumers shopping online.

TECHNOLOGY TO TAKE THE FRONT SEAT Unlike physical stores, customers making online purchases cannot examine products first hand and e-retailers do not have a direct connection with customers. This is has led to and will continue to lead e-retailers to invest in technologies that help create the feel of a physical store, opine experts. “Some websites also have virtual trial rooms, even websites offering contact lenses and eyewear have such options where you can check what suits you the best,” says an expert, while concluding, “What more can a customer ask for? Everything is just a click away.” nisi.rath@network18publishing.com

E-RETAILING STRATEGIES SPECIAL FOCUS

n i w

Helping Retailers

web’s free shipping war Online shipping is not a zero-sum game for retailers. You can attract and retain customers with creative shipping solutions — and free shipping may or may not play a part. This story shows you how... FREE shipping can increase everything—from order completion rates to order size—and decrease checkout abandonment. In a recent comScore report, three-fourths of consumers surveyed said that they abandon retailers at checkout if shipping is not free. Here are four essential ways to understand the growing free shipping trend: • The importance of free shipping is growing. comScore reports that free shipping accounted for an incremental six points of all transactions in 2009. What’s more, 75% of consumers surveyed said that they would shift to another retailer at checkout if shipping was not free. • Shipping costs are the most common reason for shopping cart abandonment. According to a Forrester Research survey of online shoppers, shipping remains a weak link in the checkout process. Around 44% of shoppers reported balking at the price of shipping and ditching a virtual cart. • Customers tend to spend more when they receive free shipping. A comScore survey of fourth-quarter (holiday) spending in 2010 showed that the average order value on free shipping purchases was $110, compared with $95 for non-free shipping purchases. If most retailers can expect similar results, the question becomes: Can the business

expense of a free shipping offer be covered by a 10–15% increase in order value? • Free shipping boosts sales when offered as a special. In an October 2010 survey of online retailers by Stamps.com, a whopping 64% stated that ‘some type of free shipping promotion’—with or without minimum spend—is the most effective promotion they can offer to drive sales during the holiday season. The next-closest response was discounted shipping, which garnered only 26% of the vote from respondents. From an online retailer’s perspective, there is no such thing as ‘free shipping’. But behemoths such as Amazon.com (with a $25 purchase) and Target.com (with a $50 purchase on qualifying items), have economies of scale that allow them to absorb the added cost. Free shipping becomes a focus of many businesses’ promotions and spreads quickly by word of mouth.Smaller online retailers, meanwhile, fear that consumers are conditioned to expect free shipping, and feel pressured to follow suit, despite lacking the means to absorb the expense. So free shipping is, for many retailers, a double-edged sword, says Corey Tisdale, COO, ShoppersChoice.com. “We know that people will buy more if we offer free shipping, but we cannot afford to eat all of our shipping costs and never pass

any of it on to the customer,” he says. So if you are a small or mediumsize online retailer reading this, you are probably asking yourself: Is offering free shipping worth the cost? While every organisation has to answer that question for itself, there are a few alternative shipping strategies to evaluate—and many small to mid-size retailers are using them in a test-andlearn approach.

6 STRATEGIES TO CONSIDER TODAY When it comes to free shipping, the encouraging news is: There are options. In fact, offering free shipping on every order all of the time is the exception rather than the rule on the web. Some retailers experiment with building the cost of shipping into the price of the product, but that rightfully makes merchants nervous about losing customers who price-compare, which is a sizable portion of online shoppers. Instead, many retailers find ways to put caveats on free shipping offers, such as free standard shipping only for lightweight (but high-margin) products, or for orders that reach a minimum purchase threshold. Retailers should also take solace in the fact that free shipping is not a mandate. Clearly, it’s a game of psychology. You have to test in order to discover where the triggers and barriers exist for your customer base and competitive situation. With that in mind, here are

OCTOBER 2012 • SMART LOGISTICS • 31

e-Retailing strategies, continued

some tactics you can try as alternatives to offering free shipping on all orders all the time. • Flat rate: Macy’s ships all online orders of $99 or more for free. Most orders that fall below that threshold are shipped for an $8 flat fee. Overstock.com gives first-time customers free shipping and ships for a flat rate (currently $2.95) on all subsequent orders, no matter how large. Companies that offer flat-rate shipping typically send those orders via ground delivery to keep costs under control. • Shipping club: Many retailers offer customers the option of paying a one-time fee in order to receive free shipping or speedier service. Amazon.com was among the first to use this strategy. Customers who pay $79 annually for the Amazon. com Prime programme receive unlimited free two-day shipping, upgrades to overnight shipping for $3.99 per order, and other benefits. • Optional upgrades: Whether they offer ground shipping for free, for a flat rate or at cost, many online retailers are giving customers the option to upgrade to faster delivery service for a fee, usually between $3 and $6 unless it is an oversize shipment. Kevin Chung, e-commerce Marketing Advisor, FedEx, likes the upgrade option because it provides an opportunity for businesses to make it clear what to expect in terms of delivery time under a standard rate, while enabling customers to opt for speedier shipping at their own cost. “Giving decision-making power to your customers is a good idea,” Chung explains. • Free shipping for minimum purchase: Many retailers, large and small, provide free shipping with a minimum purchase. Amazon.com, again, was an early adopter of this strategy, with its free shipping on orders of $25 or more. • Free shipping on eligible products:

32 • SMART LOGISTICS • OCTOBER 2012

This option is often offered with products that have higher profit margins, or on product lines that a retailer wants to promote. In a recent test, an e-commerce retailer reported the results of piloting a free ground shipping offer on a high-margin product, “My asset turns were great and I was able to clear inventory five-plus times. Call volume increased, sales increased, all signs were positive,” he says. • Free shipping for a limited time: Nearly 9 out of 10 online retailers offered some form of free shipping during the holiday season last year, according to a survey by The E-Tailing Group. Free shipping also works well to help move products that are out of season, especially if you emphasise that the same product will not ship for free if ordered later.

From an online retailer’s perspective, there is no such thing as ‘free shipping’. But behemoths such as Amazon.com and Target.com, have economies of scale that allow them to absorb the added cost.

TESTING & FINDING THE THRESHOLDS Ultimately, crunching numbers and testing a mixture of the strategies above during a period of weeks or months will serve retailers best. For example, in determining where to set the minimum order to qualify for free shipping, David Redlich, Co-founder &Director – Sales, ReStockIt.com, an online seller of office and restaurant supplies, informs, “The sweet spot comes from being analytical, knowing your competition and your average order value, and seeing if you can get customers to a higher order threshold.” ReStockIt, which has realised conversion rate hikes of 20–30% through free shipping offers, has found free shipping works best when offered as standard fare on more than 100,000 of its higher-margin products. But it is

also proven effective as part of special limited-time promotions for lowermargin products. Cases of large-size Gatorade energy drinks, for example, may run with long-term free shipping, while cases of smaller Gatorade bottles may come with free shipping only occasionally. The key to using these strategies is: test, learn and evolve. At Bedbathstore, Chief Operating Officer Mike Reichman uses a spreadsheet tool developed in-house to periodically crunch the numbers associated with free shipping offers. The spreadsheet tracks the performance of certainkey metrics—including total revenue, operating margin, number of orders, number of customers who viewed a free shipping offer, average shipping cost per order, average value of shipped orders, and the average conversion rate for a free shipping promotion—against variables associated with particular promotions, such as the threshold amount a customer must spend to get free shipping.

IN A NUTSHELL Many consumers view shipping fees as a necessary evil of online shopping. Unfortunately, it is one that often deters them from completing an order. “If you can get rid of that evil, you make it easier for them to purchase,” says Tisdale. Free shipping is a proven tool for increasing online sales, but businesses cannot allow it to cut too deeply into their bottom line. It ultimately comes down to doing the math to determine what makes sense. When free shipping does not make financial sense, it is important for e-tailers to look at other means of turning shipping into a competitive tool. By providing as many options as possible, you can put the customer in control of his or her own shipping decisions—a sense of empowerment that is fundamental to building longterm brand loyalty. Courtesy: FedEx Services

RETAIL IN PEAK SEASON SPECIAL FOCUS

PRATEEK SUR

ECONOMIC ambiguity has tampered with consumer consumption by sending-off manufacturers & retailers and making them hesitant to trigger orders & stockpile inventory against variable demand predictions. The retail gift card persists to further elongate the holiday buying season to January as consumers redeem their credit even after Christmas. Besides, steamship lines are also building waves by randomly taking capability out of the market and idling vessels; they are sinking operational costs while artificially stimulating. Steamship lines began peak season surcharges demand, but still ran below full capability. They delayed the process

came to the fore more than 10 years ago, they maintained a pattern. Large steamship lines set the rate in July– August, consequently, smaller carriers followed suit. When capability dropped below a said quota, the steamship lines lessened their surcharges and everyone else followed suit. It was a regular tug of war characterised by market variations. Nonetheless, sooner or later, supply and demand balance out. According to an industry expert, “Larger companies across the globe, like Walmart, have nothing to worry about. They bear such heavy volumes that they are cared for accordingly. Most have capability guarantees. If cost, capacity, or customer service become

to book freight with steamship lines. For example, a shipper that is moving 7,000 TEUs a year may tender 5,000 TEUs to a steamship line and then split the remaining 2,000 TEUs between two NVOs to make an additional suppleness. Smaller Tier III shippers have to be even more inventive. Many cannot work unswervingly with ocean carriers, and have to rely on mediators to find space. They may work wholly with one NVO, or specify forwarders that deal with one steamship line or with a specific commodity type. Some will sign a minor service contract with an ocean carrier, and then give the lion’s share to an NVO,

Showcasing Brilliance to meet

Demand Variations September-October is generally the most hectic time of the year for international manufacturers, retailers, steamship lines and transportation & logistics mediators, as they start increasing inventories and capacity to supervise the festive goods rush. As the pattern of modifying consumer buying habits continues even in the third quarter along with leaner ocean carrier ﬂeets conniving to toss peak season tradition aside, the latter half of 2012, promises to bring in much more for retailers. This will showcase the brilliance of the logistics players and test how fast they can deliver damage-free goods. and later discounted the premium rates. Some logistics players even waived surcharges altogether.

DEALING WITH DOUBT Many international ocean shippers have been disagreeing about what to do in order to increase this peak season capability. Some have resolved that they will not sign service contracts until the market becomes bullish, especially after knowing that the service contracts they signed during the last cycle were 10% higher than the spot market. When peak season surcharges initially

issues, Tier I companies have no shortage of suitors. Tier II importers, moving between 1,000–10,000 TEUs every year, must plan better.” Keeping a note of market dynamics via numerous media outlets is of prime importance. In addition, there are online tools, such as Zepol, that allow shippers to know how many containers competitors are bringing in and with whom. Market intellect creates costing leverage when shippers negotiate with carriers. Tier II companies also leverage partnerships with Non Vessel Operators (NVOs) and 3PL providers

while others may split volume among multiple mediators (although this is not a favoured strategy). The reason of an NVO, particularly if a shipper is not locked into a service binder, is to leverage volume for better costing. Dedicating 90% of business to one mediator and 10% to another gives suppleness while ensuring better economies of large scale.

SMARTER SEASONAL WORKERS NEEDED Gone are the days where seasonal workers walked into a warehouse hiring office in the early September–

OCTOBER 2012 • SMART LOGISTICS • 33

Retail in peak season, continued

October and then muscle around for a few months to help a retailer sort, pick and ship all those holiday orders. The present day’s e-commerce operation requires lot of sophistication. As a result, companies cannot hire individuals with the same mindset today that they did 10 years ago. This is because e-commerce commands a larger part of the retail pie as online shoppers become more demanding. Therefore, there is less room for error at a time when e-retailers are straining to meet tight festival deadlines. This has led to the consumption of more complex expertise that needs more competence and concentration from seasonal fulfillment workers and cannot be done by just some rented muscle and sweat. Talking of the technologies in the warehousing capabilities around the peak season, the industry expert avers, “Companies are currently implementing ERP, which would help in automating the back end processes, strengthening the order management, tracking & shipping and shipment efficiencies. Companies have seen the fine-tuning work well, and are now in a position where they can execute quick and timely deliveries even to far-flung locations.” Now, these labours do not need to have an IIT or Harvard scholarship on their applications, but should be strong and competent enough to read and comprehend so that they do not mess up packing slips & order tickets. Also, they have to be at ease with tasks that might include working with voice-command systems or expensive cranes. No longer are the new-age warehouses like that of the yesteryears. So, an employee needs to have the ability set and capability to come in and work in a highly technical environment. After all, the peak season depends on the skill set of smarter and tech-savvy seasonal workers.

