LOG.India August 2010 by Frewin Francis

www.logisticsweek.com

August 2010

Vol. 3 - No.11

Rs 100

Germany

Bulgaria

Middle East

INDIA

I N D I A ’ S N O .1 L O G I S T I C S M A G A Z I N E

Pull 'N Drive

Dell India’s supply-chain team led by General Manager MR Sundaresan is empowering the giant PC maker maker’s intensified market drive >>

Page 36

SERVING FRESH 30

ATLAS CHUGGED 52

WHO NEEDS LSPS 62

Designing supply chains to ensure product freshness

Why project logistics in India is a domain of select players

The thriving pharma sector has little use for LSPs. Why so?

IMPORT FROM CHINA WITH DHL. SO YOU DON’T HIT ANY GREAT WALLS. With DHL IMPORT EXPRESS WORLDWIDE, it’s simple. Language problems, multiple shipping companies, and mountains of paperwork obstructing your path to success? Why not rely on DHL IMPORT EXPRESS WORLDWIDE to handle your imports? One company door-to-door. One competitive price. One invoice in one currency. At DHL, we’ll help you overcome every obstacle. Sign up on www.choose.dhl.com/india to start saving today. Or simply call on our helpline numbers 1800 111 345/30 300 345

GET 10% OFF ON YOUR FIRST IMPORT SHIPMENT* Sign up on www.choose.dhl.com/india or call up to register on 1800 111 345/30 300 345 and start shipping with DHL IMPORT EXPRESS WORLDWIDE before 31 August 2010 and you’ll save up to 10% on your first import shipment.

*Terms & Conditions for the offer can be found on www.choose.dhl.com/india

KNAPP.com

new system

concepts

solution provider Creating reliable logistics systems is what we do. Countless satisﬁed customers show that KNAPP delivers intelligent solutions for a variety of warehouses. Trust in the alliance of industry knowledge and technological know-how.

Logistics we define

“Goods Safety is our Priority.”

Warehouses Available Ready Warehouse At Chakan Pune Approximate 5,00,000 sq. ft. area Prime Features of our Warehouses: World-Class PEFB Building. Industrial Tremix concrete flooring. Dock-Levelers and advanced handling equipment. Electricity facility along with generator backup & broadband internet connectivity. Sufficient Parking Space for easy vehicle maneuverability. Open space & concrete roads inside the complex with Tremix concrete. Scope for future expansion .

Domestic Containerized Transportation now 20% cheaper We provide safe, reliable & cost effective containerized transportation services with wide range of containers starting from 17 FT. to 52 FT. in length, to meet your needs. Containers of international standards minimizing possibilities of water seepage, pilferage, rope-marks, internal damage, dust & dirt, material loss or heavy damage in transit accidents, space wastage, etc. We provide containerized transportation services all over India & offer rates 20% less than that of the market; from Delhi, Indore, Ahmedabad, Kolkata, Nagpur, Bangalore, Goa & Hyderabad to Pune. Visit us at: www.vijaylogistics.com Registered Office: Vijay Logistics Pvt. Ltd., Prasun Tara, Plot no-66,Vastu Udyog, Pimpri, Pune – 411018 (India). Phone: +91 2135 675000-099. E-mail: info@vijaylogistics.com, marketing@vijaylogistics.com

Truck Advertising now in India... Features of Truck Advertising

Targets the urban and rural audience.

Visibility at eye level.

Penetration from 3 sides.

Offers opportunity to register. Visible in day and night time.

Registered Office : Plot no 66, Prasun Tara Building, Ajmera, Pimpri, Pune-411018. Tel/Fax : 020-27435504, Mob. +91-9823979721. www.transmedia.in Email : abhijit@transmedia.in

eDITORIAL

A Question of Choice

ecently a reader wrote in, seeking career advice. The reader, Rahul, is a fresh management graduate and has been working with a 3PL for the last few months in the areas of warehousing and transportation. Rahul said that he intends to pursue a career in the warehousing sector and wanted to be sure if the sector is as lucrative as is being projected in the media. And he added that my answer would be critical to him since he is a bit nervous whether he is making a right career choice or not. Firstly, Rahul wanted to know the future of warehousing in India. This is a question that has launched a thousand reports. One of them, a Cushman and Wakefield report published in 2008 put the sector size at $20 billion and projected a growth rate of 35 to 40 percent to expand the size to $55-billion by 201011. But considering that 2008 was an insane year and most projections made during the year caused a lot of heartache to companies and analysts alike, I would be very conservative about these estimates. Personally, one should be happy pursuing a career in a $30-35 billion (by very modest estimates) industry if I am happy making a career in the $13 billion media and entertainment industry. Aanand Pandey About future prospects, Rahul wanted to know which factors will positively impact the growth of Editor warehousing. I am an optimist, but my job demands that I’d rather err on the side of caution, so I would look at negatives first. Thankfully, the two biggest areas of concern – infrastructure and policy – have shown an incredible improvement in the recent past, what with Kamal Nath showing good results on the ground. And as I write this, the GST roadmap has become clearer with the Centre and the states arriving at a consensus – apparently it will be in place by April next year. Hurrah! That said, there are myriad issues that still have the sector by the scruff of the neck. To name a few, Indian Railways is going painfully slow on reforms; agriculture, which accounts for more than half of the logistics business in the country is slow and highly unorganized; speaking of unorganized industry, outsourced warehousing itself is fragmented, with a major chunk managed by small, unskilled players – but that could be a boon in disguise. But I will admit that the positives outweigh the negatives. The industrial sector – automotive, cement, electronics, etc. – as well as retail (expected to soar with multi-brand FDI) is doing very well. More than anything else, the Indian consumer is becoming demanding by day – an excellent thing. A demanding consumer puts pressure on last-mile delivery, which galvanizes distribution and spurs warehousing growth. That was the macro-view, but it wouldn’t do proper justice to Rahul’s question. Even though he didn’t ask me about his career path, my answer wouldn’t be complete without it. So I turned to someone who is in the thick of things. CSCMP India Roundtable President and Philips India Regional Manager, Anshuman Neil Basu, who has worked in the field of logistics for 15 years (he was with DIESL in its formative years) and warehousing has been a key part of his responsibilities. I asked him what should be an ideal career path (discounting variables like competence, etc.) for a warehousing professional. Rahul wrote in the mail that he is working in the areas of transportation and warehousing and he wants to be in the “operations department of a modern warehouse for the coming two years” to strengthen his fundamentals. Basu says that the idea of slugging it out to learn the basics for 2-3 years is a good move, however, along the way it is very important for one to learn other aspects of supply-chain such as demand forecasting, procurement, product cycle – skills that will be of huge import once he moves up the ladder. Rahul can do this by enrolling in short-term courses or joining a peer group. Moreover, says Basu, if one can choose the warehouse type, it’d be better if one works in a WMS environment. Where should Rahul aim to work eventually – a 3PL or a user – in terms of learning and compensation? Overall, there isn’t a huge difference, apparently. There is a caveat though. Basu says that working with a user at the initial stage of one’s career wouldn’t give one enough exposure to diverse functions and sectors, since a user company could be dealing with a limited product portfolio. Now comes the important part – money. For which I asked around and since no one wanted to be quoted on the subject, I could come up with only a hint of the picture, but I reckon it can help. I am told that a fresh management graduate can start in warehousing as a trainee with a salary ranging from Rs 3 to 5 lakh per year depending on the B-school level. At a warehousemanager level, which could come in the next 4 to 8 years or more (depending on competence and opportunities), he could draw somewhere around Rs 10 to 15 lakh per annum. Thereon, he could go on to head the logistics operations for a company or head a 3PL for which eye-popping salaries are not unheard of and nowadays, logistics heads even get a place on company boards. Hope that helps.

Aanand Pandey aanand@logisticsweek.com INDIA |

August 2010 | www.logisticsweek.com 5

Contents 18 UPSHOT

For a Shorter Supply Chain Cycle

Three events were the hallmark of the month as they shed light on the need for integration between suppliers and retail/manufacturers, and the advantages of outsourcing logistics.

30 Feature

Fresh off the Chain Well-planned supply chain architecture will ensure product freshness which, in turn, will increase sales.

20 Event Report Future SCM Trends

Frost & Sullivan hosted a workshop on future supply chain strategies in Bengaluru.

36 Cover Story Pull 'N Drive

< WAREHOUSING

20 24 column

Dellâ&#x20AC;&#x2122;s smooth scale-up in India, for a good part, can be traced back to its carefully built local supply-chain capabilities at its manufacturing facility in Sriperumbudur, led by General Manager MR Sundaresan.

To Automate or Not? Warehouses should automate wisely and after careful deliberation.

INDIA

| July 2009 | www.log-india.com

INDIA |

August 2010 | www.logisticsweek.com

aUGUSt 2010 46 FeatUre

ADVeRtIseR InDeX

Freight Hike Impacts Industry

Arham Logiparc .......................................................BC

In the wake of the price rise in petrol and petroleum products, industry has hiked freight rates to unjustifiable levels.

Capricorn Logistics ................................................. 59

Bar Code India ..........................................................11 DHL Express........................................................... IFC Drive India Enetrprise Solutions.............................. IBC Drive India Enetrprise Solutions (Appointment Ad) .. 59

Exide Industrial.........................................................17

Moving Mountains

Green Earth Translogistics ........................................ 9

The project logistics market brings with it risks and benefits. With India's growth plans, the sector is all set to expand in a really big way.

Hormann India ......................................................... 35 Indelox Services .......................................................13 Institute Of Supply Chain ......................................... 41 Jay Euipment............................................................19 Kairali Resort........................................................... 43 Knapp AG .................................................................. 3 Knapp AG Case Study.............................................. 65 Nilkamal BITO Storage Systems ...............................15 Round the Clock Logistics ....................................... 45 Safexpress .............................................................. 25 SCM Logistics World 2010 ...................................... 49 Sujan Shipping and Clearing.................................... 23 Supply Chain & Procurement Fraud Management ... 51 5th Southern Asia Ports, Logistics and Shipping 2010 .................................................. 57 Uniworld Logistics ................................................... 27

JUne 2010

July 2010

Vol. 3 - No.10

Rs 100 Germany

www.logisticsw

eek.com

Vijay Logistics ........................................................... 4

I N D I A’ S

N O .1 L O GIST

Bulgaria

Middle East

INDIA

ICS MA GAZ

INE

Potential encapsulated Manufacture of drugs has taken rapid steps forward, yet pharma giants have not shown the same keenness in their distribution network. In a LSPs-dependent age, how is cost-effectiveness faring against the need for world-class supply?

E YE S FRONT

VITAMIN M 26

Few realize the maintenance role plays in transporters’ profit margins

reGUlarS

news

The HyperCity supply-cha Lt Col. Vijay in team led by Nair (Retd ) is putting inspired show up an >> Page 34

BACKING UP 32

How reverse supply chain can make break a companyor position in the ’s market

FUEL SUPPL Y 46

Exploring oil-andgas upstream and midstream supplychain biz

events

AUGUST 2010

62 INDIA |

August 2010 | www.logisticsweek.com 7

< news

TRAIN OF THOUGHT

opeRaTIVe InDeX* Damco, AP Moller, Maersk, DIESL, TCS, Mahindra & Mahindra, Gippsland Aeronatutics Australia, Aerostaff, Agility..... ................ 12

There are no performance targets to be met (by the Planning Commission)…It is easy to be an armchair advisor. — kamal nath union minister for road transport & Highways, speaking at a conference on ‘Public Private Partnership in State Highways’ last month

If you are allowing FDI, do it in a calibrated fashion because it is politically sensitive and link it (with) up some caveat from creating some back-end infrastructure. — thomas varghese, ceo, aditya Birla retail and president-retail, cII, on the kind of cap in FDI one can contemplate and sourcing limits from Indian markets itself

Very early on they (GMR) were keen to give the terminal an Indian context and infuse it with Indian values. The basic positioning we created for the terminal was “Expressive India. — amit Gulati, Head, Incubis consultants, who along with Landor Associates shaped the artistic choices and settled upon the idea of the hands at the Indira Gandhi International Airport’s T3

Hellmann Healthcare Logistics, Cool Logistics, Indian Railways....................................14 Steel Strips Wheels Ltd, Tata Motors, Eicher, Ashok Leyland, Vizag Seaport Private Ltd, Gammon Infra, Lastin Holdings, Bharat Petroleum Corporation, Jawaharlal Nehru Port Trust.........................16 *Key entities mentioned in the news section

Grit and diligence pay off at 2010 F&S Asia Paciﬁc Best Practices Award Jurong Port, Manhattan Associates and Keppel Logistics bagged awards in the transportation and logistics category

t the annual 2010 Frost & Sullivan Asia Pacif ic Best Practices Awards, the global research & consulting f irm honored exemplary corporations within three categories, namely, healthcare, industrial technologies and transportation & logistics industries from the region. Held at the Intercontinental Hotel, Singapore, on July 8, 2010, the awards, held for the third consecutive year, recognized market performance along with best practices within Singapore, south-east Asia and the Asia Pacif ic region.

INDIA |

Frost & Sullivan has 18 categories of awards in each sector. Companies have to meet certain parameters. If no company meets the criteria, an award is not presented. Companies nominated for the awards have to undergo an exhaustive methodology that takes into account the planning and execution of product launches, strategic alliances, distribution strategies, technological innovations, customer service, and mergers and acquisitions. Crucial marketing factors such as leadership, strategy, service, innovation, and development are also a part of the method-

August 2010 | www.logisticsweek.com

ology. Moreover, it helps if the companies have developed a successful business plan and

excelled in the competitive global marketplace. Recognizing the outstand-

PAN India Warehousing (3PL/4PL) Reverse Logistics Primary & Secondary Transportation In-transit Damage Reduction Solutions Partnership in Road Safety Programs Logistics BPO Logistics Staffing Services Logistics Consultancy & Training Audits & Benchmarking

E-04, Devashree Garden, Rutu Park Service Road, Majiwada Naka, Thane (W) â&#x20AC;&#x201C; 400601. Maharashtra Contacts : (+91) 99879 22244/9820761645 E-mail: customercare@getl.in

< news roll of Honor category Industrial technologies

award recipient

Market Penetration Leadership Award in the Solar PV Systems Market

SolarGy Pte Ltd

Technology Innovation Award in the Semiconductor Services Market

Frontken Corporation Berhad

RFID Software Developer and System Integrator

CBS Technology Berhad

Product Differentiation Excellence Award in the Biometrics Market

RCG Holdings Ltd

Penetration Leadership Award for Contactless Smartcards Convergence

Octopus Cards Ltd

Healthcare Innovation Award for Amino Acid Production

Aminologics

Medical Imaging Product Innovation

Time Medical Holdings Company Ltd

Hospital Information Systems Company

iSOFT

Medical Imaging Company

Philips Healthcare

Contract Research Organization Company

Quintiles

transportation & logistics Domestic Logistics Service Provider

Keppel Logistics Pte Ltd

Marine Software Provider

BASS Software Ltd

Multi-Purpose Terminal Operator

Jurong Port

Warehouse Management System Provider

Manhattan Associates

Logistics Park Developer

Ascendas REIT

ing contribution to their respective industries, Frost & Sullivan’s partner Nitin Bhat said that though the recipients from the three industries operate in different business sectors, they have all weathered the toughest economic climate. A dedication to focus on business fundamentals, make business models f lexible, continuous innovation and focus on talent management that has allowed the award recipients to continue to grow their businesses. On the opportunities in healthcare despite the challenges faced by participants in 2009, Rhenu Bhuller, Global Vice-President, pharmaceuticals/biotech from Frost & Sullivan said that the companies honored are those that have taken the lead in 2009 and took opportunities rather than worked reactive-

A dedication to focus on business fundamentals and continuous innovation stood in good stead for the award recipients ly. They set their foresight on a long term game plan and see the Asia Pacif ic region as an important part of their global organization. In the healthcare space specif ically, technology is the enabler that moves the industry forward. This is applicable from the early stage drug discovery and clinical research up till hospital systems and recording of medical information at the physician or patient levels. Organizations that have succeeded are pioneers in their f ield, and

will play an important role in contributing to the double digit growth seen by the healthcare sector in the Asia Pacif ic region. Summarizing the success of the recipients from the transportation & logistics sector, Gopal R, Vice-President for Transportation & Logistics Practice, Asia Pacific at Frost & Sullivan said that 2009 was a challenging year for the transportation and logistics industry in Asia as logistics expenditures declined. But there have been some remarkable performance from transportation and logistics companies that weathered the storm and emerged stronger. A common factor among all the award recipients is their outstanding commitment to clients. All of them had reacted quickly to ac-

commodate their customers’ needs and preference. Though broadly termed as the industrial technologies sector, coming from niche operational space – semiconductor, biometrics, solar energy and chemical production – the recipients from these areas were highly commended by Satish Lele, vicepresident of the Industrial Technologies practice at Frost & Sullivan. The industrial sector is a key driver of manufacturing activity and economic progress. It also is the single largest contributor to improvements in productivity and innovation. A number of companies in this sector smartly used this period of uncertainty to invest in process, technology and research which now gives them the edge as the economy improves.

estImated spend In road sector By 2015 would Be $90 BIllIon 10

INDIA |

August 2010 | www.logisticsweek.com

< news Company News

Damco invests in the India-Africa trade lane Mumbai

he AP Moller/Maersk group’s logistics branch, Damco, is increasing its focus on the growing India-Africa trade lane. Damco has created a dedicated India-Africa trade lane team to offer innovative solutions for its customers who are moving cargo between these two markets. Damco has a network of 50 offices across 30 countries in Africa and 17 offices in India. Combined, Damco has over 1,000 experienced employees

in these two markets. The new India-Africa trade lane team in Damco will focus on offering its customers customized solutions through this large network of offices. The team will manage ocean freight (dry and refrigerated), airfreight, cargo insurance, CFS warehousing, trucking, customs clearance and supply chain management. The company also offers an advantage of door-to-door shipments to Africa using its Through Bill of Lading (TBLs).

