LOG.India May 2012

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IndIa’s LeadIng LogIstIcs MagazIne www.logisticsweek.com

may 2012

Vol. 5 — no.9

INDIA

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At The

Fountainhead anjana ghosh, Director, Business Development and hR, Bisleri Intl. oversees the company‘s supply chain for east and west in an austere and innovative manner worth emulating Page 28

CaRgO‘s aIR POCket

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India’s air cargo industry is in dire straits. An analysis

Off the wagOn: How the Rail Budget rollbacks could derail much needed reforms..10 at the helm: DIESL’s new CEO, Milind Shahane outlines his plans for the year...18 In tanDem: GDSN is the exciting new technology that, surprisingly, has few takers..38




Creative Approaches to Supply Chain Profitability: A Global Perspective from India

CSCMP India 2012 1-2 June • Mumbai, India Discover groundbreaking solutions that will enhance your supply chain and the impact it has on your customer’s operations and performance at cscmp India 2012. global supply chain thought leaders will discuss the vital and dynamic processes you need to master to successfully compete in today’s marketplace, including network design, risk management, talent, sales and operations planning, sustainability, and collaboration. This is one event that every forward-thinking supply chain management professional needs to attend! More information is available at cscmp.org. Or, contact Neil Basu (India) at nbasu@cscmp.org or Dr. Thomas Speh (USA) at spehtw@muohio.edu.

cscmp.org The World’s Leading Source for the Supply Chain Profession.™


eDITORIAL

>

Women!

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o my knowledge, Anjana Ghosh (featured on the cover) must be the only woman directly managing any part of the supply chain of any Indian company. As our sector observers would agree, it is hard to find women professionals and workers at any level of supply chain in India, and rarer to find them at senior managerial levels. As it stands, the percentage of women in India’s supply chain workforce is dismal, even by Indian standards. There is no data available on gender ratio in the Indian supply chain in particular, but we do know, that according to the World Economic Forum’s Corporate Gender Gap Report (2010) which covered 134 countries, India Inc. ranks 112, posting an embarrassing figure of 23 percent. This, despite the fact that the service sector, which has raised women employment rates worldwide, has seen a rapid growth in India when compared with the manufacturing sector, not ‘traditionally’ considered a woman employer. Forget the humanitarian angle, bridging the gender gap at the workplace makes economic sense. Studies continue to show that countries with better women employment rates have fared better than the rest—the USA has 51 percent of its workforce comprising women and Canada has 46 percent. Our logistics industry must figure even lower on this score than our manufacturing industry and understandably so, because transportation and distribution, our two major segments, do not present a conducive working environment for women workers. But the other areas that involve analysis, planning, warehousing functions, forecasting and Human Resource Management offer great scope for women. As mentioned earlier, the biggest logic offered in support of the cause of women’s employment is economics. But to me, the strongest logic has to do with the quality of life. Supply chain in India is a sunrise sector, much like the healthcare sector now, or like the IT sector as it was a decade ago. The supply chain industry offers great opportunities for personal growth, sustenance, and job satisfaction, benefits that women professionals in the sector can vouch for. Why should we not extend these possibilities to the other half of the population? In the developed world, there are support groups working for this cause in the area of supply chain. ‘Women in Supply Chain’ is a group (you can find it on LinkedIn) working for this cause in Australia. Logistics is a demanding profession and one can’t blame our employers for assuming that men would take more naturally to this profession—our employers will have to be shown all the advantages that a ‘gender-balanced’ workforce brings to the working environment and the growth of a company in our field. I think it’s the responsibility of women who are in positions of power and all enlightened men in this industry, to take up the cause. Challenging work-hours, inhospitable work environment, pay inequity—these are the reasons cited by experts that hold women back from opting for this profession. But these are the problems that can be overcome—we can take cues from the healthcare industry, a sector that boasts of one of the highest female employment ratios despite the prevalence of all these and many more such issues. Worldwide, companies like Walmart and PepsiCo are seeing and reaping the benefits of improving gender ratio in their supply chains. It’s high time that our companies begin to follow suit.

Aanand Pandey aanand@logisticsweek.com

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Contents 10 AnAlysis

Losing Momentum

28 Cover sTory At The Fountainhead

The railway budget as presented by the former railway minister, Dinesh Trivedi, was wellconceived but political compulsions forced a partial roll back of key proposals.

Running a supply-chain on a product that offers wafer-thin margins, Bisleri International has proved that maintaining a prudent supplychain can help build a success story.

16 exeCuTive FoCus The Band Baaja Growth

India makes important contributions to modern technology, but has a surprisingly unrefined supply chain.

18

Man Of The Hour Milind Shahane, the newly appointed CEO of DIESL shares his aspirations of taking the company to a whole new level in an interaction with Aanand Pandey.

20 FeATure

Skating On Thin Air Despite infrastructural bottlenecks, congestion and stringent policies in the air cargo sector, the industry is hopeful that relaxation of certain norms and inclusion of technology will bring relief to all stakeholders.

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MAy 2012 38 FeATure

Numbers In Tow Although GDSN has the potential to help retailers and suppliers to a great extent, lack of appropriate awareness about the technology is not allowing either to draw on its benefits.

ADVeRtIseRs InDex Damco India ...................................................... BC Kelly Material Handling Equipment India .............IFC Hormann India ................................................... IBC Future Supply Chains.............................................3 CSCMP ..................................................................4 Cargo Service Centre ..................................... 8 & 9 Gandhi Automations ............................................11 Siemens ..............................................................13 Green Earth Translogistics...................................15 SteelFab India .....................................................17 Schaefer India .....................................................23 Durgadevi Saraf Institute .....................................25 Exide ...................................................................35

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Sevenseas Global Express Logistics ....................41 Safeexpress ........................................................43 Cold Chain India ..................................................45 CeMat India ........................................................51

48 Book exTrACT Tomorrow, Today

Quantitative forecasting methods rely on one or more persons to generate forecasts without using any mathematical models. However, the use of judgement in forecasting is inevitable.

52 PAnorAMA Books, Journals, Blogs, Technology, C-Profile, and Mobile Apps - a look at what's new in and for the supply chain industry.

APril 2012 IndIa’s Lead Ing

LogIstIcs

www.logist

april 2012

INDIA

Vol. 5 — no.8

Maga zIne

icsweek.co

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`100

Behind the Wheel

sudam Mait ra, chain), Maru Managing executive Offic ti have shaped suzuki, shares the inno er (supply Maruti’s effic vations that ient supply chain. and the winn

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Budget Byt es: What are industry leader Out in the s saying about cOld: How this year’s Budge the cold chain, POrt Of call t...12 an essential infra-b : The govt has

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A list of forthcoming events in May. INDIA |

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< news analysis

Train of ThoughT

Daimler India Commercial Vehicles (DICV) has adopted smart packaging concepts. A milk run concept via external logistics service providers ensures full container loads. — erich nesselhauf, VPProcurement & supply Chain Management, DiCV shares strategies on reducing logistics costs at Commercial Vehicle Megatrends India 2012

The most creative businesses are SMEs that can enter the Indian market with products that will make life better for millions of Indians, if given the right support. — nancy J Powell, Us ambassador to india, at the American Chamber of Commerce’s 20th Annual General Meeting, New Delhi

We are sourcing more components from the Asean region, from countries such as Thailand rather than Japan to ward off currency risks and thereby reduce dependence on Japanese vendors.

Productivity is a major challenge in the near future because we have to move away from cost saving to cost avoidance, so there is need for innovation, need for finding better ways of delivering the same product.

—sudam Maitra, managing executive officer (supply chain), Maruti suzuki india, talks about their efforts to boost margins in an exclusive interview with Business Standard.

— Tej nirmal singh, Director and Head supply, ericsson india, speaks on challenges in the telecom industry at the LW Supply Chain 2.0 Summit

The Rail Budget:

Losing Momentum The rail budget which was well-conceived and structured has suffered due to the rollback of some its key proposals. Pamela Cheema analyses.

E

very year the country awaits with bated breath the announcements of its major budgets, the Railway Budget and the Financial Budget, which putatively kickstart growth in the country. But this year both the Budgets failed the litmus test and consequently, will be unable to spark off growth in an economy which is ominously slowing down. While the Financial Budget belied the expectations of a public which craves for growth and reform, the Railway budget which was announced with a bang, ended with the proverbial whimper. The Railway Budget presented by the erstwhile railway minister, Mr Dinesh Trivedi, was received with immense public approval, but nixed by a maeverick political decision. The country has watched with growing concern and even horror as the Indian railways, which has the third largest rail network in the world and is one of the largest employers in the country, has slipped into abysmal me-

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“From the Rail Budget, it was apparent that the recommendations of the Sam Pitroda committee on modernization and the Kakodkar committee on safety were the cornerstones of the Budget.” —sajal Mittra, CEO, Arshiya Rail Infrastructure Ltd. diocrity and even been embroiled in serious, gut-wrenching accidents. In brief, an environment which needed a makeover.

Forward-looking Budget This was precisely what Mr Trivedi set out to do with the Railway budget; while the public applauded, the political maelstrom that followed stymied his best efforts and paved the

May 2012 | www.logisticsweek.com

way for his exit. In his Budget Mr Trivedi attempted reforms, the most controversial being the increase in passenger fares across all classes, the establishment of a Railway Tariff Regulating Authority, outsourcing of noncore functions like hospitality, technology, catering, etc., permitting public-private-partnerships in the manufacture of locomotives, wagons, coaches, etc., the establishment of a



< news analysis Logistics Corp for railway goods sheds and warehouses, leasing surplus railway land to real estate developers and the formation of an Indian Railway Stations Development Corp which will redevelop and maintain spotlessly clean stations. It is obvious that an attempt was being made to overhaul creaky railway infrastructure. Says Mr Sajal Mittra, CEO, Arshiya Rail Infrastructure Ltd: “From the Rail Budget, it was apparent that the recommendations of the Sam Pitroda committee on modernization and the Kakodkar committee on safety were the cornerstones of the Budget. Although the Budget did not meet all expectations, it was definitely a step in the right direction. It was an unexpected and critical statement of the Indian railways.” Mr Anwarul Hoda, former IAS officer and currently Chair Professor, Trade Police and WTO Research Programme at Indian Council for Research on International Economic Relations (from 2004 to 2009 he was a member of the Planning Commission), is equally upbeat about the Budget as presented by Mr Trivedi. “The Budget presented by Dinesh Trivedi was very good,” he says candidly. “It sought to address a number of important aspects which have been stressed over the years by a large number of people.” According to Mr Hoda, passenger fares have not been increased for over ten years “and this is a recipe for total disaster.” The situation was thus tailor-made for an increase in fares and the rollback in fares bodes ill for the railways.

Paucity Of Resources The modest increase in railway fares across all segments was overdue and necessitated by the

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paucity of resources for enhancement of infrastructure and modernization. An industry source, who spoke on condition of anonymity, agrees that “passenger fares should never have been rolled back. After all, if you need X number of crores, then you just need X number of crores! The burden will now shift to freight and freight will become costlier.” Thus the rollback in passenger fares will not protect the aam aadmi who will still be hit by high freight charges which will result in a spike in the prices of food and essential commodities. Mr Mittra echoes these sentiments. “The plan outlay for the coming year has been projected at `60,000 crore in comparison to the outlay of `56,630 crore in 2011-12, which was later revised to `48,551crore,” he stresses. “The revision gives an indication of the shortage of funds. The passenger fare hike was therefore one such attempt, though very small, to source additional funds for projects. Also, the freight rate hike pre-budget by over 20 percent was done so with this very intent in mind. Although all these steps would not have bailed out the railways from its current financial situation, it would have addressed some part of the fund requirements.” The need for mopping up resources for the railways cannot be overemphasized. This year’s rail budget announced investments in 700 kms of track infrastructure, 750 kms of doubling of tracks, 800 kms of gauge conversion and 1,100 kms of track electrification. The necessity for such upgradation and enhancement is urgent, not only to just maintain the Indian railways, but also to enhance and spread the railway network in this vast country which has witnessed little major

May 2012 | www.logisticsweek.com

Anwarul Hoda Chair Professor at Indian Council for Research on International Economic Relations expansion of railway infrastructure practically since independence. The modest increase in passenger fares would have helped to fund this expansion.

lagging Behind China In the sphere of modernization and expansion the Indian railways lag woefully behind its competitor and the other Asian giant, China. According to Mr Mittra, in 2007 India and China had the same rail network of 63,000 kms each. But since 2007 China has barreled ahead and “added more than 30,000 kms of rail track while India in the same period has managed only a little over 350 kms,” reveals Mr Mittra. “In fact, China is currently working on a project to connect various parts of the east coast of China with Europe by rail. They are working with the government of Kazakhstan for gauge conversion of track from China to the Trans-Siberian rail system, which will connect products originating from China through Russia into the Euro-Rail system through another gauge conver-

sion in Poland. This will allow Chinese products to have cost effective access across the European hinterland, saving approximately 40-50 days as compared to the traditional sea route.” With the country’s dismal track record in the development of infrastructure, experts fear that India may fall so far behind its competitors as to find it near impossible to catch up. And such tardy growth will permanently put paid to hopes that India will emerge as one of the foremost global economies.

need To expand Capacity The financial resources required for the upgradation of railway infrastructure are mindboggling and immense, but unless the country invests in it, growth in India could see a possible hard landing. Dr Rakesh Mohan, Chairman, National Transport Development Policy Committee (with the rank of Minister of State), firmly believes that the Indian railways need to expand capacity in the next 5-15 years. Dr Mohan, who is a Professor in the Practice of International Economics and Finance and a Senior Fellow at the Jackson Institute for Global Affairs, Yale University, stresses that over the years the Indian railways have been losing more traffic share than other countries. The railways need to urgently regain or at least stem the decline of that traffic share. Dr Mohan spun out some figures to bolster his arguments. “To avoid the kind of overloading that takes place on our trains, the railways need to increase capacity by seven percent to ten percent every year. We also need to accelerate the development of our West and East Dedicated Freight Corridors (DFCs). Besides this, over the next twenty years we must


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Answers for industry.