MIXED PROSPECTS FOR 2012 It is not an unknown fact that there has not been a ‘peak season’, in the conventional sense, for quite a number of

34 • SMART LOGISTICS • OCTOBER 2012

years now. Given the ongoing economic challenges that have been occurring in India and in the global market, gauging how things will turn out in 2012 is a challenging task. However, the industry expert is of the view, “The challenges are nothing new, with relatively low retail sales growth, fluctuating fuel prices, fairly high unemployment, minimal GDP growth, and, perhaps, most relevant, the significantly lower inventory levels presently compared to the peak season build-up in recent years, which was the case in the first half of 2010 and to an extent in 2011.” With all these occurrences, freight volumes and activity stay in an asset pattern, with flat or low growth all the way through the bulk of Indian and global freight transportation modes with the end-of-year fast approaching. Attitudes and outlooks are decidedly mixed when measuring 2012 peak season

Automation will reduce manual intervention in order to avoid human error and constantly work towards making the processes efﬁcient. predictions. It was found that 40% of the retailers expect a more active peak season this year compared to last year. Around 46% are expecting it to be the same as last year, while about 14% are expecting it to be less active. Shippers are expecting a livelier peak season and are also referring to a likely increase in festive spending, added with gradually improving economic conditions. This argument is seconded by data put out earlier this year by the retail sector in India, which is calling for 2012 retail sales to hit $2.53 trillion, at a 3.4% annual increase. “The economy is still soft, and retailers are shipping earlier in the year at a slower pace & volume amount. China exports are declining, and there is still extra ocean capacity,” adds the expert. Other reasons for a flat or less active peak season incorporated aspects like financial indecision around product

costs, the concerned economic situation in Europe and currency movements across the globe—all of which have the possibility to holdup placing buying instructions until later than usual. But another factor possibly leading to a suppressive peak season cited by shippers is the seemingly fast speed in which ocean carriers have raised rates in an effort to get back the money they lost in 2011. A food importer-exporter has received six rate increases from ocean carriers since January, which makes it difficult for his company to repeatedly pass onto customers. Even with rate pressure and an uneven economy, some experts are calling for solid peak season activity. However, according to the industry expert, “The industry expects that there will be a peak season. It will not be a boom, but looking at some of the forward indicators September and October should be relatively good from a freight point of view, and there are good production figures in China and India. Things, overall, should be decent and importers, wholesalers & retailers are managing their inventory closely. However, with the level of service that carriers are providing, they can plan well ahead and do not need to build up too much inventory, as they need to keep re-supplying.” “It is hard to say for sure, but companies would be feeling it already if there was a real pull forward or an inventory re-build happening. Companies do not have the pentup demand carryover from the first quarter to the second quarter like they did last year, and this feels like a normal second quarter, with things good, but not really great. This would lead one to believe that there might be a peak season, if you couple it with supply leaving and demand increasing, they should be staring at a somewhat robust third and fourth quarter. But it is still too early to say for certain,” the industry expert concludes. prateek.sur@network18publishing.com

DROP SHIPPING SPECIAL FOCUS

Creating a

niche to

EXCEL

Using the internet to sell products and services to the ever increasing number of net users is a good way to start one’s own business. E-commerce, contrary to popular belief, is thriving and recording a double-digit growth rate. With online sales expected to reach skytouching limits during the festive season, this is the right time to get into online business. Building a website for selling products & services is no longer a difﬁcult task. The focus is not on how to get online, but on how to sell online. A product vendor may want to sell a product online, but may not want to deal with the associated risks of stocking products and handling the shipping. For such vendors, there is a way out… it’s called ‘drop shipping’. PRATEEK SUR

DROP shipping is the term used for the process whereby a retailer sells a product which he does not actually keep on physical inventory. Instead, the retailer takes orders for a product, which the vendor then ships directly to the customer. Thus, in drop shipping, the product vendor takes care of all the shipping for the retailer. Rather than ordering stock in bulk, the stock remains with the product vendor. It is only after the retailer makes a sale that the vendor packs up the product and dispatches it to the customer with the retailer label on the box. Drop shipping is great for retailers who are new to online selling,

as it means that there is little to no start-up cost and virtually, there are no risks involved (as the retailer would not need to invest in products in a bulk). Using drop shipping services also eliminates the issues pertaining to storage of products for many online sellers, as there is no need to hire any storage, which culminates into big savings for retailers. However, drop shipping does have its share of drawbacks. Firstly, drop shipping is slightly more expensive than buying in bulk for the

retailer/online seller. Often, a drop shipper/product vendor will add US$2–5 onto the cost of the product to cover their costs of processing it. This means that keeping up along with staying competitive in highprofile categories like electronics and clothing may be difficult. However, this certainly does not mean that the product vendor and the retailer cannot make money when they drop ship. It simply means that finding a niche market will be even more important and both can have their respective profits from the selling of the product to the customer.

OCTOBER 2012 • SMART LOGISTICS • 35

Drop shipping, continued

PRICING ITEMS FOR DROP SHIPPING The main reasons any company would opt for drop shipping would be scope to make more money and scope to sell more products. So, a product vendor needs to ensure that the deal is a profitable one for itself as well as the concerned retailer, while maintaining a reasonable Maximum Retail Price (MRP) for consumers. Drop shipping programmes normally follow a 50% above wholesale format, wherein companies have a wholesale price set for the product before hand. Companies always factor in total production costs when figuring the wholesale pricing. Total production costs include insurance, inflation coverage, payment for the time or employee’s time in handling product, among other factors. Talking of the drop shipping business with respect to fullfledged online retail stores in India, Muralikrishnan B, Country Manager, eBay India, says, “At eBay India, we have merchants from all elements of the distribution chain selling their products. Many brands & large manufacturers are not geared for retail sales. So, they use the services of a Trading Assistant to manage the logistics for them. Since any product can be drop shipped, experienced eBay sellers expand their business by acting

EXAMPLE TO SHOW HOW MUCH IT REALLY COSTS TO PRODUCE A PRODUCT Product costs $3 to manufacture Company adds $1 inﬂation coverage per product Company adds $2 per product to pay itself Company adds $1 for liability/ insurance coverage per product Total cost to company per product: $7 The wholesale cost is $14 (Double the CTC) The retail (MRP) cost is $28 (Double the wholesale cost)

36 • SMART LOGISTICS • OCTOBER 2012

MAIN BENEFITS OF STARTING DROP SHIPPING PROGRAMME For retailers: Gets permission to use the vendor’s product pictures and information to promote the product on their retail site, though they never purchase the physical product. Instead, drop shipping allows them to offer ‘virtual inventory’. There is no minimum purchase or automatic restocking required. Negotiates to earn a percentage of each product sale Takes orders for the product and relays order to the vendor for product packaging and shipment to the customer Can add inventory without having to write an expensive wholesale order Can work with a larger number of vendors and designers, even on a limited budget No increase in insurance costs due to lack of physical inventory Ability to keep cash coming in during slow retail sales For vendors: Allows the retailer to use the product vendor’s product information to promote the product for sale on their retail website/store Allows the retailer to take a percentage of proﬁts Ships the product directly to the customer Wide range of retailer possibilities from which to sell product Increases brand exposure through wider outlet of retail sales Ability to keep cash coming in during slow retail sales The drawbacks for vendors Lack of wholesale ordering means you are not getting a large payment upfront for your time and products Working with slow or non-paying retailers Working with retailers who do not respect your product brand as much as you do.

as enablers or Trading Assistants for brands & large merchants. This could involve the provision of services like listing & customer service or even stocking products and shipping them out.” “Infrastructure required is storage space/warehouse/computers & working space/internet connections/telephone lines/staff. The investment would depend on the scale of operations. For a large merchant, retailer or brand, the clear advantage is that they can avoid having to gear their business for retail sales. The enabler or trading assistant takes up the effort of tackling customer queries, creating listings of products, storage & shipping,” Muralikrishnan adds.

RECOUPING FEES FOR EACH ITEM THE RETAILER SELLS The payment module may vary from retailer to retailer. Some may request

to be paid on a monthly or weekly basis, while some may want to be paid after each sale. If retailers feel strongly about a payment schedule, the product vendor must add it into the drop shipping programme contract, clearly stating and making sure that the product vendor understands what the retailer is expecting in the form of payment. A retailer may accept payment via Paypal, a business check or credit card; some larger retailers carry a company credit card, which they expect the product vendor to recharge after each sale. For instance, say a customer makes a purchase from the retailer and the product vendor ships the product. The retailer may provide the product vendor with a credit card number— to keep on file in many cases—and simply ask that product vendor to recharge their card for their fees. In order to do this, the product

vendor will need to process credit cards through a merchant or Paypal account (which the product vendor should have set up if the product vendor is the product seller). Keeping a retailer’s company credit card allows the product vendor to bill for each product—and get paid—before the product vendor ships the product to the customer. This ensures that the product vendor receives immediate payment for product vendor’s goods and time without waiting for the retailer to come and personally pay the product vendor, or running the risk of a retailer who is a slow payer or non-payer. Thus, payment is very transparent and the product vendor gets the payment as soon as the retailer sells the product to any customer. An alternative to this is to bill the retailer upon each order and insist that the product vendor be paid for each product before the product vendor ships the same. This can be done with a simple transfer of funds via Paypal and no credit card is required. When creating the payment terms, the product vendor must be specific and clear about the product vendor’s expectations, including how the product vendor will handle late payments from the retailer, overcharges, refunds and non payment. Such processes make the whole transaction more transparent and error-free.

HANDLING REFUNDS, EXCHANGES OR UNHAPPY CUSTOMERS Issues related to refunds and exchanges are likely to vary from retailer to retailer. Normally, if a customer receives a damaged good or merchandise which is unsatisfactory, the product vendor will have to refund the customer. However, if the refund is due to any error on the part of the retailer, then the product vendor is not liable to refund the customer. Customer service should mostly be handled by the retailer who is representing the product vendor’s products. Therefore, there is a need

for the line of communication between the product vendor and the retailer to be open. The retailer will need to know when the product vendor has shipped a product, by what carrier it has been dispatched, any product substitutions or back orders, delay in product shipping and other key information. Commenting on the reverse logistics service in drop shipping and the one who finally bears the cost of the returns, the drop shipper, supplier or buyer, Muralikrishnan elaborates, “We are an online marketplace where buyers & sellers meet, engage and trade on their own. All the sellers on the site make arrangements for delivery of the products themselves. Thus, sellers take care of the warehousing and shipping of the respective products. The average transactions are delivered to the customer within 2–3 days. At eBay India, through methods such as eBay Guarantee and PaisaPay, we ensure that consumers have a pleasant, safe and transparent transaction.” Additionally, if a customer requests to exchange a product, the product

MAIN BENEFITS OF STARTING DROP SHIPPING PROGRAMME Companies are responsible for refunds if: Merchandise are unsatisfactory Incorrect merchandise are delivered Late or lost delivery (that shipping insurance does not cover) Merchandise that does not live up to its warranty (i.e., falls apart after washing, noticeable ﬂaws with use, etc.) Companies are not liable for refunds if: Customers unpleasant experience with a retailer Retailer error or misrepresentation of a product Shipping damage or errors that are covered under postal insurance

Wholesale pricing is largely determined by the industry and product, and what the market will tolerate. Wholesaler, retailers and customers should always be sure to research similar products to see how they can compare/compete in pricing. And always assure that they get paid something. vendor will need to be prepared for additional packaging, time and shipping costs associated with an exchange. Hence, here the product vendor should be upfront with the retailer about whether or not the product vendor will accept exchanges, and who will be responsible for the costs involved. Back ordered, discontinued or replaced merchandise can pose problems for a retailer because he relies on presenting consumers with exact information about a product— the product vendor must keep track of the retailer’s work and keep the retailer informed of any changes in the status of the product of the product vendor. If the retailer no longer expects to carry a current product in the future, intends to replace a product vendor’s product with a new one or experiences lead time issues with product vendor’s products manufacturing, then the retailer should convey his displeasure to the product vendor in advance so that the product vendor can adjust the inventory accordingly. Talking about the future of drop shipping and the extent to which it might increase in India in the next five years, Muralikrishnan concludes, “Drop shipping is still gaining impetus and is penetrating deeper into the eCommerce markets. More and more e-retailers are extensively using the drop shipping model in their business. Hence, the future looks brilliant for drop shipping companies in India.” prateek.sur@network18publishing.com

OCTOBER 2012 • SMART LOGISTICS • 37

SPECIAL FOCUS SELECTION OF LSPs LSPs

Key to customer satisfaction Online retail business has emerged as one of the fastest-growing businesses in the country and facilities like free shipping, product ratings & reviews, multiple payment options, product demonstration videos and free return policy have given it the much needed push. However, the growth of online retail is strongly linked to the performance of the logistics sector. E-retail companies following key norms in selecting quality logistics players and LSPs following certain norms before servicing e-retail customers will create a win-win situation for both the parties.

ARINDAM GHOSH

ONLINE retail business in India is on fire these days owing to easy availability of broadband services and increasing internet usage across the country. All online retailing companies are aggressively marketing their product & solution offerings through a wave of ads across various forms of media like TV, radio, internet, mobiles, newspapers, magazines, etc. and by offering huge discounts and schemes to encourage customers to buy products online. However, their credibility and competitiveness is highly dependent on the Logistics Service Providers (LSPs), which act as their backbone of growth in the industry. It is the logistics firm, which finally delivers the product to the desired customers and so, any delay caused by LSPs will put the name of the company at stake. In this regard, selecting the right LSP is of paramount importance. Commenting on the same, Rahul Harkisanka, AVP – Operations, fashionandyou.com, avers, “Selecting an LSP is one of the most crucial factors on which the growth of any e-retail company depends. Delivering the desired item at the right time and location fosters customer’s faith in the company. This, in turn, strengthens the brand name of the company in the

38 • SMART LOGISTICS • OCTOBER 2012

market.” The probability of shopping for future requirements with the same company increases, he adds. Echoing his views, Kartik Venkatraman, Marketing and Analytics – VP, Tradus.com, explains, “It is very important to opt for a quality LSP because it is responsible for the final delivery of products to the customer’s doorstep. This aspect becomes even more crucial if the delivery consists of perishable products like food items, cakes, flowers, etc., which have to be delivered within a particular time. Thus, a quality logistics partner ensures competitive advantage for an e-retail company in the market.”