Damco’s team will offer tailor-made solutions to reach key African markets

DIESL executes Rs 100-cr tech upgrade Mumbai

IESL (Drive India Enterprise Solutions Ltd) has gone live with the first phase implementation of the Rs 100 crore technology upgrade plan. DIESL, roped in TCS (Tata Consultancy Services) for the Import-Export Management Software module for its ILS (International Logistics Solutions) division. The software, Connect International, will make the company

the first freight forwarder to implement a Distribution Management tool, which was earlier used only by shipping lines. The software can manage the data of 30,000 pin codes covering 7,000 towns mapped on the system as a master for locations data. It is capable of remote access via web and includes features like sales projection management, on-

line quote management, shipment life cycle visibility, sales performance management, and credit management. The software can also generate documents like HBL, freight & cargo manifest, cargo arrival notice, etc. Connect International is completely integrated with the existing SAP systems and can schedule auto MIS to clients.

M&M to enter aerospace supply chain Mumbai

ahindra Group, which recently completed the acquisition of two Australian companies, Gippsland Aeronautics and Aerostaff, expects to penetrate into the global aerospace supplychain with leading players in aerospace. At the company’s annual

general meeting, it announced it intention of foraying into the aerospace sector to penetrate the global aerospace supplychain as a credible registered manufacturer of components and assemblies. Mahindra & Mahindra acquired majority stakes in Gippsland Aeronautics Australia and

Aerostaff Australia recently. Gippsland makes eight seater, ten seater and fourteen seater aircraft that are sold in more than 32 countries. Aerostaff is a maker of aerospace components and assemblies for global aerospace original equipment manufacturers (OEMs) in Victoria state.

Agility is logistics provider for New Zealand Olympic Committee Wellington

gility has announced its appointment as the official logistics provider for the New Zealand Olympic Committee (NZOC). The partnership agreement means that Agility will be responsible for handling the logistics requirements for New Zealand teams competing in events such as the Commonwealth Games in Delhi this year through the London Olympic Games in 2012. As well as helping New Zealand teams to compete at the Olympic and Commonwealth Games, Agility will also assist other elite teams competing at the Paralympics and Youth Olympic Games. The agreement will run through the end of 2012.

India imported over 1.5 million tons of coal in one week alone in july 2010 12

INDIA |

August 2010 | www.logisticsweek.com

< news

Hellmann Healthcare launches temperature controlled packaging solution Chennai

ellmann Healthcare Logistics, the new vertical solution of Hellmann Worldwide Logistics, has teamed up with temperature controlled packaging specialists, Cool Logistics India Pvt. Ltd, to develop a specialist solution for its airfreight services from and within India. Pharmaceutical supply chains have become more complex over recent years due to a focus on globalization and outsourcing strategies by many multinational pharmaceutical companies. Companies look actively at opportunities for growth in emerging markets and this has had a direct impact on their supply chains, namely

longer lead times whereby consignments are handled by a number of stakeholders, across multiple regions with variable ambient temperatures. These primary distributions are a significant risk to the manufacturer as they tend to be higher in volume, both in shipment size as well as in monetary terms than secondary distribution. With temperatures reaching up to 50 degree Celsius in the summer and a lack of temperature controlled holding and storage facilities available, maintaining temperature at 2-8 degree Celsius and 15-25 degree Celsius is one of the biggest challenges in In-

Maintaining storage temperature at 2-8 degree C is one of the biggest challenge in India dia and the choice of the right packaging is an integral part of the pharmaceutical supply chain strategy. It is for this reason that Hellmann Healthcare has consulted with Cool Logistics to introduce a new, locally manufactured passive temperature controlled packaging solution. Cool Logistics will wait for

clients to supply them with a profi le of where their consignment is leaving from and going to. They will then simulate this situation in one of their test chambers to test the packaging solution will maintain its correct temperature. As part of the end-to-end supply chain solution, HHL offers customers in the pharmaceutical, biotechnology and medical device sectors; transport management, warehousing services and inventory management, value added services, purchase order management, packaging solutions, cold chain management and international, regional and local distribution.

RaILways

Rlys June freight loading ďŹ&#x201A;at; revenue up 7 pc New Delhi

hile the freight loading of Indian Railways was almost f lat in June this year against June 2009, it registered about seven percent growth in freight revenues during the period. The Railways moved 79.94 million tons of goods (up 0.47 percent year-on-year) and earned Rs 4,870-crore revenue (up 7 percent y-o-y) in June. The revenue growth was supported by commodities including coal, iron ore, cement, food grain, fertilizer and mineral oil. In net ton kilometer

(NTKM) terms â&#x20AC;&#x201D; a parameter that measures the throughput â&#x20AC;&#x201D; Railways registered growth for coal, cement, fertilizers, food grains, domestic movement of iron ore and coal movement to steel plants. NTKM measures the combined effect of change in loading and distance. But, there was a significant dip movement of iron ore exports and container traffic. The Railways earned 96 percent more by moving one ton of iron ore meant exports for one kilometer in June this year against June 2009. This could

Moving less, earning more seems to have worked for the Railways

be due to a mix of increase in fare, handling and other supplementary charges. Similarly, the Indian Rail-

ways earned about 22 percent more by moving one ton of goods in containers for one km during the period.

japan Has offered a loan of rs 88-cr to Help BuIld mum-del dedIcated freIGHt corrIdor 14

INDIA |

August 2010 | www.logisticsweek.com

< news poRT

Ports may have to pay traders for delay due to congestion

Vizag seaport to invest Rs 150 cr in bulk material handling facility

New Delhi

Hyderabad

he Government is considering a proposal wherein ports may have to pay a penalty to traders in case their cargo gets delayed due to congestion at the ports. The proposal was a part of several suggestions made by an inter-ministerial task force to suggest ways to reduce the transaction costs for traders. Transaction costs include time and money spent by traders in complying with government norms on foreign trade. Ports like JNPT and Chennai levy a congestion charge on shippers. The shippers, in turn, pass it on to the traders. In effect, the traders are bearing the cost of congestion at ports. Transaction costs in India are as high as 8-10 per cent

Inordinate delays at ports have been hurting traders dearly

of the total trade value. Indian exports become expensive due to high transaction costs hurting their competitiveness in international markets. Bringing the transaction costs down to around 3 percent is expected to help India achieve global standards.

In ports in Denmark, only three percent of the total shipments are examined by the authorities as the trust factor there is high. On the other hand, in Indian ports, over 10 percent of the total shipments is examined leading to inordinate delays.

aUTo ComponenT

SSWL sets up Rs 140-cr wheel rim plant in Jamshedpur Jamshedpur

handigarh-based Steel Strips Wheels Ltd (SSWL) brought its third steel wheelrim manufacturing unit in the country under production with the inauguration of its initial one million pieces per annum capacity plant. It is located near the Tata Motors plant here on a 9-acre plot. The Jamshedpur facility will supply to Tata Motors, Eicher, Ashok Leyland and will also export to Germany and Japan.

The company plans to upgrade its present capacity to two million pieces within two years Using latest technology the unit has been able to reduce the weight of each wheel rim going into a truck by around 1.5 kg, which would help reduce the overall weight of the HCV,

which in turn would help reduce carbon dioxide emission to that extent. Having invested around Rs 140 crore in the unit, the company plans to upgrade its present capacity to two million pieces within two years. SSWL today has an overall capacity to produce around 11 million wheel rim pieces per annum at its three units, which would go up to around 15 million by June 2011.

izag Seaport Private Ltd (VSPL) will invest Rs 150 crore in developing a bulk material handling facility near the Visakhapatnam Port in Andhra Pradesh. The company has been allocated 50 acres of land by the port. The facility will mainly handle coking coal and gypsum. Its promoters, Gammon Infra and Lastin Holdings, will raise the necessary funds through the debt-equity route. VSPL had invested Rs 370 crore so far for the existing facility of two berths spread over a 70 acre area, which is on a 30-year lease from the Visakhapatnam Port.

BpCL sets up bunkering facility at Kochi port Kochi

harat Petroleum Corporation Ltd has commissioned its international bunkering facilities at the Kochi port to offer international bunkering of furnace oil at competitive rates. The first exclusive international bunkering terminal of BPCL was inaugurated at the JNPT in May. The company is commissioning a dedicated barge loading jetty at their Irumpanam installation shortly to cater to the coastal vessels at Kochi.

auto component sector eXports estImated to Be $3.2 Bn In 2009-10: acma report 16

INDIA |

August 2010 | www.logisticsweek.com

5 year warranty*

Synergic/GX/EIL/10

Heat Sealed Traction Batteries for Fork Lift trucks

It’s a winner all the way

 Spines cast at 100 Bar pressure  Optimum active material  Longer run time  Longer life  Higher reliability  Lower operational cost

* Conditions apply

15%

ty upto capaci a ex t r

Visit us at : www.exide4u.com or e -mail : sourabhad@exide.co.in or BibhuN@exide.co.in

< upshot

Industry Events

Eastern Promises

Delegates at Captains of Logistics discuss the need to control and reduce supply chain costs

Date : July 15, 2010 Event: 'Captains of Logistics' Organizer: DIESL Venue: The Park Hotel, Kolkata

rive India Enterprise Solutions Ltd. (DIESL) organized a roundtable conference at The Park Hotel in Kolkata on July 15, 2010. The conference was part of ‘Captains of Logistics’ series - with the first of multi-city roundtable conferences by leaders from the industry from respective regions contemplating the various challenges faced by the logistics arena. The inaugural chapter, which was held in Kolkata, discussed the following topics: l Kolkata: The Emerging supply chain, & Logistics Hub of Eastern India l Logistics Outsourcing The first topic dealt with understanding Kolkata and its significance as a fast emerging supply chain and logistics hub. The state needs an uplift of the SC & logistics facilities to catch

up with the rapidly changing business scenario, and deployment of modern logistics services enriched with new strategies and technologies so as to counter challenges posed by infrastructural shortcomings. In the second topic, delegates discussed the need to control and reduce supply chain costs. Organizations are considering the use of 3PLs, especially for integrated transportation and warehouse management processes. The use of 3PLs can yield important benefits like lower logistics costs, reduction in fixed logistics assets, better order fill rates, increased customer service, improved logistics system responsiveness, and shortened average order-cycle lengths and cash-to-cash cycles. The conference was presided over by Ajay Chopra, CEO, DIESL.

Strengthening Retail Chains

upply Chain Leadership Council (SCLC) held its annual conference on retail sourcing, supply chain & operation on July 16, 2010, at Sahara Star in Mumbai. According to experts, Indian retail is expected to be a $400 billion market in 2010-11. Organized retail is about five percent of this market but growing at least 30-40 percent per annum as against the overall retail growth of 8-10 percent in India. Discussions during the conference revealed that strengthening of supply chain and sourcing channels is topping board meeting agendas. N Sukumar, Sr VP, Reliance Industries said supply chains will have to shorten with the ultimate goal of retailers picking up goods from a manufacturer’s facility. Retailers such as Hypercity, Gini

INDIA |

& Jony and The Loot admitted to having tried outsourcing their supply chain to a 3PL only to find challenges with that model. Gagan Seksaria, Associate Director, Transportation & Logistics, KPMG suggested that the service 3PLs offer today has changed. This is owing (From l-r): Maj. Shashi Tiwari, VP-HR (Training, Admin & Distributo private investment tion Centre), The Loot (India); Harish Mehta, CFO, Giny & Jony; PV that has gone into logis- Sheshadri, Head (Warehousing Operations), Future Supply Chain tics services companies Solutions; Ravinder Bajaj, Head (SCM & Strategy), AFL Logistics; and Lt Col Vijay Nair, GM (Supply Chain), HyperCity Retail (India) over the last 3-4 years. Marc Dragon, Supply Chain & Optimization Leader, Date : July 16, 2010 IBM Asia Pacific stressed that cutEvent: Retail Supply Chain Forum ting edge technology can inject cost Organizer: Supply Chain Leadership Council and operational efficiencies in retail supply chains. Venue: Sahara Star, Mumbai

August 2010 | www.logisticsweek.com

Keep It Moving

Auto SCM 2010 by CII Institute of Logitstics, held at the Hotel Le Royal Meredien, Chennai

Date : July 14 and 15, 2010 Event: Auto SCM, 2010 Organizer: CII – Institute of Logistics Venue: Hotel Le Royal Meredien, Chennai

ith India in the wake of becoming a global automotive hub, industry leaders from the field of logistics, automotive manufacturing as well as auto ancillary manufacturers are seeking ways of how India can rise to become a truly global player in the automotive sector. In this light, the Confederation of Indian Industry (CII) - Institute of Logistics organized “Auto SCM 2010” in Chennai on the 14th and 15th of July 2010. R Dinesh, Joint Managing Director, TVS Sons, chaired the event. Speaking on the potential India possesses to excel in the logistics sector, the speakers and members of the audience shared views on the issues that come in the way of smoother and faster cargo movement with an eyeball on achieving logistical efficiency. B Sriram, Associate Director, Ernst & Young, discussed the chang-

es one can expect with the arrival of goods and services tax (GST) and how it will influence the automotive sector and supply chains. Bill Oliver, VP (Automotive), Global Customer Solutions at DHL Asia Pacific, spoke on the significance of the automotive component industry to India and its position of being a vital link that can make or break an automotive supply chain. Other speakers shed light on the need for integration between suppliers and manufacturers, tackling issues with health of goods during transit, and the need for a well-designed and efficient infrastructure. Last, but not the least, speakers stressed the need for transparent and time saving legislations that would greatly help in improving the overall logistics scenario in India.

< EVENT REPORT

Future SCM Trends Frost & Sullivan conducted a workshop on supply chain strategies for the future. Pamela Cheema gives a ring-side view

Date : July 14-16, 2010 Event: Frost & Sullivan, Future Supply Chain Strategies, A Frost & Sullivan Executive Strategy Workshop Organizer: Frost & Sullivan, Venue: The Golden Palms Hotel and Spa, Bangalore

INDIA |

August 2010 | www.logisticsweek.com

rost & Sullivan, India, conducted a meticulously organised workshop on ‘Future Supply Chain Strategies’ from July 14 to July 16 at the sumptuous Golden Palms Hotel and Spa, Bangalore. The workshop had excellent and focused presentations from key industry figures at the event. With India ascending the growth curve and indeed being one of the drivers of the global economy along with China, the Indian logistics industry needs, in particular, to refine its supply chain parameters to be productive and internationally competitive. The workshop was declared open and the delegates welcomed by Anand Rangachary, Managing Director, Frost & Sullivan. The first

presentation of the day, which was Frost & Sullivan’s perspective on the supply chain strategies which should be followed in future by Indian corporates, was delivered by V G Ramakrishnan, Senior Director, transportation and logistics, Frost & Sullivan. He pointed out that the cost of logistics operations in India was inordinately high in comparison with developed coun-

tries due to inadequate infrastructure, lack of a well-structured and uniform tax structure and an industry which has remained perennially fragmented. He stated that the Indian logistics industry would attain substantial revenues of $132.35 billion by 2015 with a CAGR of 9.9 percent. He analysed that the impediments in the growth of the industry were poor

infrastructure and the domination of unorganised companies.

Key Drivers However, the key drivers of the industry in future could be the rising complexity of globalised supply chains, the improved capabilities of Indian LSPs and the demand for multimodal transportation services. He noted that technology and the

swift development of infrastructure would provide a plethora of opportunities for growth for 3PL providers. In a survey conducted by Frost & Sullivan in 2009, 80 percent of the respondents believed that technology would catalyse growth while 78 percent cited the construction of logistics parks as an aid to growth. Ramakrishnan was emphatic that while key industries in the INDIA |

Howard James Scott, Chief Supply Chain Management Officer, GATI delivers his presentation

August 2010 | www.logisticsweek.com

< EVENT REPORT

Supply chain strategists should locate their DCs and logistics hubs correctly, ensure timely information, cash flow and a flexible supply chain organisation country are growing at 15percent-20 percent every year, there still exist certain fundamental issues in the industry which need to be resolved, like the very basic issue of considering logistics the core function of an industry.

End-user Perspective After Ramakrishnan’s lucid presentation, Dimple Parikh, Head of Logistics, Lupin Pharmaceuticals, provided the end-user’s perspective in supply chain trends. The largest global market size in pharmaceuticals exists in the north

VG Ramakrishnan, Senior Director, Transportation and Logistics, Frost & Sullivan

American market and is valued at $311.8 billion, with the Asia/Africa/ Australia market pegged at $90.8 billion. By 2015 Parikh expected a larger number of MNCs nibbling away at the pharmaceutical pie, with 35 percent foreign corporates and 64 percent domestic players in the market. Globally, India ranks third in terms of volume in the pharma market and the industry is expected to grow at 12 percent till 2015. Foreign Direct Investment is expected to touch over $21 billion by 2015. Since the expenditure on health care is expected to surge from 7 percent of the GDP to 13 percent by 2015, the pharmaceutical industry foresees a bright future for itself. Parikh expected diverse opportunities in the spheres of biotech, clinical trials, contract manufacturing and cold chains, but deplored “the fact there is no single window clearance for supply chain in the country, industry is concentrated in just a few states like Maharashtra, Gujarat and Andhra Pradesh and there is still no uniform tax structure in the country.”

