Lt may 2012 for net pdf

COVER STORY

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CARSTEN'S CALL AIR CARGO POLICY

INTERVIEW JEFF BAUM

EVENT IWS 2012

LogisticsTimes www.logisticstimes.net

May 2012

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PERSPECTIVE

Malcolm Monterio

Organised vs Unorganised…

Manufacturing Push & Logistical Puzzles I

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CONTENTS

All about Transportation, Distribution & Infrastructure

Volume 3: Issue No.1 * May 2012 Editor in Chief

Raj Misra rajmisra@logisticstimes.net

Editor

Ritwik Sinha ritwik@logisticstimes.net

Sub Editor Photographer Design Consultant Designer Circulation & Distribution Legal Advisor

Neha Richariya Anil Baral S. Athar Hussain Kausar Syed Kamruddin SaiďŹ Rakesh Garg

Our Bureau Mumbai Rahul Kumar rahul@logisticstimes.net Bangalore

B Shekhar shekhar@logisticstimes.net N Raju

Chennai

raju@logisticstimes.net Sudhir Kumar

Hyderabad

sudhir@logisticstimes.net

Editorial Advisory Board Paul Lim Founder & President, Supply Chain Asia Prof. Samir Srivastava Associate Professor, IIM-Lucknow Prof. Akhil Chandra Institute of Logistics & Aviation Management

Marketing & Sales Kalika Singh Ph: 011-22478538-39, 9891007542 Email: advt@logisticstimes.net Printer & Publisher Deepa Misra for

E-77, West Vinod Nagar, Delhi -110092 Tel: +91 11 22478538-39, Fax: +91 11 22471764, Mumbai: +91 9322811550 Printed at Personal Graphics & Advertiser Pvt. Ltd. Y -22, Okhla Industrial Area-II, New Delhi-110020

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COVER FEATURE

Manufacturing Push & Logistical Puzzle Edit Note

8

News Briefs

10

Product

48

Events

49

36 20 INTERVIEW

JEFF BAUM

40 TECHNOLOGY

Demystifying M2M

AUTOMATION

Next “Buzz” in the Indian Market

42

STUDY PAPER

Future of 4PL in India

EDIT NOTE

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An experiential journey In the life of a publication, two years indeed is too short a period. Yet for those behind it, being in existence for last twenty four months and delivering consistently certainly is a small but at the same time no less than a remarkable miletsone. If not anything else, then at least it provides you the first real opportunity to indulge in some nostalgia.

With this edition, Logistics Times has entered into its third year – thanks to all the support from all of you. And yes, this is my moment to recall how things have unfolded for us in last two years. “How time flies?,” is my first feeling, of course. I still distinctly remember mounting on a gantry crane to capture images of unloading operation from a ship at Visakha Container Terminal in Vizag which was the cover story of our inaugural edition (we hadn’t hired any photographer then). The shaking crane had indeed unnerved me momentarily but there was a thrill quotient too (of a different kind, of course). Probably, the message was- this would indeed be an exciting journey.

And experiential journey is how past two years of efforts can be summed up for team Logistics Times now. Without resorting to that oft-repeated cliché that ‘our product is different,’ let me point out the broader objective and vision which have been the cornerstones of our operations. The central idea simply was to produce a publication month after month which should just not have a good form but rather quality content as its driving force. And with that idea being the bedrock, we have attempted to present comprehensive cover stories on some major players of the industry, taken a close look at some of the logistics centric infrastructure facilities which hold promises for the future, brought together industry voices on a host of pertinent issues, brought in industry veterans as guest editors and there has also been interesting featurish components every now and then. We may have partially succeded in attaining that objective of ‘content first, form next’ but then as I said in the beginning – two years is too short a period in the life of a magazine. Our third year, I believe is going to be more exciting and we are well geared with a new line of products which would be announced shortly.

Coming to this edition, the cover feature subtly reflects one of our prime objectives – to minutely examine an issue of paramount importance. Present policy paralysis notwithstanding, the Government wants manufacturing to get a major push during 12th plan period as part of the process to become a much stronger constituent of our GDP framework in the long run.