KEY CONSIDERATIONS With a booming Indian economy, rising levels of disposable income along with changes in tastes & preferences and a large chunk of youngsters eager to adopt new technologies with rapidly changing lifestyles, India is set to become the third-largest nation of internet users in the next two years. Such a scenario has pushed online retail to emerge as one of the fastest-growing industrial segments in the country. In addition, one of the benefits of online retail is that it allows customers to shop 24x7 and 365 days in a year—

which is highly convenient—and, most importantly, the delivery is made at the customer’s doorstep. Select multiple logistics partners Given that logistics is one of the most important aspects to ensure satisfaction to customers, retail companies follow very strict criteria to select an LSP. Offering a perspective on the same, Venkatraman says that it is critical for e-retail companies to involve multiple logistics partners towards increasing and strengthening their reach. It is important to be associated with a lot of logistics players; if the tie up is restricted to a few logistics firms, it limits the company’s reach. To this, Harkisanka adds, “We work with a range of big and small players like start-ups, who have presence at the national as well as domestic levels. The important criteria we look at is the level of services offered by logistics players. It is based on the reach of the logistics player, its experience in the industry, the cost, etc. We also look at the responsiveness of the logistics firms to e-commerce. Sometimes, we may also outsource the logistics operations to various local players who have a strong reach within a specific area.” Reliability is crucial Elaborating further, Venkatraman

explains, “Reliability of the logistics partner in terms of making the delivery at the fixed time is very crucial. Today, there are many logistics firms in the market, who specialise in delivery for the e-commerce segment. The cost of logistics service is also an important aspect, which determines the selection, because it has an effect on the overall pricing of products.” Many companies also look at conducting surveys and talking to peers to analyse the performance and reputation of the logistics players in the market. Highlighting the need to analyse the LSP, Harkisanka elaborates, “Once we have tied up with an LSP, we constantly evaluate their performance on various parameters like their return rates, their delivery schedules, how responsive they are in understanding the dynamics of the market and accordingly, we will scale up or scale down our performance with them.” “Our company tracks all the shipment proactively. If the shipment does not get delivered within a given period time, we start following up with the courier company and send them reminders and instructions to deliver the shipment. With such strong checks the chances of customer not receiving our product is minimal,” Harkisanka informs. Develop in-house logistics facility Few big online companies like Flipkart have developed an in-house logistics facility, which handles the company’s operations in logistics. Such a mechanism brings down the cost for the company and avoids dependence on any other firms for delivery of products.

LOGISTICS PLAYERS NEED TO... The market for the online retail industry currently stands at `2,000 crore and is growing at a steady annual rate of 35%. It is likely to be worth `7,000 crore by 2015. A major role in the growth will be played by the logistics industry, which is also driving India’s economy. Providing service for

e-retail customers will generate huge scope of business for logistics players. Realising the potential to do business, large logistics companies such as Bluedart, FedEx, Gati, TCI, etc., have an exclusively dedicated service for online retailers. Further, many start-up firms have come up in the market with a specialisation on e-commerce delivery solutions like Dehlivery, Chhotu.in. Some of these companies claim to deliver anything ordered online within 24 hours anywhere in India and offer huge discounts on shipment. In this regard, Harkisanka comments, “Their service offering is highly customised as per the needs and requirements of the online retail companies.” According to Rajkiran Kanagala, Head – Business Development, TCI, “The most important consideration for any logistics player in offering its services to an online retailer is to

It is important to be associated with a lot of logistics players; if the tie up is restricted to a few logistics ﬁrms, it limits the company’s reach. check the credibility of the venture, based on its lineage, operations and equity invested. The LSP should ascertain the client’s e-commerce offerings cost suitability. It is also important to determine the Service Level Agreement (SLA) and the Key Performance Indicators (KPIs) that have been contracted upon. Besides, it is critical to look at the soundness and security of the payments being remitted. Also, the degree of readiness that the partner demonstrates in co-developing a complete turnkey solution on a partnership basis is critical.” LSPs should also offer the industry good customised solutions. They should have in-depth knowledge of the market dynamics and be highly aware of the importance of meeting deadlines in terms of delivering products. In

terms of investment, they should be ready for initial investment, before associating with the logistics industry need in order to strengthen their overall supply chain like improving the reach across the entire country, developing warehouses at strategic locations as well as in implementing modern technology and software solutions. They should have a strong inventory management mechanism and a good track record in the industry towards ensuring proper, timely and safe product delivery. Additionally, they should be able to offer services at competitive rates and offer other value-added services.

MUTUAL TRUST IS A MUST The e-commerce and logistics industry are one of the fastest-growing sectors in the country and the success of e-retail companies will, in turn, enhance the logistics sector in India. Any delay will hurt the credibility of both the company as well as its logistics partner. The customer may not shop with the same company again, which has not lived up to its promise and in the process, the scope of business might be affected. Developing mutual trust and taking LSPs as partners will benefit both the parties. According to Harkisanka and Venkatraman, given that the quality of the logistics service is intrinsically linked with the performance of the online retail companies in the market, it is critical to consider them as partners in the delivery process and not just as vendors or suppliers who offer logistics services. It is critical to work very closely with them. This will not only boost the growth of the business of the e-commerce companies, but will also enhance the credibility of the logistics players associated with them. Such a scenario will make the industry play an important role in driving in India’s growth story in the next few years. arindam.ghosh@network18publishing.com

OCTOBER 2012 • SMART LOGISTICS • 39

Illustration By Sanjay Dalvi

SPECIAL FOCUS FDI IN RETAIL

Spurring Activity in the Supply Chain? The government’s decision to allow foreign retailers to set up supermarkets in the country is likely to encourage private equity investment in warehouses, the backbone of the retail sector. According to experts, the need for efﬁciency and quality would drive investment in warehouses and supply chains. NISHI RATH

FOREIGN Direct Investment (FDI) in retail would help modernise the supply chain. This, in turn, would present a big opportunity for companies managing warehouses and logistics, as the entry of foreign retail chains would have numerous impacts, even on the logistics sector. Here’s how… Companies that will venture into India are bound to set up supply chains and logistical capabilities. This will help create significant improvements in the infrastructure needed to source, ship, store & deliver products and other supply chain activities. But, the ‘goodness’ does not end here… the entry of international companies will give rise to more competition and encourage domestic players to invest in their supply chain as well. Independent logistics providers are also expected to grow as they will be the link between small manufacturers, producers & farmers and the organised retail chains. The new FDI Policy has been approved in nine states—Delhi,

40 • SMART LOGISTICS • OCTOBER 2012

Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana, Manipur and Jammu & Kashmir and two Union Territories—Union Territory of Daman & Diu and Dadra and Nagar Haveli. Retailers planning to partner with foreign investors would be able to operate stores in states approving the FDI Policy or states expected to approve of the same in future. According to Raj Jain, President, Walmart India and MD & CEO, Bharti Walmart, “We believe that allowing 51% FDI in multi-brand retail is an important first step for the government to further liberalise this sector. We are grateful that the government has realised and appreciated the value that we will bring to strengthen the Indian economy. This policy change will allow us to connect directly with the consumer and save them money. “We are willing and able to invest in back end infrastructure that will help reduce wastage of farm produce, improve the livelihood of farmers,

lower prices of products and ease supply-side inflation. Through these, and several other initiatives, we hope to make a positive impact on the lives of the people of India,” Jain adds.

GUIDELINES THAT AFFECT LOGISTICS As per the guidelines, at least 50% of total FDI brought in by foreign retailers shall be invested in back end infrastructure within three years of the induction of FDI, where ‘back end infrastructure’ will include capital expenditure on all activities, excluding that on front end units; for instance, back end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, warehouse, agriculture market produce infrastructure, etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of back end infrastructure. According to a release by CARE Ratings, this clause would result in

the development of infrastructure and efficient supply chain management practices in the country in the long run. It will not only create new employment opportunities locally, but would also benefit consumers & retailers in terms of lower price of finished products and lower cost emanating from supply chain efficiencies, respectively. “From the foreign retailers’ point of view, CARE Research believes that the compliance to the said investment clause would lead to lower returns to the retailers in the short-term owing to half of the investments being made in ‘back end retailing activity’; the returns of which are generally visible with a lag effect. However, we believe that the said investments would reap rich dividends in the long-run with the sales of foreign retailers increasing gradually and the efficiency of supply chain infrastructure, leading to a significant reduction in the cost of retailing,” said the statement. When a retail firm sets shop in India, the back end investment will take place. That is obvious. But for the back end infrastructure design, it has to clearly demarcate the geographies. According to experts, FDI in retail is one important lever for cold chain infrastructure.

GROWTH IN LOGISTICS TO STIMULATE IT PROCUREMENT

RETAIL TRADE OF INDIA: ASSUMPTIONS AND FACTS Retail sector contributes around 10% to India’s GDP. Of the total employment, about 10% is from the retail sector. Organised retail provides employment to roughly ﬁve lakh employees. Unorganised retail provides livelihood to more than 22 crore people directly and indirectly. India is the country having the largest unorganised retail market in the world. More than 90% retailers function in less than 500 sqft of shopping space. Indian retail is expected to grow 25% annually. The Indian retail sector is estimated at around `20 lakh crore, of which the organised sector accounts for about 5%. As per the Government Policy Document, FDI in retail will create around 10 million jobs in three years with 4 million (40 lakh) jobs created directly, while the remaining jobs would be in back end logistics. The government ﬁrmly believes that FDI will lead to infrastructural development, especially in logistics and warehouse. In terms of India’s Gross Domestic Product (GDP), the total contribution from road transport sector is about 4.8%. This alone transports about for 73% of goods from one place to another. With inputs from Confederation of All India Traders (CAIT)

also help the IT ecosystem prosper by tapping multiple areas of interest.

THE SIDE EFFECTS…. According to the Confederation of All India Traders (CAIT), though FDI in retail may generate little employment among educated youth, it will also ignore the semi-skilled and uneducated population, who are traditionally associated with retail trade. This is not all! Many believe that foreign retailers will impact supply chains that are being fed by SMEs and SMEs will

From farm to fork, IT/ ITeS segments Allowing 51% FDI in multi-brand retail is are poised to play an important ﬁrst step for the government a strategic role. to further liberalise this sector. This policy change will allow us to connect directly According to industry with the consumer and save them money. experts, supply chain Raj Jain, President, Walmart India and MD & CEO, Bharti Walmart management and warehousing would be displaced. Small-time transport witness IT hardware deployments, players, too, have been complaining besides customised software, that smaller transport players are often surveillance tools, display technologies left out because of their inability to and Location Based Services (LBS). comply with the stringent terms of Physical infrastructure will rely on mega retail corporations. The Indian a robust supply chain driven by IT, transport industry continues to experts say. Trade pundits feel that the comprise small operators accounting overall impact of FDI in retail would for as much as 85% of the total fleet. be positive on the industry. It would

CHANGES CAN ENSURE POSITIVE RESULTS Recently Dr C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council (PMEAC), said, “To address the adverse affects, small traders can take part in the modern retail change story and get assimilated into organised retail, upgrade through infusion of capital & better training and organise themselves under their banner through franchises.” Though many fear that the existence of large-scale retail might eat into the share of small-time shop owners/ kirana shops, this is not what experts believe. When big branded retail chains in advanced countries could not wipe out the small shopkeepers, why would that happen in India? The ‘mom and pop’ store, what they are generally referred to, still retain that personal touch, which is not the case with large retail outlets. Besides, proximity does matter when it comes to customers. So, it should not be a great risk for small shop owners. nisi.rath@network18publishing.com

OCTOBER 2012 • SMART LOGISTICS • 41

SPECIAL FOCUS RETAILING EXTRAVAGANZA

AS a Direct Store Delivery (DSD) provider, you are aware that gaining customer loyalty is a battle won or lost on the storeshelf. Your business depends on having the right products on the shelf when the mood strikes the customer. However, it is not as simple as stocking the right type of product for your customer’s cravings. It needs to be just the right flavour, in the right size and at the right pricepoint —and of course, freshness is essential. Juggling all this data and answering the manufacturer, retailer and the customer is a monumental task. But do it right and everyone is happy—your products are in stock and easily found by the customer; the retailer captures a larger share of the consumer’s wallet and you drive sales growth and profitability.

ELIMINATING STOCK-OUTS AND MINIMISING WASTE WITH CUSTOMER PROFILE ANALYTICS Capturing competitive and customer information is playing a more important role than ever. The data can give you a significant competitive advantage by alerting you to what’s happening in the field as it happens, thus giving you the ability to proactively address opportunities. The result: you drive sales rather than simply reacting. Data, combined with the right technology to help you decipher it, gives you the ability to sense shelf movement and translate the information into true demand. A key example is a well-known sandwich supplier. To maintain their reputation for the highest quality, freshest products, the sandwiches are delivered to the store one day, and any stock that has not got sold is removed from the retailer’s shelves the next day at the distributor’s expense. Having detailed customer data is essential in order for this company to forecast demand—otherwise they are stuck picking up the tab for the unsold inventory, and those leftover sandwiches can quickly eat away profit.