Trends in Retail Sanjiv Kathuria, Director, Sales & Marketing, TNT India

INDIA |

August 2010 | www.logisticsweek.com

Supply chain trends in retail and FMCG were delineated by Amit

Mukherjee, Vice President, SCM and IT, RPG Spencer’s Retail. Mukherjee stated that India had reclaimed her top spot in retail in AT Kearney’s eighth annual Global Retail Development Index (GRDI), 2009, as “the most attractive emerging market for investment in the retail sector.” Retail has a substantial 29 percent of India’s GDP and after agriculture, is the country’s second largest employer. But despite the ever-increasing opportunities in the retail sector, Mukherjee bemoaned the restraints that are limiting the sector’s growth such as unaffordable and poor supply of real estate, multiple licences and clearances for establishing a business, supply chain bottlenecks in distribution and logistics, an acute lack of skilled manpower, etc. He strongly emphasised that with competing businesses an efficient and well-defined supply chain could result in a lucrative enterprise. Supply chain strategists should locate their DCs and logistics hubs correctly, ensure timely information, cash f low and a f lexible supply chain organisation which is also collaborative with other business functions and trad-

OUR SERVICES l Custom Clearance viz. Import & Re-export of supply / support vessels, equipment, machinery & spares consumables. l Vessel Agency (Inward & Outward Clearance) l Crew Sign-on / off (Customs & Immigration Clearance) l Supply of Deck Stores, Engine Stores & Provision Supplies. l Crew Repatriation & Travel Arrangements. l Arranging NED Passes in case of operations with ONGC. l Arranging berths at both Inner anchorage & alongside. Arranging Statutory Clearances l Essentiality Certificate (EC) for supply vessel, equipments&machinery. l Ministry of Defence (MOD) clearance l NSC (Naval Security Clearance) l Ministry Of Home Affairs (MOHA) clearance for Expatriates l Specified Period License (SPL) from Directorate General of Shipping for vessels. l Obtaining Approval on towing plan from IRS

S U J A N

SHIPPING & CLEARING PVT. LTD.

Office: A 58& 59, 2nd Floor, Electronic Sadan-1, MIDC Mahape, Navi Mumbai- 400710. Tele: +91 22 67698900, Fax: +91 22 27612008 email: Sujan3@vsnl.com

< EVENT REPORT ing partners. They must steer clear of crippling supply chain bottlenecks like absence of cold chains, poor storage facilities and transportation methods and also ensure that information technology is in place for both front-end and backend functions. He also strongly supported GST and FDI â&#x20AC;&#x153;as they will both significantly impact the way business is being done in the country and are welcome in the retail industry.â&#x20AC;?

LSPs vs New SCM Trends

Anand Rangachary, Managing Director, Frost & Sullivan

A panel discussion moderated by Anand Rangachary

INDIA |

August 2010 | www.logisticsweek.com

The preparedness of logistics service providers in an emerging environment of redefined supply chain strategies was provided by two significant LSPs, GATI and TNT India, with GATI giving the domestic perspective and TNT India putting forth a peroration of the international perspective.

Howard James Scott, Chief Supply Chain Management officer, GATI, spoke expansively about the Indian logistics industry and emerging trends. He stated that the logistics market is expected to grow by more than 20 percent over the next three years, when foreign logistics competitors are also expected to enter the market. With increasing growth, customers today are also more demanding, expecting reliability of service, reach and transit speed and price competitiveness from their LSPs. Scott urged LSPs to institute structural changes within their organisations such as seamless integration through IT, dynamic product response parameters and a reshuffle of their organisations so that they encompass air and ocean freight along with freight forwarding. He foresaw sweeping changes

< EVENT REPORT in the service portfolios of LSPs in the future, with greater involvement of LSPs in manufacturing processes, back office support to end users and high-end operational analytics. Sanjiv Kathuria, Director, Sales and Marketing, TNT India, agreed with Scott that radical changes were imminent in the logistics sector. In the future, he expected the contours of the business to change with lower operating expenses, reliable order fulfilment and greater visibility on product flow for end customers. He believed that supply chains would

Between 2010-2018 the logistics sector requires 18 lakh truck drivers, a crucial need which is unlikely to be easily filled

become smarter, be more information driven, supply decision support tools and be more connected to enable multi-partner collaborative platforms for suppliers, customers and service providers which would lead to integrated forecasting, orders and point-of-sale. He was convinced that in a fastchanging world, industry responses must be equally swift. It was his belief that in the future the logistics industry would shift to lower cost, but high growth areas. Customers would buy smaller devices, selling prices would decline and product life cycles would shorten. “Other factors that will impact supply chain are economic, demographic, ecological, regulatory and technological issues which will radically transform supply chain,” said Kathuria. “The supply chain architecture of the future will have multi-partner information models, collaborative intelligent warehouses, collaborative transport and seamless service logistics.”

Core Issues

Amit Mukherjee, Vice President SCM and IT, RPG Spencer's Retail

INDIA |

August 2010 | www.logisticsweek.com

During the workshop, two panel discussions on July 15th and July 16th respectively, brought to the fore various core issues of the industry which were discussed threadbare in debates peppered with liveliness and candour. Both discussions were moderated by Anand Rangachary, Managing Director, Frost & Sullivan. Interestingly, in the first panel discussion on July 15, Prem Kumar Verma, CEO, Tata Motors Distribution Company Limited, disclosed that there is an acute scarcity of well-trained truck drivers. Between 2010-2018 the logistics sector requires 18 lakh truck drivers, a crucial need which is unlikely to be easily filled “because no driver’s son wants to be a truck driver,” remarked Verma. “For more recruits, we have to make this look like a decent job. There should also be more training schools to improve the situation.”

Dimple Parikh, Head of Logistics, Lupin Pharmaceuticals

Gautam Dembla, Director, Spear Logistics, f layed the poor infrastructure in the country. In particular, he lambasted the poor capacity of Indian ports pointing out that “the government needs to build over-capacity at our ports. Several of India’s largest ports can’t handle 1/10 of what Singapore does.” During the panel discussion on July 16, green logistics emerged as a major area of concern with most panellists underscoring its crucial importance. Startlingly, end-users are equally in favour of green logistics. Also, corporates will save substantial sums of money by adopting such eco-friendly measures. The Frost & Sullivan strategy workshop ended on July 16 on a breezy, cloudy day in Bangalore, the city which has that quality of je ne sais quoi. The workshop discussed innovative strategies and solutions which industry could assimilate and catalyse its success in a fast changing world.

#225, ST Bed Extn., 5th Main, Koramangala, 4th Block, Bangalore 560034, India. Tel : +91 80 40833366 www.uniworld-losgistics.com

< COLUMN Column

Source: www.cirrelt.ca/mhmultimediabank/

To Automate or Not Most warehouses would like to automate extensively, but be judicious, advises Padmini Pagadala

Padmini Pagadala General Manager, As a student when I first walked into a Wal| July 2009 | www.log-india.com 46TPG Consulting, Mart Distribution Centre in the United States Mumbai

INDIA

and saw 32 miles of conveyor belts carrying cases under one roof, I just could not understand the need for such extensive automation. I wondered how all the miles of conveyor belts running overhead, the control systems and the automated sorters could possibly make any economic sense. Having landed as a fresh graduate from India, I just did not have the background or the experience to be able to fathom such a scale of automation. Today, as I walk into several warehouse facilities in India, I realize there seems to be an obsession about automation even in facilities that are less than 50,000 sq ft. There seems to be a general belief that once a machine (attached to a computer) replaces a human being, then all is bliss. I have heard many a warehouse manager mention that he would like certain operations entirely automated, not just mechanised.

INDIA |

August 2010 | www.logisticsweek.com

Why Automate? This made me wonder that is automation really a panacea for all the ills and the lacunae of a warehouse facility? Automation with all its consistency, efficiency and reliability is not a magic potion. There are times when automation makes sense and there are the times when we are better off going the manual way. The most commonly mentioned reason to automate is the payback from labour savings achieved with such equipment. When I was talking to the warehouse manager of a popular retail chain in Europe, he told me that each process in the warehouse would be evaluated as a candidate for automation. If the payback for automation turned out to be four years or less, then the process was automated. I was told that in the US, operations will get automated if the payback takes around two years. The path to automation should be taken judiciously, as in Europe where the average ware-

A cross belt sorter at a warehouse

house employee earns about 30,000 Euros a year or in the US where they are making $25,000 a year and hence the savings that accrue to the company from mechanisation are justified. But in India the average warehouse associate makes just Rs.8,000 a month, if he is lucky. Labour savings are hard to use as a justification here.

Necessary Automation But, there are situations where automation makes sense even in a country where the warehouse workers make a tenth of the developed world’s workers’ wages. I remember the conversation I had with a leader of a major Indian business conglomerate. He said that most of his Western consultants always talked about payback when it came to automation and hence would only recommend manual systems for his factories in India. He mentioned that in almost every case, three years after the consultants left, he would be forced to rip out the manual systems and automate anyway - for the sake of accuracy. Accuracy can be a huge incentive to move towards an automated solution. There is no way a team of humans can compete with a computer or a robot when it comes to accuracy and consistency over a very long period of time. Also, in a country like ours where one needs to convince about 10-15 farmers in order to acquire a plot size of even 50 acres, the lack of availability of land could be a compelling reason to automate. Not just here, but even in Europe, rising land prices are forcing warehouses to go higher up. Warehouses that are 20 m - 30 m high are not uncommon and high bay storage with Automatic Storage and Retrieval Systems (AS/RS) naturally become the only means to operate at such heights. Lack of land availability could be a major reason to go for automation. Another reason when one should automate is when the scale of operations is huge. Consider a process that in itself is least likely to be prone to errors. Neither is there any payback on the automation, nor is there any threat to accuracy. In such a case, if you have a large scale operation where you have to manage more than 100 people under one roof then suddenly, you are not running a warehouse anymore. You are simply managing a “war force”! Once the workforce you have to manage goes beyond 100 people, it is not an easy task to manage them. In some situations it would be better to automate some or all of the processes than try to manage the task manually. Imagine

AS/RS Racks under construction

a sortation activity. You have to sort out 100k cases to 200 locations or pallets in eight hours. You can do this manually, but the number of people involved creates immense congestion and management challenges. Possibly, the feasible option would be to employ a sorter to do the task. Labour laws may also swing the situation towards automation. Again, as in Europe, labour laws make it very difficult to hire or fire people with much flexibility.

Panacea for All Ills? But once you have automation in place, is everything achieved? The biggest oversight with automation is to assume that it will manage itself. Consider the case of automatic sorters. Assume you bought a sorter that had a capacity to sort 20,000 units in an hour. In order to get the automated sorter to perform at its said speed, you need to be able to feed 20,000 units into the system for every hour. In order to do this, you still need to have a workforce that can pick (in batches) and induct 20,000 units in an hour. Automation has a lot of benefits. It is efficient, consistent and accurate. But automation is not the solution for every situation. The primary goal needs to be defined before automating. There are also some processes that cannot be automated. It is no use trying to retrofit automation or even mechanization, for that matter, for such processes. Once automation is installed, a yearly overhaul is mandatory whether the machinery is giving trouble or not. The capacity of automation needs to be thought out very carefully too. It is one thing to be able to add more robotic arms to an AS/RS, but it is almost impossible to increase the capacity of sorters. All of us have our wish lists. Automation in your facility should be a result of a wise choice and not a mere wish list item. The author can be reached at padminimp@theprogressgroup.com. INDIA |

August 2010 | www.logisticsweek.com 29

< Feature

Fresh off the Chain Efficient supply chain design will ensure product freshness, says Nitin Agarwal

ith increasing customer awareness and competition, companies are under great pressure to improve product freshness, especially in the case of food products. Moreover, with an increasing array of products available on the shelf and reduced brand loyalty, freshness is an important differentiator to increase product sales. Freshness for a food product is defined by the time the product

INDIA |

August 2010 | www.logisticsweek.com

takes to reach the retail shelf from the time of production. It comprises of the following: It is critical for companies to design their supply chain in such a manner that fresh products are available on the shelf. Companies need to identify the levers for freshness and have a customized supply chain strategy for different categories of products, depending on the shelf life of various products. And

it is imperative to design the supply chain for freshness right at the product development stage itself.

Product Freshness The entire supply chain design right from production to the manner in which material is supplied to the retailer from the distributor affects product freshness. From the supply chain design it is possible to ascertain the major factors impacting

Factors Impacting Product Freshness

Freshness Build-up Plant Stock Manufacturing batch size safety stock at the plant

Plant

High Producction Low FMFO Batch sizes (esp. for Adherance slow moving SKUs)

High Planning Response Times

High Inventory & Loss of Freshness

Depot in-transit + Depot stock

Transit stock between plant and depots transportation lot size from plant to depot safety stock at the depot

Depot

Long Distribution network Low forecast Accuraqcy Indiscipline in last mile connectivity

+ Distributor

Distribution Stock

Transit stock between depots and distributor billing lot size to the distributor safety stock at the distributor

Retailor

product freshness which remain almost the same across companies and are as follows:

High Production or transportation Batch Size It is common practice in companies to optimize the production batch size and minimize the number of production changeovers to reduce the production cost. Typically, for slow moving SKUs a lot of companies produce monthly requirements in one production run. A production run has a huge impact on pipeline design and freshness of product as the entire production batch adds to the existing pipeline of the product (average of cycle inventory

+ safety inventory). For example, a production batch size of 30 days in addition to the pipeline stock of 40 days would imply that the system stock increases to 70 days. The last CFC in the system will get consumed after 70 days if the sales happen as per the forecast and the norms are properly followed. On the other hand, had the production batch size been 10 days, the freshness would have been limited to 50 days thus resulting in fresher stock and lower obsolescence. The transportation lot size from factory to depot plays a similar role in product freshness. Most of the food processing plants do not have sufficient storage space and hence

stocks are pushed downstream. As a result, companies send a lot of material to depots resulting in unbalanced inventory at the depots and higher pipeline stock and lower product freshness. Thus creating sufficient storage space upstream, preferably at the plant itself, improves inventory deployment and product freshness.

High Planning response time Planning response time here indicates the forecast process frequency and the production planning process which governs the reaction time of the supply chain to market changes. For companies having a monthly frequency for production planning, any changes in market trends are not adjusted within the month, thus resulting in the pipeline build-up on the basis of the original forecast

Impact of Forecasting on Inventory Build-up Inventory depletion for monthly bucket, could result in stock out

Inventory Buildup for monthly bucket

le s

an Pl

ua Ac t

l Sa

le s

Inventory Build up for weekly bucket

l ua

es Sal

INDIA |

le s

Pl a

Inventory depletion for weekly bucket is limited

August 2010 | www.logisticsweek.com

< Feature and hence mal-distribution and high pipeline in most cases. Companies have resorted to frequent forecast correction in addition to weekly production plan revisions, especially for short shelf life products. This really helps to produce as per market requirement and also improves the availability of products where sales have picked up.

Long Distribution Network Typically when business volumes were low, companies started distributing products through a layer of networks including Central Distribution Centres, Regional Distribution Centres and depots resulting in a multi-layered network. Today even

Impact of low forecast accuracy on supply chain

Low Forecast Accuracy Unbalance Inventory

Excess Production

Over Under forecasting forecasting lead to excess leading stock inventory outs and loss of sales

Result in Maldistribution

Low FMFO adherence at various stages in SC

when volumes have increased and probably new manufacturing sites have also been introduced, companies still continue to follow the same networks to distribute their products to the market. As a result, inventory gets blocked at each level in the supply chain and the productsâ&#x20AC;&#x2122; freshness gets adversely affected. Hence it is very critical to have the right distribution network in place. Companies have started de-layering their network and defining proper inventory norms to ensure that the product hits the retail shelf at the earliest. Companies also look at the option of distributing manufacturing, depending on the capital intensive nature of the product and the availability of raw material along with the fiscal benefits provided by state governments. The other possibility, which is gaining momentum in the FMCG sector, is to by-pass distributors only in the case of physical product movements or to convert distributor stock areas as transshipment points for route deliveries, especially in metros, delivering or replenishing stocks directly based on retail demand. Already, companies which have embarked on this initiative have started seeing benefits in terms of increased sales, reduced inventory, reduced obsolescence and the

ability to make changes faster, besides other benefits.

