IndIa’s LeadIng LOgIstIcs MagazIne www.logisticsweek.com
INDIA
February 2011 Vol. 4 — No.6 October 2010 | Vol. 4 – No.2
Method In Motion
amit mukherjee, Vicepresident (iT and supply chain) and group cio at rpg, has deployed exemplary supplychain strategies at spencer‘s retail >> page 34
TElEcom logisTics 20 THE RISEofOF LCL 38 Movement telecom network equipment opensof A quick, engaging history athe window of of opportunity evolution LCL.
`100
` 100
Miles Ahead Maruti Suzuki GM (Supply Chain Division) R. Harikumar leads a supply-chain monumental in expanse, numbers and ambition.
low NEglEcTEd Page 26 adopTioN 24 waTErways 44 ATWhy HOME: Why India’s independent retailer should notignoring fear multi-brand retail...18 WMS still does India is inland not have enough waterways at its own STEELY WONDER: Unraveling the fascinating layers of steel logistics...42 takers in India peril SPOT OFF: Whatever happened to the GPS wave in India...50
eDITORIAL
>
The Original Green Supply-Chain
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t was how I always imagined it would be. That night, as the clock struck ten, distinct silhouettes of trucks began to emerge against the moonlit horizon. One by one, they led themselves into a huge courtyard and came to a stop in a single file, right outside a cavernous structure. Each truck rumbled softly as it stood, seemingly in anticipation of being the next one to empty crates of farm-yields into a hole-in-the-wall, or a dock as the warehouse people are calling it these days. I was there, inside the warehouse, standing with a group of goggle-eyed professionals, listening in rapt attention as the warehouse manager held forth on how the retailer, which owns the Distribution Center (DC), does its supply-chain. And how the particular DC plays its vital role in the chain. With clockwork precision. Yes, I was on a visit – courtesy the Council of Supply Chain Management Professionals (CSCMP) Mumbai – to a distribution center of this retail chain whose name I am not at liberty to disclose. Let’s just say that it is one of the biggest in the business and a leader in organized retailing of farm-fresh F&V (fruits and vegetables) in the country. So according to the manager, this is how it happens. All the stores around the country are given a deadline of 2pm everyday, by when they have to place Aanand Pandey orders for F&V in line with the demand they expect two days later. So a store in, Editor say, Dharwad places an order at 2pm on a Friday on the central IT system for, say, three crates of cabbages, to be delivered on Sunday morning. The order will be relayed to a collection center (Maharashtra has seven collection centers, I was told) in the district of Beed, that is in touch with a cabbage farmer for the purpose. The center, upon procuring the cabbages, will dispatch it to the Mumbai DC, where it is checked for quality, sorted, bar-coded, cross-docked, and sent in the appropriate quantity to the respective retail store in Dharwad that placed the order. Obviously, this example is given for the sake of brevity, and the actual operation is far more complex, involving algorithms that involve a crisscross of orders and supplies for about 100 F&V SKUs for hundreds of stores. As for the DC, it goes without saying that the facility was worldclass, and the biggest enemy of Indian warehouses, the ubiquitous dust did not overwhelm us with its presence – a rare phenomenon for any place in the country where fruits and vegetables are stored. So what were the takeaways? None, as far as the actual fruits and vegetables were concerned, though I must say I was very If only wishes were gunnies. tempted when I spotted the sack loads of onions resting on the floor. I even had a fellow groupie and a dear friend, Piyush Shah, assistant professor, SP Jain Institute of Management, pose with the onions in a king-like fashion (yes, Piyush is the guy beaming as if he has struck oil, in the accompanying picture). However, it did occur to me that in our country where about 30 percent of farm produce is lost in transit, the administrative machinery could do well to learn from the advanced supply-chains and DC facilities such as the one in question. By helping save some of the wastage, this could help put some check on food-price inflation that troubles us time and again. Here’s a thought: How about organizing such tours for our friends from the food and civil supplies ministry?
Aanand Pandey
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Contents 16 upShot
Recent Events Port Finance International organized port finance event in Mumbai. Speakers convinced participants that there are many issues that needs to be set right at Indian ports.
26 Cover Story Logistics With Gumption The GM of Maruti Suzuki, R Harikumar, discusses his company's SCM strategies which have led to its preeminence in the Indian auto industry.
18 Column Have No Fear
The kiraana stores are firmly established in their customers psyche in terms of moderate prices, prompt delivery of goods and a longterm relationship. Do they still need to fear the MNC retailer?
26 38 Feature
the History of LCL-Kind
20 Feature
Less-than-container load came into being when small and medium sized companies sought out ways to export their goods. But the idea caught on.
The Fundamental Truth Ignoring the basics, as innocuous as it seems, is a trait responsible for a good component of logistics costs.
22 GueSt Column
Handling Service Logistics
A well-designed service logistics operation ensures customer loyalty, growth and significant revenue generation.
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February 2011 | www.logisticsweek.com
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FeBruary 2011 42
ADVeRtIseR InDeX
Gall of steel
Arham Logiparc ......................................................... 9
The supply-chain of steel companies move at a global level. While raw material has its own unique logistics, finished steel products are another matter altogether.
BLR ......................................................................... 53 DIESL 3rd Annual Supply Chain Event ......................15 DIESL ISC Award ......................................................13 DP World .................................................................BC Drive India Enterprise Solutions ............................. IFC Exide ....................................................................... 23 Ghandhi Automation .................................................11 Greenearth Translogistics........................................ 37 India Supply Chain Cost Optimisation Summit ......... 41 Mahindra Naivistar ................................................. IBC Man Force Trucks...................................................... 3 PE, M&A in Transport Infrastructure & Logistics Services .................................................................. 47
42 50
Port Handbook ........................................................ 45 Radhakrishna Foodland ........................................... 49 Safexpress .............................................................. 35
every Move You Make
Shree Rajlaxmi Logistics .................................... 29,31
Supply-chain companies could do well to invest in technologies that help track consignment.
Subscription ad ....................................................... 61 Thomson & Thomson ...............................................14 Vijay Logistics ........................................................... 4
January 2010 IndIa’s LeadIn
Method In Motion page 34
50 56 panorama
Books, Journals, Blogs, Technology - a look at what's new in and for the supply chain industry.
TElEcom logisTics 20 LEARN
MovementINGS of telecom 2010 26 network Critical lessons equipmwe entlearned opens afrom window industry of opportu leaders.nity
reGularS
news
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MagazIne gisticsweek.com
INDIA
Januarry 2011 Octobe 2010 | Vol. Vol. 44 –—No.2 No.5
amit mukh erjee, Vicepresident (iT and supp ly chain) and group cio deployed exem at rpg, has plary supp chain strate lygies at spen cer‘s retail >>
g LOgIst Ics www.lo
`100 ` 100
Sonic Boom
Ericsson India Director (Head Supply) Tej Nirmal Singh leads the exciting task of mana supply chain ging for in these dema the company nd-crazy times . NEglEcTEd
adopTioN 24 ATWhy CEMA WMST: The still expo and the does waTErway not have seminar. A ring-sid TOUG s 44 enough H LOVE: e view... India is ignoring takers in India Pharma logistics 20 inland ICE is challenging BUFFER: How waterwa yet rewardi ys at its cold-chain can own ng... 50 peril help contain food prices.. .56
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events
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FEBRUARY 2011
60 BaCK to BaSICS We explore three terminologies - ABC Analysis, ERP and Bill of Lading. INDIA |
February 2011 | www.logisticsweek.com 7
< news
TRAIN OF THOUGHT
oPerAtIVe INDeX* Frost & Sullivan, International Maritime Organization ...................... 10
We reach out to more than 1 lakh retail outlets and up to 200 modern retail formats. It is our distribution network which makes foreign brands tie up with us. — dilip dandekar, managing director, camlin, on its distribution tie-up with Japan’s Zebra.
India aims to invest `4.52 trillion by 2020 to build new ports and develop its shipping industry to boost trade. The investment will likely more than triple India’s annual port handling capacity to 3.2 billion tons. — gk vasan shipping minister at the time of unveiling the Maritime Agenda 2010-2020.
We are easily looking at around one million new jobs directly linked to the telecom sector over the next 3-5 years, most of which will come from sales, retail and distribution. — rajiv bawa, executive vp (corporate affairs), uninor, betting big on telecom becoming the single largest employment creator in rural India.
TVS Logistics, Universal Freight Management, Four Soft, DIESL, Manufacturers Equipment and Supply Company ......... 12 Siesta Logistics, Reliance Retail, DHL, Coca-Cola, Nokia, UB Group, Videocon, Fujitsu, Philips, Airbus, Amway, Parle Agro ............ 14
*Key entities mentioned in the news section
Industry Looks At New Road Minister With Hope On taking over as the new Minister for Road Transport and Highways, CP Joshi sent out some encouraging feelers to the industry. The industry watches in anticipation.
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n a move that has gone curiously under-reported by the media, the Ministry of Road Transport and Highways saw a change of guard on January 20 with Kamal Nath passing on the baton to CP Joshi, who held charge of the Ministry for Rural Development. Nipping all media speculation in the bud, Nath declared to journalists after taking over the new charge that he sees the new appointment as “not a promotion or a demotion”. Nath started his term with announcing his dream of building on an average 20 kilometers of roads every day, but beset by an inefficient adminis-
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trative machinery along with Rajas(something that than Chief MinisNath conceded to ter Ashok Gehlot, this magazine last helped the Conyear), and scams gress turn tables in the tendering on the BJP. Born process, the pace and brought up in of road building Rajasthan, Joshi had slackened holds a masters lately, averaging degree in phys3-4 km towards ics, a doctorate in the end of 2010. psychology and a CP Joshi, the CP Joshi, the new Minister bachelor’s degree new Road Trans- for Road Transport and in law. Highways. port and HighAfter taking ways Minister, is a 60-year old over, Joshi, in his first media adacademician who emerged on dress, promised quality roads the national political scene in and greater transparency in the the December 2008 Rajasthan functioning of his ministry. His assembly elections when he, talk of the use of new technol-
February 2011 | www.logisticsweek.com
ogy for real-time monitoring for instant feedback seems to have enthused the industry about him. Ajay Chopra, CEO, DIESL, seemed confident that the new minister will take a more aggressive target because of the backlog of work. “The new minister needs to look at a more focused and long-term perspective on the area of road development. We still seem to be very short sighted in our plans. One example here is that even now the new highways being planned are 4-or 6-lane structures, when the rest of world is at a much higher level.”
< news The All India Motor Transport Congress (AIMTC), a Delhi-based association of commercial vehicles, commented that while ministers may change, the policies continue to remain the same. Bal Malkit Singh, member (managing committee), said the organization is making a presentation to the new minister with regard to the
lack of transparency in toll charges. “We had requested the earlier honorable minister to undertake an annual collection of toll charges for trucks plying under the National Permit. Also, the absence of highway patrolmen is jeopardising the safet y of drivers and goods.” On the new development, Chitra Shinde, Chief Business
Chain Officer, GATI Limited, says that the new minister needs to make roads safer so that transporters do not face the constant problem of shortage of drivers. “The ministry should set up rest areas on highways for drivers that provide basic food and sleeping arrangement on hire. Today no driver would want his son to continue in the profes-
sion. The life of a long haul driver, although adventurous, is very tough.” If Joshi delivers on the commitment of making quality roads it would mean huge savings for logistics companies, not to mention the smooth running of the highpowered trucks that are entering the running f leets in increasing numbers.
Sector NewS
Demand For OSVs Will Drive India’s Shipbuilding Mumbai
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recent analysis from Frost & Sullivan, Strategic Analysis of Shipbuilding and Repair Market in India, finds that the shipbuilding and repair market in India is poised to pick up momentum. The reason is the increasing penetration of Indian shipbuilding companies in the offshore vessels (OSVs) segment. Indian companies have established strong credentials in the building and repair of OSVs, resulting in a spike in orders for such vessels from the industry. The limited capacities related to OSVs in leading shipbuilding nations such as Japan and South Korea are also resulting in diversion of orders to India, driving up the fortunes of the Indian shipbuilding and repair market. Growth in multimodal transportation infrastructure and integrated logistics parks has led to significant logistics outsourcing opportunities. The aging fleet of shipping companies in India is another factor energizing prospects for the shipbuilding and repair market in the country. Frost & Sullivan has found
that the market earned revenues of $1.6 billion in 2010 and expects this to reach $3.5 billion in 2016. The report adds that about 40 percent of the India-owned fleet is more than 20 years old, and Indian owners will need to spend about $4 billion to replace these during 2010-2015. In addition, the International Maritime Organization (IMO) has mandated the phasing out of all single-hull vessels by 2010, and single hull tankers constitute about 16 percent of the total vessels owned by Indian shipping companies. The future of the Indian shipbuilding and repair market looks promising and is likely to double in size in the next five to six years. The growth potential is further enhanced with the Indian government aiming for the nation’s shipbuilding sector to attain a 5 percent share in the global market by 2017. Although the outlook for the market is bright, there are some challenges. India has a vast coastline, but there is an acute shortage of deep draft water
The aging fleet of shipping companies offers good prospects for the Indian shipbuilding industry.
space along the coast. This restricts the type and size of ships that can be built or repaired in India, thereby curbing the full growth potential of the Indian shipbuilding and repair market. Shipbuilding and ship repair are both labor-intensive activities and fulfilling the requirements of this industry is proving to be a market bottleneck. The government is encouraging greater private participation in the sector and a new worldclass commercial shipyard is
being built on the eastern coast. These factors will rev up growth prospects for the market. The government is also facilitating improvements in port and infrastructure facilities and easing regulations and taxes to assist the industry in addressing the challenges and overcoming its barriers. Participants in this space are striving to gain a foothold in the small and special category vehicles segment, such as offshore vessels to optimize business traction.