< news analysis develop four more DFCs to cope with increased traffic. As freight traffic is separated from passengr traffic, it will become much easier to increase the speeds of both significantly. We also need new investment in signaling—in short, this is the kind of capacity expansion and modernization required which has not been seen since independence.” Mr Hoda, who was the Chairman of the committees for the Dedicated Freight Corridors, disclosed that the DFCs were originally scheduled to be completed by 2010, but a crippling lack of finance had stalled the projects. “Our present railway corridors are absolutely saturated and cannot take any additional capacity. The East and West Dedicated Freight Corridors will now be ready by 2016, latest by 2017, because there is a small problem of land acquisition in one of the corridors. Our railways need a huge programme of improvement, there’s no other way that India can progress.” The highly placed anonymous source notes with brutal honesty that “unfortunately in our country, decisions are taken only when we are on the verge of collapse! So when we are at the brink in another two years time,

establishing PPPs Mr Trivedi’s budget also outsourced certain peripheral areas like catering, railway hotels and manufacturing to the private sector, a move which invited intense criticism from certain sections of the media and the public. But a sector like the railways, which is in dire need of funds, needs a steady inflow of cash from the private sector which will resuscitate this segment; the railways will be able to draw upon this cash inflow to rebuild itself. Mr Hoda bolsters this argument when he stresses that “it is good to have public-private-partnerships (PPPs). In this budget what was considered was giving certain peripheral functions, like manufacturing, catering and logistics to the private sector which could be given on a revenue share basis. Also, the railways have a lot of surplus land where hotels can be set up; warehouses can also be established and goods can be shifted in an orderly manner. Obviously, the railways will get a share of the revenue. Therefore, it is a good idea to have PPPs.” In the Rail Budget Mr Trivedi had also proposed the establish-

CSCMP Ups The Ante In June The India chapter of the Council of Supply Chain Management Professionals is organising a two-day conference on 1-2 June, 2012, themed ‘Creative Approaches to Supply Chain Profitability: A Global Perspective from India’ at ITC Maratha, Mumbai. At the conference, supply chain thought leaders will discuss the vital and dynamic processes supply chain managers need to master to compete in today’s marketplace, including network design, risk management, talent, sales and operations planning, sustainability, and collaboration, according to Neil Basu, CSCMP’s regional executive director. Supply chain managers from international companies of the likes of Castrol, Intel, Proctor and Gamble, JDA International, Dr Reddy’s and academicians from IIM Kolkata and XLRI Jamshedpur are expected to speak at the event.

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should The Planning Commission advise?

that’s when we will take decisions and move forward!”

May 2012 | www.logisticsweek.com

Dr Rakesh Mohan Chairman, National Transport Development Policy Committee ment of a Rail Tariff Regulating Authority and had suggested that fuel prices should be segregated from other costs, a measure which evoked ferocious criticism from certain quarters which fear a spike in passenger fares. But these fares, which have stayed unchanged for years, require that much-needed change in fare structure. Defending the move to establish a fare regulatory authority, Mr Mittra argues that “there is a very strong need for such an authority. Passenger fares are left untouched keeping in mind public sentiment, whereas freight rates are hiked substantially to cross subsidize passenger fares. This has led to freight moving from the railways to roadways—in fact, rail share has fallen from nearly 90 percent at the time of independence to the current 30 percent levels and is falling still further!” Mr Hoda agrees and points out that there should be absolute honesty in determining passenger and freight fares. With fuel prices indicating only an upward trend, passenger fares need to be periodically reviewed. He observes with a hint of sarcasm that “if you are only thinking of elections, then you are playing to the gallery!”

After the Rail Budget was presented, rumours swirled in the corridors of power in Delhi that the Budget had been vastly influenced by the Planning Commission. But the Planning Commission is an arm of the government which does advise ministries on the course to be followed in their work. So the charge of ‘influencing’ just does not stick, for the Commission is only doing its job in advising various ministries. As our highly placed anonymous source says, “Thank God the Commission influenced the Rail Budget! The railway ministry is the only ministry which has no public interface and there has been no fresh infusion of ideas for the last 153 years. There are a couple of reasons for this, firstly, the Indian railways feel that they are doing their best and secondly, any person who joins the railways know that he will be with this sector for the next 30 odd years and therefore he becomes inward looking. New ideas are not well-received by them.” The rail budget as conceived by the former minister, Mr Dinesh Trivedi, was indeed forward looking, progressive and a step in the right direction and could have infused life into a sector which has lost its vitality. The decisions which have unfortunately been rolled back due to political compulsions will, in all probability, have to be reviewed again just a couple of years down the line when the Indian railways will once again be at a crossroads: either be the strong, invaluable support system of a turbo-charged economy or slide into deep decline with terrible implications for the Indian economy.


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< ExEcutivE Focus

The Band Baaja Growth India is still young and unsophisticated when it comes to warehouses. A country that makes important contributions to modern technology has a surprisingly unrefined supply chain, says Asim Behera, General Manager-india, swisslog.

T

he story of India Inc is much like a Bollywood movie. It seems to have skipped all vital steps but it still makes sense and is fun; much like in the telecom industry, where India went from waiting five years for a phone connection to every person having a cell phone. Old India jumped to India Inc, from agricultural revolution straight to services revolution skipping most stages of the industrial revolution.

Asim Behera General ManagerINDIA Swisslog

Warehousing At its Minimum

India is still young and unsophisticated when it comes to warehousing. A country that makes important contributions to modern technology has a surprisingly unrefined supply chain for most of its businesses. Most warehouses or ‘godowns’, as they are called, span anywhere from 10 000 sq. ft. to 100 000 sq. ft. Most places may just run on a bare minimum ERP system. Today, Indian warehouses use only a limited number of AS/RS cranes, the tallest of the installations being about 30m, with most of them being aisle changing cranes. The major industries that seem to be adopting AS/RS cranes just due to the sheer volumes (and sometimes the bulkiness of the product) happen to be Paper, Defense, Tire and Paints.

taxman And caution inhibit Automation A main deterrent to automation has been the tax structure that prevents centralization. Due to the tax structure that makes an interstate sale taxable, inventory is fragmented within the country, and volumes are not consolidated at one point. With inventory lying in places that are 10 000 sq. ft. even, automation opts itself out. There is a certain mindset today that possibly bars senior management in several industries from making huge capital investment at the cost of having higher operational expenses every month, maybe even for the next

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five years. There may be few places where automation’s cost may be justified at current volumes, but even those companies somehow just seem to shy away from making the “right” investments if they happen to be huge.

tolerant customer Base In addition to this, India has a very tolerant customer base, which makes accurate order fulfillment less critical. How many times does a customer walk into a grocery store to ask for “Tide” and gets “Rin” instead? Yet, customers are happy to have detergent at all. It is common to scramble to get to the grocery store early to buy

Due to the tax structure that makes an interstate sale taxable, inventory is fragmented within the country, and volumes are not consolidated at one point. bread before it is out for the day. Surely a stark contrast to behavior abroad: If a customer does not find what he wants in a store for a total of, say, three times he never goes back to that store. In spite of this, those of us in the automation industry are smiling.

Land And Labor The sheer lack of land space is going to drive the need for automation in India. Today, if a distribution center calls for 50 acres of land, it is about convincing over 20 farmers to sell their land. This is an intense ordeal that even some of the big players in the industry have failed at. With land being expensive and sometimes even unavailable, the only way to grow may be vertical. This could be indeed the deal clincher in India for auto-


mation. Although labor is relatively cheap in India, low productivity and skill sets negate the advantage. Thus the lack of skilled labor along with the need for accuracy will drive automation.

A smarter tax system, Hopefully When implemented, the Goods and Services Tax (GST) will overrule the current Central Sales Tax (CST) and hence negate the need for keeping inventory in every state. Although there is a lot of skepticism about when this change will actually take place and in what form, there seems to be a general awakening amongst the players to do the ‘right thing’. The hope of getting closer to the proposed tax change has led a lot of firms to rethink their supply chains and check them for efficiency.

Way Forward What we call intralogistics today is a byproduct of the Industrial Revolution. As India has skipped it and

is heading straight to the Services Revolution, the promising way for warehousing to keep up with requirements is automation. We cannot afford to ask if automation is the right thing. Rather, the right questions are: What is the level of automation needed? How can it be justified? How can automation be phased in? Think accuracy, think order volumes, think lack of land, think of unproductive labor – think about what the industrial revolution meant to the world. Naturally, you are thinking automation. It’s time for India’s warehouse’s to embrace it. Asim heads Swisslog in India. A Swisslog alumnus, he has returned to the company to take on this important strategic role from his most recent post of working for the Government, Washington, DC, USA. Asim is an Electrical & Computer Engineer, having completed his degree from the prestigious Oklahoma State University, USA.

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< ExEcutivE focus

Man Of The Hour Milind Shahane, the newly appointed CEO of DIESL shares his aspirations of taking the company to a whole new level in an interaction with Aanand Pandey. Tell us a about yourself – education, career. I was born and brought up in Mumbai. I graduated as a Chemical Engineer from IIT Mumbai in 1984 and completed my education with an MBA from IIM Ahmedabad where I studied sales and marketing, finance, & strategy. After completing my MBA, I joined the Tata Group through Tata Administrative Services. I worked at TELCO (now Tata Motors) for nine years handling sales and marketing in the construction equipment division. I have always been Milind Shahane keen on sales and marketing, and it was CEO, the reason I took up the offer. I worked DIESL there for 11 years in total. In the last two years, TELCO spun off a separate construction company, Telco Construction Equipment Company or TELCON as a separate subsidiary. I held various positions in Telco in those 11 years left as Divisional Manager – Marketing before shifting to Voltas. In Voltas, I was head of the business for material handling, mining and construction equipment. I was then promoted to COO & EVP for the engineering products business group that handled four different business positions of Voltas – mining and construction equipment, MHE, textile machinery and machine tools. I was involved in the logistics of these companies. Since you were dealing with material handling, your customers would come from the logistics sector… Correct. Our customers were mainly logistics companies but we also dealt with manufacturing companies & government held organizations, where we provided forklifts, cranes, warehousing equipment, pallet trucks, and material handling equipment. In the process, I became familiar with the concept of supply chain. We would also undertake maintenance contracts. I oversaw the logistics for the equipment and spare parts. At Telco, I had also handled the entire logistics of moving 2,000 machines from the factory to the depots and to the distributors. In my 22 years of experience in the Tata Group, this progression (joining DIESL) has come as a third opportunity.

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So from Voltas, it is DIESL? Yes. In the last year-and-a-half in Voltas, I also doubled up as head of HR and Administration and Industrial Relations. What are the changes you have noticed? How is the logistics industry different now than a few years back? Back in 1996-97, it was far more unorganized. There were small level, middle level parties and transporters, and, individuals who owned warehouses. Around 1998-99, we saw the entry of the 3PLs, who though small in size undertook logistics as an outsourced business partners. At that time, every company was handling their logistics themselves. So your major clients would be companies managing their own warehouses? Yes. In those days even Tata Motors had a warehouse in Thane and we would have our people there, managing it. Eventually, we went on to outsource it to a third party logistics player. Around 1998-99, the evolution began. Today it has evolved much more. Even the number of organized players is growing. About 10 percent of the sector would be organized now. It is increasing every year as more companies are outsourcing their logistics and focusing more on their core activities.. Tata Group has a precedent of branching out the specialized services, like it did with TCS -- from an inter-organizational they went on to a global company for other clients. Market perception was that DIESL would do something similar. But that has not happened. What is your vision to develop this? The vision is to make DIESL into a strong and integrated supply chain and logistics solutions provider. The Tata Group would like it to become a player providing solutions to companies seeking to outsource their logistics and supply chain functions – it may be within the Tata Group or other companies also. We are not going to restrict ourselves to dealing within our group companies. The Tata Group outsources all its IT needs to TCS. But since logistics cuts across a vast range will that be a chief objective for you to eventually grow similarly?


DIESL will not exclusively remain as a group company only to handle the Tata Group logistics. But we want to develop capabilities to service all Tata companies. Would it have complete backing or complete outsourcing from the Tata Group – is that a vision down the line? A Tata Group company would definitely be a preferred relationship partner. But that would depend on the capabilities we develop. Logistics is a vast domain and involves various types of specialized logistics such as bulk and liquid. DIESL’s strength is primarily in areas that are known as third party or contract logistics, in the sense that it is warehousing, transportation and distribution, clearing and freight forwarding. But whether we can develop expertise to handle bulk logistics, or liquid goods is something that will determine the extent of our service. Will that come based on market requirements that will determine these are upcoming areas? It has always worked like that, not only with DIESL but also with the other Tata companies I have worked with. We first gauge the requirement in the market and the size of the opportunity. Then we consider the strategic part – whether we have the strategic expertise needed to go with the requirements and the services we can offer. Capability development will be driven by the market. We feel there is scope to grow in the areas we are in. We would like to see growth and expansion in contract logistics and other sectors within that. Our focus sectors today are in 4-5 areas. We started with telecom logistics. We are also working with FMCD, consumer goods, retail and chemical companies – and these areas alone offer plenty of growth. The other areas we are looking at are project and heavy cargo handling, and pharma. These are enough to help us draw out plans for the next few years, and as we grow, we will look at other areas like bulk commodities. DIESL started as a small company. It is now a big organization and for a company this size, flexibility is not easy. Perhaps your challenges will be to make DIESL more adaptable and flexible. As the organization grows, it is difficult to remain nimble-footed. That is where the importance of processes and systems and technology comes in, when it comes to offering standardized or uniform experience to the customer in terms of the service levels. So that is one approach to which we are paying a great deal of attention. So your customer facing side and your adaptation side has to be tightly integrated? Yes. Opportunities will come. In order to continuously look into the opportunities arising in the market and un-

derstand needs from within the organisation, in terms of resources or capabilities, and, new processes, the formation of a strategic group is necessary. We have to constantly scan market opportunities, and see how customer requirements are moving, their demands, and identify the changes required at our end – in this way we will continue to be flexible and adaptable. A larger company finds it more difficult to take quick decisions. That is a challenge for DIESL. We are working on those lines, in terms of making our operations better, putting in processes and technology so that service levels to the customers become better. What are your priorities in your first year? We want to improve our service levels to our customers by bringing in operational efficiency in logistics and supply chain handling. We are trying to understand ways to optimize our processes for transportation of certain

We are working with fMcD, consumer goods, retail and chemical companies – and these areas offer plenty of growth. items. Simultaneously, we are also holding conference on making our storage processes more efficient at our warehouses. Technology is going to play a large role in this – not only in terms of IT systems, but also automation, barcoding and mechanization. Ultimately, all these have to be run or operated by people, whether it is technology or machines or processes. we plan to make more investments in developing the capabilities of our workforce so that they perform better. Investments would be required in training our staff and in acquiring and retaining relevant talent. What would be the sectors of focus for the short term? Since we already operate in four to five sectors, we have created some level of capability and expertise. One is traditional telecom. Though telecom sector is not growing as rapidly as it was, it is part of our DNA. So it will continue to remain our focus area. The second sector is FMCG and consumer durables where we are doing big business with clients like Sony, Panasonic and Voltas. The fourth would be the retail industry where we are working with a few companies who retail in leather, paper, & stationery goods. We will also focus on infrastructure related movements – heavy items, heavy logistics. INDIA |

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< feature

Skating on 20

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Thin air

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A

ir transportation is the major driving force for the economic growth of any country. The world today is a global hub for trade and commercial activities. But with India’s economy showing fairly satisfactory growth, the country has gradually become one of the preferred locations for trade and commerce. The United States, Europe, SouthEast Asia, Middle East and China are some of the major markets as far as international traffic to/from India is concerned. Air traffic is closely related to the GDP of a country. India ranks ninth in the world with respect to civil aviation. Moreover, the Indira Gandhi International Airport (IGI) in New Delhi has been rated as the second-best airport in the world for 2011 by the Airports Council International.