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Secrets of

4 Best In Class

Direct Store Delivery Providers The best in the Direct Store Delivery (DSD) business take technology beyond expected tasks such as Global Positioning System (GPS) route mapping, handheld scanning and printing invoices on-site. They are able to go above and beyond to actually shape customer demand, eliminate stock-outs & waste, win customer loyalty and ultimately increase proﬁtability. Here’s providing you with four ways forward-thinking companies in the DSD industry gain a true competitive advantage through the creative use of technology. The company employs very creative salespeople who work in a highly competitive environment— and it arms its people with real-time, custom-tailored information they need to maximise sales and eliminate stock-outs for each stop on their

route. Sandwiches are delivered once in the early morning and once after lunch. Stores can place orders until 10 pm. to receive inventory at 6 am the next day. The hitch lies in the fact that the sandwiches were produced and put on a truck before the customer ever

placed the late order. That’s where customer profile analytics come in. Using suggested order capabilities, the company assesses sales history, inventory turnover and current stock on-hand to determine what to deliver to each outlet. Suggested order ensures that reserve stock is placed on trucks to meet last-minute demand. The information on which trucks have extra stock is available in real-time, and the stock can be allocated to the store in need while the truck is already en route. Changing demographics and localised assortments? Not a problem, because true demand is being captured and assessed in real-time. The system provides a shopping list for each customer based on history and supplier importance, and the salesperson has the information needed to up-sell and provide the best customer service. There is a fine line between putting out too much inventory and running into stock-outs. The data provided by in-depth customer analytics helps this sandwich provider to eliminate stocks-outs, deliver the freshest products to customers and keep its waste level to 2% or less.

have the power to dynamically change the current route schedule based on up-to-the-minute requests. A good example of optimising route efficiency can be found with a leading ice cream supplier that wanted to use real-time data to improve sales effectiveness. The business faced high turnover rates with drivers and wanted to be able to better manage performance, with the expectation that they could see a 20% productivity improvement per route. With a GPS solution combined with real-time data, the company gained insight into the field and had information on where the drivers were, how long they were spending at each stop and the amount of time between stops. The stop performance information included sales amounts, missed stops, service

time and unscheduled stops. By analysing historical and real-time data, the company quickly found several areas where productivity could be improved, including the fact that too much time was being spent between stops. Technology became a good training tool and gave the company the information it needed to set up clearly defined, realistic performance expectations.The company set goals and objectives and easily manages progress against the targets. In addition to increasing productivity with the route efficiency software, the ice cream supplier attained the additional bonus of improved customer service. The real-time data gave the company

OPTIMISING ROUTE EFFICIENCY TO INCREASE SALES Maximising the effectiveness of Global Positioning System (GPS) technology means more than finding the fastest route for drivers. There is an art to optimising sales opportunities that goes much deeper than simply calculating the shortest distance between deliveries. You can take your GPS technology to the next level by integrating it with your wireless solution to gain actionable, real-time data that will help you increase revenue and cut operations cost. You will gain visibility into your drivers’ location, their productivity, route capacity and stop performance—plus

By having access to exact year over year sales, trends and data on what is moving and what is not, the representative can give the retailer a typical example of what sales would be for a solidly performing product based on a competing retailer’s statistics.

the ability to fill last-minute requests by dispatching a truck that has the stock and is close to the customer. Plus, with less time wasted, service personnel have more time to interact with the customer, building relationships and increasing sales.

LEVERAGING CUSTOMER-SPECIFIC TRENDS TO INCREASE SALES

New technology options can bring you an entirely new level of customer service, resulting in a significant competitive advantage for your business. Many companies are seeing the need to increase their forecasting and responsiveness to meet instant service requirements. Wireless operations tie the mobile representative into the back office and enable them to manage situations in real-time rather than reading reports when it is too late to respond. The data allows businesses to plan for spikes in demand as they happen and shorten the time for delivery by beginning to pick and pack an order as it is placed. Consider a beer, wine and spirits distributor with hundreds of accounts and thousands of products to sell. To provide better customer service and to increase sales, the company wanted to give the salespeople an in-hand tool that would enable them to examine customer-specific product information and trends. Using in-depth filtering tools, the sales representatives now have the ability to delve deep into product information to drive sales for the retailer. They can also analyse sales history and shelf stock to tell a customer that a specific type of product is selling particularly well. Perhaps, it is red wine that comes from California vineyards and is priced in the $15 per bottle range. The representative can inform the retailer that this is the type of wine with the strongest sales, and can recommend options for wines that meet these criteria. Plus, the representative has access to real-time

OCTOBER 2012 • SMART LOGISTICS • 43

Retailing extravaganza, continued

Keeping Units (SKUs) inventory data of what that historically perform products are on-hand at well at a particular the warehouse, so he can retail site. The mobile instantly check product representative then availability. identifies which products The result: the retailer sell well in a nearby is happy because he competitor’s store— knows he is ordering products the retailer is not what consumers want to capitalising on. buy right now, and he By having access to places an order on the exact year over year sales, spot for 10 cases. The trends and data on what is sales representative moving and what is not, knows that the product the representative can is available at the give the retailer a typical warehouse and enters the example of what sales order. The order is would be for a solidly accepted instantly at the performing product warehouse, and personnel based on a competing can immediately begin retailer’s statistics. fulfilling the order — New technology options can bring you an entirely new level of customer service, The representative can dramatically improving resulting in a signiﬁcant competitive advantage for your business. even suggest the type productivity in the of presentation and promotions that warehouse and the timeliness of price schedules to groups or individual work well for other sites, presenting order processing. The customer products as appropriate, to ensure new sales opportunities for both his has placed the order for the 10 discounts are applied. company and the retailer. cases of California red wine, Precision in the field is important, New tools are available that can along with other good-selling beer and so is being able to analyse the data take competitive analysis to another and spirits and would like the to give you and your customers a real level. Survey tools help capture shipment the next day in anticipation competitive edge. Take a look at a beer customer and competitive information of a busy weekend. The sales distributor in Texas that was losing for specific customers or products. representative enters the products and sales. The company started using Mobile representatives can capture the system will automatically apply any a business intelligence tool tailored competing product information promotional pricing and calculate the for beverage distributors in order to on-site and can build a custom exact total cost for the entire delivery. provide its mobile representatives short-answer survey that can be This way, the customer can accurately conducted to provide valuable budget and can have a check ready for Companies employ very creative management information on your the delivery when it arrives the salespeople who work in a operations and your competitive following day. highly competitive environment— situation. and it arms its people with

GAINING A COMPETITIVE EDGE: FOR YOU AND THE RETAILER

Shoppers want convenience and the ability to quickly locate products. To gain and maintain shelf space, you are responsible for getting product to the store and for ensuring that the right pricing and promotions have been applied. Multi-layered pricing strategies add complexity, including mix and match, surcharge items, group discount, promotion codes and reward points. You have to be able to affix

44 • SMART LOGISTICS • OCTOBER 2012

real-time, custom-tailored information they need to maximise sales and eliminate stock-outs for each stop on their route. witha powerful handheld that gives them indepth information on all their accounts. The representative can analyse and drill down into product information by territory, store type and specific outlet. The beer distributor identifies the Stock

THE SECRET’S OUT... The top-performing businesses in the DSD industry are utilising the latest analytic and mobile technology to increase profitability and improve shelf share in this highly competitive market. Now you know their secrets…how these new technologies could boost your own business? Courtesy: HighJump Software Inc.

Illustration By Sanjay Dalvi

ASSET PROTECTION AND RECOVERY STRATEGIES RETAIL

Using e-technology to

Safeguard Products In retail, the biggest assets are the products that a company sells. Increased prevalence of theft & fraud make it increasingly difﬁcult for manufacturers and retailers to protect these products. Getting the upper hand by protecting those assets and reducing those losses can make a signiﬁcant difference to a company’s bottom line. In a bid to ensure better safety and swift returns, companies have begun to employ new-age technologies. PRATEEK SUR

INDIAN retailers reported the highest loss of stocks to theft in the world for the fifth year in a row in 2011 (with about half of the losses attributed to shoplifting by customers). India’s shrink rate, or loss of stocks because of thefts by customers, employees and suppliers, as a percentage of sales was 2.38%, costing local retailers `3,470 crore. While the basic reasons for shoplifting and theft might seem miniscule, numerous such incidents when together accounted for makes one realise how great the loss actually is, especially after the losses are indicated on the balance sheets of organisations.

In order to prevent such incidents and get some unforeseen benefits in the form of better safety and swift returns, retailers have begun to adopt new-age technologies.

a time, these products end up on internet auction sites where criminals devise ways to convert these stolen products into cash-making strategies.

WHAT CAN BE DONE? RETAIL THEFT Losses due to retail theft are reportedly estimated at more than $30 billion. Retail theft can be classified into something as simple as someone shoplifting a single product and walking out of the store, to gangs that have become skillful in stealing huge amounts of products, to the theft of products that are in shipment. Many

Many products which are susceptible to these practices have an in-built mechanism that makes them easier to spot and track, thereby lessening and, in some cases, abolishing product return frauds, and also convalescing products that may have been recovered by law enforcement. A simple mechanism for this is the unique fingerprint created by each product’s UPC code and serial

OCTOBER 2012 • SMART LOGISTICS • 45

Asset protection and recovery strategies, continued

number. Mp3 players, flat-screen TVs, video games, in-car entertainment and navigation devices, appliances, and many other seasonal products all include serial numbers which, when united with their UPC number, make the product perfectly identifiable. However, the question that arises here is how do companies make a network record and organise this information? The extent is clearly far too extensive, both in merchandise and geography, for any single manufacturer or retailer to have any noteworthy impact on the retail sector by just working alone. Electronic registration has proved to be effective in matters of registration and reporting network, which is a working relation between manufacturers, retailers and even law enforcement personnel. Talking of the happenings that retail companies are taking into account, an industry expert, on condition of anonymity, says, “In order to ensure that the product quality is up to the required standards, retailers have mandatory quality check for all products before they are packaged and shipped for delivery.”

ELECTRONIC REGISTRATION: A TIME-TESTED TECHNOLOGY Electronic registration technology is an age-old proven technology. This technology saw the light of day with the video gaming giant, Nintendo, who in the 1990s, ensured that the profits from its video game sales were reduced by the number of products being returned, many fraudulently, and especially at retail outlets. The company devised a product registration system to offer its retailers an infallible method to track an individual product throughout its lifecycle, thereby guaranteeing that each person in the product chain—manufacturers, retailers, and consumers—were being treated justifiably and correctly. One prime element of the scheme was to provide guarding without gathering any personal user data. This system

46 • SMART LOGISTICS • OCTOBER 2012

EXAMPLES OF HOW PRODUCTS ARE FRAUDULENTLY RETURNED According to sources, fraudulently returned products cost the retail sector more than $9.6 billion a year. Some examples of these include: • Multiple use of the same receipt • Counterfeit receipts • Sweetheart returns: Where employees help out their friends by letting them return products that are not eligible for return • Product ‘Renting’: People purchase products for a speciﬁc use, such as a car navigation system for use during the family summer vacation, and then try and return it when they are done • Brick-in-a-box: Replacing the product in the box with junk, shrink-wrapping it, and returning it as new and unused • Serial number label tampering/counterfeiting.

is now available through independent service providers, including proprietary methodologies, such as vendor product registration, trending & analysis, and exemption reporting & alerts. Taking control of these processes, and given this capability to track the products, resulted in companies claiming to have achieved a 72% reduction in return rates.

HOW POS ELECTRONIC REGISTRATION WORKS? Point of Sale (POS) is a combination of a product’s UPC number and serial number, which helps to establish a fingerprint for every individual product. When a product’s fingerprint is scanned, either manually or via RFID, the information is conveyed to a third-party database, where it is accumulated with the retailer’s deal information. Elaborating further, the expert informs, “In case of any damage or size issues pertaining to the package, there is an easy return policy in place which allows retailers to bring back the product and the amount is refunded to the customer.” Since we have made the process of receipt and return easy for customers and provide as much information as possible about the products we feature, we are well able to manage these orders and handle returns/ losses that occur,” the expert adds, when commenting on ensuring the successful delivery of orders, while

protecting the product against damage or loss. According to another industry expert, “This data capture, initially, used to happen at POS to the consumer. However, some manufacturers are now recording the unique identifier information before the product is shipped to retailers. This, in turn, makes every item trackable, even if it was stolen, bypassing the retailer’s POS system. The information is then recorded again at the time of consumer purchase, thus creating a purchase record and warranty start date. This data is then stored in a third-party database.” “It is important to emphasise in this era of identity theft that no personal information is recorded with the product data. The only information that is documented is the unique identifier and the retailer’s transaction number,” the expert adds. When a product is returned, the retailer has to just scan the UPC and serial numbers to find out if the product is suitable for return. If it falls in the scope of the warranty and return policy rule, the person at the counter simply acknowledges the product and issues the apt credit or refund. If the criterion is not met, the clerk can tell the customer why it is barred. If the product turns out to have not been cataloged in the product database, the employee is alerted about the same; the seller may seek extra information

from the customer.

UNFORESEEN BENEFITS Electronic registration has brought some inadvertent, yet priceless, advantages for retailers, consumers and law enforcement officials. This is because the monetary benefits of loss prevention by barring fraudulently returned products are obvious and quantifiable. By being able to supply product transaction data, retailers have been able to perk up their customer service ratings by increasing the efficiency with which they have aided customers who have: • Misplaced their receipts • Forgotten where they originally purchased the product (or had it bought for them) • Referred customers to nearby repair centres. Manufacturers use this extensively and this has effected in having a helpful tool to pace customer service call times, trace warranty eligibility and administer funds. Customers benefit by having a virtual, electronic receipt authenticating a product’s warranty right. On a broader perspective, this has been able to put off retail fraud and to help retailers and law enforcement officials track down thieves. Nowadays, more manufacturers, retailers and law enforcement organisations are willing to get help from these databases, as they can easily spot stolen products. So, while gangs, career criminals and even normal, everyday consumers try to use guile and technology to benefit from any and every opportunity to steal from retailers, this emerging electronic registration is proving to be a useful tool to save and retrieve those allimportant retail assets.