IndIan shIpbuIldIng Industry accounts for just 1 pc of the global market 10
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February 2011 | www.logisticsweek.com
< news
TVS Logistics May Tap Capital Market With IPO Chennai
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f the company board decides, TVS Logistics may soon tap the capital market through an Initial Public Offering (IPO) in the next three-six months. The funds raised will be used to fund its acquisition plans. The move is part of the logistics company’s plans to become the flagship arm of the TVS Group. The company is planning to raise `100-200 crore through the IPO. Besides, the company
has also set a target of doubling its turnover this year. In 20092010, the company realized a turnover of `650 crore; for 2010-11, it is expecting to reach around `1,250 crore, according to reports. The company has also announced its acquisition of USbased Manufacturers Equipment and Supply Company (MESCO) for a 100 percent cash deal. As part of the acquisition, TVS Logistics would
make an investment of `50 crore. Through the acquisition the company besides leveraging the clients of MESCO, would also expand its presence in the United States market. This acquisition is expected to help handle the supply chain management in the tool and dye business, besides increasing the company’s presence in North America. Currently, TVS Logistics garners 40 percent of revenue
Universal Freight Management Optimizes Supply Chain With Four Soft Solutions Hyderabad
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niversal Freight Management (India) has entered into an agreement with Four Soft (4S), a global leader offering software solutions for logistics and transportation industry, to implement its webcentric freight management system (4S eTrans) and India customs compliance solution (4SeCustoms) across multiple locations. Universal Freight Management (UFM), with partners located worldwide, offers range of services to customers like air & ocean forwarding, multimodal transport, customs brokerage, logistics/distribution, warehousing, and consultancy. With the new solutions, UFM expects to expand its business reach, improve overall business productivity and offer efficient services to customers. The web-centric solutions
The web-centric solutions will enable UFM to automate its processes, improve operational productivity and increase service levels to customers. should enable UFM to automate its processes, improve operational productivity, reduce overall costs and increase service levels to customers. 4S eTrans is Four Soft’s webcentric Freight Management System capable of handling air, sea, road and multi-modal transport management services. Built on J2EE platform with a native browser interface, 4S eTrans is designed to provide logistics operators with operational and financial control over their day to day, order to cash process of the domestic and international freight movements. Equipped with an
integrated freight accounting module and interface capabilities with external accounting systems, 4S eTrans provides a scalable and flexible freight management solution. 4S eCustoms is an anytime, anywhere global customs compliance solution, with plug and play modules for different countries, designed to work in a multicultural, multilingual environment, as one package with interface capabilities with all Four Soft enterprise products and other ERP applications. With native browser access and a generic third party interface, 4S solutions
from the domestic market with the remaining coming from its overseas operations. In 2007, TVS Logistics acquired 49 percent stake in another US fi rm Global Rush. Having bought the remaining 51 percent, Global Rush is now a 100 percent subsidiary of the TVS Logistics in the United States. In the near future, the company plans to expand operations in China, South East Asia and Turkey.
DIeSL initiates Shram Daan Mumbai
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s part of its CSR move, Drive India Enterprise Solutions Ltd. (DIESL) has initiated ‘Shram Daan’ to construct a mini dam in the village of Jarandi in Thane district. The construction was undertaken by over 100 employees from DIESL and is the part of the village development program initiated last year by the company. The construction of the dam is part of the ‘rain-water harvesting’ project under the village development program. DIESL will monitor this extensive and comprehensive three-year plan with an internal audit team with a view to duplicating the model in other villages in the country.
are highly interactive and cost effective for the international freight forwarding and customs brokerage community.
fedeXIndIa was Is the the fIrst second to eQuIp largest delIvery producer vans wIth of two-wheelers technology to In track the world packages 12
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February 2011 | www.logisticsweek.com
< IntervIew
piecing it together Siesta Logistics Corporation (SLCL) is expanding globally. For this reason, the company raised $10 million by selling a minority stake. kiran salunke, managing director, slcl tells Log.India the company’s road map. What has been you experience of moving from established companies to a start-up?
When Siesta Logistics began operations in 2007, it took us 2-3 years to plan and understand the business module. Our group of specialists with more than 15 years of industry experience helped ease uncertainties. We are now in a position to help clients redesign their supply chains, optimize routes, negotiate better vendor terms and ensure that their materials reach on time. Our clients include Reliance Retail, DHL, Coca-Cola, Nokia, UB Group, Videocon, Fujitsu, Philips, Airbus, Amway, Parle Agro, among others.
How does Siesta Logistics plan to expand globally?
Our network of operations covers Asia, Europe, Australia, Hong Kong, North and South America. We are looking at setting up operations in South East Asia, Vietnam, South Africa, Colombo, Middle East Asia, London and more locations in the USA. Siesta Group is a diversified conglomerate with interests in hospitality, retail and agriculture. How is the overall logistics managed?
Each entity is supported by Siesta Logistics when there is a requirement. For example, Imprints, our footwear brand, has a section of its manufacturing in Kolkata. SLCL steps in to coordinate the raw material require-
ments from the vendors’ destination to delivering the finished products to points of sales. How do you customize logistics for your clients emerging from various verticals?
We cater to specific requirements from verticals such as finance, telecom, retail, and FMCG. Our domain knowledge combined with our capabilities of end-to end logistics management helps us design and execute solutions, thus enabling us to approach and acquire new clients within any vertical. Our customized solutions enhance their efficiency in logistics and bring them substantial savings. Your motto has been to remain as-
set light. How do you manage business globally?
We have a wide network of partners that allows us to work on an asset light model. We have associates in over 20 destinations across the globe. We are part of a Global Logistics Network which has 375 members, offices in 382 cities and network in 132 countries. Siesta seeks to “create an increasing need for seamless logistics solutions”. How do you plan to channelize this?
We aggregate services in the entire supply chain, so we remain in control. We cater to all imports and exports to and from India including permissions and paperwork.
Thomson and Thomson Owing to our rich industry experience of more than three decades, we are able to manufacture and export a quality range of Air Curtains,Industrial Air Curtain,Commercial Air Curtains,Pharmaceutical Air Curtain, PVC Strip Curtain, PVC Flap Door, Air Purifiers etc.
Thomson and Thomson
Unit No. 7, Near Siddivinayak Temple, Ashok Nager, Marol Pipeline, Andheri East Mumbai, Maharashtra - 400 059, India
Mr. G. Thomas Telephone : +91-22-28345547/28207912 Mobile : +91-9867099434, Fax : +91-22-28207912 Email: thomson8591@gmail.com, thomson1958@rediffmail.com
< EVENT REPORT
Ideas from Abroad Participants at the Port Finance were firm that Indian companies need to go back to the drawing board before constructing new ports. Frewin Francis looks at the sea of troubles that Indian ports face.
M
umbai witnessed its first port finance event for the international port finance and investment markets, Port Finance International. The event was organized by an UK based online news portal sharing a similar name. The event followed close on the heels of the much talked about fifth Vibrant Gujarat Summit 2011. Participants were eminent personnel from maritime boards and advisories, infrastructure companies, law firms and investment firms, among others. A constant refrain throughout the event was that ports in India can be made more efficient if the feasibility due diligence has been done well. The highlights of some of the sessions are as below: Session: Planning and Risk Management in the Indian Ports Structure Speaker: Gordon Rankine, Director, Beckett Rankine
Beckett Rankine, an engineering consultancy firm, specializes in planning and designing marine infrastructure. Some of their notable works include planning the world's largest man-made harbor at Ras Laffan in Qatar, the award winning Millbank Pier in London, and the design of the Dockmaster pontoon range. Gordon Rankine, Director at Beckett Marine, shared his
Date : January 19 and 20, 2011 Event: Port Finance Organizer: Port Finance International Venue: Novotel, Mumbai
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February 2011 | www.logisticsweek.com
(L-R) Pankaj Kumar, Vice-Chairman, GMB; Gordon Rankine, Director, Beckett Rankine; Marten van den Bossche, Chairman, ECORYS Nederland BV; and Dr. Parakrama Dissanayake, Chairman/CEO, Aitken Spence Maritime.
thoughts on development of ports and spoke at length on the areas that authorities should focus on. Having helped with surveys, strategies, designs, master plans, and project management for jetties, quays, piers, terminals, dredging and other marine infrastructure, he expressed his concerns regarding the Indian port story. He observed that a recent trend emerging is the entry of several infrastructure firms into port development without a clear understanding of marine related issues. He began his address with the study of waves. High tide often results in log period swells that disrupt cargo efficiency. It is also important to conduct a thorough understanding of the soil prior to constructing a port. He cited a recent disaster that took place at the port of ChibatĂŁo, Manaus, Brazil. A huge crack along the length of the terminal saw parts of the terminal patio give way and crumble into the river, with containers and port equipment getting swept away. Another area that Rankine
stressed on was financial control. (See graph, facing page) â&#x20AC;&#x153;Saving a few lakh rupees during the initial concept and feasibility study by cutting down on due diligence and surveys will entail the risk of enormous losses. Environmental, regulatory, design related, topography related, political, natural calamities and navigational issues need to be carefully taken into consideration before the foundation stone is laid down.â&#x20AC;? Session: Case study on Gujarat Maritime Board (GMB) Speaker: Pankaj Kumar, Vice-Chairman, GMB
In his presentation, Kumar highlighted some of the initiatives by GMB to develop the port sector in the state. He discussed the various initiatives taken by the board to attract sector players to invest in the state and the huge potential it possessed for the maritime vertical. Some pressing issues concern the environmental impacts due to ship recycling at Alang. However, steps have been taken to provide an environmentally-friendly and economically feasible solution. He also pointed out some of
Influence of Cost
Project Cost
Desig n Banka bility
ing Plann
ility
Project Time pt
Bosscheâ&#x20AC;&#x2122;s presentation followed Kumarâ&#x20AC;&#x2122;s on Vibrant Gujarat. The concerns voiced were based on his experience and exposure to the In-
Rankine's relationship graph between cost and time in a project implementation
Feasib
Session: Gujarat: Main entry point for India? Speaker: Marten van den Bossche, Chairman, ECORYS Nederland BV
dian business climate. He pointed out that while Gujarat might be the most lucrative region as far as investment in ports is concerned, it still remained as one of the most expensive regions to develop a port, citing climatologic and other soil related issues. He averred that while a large number of ports look economically attractive, in the long term considering economies of scale a larger port on the lines of the port of Rotterdam or Antwerp would still fare better. He identified Dahej and Hazira as the regions with maximum advantage due to the high level of commercialisation in contrast to Mundra which is sparsely populated. Development of hinterland access routes was also a long-standing problem, he added. While having a well-designed and efficient port is desirable, the lack of access routes to these ports makes logistics costs rise drastically.
C once
the compelling issues of security, subsequent to the Gujarat and Maharashtra coast being identified by the Intelligence Bureau as possible routes for terrorist infiltration. The state has stationed special battalions and marine police along the waters. Also the Vehicle Tracking & Monitoring System (VTMS) employed in the Gulf of Kutch, on a clear day, can detect ships as far as the coastline of Goa and Oman. The GMB has also planned for port cities/coastal townships in Mundra and Pipavav. This would also mean setting up desalination plants and solid waste management facilities to ensure clean living conditions to people employed at the ports.
Graph Courtesy: Beckett Rankine
Securing Long Term Ties
S
upply Chain Management B-school graduates and working Development Council host- executives by extending industry ed Supply Chain India Meet knowledge through well-known 2011 on January 8 in Mumbai. The supply-chain professionals. event saw a turnout from 20 leadAmongst the speakers who preing supply-chain practitioners, 22 premium academicians and 50 young B-school graduates seeking a beginning in the field of logistics and supply-chain. This academic forum in the field of logistics and supply chain management aims at Dr. RS Ghosh, President, SCMDC delivering the welcome note. motivating young
sented their views were Anjan Sen, General Manager (Logistics) at Ultra Tech Cement. He discussed the criticality of timely delivery and key issues of the cement supply chain. This is because as a commodity, cement has a volatile pricing model and requires high dependence on various suppliers for raw materials. It also calls for constant re-engineering to improve the efficiency of the supply-chain.
Date : January 8, 2011 Event: Supply Chain India Meet 2011 Organizer: Supply Chain Management Development Council (SCMDC) Venue: Hotel Stars Parade, Mumbai
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February 2011 | www.logisticsweek.com
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< COLUMN COLUMN
My Pop Strongest India’s Mom and Pop stores should not feel threatened with the knock of multi-brand FDI at the door — not only do they have a home advantage, but they are formidable in the areas of customer service, delivery, and relationship. The idea of logistics has expanded over the years to become the interesting, all-encompassing entity - supply chain - that the vegetable IS A general perceptionPagadala that Foreign DiitTHERE is today. Padmini explores themarket. two Contrary terms.to the West, we
From Logistics To Supply Chain PADMINIPagadala PAGADALA Padmini General Manager, General Manager, TPGConsulting, Consulting, TPG Mumbai Mumbai
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rect Investment (FDI) in multi-brand retail could threaten small retailers. so. What’s in a independent name one may ask? Maybe We may But there few arguments thatthe could shrug off are theadiscussion, but here not so exmake in the our independent (kiraana stores) perts industry.retailers Recently, i was at a feel better oncewith theysome know their ground.veterFor cocktail party international instance, if at 10 in the night, I call up my local ans from our industry, and they started talkkiraana shop to order a loafword of bread will deing about what the right waswho to refer to livers it in ten minutes, I wonder why they the industry we work in. they discussedhave the to fear the bigso MNCs. Having do I walk subject with much vigorsaid andthat, argued back through a supermarket to buy stuff? Of course and forth, that i thought it would be valu-I do. When I livedtheir in Singapore, Mustafa Centre, able to recount conversation. More than which must undisputedly be the world’s largthat, it’s important because i think it shows est store, was one of my favourite haunts. To be how the field has evolved. able to see rows of tiny bottles of salad dressing What’s interesting for me as a relative newnever ceased to warm my heart. Will this lure of comer to this field is that we haven’t always been foreign capital take away the business from our called supply chain professionals. according local retailers? Does the entry of foreign capital to these “veterans,” our profession has really in the multi-brand market mean the end of our changed its name three times over in the last 50 kiraana shops? Will the lessons that they have years or so. it wasn’t until the beginning of the learnt help them survive and hopefully emerge new millennium that our recent name change better than their foreign counterparts? When to supply chain professionals took place. this inevitable epic battle is complete, will the consumers rejoice? Although we will likely have to wait years for the answers, I believe it’s worth INDIA | December 2010 | www.logisticsweek.com looking at the Indian customer behavior to guess who might have an advantage.