Infrastructure Bottlenecks

The air cargo sector is besieged by infrastructural bottlenecks and congestion and hamstrung by stringent policies. Anuja Abraham reports possible developments and policy reforms that may bring some relief to the industry.

The International Air Transport Association (IATA) estimates that over 40 percent of international tourists now travel by air. But in spite of these impressive statistics on the passenger front, the air cargo sector has a different story to tell. The growth of the air cargo sector is restrained and limited by regulatory and infrastructural obstacles that slacken the pace at which this industry is growing. “There are multitudes of regulatory and statutory challenges that plague the air cargo sector in India,” confirms Mr Amber Dubey, DirectorAviation, KPMG. “These include 100 percent cargo screening practice by security agencies, lack of clarity on customs procedures for transshipment cargo, single-shift working of Indian customs at cargo terminals (as against the 24x7 operations in the passenger terminal), absence of multiple clearance authorities such as Drug Controllers, Plant and Animal Quarantine Authorities at the air cargo terminal, etc.”

Complex Cargo Handling As Mumbai and Delhi airports have been privatized under the PPP model, government reports suggest they are being upgraded at an estimated investment of US$ 4 million for a period of ten years from 2006-16. According to the 11th Planning Commission report, a projected investment of US$ 8.5 billion has been planned for the development of Indian airports. An employee from a prominent freight forwarding agency shares his experience of working in dilapidated air cargo complexes at Delhi and Mumbai airports. “There is a huge volume of cargo, but limited space for it and goods get damaged because of poor handling all the time,” says the agent. “In India, the goods are at the mercy of air cargo operators. There are inconsistent policies in allotting facilities for the storage of consignments.” The dwell time for cargo at the city airports is four to six days, owing to extensive customs procedures, unlike at international airports where the dwell time is six-twelve hours. Issues like constrictions in inter-state movement of goods, the impeded movement of air cargo between Tier-II cities and gateway airports and the scale of operations add to the woes of the forwarders leading to lower cost efficiencies. Pilferage is a reality in day-to-day operations. With an unskilled labor force on board, it is difficult to ensure proper handling of goods. Other issues that are prevalent are improper storage of cargo, missing parcels, zero accountability when it comes to damage to cargo, lack of proper security in the cargo area, hoarding of cargo due to lack of space and the arrogant behavior of the airport cargohandling workforce. Last year, a report by trade associations for the civil aviation ministry highlighted the massive loss of Rs. INDIA |

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< feature “If the transshipment procedures in India are simplified, then a notable growth in the domestic cargo traffic can come from domesticinternational transshipment.” — amber Dubey, Director-Aviation, KPMG

100 crore incurred by traders at the Mumbai international airport due to the heavy monsoon and inability and inefficiency of Mumbai International Airport Limited (MIAL) handlers to secure cargo. Mr. Bharat Thakkar, President, Air Cargo Agents Association of India (ACAAI), flashed a few photographs of the cargo complexes on the outskirts of Delhi airport. The photos depict a battalion of trucks swarming outside the complex and making a beeline for terminal exit points to collect their consignments. “The congestion at the metro airports is incredible,” says Mr Thakkar. “The extensive procedures that delay handing down the shipments to the transporters and congestion at airports make forwarding by air a very tedious job.”

Policies and Prices The Airport Economic Regulatory Authority (AERA) was constituted by the Government of India in 2008 to regulate tariff for aeronautical services at all major airports in India. AERA regulates the tariffs of all airport services that include navigation, landing, parking charges. “Everything except freight charges. Freight charges cannot be regulated, only operational costs are covered,” insists Mr Thakkar. “Airlines change their freight

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charges and keep charging their fuel surcharges according to fluctuations in the Fuel Price Index,” he explains. “The Fuel Price Index is the global index based on the current price of crude oil. Airlines from time to time keep on increasing or decreasing their fuel surcharges. For the airlines, the surcharges are either added to fuel expenses or the entire operations.” During peak season when there is a demand for space, the freight charges go up; alternately, the charges go down during the off-season. Aviation Turbine Fuel (ATF) price differs from state to state depending on the addition of sales tax that may vary as per the traffic the state airport records. In the past, a couple of airlines had to shut shop or downsize operations due to unfavorable market conditions. Deccan 360, Crescent Air Cargo, Aryan Cargo Express, Flyington Freighters to name a few, had to bear the brunt of sky rocketing ATF prices, low yield, and high operational costs which triggered off a downturn in their operations. In 2007 Parliament approved a policy (Entry for Ground Handling Services) to bar private carriers from ground-handling at the six metro airports: Mumbai, Delhi, Chennai, Bangalore, Hyderabad and Kolkata. With recent reforms, the policy now permits entry of a minimum of three

ground handlers at all airports across the country. Airport operators can also expand their operations into ground-handling. Being the national carrier, Air India in a partnership with a subsidiary or Joint Venture (read AISATS) has the right to participate in groundhandling at all Indian airports. Independent third party handlers are authorized to be ground handlers based on competitive bidding and appointment based on performance review and security clearance. But not every ground handler wishes to be monitored by a regulatory body. Mr Radharamanan Panicker, Group CEO, Cargo Service Center (CSC) elucidates, “Ground handling consists of three elements: passenger handling, aircraft handling, cargo handling. Passenger handling and aircraft handling go hand-in-hand. But cargo handling involves development of permanent infrastructure, and this is generally taken up by independent parties.” He clarifies the scope and structure of regulatory bodies which is supposed to protect the interests of industry bodies and end-users and usually has the opposite effect. “In any business environment, the investor must have the flexibility of upscaling/downscaling operations or shifting investments should something go wrong,” he states. “In the airports sector, the investments are made upfront with a time horizon of 15-20 years. So this is not an unlimited concession, but a time-period concession.” Mr. Panicker strongly feels that in any competitive environment, the customer must have a say in regulating prices without affecting the investments made by the service provider. “But we are in a competitive environment, overlooked by a regulatory body that put a cap on our investment return. The practice is impractical as the regulation does not ensure uniformity in returns.” He further elaborates, “Some


Non-compliant to new OHS regulations Inefficient warehouse planning Non-compliant to new OHS regulations Outdated storage systems Inefficient warehouse planning storage operation Labour intensive Outdated systems Unableintensive to meet KPI Labour operation Lack ofto local support Unable meet KPI Poor of use of available Lack local support headroom

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< feature “All facilitators of the supply chain must embrace e-freight. It will ensure speedy real time visibility for actions taken and flow of cargo from the time of lodging of the cargo at the cargo terminal and its acceptance, to making available the cargo for delivery and taking delivery of physical cargo.” — Keki Patel, Cargo Manager-India and Nepal, Emirates Airline

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years when we face a downturn, we approach the regulatory body and they offer to raise the tariff, but the intense competition in the market or the peak season may bring it down again. So we are caught in this dangerous cycle, where the fate of our investments is unresolved.”

international transshipment. This may create a demand for dedicated freighters,” notes Mr Dubey, KPMG. Mr. Thakkar of ACAAI feels the need of the hour is to create proper infrastructure like a dedicated terminal for domestic cargo to facilitate growth on that front.

Domestic freight

adopting e-freight

Domestic air-cargo contributes to around one-third of the total air-cargo being handled by airports in the country. Domestic air-cargo has been growing at a healthy rate of 10-12 percent in the past five years. The aircraft fleet and the number of destinations in India is growing every year. This has led to a significant increase in the belly cargo capacity. This has also reduced the need for freighters for domestic cargo at the moment. Freighter movement for domestic cargo in the country is largely limited to express cargo services. “We feel that if the transshipment procedures in India are simplified, then a notable growth in the domestic cargo traffic can come from domestic-

Traditionally, paperwork and freight documents like AWB are indispensable to ship any consignment within the country or abroad. To curb paper wastage in this industry, IATA has taken measures to promote e-freight among the forwarders, shippers, operators etc. “All facilitators of the supply chain must embrace e-freight to ensure speedy real time visibility for actions taken and flow of cargo from the time of lodging of the cargo at the cargo terminal and its acceptance, to making available the cargo for delivery and taking delivery of physical cargo,” asserts Mr. Keki Patel, Cargo Manager-India and Nepal, Emirates Airline.

May 2012 | www.logisticsweek.com

“E-freight, to put it simply, is the way of transferring information contained within the air waybill (AWB) electronically,” explains Mr. Panicker. India is still grasping the concept of e-freight. The customs and regulatory bodies can play a crucial role in encouraging users to test the concept of e-freight in India. Proper implementation of e-freight often requires co-operation from the airline, forwarders, ground handlers and consignee. According to IATA, each air cargo shipment includes as many as 30 paper documents—enough to fill 80 Boeing 747 freighters every single year. The whole purpose of e-freight is to take the paper out of the air cargo supply chain—instead replacing it with faster electronic messaging. E-freight ensures real time visibility between a host of parties involved. “But paperwork is inevitable,” admits Mr Thakkar. “In the Indian scenario, one may be required to keep a backlog of hard documents for future verification.” ACAAI, in collaboration with Kale Logistics have developed a portal called ‘Uplift’ that has a system solution in place, similar to e-freight, which is being used by its members, airlines and tested by airport operators.

raising the Bar Investments in the air-cargo infrastructure at some key airports such as Delhi, Mumbai, Bangalore, Hyderabad and Chennai have been helpful in catering to growing demand. “However, if India is to achieve the air-cargo volumes of the order handled by airports such as Singapore, Hong Kong, Dubai, Incheon, etc., then there is a need to focus on developing a growth-oriented policy framework, removing archaic rules and procedures and facilitating development of supporting infrastructure such as AFS, FTWZ, transshipment warehouses, multi-modal logistics hubs etc.,” says Mr. Dubey.



< feature The 2.5 million tons capacity cargo terminal at the Dubai International Airport enables a turnaround of 90 minutes and rapid transfer time of as little as six hours for full container load movement between the quayside at Port Rashid or Jebel Ali and the apron at the airport. Changi Airport has nine air freight terminals (AFT), with two dedicated express and courier centers to accommodate time-definite shipments, within its 47 hectare facility. Hong Kong alone handled almost 4.5 million tons of cargo last year,

cargo village will be developed a few miles from the current facility and is expected to be ready by 2014,” says Mr. Thakkar. Mr. Dubey, too, reiterates the fact that the next wave of private investments is expected from “establishing air-freight stations (AFS) in the hinterland which will help decongest airports and facilitate a shift of cargo traffic from road and rail to air.” An AFS has been developed by CSC in collaboration with CONCOR at Mulund (E), Mumbai, roughly 20 kms away from the airport to de-

“The cargo terminals are transit lounges, not storage areas. The idea of an AFS is to decongest the airports and create facilities away from the airport where custom checks and custom clearing can take place.” — radharamanan Panicker, Group CEO, Cargo Service Center (CSC)

several times more than the cargo collectively handled by 16 Indian international airports. Out of all the cargo handled in India, 80 percent of it is handled by Mumbai, Delhi, Chennai, Bangalore and Hyderabad. “Currently major metros like Mumbai, Delhi and Chennai have reached a point where there is no more space possible, especially for cargo expansion. The next best option is to create off-airport facilities such as the Air Freight Station. Two such facilities have already been created at Mumbai and Chennai and more of these are required to decongest airports. As for Delhi, its private operator GMR has announced that a

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congest the airport area and ensure faster processing of cargo eventually reducing the dwell time. “At other international airports, the custom checks do not take place at the airport, it is done at the consignee location, the shipper’s warehouse etc. The cargo terminals are transit lounges, not storage areas. The idea of an AFS is to decongest the airports and create facilities away from the airport where custom checks and custom clearing can take place,” clarifies Mr. Panicker, CSC. Mr. Panicker believes the air cargo business has always been airport- centric and it is about time the aviation sector goes the way of ship-

ping. With the creation of inland container depots (ICD) and container freight stations (CFS), loading and unloading takes place away from the port, the processing time of goods at sea-ports have shot up and the “seafreight business has jumped 300400 times more than it was a decade ago,” he claims. “Decongesting the airports, through creation of infrastructure like AFS will ensure the airport’s handling capacity goes up multiple times.”

remodeling PPP India has reached the second stage of PPP (public-private-partnership) maturity and there is a need for active involvement of lenders and financiers at the time of structuring of PPP projects so as to put mitigation tools in place. “In addition to that, conducive policy environments and incentives have to be formulated for boosting investments in air-cargo infrastructure such as air-cargo terminals, automated material handling systems, air-freight stations, FTWZ (free trade warehousing zones) etc.,” asserts Mr. Dubey. In a draft rule on PPP projects on revenue support released by the Planning Commission recently, it is suggested that ‘the government might consider providing soft loans to project developers in case of shortfall in revenue. Revenue support can be considered mostly for greenfield projects, where precedents or ground data are minimal.’ Of the recent developments, CSC has commenced operations at the greenfield terminal at Delhi airport. The terminal is being built in different phases. The first phase of the prodigious 70,000 sq. meter greenfield air cargo complex is operational. The facilities being offered include general, perishable, temperature-sensitive, valuable, dangerous goods and live animals. About 5,000 sq. meter area is dedicated for perishable export and import cargo.


MIAL and Air India, at present, are the sole custodians that offer ground handling services at Mumbai airport. Rumours are swirling around that the airport is in the process of appointing a third independent party to provide ground handling services. In 2010, AAI planned an investment of US$3.07 billion over five years. Out of it 43 percent was planned for the upgradation of three metro airports in Kolkata, Chennai and Trivandrum and the rest was to be invested in upgrading other non-metro airports and in the modernization of existing aeronautical facilities.