MEANWHILE, IN INDIA… In India, according to a recent survey, which covered 100 retailers, of which 60 were part of modern chains and 40 were from the unorganised sector, it was revealed that India’s shrink rate,

or loss of stocks is highly affected by the number of thefts by customers, employees and suppliers. The biggest donor to losses was thefts by customers, which accounted for 47.6% of the total, followed by shoplifting by employees at 25.5%. However, according to the study, the losses have declined by 12.5% from the previous year. Over the years, the shrinkage rate is coming down as retailers are getting better at managing their supply chain logistics and are moving towards hyper retail. For instance, over the past three years, shrinkage at Spencer’s has reduced from 2% of sales to less than 1% presently. To reduce the rate of thefts, retailers nationwide are spending more amounts on security solutions. India’s expenditure on loss prevention at 0.23% of sales is higher

THEFT PREVENTION MEASURES • Knowing both the unique identifier and the associated transaction number has helped retailers track down customers who have attempted to alter, forge or swap serial numbers on products or on receipts • Reporting systems have been established to aid in the recovery process by flagging products for cross-retailer return attempts • Many retail home invasions suspects are being convicted based on the product’s purchase registration record • Helps in getting hold of the perpetrators who try to substitute AA batteries in an MP3 player and returned it as new after shrinkwrapping the box • Products found at pawnshops and identified as stolen—or identified as purchased with fraudulent tender can be traced • Many pallets of Sony PlayStations had been stolen from a return distribution centre and electronic registration helped in tracing this, even after it being an electronic device.

than China and Asia Pacific region, but lower than the global standards, which are at 0.35% of sales. Companies have also reduced their losses by providing more training to employees and assigning responsibilities on team and store managers for losses. For instance, Univercell Telecommunications India Pvt Ltd, a retail chain with 400 stores selling mobile phones in South India, has tutored its staff to show no more than five pieces at a time to a customer. The stores are en suite with cameras and in cases of thefts, the money is recovered from the staffs’ salary. Although taking so much pain in the security, the chain loses at least one cell phone a month at every store it runs.

ASSET PROTECTION IS EACH RETAILER’S LIABILITY Theft is very common in retail and can occur due to in-house pilferage or consumers. Protecting retail assets in shopping localities is a big roller coaster challenge and shop lifting is just a facet of the giant wheel. Imagine the effort one needs to make in order to keep a track of hundreds of core (product) classifications that are sub-structured into thousands of mini classifications and brand varieties. And keeping in mind the fast moving population— from vendor to stores, stores to floor, floor to shelves, shelves to check outs and check outs to customers. Retailers are taking steps to lessen it, but there is still a lot that can be done. The solution is straight though difficult. Conversion of retail sales teams into ‘vigil groups’ with loss prevention skill education supported by sensible loss prevention designing forms the effectively tested solution. As an unsigned quote alerts us ‘Shopping malls, car parks, fabulous displays and hard cash attract thieves and you have a 24 hours recipe for trouble’. The troubles are nothing, but betterment opportunities in disguise! prateek.sur@network18publishing.com

OCTOBER 2012 • SMART LOGISTICS • 47

WAREHOUSING & DC STRATEGIES FOR GREATER EFFICIENCY

Bettering the present for a Bright Future

In a hard-hitting recession prone economy, the worldwide motto is, ‘Do more with less!’ Companies are looking for innovative traditions to pinch a few more rupees, or a few extra hours, from their operations and alongside pleasing clientele with ever-better service. Companies are trying to accomplish these goals alongside saving energy and reducing the environmental impact. Warehouse operators can take up various excellent strategies to boost efﬁciency like, warehouse management systems, wireless communications systems, materials handling automation, and well-designed cross-docking, etc. Companies also are pertaining to practices that a layman might not have even heard of. Logistics professionals are making their warehouses smarter, greener, and more economical. Here’s how… PRATEEK SUR

THE recent economic downturn could be viewed as the catalyst of modern warehouse management as it forced logistics players to analyse their operations in unimaginable ways. Not only has the market seen tremendous advancements in technology, but it has also witnessed the evolution of innovative strategies. Savvy customers have developed an understanding of an economic lifespan for getting better efficiencies. It is this realisation that can make or break a company’s efforts to optimise its strategies over the years. Some such strategies would include:

LIGHTS, ACTION...

Image Courtesy: www.ssi-schaefer.de

48 • SMART LOGISTICS • OCTOBER 2012

The first thing on the to-do list, for saving energy and cutting costs in a Distribution Centre (DC), is to reinstate older lighting systems with high-intensity fluorescents. Conventionally, warehouses have always used mercury vapour lamps, which emit a bluish light, or sodium halide lights, which exude a yellow

cast. Both of these bulbs throw a cone-shaped light, making them a less-than-efficient warehouse solution. These bulbs cast a shadow on the items high up in the racks and low down on the floor, this wasted light falls into places that are sheltered by racks. Moreover, these lights take a couple of minutes to achieve full luminance and also consume more power. Newer companies are retrofitting warehouses with T5 fluorescent bulbs and fixtures. These emit more than enough light and because of their horizontal shape, they cast it in a linear pattern. Positioning the lights suitably can give proper luminance from the top of the racks to the bottom along the aisles. In open spaces, these lights can be positioned properly to spread light evenly. Some companies are going a step ahead and installing motion detectors to manage their fluorescent lighting. If the detectors do not sense movement in an aisle for a preset time, the lights shut off, and only a few lights remain switched on to give minimum light. As and when somebody moves into the aisle and any movement is detected, the lights switch on automatically. The next energy-saving method that can be applied along with a fluorescent lighting system is ‘Light Harvesting’. When bright sunlight enters a room, a sensor sends a signal to automatically dim the lights. When clouds roll in or the sun moves to the other side of the building, the fluorescent lights grow brighter. This method is appropriate for buildings with large windows— not a common warehouse feature. Presently, manufacturing plants have started using it. A warehouse could fit such a system in places near the loading docks, which do get ambient light. One common example is the usage of polarised plastic. Polarised plastic reduces the quantity of lighting needed in the building. It also allows warmth to enter in the winter months and blocks the sun in the summer to minimise energy consumption.

Buildings earn Leadership in Energy and Environmental Design (LEED) certification for attaining goals in sustainable site development, water savings, energy efficiency, materials selection, and quality of the indoor environment. Nowadays, warehouses incorporate recycled steel, highly efficient lighting and a plumbing system that includes low-flush toilets. Warehouses also install a bright white roof designed to reflect light and heat back into space, rather than absorbing it and contributing to global warming. In the near future, warehouses might become even more sustainable by adding alternative energy sources, such as solar panels or a wind turbine. Solar panels are becoming increasingly more cost-effective nowadays. A significant Return on Investment (RoI) and a positive impact on energy consumption with windmills are still affordable.

GOING UP The next simple technique to achieve

BENEFITS OF MULTI-STOREY WAREHOUSE A multi-storey warehouse allows a company to operate in a dense urban area, rather than locating miles from the population centre. That approach offers quite a lot of benefits, such as: It abridges customers’ transit time. Companies in impenetrable metropolitan regions tie up a significant percentage of total operating cost in transit time. Firms soar in terms of efficiencies once they cut transit times. The next advantage is environmental as shorter trips burn lesser fuel. Moreover, it is easy to devise ‘green’ features into a facility that adheres to intense usage on a small location. Third, a multi-storey warehouse offers more working floor space per sqft of land. An archetypal Floor Area Ratio (FAR) in the US is 35–40%. In Japan, FAR reaches as high as 375%.

the zenith in warehouse efficiency is to achieve new heights. In many a crowded Indian cities, for example, vertical warehousing assists some companies beat the high price of land, reduces transportation costs, and cuts short the facility’s environmental impact. Multi-storey DCs have not yet caught on in the US, but that might change in the near future. Multi-storey facilities are being discussed at span in the Los Angeles Port area, and in the New York/New Jersey market. Officials at these ports are trying to devise better ways to provide ample distribution ability in regions where there’s little room left to expand. Commenting on the technologies that would help warehouses, Biju Nair, IT Director, DHL Supply Chain India, explains, “Technology is meant to be a part of the integral infrastructure of the supply chain business. A good WMS system needs to be fine-tuned to fit each business configured on it. Understanding the exact requirements from the customer’s perspective, along with internal operations processes and Standard Operating Procedures (SOPs) is a must before configuring a WMS system. Pre-implementation and post-implementation productivity gains and few other cost saving parameters put together can help assess the RoI.” A multi-storey warehouse logically requires diverse design solutions than a single-storey facility. One approach for moving goods in and out of the higher floors is a pair of spiral truck ramps, one for upward-bound traffic and one for downward-bound. Another solution is to serve just one floor with a ramp, and the rest of the building with both pallet lifters and freight elevators to allow storage of goods that do not move in and out as fast as the others. It is because the higher levels of a multistorey warehouse ought to be engineered to withstand heavy loads, a vertical warehouse can be more costly to build than a one-storey facility. If the cost of obtaining the land symbolises at least

OCTOBER 2012 • SMART LOGISTICS • 49

Strategies for greater efficiency, continued

50% of the total construction charge, going vertical is not a bad idea. Markets such as Tokyo & Osaka, Singapore, Mumbai, Kolkata, and certain Chinese markets, have reached that tipping point. American cities are far away from that tipping point, mainly because of the existing economy with its depressed real estate costs. Recent trends in the US have favoured the construction of mega-sized DCs on the periphery of metropolitan areas. But this trend could reverse itself in favour of development closer to the city areas.

A LIFT FOR LIFT TRUCKS Whether the warehouse inhabits one or more storeys, companies still need to move goods from one section of

and lift truck dealers—before reaching the end user. By the time an end user gets a part, it has been faced with three markups. Elaborating on the logistics equipment, Devdip Purkayastha, President CHEP India, avers, “Control over equipment is core to our business, which we believe, is the best in class RoI for us. India is a very costconscious market and it is difficult to leverage high cost application in the price offer to the customers. To overcome this challenge, we have built a plethora of systems that incorporate state-of-the-art global applications as our technology backbone and have interfaced locally developed, lowcost high-impact sub-applications to support our Indian business.

Pre-implementation and post-implementation productivity gains and few other cost saving parameters put together can help assess RoI. Biju Nair, IT Director, DHL Supply Chain India

the shop floor to the other. Forklift trucks provide another focus for companies that want to make the warehouse operate more efficiently and economically. Some companies that operate large electric forklift fleets have been testing the use of hydrogen fuel cells to power them and because they emit nothing but water vapour, these cells are environment-friendly. While it takes hours to recharge conventional batteries, refilling hydrogen cells takes just seconds. Companies place a hydrogen tank outside their warehouse, and refuel the lift truck just as they would do for a car. Another advantage is that a hydrogen fuel cell releases the same level of power all day. That is not true of a usual battery. As the battery begins to discharge, the power rating starts to decrease. Whatever its power source, eventually a lift truck will need maintenance. Companies that maintain their own lift trucks are candidates for the parts procurement service. Normally, these parts pass through three layers of suppliers—parts manufacturers, lift truck manufacturers

50 • SMART LOGISTICS • OCTOBER 2012

Today, over 35 CHEP warehouses, spread across the Indian geography are connected on a real-time basis. CHEP IT team is currently working on leveraging the expanding mobile computing technologies to further enhance our ‘customer delight’ and ‘service excellence’.”

BUILDING A TEAM No matter how green the building is or how efficient the processes are, companies cannot run a warehouse without labour. When employees on the floor pull together as a team, opportunities to improve the operation flourish. A key to running a world-class warehouse is to develop a corporate culture in which management and employees share common values. A strong sense of community in the warehouse drives excellent performance because everyone’s efforts are allied. At each warehouse, companies try to provide the facility, the warehouse management system, and the customer, orders. Companies are responsible for receiving, putting

away, picking, shipping, arranging inbound and outbound transportation, and keeping inventory in good order.

COMMUNITY SERVICE One strategy that many company managers use to build team spirit on the warehouse floor is to encourage community service. Collaborating for the sake of others encourages employees to feel like partners. It provides a different perspective of a fellow worker and generates camaraderie and strong bonds. Employees at other warehouses have participated in walk-a-thons, run after-school programmes, and led students in renovating houses for the needy. Such facilities always outperform the others as the employees enjoy their work. Performance soars because public service projects get employees used to the idea of putting others first. Once they do that, they become a true team built on trying to continue to improve. That spirit spills over into the warehouse, where employees feel empowered to influence the culture and processes. Many companies endeavour to strengthen corporate culture in the warehouse by going beyond philanthropy. Companies treat employees like valuable team members, encouraging them to share ideas and information among themselves. This kind of collaborative corporate culture gives employees a sense of ownership. In the current economic slump, when it is more important to control costs, companies have stepped up to the task and have worked with their associates while being able to improve productivity through increased flexibility.

FULL SPEED AHEAD ‘We are going to find a way to do it’ should be the cry of all logistics players who plan creative solutions for their warehouse operations. A smarter, faster, greener, more efficient warehouse puts a company in a position to ride through tough times and keep speeding ahead.