Soft Customer The Indian consumer is very tolerant to stockouts. We buy from what is available, more so in
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are quite averse to eat mangoes in December or strawberries summer. Why did theinchange take place? as we in When a customer walks intoevolution a store and india follow the supply chain path asks product, he is expected to make do that for the aWest has mapped, it’s worthy to confrom available. Compare thatthat to the sider what each is step and whether or not step promise of necessary the local kiraana storethe to deliver was really or relevant. biggest home an out-of-stock product the minute heof mistake we can make is copying for the sake procures it. This is of course possible because copying. it strikes me that sometimes even the the local retailer sources hisnot manpower from logistics terms used might transfer as well villages and sustains his profi ts by underpayas the practices. ing his employees. What would happen when India enforces minimum wages or its child laThe Beginning bor laws with vehemence? Most of you would be familiar with the CounThis same “make do” attitude, I think, shapes cil of supply Chain Management Professionals Indian thoughts on brands. How often do we go (CsCMP). the CsCMP is the world’s pre-eminent to a kiraana store and ask for “Good Knight” and organization of supply chain professionals . settle for “Mortein”? This is extended to health there are thriving chapters of the organization and beauty aids and even dry grocery as well. But in Mumbai and Delhi. But, what most readers the question is, if the products do start appearmay not be familiar with is that in the very begining on the shelves, would consumers start to bening in 1963, when the founders came together come brand conscious? Will we always tolerate to set it up, that’s not what they called it. a supply chain that forces us to settle for products other than those asked for? Customers are known to wait for the car they want or seek out another retailer to buy the cell phone they want, but will this trickle to products such as atta and washing powder? There is reason to believe that if the products are available on the shelf when a customer needs it in one store, there will be a shift towards the product than the retailer.
Price Matters Most Indian consumers are lured by competitive prices and promotional offers. The queue for the annual Big Bazaar sale runs through the entire length of a popular mall in Mumbai. This year I braved myself and tried to catch a glimpse of what the store looked like on the inside, the first day of the sale. Like any big sale, the smaller sellable units had been replaced with bigger ones. While the savings could not justify my having to haul home five-kilo bags of washing powder or any other products, I could see how it all could add up for a household buying dry grocery for two months or more. Today, even by very conservative estimates, at least 40 percent of the Fruits and Vegetables (F&V) are damaged in transit. This means that the supply is short and it is the customer who has to pay for the pilferage. Multibrand retailers can run their supply chain at about eight percent of the cost of goods sold and the savings accrued are passed on to the customer. The real savings in a retail business is the ability to save the pennies. This can only be saved if the retailer manages to grab a small percentage from every nook and corner of the supply chain or other areas of the outlet. This is the biggest, and probably the only, area where organized retailers beat the local retailers hands down.
Quick Home Delivery While home delivery may border on the premium for vegetables or pulses, it is expected in terms of white goods. It is also expected that installation will be done as in the case of home theaters. The organized retailers have tried to work around it by offering home delivery for the following day. This is managed from the store rather than the warehouse, unlike in the West. Of course, the customer cannot choose the time when the product will be delivered. This is an opportunity area for local retailers. The mom and pop stores could do this effortlessly with their small scale of operations. It could even mean bigger sales, if they could figure out a cost-effective method.
Building Relationships When the person whom I have purchased goods regularly from walks into my office and answers all my questions with regards to a new product, he clinches the sale. It should seem pretty simple for large retailers to do this. Often, they do not seem to get this right. If I do buy a product from a big retail chain, it is unlikely that I will find the same sales person every time I make a purchase. The product is always more expensive. Worse of all when I have a problem, they will tell you to go elsewhere. Unlike my vendor who may not be able to solve the problem himself, but will direct me to the right place and offer his personnel to get the work done - for a premium of course. This is the golden
zone that the mom and pop stores have. You only have to call them when something goes wrong. They would take back the product with no questions asked or in other cases fix it. They do not have a ‘sales’ team, a ‘delivery’ team or a ‘repair’ team. They are truly one company. This is probably where local retailers can cash in. While building a personal relationship with the client may seem tough, it is not impossible to hire the right staff to answer questions and make sure that repairs, if not returns, are accepted amicably and processed in a reasonable amount of time.
Who Will The Winner Be? If I were a local retailer, I have the home advantage. I have procured the real estate for the stores which is, by far, a difficult task. Also, I know most of the challenges and have a head start on how to tackle them. If the market does get opened up to multi-brand retailers, the best ‘win win’ strategy would be to tie up with the right foreign company rather than fight them. That would be a marriage that would make even the consumers happy. As a matured retailer from outside, their vast knowledge would be an advantage. There is the capacity of being able to run the supply chain at 6-8 percent of the cost of goods sold. This cannot be construed as being able to merely copy paste western or for that matter any other solutions here. As the cliché goes, India is unique. Having made mistakes already, matured retailers know where to invest. The foreign companies would still have to procure the real estate for the stores and figure out how home delivery could be made efficiently. If I were a kiraana store, would I worry? A little. One cannot forget that the same debate raged a few years back when large retailers started to set shop in India. Did that mean the end of the kiraana shops? Definitely not. A few may have lost some of their sales but not the ones who had a good relationship with their customers. As a kiraana store or even a small electronics dealer, there is always the price advantage. There is no way a large retail chain can beat the seller who sells onions near a local railway station. The seller will make it a point to peel off the bad layers till each onion is clean. The fruit seller has the skill to note ‘good customers’ for whom he will handpick the good apples. If I were a kiraana guy who had the capacity to home deliver in ten minutes and take cash at delivery, I would only be a bit worried. Best of all, if I own the piece of land where my little shop sits in the midst of a hundred households, I might not be that worried. And best yet if I were sitting on top of the supply chain buying my shampoos from the mall, getting my apples from a retail store and my monthly grocery home delivered, I just might sit back and wait for the battle to begin. The author can be reached at padminimp@theprogressgroup.com. INDIA |
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< GUEST FEATURE
The Fundamental Truth A large component of logistics costs stems from companies glossing over the good ol’ basics, says Ram Madhav Sarma.
I
t is a much bandied about fact that logistics costs in India amount to 13 percent of GDP compared to the developed world’s figure of around 6 to 8 percent. Logistics players in India attribute the high cost to government policies, duty structure etc., and also, to a large extent, on our dependence on the “unorganized sector”. To me, the term “unorganized” used in this context must not be restricted only to small fragmented players who work with unskilled labor, restricted assets and infrastructure, but should also be expanded to include the big, major players who throw away the “basics” to the wind, a propensity that I feel is a big contributor to the costs. Unlike other sectors, logistics
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involve costs at every level; every aspect of the logistics processes, irrespective of the size and quantum, adds up to the overall costs. Therefore, the reduction in the overall costs at the macro level has to begin at the micro level. The mention of costs brings to mind the experience of this high ranking official who retired from the government service with an offer from a paper company, to head its division in one of the metros. In the way that he was used to working, he started with establishing the basic systems and processes within the company in fi rst three months after joining. During the fourth month, the company fi red him. The reason: He was not generating the adequate
It is a fact that efforts made to generate revenue accrue better output than that of reduction of costs. revenue for its division. The company argued that his basic job was to earn the revenue for the division and all the other things remained “secondary”. Obviously, the company did not feel the requirement for such systems as, in all probabilities, the company must’ve been covering these costs through either
high revenue generation, or in other words, by passing on these costs to its customers. Similarly, a European Projects company contracted for transportation of vehicles from an African country to India did not have a well laid out system for the collection of the vehicle keys from the agent at the embarkation port. The offloading of vehicles at the Indian port could not be delayed till the arrival of the keys; therefore, the costly specialist vehicles had to be offloaded with the help of a crane, resulting in a substantial loss as handling damages. The auto company had carried out the initial acceptance checks of all the vehicles at the consignee point, but the similar system was not followed at various transshipment points by its 3PL providers, resulting in the auto company incurring losses again due to deficiencies in the vehicles which it could not pinpoint to any of its outsourced agencies. All because of the company’s neglect of a basic procedure. A simpler example is of the passenger cargo-handling system at our airports. Most of the damages to the baggage do not occur during transit, they occur due to mishandling at the transshipment points by the ground handlers. A regular passenger can rarely spot any baggage coming out on the conveyer belt in an upright position, which results in a long queue at the claims counter. It just requires an effective supervision at the transshipment point by the handler. Shouldn’t an airline carry out a cost-benefit analysis for such an issue? All these examples had two things in common: One, these logistics guys did not see any merit in concentrating on the small issues at hand, and two, they obviously pushed the resultant costs to their consumers. It is not that they are not aware of these basics; it’s
Most of the players focus on the top-line and think that passing off the logistics costs to the end consumers will solve the problem.
just that these are too small issues for them to concentrate upon visà-vis the bigger picture of revenue generation. It is a fact that efforts made to generate revenue accrue better output than that of reduction of costs. Hence most of the players focus on the top-line and think that passing off the costs to the end consumers will solve the problem. But the companies don’t see how that adds to the overall logistics costs. Importantly, it’s more critical for the bigger players to contain logistics costs by sticking to basics – due to the quality imperatives and bigger quantum of processes involved. The so called “organized” players do have the wherewithal to work out the costs, but what they need is the attitude to look for it. This attitude, once adopted, percolates down to various players along the supply chain. On the other hand, due to high competition, the smaller players somehow become aware of these basic benefits and have to perforce utilize it to their advantage.
The onus of breaking the vicious cycle of costs remains with the logistics sector due to the enormity of its role. Some micro-level solutions for that lie in: (a) Recognizing that even the smallest process carries costs to the company. (b) Re-engineering every process in order to fi nd and reduce the costs. (c) Educating the lowest employee about the outcome of her involvement in the process of achieving cost reduction. (d) Executing accountability at every level in the process. (e) Incorporating the term “contributing to reduction of overall logistics costs” in their respective mission statements.
Ravi Madhav Sarma is a qualified logistics manager with two decades of experience in military logistics. The views expressed here are his own based on his experiences with corporate logistics. INDIA | February
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< Guest feature
Service LogiSticS:
the game changer Service logistics not only retains customers but it also provides substantial revenue.
S
sanjiv Kathuria Country - Sales and Marketing Director, TNT
ervice logistics has come to the fore and is believed by many to have the potential of being a game changer in the industry. The growing concern for the environment, along with a rapid increase in the introduction and use of new and advanced technology, has led to an increased interest and focus on service logistics. And expectedly, any one definition fails to satisfy all its stakeholders. For the purpose of this article, service logistics is defined as “All logistical activities that support the servicing of a sold product throughout its lifecycle”. This includes managing Dead On Arrival (DOA), Dead After Purchase (DAP), Warranty Management, Collection of Defective goods from customers for repair, Swap, Storage, Order management and Distribution of spare parts required for repair.
a Key Differentiator As the high technology market particularly becomes increasingly commoditized, there is a growing realization that the manufacturer’s aftermarket service can become a key differentiator in customer retention, sustained growth and a substantial revenue stream. This means offering good service, maintenance, repair and warranty programs. Managing and supplying spare parts within a specified time limit is also a critical part of service logistics. Traditionally, organizations have used forward logistics channels to fulfill their service logistics activities. This is partly due to the
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comfort of riding on existing infrastructure and avoiding multiple vendor management. This created inefficiencies and a clear conflict of interest between the manufacturer and their distribution partners. To address this, manufacturers began to look to outsourcing service logistics functions to specialist companies who can bridge the gap between the service commitment of the manufacturer and its actual fulfillment. The outsourcing of the service logistics supply chain has given the manufacturers the benefit of faster turnaround time, and reduced total distribution costs by keeping a tab on the inventory carrying cost and leveraging the expertise of organization skilled in service logistics.
rapid Growth Some of the industries that have been early adopters of ensuring a robust service logistics supply chain are from the computing and telecom vertical. The telecom industry for both hardware infrastructure services and devices has been aggressive in adopting the service logistics route primarily, as the cost of the device comes down and sales volumes increase across the geographical expanse of the country. The service logistics market in India grew rapidly at an estimated 16 percent CAGR in 2009-10. According to a recent study, the service logistics market potential was valued at €200 million (`1400 crore) for these industries alone.