Steering ahead The Indian government is taking initiatives step-by-step and implementing regulations to boost the air cargo sector in India. “Some examples include encouraging private participation in air cargo terminal operations, automation and simplification of a few customs procedures and Electronic Data Interchange (EDI). The industry is eagerly awaiting the release of the national air cargo policy which is currently being developed by Ministry of Civil Aviation (MoCA),” says Mr Dubey. Mr Thakkar, ACAAI, further

elaborates, “In 2011 which marked the hundredth year of Indian Civil Aviation, MoCA, under its current Secretary Dr. Nazim Zaidi, announced the formation of a working group on the air cargo/express Industry, under the chairmanship of the Economic Advisor to MoCA, Mr. M. Kannan, where all stake holders were invited.” Within seven months of its formation, the group outlined the preliminary draft of the air cargo policy. The first draft was then submitted to MoCA. “We believe that if the policy is comprehensive enough to address most of the infrastructure, regulatory, taxation and operational issues ailing the air-cargo sector, the aircargo volumes can be several times of the current level. The government has collated views from a wide variety of industry stakeholders. It is hoped that the policy will balance the interests of different stakeholders and help leverage the huge potential that exists in India,” adds Mr Dubey. In a press release issued by the MoCA, Mr Ajit Singh, Indian Civil Aviation Minister, promises the policy will propel India among the top five markets in the world by attracting investments and provide access to safe and affordable air services, with a strong regulatory framework and world-class infrastructure fa-

Creation of infrastructure like AFS will decongest airports and facilitate faster processing of goods.

“We have been a force in the aviation sector and Mumbai Air Cargo is ranked 29th in the leading Air cargo terminals of the world, recording a growth of 18.5 percent YOY between 2009 and 2010, moving from 566,368 MT tons of cargo to 671, 288 MT.” — Bharat thakkar, President, Air Cargo Agents Association of India (ACAAI)

cilities. The policy carries a clause that states that Aviation Turbine Fuel should be notified as declared goods, (of special importance), with uniform central sales tax of only four percent across the country. Despite infrastructural constraints, the air cargo business has shown consistent double digit growth for numerous years. “We have been a force in the aviation sector and Mumbai Air Cargo is ranked 29th in the leading Air cargo terminals of the world, recording a growth of 18.5 percent year-on-year between 2009 and 2010, moving from 566,368 MT tons of cargo to 671,288 MT,” adds Mr. Thakkar. With private terminals, greenfield airports, off location processing hubs and modernization efforts, the air cargo sector is on a growth trajectory. In the years to come, India will be a frontrunner for the highest air cargo traffic and may possibly set a benchmark for efficient infrastructure and compliant regulations that will unleash the full potential of the air cargo sector in the country. INDIA |

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< cover story

Photos: Vikram Barwal

At tHE Fountainhead

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anjana ghosh, Director (Business Development & human Resource), Bisleri International INDIA |

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< cover story

Bisleri International’s austere supplychain is a trailblazer in management lessons, discovers Jayashree Mendes.

I

t was a champion effort. Back in the 1990s, it was also unthinkable. Who would pay for bottled water? Supplying potable water to the citizens at large is the duty of the government, that continues to remain elusive even in these times. But it took the earnest intention of the private sector that the employing the right methods could make it work. There’s a similar story in the telecom sector too, where the entry of the private sector

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opened up a revolution. But in water, Bisleri International paved the way in 1993 by converting ground water to clean, portable water ready for consumption. Probably, a trip to Bisleri International’s plant at Andheri in Mumbai will convince you. Stacks and rows of neatly arranged green labeled bottles and 20-liter jars tell you that the processed water is ready for consumption. They are awaiting loading onto the trucks and vans that throng the premises. As you enter the building that houses the speckless offices, you are struck by the ubiquitous presence of small clusters of mineral water bottles displayed across counters, center tables and aisles. It is also hard not to miss the giant cut-outs of the new mascot - a friendly looking monster (see pic) - standing at corners and scattered at various points in the building. The friendly neighborhood mascot, Bisley (a blue monster) made an appearance seven months ago as part of Bisleri’s campaign to refresh the brand. Bisleri wants to tell you the story that Bisley, who lives with his mother in a lake within a Hamsa painting, also likes to wash down his meals (read humans) with Bisleri, thus relying on it for protection. Anjana Ghosh, Director (Business Development & Human Resource), Bisleri International, who oversees the supply-chain of Bisleri

International for the western and eastern region, is a surprise. She’s a tad different from any other supply-chain personnel we have met. “The acumen to manage the supply-chain and logistics was acquired after I joined Bisleri. I have spent 16 years helping steel and chemical companies set up plants and bringing them up to commercial production.”

Going With the Flow The supply-chain of Bisleri International’s mineral water is heavily caught up in constant replenishment


A Few Bisleri Statistics The refusal by transportation companies to ply bottled water across the city opened up avenues for the company.

Number of Manufacturing plants: 49 Revenue (2011-12): Rs 500 crore Number of supply chain employees: 200

to the markets it caters to. The four regions of the country are catered to by a similar supply-chain strategy with Ms. Ghosh; RK Garg, Director (North) for the entire North region; and Santosh Borkar, Director (South) overseeing the Southern region. Although Bisleri has come to be a generic brand now, back in 1993, when the company forayed into the bottled water business, its nature of being a high-volume-and-low-margins business failed to attract transportation companies. So the company embarked into hitherto unknown territory. It began transporting the water

on its own. Today, like Ms. Ghosh says, “What we run here is a mini transport and logistics company.” Since the mineral water business runs on thin margins, the supplychain division is constantly called upon to innovate new methods to replenish stocks daily without eroding existing margins. “Since we use only road transportation, our freight cost alone is 28-30 percent of our capital cost. Another 30 percent is packaging cost, and yet another 30 percent is the margins we give our distributors. We constantly strive to keep costs as low as possible, and what works for us is

Number of distributors: 3,000 Number of warehouses: 10 Number of SKUs: 6 Local LSPs: National Roadlines, Ramdev Pir, TCI Hiways, United Transport Inventory Turnover: 2 days Technology Providers: Navision, Symco Number of retail outlets (owned and franchisee separately): 1 million Local suppliers: Pre-forms: SNJ Synthetic, Chemco, Manjushree, Pearl, BB, Naina, Crystal PET, Freshpack Bottle Caps: Oriental Containers (Goa), Plenco (Silvasa) Labels: Paper Products (Mumbai)

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materials and water. Ms Ghosh says, “Our suppliers are located close to the plant. Spending on long hauls of raw materials is unaffordable as it would incur expenditure on freight. Suppliers supplying to the Mumbai plant are based at Silvassa and Thane.” Across the country, the corporate has eight manufacturing plants. Besides this, it has outsourced manufacturing to 11 franchisees and, what it terms, contract packers, who number around 30. Another three manufacturing plants are still under construction, two of which are coming up in Mumbai. Speaking of the difference between franchisees and contract packers, Ms. Ghosh says contract packers are limited to manufacturing alone and delivering finished goods to the company-owned warehouses. The corporate pays the contract packers to manufacture. The franchisees, on the other hand, manufacture as well as sell the goods to distributors and retailers, and pay a royalty to the parent company. Bisleri Mumbai’s plant runs 24/7 and its three lines manufacture 600 bottles per minute (bpm). A day’s production could go up to 70,000 cases. “I cannot afford to shut down any of

the lines for maintenance as our replenishment will go awry,” Ms Ghosh says, adding, “Even retaining stocks for two days is a logistics nightmare in terms of delivery and parking the 200-odd trucks within the premises.” In terms of output, the corporate has a long-standing relationship with its franchisees. They strictly abide with the quality expected of them, and also subject themselves to scrutiny every month by sending across samples of the processed water and the packaging. Since the franchisees also sell, Bisleri International carves out plans in terms of growth and annual sales. The franchisees also have to adhere to stringent specifications on manufacturing. The pre-forms are manufactured only on Husky machines that throw up little rejections and defects. Production schedules are given a month in advance. The lynchpin on which Bisleri International’s manufacturing and supply-chain is based is reducing the

distance of freight and keeping costs low. The model that works well for the company is appointing a contract packer every 200 km and then distributing the goods within a minimal range to offset the cost of freight. The increase in delivery routes within a certain radius are also commensurate to the increase in the number of contract packers. In terms of its 200 distributors in Mumbai alone, the corporate has confined them to certain locations. They have to deliver on the volumes. Ghosh says, “For instance, our distributor in Andheri (West) will not extend his services to Vile Parle. It would be unfavorable for his business as it would increase his fuel and manpower cost.” One of Bisleri’s woes is the cognition that it has not been able to meet supply with burgeoning demand. Says Ms Ghosh:“The market is growing at an exponential pace. And because we cannot add more lines to the existing plants, we are increasing the number of contract packers so as to create

Bisleri Intl employs continuous manufacturing, where an assembly line produces a finished product made specifically for a customer order. INDIA |

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< cover story shorter routes to the retailers.” In terms of raw materials, Bisleri International prefers to work with local and regional suppliers. The packaging raw materials include preforms (PET), caps, labels, and the cartons (see box).

streamlining It systems Bisleri International deploys Navision ERP from Microsoft, and Symco. Navision, generally used by mid-sized companies, works on pay-for- what-you-use. It integrates all the business information for the company in terms of products, sales and inventory and Bisleri International also uses it at its warehouses across the country. The company is also trying to

connect all its distributors to the software. Since supplies are region-specific and on a daily basis, it is critical that Bisleri International has access to stocks lying across warehouses and with its distributors. For instance, the three warehouses across Mumbai are connected through Navision to the mother plant. The seven plants in the rest of Maharashtra are connected to the franchisees and the distributors within that area, and also to each other.

reverse Logistics The reverse logistics are mainly for the empty jars of 5-20liter. As it comprises 50 percent of the overall business, the trucks return with the

‘empties’ to the plant. Along the way, the supply-chain division noticed that the empty jars would contain foreign particles that were firmly lodged. It began the process of educating its supply chain personnel to ensure that the jars return with caps.

Green supply chain Three years ago, Ramesh Chauhan, Founder, Bisleri International, initiated a move to tackle an environmental hazard – he commissioned collection centers and roped in ragpickers to collect the PET bottles strewn across the city. This intervention triggered off an entire PET recycling system. Ms. Ghosh says, “We were the pioneers across the country to initiate collection of

Bisleri International: Supply Chain Flow

Supply Chain Structure

Preforms Cartons Labels caps

Route

Route

Raw Material

Depot Processing & Packaging of FG

Distributor

Distributor

Supplier

Information Flow Consumer

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Log. India

Size 206 X 270 mm Date 14.06.2011


< cover story discarded PET bottles and give it value. We spoke to plastic manufacturers and send it across to them for regrinding and recycling.” The recycled PET is then used for injection moulding, manufacturing Sintex tanks, asphalt roads, etc.

Bringing Down costs The challenges of bringing down costs lead the company to constant tweaking of the supply-chain, mainly transportation. Last fiscal the company brought down its logistics cost to 24 percent. Load optimizing helped the company reduce per case cost. Ms Ghosh notes that “When I took over sales and managing operations in 2007-08, our trucks made one trip. The system then was to send one truck to deliver cartons and another to deliver jars and collect the empty ones. The logistics costs were huge.” The supply-chain department then began routing larger trucks to more outlets thus covering bigger miles.

Loading and unloading also required the services of loaders. This has now been optimized and with the help of mechanization (forklifts), the manpower required is down to one from eight. From three forklifts, today it has eight on the Mumbai premises alone, and forklifts at every

warehouse. The forklifts run on gas. The company also went up to every retailer and corporate and pressed them to allow delivery of the water in the evening. “The retailers were reluctant as they prefer delivery in the mornings, which is not peak time. It required a change in mindset. Hence

The challenges of bringing down costs lead the company to constant tweak the supply-chain, mainly that of transportation.

Since supplies are on a daily basis, it is critical that Bisleri retains ready stock across warehouses and with distributors.

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< cover story

In keeping with its continuous replenishment strategy, the manufacturer maintains an inventory of two days or less.

short route distribution.” The supply-chain of Bisleri International, manufacturers of Bisleri, Vedica (mineral water) and Bisleri Soda, works on Continuous Replenishment Program. This calls for synchronization of the master production schedule, an accurate raw materials delivery system and a detailed job shop schedule. As a rule, the supply-chain replenishes only for the sold amount as needed in real time. The real time can only happen through direct route transportation. In Mumbai alone, Bisleri International supplies 50,000 cases daily through 150-owned trucks and another 80 outsourced trucks that cater exclusively to Bisleri. “Every truck is scheduled to make two trips per day. Those are the sort of volumes we have,” Ms Ghosh adds. Trucks carry full-load to the warehouses in Mumbai, the retailers and corporate sales. Explaining the daily routine of the imperativeness that the system work

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clockwise, Ms Ghosh says, “It is not easy managing the 200-plus trucks that enter these small premises daily, parking them, loading them, and ensuring that they leave destination wise. We have to chart out routes for the trucks regularly.” The supply-chain division keeps precise track of the number of vehicles coming in. They are required to call beforehand. Besides the loading factor, there’s also the unloading of the returnable 20-liter empty jars that come for refill, apart from some unsold stock. Since the company operates only one manufacturing unit in Mumbai (and a smaller one in Thane), it needs to carefully plan the logistics of transporting goods across Mumbai and Thane. Ms. Ghosh says, “For this reason, we transfer some stock to our own warehouses in palletized or caged trucks. That brings down our logistics cost and the goods too are sent out in bulk. So we adopt a hub and spoke model.”

sell Now, Pay Now As a high volume product, storage space is a problem for small time retailers and distributors. In keeping with its continuous replenishment,

the manufacturer maintains an inventory of two days or less. Managing about six SKUs, Bisleri International has to assure retailers of prompt service on a daily basis, and distributors of a continuous supply every twothree days. As a bulky and fragile item, multiple handling is strenuously discouraged. For this reason, the company has made it mandatory that its distributors have their own warehouses. Besides this, the company also manages its own warehouses across various regions.