CLOUD-NATIVE TRANSPORTATION MANAGEMENT SYSTEM AUTOMATION TRENDS

TRANSPORTATION operations in today’s world are getting highly complex. They tend to be spread across geographies, operate in multiple modes and have to cater to an everincreasing supply chain complexity. This fast changing scenario requires transportation managers to build capability that is agile, robust and adaptable to change. A Transportation Management System (TMS) becomes imperative for improving an organisation’s ability to manage costs and service performance. There is a dire need in the market for advanced transportation optimisation solutions that have the capability to devise the

stakeholders.

RIGHT EXECUTION IS THE KEY Though transportation management products with varying degrees of

A cloud-native TMS can deliver the holy grail of reduced cost of transportation operations and signiﬁcantly improved customer service at an affordable cost. maturity and geographical presence have been around for some time now, customers have struggled with their adoption, especially in

market still continues to lag, due to cost considerations. It also has not helped that typical implementation cycles of TMS have rivalled that of ERP implementations—running into months and even years! On the other hand, some localised TMS have tended to provide quick deployment and low cost of ownership, but lacked in functionality that restricted the value that can be derived from such implementations. The need of the hour is a TMS that is functionally rich, flexible, can be deployed quickly and offers a demonstrated Return on Investment (RoI). The cloud provides a powerful mechanism of delivering

Optimising Supply Chain Execution Volatility in fuel prices and unpredictable capacity requirements, mixed with changing customer demands, puts transportation operations in the crosshairs of CxO from cost management and customer serviceability points of view. The increased focus on customer serviceability to be competitive in the market makes it imperative to think of innovative ways to manage transportation costs, while building all the ﬂexibility in execution to differentiate customer experience. most optimal transportation regimen for an organisation through optimised decision support for cost, carrier, mode, schedule, asset and route. With effective order management, execution monitoring and financial settlement, such systems can enable better operational and financial control leading to more reliability and predictability in operations. Mobility solutions combined with GPS tracking can create a clear line of sight into operations and improve visibility for all

developing markets. The current breed of global solutions assumes a certain level of maturity and readiness in the ecosystem for it to deliver projected benefits; this often leads these solutions to not effectively address the nuances of a developing market scenario. Implementation of the available solutions also requires advanced skills that are not easy to acquire and retain. In addition, in both developed and developing markets, the adoption of such systems in the mid-

such a system.

CLOUD-NATIVE TMS A cloud-native TMS offers a viable option to the pain areas of the transportation management process. Cloud native refers to software that is architected from the ground-up to leverage the benefits of cloud and is not just hosted on cloud. A cloud-native TMS can offer advanced optimisation capability that is real-time and scalable to fluctuating business needs—daily,

OCTOBER 2012 • SMART LOGISTICS • 51

Cloud-native transportation management system, continued

weekly, seasonally or annually—at an affordable cost. A cloud-native TMS also enables businesses to easily connect to mobile devices, leverage the cloud to integrate to all the third parties in the ecosystem like carriers, portals, liners, etc., and, more importantly, connect to internet-enabled devices like Vehicle Telemetry or Engine Control Units (ECU) of the transportation fleet. This provides customers the capability to significantly improve their cost and service performance. The ability to iterate faster helps address the changing requirements and cloud makes transportation solutions more accessible to a wider set of users; which potentially can create a wider impact on operational efficiencies in the ecosystem. Rather than investing in computing hardware for maximum load that occurs perhaps once a day or once a month, cloud provides a way to affordably scale for short durations as business volumes

fluctuate by using computing power only when necessary. The customer can set scalability rules that ensure they do not exceed budgeted spends while leveraging the ‘Pay As You Go’ model. Cloud-native architecture also enables streaming optimisation, where high-velocity, high-volume business can run planning near-real-time to

The current breed of global solutions assumes a certain level of maturity and readiness in the ecosystem for it to deliver projected beneﬁts; this often leads these solutions to not effectively address the nuances of a developing market scenario. be extremely agile and responsive in fulfilling demand. Such solutions can also leverage the native integration service bus capability to not only integrate to on-premise applications, like ERP, but also easily connect to

external parties like carriers, suppliers, customers and other providers.

DELIVERING TANGIBLE BENEFITS Adopting a cloud-native TMS allows transportation executives to move to an ‘OpEx’ model while avoiding vendor lock-in. Businesses can clearly understand their spend versus value equation as compared to the conventional model where there is significant upfront capital investment with little visibility in returns for years till the system is fully operational and business processes have matured. They easily integrate with customers, partners and vendors while keeping implementation times aggressive. A cloud-native TMS can deliver the holy grail of reduced cost of transportation operations and significantly improved customer service at an affordable cost. Niranjan Umarane, Director – Product Management, Icertis

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 So, join our endeavour to provide relevant and useful content to our readers… rush your articles, write-ups to archana.nayudu@network18publishing.com

52 • SMART LOGISTICS • OCTOBER 2012

INNOVATION AND FLEXIBILITY IN SCM STRATEGY

Offerin

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a competitive edge Today companies are highly aware of the beneﬁts of offering quality products at competitive prices in the market. They are taking up various initiatives in this direction. However, it is the supply chain, which will be the differentiating factor for companies who are looking to capture and create a niche for themselves in the market. Brining in innovation and ﬂexibility in order to strengthen their supply chain will give companies an edge to tackle competition and ensure high levels of competitiveness. ARINDAM GHOSH

ACCORDING to a study by McKinsey & Company, responding quickly to supply chain disruptions is a top priority for organisations today. As per the present scenario, various factors like unexpected changes in demand, rising levels of demand customisation, price volatility, exchange rate fluctuations, trade protectionism, economic crisis, weather conditions, like natural disasters, etc., have forced companies to further improve their supply chain by bringing in innovation and flexibility. Commenting on the importance of innovation and flexibility in the supply chain management, Anil Arora, MD, MJ Logistic Services, explains that when a company’s supply chain is flexible and innovative, it allows the company to quickly adapt to any changes in the market. Agreeing with his views, Sumit Dutta, Partner, McKinsey & Company, Inc, informs, having the features of innovation and flexibility “is a must-have capability for companies today in their SCM who are looking to gain a competitive advantage in the market”. Further commenting on the role of logistics companies

towards bringing in more flexibility and innovativeness in the supply chain, Arora highlights, “The scope of logistics firms in terms of bringing in innovation is limited to a level where the user industry is comfortable.” The user industry has to be willing to listen to its logistics service providers (LSPs) so that innovation can happen. But in terms of flexibility, the user industry is supportive to the logistics solution provider because they know that LSPs have complete expertise in delivering the product to the desired location.

PRACTICES TO BE IMPLEMENTED Logistics is one of the fastest growing sectors in the country. The market recorded revenues of about $82.10 billion by 2010, in the process registering a growth of about 9.2% over the previous year. But if certain practices are followed towards making the supply dynamic, it can further strengthen the growth and development of the industry in the country. Commenting from the perspective of Tier 1 component supplier on the steps that can be taken to improve responsiveness of

SCM, Dr R Mahadevan, Group Technology Director, India Pistons, says that there is a need to adopt various lean practices, including justin-time, kaizen activities, kanban system, visual management etc.; bring in improvement in communication all levels till the shop floor; and plan to improve the spare capacity as a strategy. Complementing Mahadevan’s views, Arora says that in terms of flexibility, they have created a spare capacity which can be used, if any disruptions in the market happen. Elaborating further, Mahadevan expounds that some of the following steps can be looked into: • Outsource as much as possible, particularly in undifferentiated areas • Outsource knowledge and product, not product alone • Optimise pipeline inventory in collaboration with other links in the supply chain • Transparently share risks as well as rewards • Variable cost structures can be tweaked to demand • Collaborative product development. S Bagavathy Appan, VP –

OCTOBER 2012 • SMART LOGISTICS • 53

Innovation and flexibility in SCM, continued

Procurement, JCB India, too, highlights a few major practices that can be implemented to bring in higher flexibility towards carrying out logistics operations. He suggests: • Lower the number of suppliers. For instance, the flagship product ‘Backhoe’ JCB has relentlessly worked to ensure ‘99% business to 100 suppliers’. In 2011, 100 suppliers provided 1,700 crore of material to the company • Suppliers should be close to the plant. In the case of JCB’s manufacturing facility in Ballabhgarh, most suppliers are located with in NCR • Introduce technology for higher information speed and accuracy across supply chain.

UNCERTAINTY: A MAJOR CHALLENGE India spends more on logistics as a percentage of GDP than even developed countries which is about 30% higher and there is scope for a 4–7% cost reduction in logistics. One of the major challenges faced by companies includes tackling uncertainty and becoming competitive in the market. To deal with this scenario, some of the options which companies can look to adopt are: • Reducing the level of uncertainty through better demand forecasting using modern and state-of-the-art technologies • Ensuring that the entire supply chain is more responsive with flexibility and agility. A supply chain which is not agile, will lead to higher delivery costs, wastage of resources, higher inventory and customer dissatisfaction. One should, however, not think of uncertainty as a threat, but as an opportunity to improve agility, believes Mahadevan. “To move in this direction, it is important to improve communications to seamlessly

54 • SMART LOGISTICS • OCTOBER 2012

one of the possible options for companies who are looking to gain a competitive advantage in the market. An agile supply chain will allow the company to be flexible and responsive according to market conditions. But implementing such a scenario can be y) mpan & Co y highly challenging for e s cKin ns (M eratio a country like India, given that p O e y Agil Kinse the logistics market in the country is e: Mc Sourc connect all players highly fragmented. involved in the supply and About 76% of the logistics service chain and take the cost out—‘not’ in India is handled by the unorganised transfer to another player in the chain,” sector. In the addition, other major Mahadevan explains. Elaborating hurdles in the development of logistics further, he adds, “Compared to sector can be attributed to poor China, we have a logistics cost infrastructure and low technology disadvantage of 2.2% adding to our penetration. But the infrastructural overall uncompetitiveness. Further, problem seems to be improving. the cost of products goes up by an There are phenomenal estimated 1.5–2% due to poor supply improvements in infrastructure, chain management.” Expounding particularly in NCR, and companies on a step to remove uncertainty in are increasingly becoming aware of the the supply chain movement, Appan benefits of implementing technology says that his company JCB shares in the supply chain process. An agile expected production bands on rolling supply chain will not only respond five months basis to enable accurate to the market situation changes, but planning at the suppliers’ end for raw will also react quickly to the disruptions materials, manpower, etc. Some of in the production system and any kind the other major initiatives that can be of emergencies. taken include: • Quarterly business reviews with FLEXIBLE SUPPLY CHAIN WILL DRIVE all the supply chain partners and INDIA FORWARD continuous engagement through The logistics sector today stands at events like workshops $110 billion and is expected to reach • Regular financial health checkups US$200 billion by 2020. With the of all the important partners government setting a target of raising • Transparency, for instance, policies the share of manufacturing sector to on pricing, share of business, etc. 25% of GDP by 2020, the projected • Ensuring accountability through figure for the logistics sector may well various mechanisms, like timely be crossed if an innovative and flexible payments, etc. supply chain mechanism is strongly implemented by all companies. An agile supply chain will not only make AGILITY HOLDS THE KEY the country’s logistics and supply chain Under the new world of volatile highly competitive, but will also make demand and supply, the company the sector a stronger driver of India’s has to cater to its customers in the growth story. best possible manner. In this regard, taking up initiatives towards making the supply chain agile can be seen as arindam.ghosh@network18publishing.com

HANDY GUIDE FOR ONLINE SCM

TIPS & TRICKS

SUPRITA ANUPAM

CHANGE THE FOCUS

A direct communication with customers is much easier for online retailers as they have direct and right access to consumers. Hence, apart from updating the client about their delivery update, they can use their info to create a new market-driven strategy without paying anyone else for market driven strategies. CHAN GE TH EF OC US

4Cs

Consumer nssumer umer C Cost ost Convenience onvenience Communication mm munication icatio on

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Since online retailers now offer a wide range of products, it is important to have a right balance of logistics cost on all the products. This is where Indian e-commerce firms will have to localise their process and supply

D sh rop ip pe r

TAKE CARE OF COST

COMMUNICATE

INTEGRATE ECRs Efficient Consumer Responses (ECRs) can be divided into supplier, buyer, drop-shipper, product, supply chain provider and so on. It is necessary to integrate all the responses before stepping into the next market strategy. These will help optimise assortments, promotions, new product introduction, and consumer value creation to operational excellence and integrated demand-driven supply. UNICATE COMM

While in normal retail stores, the priorities are based on 4Ps, i.e., product, price, place, promotion; in case of online retail stores, the focus must be changed to 4Cs— consumer, cost, convenience, communication. Focussing on consumers will ultimately enthuse them and ensure that they return to the same online retailer.

the local logistics providers of the corresponding cities. It minimises two biggest glitches of online retailers—supply chain cost and delivery on time.

Rs EC TE RA EG

TIME has moved ahead from sustaining innovations to disruptive innovations. E-commerce is one such disruptive technology. But the sustainability lies in its supply chain management—the backbone of online retail stores. At a time when retailers are offering free shipping, it is necessary to integrate cost and efficiency as delay in delivery or higher price might cause the business firm to fail. Here are a few tips to optimise and energise the supply chain management as well as the whole business for online retailers.