< Guest feature As the product cost decreAses, the cost of service As A percentAge increAses.
service supply Chain The service logistics customers can be grouped into two categories窶的nstalled Base Product (IBP) like, servers, heavy duty printers, telecom towers and Return to Bench (RTB) for example, mobile phones, laptops and iPods. In the case of the Installed Base customer, only the spare that is defective moves, whereas for the Return to Bench category, the entire product is sent back for repair. The diagrams below depict a typical supply chain for both the IBP and RTB customers (Figure 1 and 2). For any manufacturer wanting to set up a service logistics supply chain, the road is full of hurdles. Most of the current options are highly disorganized with multiple local logistics and repair providers acting independently. One of the key challenges that companies face is managing a complex network of multiple vendors with varied service levels and costing. With increasing levels of competition, aftermarket service has become the key differentiator. As the product cost decreases, the cost of service as a percentage increases. This dichotomy of controlling costs, while improving service levels in a scenario of decreasing product costs, is propelling manufacturers to focus on designing an efficient supply chain to optimize this cost. For manufacturers set to design and evaluate a service logistics supply chain solution, some of the questions that need to be an-
swered are: n What is the percentage of products returned for repair during warranty? n What is the cost to process return vs. cost of product? n What percentage of the value of a returned product did the company manage to eventually recover? The answers to these questions will help determine the viability of engaging with a logistics service provider. Some of the challenges that companies and people in service logistic supply chain experience include: n A general lack of focus or top management involvement in this part of the supply chain. n Lack of sound forecasting techniques for service parts. n Inefficient and ill-suited IT systems to manage service logistic activities. n Major growth coming from Tier II and Tier III cities and beyond, coupled with poor transportation network connecting them. n Logistic service providers have limited coverage in these locations. n Reliance on channel partners to manage returns business, resulting in lack of focus and conflict of interest.
is Outsourcing the answer? Service logistics helps the client to reduce inventory and logistics costs and shorten delivery timescales, as well as provide rap-
figure 1: supply Chain of installed Base Product
Source: TNT
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Source: TNT
figure 2: supply Chain of return to Bench Product
id pick and pack distribution service. Companies now need to choose between “make” or “buy”. Companies which decide to manage this part of the supply chain in-house will need to evaluate their practices and use of technology, or face growing costs and customer concerns. The skill set of individuals managing it also needs to be checked. To take care of the future and be competitive, companies need to keep investing in the latest IT technology and also regularly train its manpower. The move towards outsourcing is beneficial because of the complexities in this part of the supply chain. It requires a different level of expertise and know-how, and enables companies to procure services from specialists and leverage the advantage of using the shared resources on space, manpower and IT with degrees of customization as required. The specialists invest constantly in upgraded IT infrastructure, manpower and reach, along with the sharing of best practices which are passed on to customers. Repair turnaround times, inventory control, security, network reach and real-time data visibility are key priorities for customers when identifying a logistics provider. While choosing a reliable service logistics partner, the company needs to evaluate the partner on various parameters. The parameters will include criteria such as does the partner have a road and air network for domestic and international locations, security
readiness in terms of certifications and robust systems, data availability and clarity, cost efficiency in terms of shared fixed costs and flexible pricing methods, value added services such as escalated deliveries for critical parts, IT system enabling transparency, reporting and monitoring and last, but not the least, service logistics knowledge, the right people and the right experience.
after Market service Selecting a good service logistics partner is just half the job done. The critical part still lies with the manufacturer. The key differentiator in aftermarket service still has to be created by the manufacturer by integrating and defining the scope and objectives of service logistics activities. The first task is to lay out a well-defined and documented service policy. The manufacturer also has to select the right partner and integrate all the stakeholders in the service logistics supply chain with a clearly specified scope of activities in order to efficiently monitor performance. A continuous improvement process will help refine and raise the benchmark. Thus, a well-designed service logistics operation ensures that the manufacturer’s supply chain is always dynamic, on demand, and fast to market with seamless storage and distribution.
repAir turnAround times, inventory control, security, network reAch And dAtA visibility Are priorities for customers.
The author can be reached at sanjiv.kathuria@tnt.com INDIA |
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< Cover Story
Eye For Innovation Photos: Ramlath Kavil
Maruti Suzuki India thrives on a remarkably efficient supply-chain aided by General Manager (Supply-Chain Division) r. Harikumar's penchant for innovative ideas that work. Pamela Cheema reports.
R. HARIKUMAR, General Manager (Supply Chain Division), Maruti Suzuki INDIA |
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< Cover Story
N
eat rows of Maruti’s popular models of cars, like the AStar, Ritz and Wagon-R glint in the early morning winter sunlight in the stockyards as we drive into the 300-acre Maruti Suzuki plant at Gurgaon, Haryana. Inside the plant, there is frenetic activity as executives and workers, clad alike in pale green uniforms, are huddled over their work in austere offices. Adjacent to the offices and adding to the general clamor and din of a manufacturing plant are conveyor belts, with massive chains holding the gleaming bodies of new cars, creaking noisily above the belts. R. Harikumar, General Manager (Supply Chain Division), Maruti Suzuki India Limited, ignores the ca-
The Maruti Suzuki Supply-Chain: Highlights n Current
annual production capacity n Avg. components per car n No. of local Tier I vendors n Global vendors n Supply Chain Employees n Inventory Turn Ratio in 2009-10 n No. of LSPs n Manufacturing plants n DC location
: 1.2 million : 7,000 : 250 : 20 : 150 : 21.2 : More than 100 : Gurgaon & Manesar : Gurgaon
cophony as he earnestly discusses the supply chain methods of his company which have helped Maruti grab a substantial chunk of the domestic market. Maruti has a 50 percent plus share of the domestic market and manufactures 1.2 million cars per year — this includes the domestic and export market. "By 2015 we aim to hit the 2 million mark" discloses Harikumar. “With that goal in mind, we are increasing the capacity of our plants. We already have a second plant in Manesar, Haryana, 25 kms from our Gurgaon plant and we are planning to set up another plant at the same site, thus augmenting the capacity of our plants.”
Delivering value Kumar proudly describes Maruti’s supply chain or ‘value chain model’ (as he terms it) as “very slim, trim and robust.” A large tranche of the company’s domestic suppliers, around 86 percent of them, are located within a 100-km radius of the Gurgaon factory. The vendors keep up an unending supply of critical components like body panels, bumpers etc. with only tyres sourced from Ballabgarh in Haryana, Chennai and
A large tranche of the company’s domestic suppliers are located within a 100-km radius of the Gurgaon factory.
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remote areas of Madhya Pradesh. Vast supplies of components, based on indents, are ordered from the vendors; keeping a watchful eye on customer satisfaction, Maruti stockpiles its components (which form a part of Maruti’s Genuine Parts system) and distributes them swiftly from its central warehouse located close to its Gurgaon factory, into the aftermarket.
the transport Mix Maruti Suzuki is said to possess the largest and most closely connected auto dealer and aftermarket network in the country. The company has 877 sales outlets in 619 cities, with 2,855 workshops in 1,363 cities. It also has 346 True Value Outlets (certified used car dealer network) which cover 202 cities! Most of the company’s cars are moved to their destinations by trucks and trailers, with less than 10 percent being transported by rail. Poor and snail-slow development has hamstrung rail infrastructure, which thus offers few options to auto manufacturers in the country. “We are in discussions with the railways to increase transportation
< Cover Story Source: Maruti Suzuki
by rail,” says Kumar. “We also expect auto wagons to be ready within a couple of years. But even when auto wagons are ready, the poor state of railway infrastructure – insufficient number of railway tracks and wagons – will severely limit auto transportation by rail.”
Demand Fulfillment Maruti’s trim and efficient supply chain network has netted the company many rewards, notably the ability to assess market demand accurately, fulfill it speedily and to the entire satisfaction of its legions of customers. The company has 250 plus Tier-I vendors and 20 global suppliers who ensure continuous supplies. Maruti maintains a spare Just-In-Time inventory which is replenished on an hourly basis. Its vendors are connected to the company’s much-lauded e-nagare system, which is an electronic supply chain system, through which the
FY10: How Maruti Fared n Gross
Revenue (2009-10): $67 Billion. increase in Domestic Sales. n 111% increase in Export Sales. n 40%
Future Action Plan n To
develop capability for full model change in all aspects - planning, design, development and testing. n To develop more products with alternative fuel option. n Compliance to safety and emission regulation such as offset, side impact, etc. n Carry out continuous up-gradation of existing models. n To build the Company's knowledge base and its image on technology by designing and showcasing projects in auto exhibitions. n Emphasis on VA/VE & innovative cost reduction ideas to cut down costs. n Developing costing knowledge of various automotive technologies through standard cost tables and cost benchmarking. n Cost planning of new products right at the new product planning stage to put cost in right perspective during the concept stage and give target cost to designers. n Emphasis on focused cost down models for competitiveness.
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Maruti's vendors are connected to the company’s much-lauded e-nagare system.
vendors inform the company on a day-to-day basis of diverse requirements and provision of supplies. Once informed of desired supplies, the vendors deliver the material to the factory doorstep. “Our seamless supply chain is due to the combined effort of the company and its vendors. This is what keeps our system running,” says Kumar proudly. “Our production system is also very efficient and it gives an absolutely correct prediction of demand.” The company’s production is planned meticulously and with great attention to detail and once a target has been fixed, Maruti resolutely sticks to it. The company’s target is decided by the market as well as organizational directives. Maruti's numerous dealers send their feedback through the company’s IT systems which are then compiled and used as market surveys. “Our dealerships are closed and very mature,” emphasizes Kumar. “Our dealers know our policies and priorities, so we know we can rely on their data.” With its supple and effective supply chain strategies, Maruti has been able to navigate through the shoals
of the economic downturn and even fend off stiff competition from multiple auto brands. Its inventory turn ratio has improved by 27 percent from 16.7 in 2008-09 to 21.2 in 2009-10.
Handling Global Suppliers The rise in inventory turn ratio has been assisted not just by deft handling of the domestic market, but also the seamless management of supplies sent by global suppliers. Maruti Suzuki receives 60 containers of components from Japanese companies every week. “Most of our shipments are on a Free on Board basis, that is, we decide the shipping schedule and the shipping company,” elaborates Kumar. “Maruti is responsible for shipments from their factory to my factory here. I am responsible for shipping, port clearance, customs clearance and inland transportation. So from the foreign destination to my factory here, is my job. This makes for better control.” Kumar, who has a degree in Business Economics from Delhi University and who joined Maruti Suzuki India Limited in 1984 (in marketing and later graduated to logistics), has
< Cover Story prepared precise and detailed plans of shipping schedules for global suppliers. “I have yearly, half-yearly, quarterly and monthly plans,” he explains. “When there are just four months left for the materials to be shipped, I tell my suppliers to firm up their schedules. I also give projection letters to my suppliers detailing the quantities we require. When there is just one month left, we inform the shipping companies of the schedules and tell them to liaise with our suppliers. By that time, we also know what are the volumes of material we require in our plant for the various models." Warming up to his subject, he dips into greater detail as he says
e-nagare is a system which has been pioneered by Maruti for Just-In-time inventory, uninterrupted production and quick response to market fluctuations.
expansively,"When the ship sails, through our IT systems we get to know when it will be at JNPT; we post a person there who takes the matter forward.” Despite the auto maker’s grueling work schedules and the rough and tumble of the auto market, Kumar insists that his company has never had to fret about vendor lead time issues. Supplies from the vendors have segued seamlessly with production schedules, with rare work stoppages, due to the maturity and finesse of Maruti’s supply chain system. This in turn, according to Kumar, has
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spawned the attitude in the company that stoppage of production is a crime.
the e-nagare Factor Much of the credit for this uber efficiency is due to Maruti’s muchdiscussed ‘e-nagare’ supply chain system. E-nagare is a Japanese word which defines continuity and flow. It was installed at the Gurgaon plant in 2003 after several experiments with various supply chain strategies. This is a system which has been pioneered by Maruti for Just-In-Time inventory, uninterrupted production and quick response to market fluctuations. It is suitable for vendors who operate
in the vicinity of the plant and within a three-hour transit time from the factory. The stock position is generated daily and sent to the vendor at a particular time through this system. The vendor then plans the schedule accordingly for the next day. Every corridor of Maruti’s plants is lined with movable storage cabins known as ‘bins’ which store auto components. As the stock in the bins is used up, information is sent to the vendor through e-nagare and it is replenished. Says Kumar: “The system is so designed that it picks up the nearest supply time for each block of production requirement. And as per
Supplies from the vendors have segued seamlessly with production schedules.
our inventory norms, no safety stocks are maintained. Only advance material for about two hours production will be available at best.” On the basis of the information that is supplied, the vendor ensures supplies at pre-defined timings and frequencies. Kumar is visibly proud of the e-nagare system “which enables us to roll off 4,600 cars a day. This system is now our lifeline!”
eye on Quality Despite the hard slog of an ambitious production schedule, Maruti has devised a program called 'Shikhar’ to keep a sharp check on efficiency and
productivity. The HR, production and supply chain verticals of the company structured this program to halt any slide in quality. Actually, Shikhar is an incisive vendor analysis, whereby the performance of those vendors who produce the most defective equipment is measured. Kumar explains the concept carefully by pointing out that “those vendors are checked who produce defects at a monthly average of 500 per million.” Vendors who exceed Maruti’s sacrosanct limit are retrained and educated till their performance improves substantially. Other benchmarking initiatives comprise of performance measure-
Shikhar is an incisive vendor analysis, whereby the performance of those vendors who produce the most defective equipment is measured.
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< Cover Story Pioneering Green Automaking In India n First
to set up effluent treatment facilities way back in 1984, when there was no legal requirement. n First Indian automobile company to go for ISO 14001 certification in 1999. n First to use natural gas for power generation at its captive power plants. n First to introduce factory fitted LPG and CNG cars. n First to launch ELV compliant cars. n First to launch cars complying to Bharat Stage-IV emission norms. n First to voluntarily disclose fuel efficiency of cars at dealership.
We also need to have more dedicated freight corridors all over the country. If China can have many freight corridors across the country, why not India?
34
ments in various Key Result Areas (KRAs) which are applied to managers, suppliers, dealers, etc. with different parameters for each category. Due to this relentless quest for quality, according to Kumar, there has never been a line stop in the company. However, poor infrastructure in the country may pose challenges to Maruti Suzuki’s ambitions for the future. Kumar underscores the decrepit condition of most Indian ports, the low productivity, poor
connectivity, ill-trained manpower, obsolete trucks and the ubiquitous pot-holed roads! “I have seen many ports in the world, especially in Singapore and China, they are so different from ours with their high productivity and punctuality,” complains Kumar. “We have to develop our infrastructure, but I will say that it’s not just the government’s fault, even the different stakeholders are responsible for this state of affairs.” Kumar also points out the deficiencies in railway infrastructure and the urgent need to lay more tracks. “We also need to have more dedicated freight corridors all over the country. If China can have many freight corridors across the country, why not India?”
No Big-Name LSPs Maruti Suzuki’s finished goods are carried across the country by more than a 100 LSPs who are on the panel of the company. The automaker avoids the pitfall of being lured by big name LSPs and prefers to nurture small-time service providers who are eager to grow with the company and form its rock-solid service provider base. The company believes that large big players are loth to shed their time-tested methods and learn new techniques. Hence it prefers to hire service providers who have just made a foray into the business, moulds them carefully and encourages them to stay with the company, with the additional carrot of longterm contracts! “Many of our transporters have been with us for 12-13 years if they live up to our performance expectations,” says Kumar, “and some of our clearing agents and shipping companies have been working with us for 24 years!” Maruti keeps checking the roadworthiness of the vast fleet of vehicles maintained by its transporters. “We never use a trailer older than four years,” asserts Kumar. “After every four years we change the trailers. We
have a contract with our transporters about this and they are bound to make this change.”