Low Forecast accuracy With more SKUs being introduced every day and customers becoming more demanding, it is really tough to predict what companies should sell. The problem gets aggravated when forecasting estimates happen at the most granular level, as customer behaviour may vary from month on month, but at an overall depot level, the forecasting should be much more accurate. An important business aspect is to look at an opportunity for SKU rationalization which helps the company to focus on high selling brands. Companies also look at having different strategies for fast moving products and slow moving products, as forecasting makes sense only for fast moving products and the slow moving ones can be replenished on the basis of the minimum-maximum levels set for them. Another practice is to forecast at a macro level (all India SKU / depot SKU) to ensure more forecast accuracy and better deployment of stock from plant to depots. Companies should also strive to make the forecasting cycle shorter as it helps to forecast closer to the point of con-

Manual intervention for depot dispatches

FIFO violation at factory

FMFO violation at factory

FIFO non adherence at distributor

Low FMFO Adherence across the supply chain

INDIA |

August 2010 | www.logisticsweek.com

Manual orders to ensure truck load formation

Stock pushing for faster liquidation

Distributor/ sales team anticipating more/less sales vs forecast

Manual intervention for dispatch from depot to distributor

Right order not generated due to historical data inaccuracy

GET YOUR FREE COPY OF WAREHOUSE HANDBOOK Ma y ww 200 9 w.l og-i n

Vo dia l. 2 - N .co o.8 m

INR

:10

0/-

NEW LAU NCH

www.logisticsweek.com

MO 14 TO FR68 ROLA & FR 6000

July 2010

Vol. 3 - No.10

Rs 100

Germany

Bulgaria

w Ha it n h d ca l e r e

Middle East

INDIA

I N D I A ’ S N O .1 L O G I S T I C S M A G A Z I N E

TU R TIM NAR

OU Logi E ND prov stics 20 a ne ider softw w ag Four are enda Soft for has se 2009 t .

(continued from front flap)

warehouse, to storage and material handling, information technology and automation of a warehouse and the grossly neglected area of security. Whether you are in the boardroom or on the warehouse floor, this handbook aims to set you thinking about new concepts in warehousing and the urgent need to incorporate them in your business.

INDIA

Page 34

VITAMIN M 26

BACKING UP 32

FUEL SUPPLY 46

Few realize the role maintenance plays in transporters’ profit margins

How reverse supply chain can make or break a company’s position in the market

Exploring oil-andgas upstream and midstream supplychain biz

The Warehouse handbook In a business environment which is slowing edging towards positivity, The Warehouse Handbook will be a welcome reference tool for the logistics and the supply-chain industry. Also, with the passage of the much-awaited GST in April 2010, warehouses will move several steps up to highly automated Distribution Centres which will impact industry’s bottom-line. The Handbook will thus give a new perspective on the subject and enable industry to streamline its operations and processes. The various chapters of the book have been written by noted specialists in the industry with the sole purpose of removing nebulousness from major aspects of the logistics business. The handbook covers the entire gamut from the present state of the industry, site selection, design and processes of a

reas is a on good to do it.

Presented by

The HyperCity supply-chain team led by Lt Col. Vijay Nair (Retd) is putting up an inspired show >>

24 30 34 42 46

The Warehouse handbook

EYES FRONT

.... .... .... .... .... .... .... .... .... .... .... .... ... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .. .... .... IND .... .... .... ... U .... .... WA STR .. .. .... .... .... A cl TCH Y .... .... .... the ose lo 50 ... .... .... af te autom ok at .... rmar otiv .... .... ket e .. in In dia. RIG HT EX Don PEC unle ’t shakTATIO enou ss th e ha N 3 gh ere nds 8

(continued on back flap)

Gold Sponsor

Published by

Gold Sponsor

The Warehouse handbook

DVV Media Group

Save Money PLUS Get A FREE Warehouse Handbook Subscribe to at a special price Period

Yearly Cost (Rs) You Pay (Rs)

3 yrs

3,600 (36 issues) 3,300

3 years

3600 (36 issue)

2 years 2,400 (242400 (24 issue) 2 yrs issues) 2,500

1 year 1,200 (121200 issue) 1 yr issues)(12 1,600

Effective Save

S You Rs 1,300 + FREE Warehouse Handbook costing Rs1,000 2880

20%

2040

15%

ave

20%

Rs 900 + FREE Warehouse Handbook costing Rs 1,000

1080 Rs 600 + FREE Warehouse10% Handbook costing Rs1,000

 3 years  2 years  1 year

INDIA INDIA

Fill in BLOCK LETTERS

w w w.logisticsweek. com

Name:

Designation:

Company Name:

Industry:

Address: City: Country:

State:

Pin Code:

Telephone:

Fax:

Mobile:

Email:

DD / Chq. No.

Drawn on (Bank): for Rs.

Dated:

in favour of ‘DVV Media India Private Limited’.

Account Transfer: Remittance should be made to: 1. 2. Swift No. : DEUTINBBXXX 3. I Ban No. : DE84500700100953478500 4. Information / proof of transfer with swift message copy should be mailed / faxed to ‘DVV Media India Private Limited’. DVV Pvt. Ltd., 9, Ground Floor, Sona Udyog, Parsi Panchayat Road (Old(Old Nagardas Road), Andheri (East), DVVMedia MediaIndia India Pvt. Ltd., 9, Ground Floor, Sona Udyog, Parsi Panchayat Road, Nagardas Road), Andheri (East), Mumbai Mumbai -- 400 400 069 069 INDIA INDIA Ph:+91-22-2824 0198 / 2837 5323 Fax : +91-22-2836 0143 Email: suhasini@logisticsweek.com mail@dvvmedia.com NDIA

Subscription _A4 LOG.india_2009.indd 1

5/30/2009 11:27:32 AM

g rMi er P aM P w M vav P ewa MiN Ner Por Te NTaiNaPaTN rT Ne PiPa g? gaT y TeroNTai TNaM T Ne Co iSHN ao Po PorTNdliN aTewa Nai C HNaPao Por Po kr rMug aMraal Ha dia g CHeN kriS Muga aMra Ma rT dHaTeri ed iNMiTed PorT T Mar rT dH Po PT M liMiTalS li Ndra a PorgHi PoN u Ndl T di present i you JN ivLOG.India Te rMiN and MLogisticsweek r a o M a C r i a PrCal Te PaTN abg kal Po a TuT toraPerformance Excellence’, a ik iP go Ha PorT a Si Sa‘Roadmap k k arad on Indian Ports. vi Mbai orHandbook T Mu CHi P PorT P ko ldia Ha The handbook looks into all the issues related to the major Indian ports with experts’ views of a roadmap to possible solutions for ports infrastructure and performance excellence. The main topics to be covered will be:

Por t

a OOK i d n I s o f NDB HA

war

g n i s u eho

• Need for Mechanization at Indian ports • Draft Constraints (which hinder entry of large vessels to most major ports) • The Policy Conundrum • Regulatory Issues (The TAMP Factor) • Labor Management at Ports • PPP: Challenges and Opportunities • Major and Non-Major ports: Lessons to be Learned • Epilogue

n! DBOOK o o S g HAN Comin

our Y k o o B w! o N y p Co

Book your copy NOW and avail of the early bird discount Email: suhasini@logisticsweek.com To advertise:

West: Ashok Thakur ashok@logisticsweek.com’ Dinesh Mishra dinesh@logisticsweek.com

INdIa

We Transport Information www.logisticsweek.com

sumption and reduced inventory in cases of over-forecasting and better availability of products in case of underforecasting (often resulting in increased sales)

Low FMFO Adherence Non-adherence of FMFO (first manufactured first out) at any level in the supply chain results in accumulation of older stock at respective nodes. The accumulated stock at various nodes is either sent to the lower node for liquidation, hence impacting product freshness or finally is declared as obsolete stock and then damaged as per company policy. Inventory management at batch level is of the utmost importance at the depot and the distributor, as products with shorter shelf life are sensitive to product freshness for their sales and customer perception.

Indiscipline in Last Mile Connectivity Last mile connectivity refers to the movement of products from the depot to the distributor and then from the distributor to the retailer. Typically companies have a fixed schedule to service distributors. Most companies work on the continuous replenishment concept, supplying distributors as per the forecast and inventory norms. Companies resort to a lot of manual intervention in replenishing distributors due to a lot of reasons like irregular supplies from factories, credit availability, forecast correction, etc. Manual intervention consumes considerable amount of time of the sales team and also corrupts data history thus making it difficult for the system to operate efficiently. The actual order from the retailers is not captured in most cases as the sales person takes orders only for SKUs which are in stock at the distributor. With time, such SKUs are phased out from the system and hence no forecast is generated with no supplies from the factory, thus resulting in lost sales. Proper order capturing and servicing of demands from the depots is critical to ensure availability of product. For low selling products, one primary pack itself is two-three months of requirement for the distributor. Since companies follow the policy of billing in primary packs, the distributors end up blocking high working capital in low selling SKUs which also impacts product freshness for such SKUs. Companies either need to look at redesigning the pack size for such SKUs or do bulk break at the depots and unit billing with regard to distributors. Thus it is of the utmost importance to diagnose the problems which are adversely impacting product freshness for the respective company and then have a plan in place to address the same. All the issues need to be addressed collectively to have the desired product freshness and give quality to the final customer. The author is Market Segment Leader, FMCG, Miebach Consulting. He can be reached at nitinagarwal@miebach.com.

Industrial sectional doors with dock levellers and dock shelters

Everything from a Single Source: Logistics Solutions from Hรถrmann Intelligent solutions are called for wherever smooth work processes are needed. With Hรถrmann, you can find everything you need from a single source: dock levellers, dock shelters, loading houses and industrial doors. All are perfectly adapted to each other, providing you with the right system for any situation. Flexible high-speed doors with SoftEdge crash protection

Doors for Home and Industry

More Information:

www.hormann.in | | INDIA

August 2010 www.logisticsweek.com 35

call 1-800-102-DOOR โ ข info@hormann.in

< Cover Story

Pull 'N Drive 36

INDIA |

August 2010 | www.logisticsweek.com

dell India's supply-chain team led by General Manager MR Sundaresan is empowering the giant PC maker's intense market drive. By Aanand Pandey INDIA |

August 2010 | www.logisticsweek.com

< Cover Story

his little anecdote could gladden the hearts of India’s economic planners, no matter how briefly. Towards the end of our threehour drive from Chennai to Dell India’s sprawling, lush green 50-acre Sriperumbudur manufacturing site – nestled quietly between factories of giant MNCs of the likes of Samsung and Nokia , we lost our way. And just when we were a couple of wrong turns away from giving up, our cellphones having lost all contact with the mechanized world , we got help from unexpected quarters. A local woman laborer at a roadside shanty, having overheard ‘Dell’ from our frantic requests to passersby, signaled to us that we’ve strayed miles from the facility. And her eyes lit up as she gave us the exact location, right down to the last turn, in allegretto Tamil. The reasons behind the old woman’s heartwarming smile could be many (one of which could be Dell’s sustainability initiative. More about that later), but the fact is that Dell is increasingly being heard and seen at new places. And reclaiming some. Recently, International Data Corporation (IDC) reported that Dell, with a strong 19.1 percent growth, has reclaimed the second spot from Acer in the second quarter of 2010 (2Q2010). Buoyed with strong growth in Asia Pacific and Latin America, Dell seems to be closing in on the market leader HP as well. Dell grew 19 percent in overall unit-shipments year-on-year (2Q092Q10) compared to the 12.3 percent. Incidentally, HP dislodged Dell from the number one spot in 2006. Speaking of new places, Dell Inc.’s computers are being seen of late at prominent retail stores worldwide. Starting 2007, Dell began showcasing products at prominent retail outlets such as Wal-Mart, Britain’s Tesco stores and China’s Gomes stores – its Indian subsidiary followed suit two years ago with placements at Croma

INDIA |

August 2010 | www.logisticsweek.com

and eZones stores, etc. Also, Dell India has been fast shoring up its exclusive retail presence. Dell’s website shows a total of 37 exclusive stores in the metros and the Tier1 and Tier2 cities in India. The $53-billion computer maker’s fresh retail entrée owes its origins to CEO Michael Dell’s customeroutreach strategy, something he has been working on ever since he retook the charge in January 2007. Onlookers attribute Dell’s seemingly imminent turnaround to its sharpened customer focus, and the fact that the strategy is supported amply by one of its mainstays – Dell’s fabled supply-chain efficiency. This year, Dell figured among the top five in the AMR Supply Chain Top 25 global rankings, with the report noting that “Dell remains a highly respected supply chain player”. Unsurprisingly, Dell’s smooth scale-up in India, for a good part, can be traced back to its carefully built local supply-chain capabilities. Leading the India supply-chain team is Dell India General Manager MR Sundaresan, who has been with the company for the last five years – with more than three years at the helm of manufacturing and delivery operations. It could be happy coincidence, but much in line with Michael Dell’s strategy, Sundaresan comes with a strong grounding in supply-chain from the consumer-goods side – an industry that breathes market orientation. Prior to Dell, Sundaresan headed supply-chain for Whirlpool in India. Then, Sundaresan is ex-HUL (now Unilever) – an exalted club that could be the consumer-goods equivalent of Freemasonry.

Supply-Chain Ops Dell India’s Sriperumbudur plant began commercial production on July 30, 2007. At the time of opening, according to media reports, the plant had a capacity of 4 lakh units.

MR Sundaresan, General Manager, Dell India

Globally, we have realized that a lot of consumers want to touch and feel a product before they buy it, more so in the emerging markets like India

According to the company, the current capacity of the plant is 10 lakh units per annum. “This (Sriperumbudur) facility predominantly fulfills the India demand. We also have started exporting products from this place to parts of Middle East,” says Sundaresan. A high proportion of production comprises made-to-order products. The plant sources components from all parts of the world, and completes the units – desktops, laptops and servers, among others – as per the customer orders. Expectedly, the direct sales model gives Dell’s supplychain the much-celebrated edge. “The made-to-order model gives us the benefit of knowing what exactly the customer wants. We would be the first to understand what the changes in the market are – we are the fastest to have our products reach our customers,” Sundaresan says. “Additionally, as we continue to build a robust channel ecosystem, we have successfully extended many of the benefits of our customized model to our channel partners, helping their profitability and offering them a unique advantage.” All the components from suppliers are stored as Vendor-Managed Inventory (VMI) in the Supplier Logistics Center (SLC) facility, which is situated close to the main Sriperumbudur plant and is managed by the Singaporeheadquartered 3PL, the YCH Group. As the Dell manufacturing team receives the customer order, it accordingly pulls the specified inventory from the SLC. The title of the material is transferred to Dell only the material is pulled from the SLC. “Inside the factory we don’t have more than four hours of raw materials inventory at any point in time,” Sundaresan says. The manufacturing team then assembles the hardware, loads the software as per the customer requirement, tests it, and ships it. “We have logistics service providers (LSPs) who then pick up the goods from here and take them to the customer location,” he adds. INDIA |

August 2010 | www.logisticsweek.com 39

< Cover Story 3PL Deliverables

Inside the factory we don’t have more than four hours of raw materials inventory at any point in time

INDIA |

August 2010 | www.logisticsweek.com

YCH and DHL are Dell’s two logistics service providers in the country. YCH manages the SLC that houses all the raw material as VMI from the supplier. Based on the kit pull orders, YCH supplies the material just-in-time directly to the line. YCH India CEO Balaji V informed Log.India, “We have a state-of-theart, TAPA ‘A’ security and LEED certified green facility of over 250,000 sq ft of built up area, where we operate VMI with a process we terms as Intribution.” YCH also provides seamless visibility to Dell and its suppliers by providing them real time Inventory visibility and inventory reports. YCH’s last-mile delivery capability created for Dell is termed as Intrabution. YCH has dedicated teams managing Dell deliveries both in terms of physical delivery and in terms of managing information pre- and post-delivery operations. “The mechanism deployed ensures total visibility to both customers and to our operations through its complete delivery cycle,” said Balaji. On its part, DHL provides 3PL services to Dell India at various levels. The DHL Global Forwarding (DGF) provides service to Dell India in the area of imports, exports and customs clearance for the latter’s air and ocean freight shipments. DGF freights the raw materials from various Dell vendors to the Sriperumbudur plant. The finished desktops are exported by DGF to their hub in Middle East markets by ocean freight. “DHL Supply Chain (DSC) provides customized warehouse management services to Dell India, supported by IT infrastructure for inventory management,” said Jyoti Row Kavi, Director - Corporate Communications & Sustainability, DHL Lemuir Logistics. DSC also provides transportation services for last mile delivery. As the domestic arm of DHL, Blue Dart handles the local distribution (within India) for Dell.

Blue Dart makes last mile distribution for Dell that includes deliveries to individual customers (B2C). According to Ketan Kulkarni, Vice President and Head – Marketing, Corporate Communications and Sustainability, Blue Dart Express, this particular service is unique to Dell in India which meets the latter’s specific requirements, one of which is prealerting the consumers before delivery allowing for his convenience. Both YCH and DHL provide services to Dell for reverse logistics as well.

technology Providers Globally, Dell’s direct and real-time connect with customers and seamless collaboration with suppliers give the company an edge in meeting customer demand while keeping the inventory low. And much of this capability hinges on information technology. Dell has a large IT development team that creates the webenabled collaborative environment. For speciﬁc supply-chain functions, Dell use a large number of IT tools off the shelf. “However, most of the integration work we do within the company. Al the tools are fairly webenabled, easily integrated with the suppliers’ side,” says Sundaresan. Dell India declined to give the names of specific IT tools, but globally, the company has been using i2 SCM solutions that integrate forecasting, planning and execution with visibility across the supply-chain, according to industry white papers. Oracle’s database solutions and business suites also form a key part of Dell’s IT infrastructure as per the reports. Dell India uses Radio-Frequency Identification Technology, but within the factory operations to keep track of products, informs Sundaresan.