Manufacturing concern A mid-sized company manufacturing a single product, Bisleri International employs continuous manufacturing as a method. The process is an assembly line that produces a single finished product rather than a number of products or products made specifically for a customer order. As the products are not customized, it allows Bisleri to sell finished goods to the customer without modifications. Bisleri International’s range of raw materials is confined to packaging


at the end of the day, we could also send out more stock, helping us bring down our fuel costs.” The constant increase in demand is also compelling the company to enhance manufacturing capacity. “We do this by increasing the speed of the line. Since we cannot add more lines, we have been adding the blowing

machines and increasing the filling speed,” says Ms. Ghosh. At a time when most companies are looking at ways to penetrate the rural markets within the country, Bisleri International has been wary. Ms. Ghosh hastens to add, “Yes, we are more city-centric and not because the rural market does not exist for us. We do have contract packers in smaller villages across the country, mainly

INDIA |

in Maharashtra. But reaching them is a cost to us.” When the company first sought to go to remote locations of the country, mainit had to adhere to its policy of main taining deliveries within a radius of 200 km. “Supplying from Pune to Kolhapur costs us Rs 20 per case. We aldon’t make that much margin that al lows us to be spendthrifts. It is this loss that holds us back from going to rural locations,” adds Ms. Ghosh. The model of setting up more plants through contract packers Alhelped the company immensely. Al considthough mineral water is not consid ered a luxury product, people in rural areas are conscious of the potency of the water available. Ms. Ghosh contends that it is their reluctance to ensure delivery everywhere that has also led to the burgeoning of the unorganized market. “Moreover, I ofam sure the unbranded players of befer huge margins to the retailers be cause they are little known. Since the manufacturing cost is no different from my cost, and if I am not making money, then I am sure nor is he. At least I have economies of scale. I am comsure most unbranded players com promise on the quality of the water,” she strongly contends. So how about outsourcing logistics like most other manufacturers? Laughing, Ms Ghosh says, “A couple of years ago, Mahindra logisapproached us to undertake our logis systics. We invited them to study our sys tem. Soon after that we received word replithat it would be hard for them to repli cate what we are doing.” Bisleri International would prefer to outsource its logistics. But there are few takers. “Our logistics would optimizainclude managing the optimiza tion of trucks, constant attempts to decrease costs, manage three shifts reto produce the amount of stock, re plenishment, and the cash sales that happen every day with our retailers. The company to whom we outsource cannot think of this kind of multitasking,” Ms Ghosh avers.

May 2012 | www.logisticsweek.com

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< feature

Numbers

In Tow

Although there is a fair amount of awareness about GDSN in India, both retailers and suppliers are not forthcoming when it comes to implementing the technology. Pritha Dey investigates.

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A

n internet based, interconnected network of interoperable data pools and a global registry that enables companies around the globe to exchange standardized and synchronised supply chain data with their trading partners using a standardized global product classification – does that sound interesting and helpful when earlier, it was considered far-fetched or unavailable? Well, such technology exists and western nations have been using it and reaping benefits. But India has not started drawing on this technology yet. We are talking about Global Data Synchronisation Network (GDSN). The GS1 Global Registry and the GDSN became operational on August 1, 2004. GDSN is built around the GS1 Global Registry®, GDSN Certified Data Pools, the GS1 Data Quality Framework and GS1 Global Product Classification. When combined, these data pools provide a powerful environment for secure and continuous synchronisation of accurate data. With GDSN, trading partners always have updated information in their systems, and any changes made to one company’s database are routinely and instantaneously provided to all the other companies who do business with them. When a supplier and a customer know they are looking at the same accurate and updated data, it is smoother, quicker and less expensive for them to do business together. GDSN provides a single point of truth for product information. In India, Infotech Enterprises offers an active GS1 certified data pool through their partners SA2 Worldsync (an organization owned by GS1, Germany). The service is offered in software as a service model (SAAS) and is charged on the basis of the turnover of the organization. There is an annual subscription cost which varies with the turnover of the organization. This starts from as low as `1500 per month.

Why GDSN? Varun Kapur, Senior Manager, Business Development, Retail and Supply Chain, India, Infotech Enterprises Information Technology Services Pvt. Ltd. says, “Based on studies and an analysis of the current modern trade/retail market in India, the current extent of inconsistency in product master data between retailers and suppliers exceeded 70 percent.” He adds that estimated losses on account of the same which were sustained by the Indian retail and Consumer Product Goods (CPG) sector over a five-year period pointed to losses of between `40-50 billion due to data inconsistencies and subsequent errors. Synchronised data eliminates errors in data alignment between trading partners, which creates supply chain information efficiencies, and ensures accurate data in transactions. High, unnecessary costs due to master data problems, such as supply chain information inefficiencies and inaccurate data in transactions are common. Invoices with errors add to these costs. In addition, the liberalisation of economies and the globalisation of trade has created the need for a smooth flow of goods and better control of supply chain processes, which can be achieved through combined operations and communication among trading partners. By incessantly synchronising the master data between the systems of manufacturers/suppliers and retailers, homogeneity in master data can be ascertained.

assessing the Gains Accenture and Cap Gemini have published reports describing the business benefits of GDSN based on extensive research with major associations, suppliers and retailers, including Royal Ahold, The Coca-Cola Company, General Mills, The Hershey Company, The J.M. Smucker Company, Johnson and Johnson, Nestlé, Pep-

Terms Related To GDSN GDSN Certified Data Pool: A network of interoperable data via which the GS1 Global Data Synchronisation Network connects trading partners to the GS1 Global Registry®. GS1 Global Registry: The central directory for providing information for subscription sharing, achieving data pool interoperability and Catalogue Item uniqueness by the registration of items and parties. Global Standard Management Process (GSMP): Develops the standards needed to support GDSN. Business Message Standards (BMS): contains all necessary information to implement the electronic messages that make the GDSN standard work. Extensible Markup Language (XML) Schemas: XML schemas are the mes-

sages themselves in electronic format. Global Location Number (GLN): A 13-digit unique location number mandatory within the GDSN to identity data owners/information providers, such as distributors, brokers, and manufacturers, as well as legal entities and physical locations. Global Trade Item Number (GTIN): A 14-digit number used to uniquely identify a product where there is a need to retrieve pre-defined information. The product may be priced, ordered or invoiced at any point within the supply chain. Global Data Dictionary (GDD): A repository for all data attributes, which are simply descriptions of any item. It allows users to store, re-use and share precise entry names and business definitions and their equivalent representations for GS1 Standards such as Electronic Data

Interchange (EDI), XML and Automated Identification Codes (AIDC). Electronic Product Code (EPC): Used in Radio Frequency Identification (RFID), EPC provides the information about the exact location of a product in the system. Data Quality: Good quality data means that all master data is complete, consistent, accurate, time bound and industry standards-based. By improving the quality of data, trading partners reduce costs, improve productivity and accelerate speed to market. Global Product Classification (GPC): To ensure products are classified correctly and uniformly, GDSN uses GS1 Global Product Classification (GPC), a system that gives buyers and sellers a common language for grouping products in the same way, everywhere in the world.

Source: www.gs1.org INDIA |

May 2012 | www.logisticsweek.com 39


< feature siCo, Procter and Gamble, Sara Lee, The Gillette Company, Unilever, and Wegmans. Their studies discovered that retailers benefit in several ways. For example, order and item administration improved by 50 percent when data synchronisation was in place. Coupon rejection at checkout was reduced by 40 percent. Data management efforts were reduced by 30 percent. There was an overall improvement of on-shelf availability, with out-of-stock items reduced from eight percent to three percent. Timeto-shelf was reduced by an average of two to six weeks, whereas order and item administration improved by 67 percent. Item data issues in sales process were reduced by an average of 25 percent to 55 percent. A GCI-Capgemini Global Data Synchronisation report entitled ‘Global Data Synchronisation At Work In The Real World’ demonstrates the benefits of GDSN with the help of some case studies. The report states:

n Leading

Japanese retailer AEON reduced their item management costs by $2 million using GDSN. n Johnson & Johnson have virtually eliminated data integrity related out-of-stocks at Wal-Mart in the U.S. n At Dutch retailer Albert Heijn, an improvement in data accuracy through GDS (with four trading partners) has resulted in a 30 percent productivity improvement in their data management department.

the retractors Björn Bayard, Owner, Bayard Consulting, says that although GDSN is the only global infrastructure to exchange product information and has flexibility built in with the extension concept, implementation is complex for suppliers and retailers. Mr. Bayard has been professionally associated with SA2 Worldsync GmbH and is an ardent blogger about master data management and

Source: Infotech Enterprises

Global Data Synchronization Network

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GDSN. He says, “Even though GDSN defines a message standard, this is only mandatory to be used between data pools. The communication between data source/recipient and the data pool is not standardized at all.” This means every Master Data Management (MDM) tool provider has to build an extra interface for each and every data pool he wants to connect with and presently, not many tools have built-in GDSN capability. Also, typically GDSN does not cover all the requirements a retailer has regarding data synchronization. Therefore, retailers often seek additional product information from suppliers in different ways. Obviously, GDSN today does not cover B2C data. “GDSN Pricesync is very complex and there is only one country (Australia) which has adopted it till now,” states Mr. Bayard. There is huge re-engineering of the message format under way (Modular Item / GDSN 3.0) to give GDSN more flexibility. “The mar-



< feature

“While GDSN is extensively used in America, Europe and Australia, it is still to take off in India.” — Varun Kapur, Senior Manager, Business Development, Retail and Supply Chain, India, Infotech Enterprises Information Technology Services Pvt. Ltd.

ket believes that the re-engineering may be ready by 2015,” notes Mr. Bayard. This will put a lot of burden on all data pools and probably also on customers using GDSN today. Kumar Rajagopalan, CEO, Retailers Association of India, adds, “The basic principles of Garbage-In-Garbage-Out (GIGO) applies in GDSN standards too and if enough care is not taken while creating master data base, the usage of the standard can get limited.”

GDSN In India Mr. Kapur says, “While GDSN is extensively used in America, Europe and Australia, it is still to take off in India. As a retailer, Hypercity has been the first to show active interest and is in the process of asking their suppliers to use this for data ex-

change.” He continues that “MNC retailers show the maximum appetite for GDSN as they have experienced the benefits of this technology in other countries. Companies like Hindustan Unilever (HUL), Coke and Nestle have been using GDSN globally, but not in India. However, large retailers like the Future Group are showing an interest, says Mr. Kapur. Recently a pilot survey was conducted on GDSN which saw 21 leading retailers/wholesalers and manufacturers in India come together in an initiative driven by Retailers Association of India (RAI) and Infotech Enterprises Ltd. Using technology from GDS solution provider SA2 Worldsync, the results from the pilot project demonstrated that a framework now exists for the

adoption of GDSN in India, discloses Mr. Kapur. Interestingly, over 7,000 companies in India already have a valid GLN (Global Location Number) which is a pre-requisite for using GDSN. Mr. Rajagopalan says, “Not all retailers in India are fully aware of GDSN. Some who are aware are keen. However, since GDSN implementation is successful only when the vendors and retailers come on the same page, the implementation plan is yet to be agreed upon.” According to Mr. Rajagopalan, Indian retailers are yet to wholly comprehend the power of GDSN standards. More importantly, he says, suppliers to retail companies are yet to realize that a great GDSN implementation can result in better availability of their products on retail shelves and increase sales. Speaking about how GDSN will help supply chain professionals, Mr Rajagopalan says, “What LinkedIn or Facebook does to us is what GDSN can do for products. Since GDSN is about the creation of a Master Data Management standard and various people in the supply chain of the product can get access to the master information of the product, the benefits can be immense.” Mr. Kapur agrees with Mr. Rajagopalan and laments that although modern trade retailers in India are aware of

GS1 SUGGESTS: Some General Advice And Suggestions To Consider As You Get Started

Source: www.gs1.org

Establish a core business team: An executive/business sponsor for commitment and business perspective, business subject matter experts for business processes and technical resources for day-to-day functionality. Get commitment from senior management for your data synchronisation strategy, communicate this commitment internally and to your trading partners, and get “buy-in” across the company structure. Build your company-specific business case on the basis of the rationale and link it to key performance indicators (KPIs). Build an implementation team: Choose a Certified Data Pool that has successful implementations (ask for references) and addresses your needs. Ensure your data is factually accurate and properly classified by implementing a data quality programme. This

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is essential. Synchronising incorrect or improperly classified data only creates problems, delays and costs in the supply chain. Ensure that your company and your trading partners have adopted the GS1 GTIN, GLN, Global Data Dictionary (GDD) and Global Product Classification (GPC) standards. Start working with a few key items and with a small number of trading partners that are strategically important and committed to developing the capabilities required to exchange clean, GS1 System standards-compliant data via the GDSN. Engage in pilot tests with selected partners, monitor results and make the necessary work flow, process and technical adjustments before moving to full production.



< feature GDSN and show willingness to implement it, they do not do enough to get suppliers on board. GDSN works best when suppliers transfer data to the data pool. However, for this to be effective, retailers must ensure that suppliers do so.

the Indian Scenario At present, Hypercity is the only retailer which has taken the initiative of

conducting their own backend R&D to assess the usefulness of GDSN. Nikhil Nagare, Analyst-Supply Chain, HyperCity Retail (India) Ltd., admits that while GDSN has not yet been implemented in HyperCity, they have completed the process of getting a Global Location Number (GLN) number from GS1 India. Presently, only Britannia is on GDSN but they have not yet uploaded the complete

data required. A spokesman from Britannia discloses that, “It is at a very nascent stage at our end. We have uploaded information about some 20 odd SKUs. If HyperCity finds the information useful, we shall think of the way ahead. Also, no other manufacturer or supplier has updated any information yet.” Mr. Nagare says, “As all suppliers and retailers are not ready to come on board collectively, we have

The GS1 global website cites benefits for both retailers and suppliers with GDSN: Benefits for Retailers

Benefits for Suppliers

Better Category and Promotion Management

Better Category and Promotion Management

Less need for local agents or intermediation

Improved visibility for stock-level planning

Ability to expand supplier base

Maximized retail exposure and product posting

Improved visibility for stock-level planning

Simplified/enhanced category reporting

Simplified/enhanced category reporting

Quicker and easier new item introductions

Quicker and easier new item introductions

Shorter lead time on product promotions

Shorter lead time on product promotions

Easier to add or change catalogue items (or their prices)

Price changes or corrections easier to manage, less need for costly human intervention Easier Administrative Data Handling

Easier Administrative Data Handling

Less in-store labour required: cost savings

No need for cross-reference tables

Less administrative personnel needed: cost savings

Fewer invoice disputes

Less time spent maintaining catalogues

Fewer write-offs

Less need for duplicate catalogues

Fewer accounts receivable

No need for cross-reference tables

Fewer order defects

Fewer invoice disputes

Fewer downstream shipping and billing discrepancies

Fewer order defects

Source: www.gs1.org

Better fill rates Smoother Logistics

Smoother Logistics

Savings from more accurate weights and measures

Efficient order sizing from accurate weights and measures

Error-free shipment receiving

Easier order tracking and tracing

Fewer return shipments

Fewer return shipments

Fewer backorders

Higher percentage of perfect orders

Less excess or “safety” stock

Fewer emergency orders

Optimized location despatch

More accurate picking

Reduction in shrink

Optimized short-term planning

More Satisfied Consumers

More Efficient Employees

Better on-shelf availability

Less administrative work means sales, buying and merchandising teams can focus on generating demand for product, growing business

Quicker checkout times More promotions Better Bottom Line

Better Bottom Line

Increased sales

Increased sales

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IQPC is bringing the Cold Chain series to India Responding to the demands for new and advanced technologies in India’s cold chain industry; IQPC brings you the latest in its global series of cold chain events: Cold Chain India, which will be held on 7-8 June 2012 in Hyderabad, India. The event will address best practices in the monitoring, control and management of temperatures and other associated risks to bio-pharma products across the entire supply chain.