Wider Net Maruti does not transport or store the various components of its finished goods in warehouses across the country. It has a single main warehouse in Gurgaon, Haryana, in which the components of its finished cars are stored. From this warehouse, products are distributed by indents to multiple dealers. According to Kumar, the present system has been indisputably successful because dealers order spare parts along with the cars. This system was devised to ensure quality. But with Maruti’s present hegemonic position in the auto market and the need to distribute its products more evenly in the market, the management is reconsidering its warehouse policies. The company now favors decentralization, with warehouses established in every region in the country. Maruti Suzuki’s warehouses are fully automated with the latest loading, unloading, pick-up and carry equipment. The warehouse systems also enable on-line material identification and capture Firstin-First-Out movement, periodic stock taking and inventory carrying cost analysis. With the winds of change sweeping the logistics industry and resistance to new ideas crumbling, there has been much talk recently about the concept of collaborative logistics. Tapping combined strengths could decisively lower costs in a market where inflation shows no signs of abating. Kumar is receptive to the idea and mentions that “we allow our transporters to take other vehicles, like Hyundai cars, on their return trips. But using the same stockyards is a sensitive and political issue, a decision which only the management can take.”
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< Cover Story Accurate Foretelling Globally, the market is just emerging from a harsh downturn whose lingering effects are still being felt. Maruti Suzuki is in the process of becoming a major exporter in SouthEast Asia and the Asia-Pacific region. The company is also attempting to make deep inroads into the European and South American markets with the assistance of its Japanese parent company. With its multiple ambitions and fierce domestic pres-
today Maruti Suzuki India Limited has a totemic significance in the Indian auto market – a company which began small, struggled to the top and now has carved an enviable position for itself in the auto industry.
isfy customer expectations about Maruti’s products. Through the practice of ‘kaizen’, checks and balances are maintained to ensure that there is no slippage in the quality of its products. “We observe each and every activity and identify gaps and scope for improvement,” says Kumar earnestly. “Then we make step-by-step improvements, spread out over a period of time. We also check the ‘before’ and ‘after’ scenario and only then standardize our products.” The company is equally fastidious about its sourcing decisions as it will never permit consumer confidence to sag. Maruti Suzuki maintains a huge databank of vendors and is aware of the components produced by each vendor; if a new product has to be developed, the existing vendor will first be tried. If the vendor has difficulties with the product, a new vendor will be developed. Sourcing decisions also include the formulation of alternate plans to offset any negative blowback. “For every Plan A, we have a Plan B in place, but it’s seldom applied, as we know and we ensure that we are right the first time and every time,” says Kumar with supreme self-confidence.
the Persistent Innovator
sures, the company’s market estimates and its demand forecasting projections could go awry. But Kumar maintains that the company’s forecasting techniques have been finessed to exclude possibilities of error; Maruti ensures that its projections are neither too conservative nor too optimistic. This enables the company to maintain equilibrium – it fulfills its own sales projections and customer expectations and at the same time, never loses sight of ground realities. Similar care is taken to sat-
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Today Maruti Suzuki India Limited has a totemic significance in the Indian auto market – a company which began small, struggled to the top and now has carved an enviable position for itself in the auto industry. It constantly seeks innovations and tries not to let a single new idea run into the sands. In keeping with the times when green initiatives are being emphasized, the company manufactures CNG and LPG vehicles. Research is in progress for the production of hybrid and electric cars in the future. Maruti uses only CFL bulbs in its factories and has invested heavily in a very effective water harvesting system.
The company employs 7,000 plus workers in its various offices across the country; the Gurgaon plant alone has 3,000 plus employees on its rolls. The percentage of women in its various plants is increasing with more women being promoted as supervisors in the company. Maruti also runs an all-women ITT (Industrial Training Institute) at Gurgaon. Among other corporate social responsibility initiatives are road safety and vocational training programs, some of which the company has been conducting for a decade. Maruti established its first Institute of Driving Training and Research (IDTR), in partnership with the Delhi government in 2000. This was followed by the second IDTR in 2009 and two more in 2009-10. New IDTRs are also being established in Gujarat, Haryana and Uttarkhand. In an effort to increase consciousness about road safety issues which have remained in a state of benign neglect for years, the company launched its first Maruti Driving School in 2005 – it now has 83 Maruti Driving Schools across the country. Maruti Suzuki has also adopted four villages around its second plant at Manesar in Haryana and bankrolls the development of their education and healthcare. Outside R Harikumar’s office the conveyor belts are still grinding on relentlessly, giving one a jump-seat view of Maruti Suzuki’s steadfast pursuit of its production goals and targets. Ignoring the knot of people around him urging him on to the next meeting and the klatch of people at various desks in the open office, Kumar looks at the machines with visible pride on his face. “You know,” he says proudly before he walks away, “ I don’t remember a single day in Maruti when we planned 1,00,000 cars and ended up producing just 99,000 cars!”
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< feature
The Rise and Rise of LCL the evolution of less-thancontainer load (LCL) had its beginnings when small and medium-size companies realized the high costs of shipping small parcels and sought an option from shippers. Vivek Kele brings to us the history of LCL.
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C
arriage of small parcels has been in existence since merchant shipping started. Earlier, small parcels were transported by sea in break bulk mode as general cargoes. All this changed with the advent of containerization. Gradually, the entire liner trade moved from break bulk to container mode, so much so that liner shipping became synonymous with container shipping. The fact however remains that any regular shipping service, break bulk or container, with dedicated port rotation and schedule integrity is a liner service. This schedule integrity could be practiced better with containeriza-
tion. But in the bargain, the exporters dealing with small parcels had a problem, as the decline of break bulk services left them with fewer options to carry their parcels. The need to carry small parcels still remained whereas the carriers could offer only Full Container Services. Thus began the era of specialized LCL carriers. The development of a modern LCL carrier can be traced in the following four stages of evolution:
Stage One (1982-1987) In this era, containerization was a new phenomenon and container carriers could offer only FCL services. Port-toport LCL services was being offered
LCL carriage activity was cumbersome and not remunerative enough. This resulted in setting of extremely high LCL freight rates, making it an elitist kind of service. What the carriers did not realize was that the users of LCL services were the small and medium manufactures and traders whose business model did not permit incurring high costs towards transportation and this kind of pricing directly affected their competitiveness.
Stage two (1988-1995)
only by enterprising and better organized shipping lines. But these were few and far between and the services were offered only on the trade lanes where they had direct calls. Very few carriers offered transshipment services for the LCL cargoes and the ports covered under these services were limited. Moreover, the LCL services offered were purely based on inducement. Firstly, there were no weekly services and there was nothing like “fixed day calls” and that coupled with inducement based departures made the LCL services then offered inconsistent and arbitrary. Also, LCL carriage was not an attractive business for the carriers; their core competencies rested in handling ships and containers. For them,
Considering these issues faced by the carriers and the trade, around the same time large customers began demanding of the carriers to offer them LCL carriage. Since this was a specialized activity, it prompted the ocean carriers to start separate divisions within their companies to cater to this new business activity. The newly consolidated divisions used the containers of the parent company, and services were offered to select large customers such as department stores, large buying houses, catalogue sales companies in North America and Europe. However, there were other customers who sought to send their shipment by LCL mode and did not have viable options. Seeing this as an opportunity, a few entrepreneurs started offering LCL services. They bought FCL space from the carriers and retailed the same on an LCL basis. This method involved a certain amount of risk and dedication at the same time. The risks were towards paying for FCL space to the carrier —independent of the cargo available — and then work backward to gather enough LCL cargo to make a full load. Sometimes they succeeded, sometimes they did not. It also called for dedication to manage the cargo by ensuring warehousing space to receive LCL consignments and then stuff them in to container loads. They did this by choosing experts in
the team to manage heterogeneously packaged cargoes and organizing all the customs and port documentation required at the port of origin, port of transshipment and finally at the port of discharge. All this made the LCL business challenging and a niche business that thrived for those who took the risks and had the dedication to organize the complex activities.
Stage three (1995-2007) Slowly and steadily, by 2000, almost all major shipping lines had withdrawn from this business and carriage of LCL cargo developed into a specialized domain of consolidators. This gave an opportunity for new players to enter this space, and while some were serious operators, there were some who were testing the waters. In time, only the serious players survived. As the LCL carriage activity matured, it became more streamlined and gave rise to the Hub and Spoke concept and worked exactly the way airlines operate through this model. Cargo originating from smaller ports to a large one or originating from a larger port and destined for smaller ports had to be routed through a hub location. This hub location required to have enough cargo inducement to make direct boxes to far and wide destinations. Depending on the cargo flow and the cost of transport some FCL international transshipment hubs concurrently emerged as LCL cargo hubs over a period of time. The early 90s saw the ports of Hamburg/Rotterdam/Antwerp emerge as LCL hub ports in Europe, and Singapore/ Hong Kong in Asia. Over the years other ports like Dubai, Durban, Busan (South Korea), Barcelona, Miami, Colon Free Zone and Colombo also emerged as regional LCL hubs. Simultaneously, another development was the extension of LCL carriage activity to the land side by the LCL consolidators. This was faciliINDIA | February
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< feature tated in countries like the USA, Germany and other European countries where the transport infrastructure in terms of roads and warehouses was better developed, not to mention that its customs legislation were open to this kind of business activity. In India this is being developed through multi-city consolidation with permission from the Indian Customs. LCL cargoes can now be Custom cleared at ICDs. A value addition that Consolidators started offering at this stage of evolution was the carriage of hazardous (Haz) cargo by LCL mode. This was made possible after the classification of Haz cargoes by the IMO along with laying down of packaging norms, handling procedures and the paperwork involved. This was a boon to shippers as it brought down their transport costs drastically. As LCL carriage activity matured, it gave rise to the hub-and-spoke concept.
Stage four (2008-present) LCL carriage business is steadily being consolidated globally. In terms of neutral LCL operations, only 3-4 promi-
nent players are emerging to be strong operators who can offer global services with consistency. The industry has also seen large forwarding companies offering LCL services; these services are offerings limited to their in-house dedicated customers only. The global LCL business is characterized by the following service features: 1. Global footprint in operations catering to the LCL transport needs of large MNC freight forwarders. 2. Movement visibility through use of strong back-end technology. 3. A multimodal transport document backed by the goods carrier’s liability coverage. 4. Service availability through effective and efficient routes. 5. Offering local pickups from within city warehouses/CFSs for international destinations. 6. Nationwide land and port side LCL cargo capabilities though own offices and agents. 7. DDU (delivered duty unpaid) and DDP (delivered duty paid) services for exports and ex-works LCL pick up services for Imports. 8. Air and sea services.
What Makes a Good LCL Service Provider
Photos: Ramlath Kavil
A good LCL operator can be recognized by the following characteristics: a. Global services through a right mix of direct and transshipment services. b. Full visibility of movement of cargo on the web through a strong IT system. c. Full knowledge of documentation required for carrying the LCL consignment till final delivery, especially in the world of AMS (Advance Manifest System), ACI (Advance Commercial Information) and ENS (Entry Summary Declaration). d. Strong infrastructure in terms of warehouses to handle smaller LCL shipments of all kinds.
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LCL shippers also face challenges. Some of them are: 1. Inability to choose the right service provider as price is the single most governing factor in most cases. 2. Unscrupulous LCL operators offering cheap rates at origins and overcharging the consignees. 3. Lack of responsibility by some operators to handle extraordinary situations leading to claims. 4. Poor infrastructure available to handle the LCL shipments leading to damages and unhappy consignees. On the other hand, LCL operators too face some challenges. They are: 1. Shippers inadequately packing cargo which cannot withstand multiple handling — a sure with LCL cargo. 2. Shippers ignoring the packaging requirement at destination, namely the WPM (Wood Packaging Material) regulation, AQIS (Australian Quarantine) etc. 3. Shippers not providing the documentation Invoice, Packing List, Declarations, Import Licenses, etc. required for smooth deliveries at destinations. 4. Mis-declaration of ‘haz’ cargoes, declaring wrong weights, leading to accidents and loss of property. 5. Fraudulent exports made to claim export benefits leading to unclaimed cargoes at destination and hence carrier charges remaining unpaid. As global trade expands, merchants will require transporting cargo on an LCL basis. There will be enough cargo for LCL operators to carry. It is also important to know that only the large global operators with consistent services will continue to survive, grow and expand. The author is Director, Teamglobal Logistics Pvt Ltd. He is also Managing Committee Member of AMTOI (Association of Multimodal Transport Operators of India) as a Special Invitee. He can be reached at vivek@teamglobal.in.
< feature feature
STEEL ON WHEELS
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Supply-chains of steel function at a global level and call for a high level of activity. Logistics service providers have to consider various levels of preand post-production processes. Jayashree Mendes follows the trail.
A
ccording to industry estimates, India’s steel production in 2009-10 stood at 64.88 million ton (MT), up 11 percent from a year ago. In the same year the country also emerged as the third largest producer of fi nished steel in the world. So it’s not surprising that Indian steel companies are organizing themselves to increase production through Greenfield (26 mt) as well as Brownfield (34 mt) expansions. Moreover, in their bid to make better steel products, most steel companies have been eyeing global acquisitions or tie-ups and have thus acquired access to better raw materials, components, technology, etc. Engaged in an unbound rush for scale, steelmakers are following two main goals: they are purchasing additional production capacity that will help them to improve their cost structure, while offering increased market advantage. The last two months alone have seen two major announcements from the giants of the steel industry. Tata Steel has tied up with Japan-based Nippon Steel Corp will invest $479 million to produce 600,000 tons of cold rolled automotive steel by 2012. Jindal’s JSW Steel, on the other hand, is acquiring 41 percent stake in Ispat Industries, which will make JSW
the largest steel maker in India. Almost all other domestic companies too have announced similar tie-ups or expansion projects.