Demand and Fulfillment A Businessweek article published last year described how Michael Dell, in order to give top managers better

A Two Day Workshop on

Business Forecasting & Demand Planning Anchored by Dr. Vaidy Jayaraman, University of Miami

Dr. Rakesh Singh,

Chairman ISCM & Director, Durgadevi Saraf Institute of Management Studies

Workshop Structure: The workshop will involve class room presentations, group activity, caselet analysis and computer based modeling. Key takeaway:

Introduction to Forecasting &

Inventory Management

Performance Improvement Tools,

Techniques and Strategies Setting Goals and Executing Strategy & Application to Contemporary Issues Why do we need Forecasting & Inventory - Importance and

Relevance to India

Forecasting models including Time

Series Model, Cause and Effect Models, Judgment / Qualitative Models, How to pick and choose a Forecasting method Aligning Supply with Demand, Managing key stakeholders along the supply chain, Internal Customer relationship and performance management Introduction to Forecasting, Forecasting Process, Consensus Forecasting, Collaborative Planning

Forecasting and Replenishment (CPFR) Inventory Management, Independent Demand, Dependent Demand, Inventory Systems, Key differences between Push vs Pull supply chain planning This workshop is for middle level executives in the following functions: Sales Marketing Finance Operations Logistics

Date: 2nd -3rd September 2010 Venue: Learning Center, Kirandevi Saraf Institute of Complete Learning, SV Road, Malad West, Mumbai Fees: Rs. 12500/- per candidate. Fee is inclusive of study material, lunch and tea/coffee.

About ISCM: Institute of Supply Chain Management (ISCM) established in the year 2009 in collaboration with Kirandevi Saraf Institute is based at Malad, Mumbai. SCM is one of the leading institutes in the area of Supply Chain Management in India. It offers full time and part-time post graduate programs and also specialized management development programs in the area of supply chain and business forecasting. The programs offered by ISCM are highly respected and recognized in corporate sector.

Institute of Supply Chain Management

Kiran Devi Institute of Learning, Ghanshyamdas Saraf College, S.V. Road, Malad (West), Mumbai - 400 064. Tel: 9004269801, 9821111672 Email: info@iscmindia.com Website: www.iscmindia.com

< Cover Story client-response flexibility, decided to restructure the business in 2007 into four customer groupings: consumers, corporations, small and midsize businesses (SMB), and governments and educational buyers. The model has remained the same in India. And it seems to be working. According to industry reports, Dell India’s recent success can be attributed to its strong recent performance in the consumer, SMB and education segments. Early this year, when Dell India crossed the $1billion-revenue mark, sector observers credited company’s success to its multi-channel strategy that has allowed the company to reach newer markets and customers. For one, the retail strategy seems to be paying dividends. “Globally, we have realized that a lot of consumers want to touch and feel a product before they buy it, more so in the emerging markets like India,” Sundaresan says. “In India we are in the retail space for the last two years. We are available in all kinds of retail formats. We have presence in all the top markets – Tiers 1, 2 and 3 cities through the IT retail channel. We also have kiosks at a number of retail outlets where consumers can place the order online.” The consumer can also pick a Dell product off the shelf at these points but there he will get only a fixed configuration. As for Dell’s forte – Internet sales – the company has been whipping up demand through constant messaging through B2C media. Result: Expected, rapid increase in demand. So how is Dell India able to forecast and manage demand? For the channel route, Sundaresan says, “We talk regularly to our customers – directly, online and through our partners. This offers us tremendous insights as well as data to figure out the demand patterns for direct as well as indirect sales.” By media accounts, channel partners contribute 22 percent to Dell’s global revenue. The company

INDIA |

August 2010 | www.logisticsweek.com

has 4,000 partners in the APJ (Asia Pacific Japan) region. Dell’s build-to-order route, on the other hand, gives it a lead over others when it comes to demand forecasting. The advantage is two-fold. “One is, we are able to see market changes quickly and prepare our supply-chain accordingly – for example, I can go and prepare my LCD vendors, seeing a surge in LCD demand. For example. I am able to ready my supply chain the quickest and secure the changes in the marketplace,” Sundaresan says. The other advantage is that Dell is able to shape demand based on its knowledge of its inventory. “Our direct relationship with the customer helps us in responding to inventory surplus issues, where we are able to offer such inventory with better pricing or with a faster delivery time,” he says. Dell manages its supplier relationships globally, since most of them are vey large companies. Accordingly, Dell’s regional arms convert the demand forecast to a supplier forecast, based on the respective production plans. The forecast is shared seamlessly through the Internet with its global suppliers. Dell’s suppliers are responsible for ensuring that they maintain a pre-defined level of inventory. “Once we pull the material for production, they replenish it. We segregate the contracting in commerce versus transaction and data – transaction and fulfillment is managed both at the regional level and the local level,” he says. Ergo, the Bullwhip effect is the least in Dell’s case.

Cost Optimization Dell India ships millions of products in a year, and errors, no matter how marginal, could add to the cost. To reduce errors, the local supply-chain team has made an innovative use of low-cost automation – all the products being shipped out of the facility have barcode scanners that have the order

DHL Supply Chain (DSC) provides customized warehouse management services to Dell India, supported by IT infrastructure for inventory management” — Jyoti Row Kavi, Director - Corporate Communications & Sustainability, DHL Lemuir Logistics

numbers as well as the customer details. “When we send the products out of the factory, we scan them and give the scanned info to our LSPs. These scanners are integrated with the ERP,” Sundaresan says. “At every part of the supply chain, we expect the LSPs to have track and trace. So the customer is aware at any point where his product is.” Over the last few years, Dell India has moved to control costs on several fronts. For the inbound supply-chain, the team has progressively moved from air to sea. For a majority of industry players, it was the recent recession that prompted this shift. The Dell India team, however, had long been on it, beginning much before the recession. This has also helped the team forecast better since ocean lead times are much more. The supply-chain team also uti-

< Cover Story from Dell. This strategy has resulted in huge cost savings over time. Fourthly, Dell India has localized a lot of materials that it had to import -- packaging material, user manuals, for instance, are made locally now, informs Sundaresan.

The Next Big Thing

DHL Supply Chain (DSC) provides customized warehouse management services to Dell India, supported by IT infrastructure for inventory management” — Balaji V CEO, YCH India

lized the scaling up of India business to reduce the warehousing costs for all the nodes. “With more scale, we could negotiate much better with the LSPs,” Sundaresan says. Within the manufacturing facility, the team has been able to harness the benefits of scale in better utilizing its fixed costs. When the Sriperumbudur facility commenced three years ago, it ran single-shift operations as it was enough to meet the entire India demand. Today, the facility is running two production shifts, thus improving asset-utilization metrics. The third area is that of outbound logistics. In order to meet customer expectations, Dell India was doing air deliveries as well as surface deliveries. Over a period of time, it has been able to do reduce the number of air deliveries and increase the number of surface deliveries – committing the latter to tighter delivery times to meet the high expectations a customer has

INDIA |

August 2010 | www.logisticsweek.com

Dell India’s next big strategic push on the manufacturing front would be to attract big suppliers so the latter set up bases in India. Among other things, its fruition would depend on how Dell grows its India demand and is able to scale up its operations in India but will have to be led by the government policies that will shape the PC industry and drive deeper, larger growth in the country. Sundaresan gives Malaysia as an example, where Dell started small, only to grow tenfold and attract a host of its suppliers to the country. In India, Dell is working with the government in this area. “The government is an important partner in this endeavor of ours. Dell along with the Manufacturers’ Association for Information Technology (MAIT) is involved in discussion with the government in that how do we collaboratively convince suppliers in China, Malaysia, Taiwan to say to set up the supplier base here,” he says. Evidently, Dell India’s business is on a fast uptick but for suppliers to set up base in India, there are bigger issues at play that are out of Dell India’s purview. Sundaresan cites logistics cost, transaction costs and infrastructure as the three big challenges in the way. “The transaction cost is still high in terms of paperwork because of low level of automation. The government also needs to make the business environment more conducive in comparison with other countries,” he says.

Reducing E-Waste Along with Nokia, Dell reportedly leads the efforts made by global

electronic goods producers to reduce e-waste, particularly in the developing world. “We partner with companies at the global level – who have a proven track record of managing e-waste,” Sundaresan informs us. Dell’s e-waste program is divided into two parts –consumer and commercial. For the first part, Dell offer a free pickup to its customers. The commercial part is the when where Dell offers it at a fee for non-Dell PCs as well. On the consumer front, not only does Dell offer free recycling to its consumers, but it also launched the Dell GoGreen campaign that incentivizes consumers that opt for recycling through discounts on future Dell purchases.

Not All for Profit Unbeknown to many, Dell was the first computer maker that announced – and implemented ahead of schedule in August 2008 – its plan of going carbon neutral through a series of initiatives to reduce energy consumption and reduce carbon emission. On the social-responsibility front, Dell is working towards imparting education to the youth through a program called Dell YouthConnect. It is working with the about nine different NGO’s in the country to prepare a generation of young people across the country (and globe) to connect to a more promising tomorrow by bridging the technology gap and unleashing their potential through various educational initiatives. Worldwide, Dell is known to lead the global companies (according to a Technology Business Research 2009 report on CSR) in renewable energy use as well as its integration of sustainability with local businesses – that should mean many more cheerful villagers pointing in Dell’s direction, we hope.

< feature

Despite the hike in prices of petrol and petroleum products, industryâ&#x20AC;&#x2122;s newly increased freight rates are unjustified argues Vishwas Udgirkar

INDIA |

August 2010 | www.logisticsweek.com

hen the government decontrolled the price of petrol on June 25th 2010 and simultaneously proposed a partial decontrol of diesel by making it costlier by Rs 2 per litre, the Indian Foundation of Transport Research and Training (IFTRT) rightly suggested that freight rates and truck rentals should rise by almost five percent in keeping with the newly legislated rates. But industry and its apex body, All India Motor Transport Congress (AIMTC), insisted that freight rates should rise by ten percent to 15 percent. Thereafter, freight rates did increase and settle at wholly unjustified rates, above five percent. These price increases are not sustainable in the long-term and not in the best long-term interests of the economy or industry. The share of road transport has risen (by 2009-10) from 20 percent of passenger traffic and 11 percent of freight traffic in the 1950s to 80 percent and 60 percent, respectively. Road transport is an important segment in the Indian transport sector, with a 4.5 per cent share of the GDP in 2005-06. During the fi rst five years of this decade, the annual average growth in the road transport sector was at 9.5 percent compared to that of the national GDP at 6.5 percent.

Salient features A sustained CAGR of around 11 percent is the most salient feature of the Indian transport sector. The Indian four-wheeler vehicle fleet has been dominated by personal vehicles and the share of goods vehicles has come down sharply from over 25 percent in 1951 to around five percent in 2004. This shows a decreased sufficiency of public transport as well as the need for an enabling framework to build up large scale goods transport enterprises from public and private players. The Indian 3PL services market

(which is a fraction of the total logistics market in India) is negligible when compared to the 50 percent slice of the market the same services have in developed countries. The sector has not been able to attract enough FDI as well. The investment in transport infrastructure has been around seven per cent, whereas that in all transport and logistics services (1.9 percent logistics and trading, 0.65 percent sea transport, 0.20 percent air transport) has been quite low.

Market regulation The main concerns of foreign players are the market structure and regulation. The Indian road transport and logistics market is highly fragmented and unorganized. The private sector which comprises individual operators has a dominating presence in the ﬁeld of road transportation. Their share in public transport is over 70 percent and in goods transport is nearly 100 percent. The rest of the public, in the main the commuters who avail the services of around 70 nationalized passenger transport bodies formed under Road Transport Corporation Act 1950, are likely to be shielded from erratic price hikes. From the FDI perspective, there are numerous regulatory stipulations on several

kinds of investments in this sector. The absence of healthy competition, adequate investments, policy incentives, and the proﬁteering tendencies of the players are subjecting the transport service consumers to such unjustiﬁed hikes. As such the transport and logistics costs (excluding transport infrastructure) in India are 13 percent of the GDP, as against around 7 percent in developed countries, which itself shows the level of productivity, efficiency, competence, and competition in the Indian logistics sector. Looking at the weight of fuel cost in operating costs (at around 60 percent), then the weight of operating costs in truck rentals and lastly, the weight of truck rentals in the total transport cost, a hike of around 4 percent-5percent was justifiable on this occasion.

Hike Impacts economy The disproportionate hike has impacted the general economy in various ways such as reduced economic activity, increase in the prices of goods (over and above the change in fuel cost), higher inﬂation, etc. For the transport and logistics industry, the increase in price would mean contraction in demand, substitution of service, entry of new players (especially logistics MNCs) in a major

Road Freight Index RFI (2003-2007) 170 160 150 140 130 120 110 FY 2003

FY 2004

FY 2005

INDIA |

FY 2006

FY 2007

August 2010 | www.logisticsweek.com

< feature way with competitive and qualitative service options, resorting to provisions of competition and consumer protection regulations by users, increased tendency to use in-house transport, bidding for transport contracts, supply chain optimization efforts resulting in less business for transporters, etc. If at some stage logistics becomes very critical in deciding the competitiveness of a product, the small and medium manufacturers (the lobby hit hardest by this hike) will come up with an innovative solution such as cooperative transport. What encourages this think-

routes. TCIL computes Road Freight Index (RFI) as weighted average freight rates compiled across various routes. The RFI graph here shows the steep increase in freights in the last few years.

radical Changes However, these developments have not gone unnoticed by the government. The proposed National Road Transport Policy by the Thangraj Committee suggests radical changes in the transport sector, including pricing of transport services. It recommends constitution of a Road Transport Regulator which

Under-recoveries of Oil PSUs

anomalies in Oil Sector

Rs Thousand crore

40 30 20 10 0 FY 2004

FY 2005 MS

FY 2006

LPG

FY 2007

Kerosene

ing is the fact that historically, be it a fuel price rise (such as the one in April 2008), tyre price rise, toll road commissioning, a seasonal peak of transport demand, or something that results in cost/ compliance or risk to the transport industry, the freight hikes have been more than reasonable. The very nature of the Indian market makes it difficult to compute and maintain the freight indices, let alone predicting the future freight rate. The Transport Corporation of India Limited computes the Indian road freight index (IRFI) on select

INDIA |

pen daily, weekly, etc. the decontrol notification says that further increases will be made in consultation with the government, with an additional provision for the government to intervene when prices are volatile and high. This implies that the private sector again will not be very sure of a level playing field in selling products. The government OMCs will be protected by budgetary or off-budget support and the private companies will have to close their operations, as in the past, when prices swell. This will harm the entry and healthy competition from private companies.

August 2010 | www.logisticsweek.com

FY 2008

FY 2009

HSD

will be empowered to fix price bands for different kinds of transport services. The promulgation of such regulation may not be on the priority agenda of the government now, but repeated disproportionate hikes by transporters may precipitate such regulation. The petroleum product pricing regime in India is undergoing gradual reforms and the road transport industry must react to them cautiously and not hastily. The day when diesel prices will be free market prices is quite far away. Though internationally price revisions hap-

There are several anomalies in the Indian oil sector. The cost prices computed by the OMCs are materially inf lated. Whereas only 70 percent of the crude volume is actually imported, an assumption of 100 percent of products at higher custom duties is made. There are several notional price build-up factors. Additionally, when one takes into account factors such as redundant retail infrastructure, cross-subsidies amongst products and complete absence of eff icient private competition, these prices turn out to be even higher. (Remember that during the recent crude oil price spike, when OMCs started computing underrecoveries from $55 per bbl, RIL closed operations when the price shot over $90 per bbl when loss minimization could not work. Under-recoveries are not accounting losses or cash losses but they are losses with respect to these notional price build-ups and hence provide a good cushion to OMCs). With a level playing field being provided, there will be enough competition in the oil sector and the transporters will be expected to show ďŹ&#x201A;exibility in changing the

Asia's leading and industry recognized manufacturers-focused supply chain and logistics event Platinum sponsors:

Silver sponsors:

12 - 15 October 2010, Marina Bay Sands, Singapore With forward looking strategies and innovations, SCM Logistics World 2010 is your answer to a supply chain that is transparent, cost effective and customer driven. Over the span of four days, senior supply chain and logistics professionals across Retail and CPG, High Tech, Chemical, Oil & Gas, Industrial and Heavy Machinery, vendors and solution providers will gather at one dedicated platform to discuss on current and future industry challenges, trends and innovations.