So why is this event being held in India?

For sponsorship opportunities

India’s cold chain market is growing at a rate of 20-22% each year

+91 80 4322 4132 sponsorship@iqpc.ae

India currently contributes 8% of the worlds pharma production The Indian pharmaceutical market is expected to rank as a Top 10 leader with a growth value of US$ 55 billion by 2020

Who will attend? Vice Presidents, Directors and Heads of Supply Chain, Logistics, Quality Assurance, Stores, Procurement and Warehouses

What is in it for you? Shortlist potential customers who are in need of supply chain solutions Network with pharmaceutical supply chain, logistics and QA stakeholders Develop an understanding on current regulatory framework and polices for cold chain operations in India Learn about current infrastructure challenges aecting cold chain operations in India Understand the challenges faced by pharmaceutical companies when exporting goods nationally and internationally

www.coldchain.in


< feature not been able to estimate completely how useful GDSN will be.” It often happens that there are inactive products or de-listed products at the supplier’s end. But the changes in the supplier’s master data do not get updated at the retailer’s end. This results in supply chain errors. In order to gauge the efficacy of GDSN, HyperCity started a pilot at their end in September 2011. Mr. Nagare lists the benefits derived: n A good fill rate. n Increase in contribution to overall sales. n Better inventory management. n Improved availability. n Data similarity between supplier and HyperCity. n Reduced reconciliation. n Improved relation. n Involvement of both supplier and HyperCity supply chain in ensuring higher compliance to Purchase Order (PO) servicing and sparing Buying and Merchandising team from supply- related engagement with suppliers for the identified vendors. HyperCity deliberately did not continue the pilot in January and February to cross check the results. The results showed a slump in fill rates and sales. “Master data is extremely crucial. Whatever changes are made at the supplier’s end must be updated at the retailer’s end. GDSN will help do this automatically through EDI,” states Mr. Nagare. He explains that a product has many attributes. Feeding the system with all the features of a product will be of help to the WMS system at Distribution Centres to assign particular slots for keeping products; exact size of the product will help in planning the shelf arrangement in stores and also make room for optimum utilization of vehicles. “GDSN as a concept is very good, it is fantastic, and can lead to an increase in sales. But as there were problems when it was being implemented internationally, similarly we have to go through the same

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“Master data is extremely crucial. Whatever changes are made at the supplier’s end must be updated at the retailer’s end. GDSN will help do this automatically through EDI.” — Nikhil Nagare, Analyst-Supply Chain, HyperCity Retail (India) Ltd.

learning or growth path for GDSN in India too,” opines Col. Vijay Nair, General Manager Supply Chain, HyperCity Retail (India) Ltd. Baiju Mohan, Head Supply Chain Development, Marico Ltd., says, “Not many companies are using GDSN in India. We are getting started with Electronic Data Interchange (EDI) and we intend to follow it up with GDSN. But we are not on GDSN at present.” EDI is integral to GDSN. EDI is the interface which speaks both languages, converts the data which both systems understand and feeds it either way. In modern retail, where most back-end operations are mechanised, GDSN is important because if the master data of the retailer and the supplier is not the same, orders do not get processed when a system does not recognise a specific product. Col. Nair gives an example, “If the product is Rin Advanced and I write Rin, then the supplier cannot give me Rin Advanced until I write Rin Advanced in the order, because it is not a person talking to a person, it’s a system talking to a system. So you have to talk exactly the same language. So, here when I am saying I want 100 Rin, the supplier does not have Rin and he has Rin Advanced as he has stopped making Rin a few years back. But my data is still calling it Rin. So the HyperCity system is speaking in a language which the HUL system does

May 2012 | www.logisticsweek.com

not understand. So, inspite of HUL having Rin Advanced to give you, the system will show no supply. So if data gets synchronized, I will order only Rin Advanced as I would know that HUL has Rin Advanced only.” Identical data, both at the retailer’s and supplier’s end would also mean that order integrity is very high.

the Hurdles Col. Nair feels that the opportunities intrinsic to GDSN are immense, but things are not taking off because the awareness about GDSN is low and no one is very clear about the benefits it will actually give. “Anybody who talks says that the benefits are limited only to ordering and that I should be able to put a right order to a supplier. That is the only benefit which is currently seen,” opines Col. Nair. Currently, GDSN is being looked at only as a fulfilment measure, wherein order fulfilment should not drop because of wrong ordering or a wrong product being ordered which is not available in the system. Specifically, the most important elements of the products are being looked into. Col. Nair points out that, “May be systems in the country are also not mature enough to handle all these attributes. May be we don’t have the retail expertise in the country today to use all of them.” He highlights another problem


pertaining to India – taxation. The costing of products in India varies from state to state. Taxation was one issue which GDSN could not address before. But they have made some modifications, wherein they have introduced the concept of GLN, a unique location identification number. “Now, under GDSN, attributes can be fed into the system for particular locations. So, suppose location number 1, 2, 3, 4, is in Maharashtra, the attributes of Maharashtra taxation and rules can be filled into those locations,” elucidates Col. Nair. GDSN has made this modification which is specifically for India.

ing conditions in India and the changing products and prices, it is a difficult task. Return on investments could also be a concern.” However, the major problem facing the adoption of GDSN in India seems to be what Col. Nair calls “the chicken and egg situation between retailers and suppliers”. Suppliers do not want to share their data unless all the retailers are on board. On the other hand, retailers do not want to enrol unless all the suppliers agree to put their data on the system. This is where the intervention of a central body like RAI is required. Commenting on RAI’s role, Mr. Rajagopalan says, “RAI is definitely keen on

“Indian companies do not have legacy systems and are starting with a much more modern IT infrastructure which should help to get GDSN implemented and up and running.” — Björn Bayard, Owner, Bayard Consulting

Apparently, retailers are dissatisfied with the charges being levied on them as fees for using GDSN. Col. Nair explains, “Retailers are smaller than suppliers. But the charges which are being currently levied on retailers are higher than what suppliers are paying.” In a situation where retailers are not clear about benefits which can be derived from GDSN, they are averse to paying the charges. “Pricing is also a problem,” says Nelson Vannan, Customer Service Manager-Organised Trade, Nestle India. “For every change in price, a new Universal Product Code (UPC) has to be created. Given the chang-

the development of a robust GDSN standard for India. Any technology that enables a more robust supply chain which brings down duplication of work between suppliers and retailers and helps increase the sales of retailers, does have support from RAI.” Mr. Vannan thinks that GS1 India could also act as a mediator in bringing both the suppliers and retailers on board. The reason for the lack of interest on the part of the suppliers can also be understood. The overall sale contribution of large suppliers is about five-seven percent in modern retail and the remaining 93 percent is in traditional retail. INDIA |

GDSN is going to be used only by modern retail and not by traditional retail. Hence manufacturers or suppliers are more concerned about the 93 percent belonging to the unorganised retail sector, rather than the minuscule seven percent of organised retail. Thus suppliers are disinterested in contributing to GDSN as the organized retail sector does not carry heavy revenue clout. Speaking about the contribution of organised retail, Col. Nair says, “Had we been contributing about 30-40 percent, GDSN would have certainly moved much faster. But now, organized retail is not contributing substantially to force a decision on the supplier.”

the Way ahead Mr. Bayard says, “According to my understanding, retailing in India is going through a fundamental change. Organised retailing is gaining pace and gaining market share.” He continues that as GDSN helps to make your supply chain process much more efficient (for example by supporting electronic ordering, invoicing and despatching); it will help organised retail to keep prices low and delivery swift. One of the key issues with GDSN, according to Mr. Bayard, is that some sophisticated IT infrastructure is required, not only at the retailers’ end but also at the suppliers’ side, to completely leverage the benefits. In western countries, companies are typically struggling with their legacy systems because they do not have the capabilities to really do data synchronisation with business partners. Mr. Bayard says, “I could imagine that this is actually an opportunity in the Indian retail market because Indian companies do not have those legacy systems and are starting with a much more modern IT infrastructure which should help to get GDSN implemented and up and running.”

May 2012 | www.logisticsweek.com

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< Book EXTRACT

Tomorrow, Today Quantitative forecasting methods rely on one or more persons to generate forecasts without using any mathematical models. However, the use of judgement in forecasting is inevitable.

Q

BusinEss FoRECAsTing And dEmAnd PlAnning — Better Forecasting + improved Customer sevice = Higher Profits By Rakesh Singh and Vaidyanathan Jayaraman Copyright 2011, Dr. Rakesh Singh & Dr. Vaidyanathan Jayaraman ISBN: 13:978-81-921528-1-3 Pages: 161 Price: `550/Published by New Book Review Publishing House

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May 2012 | www.logisticsweek.com

ualitative methods are used when there is little data to support quantitative methods. Qualitative methods are necessary when there is little or no past objective data relevant to the future. The forecasting process should provide a method for input of subjective information from managers. The forecasting process should prompt and support managerial intervention. Qualitative forecasting methods rely on one or more persons to generate forecasts without using any mathematical models. Thus, these methods are subjective and judgmental. Expert opinion and the Delphi technique are two of the well-known qualitative methods. The expert opnion method is based on having experts use their knowledge and judgment to predict the future. The Delphi technique uses a panel of experts who respond to a series of questions relevant to the variable to be forecast. A coordinator collects the responses and uses them to prepare a second set of questions that is distributed to the same panel. The objective of the technique is to have the panel reach a consensus after responding to a reasonable number of rounds of questions. Qualitative methods should be used when one or more of the following conditions exist: 1) Little or no historical data on the variable to be forecast exists. 2) The relevant environment is likely to be unstable during the forecast horizon. 3) The forecast has a long time horizon, wuch as more than three to five years. Qualitative techniques can be used in a wide range of circumstances. In some cases quantitative techniques cannot be used, eg when past information about the values being forecast does not exist. For example, for a new product, there are no past data on sales on which to base estimates of future sales. Similarly, past sales of a product might not be relevant if a competitor launches a new product with superior features or performance. In other situations, there is insufficient time to obtain data or use quantitative techniques, or circumstances are changing so rapidly that a statistically based forecast would be of little guidance. Even when statistical techniques are


available, qualitative techniques involving human judgment are often used by managers for forecasting. Further, managers appear to be more comfortable dealing with their own judgements or with those of a colleague, compared with forecasts generated via a computer package and lacking transparency. Even when quantitative techniques are used, estimates may be combined with qualitative judgments, or supplemented, reviewed or screened by subjecting them to qualitative judgments i.e. any forecasts provided by an analyst are for decisionsupport, not decision-making.

Problems with Qualitative methods A purely judgmental approach to forecasting might avoid the use of computational techniques altogether. The exclusively judgmental approach relies upon the perceptiveness, insight and experience of the forecaster to produce the forecast of the future state. Depending upon how inconsequential the decision and how able the forecaster, a purely judgmental approach may yield satisfactory forecasts. In cases of more consequential decisions or more dynamic situations, computational forecasting methods may be in order. However, it does not necessarily follow that a computational approach will be able to improve upon informed judgement.

The necessity of Judgemental Forecasting The use of judgement in forecasting is inevitable. Let us consider three different hierarchical levels of decisionmaking: conditional, operational and contextual. At each level, subjectivity is added to the forecast. Many tendencies towards bias were found on other studies covering many fields. Direction of trends, level of noise, forecasting horizon all influence forecast accuracy. More complex models do not always give better results than simple ones and contextual information or domain knowledge often lead to better forecasts. Improvement by combining different forecasts are persistently found to be an effective method for improving results. A rule based forecasting system encompassing the whole forecasting process could further improve forecasting skills and reduce bias.

mechanism It is important to note that the decisions made in the early stages affect the choices made in later stages. For example information needs specified at the start will affect the sampling design, the way in which the questionnaire is structured and the selection of data analysis techniques. It should be noted that if there were only forward links in the process then the survey administration could be done one step at a time, completing each step before considering the next. Implicit in this ‘single direction’ approach is the assumption that there are no

limiting factors in later steps. This is seldom, if ever, the case. For instance there are often limitations on data collection or data processing resources, i.e. budget constraint. These limitations restrict the alternatives available at earlier steps. Backward linkages run from the collected data and the ensuing analysis that would then lead back to the developed survey questionnaire and sample design phases. This illustrates that major decisions concerning data collection and analysis should always be considered before selecting a sample and designing a questionnaire. Techniques for collecting information from individuals such as surveys and polls can be easy to implement, done at a low cost and on a timely basis. However evidence suggests that forecasts produced by groups offer greater forecasting accuracy than those derived from individuals. Groups also provide more information, although the marginal increase in information content

Even when statistical techniques are available, qualitative techniques involving human judgement are often used by managers for forecasting.

decreases as group size increases. The use of groups also provides an opportunity to gain more information about the range of possible outcome values hence giving an insight into the risk associated with the estimates. From a behavioural perspective, it is also likely that a group responsible for implementing a project will have greater commitment to it if they are also involved in providing estimates of variables used in the financial analysis leading up to a decision to proceed with a project. The choice between using individual versus group techniques really comes down to the particular situation and what is feasible. For instance group techniques such as Delphi and Nominal Group Technique often require greater skills, resources and time than collecting information from individuals using some form of survey or poll.

delphi method The Delphi forecasting method is based on subjective expert opinion gathered through several structured anonymous rounds of written interviews. Each successive round provides consolidated feedback to the respondents and the forecast is further refined. The objective of the Delphi method is to capture the advantages of INDIA |

May 2012 | www.logisticsweek.com 49


< Book EXTRACT

multiple experts in a committee, while minimizing the effects of social pressure to agree with the majority, ego pressure to stick with your original forecast despite new information, the influence of a repetitive argument and the influence of a dominant individual.

steps in delphi method In a classic Delphi survey, the first round is unstructured, allowing panelists to identify freely and elaborate on the issues that they consider important. These are then consolidated into a single set by the monitors, who then produce a structured questionnaire designed to elicit the views, opinions and judgements of the panelists in a quantitative form. The consolidated list of scenarios is presented to the panelists in round two, at which time they place estimates on key variables such as the time an event will occur. These responses are then summarized and the summary information is presented to the panelists, who are invited to reassess their original opinions

There are a number of variants on the classical delphi method. When the issues are well-defined, the monitoring team can develop a clearly defined scenario.

in light of anonymous individual responses. In addition, if panelists assessments fall outside the upper or lower quartiles, they may be asked to provide justifications as to why they consider their estimates are more accurate than the median values. Further rounds of collection of estimates, compiling summary information and inviting revisions continue until there is n o further convergence of expert opinion. Experience reveals this usually occurs after two rounds, or at the most four rounds. There are a number of variants on the classical Delphi method. When the issues are well defined, the monitoring team can develop a clearly defined scenario. In such circumstances, it is common to replace the unstructured first round with a highly structured set of questions through which specific estimates of parameters are obtained. A statistical summary of all responses is then provided to the panel for the second round, rather than in the third. In such cases, it is common for the Delphi method to include only one or two iterations. Another variant is the ‘paper’ Delphi (sometimes also known as a ‘paper and pencil Delphi poll’) that is conducted entirely

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by mail. Another variant is the ‘real time’ Delphi whereby feedback is provided by computer and final results are usually available at the end of the session.

nominal group discussion The classic Delphi method is conducted through a combination of a polling procedure and a conference. Communication between conference panelists is however restricted and undertaken through the monitoring team. Even though panelists are at the same physical location, there is no face-to-face contact. Even in variants of the Delphi, there is no face-to-face contact. The nominal group technique (NGT) uses the basic Delphi structure but in face-to-face meetings which allow discussion among participants. A meeting with NGT starts without any interaction, with individuals initially writing down ideas or estimates related to the problem or scenario. Each individual then presents their ideas or estimates, with no discussion until all participants have spoken. Then each idea or estimate is discussed. The process is then repeated. For this reason, NGT is sometimes known as the ‘estimate-talk-estimate’ procedure. In practical terms, like Delphi, the framing of the questions or the scenario is crucial for the success of the process. Also, ideally, the leader or the moderator of the discussion should come from outside the group.