Steel Giants The Indian steel industry consists of three groups. The first group is the integrated steel producers which produce greater than one million ton and includes Steel Authority of India Ltd (SAIL), Tata Steel and Rashtriya Ispat Nigam Ltd (RINL). The group of secondary majors consists of the Ispat Group, Jindal Group, Lloyds and Essar Steel. Their capacities range between one million ton and two million ton using a mix of technologies, with much lesser degree
of backward integration. These two strategic groups together control around 70 percent of the mild steel capacity. The third groups of tertiary producers are mini-steel plants, using electric arc or induction furnaces and comprise a small part of the market. Globally, steel consumption has been increasing consistently year after year. Although development of infrastructure is a primary reason, complementary industries such as automobiles, construction, railways, etc is helping the steel industry to grow at a rapid pace. Most steel companies run operations with plants at several locations, from where products are shipped to various destinations.
MetalsIndustry Industry ValueChain Chain Metals Supply Traders Suppliers • Coal • Iron ore • Scrap • Limestone • Fluxes • Alloys • Gas • Scraps • Slabs • Hot bands • Equipments • Spares Parts
Integrated Mills
Buyers • Transportation
Processors
(Steel, Aluminum)
Non-Integrated Mills (Steel, Aluminum)
• Construction
Distribution Fabricators, Converters and Service Centers
Centers
• Industrial/ Commercial • Equipment • Energy
Logistics Providers Graph Courtesy: Ispat Industries
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< feature The supply-chain would tend to get complex. Considering the voluminosity of steel companies, it is only natural that their emphasis remains on maximizing capacity utilization and keeping costs low, especially in each phase of the supply chain (See Box: Metals Industry Supply Chain). Considering that steel goods move in a volatile market, steel companies are in
the logistics cost of steel can go as high as 13-18 percent of production if companies are not careful. — Gangadhar rout, Head (Logistics Solutions), Essar Steel
the habit of conducting a periodic analysis to minimize costs that aid in production planning.
Keeping a Hawk's eye Steel production is a highly material and energy intensive industry, according to Essar Steel’s head
(logistics solutions), Gangadhar Rout, and manufacturing one ton of steel requires handling and transporting four ton of bulk (raw) material. In addition, the capital outlay that goes into steel manufacturing is quite large and has to be computed by the tonnage and adhered to. Hence, it is important that steel companies maintain a hawkish eye on logistics and supply chain operations. “The logistics cost of steel can go as high as 13-18 percent of production if companies are not careful,” he adds. For managing the supply-chain of steel, it would help the supply chain division of manufacturers or logistics service providers (LSPs) to understand the various types of steel, the specific requirements and purpose of steel and related products (See Box: Types and Uses of Steel), and the transport requirements for each. The company or department responsible for the supply chain of steel must also understand the multiple objectives and stages of steel production. Moreover, steel companies operate in a global market, and its supply chain would function at a global level too. Clearly, the supply-chain of
types and uses of Steel Product
Form
Uses
Hot Rolled
Coil/Sheet
Cold rolling Auto parts manufacturing Railway wagons
Cold Rolled
Coil/Sheet
Construction, Welded tubes and pipes, Strapping, Galvanizing / Color Coating
Hot Dip Galvanized
Coil/Sheet
Roofing, Partition, False Ceiling, Steel buildings, Decking, Truck bodies, Fuel and oil tank, exhaust pipe, washing machine body, water tank, door/ window pane, grain silo, water heater, freezer, desk, locker, container, packaging material, etc
Steel Billets
Round bar, Flat Bar, Wire Rod
Wire Rods
Electrodes, Wire Mesh, Fasteners
Galvanized Corrugated Sheets
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Industrial Sheds, Temporary Structures, Housing
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steel is not confined to finished products. Raw materials such as coke, limestone, iron ore pellets, iron ore lumps and fines take up the majority, says Hitesh Gossain, Senior Vice-President, Credence Logistics, a leading supply-chain solutions company. “Logistics in pre-production would include inbound raw material movement management, in-plant material handling, and in-plant logistics; the post-production would entail semi-finished products, finished products, and slag management and utilization.” Steel comprises finished steel, semi-finished steel, stainless steel and pig iron. Hence all these products require an efficient supply chain that extends visibility of demand based on economy and market, raw material supply based on transportation, and suppliers and their price.
raw Material Logistics The raw material for steel, available in loose form, requires a separate set of vehicles and the transport operators include mainly brokers. Transportation weight loss and quality check are a major concern in this segment. Most steel manufacturers prefer to source vehicles from large f leet owners and manage to transport steel products via established road, rail and marine networks through strategic alliances with major contractors. Abhijit Chaudhuri, Director (Supply Chain Management), Ispat Industries, says, “Supply-chain management is synchronizing of different modes of transportation. For instance, for transporting raw materials we use rakes, barges, road, Handymax, mini bulk carriers (MBCs), or Panamax.” According to a source in Tata Steel, steel and its raw materials being bulk material are mostly transported by rail and sea. It re-
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< feature SCOPE OF LOGISTICS SERVICES IN STEEL PRE-PRODUCTION Inbound raw material movement management Rail movements Road movements Sea movements Coastal operations Port Logistics Management In-plant material handling Bulk raw material Gas transportation DRI (Direct Reduced Iron) transportation Scrap management – movement , storage and handling In-plant logistics Ladel transportation Slag removal and handling POST-PRODUCTION Semi-finished products Computerized management systems –trace Product tracking Slab handling Finished products Outbound transportation management Packaging solutions Quality control – QA mapping Yard Management – Stacking / Stock management/ Bar coding ANCILLARY SERVICES Slag Management and Utilization Courtesy: Credence Logistics
quires a massive handling system like tipplers, stock yards, material handling systems like stacker or reclaimer and also large storage capacity. Unique to steel products is its long shelf-life. Steel dispatches require care in packaging, bundling and handling to avoid damages. Hence, companies prefer the last leg dispatches by road only. The movement of products involves trucks/rails/barges from origin to load port, from there on to customs, then shipping at load port, and finally discharge. Shirish Deshpande, Manager (Supply Chain Division), Kalyani Steel, says, "Raw material is bulk, while manufactured goods have dimension. Since cargo movement is in bulk, an inadequate infrastructure for smooth movement is necessary. Well maintained equipment for continuous use is important, because breakdowns are common and this can halt the supply chain.” As an LSP, Credence Logistics helps integrated steel manufacturers address the needs of today’s marketplace requirements effectively by managing the f low
FinishedSteel Steelflow Flow for Essar Steel finished
ROAD/RAIL/SEA
RETAIL OUTLET
ROAD/RAIL/SEA
HAZIRA
ROAD / RAIL /SEA
SERVICE CENTRE
SEA Graph Courtesy: Essar Steel
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DOMESTIC CUSTOMER ROAD
OVERSEAS CUSTOMER
of information across operational interfaces like supplier-procurement, raw material-production, operations-maintenance, productdistribution, and retail-customer – in other words, the extended supply chain of the organization. A spokesperson from Arshiya Rail Infrastructure Limited, a subsidiary of Arshiya International Limited, says that traditionally steel and steel products have been moving through trailers and trucks via road, and were subject to much inefficiency like damage, high rate of accidents, theft and pilferage, etc. Containerized rail movement was minimal. “Ever since we obtained a pan-India rail license, we have been engaged in the movement of steel and steel products in various forms for leading manufacturers. Being sensitive to the specific needs of our customers, we have begun providing dedicated rakes (charter services) along with customized containers to meet specific product demands thus reducing losses.” Although rail is an inexpensive method of transportation, steel manufacturers are irked with the difference in pricing by Concor for domestic and export of steel products. The Railways charge `800 a ton for domestic movement of iron ore, while it charges `1,980 a ton for exports. This has resulted in a sharp increase in prices of iron ore. To obviate and decrease transportation costs, Tata NYK Shipping, a joint venture between Tata Steel and Japan’s NYK Line, has plans to more than double its f leet to 30 ships by 2014. In the next 3-4 years, Tata NYK has plans to increase its f leet size to 30 vessels including 16 owned ships. The joint venture shipping company was formed to move raw materials and finished steel for the Tata Group and to allow it gain strategic control over logistics.
< feature Ports on their own too are increasing capacities to accommodate for iron and steel cargo. Paradip Port, for instance, has announced plans to adding one more iron ore and coking coal berth at the beginning of 2020 and a dedicated container terminal with a capacity of about one million TEU during the same period. It plans to develop logistics parks and CFS’s, not requiring waterfront access, outside of the port premises. The estimated land required to develop an integrated steel logistics park would be 2,500 to 5,000 acres depending upon the scale of logistics
the supply-chain of steel is not confined to finished products. raw materials such as coke, limestone, iron ore pellets, iron ore lumps and fines take up the majority. — Hitesh Gossain, Sr. Vice-President, Credence Logistics
activities which will be undertaken in that park. However, steel manufacturers are happy with changes taking place to make logistics easy. New heavy vehicles with more carrying capacity are coming into the market. Integration of multimodal operations are effective, while utilization of waterways is better for transportation and even helps in reduction of CO2 level. The development of large private ports like Gangavaram, Krishnapatnam and Kakinada (East Coast), Mundra, JSW (East Coast) will make supply chain smoother. Secondary steel manufacturers prefer to create a safe and smart
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supply-chain by making it f lexible so that it can handle variations in demand. Supply-chains are run from business units owned by them, and which acts as their service provider. A sophisticated transport management system helps complete the picture. Forecasts are collaboratively planned with distributors, local manufacturers and export orders.
role of technology Technology plays a vital role in today’s logistics scenario. Companies need to ensure that supply chain planning, order management and IT production control systems are fully integrated. Supply-chain visibility is a prime concern for steel companies. Visibility here implies the faculty to see information and collaboration, the chain of activity and understand the need to respond internally, as well as through the network of suppliers and customers. A strong visibility helps steel companies to coordinate activities across the supply chain, improve efficiency and respond more quickly to events at the end of the chain. In terms of managing warehousing facilities at key delivery points around the world, supplychains of steel companies are resorting to retaining depots or terminals, in the case of shipping of goods, close to dispatch sites and steel service centers. Essar Steel manages its service centers on a strong IT backbone comprising SAP, i2, JDA and internal developed solutions that provide end-to-end visibility. With the largest and youngest steel service centers in India, its resources are managed by Essar Logistics, its own logistics division. Moreover, dedicated trailers fitted with GPS systems help track movement. As an LSP, realizing the importance of technology, Credence
Logistics has invested heavily and developed an in-house software for resource planning and accounts assimilation. It has also developed a track-and-trace system for all its movable assets (trailors, tankers and barges) for which clients have access to real time positioning data. It also offers its customers an in-house customer care center with a dedicated toll free number to help track their consignments. According to a report brought out by IBM in 2009, the supply chain of steel needs to connecting top floor to shop floor by integrating enterprise resource planning (ERP) and manufacturing execution systems – and ERP to ERP connections across the supplier/customer network. Within the metals and mining supply chain, different management practices have different times frames. Planning is medium to long term in time and precedes action and is demanddriven. Scheduling is immediate to short term and as exact as possible and is order-driven. Execution, production of steel and filling orders, should be exact and concurrent. The study further points to an evolving role of supply chain leadership in managing challenges. Across industries, the traditional supply chain roles of distribution and logistics, planning and sourcing/procurement are still primary responsibilities. However, fewer metal companies have an increased span-of-control including technology enablement, risk management, and customer management. As supply chain executives address the new challenges, these non-traditional functions will likely rise in importance. Steel companies are less likely, however, to collaborate with customers on demand planning, forecasting and replenishment programs. This suggests that steel companies have an opportunity to improve the value provided to the customer.
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< feature feature
Every Move You Make
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Global Positioning Systems (GPS) helps track precise locations of objects using a space-based navigation system. But unfortunately, the logistics industry, where it could largely be used, have adopted a passive attitude to the technology. Frewin Francis tracks down the reasons.
A
recent report released by SIAM India (Society of Indian Automobile Manufacturers) predicts sales of light commercial vehicles (LCVs) to grow by 25 percent and medium commercial vehicles (MCVs) by 23 percent in calendar year 2010-2011. While this might bring a smile on the faces of component suppliers, tracking solution providers are not exactly ecstatic. Although increasing values and criticality of goods is making it mandatory for logistics companies to track their consignments, acceptance of tracking technology is yet to be widely embraced. Global Positioning Systems (GPS) might have greater acceptance in developed countries, but it is yet to become fashionable in India. GPS involves two functionalities: tracking and navigation. Tracking accounts for approximately 25 percent of the market, with navigation enjoying the larger pie. According to a recent report brought out by knowledge services firm Netscribes (India) on the GPS market in India, the overall market in India has been growing at 65 percent and has been pegged at `7.8 billion in 2010. Gaurav Kumar, Assistant Research Manager at Netscribes explains the disinclination to adopt tracking technology. “Organized logistics service providers who are willing to embrace GPS form a mere 15 percent, while unorganized players are unwilling to use GPS due to a limited fleet size. GPS service providers are also discouraged with the National Map Policy of 2005 that requires them to take prior permission from the Survey of India (it
plays a nodal role in dissemination of map data to the general public) to use maps. The high import duty of 34 percent on GPS devices has also not helped its case.”