Our speakers include:

James Keegan Vice President of Supply Chain & Logistics Asia Pacific Schneider-Electric

Rachel Ougier Simonin Vice President of Global Logistics Alcatel-Lucent France

Patrick Bian Global Logistics Director Cabot Corporation America

Kalpesh Pathak Vice President of Supply Chain Management Fiat India

Greg Sullivan Vice President of Supply Chain, South East Asia and Australasia Unilever Singapore

Frederic Fontaine Director Organization Systems Supply Chain Carrefour

Johnson Zhang Associate Product Supply Director Procter and Gamble

Shashank Raodeo General Manager, Logistics and Supply Chain Management Mahindra Renault

N.V Chandramoulin Head of Demand & Supply Chain AMEA DSM

Networking business lunch sponsor:

Awards sponsor:

Exhibitor:

Supported by:

Held in:

Held in conjunction with:

Offical Newspaper:

Hear them share about: • Using supply chain as a strategic ‘weapon’ to drive value, top line revenue, branding, sustainability and improve company’s liquidity • How transport management technology enhances performance level • Using technology and collaboration with transport carriers to gain efficiency, productivity and competitive advantage • Analyzing the role of business intelligence investment in uncovering opportunities to stay ahead of competitors

Be a part of this exciting program, BOOK NOW! Main umbrella event:

Co-located conferences:

Official media partner: Chemical, Oil and Gas

Organised by:

SCM ad 206x270 Logistics week.indd 1

Retail and CPG

High Tech

Industrial & Heavy Manufacturing

Contact Candy Tan at +65 6322 2770 or email candy.tan@terrapinn.com www.terrapinn.com/2010/scmlog 7/29/10 11:21:27 AM

< feature service charges in both directions with uniform discipline. Another issue in oil sector reforms is the high level of disparity in the price of petrol and diesel. Internationally diesel is sold at the same (actually a little more, if we speak about most of the developed countries) prices. In the event of total decontrol of diesel prices, (which is currently around 20-25 percent cheaper than totally decontrolled or levelly priced petrol all over the country), the impact on transport

It is unreasonable to expect that the government should perpetually bear losses, especially when prices remain at higher levels for a sustained amount of time costs will be very severe even if we assume that the transport industry reacts reasonably. Diesel price reform is a complex issue and will require the government’s best experience in managing such reforms. But the transport and logistics industry must start embracing the practices followed internationally so that they can work in the petrol-diesel price parity arena. Globally, the supplies of petroleum will be not able to keep pace with its demand due to rapid economic growth, especially in emerging markets like China and India. Hitherto range bound prices of crude observed for over a century are now showing a more than usual steep northward trend. The movement of the average monthly price of an Indian basket of crude oil in the world market from US$ 36 per barrel in May 2004 to US$133 per barrel in

INDIA |

August 2010 | www.logisticsweek.com

July 2008, (now hovering around US $ 70 per barrel), is a clear indication of the same.

Unreasonable Expectations India, which has 75 percent dependence on imported crude, bears a huge brunt of this price rise. The Indian government is expected to protect consumers from “sudden oil price shocks”. However, it is unreasonable to expect that the government should perpetually bear losses, especially when prices remain at higher levels for a sustained amount of time. The magnitude of petroleum subsidies at the prevalent crude prices will seriously jeopardize the other developmental objectives of the government. The petroleum product price (and market) reforms were long overdue in India and suffered due to an absence of political will. The government has shown considerable courage in acting on these issues and it is a welcome step in the right direction. Globally oil regimes can be divided into oil-taxing and oil-subsidizing regimes. India is an oiltaxing regime. Oil related taxes and duties at central and state levels, extra levies for the transport sector’s development, dividends from oil PSUs and profit sharing in upstream segments constitute a major share of government revenues. The dependence of the government on oil sector revenues cannot be altered, at least in the foreseeable future. If this macro-economic premise is a given, then the government is bound to work towards reforms in transport service pricing, especially when it makes a case of profiteering.

The Future What are we going to see in the future? Crude oil prices are determined by international equations of demand and supply, while oil sector taxation is dictated by larg-

er macro-economic constraints. To safeguard the interests of consumers of the transport service which constitutes the overriding objective of the government, it will look at opportunities in controlling the domestic transport industry. Come another crude oil price spike (or plateau), followed by another hyper reaction by the transport industry and it may mark the beginning of the transport service price control regime. Transport price regulation will not be an easy ball game. Looking for non-price regulatory measures, selection of the services to be brought under the scope of such price regulations, deciding the cost and profit structure of several types of players and the routes on which the controls will be applicable, the services on which the prices will be controlled, the price bands, the periodicity of their revision etc., will remain key issues. Another important issue will be the enforcement of these regulations, as the transport deals take place directly between two private parties and monitoring the compliance of the regulation will be difficult. Across the world, public transport (other than air transport in most cases), is well within the ambit of price regulation as it is mostly public owned. The experiment of price control in the transport service may be attempted in India, but will not achieve its objectives for several reasons. On one hand, the government should tinker with its oil revenue philosophy and on the other hand, it should undertake measures to discipline the transport industry especially through inducing higher competition and enabling the creation of mega-players who guide the market course. The author is the Executive Director, Transport & Logistics, at PricewaterhouseCoopers. He can be reached at vishwas.udgirkar@ in.pwc.com

16th & 17th September 2010, Hotel Sahara Star, Mumbai. You should attend this event if you are: Internal auditor, audit manager, Financial controller, accountant, Head of corporate governance, Chief Vigilance Officer, Vigilance Head, CFO, VP Finance, CEO & MD Head of Supply Chain, Head of Purchasing & Procurement, Buyer, Merchandiser, Fraud investigator Legal & compliance manager, Company Director, Risk Management & Regulatory Manager To avoid being disappointed later on

With an exciting and overwhelming response we have very limited positions available for the event.

Is your supply chain and procurement fraud free? Still thinking and your thoughts are maybe and not sure then read on…. Supply chain operations and procurement functions are very susceptible to fraud due to their nature made more complex in today’s global environment. Organizations can be victims of fraudulent activities – including theft and product substitution – at every step in its supply chain both internally and externally and through internal-external collusions. The failure to detect and reduce fraud at the source can lead to large financial losses as the fraud manifests itself through the supply chain and results in consumer injury and death. Good governance demands a thorough risk analysis, which includes an organization’s susceptibility to fraud. Supply chain fraud detection and reduction requires a new examination of an organization’s activities beyond starting at the end: the financial statements. Minor fraudulent activity can turn into a larger one leading to a hard impact, as the fraudster gains more confidence with increasing nondetection. Join this knowledge forum to gain new insights into supply chain fraud and learn achievable detection and reduction methodologies.

Confirm your seats TODAY Leading experts will share with you - the nature and eventuality of fraudulent activities that can happen in your supply chain, procurement and best practices and strategy for prevention, detection and investigation Norman Katz President, Katzscan, Inc

Richard Dailly Managing Director, Kroll (India)

Conceptualized & Organized By

Sukumar Narasimhan Sr. VP-SCM Reliance Industries Limited

Kanwal Mookhey

Rohit Mahajan Executive Director, KPMG

Jayant Dwivedy CEO, Empronc Solutions

Pncpl Consultant & Founder,

Network Intelligence

For Registration: Email: - k.raichand@ronevancia.com Cell :- +91 93 2004 2227 Phone:- +91 22 2855 2007 Fax :- +91 22 2811 6776

Dipak Ghose Managing Consultant, Deloitte

Sreedhar K VP-SCM & Finance, VKL

Arif Siddiqui

Vinit Bhansali Co-Founder, Copper Spiral RFID

Coign Consulting

Silver Partner for this Forum

Media Partners For this Forum

< Feature

Project logistics

Moving Mountains

The logistics of ultra-sized cargo still remains the speciality of a select few. Frewin Francis sheds light on some of the challenges

INDIA |

August 2010 | www.logisticsweek.com

INDIA |

August 2010 | www.logisticsweek.com 53

< Feature

ning with 120 wheels underneath and being pulled by a combined power equal to about 1,200 horsepower! The huge cargo was an instance of project logistics or project cargo-forwarding. The cargo handled in such projects is usually oversized, fragile, of high value and requires specialized lifting, handling and transportation equipment. Here, every assignment requires a different combination and poses a new challenge.

Special Expertise The cargo to be handled in such projects requires special equipment and expertise, different from the rest of the logistics and freight-forwarding industry, where the containers, cranes, trailers and lifting equipment etc. have been standardized. Hence project cargo is considered a niche area into which only formidable players with experience venture. Since its challenging and uniquely rewarding, it has immense scope in the country especially today, when infrastructure and core industries are beginning to boom.

At the outset, the aspirants must prepare themselves for some of the challenges that project cargo entails. Depending on the final location, for example, project-cargo assignments involve many challenges, some of which include overcoming harsh climatic conditions. In some cases, the military, armed personnel and security teams accompany the cargo as it moves through remote or hostile areas. In other instances, the topography itself presents obstacles to the transportation of goods and equipment. For example, a river might have to be dredged prior to a heavy shipment via a barge. A step-by-step planning of cargo movement is required. That would involve, identifying and calculating the risk of critical components. It also includes careful identification of the right handling equipment and the right selection of highly trained and experienced manpower. The handling of project cargo is done by a variety of equipment. The lifting of such cargo is done by heavy lift cranes such as board cranes. The cargo can be carried by air with the help of airlifters like the Boeing C-17 and the Antonov AN 124. By road, specially designed multi-axle trailers with one prime mover, or in some cases, multiple prime movers or flatbed trucks are employed and by water, heavy lift ships, tug or barges are used. In India, the cargo is often lifted off a ship or from a cargo aircraft onto multi-axle trailers, from where it is transported by land and at times moved through inland waterways using self-propelled barges or a combination of barges and tugs.

Source: Panalpina

ot so long ago, a friend, now the logistics manager of a reputed Indian MNC, then a gawky student at a German university, had his first brush with the enormity of project logistics. During a pleasant drive through the German countryside on a balmy afternoon, he was stopped in his tracks by a roadblock that lay ahead of him, and traffic soon began piling up behind him. After a few minutes he saw the biggest thing he had ever seen move by road, a huge gas turbine — close to six meters in width — crawling like a giant caterpillar on the road. Our logistics-manager-to-be stepped out of the car and asked the men in charge of the vehicle specifics about the cargo. They told him that it that it was the world’s biggest gas turbine, weighing around 500 tons, capable of generating around 400 megawatts of power. The turbine was being hauled by a 20-axle trailer and being driven by two prime movers, one to pull the cargo and the other to push it forward. The cargo was run-

Facing Challenges In terms of movement, among the challenges faced is the availability of infrastructure to move project cargo quickly and efficiently. This could be the availability of ports where vessels carrying cargo can berth or the availability of loading and un-loading equipment for handling cargo. The

Source – Panalpina

Panalpina has the project for Delhi Metro Rail Corporation (DMRC) which will go on till 2010 The Antonov AN 225 freighter aircraft

54 INDIA | August 2010 | www.logisticsweek.com Narayan says, “Companies who have ho will survive? M Gopinath, head-transport op- been in the business for long with adations, Lee & Muirhead Pvt. informs equate equipment have better chances

competitive as compared to the rates decided earlier and they will make a profit. They will see a reverse trend,

RNI No. MAHENG/2007/23777 l Registration No.MH/MR/South-279/2008-10

SAUDI

Allowed to post at Patrika Channel Sorting Office G.P.O. Mumbai - 400001

Date of mailing: 5thSupported of every month issueby Officially the Ministry of Transport of the Kingdom of Saudi Arabia

TRANSTEC The most comprehensive

TRANSPORTATION MATERIALS HANDLING WAREHOUSING & LOGISTICS exhibition in the region

25-27 October 2010 Dhahran International Exhibition Center, Dammam, Kingdom of Saudi Arabia

www.sauditranstec.com ORGANISED BY MEDIA PARTNERS

IES srl - International Exhibition Services Z.I. Settevene - Via Cassia km 36,400 01036 Nepi - (VT) - Italy Tel: +39 0761 527976 Fax: +39 0761 527945 Email: exhibition@sauditranstec.com

Dhahran International Exhibitions Company P. O. Box 7519 Dammam Kingdom of Saudi Arabia 31472 Tel: +966 3 859 1888 72Fax: +966 3 859 0212 Email: dhahranexpo@sauditranstec.com

OFFICIAL PUBLICATION

OFFICIAL CHAMBER OF COMMERCE & INDUSTRY

OFFICIAL SUPPORTING ASSOCIATIONS

< Feature

Source – Beluga-Group

The Indian logistics industry is growing at 20 percent vis-àvis the average world logistics industry growth of 10 percent. Since the organized sector accounts for merely 1 percent of the annual logistics cost, there is immense potential for growth of the sector.”

A commonly used lifting eqipment - Board crane

Source – Kuehne + Nagel

— Sharmila Amin, Head of Pan Projects, Panalpina

A multi axle trailer used by Kuehne + Nagel

infrastructure suitability of roads and bridges should also be checked for the conveyance of such cargo. In countries that have achieved logistics efficiency, like Germany, Australia, Canada, the UK etc., well- designed and smooth roads ensure that vehicles ply at a pre-calculated speed sans interruptions or slowdowns. But in India, where road transportation accounts for more than 60% of inland transportation of goods

INDIA |

August 2010 | www.logisticsweek.com

and roads and highways carry 40% of freight, bad roads pose one of the biggest challenges. Developed countries also make optimum use of rail, inland waterways and roads, either exclusively or in combination, to ensure the timely delivery of cargo. In India, however, rail infrastructure is shoddy and with the full potential of inland waterways yet to be tapped, the setting up of temporary infrastructure like jetties or bridges may

be necessary for safe, precise and efficient movement of such cargo. Slow movement of cargo due to bad road conditions, red-tape and delay in government clearances, coupled with unreliable power supply and slow banking transactions, make it difficult for exporters to meet the deadlines for their international customers. To expedite shipments, they have to book their cargo as airfreight, rather than sea freight, which adds to the cost of shipments making them uncompetitive in international markets. Moreover, many large shipping liners avoid Indian ports due to long turnaround times. Hence many Indian exporters have to resort to transshipments at ports such as Singapore, Dubai and Colombo, which in turn add to the cost of shipments and also delays delivery.

< Feature Case Study

Beluga team loading of 736 ton reactor from Ishikawajima Heavy Industries, Japan to India

Tons of ballast water kept the vessel in balance. “The most critical point during the whole process is when the cargo passes the ship’s rail. This is the most unstable moment because the cargo passes the highest point and the centre of gravity of the vessel is the highest as well,” explains Roberto Frigeni, director of the Beluga Transport Engineering, who was on site to support the team. “Due to the limited space on the deck we could not take advantage of much room to swing the reactor and had to place it precisely in the designated position.” Then steel mats were spread to reduce the enormous point load impacting the hatch covers of the vessel through the cargo. Due to excellent planning and cooperative effort the super heavylift was successfully

concluded. Subsequent to lashing and fixing the valuable freight on the deck, the vessel was prepared for sailing. After leaving the port area, MV “Beluga Intonation” set course 228° and headed for Singapore, her first and only stop on the way to the port of destination in India. Source – Beluga-Group

n February 4, 2009, the master of MV “Beluga Intonation”, Johan Buysse and his crew tackled a truly ambitious task in the port of the Japanese city of Yokohama, the loading of a super heavy 736 ton reactor. The challenging lift needed elaborate pre-planning and high accuracy because other cargo limited space on the weather deck. In the port of Masan, South Korea, the vessel had already loaded three plant components for the chemical industry, a 71- metre refining column, a 58-metre recovery column and a 30- metre long saturator. All three items weighed between 229 and 350 tons. The lift in Yokohama started around 10 am in the morning. A small barge with a 35-metre long reactor moored alongside the multipurpose heavy-lift project carrier. Due to the extreme torsion which impact vessels during a lift of such dimensions, strict safety regulations had to be applied. Only team members actively involved in the operation – the captain, chief officer, cargo superintendent and two crane drivers – stayed on board.

The 35 metres long reactor was loaded by the board cranes ex barge to the multipurpose heavy-lift project carrier2.

The board cranes lift the reactor onto the MV Beluga Intonation. The recurring enormous torsion forces made strict safety regulations necessary.

INDIA |

August 2010 | www.logisticsweek.com

The 35 metres long reactor was loaded by the board cranes ex barge to the multipurpose heavy-lift project carrier.

APPOINTMENTS Looking for Best Talents in Logistics and SCM Domain? LOG.India magazine offers companies an opportunity to advertise job openings for logistics and SCM professionals. • Reaching out to the best logistics & SCM talents across user companies and LSPs • Most widely read magazine in the domain • Special discounted advertising rates To book your advertisisng space contact jayaram@logisticsweek.com

INdIa

We Transport Information

< Feature Safety Issues While transporting large cargo by sea, ensuring the safety of the crew, ship, cargo and equipment is critical. All possible risks that may lead to injuries, illnesses, accidents or damages must be assessed before shipment. This also includes protection of the environment where the cargo is being transported. As a member state under the IMO (International Maritime Organization), headquartered in London, India is expected to comply with the ISM and ISPS (International Safety Management) and (International Ship and Port Facility Security) laws respectively, which prevent environmental pollution. Indian ships are also checked for ISO 9000 and ISO 14000 to ensure that the ships are at par with other vessels sailing under the same regulatory body. Other challenges involve providing complete turn-key services from door to work-site, including managing quoting processes, expediting purchase or-

Project Cargo: Hot Spots

Source â&#x20AC;&#x201C; Planning Commission

INDIA |

August 2010 | www.logisticsweek.com

ders, warehousing, insurance, customs clearance and trade documentation. There are also many regulatory permissions that need to be acquired prior to any project cargo movement. These include multiple road permits, permission for handling and lifting equipment and documentation required from multiple authorities for the movement of the cargo. Special care must be taken to ensure that there is no damage caused to roads, electrical cables and other civilian infrastructure. Since the cargo must be transported inland by road, it must be done in a manner where there are no safety or environmental threats to civilians or surroundings. In most cases such cargo is moved at night.