Expert system Expert Systems are typically computer-based heuristics or rules for forecasting. Interviewing forecasting experts and then constructing “if-then” statements determine these rules. Going through the various applicable “if-then” statements generates forecasts until all statements have been considered.

Jury of Expert opinion A forecast arrived at through the ad hoc combination of the opinions and predictions of informed executives and experts. The jury of expert opinion is one of the simplest and most widely used forecasting approaches. In its most basic form it involves having a group of executives who deliberate and then decide on the best estimate for the item being forecast. As a precursor to the meeting, it is common to provide background information to executives. There are a number of variants of this technique. One of these variants is when the estimates of the group are obtained by participants who record their estimates on paper. The feedback from the respondent are then combined to produce an average. This variant of the jury of expert opinion approach could almost be considered an informal variant of the Delphi method. The key difference is that there is no mechanism to prevent interaction amongst group members.



< panorama Off the shelf

Ensuring Global Food Safety

T

he HACCP (Hazard Analysis and Critical Control Points) system is still recognized internationally as the most effective way to produce safe food throughout the supply chain, but a HACCP system cannot operate in a vacuum. It requires prerequisite programmes to be in place and it can be highly affected by, or dependent upon, other major considerations such as animal, plant, human and environmental health, food security and food defence. This book: n Provides a practical and up-to-date text covering the essentials of food safety management in the global supply chain, giving the reader the knowledge and skills that they need to design,

implement and maintain a world-class food safety programme. n Builds on existing texts on HACCP and food safety, taking the next step forward in the evolution of HACCP and providing a text that is relevant to all sectors and sizes of food businesses throughout the world. n Shares practical food safety experience, allowing development of best-practice approaches. n Educates practitioners. Food Safety For The 21st Century By Carol Wallace, William Sperber, Sara E. Mortimore Publisher: Wiley-Blackwell Price: `10,811.77

SCM Essentials

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resenting the core concepts and techniques of supply chain management in a clear, concise and easily readable style, the Third Edition of Essentials of Supply Chain Management outlines the most crucial tenets and concepts of supply chain management. Key features: n Shows how to utilize technology to boost efficiency and responsiveness n Introduces new material on the latest technology and practices available for supply chain management n Offers new cases and executive interviews throughout the book

n Written by author of Business in the Cloud: What Every Business Needs to Know about Cloud Computing Creating an effective supply chain is key to staying ahead in today's complex market. The third edition provides the tools, guidance, and examples to help maximize business performance and create competitive advantage.

Essentials of Supply Chain management, 3rd Edition By Michael H. Hugos Publisher: Wiley Price: `2,056.91

Managing Supply Chain Risk

M

Supply Chain Risk impacts every organization irrespective of sector, size or location in the supply chain. At the same time, the cost of managing supply chain risk is escalating significantly, as are the consequences of not managing such risks effectively. This handbook represents the work of 30 different authors from 11 different countries, all of whom are recognized international authorities in research, practice, and policy associated with Supply Chain Risk Management (SCRM) and the wider domain of Supply Chain Management (SCM). The first truly comprehensive collection

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of current research and leading-edge thinking on supply chain risk and its management, the book is structured into four main sections: Risk Analysis and Assessment and Tools; Supply Chain Design and Risk; Supply Chain Risk Management; and Supply Chain Security.

Supply Chain risk By Zsidisin, George A.; Ritchie, Bob (Eds.) Publisher: Wileyll Price: `8,759.65

May 2012 | www.logisticsweek.com


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Editor’s Note Enfant Terrible Bad logistics is often the cause for unhappiness and displeasure. It could be due to numerous reasons from traffic snarls, to delays in paper work or some little-known regulation that could cause delays in delivery. But to the receiver, it is bad logistics. Often, when you have asked for something to be delivered at a pre-decided destination and especially if you are eagerly awaiting the delivery, nine out of ten times it will never arrive on the scheduled date. This happens so often each time I order some books/CDs/appliances. The service provider will tell you that he has made more than one trip and there was no one home. And then you get into an argument. Is ensuring prompt delivery so tough? Don’t responsible people sitting in offices take stock of goods that have arrived and those that need to be delivered? Is the infrastructure in such doldrums? Surely, they are not short-staffed. Nor do people live in such remote areas (In the movie Il Postino, a make-shift postman delivers a letter with prompt regularity to his only customer who lives on the top of a hill) where they need to search out more deliveries within the area to justify their trip. And God help you if your parcel happens to be a passport.

page 22 suppLy shyLocks: Extortion from transporters at checkpoints is routine. A report.8 Let it pass: Reducing production lead time is key to smoothening logistics flow...16 a maN‘s WoRLD: Where are the ladies in the industry when we need them? ....42

An update on talent management in supply chain.

PAGE 11

November 16–30, 2011

Devadas Nair, head supply chain, shoppers stop, is in the thick of a retail revolution, shaping the supply chain of one of its prime catalysts.

the humaN aNgLe 50

Ms. Shagun Kapur Gogia, Director/Founder of Tuscan Ventures, has grand plans for the cold chain industry in India.

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Jayakumar Krishnaswamy, AkzoNobel’s SCM l’s SCM head, is managing a 24x7 supply-chain. Here’s Nobeigues amy, Akzo aj Rodrain. Here’slow TElEcom NEglEcTEd how he plans to accomplish it. Ravir Krishnasw Page 16 supply-chy Manager, 20 ger Jayakumar a 24x7 ent logisTics adopTioN 24 waTErways 44 Sanja ging Mana nishm it. the FMC PageG16 OLD hd is mana EcTE s Reple GET SET,n GO 38 ORDER: How auto cos manage serviceIndia logistics for phased-out models...08 mplis Movement of telecom Why WMS still does is ignoring inland head,Distr ibutio NEgl ain of44 Britannia’ to acco nal plans 08 network equipment openss ring not have enough HAND: How FDI in Retail would waterways at its own logistics...25 rway Natio supp The the true story ofly-ch supplymodels...THE FOREIGN change India’s waTE how he ge phased (right) and g inland-out s...25 takers and window of opportunity peril 20 in IndiaSCM: Amid all the din around green s for ensu education inisIndia. ignorin locks (left), manaachain logistic logistics, some practical wisdom...30 Page PRO-LIFE low own logistic erjee serviceIndia 24 India’s the eroadb ...30 ays at its Mukh ing manag TioN change wisdom waterw cos al would auto ShapinG up Retail Brawn 18 Food Security and S ScM: The bill is noble, but do we have the supply-chain...10 adop look. How clear r while R: does in sharp s, some practic still peril AFDI majo ORDE : How tics. -line...14 Jane: The percentage of women execs in corporate supply-chain....16 OLD Why WMS green logistic Woodland’s products logisHow ny bottom Supply less enough IGN HAND din around 30 the compa seam FORE not have all on.... come together from scratch dent THE s India SCM: Amid rdizatiturn oF inventory inventory: Scrutinizing ways to improve inventory turns.....60 takers in -chain hurdle rue lack of standa ...36 PRO-LIFE How supply ers SCM chiefs cs manag gation of PICTURE: logisti ER congre t Retail BIGG bigges LACUNAE: from arguably the RETAIL hts MIT: Highlig

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Vol. No.4 er 2011 Vol. 5 — – No.2 Octob 20112010 | Vol. 4 December October

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In For The Long Haul

Varun Dhawan, VP-Taxation, Blue Dart Express Ltd., simplifies the issues with GST that have boggled many in the logistics industry.

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Editor, LogisticsWeek

Firms Rethink Supply Chain Risks

Disasters in Japan, Thailand highlight need for continuity plan Bangkok As flooding in Thailand disrupts supply chains in many industries, the event—along with Japan’s March earthquake and tsunami—is prompting many to consider aspects of supply chain risk that might have been previously overlooked, says a recent report in Business Insurance. While many expect global sourcing to become an even larger factor for businesses going forward, recent events are prompting companies to consider the geographic concentrations of suppliers, the need for backup suppliers and reengineering processes to accommodate backup components should supply chains be disrupted. With an estimated 45 percent of the world’s hard-drive production located in Thailand and flooded plants affecting production by major manufacturers such as Seagate Technology Inc. and Western Digital Inc., some analysts say the disruption could affect PC production through the first half of 2012. The flooding also has had a major impact on the auto industry, where disruptions at Thai auto manufacturing plants and parts producers reportedly is expected to result in lost production of 250,000 vehicles worldwide. Many Japanese companies relocated production to facilities in Thailand after the March earthquake and tsunami. London-based law firm Reynolds Porter Chamberlain L.L.P. said the move to Thai facilities helped many Japanese companies mitigate their losses after the Japan disaster. But many now face further losses as a result of the floods in Thailand. “The problem for insurers who provide business interruption cover to Japanese manufacturers is that they have to cover the losses stemming from the Thai flooding because so many businesses moved some or all of their supply chain there,” Daniel Saville, legal director in the reinsurance and corporate insurance department of Reynolds Porter, said in a statement. “Moving production from Japan to Thailand was “Plan B.’ The question now is whether those businesses have a “Plan C,’” he said.

Source: cleveland.com

IndIa’s

Car manufacturers across the world suffer delays as factories lie submerged. Gerry Alonso, senior VP of claims at Factory Mutual Insurance Co., noted that the “slow developing” nature of the Thai catastrophe makes it difficult to get a handle on the extent of losses. And, the duration of the flooding could exacerbate the losses. “We’ve had some clients that have been able to procure divers and go in there, but that gives you an idea of what you have.” Mr. Alonso said. “The frustrating part from a claims perspective, you can’t assess losses until the water’s gone.” William J. Montanez, director of risk management at Ace Hardware Corp. and a member of the board of the Risk & Insurance Management Society Inc., said his company hasn’t been affected by either catastrophe, though it relies on overseas suppliers. Mr. Montanez said, “At the back end, we have to look at safeguarding and how we can make it less risky to do it.” With the Thai floods raising awareness of the risk of geographical concentrations of suppliers, Linda Conrad, director of strategic business risk management at Zurich Financial Services Ltd. in New York, said her company has been working with clients to

identify where suppliers and industries are concentrated. “I think this illustrates the need for better continuity plans, including backup supplier arrangements, diversifying the locations of suppliers and using different backup suppliers than competitors.” Ms. Conrad also said companies are starting to ask existing suppliers about their own continuity plans. “People are also starting to do a lot more scenario analysis, including calculating the potential impact of having to re-engineer processes if alternative components or parts don’t match the specifications.” In general, the recent supply chain disruptions are leading many companies to embrace “that resiliency mindset of: Let’s try to think through some hypotheticals and plan for this when it costs us less than when we are in a crisis,” Ms. Conrad said. “At the end of the day I think the onus that’s going to be on risk management and management in general is how can we get a preview of what the future might look like and how will we respond to it,” Mr. Montanez said. “That’s what ERM is all about.”

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BLogoSphErE Why China Is not ready For Lean projects rosemary Coates What methodologies such as Lean, TQC, Six Sigma and others don’t take into account are the cultural differences between the western world and China. Lean principles are based on Western ideas and methods including critical thinking and collaboration. The teachings of Confucius, on the other hand, suggest behaviors that oppose collaborative problem solving and public criticism. The Chinese have been practicing Confucian values for nearly 3000 years. Children are taught Confucian values in elementary school and families practice them in their daily lives. For example, “saving face” is way more important than concerns for quality. If a worker were to criticize the production line processes as the cause for quality problems, the line supervisor would surely lose face. So it is very unlikely that anyone would speak up to offer criticism. In the US and Western Europe, Lean Processes have become a way of life. But for the hundreds of thousands of

Journals, Case studies, Research Reports

rESourCE CEnTEr Six Sigma Initiatives Streamline Operations Penske Logistics Ford conducted studies to determine the benefits of transitioning the company's decentralized logistic operations to a centralized approach. The decision was quickly apparent—centralization of the company's logistics operations would increase both velocity and visibility throughout the network, as well as reduce supply chain costs. By working with individual plants and corporate management, Penske established a baseline of current operations and outlined the proposed solutions. The new logistics program would establish a Penske Logistics Center that included the following core functions: n Network Design Optimization— the order dispatching centers (ODC) would be a central delivery point for suppliers. Different supplier shipments going to the same plant would now be cross-docked into trailers at the ODC. Loads would be consolidated and delivered on a scheduled basis to reduce the amount of milk runs, less than truckload

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other Chinese factories, lean is often met with resistance or at the very least passive non-participation. Lean programs in the West are often led by Manufacturing Engineering or QA or an internal consulting department. In China, the workplace is all about production, not the refinement of processes. Chinese engineers are assigned to production and only production, not strategic projects. Chinese QA exists to assure that the customer’s specs are being met. Internal consulting is an unfamiliar concept. These functions within Chinese manufacturing organizations don’t have the time nor the inclination to take on Lean projects, no matter what the return on investment suggests. Of course, Lean Manufacturing principles, techniques and methods are being introduced in the large global manufacturing sites in China and slowly adopted. Over time, this may lead to a broader adoption in smaller factories, as manufacturing matures in China. But for now, and the next 10-15 years, I see traditional values winning the race. http://bit.ly/IaJeIj

shipments (LTL) and premium freight charges. n Carrier and Premium Freight Management—Penske refined Ford's carrier bidding process by placing more stringent requirements on carrier partners. Carriers were now required to meet specific safety, equipment and technological specifications; provide experienced and certified drivers; and show proven experience of on-time delivery/pickups. n Information Technology System Integration—Penske also implemented several information technology solutions throughout the logistics network, including its proprietary Logistics Management System and RouteAssist, an advanced routing tool. Other programs included a Web-based metric reporting system and order tracking software. Drivers were provided with PDA scanners and an electronic driver log. Carriers were now required to have satellite communications and engine monitoring systems on all trucks for load tracking. ODCs were provided with integrated RF cross-dock scanners that tracked the delivery of individual parts.