How it Works GPS is run from a space-based global navigation satellite system (GNSS) that provides location and time information anywhere. However, the devices must have access to four or more GPS satellites. The satellites are maintained by the United States government and are freely accessible to anyone with a GPS receiver. GPS tracking, as the name suggests, is a service. Shivalik Prasad,
A GPS module connected to an internal communications network of an automobile provides limitless possibilities to the amount of data that can be captured and processed.” — Shivalik Prasad, Director, MapmyIndia
A GPS Navigation Device - (Source: MapmyIndia)
Director, MapmyIndia, a tracking service provider, says, “The service functions through four blocks that work thus: A GPS module receives the GPS signal and calculates the coordinates. A telecommunication link transmits the GPS data, and an intricate map server and a GPS server at the service provider’s end complete the picture.” A GPS receiver calculates its position by timing the signals sent out by GPS satellites. Each satellite continuously transmits messages that include the time the message was transmitted and precise orbital information. The receiver understands the messages to determine the transit time of each message and computes the distance to each satellite. These distances along with the satellites' locations are used to triangulate the position of the receiver. Three satellites might seem enough to calculate the position since space is three dimensional and INDIA |
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< feature
A GPS receiver with integrated antenna.
a position closest to the Earth's surface can be assumed. However, even a minute clock error could result in a positional error. Hence receivers use four or more satellites to calculate the receiver's location and time. For instance, says Prasad, a GPS module connected to an internal communications network of an automobile provides limitless possibilities to the amount of data that can be captured and processed. Data could range from internal temperature inside the car, indication if door is open, indication if the engine has
Source: Wikipedia
been shut down, among others. The range of data captured is subject to the customer’s requirements and investment options.
types of tracking units GPS tracking units are divided into three categories. A GPS data logger logs the position of the object at regular intervals and stores information in flash-based memory. Data on the memory can be retrieved or transferred to other stores with the help of USB connectivity. These devices are suitable for hikers and cycling enthusiasts, who can make use of the logging facility to chalk out future routes. GPS data pushers are used for security purposes. This unit sends data from the device to a central database, updating information on location, direction, speed and distance. Such devices are suitable for monitoring vehicles. Since it is easy to track
movements of vehicles carrying valuable items, data pushers are often used for spying. A GPS data puller allows the user to ‘pull’ data from the receiver as and when needed. The device remains on at all times. Though it is not as commonly used as the pusher device, it is particularly useful for tracing stolen goods. A mobile phone with integrated GPS can reply to an SMS from the data puller.
Vehicle tracking System The Real-time Tracking Devices, also known as active trackers, has the ability to track a vehicle or any other object in real-time. Trackers can locate a particular object or collect the positioning data and send that data to the end user with the help of cellular phone network. Users can request live information at any point of time and even access
GPS to the aid of M&M's farm equipment
M
ahindra & Mahindra’s (M&M) Farm Equipment Sector (FES) is one of the largest manufacturers of tractors in India. M&M has two tractor manufacturing plants located at Mumbai and Nagpur in Maharashtra. Apart from these, the FES has satellite plants located at Rudrapur in Uttaranchal and Jaipur in Rajasthan. The objective of satellite plants is to produce tractors of high customization and quality at affordable costs and facilitate quicker deliveries. Strategically, M&M FES sources components and parts at a single location from Kandivali (Mumbai) and sends the required quantity to its assembling plants at Rudrapur and Nagpur. While Nagpur is around 800 km from Mumbai, Rudrapur is around 1,400 km away. The trucks have to traverse four states —Maharashtra, MP, UP, and Chhattisgarh — to reach Rudrapur. The FES division uses the services of 12 transporters together owning 350 trucks. With a production capacity
of 9,000 tractors per year, ensuring availability of raw materials on time is a challenging task. Despite meticulous planning, M&M encountered problems in transporting raw materials as per the dynamic requirements of the plants. Problems were: n Dispatches delayed due to nonavailability of trucks on time. n Absence of information on the expected time of arrival of the trucks. n In-transit idle times of trucks unknown thus delaying deliveries. M&M continuously strove to implement IT enabled measures to transform the SCM. It was then that they came across automatic vehicle tracking services (AVTS) from eLogistics.
the etracK Solution Initially eTracK devices were installed on 200 trucks in the first phase and later extended to the entire fleet. Majority of the trucks earmarked for tracking were n the Mumbai-Rudrapur route.
eLogistics provides online vehicle location reports every two hours and status reports on a daily and weekly basis. It has also provided M&M online access to eTracK application software to track location of the trucks. The weekly reports comprise distance travelled between trips, average speed of trucks, number of kilometers travelled by each truck, idle time and unscheduled halts.
Benefits of etracK The following are the benefits accrued out of eTracK system: n Real-time information of trucks estimating arrival time and dispatch planning. n Idle-time reduction through constant monitoring of vehicles. n Improved productivity by reduction in turnaround time. n Reduction in in-transit inventory. n Reduced anxiety levels in managing supplies. Source: eLogistics
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< feature data through Internet for which they will have to pay a monthly fee. The other type is Passive Tracking Devices that collect data and store them in an internal memory. When the device is fitted onto a computer the tracking data is downloaded to analyze. These are limited only to vehicle tracking and are installed in a vehicle, and the data stored in the unit is later transferred to a handheld device after the vehicle returns. With no monthly charges, this is cheaper than an active service.
Some roadblocks GPS service providers face several issues that prevent them from offering unconstrained services. A prime concern for service providers is tracking small towns. While big cities are organized for navigation, smaller towns follow inconsistent naming standards. Selling a GPS device is easy. Following it up with consistent service is not. V. Sanjeevi, Managing Director, eLogistics, a GPS service provider, a company recently acquired by Austria-based intelligent transport systems company, Efkon, says, “Often, a fleet operator would buy the device only to find out a few months later that the company has vanished into the night. This leaves customers stuck with devices and no service.” To make matters worse, most GPS devices include extended messages in their products as part of their data protocol for maintenance purposes.
GPS explained GPS Signal: Radio signals broadcasted by GPS satellites enabling GPS receivers to determine location. GPS Tracker: Determines precise location of an asset to which it is attached and records its position at timely intervals. GPS Navigator: Receives GPS signals for determining current location. GPS Receiver/ Module: A GPS receiver calculates its position by precisely timing the signals sent by GPS satellites high above the Earth.GPS Modules feature a built-in antenna and memory back-up.
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February 2011 | www.logisticsweek.com
These messages differ from vendor to vendor. Once a service provider flees, the customer is left with nothing but a bunch of GPS units and no tangible benefit for their investments. The lack of a good map server and a robust telecommunication service provider also add to woes. Prasad states that companies earlier used the map service from Google. This was initially offered free but later barred from commercial use. Moreover, GPS service is provided using the SIM card of cellular service providers. And GPS service providers are unwilling to take ownership of the SIM. This has resulted in a small number of GPS service providers. On the slow adoption of GPS service in India, Balaji Swaminathan, Global Practice Head (Shipping and Transport Logistics), Ramco Systems, points out that there is resistance amongst some transporters to use GPS systems because of lack of coverage and the high cost of hardware and software. Talking about price, Prasad says MapmyIndia offers a tracking service that costs `13,000 and comprises installation, SIM card and national roaming at a fee of `350 per month.
Changing times The arrival of international players in any business spells competition. This has succeeded in getting local players to scale up their operations. With new models of trucks coming from global players into India, GPS is expected to be a standard fitment. Drivers are being educated that the GPS device is not meant to leash them but to help them. Tracking the vehicle could enable the company to provide help in case of an accident or any such occurrence.
Many Possibilities GPS need not limit itself to tracking vehicles and consignments by fleet operators. Banks use tracking services to monitor cash vans to ensure their safety at all times.
Employing a tracking service reduces communication costs and increases fleet management. It can help to communicate with drivers warning them of roadblocks or dangers.” — Dushyant arya, Director, Indo Arya
Dushyant Arya, Director, Indo Arya says that employing a tracking service drastically reduces communication costs and increases overall fleet management. Tracking can help to communicate with drivers warning them of impending roadblocks or dangers. In the mining industry, routes of mines are intricate. LocationGuru’s Mine Management System (MMI) enables route/stops plotting and configuration. Web-based flash alerts provide for route deviation, automatic dumper trip monitoring, estimation of dumper output, call facility to communicate with driver, unexpected stops, over-speeding, and long halts. With all the advantages provided by GPS, more players are expected to enter this space. It is hoped that stiff competition and the ever evolving Indian customer will ensure that the market reaches a level of maturity where tracking is no longer an option.
THE WAREHOUSE HANDBOOK- II : Managing Change LOG.INDIA and DIESL presents you a updated handbook on the Warehousing Industry which would cover the entire spectrum of Indian market Are we ready to embrace various tectonic shifts that are happening in the warehousing sector -in policy (GST), in client expectations, in infrastructure, in technology, in scale of operations, in risk management, security issues, in automation, etc. So the tentative topics covered in the handbook will be as under
The ok andbo ouse h Wareh which
is nt vironme The siness en positivity, In a bu ltowards be a we edging ll ng wi wi slo book ics and use Hand the logist Wareho with e tool for , nc so Al ere . come ref industry GST ly-chain -awaited the supp e much ve ge of th will mo the passa rehouses tomated 2010, wa au ril hly Ap hig in impact ps up to ll wi ste l severa res which ok tion Cent e Handbo Distribu line. Th the ’s bottom- perspective on industry new eams give a try to str us will thu ind le and enab esses. subject and proc the book erations ters of line its op us chap specialThe vario by noted en itt le puren wr th the so wi have be m try e indus sness fro th lou in bu s ist . oving ne business rem ics of ist pose mut of the log ga ts e ec tir en major asp , vers the book co e industry te of th The hand a sta of nt e prese processes from th sign and tion, de ec sel e ) sit back flap
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Sustainable Supply Chain Management
T
he book focuses on the need to develop sustainable supply chains in all aspects - environmentally, economically and socially. The authors aver that the definition of sustainable supply chains must not be restricted only to the so-called "green" supply chains, but recognize the fact that in order to be truly sustainable, supply chains must operate within a realistic financial model. Supply chains should contribute value to the society and they cannot be termed as sustainable unless they are realistically funded
and valued. The book provides an insight into the above mentioned issues via examples from a range of real-life case studies. sustainable supply chain management By Balkan Cetinkaya, Richard Cuthbertson, Graham Ewer, Thorsten KlaasWissing, Wojceich Piotrowicz, Christoph Thyssen Publisher: Springer Price: `2,900
Advanced Manufacturing and Sustainable Logistics
T
he book constitutes the proceedings of the 8th International Heinz Nixdorf Symposium, IHNS 2010, held in Paderborn, Germany, during April 21-22, 2010, under the title “Changing Paradigms: Advanced Manufacturing and Sustainable Logistics”. The 27 full and two short papers presented in this book have been carefully reviewed and selected by the authors from a total of 63 submissions. They are grouped in five parts on Supply Chain Management, Production Logistics and Industrial Engineering, Operations Research Techniques, Humanitarian Logistics, and Simulation. The Heinz Nixdorf Symposium is an established biannual
event of the Heinz Nixdorf Institute during which researchers and practitioners come together to present challenges from industry, discuss contributions from research institutions and develop novel solution approaches.
Advanced manufacturing and sustainable Logistics By Wilhelm Dangelmaier, Alexander Blecken, Robin Delius, Stephen Klöper Publisher: Springer Price: `3,630
Supply Chain as Strategic Asset: The Key to Reaching Business Goals
V
ivek Sehgal in his book provides guidance on creating competitive advantages through strategy realization. It is his experience as senior director of research at Manhattan Associates and at previous organizations that have helped him understand how one’s supply chain can create competitive advantages and help achieve business goals. The author explains how aligning the supply chain design with business strategy helps build competitive capabilities, prioritize capital investments, and takes firms beyond industry
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INDIA |
best-practices. The book does so with the help of real-life cases that demonstrate how strategy alignment can produce results for the most successful companies and how it can be achieved in-house. Some of the case-studies in the book include Wal-mart, Cemex, Kmart, HP and Dell. supply chain as strategic Asset: the Key to Reaching Business Goals By Vivek Sehgal Publisher: Wiley Price: `2,700
February 2011 | www.logisticsweek.com
BLoGosPHeRe some Key trends that Will Drive Freight transportation In 2011 Blogger: Dan Goodwill Goodwill writes with anticipation about some of the trends he hopes to see in the new year. He feels that shippers will adapt supply chains to take advantage of multimodal options since intermodal transportation has been on a growth curve and will continue to do so. He also expects an increase in demand for large container vessels since shippers and shipping lines are preparing for the completion of the $5.25 billion expansion of the Panama Canal that will be completed in 2014. This will lead to an increase in orders for “megavessels” that can carry 20,000 20-foot containers, more than double the capacity of today’s most common ships. Furthermore, with global trade having increased by an estimated 11.4 percent in 2010, it is expected to increase by another seven percent in 2011. He feels that vessel freight rates will remain flat since slower economic growth and increasing ship capacity will result in expanded vessel space allowing shipping rates to remain flat. search tags: dan goodwill, megavessels, Panama Canal
transporting Hope: WFP Logistics In the Fight Against AIDs Blogger: World Food Program website A few months ago, WFP, a humanitarian agency fighting hunger worldwide, published a series called ‘The Longest
ResouRce centeR TCO Of Rail Signaling Systems By Invensys Rail Invensys Rail is a multinational company specializing in delivering state-of-theart railway control and communication solutions. They set out to build a Total Cost of Ownership (TCO) model to quantify the cost of various lifecycle stages from scheme design to implementation, operation and maintenance. Ivensys populated the model with real-life data provided by rail infrastructure operators from Europe, US and Asia Pacific. This paper discusses some of their findings. Lifecycle costs are a well understood concept in networked infrastructure assets. In the rail industry the concept is less widespread, nevertheless a useful tool to inform resource allocation decisions or assess the relative merits of different rail signaling technologies across the whole asset lifecycle. Cost is not the only factor
Road’. It was about the creation of 'wellness centers’ along transport corridors in Southern Africa in an effort to reduce the impact of AIDS on the transport sector. WFP Logistics in DR Congo initiated the “Transporting Hope” project in 2009, and are celebrating the opening of the first wellness clinic in Lukala on the Matadi/Kinshasa corridor, established in collaboration with the North Star Alliance who manages the wellness clinics program throughout Africa. In addition to the HIV/AIDS prevention campaigns for transporters, the Transporting Hope program is also creating an interconnected “Wellness Clinics” network on vulnerable hotspots, which provide mobile transport workers basic healthcare and services such as HIV testing and medical treatment. search tags: hope, WPF, wellness centers, AIDS, Transporting Hope
study examines shippers' views on port performance Blogger: toby Gooley Infrastructure improvements typically take many years to complete, while the needs of ports' customers—shippers, carriers, and other port facility users—may change very quickly. This raises a question: Do ports win and retain business based on their infrastructure and efficiency, or do customers use different measures to evaluate port service quality? search tags: toby gooley, port, shippers, pprn
Journals, Case Studies, Research Reports in implementing a signaling system, but it is an area that interests all rail infrastructure operators. Search Tags: Invensys Rail, TCO, rail signaling
amount of products to discounters at a profit is a viable solution for organizations that do not have policies against marketing their items at discount stores. Search Tags: Streamlining Slow Movers, Kuehne+Nagel
Streamlining Slow Movers
Poor Safety At Construction Sites
By Kuehne-Nagel
By Volvo Nearly all companies face the challenge of storing "slow-moving" inventory that's either too important or expensive to throw away. Understanding the importance of finding efficient ways to manage slow-moving products is a key to saving time and money. Kuehne+Nagel have a few suggestions on how this can be done effectively. Begin by dedicating private warehouses to slow-moving products, especially among food chains. When products become fast moving in season, food chains can package and transport them in store-ready pallets to other distribution centers to join high-turnover items. Selling inventory to resellers that take huge
Every year, more than 300 people die in vehicle accidents at construction sites in the European Union (EU). According to Eurostat, about 1,000 people die on European construction sites every year. It is usually the human factor that is the cause. This is why Volvo Trucks attach importance to safety issues in its training program for drivers. One-third of these accidents involve vehicles, meaning well over 300 fatalities a year. Volvo Trucks introduced the construction truck, Volvo FMX. Much of the course content deals with safety. Search Tags: poor safety, construction, Volvo FMX
— Compiled by Frewin Francis INDIA |
February 2011 | www.logisticsweek.com
57
< PAnoRAmA LAuncHPAD
New Products, Technologies, Solutions
urbalis control system
multi-Directional Reach trucks
U
rbalis is an advanced control solution from Alstom that addresses problems of rail network congestion. This system for piloting trains and operating urban and suburban lines integrates a radio-based Automatic Train Control system (also called CBTC – Communication-based Train Control). Urbalis improves passenger transport and network performance by continuous radio communication between trains, track, interlocking systems and the control center. The control system optimizes traffic by reducing intervals between each train, thereby increasing the line’s capacity. The open architecture of Urbalis also makes it possible to integrate the transmission of information from trains to the control center. The system has a quick and easy installation, making the entry into service time easy, both for new lines and in the case of renovation of the train control and signaling system of an existing line. The renovation process can be led without disturbing operations and in a
J short schedule of 24 to 36 months. Urbalis is also compatible with all types of rolling stock (metros, tramways, suburban trains), with or without a driver, built by Alstom or by other suppliers. Key Features: Radio-based Automatic Train Control system Interoperability with solutions by competitors Manufacturer: Alstom Selling Point: Helps improve passenger transport and network performance by continuous communication between trains, track and the control center.