Scope of Business For most countries, logistics costs vary between 9 percent and 20 percent of the GDP. Logistics costs in India are estimated at 14 percent of the GDP, which translates into US $140 billion, assuming the GDP of India to be slightly over $1trillion. Of this, almost 99 percent can be attributed to the unorganized sector (such as the owners of less than five trucks, small warehouse operators, customs brokers, freight forwarders, etc.), and a little more than 1 percent, i.e. approximately $1.5 billion, is contributed by the organized sector. However, the industry is growing at a fast pace and if India can bring down its logistics cost from 14 percent to 9 percent of the GDP, savings of approximately $50 billion will be realized at the current GDP level.

Through 11th 5-year plan, government of India is focussed to take Infrastructure spend to new levels and this will ask for higher demand for projects logistics support â&#x20AC;&#x201D; T.G.Ramalingam , CEO- Projects Logistics, Allcargo Global Logistics Limited

With the 11th five-year plan and the governmentâ&#x20AC;&#x2122;s intense focus on massive infrastructure projects and heavy infusions of investment in defence, oil and natural gas and increasing the capacity of power generation in the country, more complex, critical and invaluable machinery and installations will be transported to and from India. However, no regulatory body has so far been set up in the country to streamline the process of project cargo movement. Indian firms in the project cargo segment are faced by challenges unique to the region in terms of cultural, regional and bureaucratic practices. There is a dire need to establish laws to reduce wastage of time and increase efficiency in the business.

Enter the Ring Indian project cargo managers require familiarity with procedures, need to have easy access to officials

and good foresight in planning and execution which will ensure timely delivery of consignments. The job also demands a lot of technical support. Since goods are usually directly or indirectly related to mechanical, civil or electrical engineering, good teams of engineers are also required. Project cargo managers should also have an extensive network of contacts with key industry service providers. Over-dimensional cargo needs non-standardized vessels, equipment and transport facilities to undertake complete door-to-door movement. To do this, the project cargo manager needs a good network of contacts in the industry where he can arrange such facilities at quick notice. Since handling equipment is non-standard, it needs to be madeto- order in many cases. A novice could face problems in timely access to cranes or trailers, leading to delays which could result in losses. Indian freight forwarders also face stiff competition from multinational freight forwarders for international freight movement. MNCs, because of their size and operations in many countries, are able to offer low freight rates and extend credit for long periods. However, India has its own share of project logistics pioneers. Founded in 1916, J. M. Baxi & Co. is one of the oldest shipping agencies in India. Some of the other big players in the Indian market are L&T who are also involved in project logistics assignments of moving their own turn-key projects within the country as well as to global locations. Some other notable project logistics specialists like Urmila Project Service of Ardeshir B.Cursetjee & Sons Limited, Lift & Shift India Pvt. Ltd. and the Resham Singh Group have been the pioneers of project logistics in India long before foreign players entered the market. Many large Indian corporates such as Tata and Reliance Industries have been attracted by the

potential of this sector and have established logistics divisions. Large express cargo and courier companies such as Transport Corporation of India (TCI) and Blue Dart have also started logistics operations. These companies enjoy the advantage of already having a large asset base and an all-India distribution network.

Cost Imperatives The cost of entering the project cargo segment is proportional to the size of cargo handled. The costs could vary, depending on the strategy one adopts to start the project cargo division. Such a division would require investment in competent personnel who can manage operations across various locations. It would also require the opening up of offices in key areas across the world, either directly or through an agent to oversee smooth movement of operations. Choosing to be asset heavy, can be quite capital intensive as it would require a lot of capital investment. A player interested in providing onshore services then would be required to invest in a fleet of vehicles of various capacities to cater to various requirements. Similarly, if one is interested in providing waterway solutions then investments in barges and tugs will be required. A project cargo player can also be asset light and sub-lease such equipment. In such a scenario, operating costs can also be reduced. However, there is a lack of trust and awareness among Indian shippers with regard to outsourcing logistics. The volume of outsourcing by Indian shippers is presently very low (10 percent), compared to developed countries (50 percent and sometimes as high as 80 percent). The unwillingness to outsource logistics may be attributed to scepticism about its possible benefits, perceived risk, losing control of sensitive organizational information and vested interests in keeping logistics activities in-house. But the Indian markets have their

A project-cargo player can also be asset light and can get access to equipments through subleasing them. In such a scenario it will be less capital intensive.” — Lars Sorensen , Regional Manager, Damco (South Asia)

own set of strengths too. There is ready availability of skilled labor and the climate conditions are favorable to project cargo movement, as most of the country is not subject to drastic weather conditions. So, whether its pipes, trucks, rail cars, complete or dismantled factory facilities, the gamut of project cargo is enormous. Like a double-edged sword, it’s risky as well as lucrative. The projects often feature a long range of parallel or successive shipments as well as a great variety of cargo in one shipment. In some cases, one project might take months or years if a customer needs the goods on time at different parts of the world. But with the business being exceptionally lucrative and infrastructure projects lined up amounting to values of 12 digit figures, let’s gets these behemoths moving! — With inputs from Damco, Allcargo Group, Lift & Shift and Panalpina

INDIA |

August 2010 | www.logisticsweek.com

< feature

Potential Encapsulated Most Indian pharma companies manage their own complex supply chain. However, the dangers of product damage and the threat of disrepute is compelling the industry to seek out LSPs, says Jayashree Mendes

hen the recession affected the world, two sectors managed to avert the crisis â&#x20AC;&#x201C; food and pharma. You cannot do without either. In the case of pharma, a McKinsey report brought out in November 2009 paints a bright picture ahead. The $20 billion Indian pharmaceutical industry is expected it to grow at a compounded annual growth rate (CAGR) of 14-15 percent to touch $40 billion by 2015. The Indian pharmaceutical industry exports to more than 200 countries, including about 60 highly regulated markets, but it also caters to every nook and corner of the country. So it is surprising that an industry this size transports and sells its products largely without the professional touch of endto-end logistics service providers.

INDIA |

July 2010 | www.logisticsweek.com

Hold of the Past Explaining the pharma sector’s decision to largely manage its supply chain, Jeevan Raosahib, Managing Director, Indelox Service Pvt Ltd, a thirdparty logistics management company, says, “It is incredible that such a huge industry juggles manufacturing and shipment of active pharmaceutical ingredients (API), drugs, biotech products and medical devices on its own. Even today, most companies abstain from using the services of logistics service providers (LSPs). Little wonder then, the Indian pharmaceutical industry is lacking in world-class best practices of supply chain management.” The rapid growth of technol-

ogy seen in the manufacture of drugs does not reﬂect in its supply chain. At a time when other manufacturing companies have realized the effectiveness of roping in logistics companies, the pharma industry with critical speed-to-market relies on the traditional method of supply chain - clearing & forwarding (C&F) agents. Defending the supply chain policies of pharma companies, Masud Shaikh, Head (Distribution & Logistics), Alembic, a pharmaceutical company based out of Gujarat, says, “Pharma companies spend large amounts of money on research and development (R&D) and manufacturing. Hence they are wary of hiring logistics players and adding to costs.

Because costs are already huge, logistics would mean an additional 3-4 percent in costs. So they prefer to work with C&F agents who are spread out in rural and remote locations.” The C&F agents manage stock maintenance for the companies and forward stock keeping units (SKUs) to the stockists on request. Companies retain one to three C&F agents in each state. Hence a company may have a total of 30-40 C&F agents across the country. The C&F agents also act as vigilant agents. Most companies that Log.India spoke to say agents also offer a region forecast. He reports trends and potential in cities, while taking care of inventory and scheduling from the central stock point of the company. Manufacturers get an idea of what drugs are selling in a particular location. Like any other industry, pharmaceuticals are prone to frequent and sudden demand and supply modifications. Taking note of the changes need an eye for detail and picked up so that stocks can be sent as per requirement to that region. So would not LSPs be in a better position to offer the same services

Highlights The industry is expected to touch $40 billion by 2015 Mostly C&F agents and stockists handle the entire supply chain n Agents offer value-added services such as region forecast and trends n Advantage of LSPs is the correct transport of sensitive materials n Proﬁtability is positively impacted when bringing in LSPs n n

INDIA |

July 2010 | www.logisticsweek.com 63

< feature and more? Shaikh says, “The supply chain of pharma is highly complex. But the margins are high. This is a big lure for small agents. Besides, as agents they don’t need to invest as many people, resources, investments as an organized 3PL.”

Sensitive Materials The current distribution method throws up various questions with regard to movement of temperature sensitive materials. This is especially true for biotech products, pre-filled syringes, and some drugs that require careful climate management during transit. Dimple Parikh, Head (Logistics), Lupin Limited, one of the top pharmaceutical companies in India, says, “Drugs and medical devices cannot be treated like any other material. Personal supervision is required during movement of each box. Many a times by the time the box reaches the

stockist, the drugs are corrupted.” Taking this further, Sanjiv Kathuria, Director (Sales & Marketing), TNT India Pvt Ltd., a Bengalurubased logistics service provider, says, “C&F agents are not the right people to be given charge of an entire supply chain of critical materials. Specifically in the case of cold chain distribution, they cannot provide for a superior reach of temperature controlled drug distribution. Certain vaccines and oncology trials in India demand cold chain distribution infrastructure as these products move under 2-8 degrees Celsius. For other drugs it is necessary to have a controlled ambient movement (15 to 25 Deg C) from normal ambient.” The absence of LSPs or 3PL players throws up infrastructure challenges for the companies. Land and air connections to interior locations are usually poor and could delay delivery of

LSP Role In Pharmaceuticals ogistics plays a critical role in L pharmaceuticals, especially in the case of sensitive and life science products. Some of the well-known pharmaceutical logistics players in the Indian industry are TNT, Caliper Integrated Services, Indelox, World Courier, Hellmann Logistics, among others. Pharma logistics players must invest in cold chain and tracking technologies. Crucial to pharma products is maintaining the quality or the potency of the drug till it reaches the consumer. So the LSP must have the required infrastructure of unique packaging method such as Thermo Pack which is used for storing chilled samples that requires a controlled temperature of 2-8 degrees Celsius up to 96 hours. The logistics provider also has to provide cold solutions for products that require temperature of -40 degree Celsius for at least 20 hours. The packaging activities for pharma products require trained and dedicated staff unlike other types of products. A slight deviation in handling during transportation

INDIA |

can cause degradation of the drug. This is especially true in a geographically diverse country like India with extreme climates with its multilayered distribution channel. At every level, there are associations comprising of stockists or retailers that decide on the products that are in demand in a particular region. The long channel of distribution, which is also inclined to see high rate of counterfeit products seeping into the market, makes it mandatory for a company to make all its stock keeping units (SKUs) available at all levels at all times. IT adoption in logistics is another imperative. Pharmaceutical companies and logistics companies have realized that to improve distribution and keep inventories at optimum levels there is a need for integrated solutions in SCM. So adoption of technologies like SAP and RFID can help trace and track stock, while providing for liquidation when required, and streamlining interconnectivity between manufacturing facilities, warehouses, and CFAs across states.

July 2010 | www.logisticsweek.com

Pharma companies work on nominal budgets and are wary of adding logistics costs to their spiraling costs — Masud Shaikh Head (Distribution & Logistics), Alembic Pharmaceuticals

life-saving drugs within a stipulated time frame. Shaikh says, “C&F agents are not equipped with proper storage infrastructure and the right vehicles to support transportation. This could mean poor hygiene and exposure to outside elements. Moreover, C&F agents are not equipped with IT infrastructure to support visibility of products in the supply chain in case of inventory management, recalls, destruction, etc.” Kathuria adds, “Pharma drugs and equipment require advanced freezer and refrigeration systems and sophisticated temperature monitoring systems that include alarms in case equipment falls outside acceptable temperature ranges.”

Signs of Life Companies such as Novartis, Johnson & Johnson, and Actavis, among others, have realized the importance of using the services of organized LSPs. According to a spokesperson at Actavis, “Experienced 3PL providers bring

Imprint Feature

Warehouse Automation at HEFAGRA Spain In order to hold its leading role on the Spanish pharmaceutical market and to ensure highest quality and reliability in service, Hefagra, a cooperative of 700 pharmacies in Granada (Spain), responded to the call of time, realizing a new distribution centre with cutting edge technology. The focus was on implementing an innovative all-in-one solution with a maximum degree of automation and increasing the speed of services. The construction of the new building for the distribution centre in a high-risk earthquake area was an especially challenging aspect. Due to the solid relationship from past projects, Hefagra entrusted KNAPP with the realization of its new distribution centre. The high-performance KiSoft WMS (Warehouse Management System) is the core of the logistics solution, conducting the three-line stacker crane Smart-Storage System in the goods-in area, the goods-to-man storage and picking system OSR ShuttleTM as well as all automatic and semi-automatic picking solutions within the warehouse. KNAPP rendered the entire scope of services, from technology up to warehouse management and control software.

Monitoring with KiSoft i-POINT

With the visualisation software package KiSoft i-POINT, Hefagra can switch on and off, monitor and operate the entire warehouse as well as individual areas. The warehouse is displayed authentically in one or more images visualizing the control units within the entire facility.

Goods-in

During the goods-in process, the Warehouse Management System registers expiry dates and lot IDs and each product is automatically allocated a storage location after the goods have been checked. Registration of the lot ID ensures the complete traceability of all pharmaceuticals from producer to consumer.

Detrashing

All products which are destined for storage in the automatic container storage system or in the OSR ShuttleTM are transferred from their original packaging to storage bins suggested by the KNAPP WMS and automatically supplied by the system. In this process the barcode of the storage bin is allocated to the product information.

High-bay racking system for containers

The high-bay racking system with a length of 100 metres was realised with a Smart-Storage-System. The storage locations are operated via

processed with the oft proven autopickers SDA, TDA and LMS.

Manual picking

In the manual stations, products are picked from the flow rack using RF terminals. The staff receives information via radio frequency which is displayed on the hand-held terminal.

OSR ShuttleTM picking

The OSR ShuttleTM principle makes it possible to achieve an especially high picking performance in the most ergonomic and efficient way. Pick-to-Light displays show the position and quantity of goods to be picked while the Put-to-Light indicators mark the container which is to receive the products.

Pick-to-Belt

three stacker cranes which are responsible for storage and retrieval, replenishment of products and reorganisation within the system.

Order processing

The automatically started picking container is transported to the requested picking areas upon allocation to the order. To reduce the transit times, areas which are not relevant for the order are simply passed by.

Automatic order processing with central belt autopicker

Some 75 percent of all order lines are processed in the central belt autopicker area of more than 100-metre length. Three lines of stacker cranes automatically replenish the 4,680 autopicker channels of the SDA and TDA. Fast and medium moving products are

Extremely fast-moving products and products which cannot be supplied in containers are picked directly from the pallet storage area or flow racks in a process controlled by the KNAPP WMS. The shipping labels are then attached and the products transported to the dispatch area on the Pick-toBelt system.

Goods-out

The completed containers are automatically addressed, receive shipping documents, are sealed, strapped and diverted to the dispatch area. The conveyor system ensures that the transport containers are grouped according to their destinations and sorted according to route, thus reducing the intervals between routes by 30 percent.

The customerâ&#x20AC;&#x2122;s benefit

With the rapid, trouble-free and accurate provision of requested products, Hefagra has succeeded in further strengthening its position on the Spanish market for pharmaceutical distribution. The warehouse of 20,000 sqm at the Granada location meets every single one of the customerâ&#x20AC;&#x2122;s requirements.

< feature on board facilities and equipment that are designed to follow the requirements of the pharma industry. Their advanced tracking and reporting systems help bring to attention products that could have expired or compromised on due to improper storage and handling. They also offer visibility and control of stored materials with sophisticated inventory management.” A 3PL player equipped to handle pharmaceuticals will have the right people, systems and technology in place. Kathuria says, “The 3PL players conditioned to handle pharma will employ staff with specialized training and knowledge required to handle valuable and sensitive pharmaceutical and biotechnology materials. An inexperienced supply chain management can lead to losses of millions of rupees and endanger consumer safety. Other issues could be brand erosion due to counterfeiting, theft and diversion.” The correct 3PL provider can enable drug manufacturers to realize significant financial returns. Profitability is enhanced by leveraging the best practices of a pharma industry

The Indian pharmaceutical industry is lacking in worldclass best practices of supply chain management — Jeevan Raosahib Managing Director, Indelox Service

INDIA |

August 2010 | www.logisticsweek.com

3PL partner in the following ways: *Just-in-Time (JIT) inventory levels resulting from greater visibility for the stored materials n A streamlined supply chain process that results in decreased operational costs n Tighter control and better documentation resulting in a reduced risk of fines and product recalls n Increased customer confidence resulting in brand loyalty and higher margins n Enhanced focus on core business competencies resulting in greater efficiencies There is also a general thought in the industry that the implementation of goods and services tax (GST) should see pharma companies adopt the practice of going through organized logistics channels as there are cost benefits.