BE OPERATIONALLY AGILE Configure the right assets and

Energising e-Commerce It is a wrong perception that in online shopping, customers have to pay extra for logistics even if it is written free. Though a product’s price tag includes its logistics cost, in the case of online retailing, it sometimes exceeds the tag as MRPs are in accord with bulk supply and not per piece. But an efﬁcient, integrated, market-driven strategy can overcome these and turn the same into crème business. chain policy as Indian customers taste & supply chain cost change geographically. Further, one-to-one marketing should be enabled to enhance customer retention, new interest in activity-based management to measure process profitability and customer profitability. For instance, Walmart among other retail stores come up with punch lines such as ‘low price, best value’ or ‘every day low prices’ to attract new customers.

operations to know the latest emerging market trends as per product category with geographic region. In the US, few retailers have built systems giving stores the opportunity to respond to local customers by integrating their local supply chain. Thus, assortment & shelve presentation are systematically adapted to local sales, and replenishment is executed using computer-assisted ordering.

DELIVER ON TIME

‘FRESH N FOREMOST’ APPROACH

In e-Commerce supply chain, it is not about the success of 98%, but about the failure of 2%. E-commerce business completely relies on customer retention, retaining which should be the core business. The 2% failure can anytime change the customer’s taste. To deliver on time, retailers should allocate their stores in different cities geographically and according to demand. This must be supported by

Lastly, make sure that the product being delivered is fresh, particularly in the case of F&Bs and pharmaceuticals, where a slight delay in delivery will turn into big losses because of the cold chain requirements and further, those F&Bs might not remain fresh, which will make the consumers unhappy. suprita.anupam@network18publishing.com

OCTOBER 2012 • SMART LOGISTICS • 55

TENDERS

Latest Popular Tenders brought to you by www.tendersinfo.com MOBILE CRANE

Desc

Org

: National Hydroelectric Power Corporation Limited (NHPC)

: Operation and maintenance of external coal handling system

BOD

: October 19, 2012

TRN

: 12388761

Loc

: India

Desc

: Purchase of 01 No. 20 tonne capacity (rough terrain) mobile crane

: Domestic competitive bidding

BOD

: October 16, 2012

FORK LIFT

Loc

: India

Org

: Singareni Collieries Company Limited (SCCL)

: Domestic competitive bidding

TRN

: 12418893

Desc

: Procurement of 5 tonne fork lifters

EDT CRANE

BOD

: October 20, 2012

Loc

: India

: Domestic competitive bidding

Org

: Department of Space (DOS)

TRN

: 12416772

Desc

: Supply installation, testing & commissioning of tonne single girder EDT crane

BOD

: October 17, 2012

Org

: Border Security Force

Loc

: India

TRN

: 12338206

: Domestic competitive bidding

Desc

: Supply of steel roofing trough

ROOFINGS

RACKS

BOD

: October 22, 2012

Org

: Military Engineer Services

Loc

: India

TRN

: 12422763

: Domestic competitive bidding

Desc

: Provision of mobile file racks

BOD

: October 18, 2012

Loc

: India

: Domestic competitive bidding

PROJECTS NEW CONTAINER TERMINAL PROJECT AT VO CHIDAMBARANAR PORT

CARGO SERVICE

Org

: VO Chidambaranar Port Trust

Org

: Western Railway

Project Type

: Construction

TRN

: 12390383

Project News

: Build and operate a new container terminal

Desc

: Transportation of heavy P Way materials and P Way fittings

Loc

: India

Project Cost

: `312.23 million

BOD

: October 19, 2012

Implementation Stage : Ongoing

Loc

: India

Contact details:

: Domestic competitive bidding

VO Chidambaranar Port Trust Tuticorin - 628 004, Tamil Nadu

CARGO SERVICE Org TRN

: Tamil Nadu Generation And Distribution Corporation Limited : 12355479

Tel

: (0461) 2352290 (50 lines)

Fax

: (0461) 2352301

: info@vocport.gov.in

Org: Organisation’s Name, TRN: Tendersinfo Ref No, Desc: Description, DSLD: Doc Sale Last Date, BOD: Bid Opening Date, Loc: Location, BT: Bidding Type.

INFORMATION COURTESY: TENDERSINFO.COM 1, Arch Gold, Next to MTNL Exchange, Poisar, SV Road, Kandivali (W), Mumbai - 400067, Maharashtra, India Tel: +91-22-28666134 • Fax: +91-22-28013817 • Email: parmeet.d@tendersinfo.com

56 • SMART LOGISTICS • OCTOBER 2012

ENGINEERING EXPO CHENNAI 2012 EVENT PREVIEW

CHENNAI November 22-25, 2012 Chennai Trade Centre

Offering a competitive advantage With the passage of time, Chennai has emerged as a hub for the automotive and allied industries. Amid this as well as the growth of other industries, Network18 Publishing is all set to hold the ﬁfth edition of Engineering Expo Chennai. This edition will provide a suitable platform to exhibitors for showcasing their products and services to prospective visitors in a competitive atmosphere. Set to be held during November 22-25, 2012, this edition endeavours to get bigger and better. SHIBANI SHAH AND CHANDREYEE BHAUMIK

CHENNAI, originally known as Madras, has always been a major industrial hub. Located on the Coromandal Coast of the Bay of Bengal, the city is well connected to different parts of the country. With a number of industries located in Chennai the industrial growth of the city is at par with other parts of the globe. According to Deepak Sharma, Partner, Ball & Roller Bearing Co, “Chennai, in the past few years, has grown to become the largest automobile manufacturing hub and is still growing; in a single word Chennai has become a one-stop solution for industries.”

AN EVOLVING INDUSTRIAL DESTINATION Vision 2026 is to make Chennai a prime metropolis that will be more liveable, economically vibrant and environmentally sustainable as well as with better assets for future generations. According to various industry reports, the manufacturing industry of Chennai comprises large segments ranging from petrochemicals and chemical industry, electrical and automobile and several other related ancillary industries. Some of the largest industrial areas such as Ambattur and Manali are located in Chennai Metropolitan Area (CMA) and house multi-product industries. Other industrial estates at Guindy, Thirumazhisai and Thirumudivakkam house medium and small-scale industries.

Chennai has a large base of leather industry and accounts for about 50% of the total exports of the country. Most of the footwear industries are located within CMA. In addition, a cluster of chemical industries is located at Manali in CMA. Further, an export-processing zone spreading over an area of 261 acre is located at Tambaram for apparel and other exports. Elaborating further, S Raghavan, Proprietor, Best Systems & Services, expounds, “Chennai is a potential industrial city. As major international companies are setting up shop here, the supportive and ancillary industry growth is imminent. Chennai is developing proper infrastructure and promoting new industrial areas, which attracts a lot of investors. Chennaites’ work culture is also conducive to the new industries—both foreign as well as domestic.” Highlighting why Chennai has become an attractive destination, K Ravi, GM, MGM Varvel Power

Highlights of this edition 200+ expected exhibitors 15,000+ expected visitors Business transaction worth `48 crore expected 8,000 + products on display Spread over an area of more than 4,200 sq m Showcasing more than 30 diverse industry categories

Transmissions, elaborates, “Chennai is an attractive destination because of its infrastructure, the port and the established manufacturing base, and because of its desire to grow more.” Large automobile engineering, glass and ceramic industries, are located at Maraimalai Nagar, Irungattukottai, Sriperumbudur, Thiruvallur and Gummidipoondi around Chennai. It is interesting to note that Tamil Nadu accounts for about 21% of passenger cars, 33% of commercial vehicles and 35% of automobile components produced in India. Indeed, Chennai,

Glimpses of previous edition 175 exhibitors 11,359 business visitors 5,000+ products displayed

`41.98 crore business generated

4,200 sq m exhibition area 85,000 kg machinery moved Delegations from more than 84 different companies such as Apollo Tyres; Brakes India; Bharath Weld Equipments & System; Bureau Vertas India; Valeo Systems; Petro Constructions; Lucas TVS; Wabco TVs; RK Engg Works; Indian Navy; Hyundai; Larsen & Turbo; Michellin Tyres; Foxconn India and many more

OCTOBER 2012 • SMART LOGISTICS • 57

Engineering Expo Chennai 2012, continued

the ‘Detroit of India’ is truly emerging as a major export hub for cars in South East Asia. Commenting on the scope Chennai provides, PK Sivaswami, Mentor, India Operations, Zhejiang Fit Bearing Co Ltd, avers, “Chennai is a major hub for manufacturing auto components, electric motors, two wheelers, etc. This scale of exposure to the industry by participating in such events will help us to develop a market for our brand of bearings, which are at par in terms of quality with leading manufacturers offering competitive pricing.”

GLORIOUS PAST EDITION The 4 th edition of Engineering Expo Chennai in 2011 offered a unique platform for the exhibitors to showcase their products and business enhancement. There were more than 5,000 products displayed and about 12,692 visitors and generated a business transaction worth `41.98 crore. Apart from showcasing the best in terms of engineering innovations and technologies, the 4th edition of Engineering Expo Chennai 2011, served as a conducive platform in amalgamating the capabilities of the state with specific needs of the industries. With a strong base in MSME, this exhibition offered a unique advantage by not only providing new opportunities for enhancing the business, but also for augmenting the existing process with cost-effective technologies. Being an all-inclusive engineering show, the event provided an opportunity to exhibitors from various sectors to spread awareness about their products and services. Describing the reason for his participation, Raghavan adds, “We were inspired by the visitors’ profile and response to the expo.” With the expo expected to get bigger and better this year, the organisers are looking forward to larger number of exhibitors and visitors. Elaborating further, Ravi adds, “Our experience last year was good and we are

58 • SMART LOGISTICS • OCTOBER 2012

NEW ATTRACTIONS IN THIS EDITION Panel discussion aims at providing a roadmap to infuse growth in the region Institutional Buyer Involvement Plan to attract delegations from large corporate and major institutions Improvised visitor profiling —profile, scan, filter and bring in visitors as per exhibitors’ requirements Providing business networking support to exhibitors by leveraging Network 18 Publishing’s industry connect Credit rating facilities for the benefit of exhibitors Providing complete travel solutions for exhibitors Offering logistics services to ensure smooth cargo handling, custom clearing, transport compliance, etc looking forward to get more prospects this year.”

FROM THE ORGANISER’S DESK Engineering Expo turns 11 this year. Elaborating on the success graph, Sandeep Khosla, CEO, Network 18 Publishing, comments, “After 10 successful years of service to the industry, Engineering Expo today has established itself as India’s largest multilocation trade show on manufacturing. The Expo is a preferred destination for small and medium enterprises as well as manufacturing & engineering organisations to further their growth and that of the industry at large.” “For the 2012–13 season, we have eight editions spread across an equal number of locations of a rising India. Keeping our esteemed exhibitors and valued customers in mind, we have made elaborate provisions to offer a never before experience. These, we reckon, will add substantial traction to the industrial growth of the nation,” Khosla adds.

HIGH EXPECTATIONS FROM EXHIBITORS With the Engineering Expo Chennai 2012 on the anvil, it is time for the exhibitors to build up on their expectations. Discussing his expectations from the expo, Sharma states, “We are expecting a huge footfall from quality buyers. We look forward to spreading awareness about the availability of world-class quality products and generating new possibilities of developments in products & services.” While exposure to potential clients and quality visitors is the major expectation of the exhibitors, Raghavan adds, “We want to exhibit our potential in providing innovative solutions to typical requirements of process industries.” Continuing in this regard, Manoj Kumar, Director, Apex Auctions India Pvt Ltd, informs, “We are sellers of equipment, machine and tools pertaining to the manufacturing industry and are participating in the Engineering Expo Chennai for the first time. We are expecting the right to gain exposure to the small and medium enterprises, small scale industries who will be attending the expo.” Seconding the above thoughts, K Balaji, CEO, Aquaflow Enterprises, elaborates, “We are hoping to generate enquiries. Last year, we had participated in the expo and this is the second time for us. This expo is beneficial for us since Chennai is the manufacturing hub, and therefore, we are aiming to generate a lot of business from here.” Sharing his expectations, Ravi adds, “We are anticipating visitors from sectors such as auto, pharma, chemical, automation, material handling, construction and packaging to visit us. We are focussing on our range of products such as gearboxes, gear motors, motors & brake motors, and are aiming to establish our brand.” shibani.shah@network18publishing.com chandreyee.bhaumik@network18publsihng.com

TRADE SHOW TRACKER EVENT LIST

NATIONAL

ABROAD

9-11 OCTOBER 2012

15-17 OCTOBER 2012

16-19 OCTOBER 2012

METRORAIL ASIA 2012 Focus: Latest Developments in Global Rail and Infrastructure Where: Hyatt Regency, Mumbai, India Tel: 65 6222 8550 Fax: 65 6226 3264 E-mail: enquiry.sg@terrapinn.com

CHINA (SHENZHEN) INTERNATIONAL LOGISTICS AND TRANSPORTATION FAIR 2012 Focus: Logistics Service Providers Where: Shenzhen Convention & Exhibition Center, Shenzhen, China Tel: +86 755 8358 1250 Fax: +86 755 8358 1307 E-mail: cilf@szflp.org.cn

SCM LOGISTICS WORLD 2012 Focus: Logistics & SCM Where: Singapore Tel: +65 6322 2313 Fax: +65 6223 3554 E-mail: misha.tan@terrapinn.com

NATIONAL

ABROAD

21-24 NOVEMBER

20-21 NOVEMBER

20- 21 NOVEMBER 2012

CeMAT INDIA 2012 Focus: Trends And Technologies In Material Handling, Storage And Logistics Where: India Expo Centre, Greater Noida, India Tel: +91 22 40050681/82 Fax: +91 22 40050683 E-mail: tushar.alekar@hmf-india.com