Material handling equipment
Rack systems
Services
Rental forklift trucks Used forklift trucks After-sales services Financial services Full-service programme Fleet management Driver training Jungheinrich PROFISHOP
Hybrid Propulsion system
Compartmentalised racks Wide-span racks Pallet racks Cantilever racks Warehouse platforms
Logistics systems Complete logistics solutions Material flow systems Warehouse management systems
Hand pallet trucks Electric pedestrian pallet trucks Electric pedestrian-controlled trucks Electric three-wheel forklift trucks Electric four-wheel forklift trucks Diesel forklift trucks LPG forklift trucks Reach trucks Horizontal order pickers Vertical order pickers High-rack order pickers High-rack forklift trucks Tow tractors
A one-stop shop for all your logistics needs.
C
ompanies that maintain their own lift truck fleet have realized that battery management is crucial in sustaining truck uptime in their distribution centers. In its endeavor to be environmentally friendly, Hitachi Rail along with East Japan Railway Company (JR-East) has developed a hybrid propulsion system that combines an engine generator, motor, and storage batteries. This system provides regenerative braking which has not been possible on conventional diesel-powered trains, thereby enabling increased energy savings via regenerated energy. The system uses a series-hybrid configuration that first converts the engine output into electrical power and uses only motors for propulsion. The AC output generated by the engine is converted to a VVVF (variable voltage variable frequency) AC supply by the main converter to drive the induction motors. Storage batteries are located on the intermediate DC section of the main converter, and the charging and discharging of the storage batteries is controlled using output adjustment of the converter and inverter. The hybrid propulsion system also
58
ungheinrich has launched a new series of multi-directional reach trucks, the ETV Q series. It is ideal for stacking and retrieval at high lift heights and for long loads that need to be transported in narrow aisles. The electric all-wheel steering enables the trucks to transport loads up to 26.2 feet long. The truck has five travel programs available, ranging from modified standard travel to rotational travel and all-wheel parallel
INDIA |
utilizes constant-power converter control using electrical power in order to manage the energy balance of the DC section. The output from the storage batteries and engine are controlled as follows according to the running conditions: Accelerating: The storage batteries are used for acceleration at low speeds, and additional power is provided by the engine generator from the mid-speed range. Braking: The engine is shut down and regenerated power is stored in the batteries. Constant-speed braking: Regenerated power is absorbed using engine braking to prevent overcharging on continuous downhill gradients. Key Features: 10 percent improvement of fuel consumption 60 percent reduction of the hazardous substances in engine exhaust 30db reduction of noise in stopping at the station The right solution for any application.
Apart from traditional product offerings, Jungheinrich offers its customers tailored solutions for all areas of intralogistics operations (trucks, systems, processes)—from the initial consultation, budgeting and project planning, to system integration and service support for ongoing operations.
10
1360_09_Bro_Image_engl_xl_r.indd 10
Manufacturer: Hitachi Rail, JR-East Selling Point: Provides regenerative braking not possible on diesel-powered trains.
February 2011 | www.logisticsweek.com
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12.05.2010 12:02:09 Uhr
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travel and facilitates 360° steering. Load weight display can check weights at the press of a button. The trucks also feature energy recovery during braking and optimal mast lowering to provide increased uptime. The ETV Q series has 3-phase AC technology for drive; lift and steering motors help in quick acceleration, plugging and greater operational availability due to maintenance-free motors. Key Features: 3-phase AC technology 360° steering Transport loads up to 26.2 feet long Manufacturer: Jungheinrich Selling Point: Stacking and retrieval at high lift heights.
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Back to Basics In this section, we revisit some basic concepts – everyday logistics and supply-chain terms that need a brush up (or update) every now and then.
ABC Analysis
A
BC Analysis is the classification of products in inventory as per its level of importance, which is based on criteria such as volume of sales and purchase. In cases of large volume of inventory, categorizing them in A, B and C categories can help the warehouse manager organize it into groups. Inventory constituting high priority products are grouped under A, lesser priority under B and least priority under C. The analysis is carried out by first determining the annual volume of sales and costs of each item. Each item’s annual volume is then multiplied by its rupee value, and the percentage of total inventory in terms of annual sales is calculated. The
top 10 percent items having highest rupee percentage would be classified as A, next 20 percent as B and the remaining 70 percent as C. The advantage of ABC Analysis is that the company can reduce inventory costs by focusing on the classified category. Also the average inventory value can be kept constant by fixed ordering of B items. However, a drawback of this process is that importance is given to an item based on its annual consumption and cost value. To avoid this, the analysis should be reviewed periodically so that changes in
price and consumption are taken into account. The ABC Analysis is also criticized for neglecting other factors besides cost that might call for example in a situation, or for higher concentration on C items thus affecting the production process.
Enterprise Resource Planning (ERP)
Bill of Lading
E
B
RP is a class of software that consolidates all of a company's departments and functions into a single system thus servicing each department's specific needs. The software helps personnel in the chain maintain efficiency in customer management and be effective in delivering on customer expectations. The implementation of ERP in logistics strengthens cooperation between suppliers and clients involved. With ERP, indicators such as number of stock units, date of delivery, and changes in the production line can be laid out and modified when required. Since ERP software makes a note of the movement of goods as and when they take place, there's no discrepancy in recording the status of goods and the information
ERP
can be cross-checked. Examples of ERP systems are the application suites from SAP, Oracle, PeopleSoft, among others. For instance, Godrej Consumer Products Ltd (GCPL) has opted for MFG/PRO for its ERP, as it has a decentralized structure and allows every factory, branch and CFA to operate the ERP on its own.
ill of Lading is a legal document between the shipper and the carrier of a particular good that must essentially be signed by the carrier, the shipper and the receiver. The document details the terms and conditions between the shipper and carrier with information about the type of goods being carried, the quantity and the destination. It also serves as a receipt of shipment once the goods have been delivered. For example, if a logistics company is transporting gasoline from a plant in Mumbai to a gas station in Pune with the help of a truck, a representative of the plant as well as the driver of the truck would be required to sign the Bill of Lading after the gas has been loaded. On delivery, the truck driver must ensure that a representative at the station signs the document as well.
Can you help us with more such terms – used everyday but seldom revisited? Please mail your suggestions to aanand@logisticsweek.com. If chosen, we will be happy to publish your suggestion with due credit. 60
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Sonic Boom
amit mukherjee, Vicepresident (iT and supply chain) and group cio at rpg, has deployed exemplary supplychain strategies at spencer‘s retail >> page 34
Ericsson India Director (HeadSupply) Tej Nirmal Singh leads the exciting task of managing supply chain for the company in these demand-crazy times.
Presented by
The HyperCity supply-chain team led by Lt Col. Vijay Nair (Retd) is putting up an inspired show >>
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
TElEcom logisTics 20 LEARNINGS 2010 26 Movement of telecom network equipment opens Critical lessons we learned afrom window of opportunity industry leaders.
low NEglEcTEd adopTioN 24 waTErways 44 ATWhy CEMAT: The expo and the seminar. A ring-side 20 inland WMS still does Indiaview... is ignoring not have LOVE: enough Pharma logistics is challenging waterways at its own TOUGH yet rewarding... 50 takers in India peril ICE BUFFER: How cold-chain can help contain food prices...56
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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
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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.
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F e b r u a r y 2 0 11 February 10 – 12, 2011 InternatIonal engIneerIng & technology FaIr 2011 Pragati Maidan, new Delhi International Engineering & Technology Fair 2011 is dedicated to engineering and manufacturing industry in India. The 19th edition of IETF will serve as a B2B event, offering an ultimate opportunity for industry professionals, decision makers, manufacturers and service providers to meet, establish network and generate business opportunities. The industry professionals, attendees and exhibitors will get additional platform for various activities, which include technology promotion, demonstrations, meetings and preparing investment plans. The 19th International Engineering & Technology Fair 2011 will be a unique place for attendees to explore newest products, learn innovations, compare products and hear experts’ advices on these products. The targeted exhibitors at the fair are companies dealing in manufacturing, export, import and supply of engineering software, safety and security equipment, diesel & gas generators, chemical plants, desalination plants, welding equipment, storage equipment, waste disposal & treatment, among others. organized by: Confederation of Indian Industry (CII) Tel: +91 124 4014060-67 February 11 – 14, 2011 MInerals Metals Metallurgy MaterIals Pragati Maidan, new Delhi Minerals Metals Metallurgy Materials 2011 is an excellent B2B platform for the companies dealing with minerals, metals, metallurgy and materials. The event is the eighth edition of this trade fair series, which is known for its highly specialized metallurgical technology, products & services. The exhibition has been organized by international trade and exhibition events. India is naturally rich in mineral resources and it needs the best technologies in the world, so that it can transform its resources into assets. Exhibitor’s are casting machines & technology; consulting, design and services; copper production, energy conservation, electrical engineering and process control technology, environmental protection and disposal plant and equipment for casting and pouring of molten steel, research and development, rolling mills, safety technology, plant and equipment for casting and pouring of non-ferrous metals, plant and equipment for iron making, etc. organized by: International Trade & Exhibitions India Pvt Ltd. Tel: +91 11 40828282
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INDIA | February
February 21 – 23, 2011 InDIan busIness aVIatIon exPo 2011 hotel shangri-la, new Delhi Indian Business Aviation Expo 2011 addresses a rapidly expanding and hugely untapped market of business jets. In the present time, Indian civil airports are already buckling under the pressure of handling increased number of air travelers and with the forecast that there will be 600 million visitors per annum in 2027, the pressure on the Indian aviation industry is unrelenting. The promotion and development of business aviation will be a step towards easing the pressure off an already choked civil aviation industry. This event will give an opportunity to the aircraft manufacturers and government representatives to come together under one roof and discuss the potential of business aviation industry. Some of the exhibitors at the event will be aircraft manufacturers, flight planning, aircraft components, MRO organizations, IT systems & providers, Engines & engine systems, fuel systems, ground service suppliers & equipment, hydraulic systems and instrumentation, etc. organized by: Exhibitions India Tel: +91 11 42795000/42795032 February 23 – 26 2011 PharMa WorlD exPo & cheMtech WorlD exPo bombay exhibition centre(bec), Mumbai Organized by Chemtech Foundation, Pharma Bio World Expo is a prominent show for pharma and biotech industry in India. For four days, the show will be held at Bombay Exhibition Centre and will vest on an area more than 30,000 square meter. Exhibitors expected to be present at the event are pharmaceutical processing plants & equipment, pharma packaging machinery & materials, API, bulk drugs, analytical laboratory supplies (instruments, glassware, lab. reagents / chemicals), environment control equipment & services, utility, utility services & maintenance, contractors - turnkey, and ISO/gMP consultancy service. At the exhibition, Industry Automation & Control will also hold its exhibition for the automation and control industrial sector. Exhibitor’s present here will be factory automation, process automation, instrumentation and controls, robotics, power plant & MCC automation, drive automation, emergency shutdown system & SIL certification, gas & liquid analyzers, safety and supply technology in the field of assembly, handling and robotics, complete factory automation systems, and turnkey system solutions in the field of industrial automation. organized by: Chemtech Foundation Tel: +91 22 22874758
2011 | www.logisticsweek.com
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