A 3PL player equipped to handle pharmaceuticals will have the right people, systems and technology in place — Sanjiv Kathuria Director (Sales & Marketing), TNT India

Technology Use India’s intractable geography makes distribution of products to remote locations difficult. Technology plays a critical role. LSPs and agents need to track products accurately. Hence pharma companies utilize inventorybased bar coding or radio frequency identification (RFID) as such systems automatically scan labels and electronically store the information without manually entering data. RFID is superior to bar coding because it does not require line-of-sight scanning, allowing inventory levels to be calculated in real time and virtually eliminating drug counterfeiting. Other technologies are product tracking technologies such as Enterprise Resource Planning (ERP) software and document management systems as they aid operational efficiencies. Companies with these technologies are better equipped to provide a complete history of the handling, status, transfer and overall management of pharmaceutical and biotechnology products. “Here it is important that firms have redundant servers with data

backup strategy,” adds Raosahib. Established and documented Standard Operating Procedures (SOP) for handling, storing and transporting pharma and biotechnology products and materials should be made use of. The LSP should have a detailed disaster recovery plan that documents the internal procedures for crisis situations such as natural disasters, threats or other emergencies.

Long-term Benefits Manufacturers need to ensure that their drug reaches customers with uncompromised quality. An LSP can help manufacturers retain control over a multilayered distribution system, while offering a well-managed cold-chain management process. It is only now that most pharma companies are realizing the importance of an effective distribution system. Coping with the challenges of streamlining the systems in India will ultimately benefit the patient and the healthcare system..

OFF THE SHELF

A Factory Approach To Lean Integration

he authors, Schmidt and Lyle, while discussing lean integration, have divided the book into three parts. The first part describes the significance of lean and demonstrates how established “lean” techniques can be used to take control over the entire integration process. The book explains how well-known “integration factories” leverage benefits of repeatability and continuous improvement across every step of an integration project. The case studies in Part II show how lean integration is not a theory – but an application in a real world context. Drawing on their experience, Schmidt and Lyle bring together best management principles and measurable

actions for streamlining integration development and maintenance. Part III of the book offers a prescription or "how to" guide on how lean integration can be treated as a business strategy and applied efficiently to provide maximum business flexibility, supporting rapid change without compromising on stability, quality, control, or efficiency. lean Integration: An Integration Factory Approach to Business Agility By John G. Schmidt and David Lyle Publisher: Addison-Wesley Professional Price: Rs 1,890

Monitoring Cold Chain Logistics

uis Ruis-Garcia while shedding light on cold chain logistics, details how every day millions of tons of temperature-sensitive goods are produced, transported, stored and distributed worldwide. Cold chain describes the series of interdependent equipment and processes employed to ensure the temperature preservation of perishables and other temperaturecontrolled products from the production to the consumption end in a safe, wholesome, and good quality state. In this framework, fieldbus and wireless sensor technologies are entering a new phase.

This book presents research studies focused in three emergent sensing technologies: Controller Area Network (CAN), Radio Frequency Identification (RFID) and Wireless Sensor Networks (WSN); showing real implementations for tracking and monitoring in the cold chain. development of Monitoring systems for cold chain logistics By By Luis Ruiz-Garcia Publisher: LAP Lambert Academic Publishing Price: Rs 4,000

Planning And Designing Of Airports

he authors provide an in-depth view on airport planning and design to reflect the significant changes that have occurred in the aviation industry. In 2008, the commercial segment of civil aviation, consisting of more than 900 airlines and 22,000 aircraft, carried more than two billion passengers and 85 million tons of cargo on more than 74 million flights to more than 1,700 airports in more than 180 countries world wide. The new edition includes coverage of latest aircraft, air traffic management technologies, passenger processing technologies, computer-based analytical and design mod-

els. Guidelines are laid down for calculating runway lengths and pavement thicknesses according to international standards. The book also discusses airport security planning, environmental planning and financial strategies for airports. planning and design of Airports, Fifth edition By Robert Horonjeff, Francis McKelvey, William Sproule, Seth Young Publisher: McGraw-Hill Price: Rs 5,900

INDIA |

August 2010 | www.logisticsweek.com

< panorama Blogosphere IBM's Green Supply Chain Blogger: Andrew Winston, co-author of Green to Gold and author of Green Recovery Winston talks about how IBM, in its endeavor to green its supply chain, brought about a new value chain to the discussion - electronics and IT. In 2004, the company launched its own IBM Supplier Conduct Principles, which helped define the Electronics Industry Code of Conduct (EICC) standards. Back in 1998, IBM had asked suppliers to consider adopting the international green operating standards, ISO 14000. IBM demanded that suppliers must deploy environmental management systems (EMS) to measure existing environmental impacts and establish goals to improve performance and publicly disclose their metrics and results. Search Tags: Andrew, Winston, ibm, hbr

Turning "No" Into "Yes" In India Blogger: Semil Shah, Management Consultant and Entrepreneur, San Francisco Bay Area In his blog, Shah talks of the challenges entrepreneurs face when setting up a venture in India, with No being a common answer one hears. The author has a solution to turn the “No”

into an “Yes” by tackling root causes of the problem. A common deterrent is Indian bureaucracy. The lack of exposure to technology often leads to a misunderstanding of costs and benefits. To overcome this one must engage social networks to organize symposia that expose officials to the idea of a neutral setting, thereby reducing the understanding gap. Search Tags: semil,shah, hbr, entrepreneur, bureaucracy

Nike's Strategy For Sustainable Business Blogger: Nike Nike identified sustainability as a key to growth and innovation. Recognizing the impacts of declining natural resources and the need to become carbon-efficient, Nike discusses a closed-loop business model where the goal is to achieve zero waste in the supply chain and have materials that can be continuously reused. This vision is designed to drive innovatiom and sustainable business processes and models. Nike has also launched a footwear energy efficiency program with five contract manufacturers. The result - absolute CO2 footprint was down 6 percent despite a 9 percent increase in production. Search Tags: nikebiz, global strategy, sustainable business

Journals, Case Studies, Research Reports

Resource Center Lean Case Study: Boeing

Optimum Ship Routing

By Kamran Zamir, Managing Partner, GameChange Consulting

By George L. Hanssen and Richard W. James

In the early 90s Boeing realized that it isn’t enough for a company to merely cut down costs; it also needs to streamline processes while improving quality, respond quickly to customer demand and empower employees while increasing profits. Boeing realized the need for lean manufacturing techniques in order to find ways to make its products competitive. Implementation of lean techniques at Boeing covers everything from suppliers and procurement to manufacturing and delivery. As a result, Boeing reduced defects by 90 percent in the manufacture of the Super Hornet, 54 percent in build time of the Apache helicopter and lowered inventory levels by 42 percent of the Boeing 737 among other things. At the Renton factory several tactics were introduced to achieve lean manufacturing such as value stream analysis and mobile communication systems for employees. Search Tags: Boeing, lean case study, Kamran

INDIA |

In this paper, Hanssen and James describe the system developed and used by the United States Hydrographic Office for selecting the optimum track for transoceanic crossings by applying long-range predictions of wind, waves and currents to a knowledge of how the routed vessel reacts to these variables. Over a period of two years, over 1000 optimum ship routes were provided to one authority, with an average reduction in travel time of 14 hours and optimum use of fuel. Search Tags: hanssen, hydrographic, Richard, Cambridge, routing

Inventory in Motion: A Direct Alternative to Global Fulfillment By UPS UPS studies how logistics visionaries have talked for years about eliminating or at least reducing the role of inventory in modern supply chains. What is appealing in this vision is the reduction in logistics costs and the fulfillment cycle. Ups teach-

August 2010 | www.logisticsweek.com

es how a direct to store or distribution bypass approach to global fulfillment can lead to a leaner supply chain since it will enable companies to shrink the fulfillment cycle and eliminate inventory costs. Directto-store can offer a good balance between fulfillment speed and logistics costs. Search Tags: inventory, motion, ups

Circle of Service Workflow By Qualcomm Qaulcomm's decision to integrate its Circle of Service Workflow with dispatch systems has helped improve efficiency of its transport fleets. By automating functions such as load assignments, event triggers, and work process forms, Circle of Service Workflow helpsto lower operational costs, reduce errors made by manual entry, and improve ontime fulfillment across entire fleets. The intuitive, easy-to-use design of the incab interface reduces driver training time, increases visibility, and improves compliance on both the Mobile Computing Platform 100 and 200 Series. — Compiled by Frewin Francis

Launchpad

New Products, Technologies, Solutions

SIMCORE’s Solution For Measuring Terminal Performance

IMCORE has introduced PAX2SIM, a new method to evaluate performance of airport passenger terminals. The software, with specifications from ADPI (a private subsidiary of Aéroports de Paris Group) has been designed to be accurate and easyto-use in the terminal, especially during peak hours. With numerous international projects, such as PARIS CDG, Athens International Airport, Jeddah KAIA, Delhi International

Airport T3, Mulhouse Euroairport, London Heathrow T2, SIMCORE has capitalised its experience in baggage handling simulation, passenger terminal capacity planning and terminal operations optimization. SIMCORE’s software can be used on a tablet PC or a PDA and are placed at 12 different functional areas in the terminal to gather several kinds of measures such as resources, passengers, bag timing, process timing and density mapping.

New Technology Standard for Electronic Toll Collection

oll booths on National Highways will adopt the passive RFID technology standard – ISO 18000 6C — for electronic toll collection (ETC) system. It is based on the recommendation of a committee set up for this purpose, headed by Nandan Nilekani, Chairman, Unique Identification Authority of India (UIDAI). The recommendations have been adopted by the Highways Ministry. In the ETC system, vehicles will have tags on their windscreens – where amounts can be pre-loaded (just like prepaid SIM cards for phones) – and when the vehicles pass through NH toll lanes with tag readers, the

toll amount would automatically get debited. This will pave the way for setting up of ETC systems across the NH network.

INDIA |

VHA Launches Application For Supply Chain Savings In Hospitals

HA Inc. has teamed up with MicroStrategy, a provider of business intelligence software, to build a mobile business intelligence application, VHA DataLYNX, giving hospitals instant access to supply chain analytics data. VHA Inc., based in Texas, is a national network of notfor-profit health care organizations that work together to drive maximum savings in the supply chain arena and set new levels of clinical performance. VHA DataLYNX provides a single source for ensuring the accuracy of purchasing data and lays the groundwork for efficient supply operations by synchronizing data. This service complements and integrates DataLYNX with VHA’s SupplyLYNX, allowing cleansed data to be more accurately analyzed and matched to existing contract opportunities. As a result, the user can improve labor efficiency, contract management and pricing while reducing inventory and logistics costs. Mobile access to this information enables hospital executives to continually monitor cost reduction efforts and drive supply chain savings. The new mobile platform, built using MicroStrategy Mobile, will enable VHA member hospitals to report, analyze, and monitor data to reveal trends and insights from handheld devices.

August 2010 | www.logisticsweek.com 69

< EVENTS

A PUBLICATION OF DVV MEDIA GROUP

August 2010 August 19-21, 2010 SME Expo Logistics Chennai Trade & Convention Centre Organized by INIS Enterprises Private Limited, the SME Expo Logistics will be held at Chennai Trade & Convention Centre. The event is a major hub for small & medium enterprises (SME) logistics and materials handling sectors. It is organized along with a two-day conference and seminar. SME Expo - Logistics & Material Handling 2010 is aimed at providing a common platform for SMEs in the logistics arena to explore business opportunities and exchange their ideas and expertise. It is an industry program to disseminate the insights into the issues and probable trends that the logistics sector is likely to face. This expo will offer an opportunity to exhibit the most up-to-date trends in the logistics & material handling sectors. SME Expo – Logistics & Material Handling 2010 is a forum to determine business opportunities, confer industry’s issues, and to discover numerous technology and products in logistics and material handling. Organized by: INIS Enterprises Private Limited Tel: +91 22 28763111 August 20, 2010 WiMAX India New Delhi Le Meridien, New Delhi, India WiMAX India will bring together international and domestic service providers to evaluate best practice, assess business models and discuss the projected impact of WiMAX on the Indian broadband market. The 7th WiMax India 2010 International Conference will focus on the delivery of next generation broadband services using WiMAX, 802.16x and similar proprietary standards. Speakers will discuss crucial issues of standards & interoperability; spectrum & licensing; network optimization & frequency planning; business models; international success stories & lessons learnt from large-scale WiMAX deployments; business opportunities and threats; using WiMAX as a means of delivering broadband services to the bush; how WiMAX can complement other telecommunications offerings; costs & financing; and strategies for capturing the mobile market. Profile for exhibit include abrasives, boilers, chemicals, compressors & gas turbines, drilling equipment, electrical equipment, fire alarm systems, filters, gas detectors, heat exchangers, laboratory equipment, leak detection, wire control systems, tubing services, seismic surveys, refinery equipment, pipelines, offshore construction equipment, petrochemical products, etc. Organized by: Bharat Exhibitions Tel: 91 11 41639672/41639676

INDIA |

August 20-23, 2010 Industrial Expo-Ludhiana Punjab Trade Centre, Ludhiana, India This is an annual exhibition on industrial products, technology and related services. The scope of the event covers: machine tools, material handling, transmission, chemicals, hydraulics and pneumatics, electrical & electronics, automobiles, plastic and packaging, textile, pumps & valves, testing & measuring instruments, and environment, health & safety. Profile for exhibit includes pulleys, V-belts, gears and gearing, gas generation and gas purification plants, fasteners and clamping elements, heat treatment and supplies, testing laboratories of engineering products, precision engineering. Organized by: Paramount Exhibitors Tel: +91 172 2274801/2274802/2274803 August 26-29, 2010 Machine Tool Show - Pune Auto Cluster Exhibition Centre, Pune, Maharashtra Pune Machine Tools 2010 will be organized in Autocluster Exhibition Centre Chinchwad, Pune. Pune Machine Tools will showcase innovations in engineering, machine tools, automation & automotive technology. It is designed to present the entire spectrum of developments in the machine tools sector. Pune Machine Tools 2010 provides an opportunity to achieve quality conversation with existing and potential customers by establishing contacts and strengthening existing ones. The show has been approved by India Trade Promotion Organization and been supported by Machine Tools Manufacturing Association. Organised by: KMG Business Technology Tel: +91 79 32410602 August 4-6, 2010 Industrial Maintenance Expo NSIC Exhibition Center, New Delhi Industrial Maintenance Expo is a trade event dedicated to the maintenance & repairs segment of engineering and process industry in India. It will assemble leading national and international companies to display and demonstrate the latest technologies, equipments, products, services and trends in the maintenance sector. The trade fair will provide a great platform for the attendees to discover latest maintenance technology, servicing, repair, and maintenance practices and techniques for their companies. Industrial Maintenance Expo 2010 will be an event to learn about technologies and solutions and interact with the suppliers and establish new business contacts in the industry. Organised by: Confederation of Indian Industry (CII) Tel: +91 124 4014086/4014060 – 67

August 2010 | www.logisticsweek.com

INDIA www.logisticsweek.com DVV MEDIA INDIA

DVV Media India Private Limited 9, Ground Floor, Sona Udyog, Parsi Panchayat Road, Andheri (East), Mumbai -400069 INDIA Phone :+91-22-28240198 / 28375323 Fax : +91-22-2836 0143

Publisher: Jacob Joseph Puthenparambil jacob@logisticsweek.com EDITORIAL Editor: Aanand Pandey aanand@logisticsweek.com Editor-Special Projects: Pamela Cheema pamela@logisticsweek.com Features Editor: Jayashree Mendes jayashree@logisticsweek.com Contributing Editor: Kathryn Semcow kathryn.semcow@dvvmedia.com Special Correspondent: Frewin Francis frewin@logisticsweek.com CREATIVE Chief Designer: Shivasankaran Pillai shiva@logisticsweek.com Photography: Ramlath Kavil SALES AND MARKETING Sales Head: Jayaram Nair jayaram@logisticsweek.com North: Sumit Bajpai sumit@logisticsweek.com West: Ashok Chand Thakur ashok@logisticsweek.com Dinesh Mishra dinesh@logisticsweek.com Marketing Support: Sangeeta D, Suhasini S DVV MEDIA GROUP Gmbh www.dvvmedia.com CEO: Dr. Dieter Flechsenberger Director International Business Development: Nigel Tomkins Printed by Jacob Joseph Puthenparambil, published by Jacob Joseph Puthenparambil on behalf of DVV Media India Private Limited. Printed at Savai Printer Private Limited, A661, TTC Industrial Area, MIDC, Mahape, Navi Mumbai - 400 705, India and published at 9, Ground Floor, Sona Udyog, Parshi Panchayat Rd., Andheri (E), Mumbai - 400069. No part of this publication may be reproduced or transmitted in any form or by any means including photocopying or scanning without the prior permission of the publishers. Such written permission must also be obtained from the publisher before any part of the publication is stored in a retrieval system of any nature. No liabilities can be accepted for inaccuracies of any description, although the publishers would be pleased to receive amendments for possible inclusion in future editions. Opinions reflected in the publication are those of the writers. The publisher assumes no responsibilities for return of unsolicited material or material lost or damaged in transit. All correspondence should be addressed to DVV Media India Private Limited. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only.

ANNUAL SUBSCRIPTION RATE INDIA: INR 1080/INTERNATIONAL: EURO 240 / USD 325 SUBSCRIPTION TERMS The minimum subscription period is one year.

Drive In dia

Enterpr ise Solu tions Lim ited Enterpri se

dia Ent erprise Solutions A Limited Enterpris e

olutions Limited Enterprise

Drive India Enterprise S

Drive In

RNI No. MAHENG/2007/23777 l Registration No.MH/MR/South-279/2008-10 Allowed to post at Patrika Channel Sorting Office G.P.O. Mumbai - 400001 Date of mailing: 5th of every month issue