LOGIPHARMA ASIA Focus: Pharma Supply Chain Where: Singapore Tel: + 65 6408 9205 Fax: + 65 6822 7370 E-mail: christine.foo@wbresearch.com

8TH TRANS MIDDLE EAST 2012 Focus: Transportation and Logistics Where: Gulf International Convention and Exhibition Centre, Bahrain Tel: +973 17 713000 Fax: +973 17 712088

NATIONAL

ABROAD

7-9 DECEMBER 2012

7-10 DECEMBER 2012

5-8 DECEMBER 2012

INDIA WAREHOUSING AND LOGISTICS SHOW Focus: Logistics & Transportation Where: Auto Cluster Exhibition Centre, Pune, India Tel: +91 120 4273921/43341111/4273921 Fax: +91 11 46520734

INDIA LOGISTICS SHOW Focus: Railway, Shipping & Aviation Where: India Expo Centre, Greater Noida, India Tel: 022 27812093 Fax : 022 27812578 E-mail: ics@indiaconvertingshow.com

INDUSTRIAL AUTOMATION & LOGISTICS INDONESIA Focus: Automation & Logistics Where: Jakarta, Indonesia Tel: 60 3 8023 5352 Fax: 60 3 8023 3963

AHMEDABAD October 5-8, 2012

PUNE November 2-5, 2012

INDORE January 11-14, 2013

CHENNAI November 22-25, 2012

AURANGABAD February 1-4, 2013

LUDHIANA December 21-24, 2012

RUDRAPUR February 23-26, 2013

HYDERABAD May 31-June 3, 2013

Tel: 022-30034651 • E-mail: engexpo@infomedia18.in • Web: www.engg-expo.com

OCTOBER 2012 • SMART LOGISTICS • 59

PRODUCT UPDATE

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

BARCODE READERS WITH 2DMAX+ TECHNOLOGY

ith 2DMax+, readers can now identify and decode severely damaged or poorly marked 2-D matrix codes. Most importantly, the barcode readers are unaffected by variations in lighting, marking method, code quality or surface fi nish. “2DMax+ is a proven breakthrough in 2-D decoding. Th is functionality is especially helpful in the pharmaceuticals, food, beverage and consumer goods packaging sectors. Barcode reading in these industries are often challenging due to poor print quality, varying part sizes, curved surfaces and labels damaged by environmental factors or supply chain activity. 2DMax+ helps these users achieve the highest reading yields and maximise throughput. 2DMax+ can read Data Matrix codes even when critical elements are missing. 2DMax+ can also locate and decode Data Matrix codes that are over exposed or underexposed, without requiring multiple retries. Th is improves throughput, speed and overall reliability.

Cognex Sensors India Pvt Pune, Maharashtra Tel: +91 2040147840 Email: sisd.support.asia@cognex.com Website: cognex.com

HYDRAULIC CRANES

he truckmounted hydraulic cranes (model Hydra-825) superstructure frames fabricated from high-tensile steel plates and sections with mechanical superstructure lock operated from cab. The 3-section fully synchronised fully telescoping box section boom is fabricated from high-strength low-alloy steel plates with internal and external welding. Boom derricking has a single- double-acting hydraulic ram mounted on a large diameter bushes. Til Ltd Kolkata, West Bengal Tel: 033-25531352 Email: tilkmt@tilindia.com Website: www.tilindia.in 60 • SMART LOGISTICS • OCTOBER 2012

CAGE PALLET

he supreme quality cage pallet is completely designed with extreme quality raw material and are procured from renowned industries. Th is cage pallet comes in different specifications with respect to its application. Its base is made of MS tubular structure with sides of wire mesh provided at the bottom for forklift or pallet truck entry. It is a self-cleaning see-through pallet and can be stacked one upon the other. Its wire mesh container is stackable and totally collapsible. The wire mesh pallet is used in automobile industries as well as warehouses of large factories. It has up to 1,000 kg weight bearing capacity with even load distribution.

Ahlada Industries Pvt Ltd Hyderabad, Andhra Pradesh Tel: 040-23094301 Email: industries@ahlada.com Website: www.ahlada.com

EOT AND HOT CRANES

hese EOT and HOT cranes are available in both singlegirder and double-girder ranging from 500 kg to 50,000 kg capacity. The cranes are designed and manufactured in accordance with IS:3177 considering proper factor of safety with respect to appropriate duty classifications. Different types are available, like double-girder overhead travelling cranes, single girder overhead travelling cranes, heavy-duty overhead travelling cranes with main and auxilliary hoists, under slung cranes, EOT/HOT crabs, etc. The cranes are used in steel mills, foundries, paper plants, cement plants, power plants, dairy plants, chemical plants, fertiliser plants, petrochemical plants, engineering plants, textile industries, general industries, etc. Techno Indus Ahmedabad, Gujarat Tel: 079-2583 0742 Mob: 09313159058 Email: info@technoind.com Website: www.technoind.com

GOLIATH CRANES

he single girder and double girder Goliath cranes conform to IS:807-1976, IS:3177-1977, IS:3938-1983 and IS:4137-1963 wherever applicable. These cranes are manufactured up to 50 ton capacity and for 40 m span. Grabbing cranes are designed to suit indoor or outdoor location and can also be supplied with grab buckets, electromagnets. Goliath cranes are designed to run on forged steel wheels running on L-type housing on anti-friction roller bearings. These cranes are suitable for control from floor, by means of pendant controller or from the driver’s cabin by means of master controller or through radio remote control. Elmech Engineers Mumbai, Maharashtra Tel: 022-2352 1798/2710 Email: eddycranes@vsnl.com Website: www.elmechengineers.com

panel on loading/unloading end. The height of the loading and unloading ends can be changed, independently. The conveyor is completely mobile, mounted on sturdy wheels for easy mobility. It has telescopic arms for greater reach inside the truck. The truck loading conveyor has a choice of powerised rollers or heavy duty belt, choice of various belts depending on the application, choice of lighting on the conveyor to facilitate unloading/loading of containers, etc. Aravali Engineers Noida, Uttar Pradesh Tel: 0120-2401105 Email: sales@aravaliengineers.com Website: www.aravaliengineers.com

PLATFORM TRUCKS & TROLLEYS

mika Enterprises leading structural fabricators now offer platform trucks for heavy weight transportation around the warehouse, plant or office. Made out of MS Sheets, angles, fl ats,

TRUCK LOADING CONVEYOR

he truck loading conveyor is used for loading/unloading bags, cartons, boxes, crates, etc, from trucks. It comes with completely motorised operation with operator control

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OCTOBER 2012 • SMART LOGISTICS • 61

Product update, continued

pipes, etc these Platform truck are provided with convenient tubular pull handle. And roll effortlessly on 4-pneumatic wheels. All welded construction ensures a super strength Available capacity from 500 to 5,000 kgs. Platform trolleys are available in capacity from 250 to 2,000 kg and roll effortlessly on 2- swivel, 2 rigid heavy duty casters. Ambika Enterprise Mumbai, Maharashtra Tel: 022- 4023566 Email: ambica.response@gmail.com Website: www.ambika.com

ensures the long-term durability of the system purchase. The modular design, requiring no welding or painting, greatly reduces downtime during installation, expansion, or upgrade. Konecranes India Pvt Ltd Pune, Maharashtra Tel: +91-020-40047470 Email: india.sales@konecranes.com Website: www.konecranes.com

METAL PALLET

he Venture-445 is a metal pallet available in two models with/without MS sheet platform in mild steel in order to avoid wooden pallets to save trees. Some of the advantages include: protect trees & save nature, lightweight & heavy-duty, stackable & save transport cost for movement of empty pallets, long life & cost-effective, reusable & longterm savings, export ready, resale value even in scrap condition, maintenancefree, customisation based on requirements, can be used all four

ALUMINIUM CRANE SYSTEM

hese XA aluminium light crane system applies the strength and low weight of aluminium to every light material which needs to be lifted. Handling low loads is of up to 2 metric tonne across a wide variety of rail types, it is a robust, cost-efficient solution. An anodised aluminium surface

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62 • SMART LOGISTICS • OCTOBER 2012

sides by hand pallet & fork lift, good strapping with the product, weather-proof, and other value-added features. Pushpak Products India Pvt Ltd Bengaluru, Karnataka Tel: 080-28382031 Email: vision@pushpak.co.in Website: www.pushpak.co.in

WALL CONSOLE CRANES

he wall console cranes can slide horizontally along a track on the wall. The girder can reach up to 10 metres, and loads can be lifted up to 20 metres. Such features allow the wall console cranes to squeeze into the tightest assembly line, warehouse, or other industrial area. Th ree end carriages work together for a stable and balanced crane. Steel girders ensure strength and painting resists corrosion over the life of these systems. Konecranes India Pvt Ltd Pune, Maharashtra Tel: 020-40047470 Mob: 09313159058 Email: india.sales@konecranes.com Website: www.konecranes.com

HYDRAULIC PALLET TRUCK

iger hydraulic pallet truck is of high quality engineering and heavy-duty construction. It is an economical solution for handling heavy loads. The frame is made of heavy duty formed steel, jig welded and forks of double fl anged pressed steel which gives maximum strength. Ram

and pump plunger of the hydraulic cylinder is grounded to high precision and hard chrome plated which reduces wear and resists from corrosion. Special safety valves are provided for smooth lowering of load and a dual overload safety valve is provided to protect the truck from damage due to overloading. Ferro Foundries Pvt Ltd Mysore, Karnataka Tel: +91-821-2402376,+91-0821-3048000 Mob: 09845120878 Email: info@ferrotiger.com Website: www.ferrotiger.com

The information published in this section is as per the details furnished by the respective manufacturer/distributor. In any case, it does not represent the views of

Looking For A Specific Product? Searching and sourcing products were never so easy. Just type SL (space) Product Name and send it to 51818

eg. SL Forklift and send it to 51818 OCTOBER 2012 â&#x20AC;˘ SMART LOGISTICS â&#x20AC;˘ 63

PRODUCT & ADVERTISERS’ INDEX NDE DE

Looking For A Specific Product? Searching and sourcing products were never so easy. Just type SL (space) Product Name and send it to 51818

eg. SL Forklift and send it to 51818

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

Pg No

Products

Pg No

Aluminium crane system ...........................................................62

Hydraulic palet truck .................................................................63

Auto FLC ................................................................................... 4

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

Barcode readers with 2DMAX+ technology ................................... 60

Logistics solutions ...................................................................FIC

Cage pallet .................................................................................60 Conveyor logistics management. ................................................. 3

Metal pallet ................................................................................62 Pallets ......................................................................................4,63

Damco logistics ..........................................................................13 Platform trucks & trolleys .........................................................61 EOT and HOT cranes ..............................................................60 Specialized storage & transport .................................................13 Fleet management services..................................................... BIC Foldable plastic crates ................................................................. 4 Folding large container (FLC) .................................................... 4 Goliath Cranes ...........................................................................61 Hydraulic cranes .........................................................................60

Truck Loading Conveyor ...........................................................61 Vehicle tracking services ........................................................ BIC Wal console cranes .....................................................................63 Warehousing............................................................................FIC

Pg No

Advertiser

Tel. No.

E-Mail

Website

BIC

Alpha Analytics Services Pvt Ltd

+91-20-25897063

vivek.rane@alpha-analytics.com

www.alpha-analytics.com

Chep India Pvt Ltd

+91 022 67839400 Savio.Pimenta@chep.com

www.chep.com

Damco

+91-22-33088249

Commercial.India@damco.com

www.damco.com

Engineering Expo

+91-9819552270

engexpo@infomedia18.in

www.engg-expo.com

Engineering Expo Hyderabad

+91-9819552270

engexpo@infomedia18.in

www.engg-expo.com

Network18

7,BC

Safexpress Private Limited

www.network18online.com +91-1800-113-113

suyash.srivastava@safexpress.com

www.safexpress.com

Schaefer Systems International Pvt Ltd +91-022-61114700

schaefer@ssi-schaefer.in

www.ssi-schaefer.in

Sintex Industries Ltd

+91-2764-353500

pallets@sintex.co.in

www.sintex-plastics.com

FIC

Uniworld Logistics

+91-0124-4797400

nihar.parida@uniworld-logistics.com

www.uniworld-logistics.com Our consistent advertisers

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

64 • SMART LOGISTICS • OCTOBER 2012

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

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

E-mail: b2b@infomedia18.in

PRODUCT INQUIRY FORM Aluminium crane system

Hydraulic cranes

Auto FLC

Hydraulic palet truck

“BARCODE READERS WITH 2DMAX+

Logistics services

TECHNOLOGY”

Logistics solutions

Cage pallet

Metal pallet

Conveyor logistics management.

Pallets

Damco logistics

PLATFORM TRUCKS & TROLLEYS

EOT and HOT cranes

Specialized storage & transport

Fleet management services

Truck Loading Conveyor

Foldable plastic crates

Vehicle tracking services

Folding large container (FLC)

Wal console cranes

Goliath Cranes

Warehousing

First Fold Here

Second Fold Here

Alpha Analytics Services Pvt Ltd

Network18

Chep India Pvt Ltd

Safexpress Private Limited

Damco

Schaefer Systems International Pvt Ltd

Engineering Expo

Sintex Industries Ltd

Engineering Expo Hyderabad

Uniworld Logistics

Third Fold Here

GLUE

ADVERTISERS’ INQUIRY FORM

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10 / 2012

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