May 2012 | www.logisticsweek.com

n Finance Management—As part of its carrier management system, Penske would now provide drivers with a single set of paperwork procedures to ensure delivery documentation was collected and submitted to accounting. Penske developed a new freight billing system that would capture freight costs and allocate those costs by plant. As a result, Ford could see which plants had the highest and lowest freight costs and which carriers were most cost effective. In approximately 18 months, Penske had completely transitioned Ford's logistics operations to a centralized network design. More than 700 inbound and 500 outbound trailers now move to and from Ford's ODCs per day, with most loads carrying at 95 percent capacity. Shipments are consolidated at the ODC and previously unused cross-docking space is now in high demand. Fourteen million pounds of freight are cross-docked each day, resulting in an inventory reduction of 15 percent. http://bit.ly/koERs2

— Compiled by Anuja Abraham


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< panorama TooLS

mobile apps of The month

A peek at some of the latest mobile applications for logisticians.

Con-Way Freight Tools

Platform: Android. iPhone, iPad, Blackberry (compatible with software 4.0 - 5.0 only) This mobile app provides a personalized rate quote, tracking of your shipments, and the ability to view your documents and locate and call on any Con-Way service centers. Developer: Con-Way Language Supported: English Price: Free URL: http://bit.ly/HX5qBR

DhL activeTracing

Freightguard

Platform: BlackBerry. iPhone, Android FreightGuard was designed to meet the cargo insurance needs of shippers, freight brokers, and owner/operators within the trucking industry. The features of the app include one can get a quote immediately, purchase the coverage rights from your phone in seconds, receive the policy documents in seconds, file a claim, reach out to customer support and many more. Developer: Salebug Language Supported: English Price: Free URL: http://bit.ly/J1zGLt, http://bit.ly/HRV6fc http://bit.ly/JeM395

Platform: Android, BlackBerry, iPhone

The app allows you to check your shipments' status while on the go. You can scan and read bar codes using the camera phone. Favorites’ list help you organize your shipments information and add aliases to identify shipments easier. It also allows you to send your business partners links to the shipment status via email. Developer: DHL Freight GmbH Language Supported: 1.1.4 available in German and English Price: Free URL: http://bit.ly/HMjOey

Trucker Tools Platform: iPad, iPhone

This app (exclusive in the US) helps you find latest & lowest diesel prices, nearest truck stops, live traffic, and current promotions on food, products and services at truck stops across the country. It also locates truck stops near a city, your current location, along an interstate, or at a specific exit — and provides directions. Developer: Salebug Language Supported: English Price: Free URL: http://bit.ly/HSkZhm

Freight Systems

FSntracks

Customers will be able to retrieve their shipment status being moved by sea, air and land transport by Freight Systems across the globe through their brand new mobile tracking application. Developer: Freight Systems India Pvt Ltd Language Supported: English Price: Free URL: http://http://bit.ly/J1wYFN http://bit.ly/J8BLJr http://bit.ly/JDTxiD

View location and tracking data reported from your FSN GPS tracker. View the current location of your GPS tracking device. Review locations for the last hour, last two hours, up to last 24 hours. Review location report details – time, address, lat/lon, velocity. Check device settings – how often the device is scheduled to report and remaining battery level. Developer: FreightWatch Security Net Language Supported: English Price: Free URL: http://bit.ly/J0Cjjd

Platform: BlackBerry, Android, iPhone

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May 2012 | www.logisticsweek.com

Platform: iPhone, iPad


Imprint

ICE Awards “By words we learn thoughts, and by thoughts we learn life.” — Jean Baptiste Girard At Shailaja Nair Foundation, we understand the importance of keeping people connected on a personal and tangible level, in any organization. We have always valued the art of written communication and the role the print medium plays in bringing together the employer, employee and their respective families. An important tool for this is the in-house magazine. An in-house magazine is created thanks to the effort of dedicated individuals within an organization who take the time to create this tool for connectivity, despite it being a rarely noticed job. We have decided to give this ‘voice of an organization’, a platform to be recognized and the people behind it, a chance to bask in the glory of its creation. To honor the best talent and creativity in in-house magazines, Shailaja Nair Foundation instituted the ICE Awards in 2009. Inhouse journals in any language and from any part of the world are welcome to participate. A competent jury then judges the magazines across varied categories like name, design, content, employee participation, etc. Over the years, we have witnessed enthusiastic participation from renowned and prestigious organizations like Reserve Bank of India, Hindustan Unilever Ltd, Mumbai International Airport Pvt. Ltd, UTI AMC Ltd, Dr Reddy’s Laboratories Ltd, Thane Municipal

Corporation, Hindustan Zinc, Mahindra & Mahindra, Kirloskar Brothers Ltd, UB Group, Cafe Coffee Day, Kuoni Travel Group, Boeing International Ltd, BEST, McDonald’s, Hindustan Copper Ltd., IIT Bombay, Taj Hotels, Varroc Group, Nabard, Government Law College, Vanarai Foundation, HT Media, Raj Bhavan, Mumbai, etc. Dr. Gita Piramal, the noted author of the book ‘Business Maharajas’ and chief guest at the ICE Awards 2009, said that the cost involved in creating a magazine is almost negligible when one considers the kind of warmth and loyalty it brings to an organization. Shailaja Nair Foundation aims to make ICE Awards bigger and better with each passing year and a name to reckon with amongst organizations and corporates. It is our wish that these awards encourage more organizations to produce in-house magazines, thereby keeping the ties between people alive, even in today’s fast paced times. To know more about ICE Awards or Shailaja Nair Foundation, please visit: www.iceawards.in www.shailajanair.com

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A PUBLICATION OF HAmBUrg mEDIA grOUP

May 2012 May 11 - 13, 2012 InternatIonal ConsuMer eleCtronICs expo Hotel Gokulam park and Convention Center, Kochi International Consumer Electronics Expo is a three day international trade show that caters to the field of consumer electronics with diverse sub areas such as home automation, music systems and home theater systems, control systems and office automation systems. International Consumer Electronics Expo is poised to be a great platform for the exhibitors to introduce their products and services to the esteemed decision making trade buyers who are believed to turn up at the event. Some of the leading brands in the consumer electronics industry will be looking to open up new avenues in the high profile Indian markets. Exhibitors’s include: Dealers and manufacturers of home automation, office automation and control systems such as CTV, LED, LCD, plasma TV, smart TV, satellite TV devices and service providers, projector and projection screen, ISPs, servers, Internet based MMS Providers, IP TV, Clocks Electronic Voltage Stabilizers, Inverter, UPS, and digital imaging equipment. organizer: Soorya Trade Fair Inc. Tel: +91 80 25231675 May 11 - 14, 2012 My BusIness IndIa sHow Vapi Industrial association Ground, Vapi My Business India Show is a significant platform to facilitate all the manufacturers, dealers, traders and suppliers of different Industries. The event is expecting visitors coming from key persons from the manufacturing business like engineers, marketing officials and key policy makers of the industry. The show includes automobile, telecom, electrical, among others. Exhibitors’s include: manufacturers, suppliers, business owners, dealers and traders to showcase their products and services. organizer: MBI Tradelink Tel: +91 261 3199559 May 17 and 18, 2012 GreenteCH FIre saFety and seCurIty GloBal ConFerenCe and expo to Be announced (Visakhapatnam) The 11th Annual Greentech Fire, Safety And Security Conference And Expo will run concurrent with conference offers excellent opportunity to have major exposure for development of business/trade with participants. It offers the best place for buyers and sellers and incredible opportunities for joint ventures and collaborations, sourcing requirements, transfer of technology, research and development, investment opportunities, supply of plant, machinery, process control eqipments, projects, services, etc. 62

INDIA |

Exhibitors’s include: Manufacturers, exporters, suppliers, contractors in the area of fire, safety, and security, and will display their products such as access control devices, bank security equipments, CCTV surveillance system, de-bugging devices, emergency route lighting systems, explosive detection and disposal, factories and hospital security devices, fire alarm and fire fighting equipments, fire extinguishing chemicals. organizer: Greentech Trade Fairs Private Limited Tel: +91 11 25593846/25554739/ May 18 - 20, 2012 IndIan MaCHIne tools and autoMatIon expo aMrItsar Kumar International, amritsar Indian Machine Tools And Automation Expo Amritsar offers a range of machine and automated equipments designed to aid the professionals working in the industrial sectors. The show will offer a comprehensive range of advanced technology aided automation equipments which have attractive designer and tough body structure. Exhibitors’s include: CNC machines and tools, CNC lathes, automatic lathes, boring machines, die casting machines, drilling machines, electro erosion machines, laser cutting. The exhibitors will also present forging machines, hardening and heating machines, polishing and debarring machines, machines for the production of bolts, screws, nuts and rivets, and all types of abrasive tools, assembling systems and industrial robots, chuck jaws, vices and tooling columns, process control systems, 3D planning and 3D simulation precision. organizer: Paramount Exhibitors Tel: +91 172 2274801/2274802 May 24 and 25, 2012 Cloud ConneCt BenGaluru nimhans Convention Centre, Bengaluru Cloud Connect Bengaluru offers a range of IT related solutions and equipments designed for the IT professionals. Conference sessions, live demonstration programs and various other informative programs are held to guide and update the professionals about the recent updates in the cloud computing area. Exhibitor’s: The services provided in this show incorporate cloud and grid architecture, cloud based services and education, infrastructure services, software solutions, virtualization, high performance computing and cloud delivered testing. The participants have also added in the effort of providing cloud lock in, cloud interoperability and multi cloud frameworks. organizer: UBM India Pvt. Ltd. Tel: +91 22 66122648/66122600

May 2012 | www.logisticsweek.com

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publishing director: Jayaram Nair jayaram@logisticsweek.com edItorIal editor: Aanand Pandey aanand@logisticsweek.com editor-special projects: Pamela Cheema pamela@logisticsweek.com executive editor: Jayashree Mendes jayashree@logisticsweek.com editorial executive: Anuja Abraham, Pritha Dey CreatIVe Chief designer: Shivasankaran Pillai shiva@logisticsweek.com ad-sales Soney Mathew soney@logisticsweek.com Snehal Phatnaik snehal@logisticsweek.com eVents events Manager: Upendra Kshirsagar upendra@logisticsweek.com Marketing support: Sangeeta D, Suhasini S HAMBURG MEDIA GROUP www.logisticsweek.com Printed by Jacob Joseph Puthenparambil, published by Jacob Joseph Puthenparambil on behalf of Hamburg Media Private Limited. Printed at Print House Private Limited, Rabale, MIDC, Navi Mumbai - 400 705, India and published at Bldg.4/6, Sona Udyog, Parshi Panchayat Rd., Andheri (E), Mumbai - 400069. No part of this publication may be reproduced or transmitted in any form or by any means including photocopying or scanning without the prior permission of the publishers. Such written permission must also be obtained from the publisher before any part of the publication is stored in a retrieval system of any nature. No liabilities can be accepted for inaccuracies of any description, although the publishers would be pleased to receive amendments for possible inclusion in future editions. Opinions reflected in the publication are those of the writers. The publisher assumes no responsibilities for return of unsolicited material or material lost or damaged in transit. All correspondence should be addressed to Hamburg Media Private Limited. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only.

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Endorsed by


Hรถrmann offers a complete programme. For the home... Automatic garage doors, entrance doors, internal doors, security doors, fire doors, smoke-tight doors and multi-purpose doors. Over 50 years of Hรถrmann experience is integrated into each and every product. For industrial and commercial applications... Hรถrmann sectional doors, rolling shutters, fire doors, security doors, multi-purpose doors, loading technology and high-speed doors. Hรถrmann is the only manufacturer world-wide that offers you doors, operators and loading technology from one source.

Hormann India Pvt. Ltd 402, Durga Chambers, Plot No A-8, Veera Industrial Estate, Veera Desai Road, Andheri-West, Mumbai-400 053, India. Ph: +91 22 40166593 Email: jagdish.anne@hormann.in www.hormann.in


DAMCO.COM

RNI No. MAHENG/2007/23777 l Registration No.MH/MR/South-279/2011-13. Allowed to post at Patrika Channel Sorting Office G.P.O. Mumbai - 400001. Date of mailing: 5th of every month issue. Published on 1st day of every month.

FAST CHANGING TRENDS AND INCREASED GLOBALIZATION HAVE LED TO NEW SUPPLY CHAIN CHALLENGES FOR RAPIDLY EVOLVING INDUSTRIES At Damco, we understand that market dynamics in industries such as apparel & footwear are fast-paced with complex and varied products that require constant attention and tracking; right through to delivery on the shelves.

Damco India Pvt. Ltd. 13th Floor, Tower A, Urmi Estate, Ganpatrao Kadam Marg Lower Parel (W), Mumbai, India 400 013

Visibility, Scalability and Flexibility!! Our tailor-made solutions enable you to achieve unparalleled levels of reliability and flexibility in your supply chains; whilst helping you to cut costs and gain end-to-end stock keeping unit (SKU)-level visibility.

+91 22 3308 8249 Commercial.India@damco.com www.damco.com

Understanding the Indian supply chain With 20 years of presence in India, we understand the Indian supply chain and its uniqueness. Through our network of 21 offices and over 400 experienced logistics professionals, we are close to your business, and can offer you tailor made solutions relevant to your industry.

OCEAN FREIGHT

AIR FREIGHT

SUPPLY CHAIN MANAGEMENT

CUSTOMS BROKERAGE

WAREHOUSE AND DISTRIBUTION

TRUCKING

Global logistics. Individual solutions.

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March 2012 / Š Damco International A/S


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