Honourable intentions no doubt but it would require quite a lot in terms of giving a facelift to logistical modalities to support the new manufacturing foundation. Professor Akhil Chandra (our Editorial Advisory Board member) who has written the cover feature argues the kind of equilibrium which needs to emerge between manufacturers and logistics service providers to realise the grand dream.

Among other highlights of the issue, there is an interesting perspective contribution from industry veteran Malcolm Monteiro on that intensely debated issue of – organised vs unorganised. Contrary to popular belief that unorganised players would be ultimately dumped by a transforming system, , Malcolm highlights the unique positioning of unorganised players in the Indian logistics space which can be used in a more constructive and structured manner.

Waiting for your feedback.

Ritwik Sinha ritwik@logisticstimes.net LOGISTICS TIMES August 2011

NEWS BRIEFS

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Modest growth at minor Ports The Union Minister of Shipping, G.K. Vasan recently informed the Rajya Sabha in a written reply that the cargo traffic handled at major and minor ports over the last three years has increased.

However, a close look at the statistics provided in the written reply clearly points out that it’s the minor ports where traffic has increased on a consistent basis and at a modest pace.

Ports 2009-10 Major Ports 561.09 Minor Ports 288.80 Total 849.89 (Figures in Million Tonnes)

2010-11 570.03 314.79 884.82

2011-12 560.15 370.00* 930.15

The minister meanwhile informed the house that the Government is taking a host of steps to modernise the ports sector. These include: deepening of channels for improvements in drafts; construction of jetties, berths, etc; procurement, replacement or upgradation of port equipment; improvement of Rail/ Road projects and other capacity addition projects including backup facilities.

Foodgrain movement by Railways The Ministry of Railways is working in close coordination with the Ministry of Consumer Affairs, Food and Public Distribution and Food Cooperation of India (FCI) for smooth movement of foodgrains.

Indian Railways has given high priority (‘B’ priority) for movement of foodgrains as per Preferential Traffic Order. The movement of foodgrains is programmed traffic. The monthly programme is submitted by Food Corporation of India and accepted by the Zonal Railways.

Loading and unloading is done by FCI. Efforts are made to ensure loading as per the programme given by FCI. However, loading is dependent upon the unloading and storage capacity of FCI at the destinations. South Central Railway has loaded 80 per cent of the given programme during the year 201112 because unloading has not been done within the stipulated time. In addition, “BCBFG” special type wagons are also being utilized for carrying bulk foodgrains.

This information was given by the Minister of State for Railways, Bharatsinh Solanki in a written reply in Rajya Sabha recently.

LOGISTICS TIMES May 2012

Packaged food industry to touch $30 bln Growing at a compound annual growth rate (CAGR) of about 15 to 20% annually, Indian packaged food industry is likely to touch $30 billion by 2015 from the current level of $15 billion including snacks food, ready-to-eat food, healthy and functional food, said an analysis paper released by leading industry association ASSOCHAM recently.

Factors that have fuelled this industry’s growth are the arrival of food multinationals, rising popularity of quick-service restaurants, modern retail trade, technological advancement, and changing urban lifestyles.

The main categories of packaged food are bakery products, canned/dried processed food, frozen processed food, meal replacement products and condiments. Some emerging new categories in this segment are processed dairy products, frozen ready-to-eat foods, diet snacks, processed meat and probiotic drinks.

The growth in the economy, coupled with a strong desire among consumers to maintain a healthy lifestyle and the growing awareness of functional ingredients such as herbs, minerals, vitamins, omega fatty acids and probiotics is driving the functional foods and beverages market, highlight the paper.

The paper also points out that there is a large divide between

urban and rural consumers in India. Urban residents consumed 78% of all packaged food in 2011, while rural residents consumed just over 22%.

Regional Sales of Packaged Food in 2011 East and Northeast

21%

North

38%

South

28%

West

36%

Blue Dart Quarterly Sales crosses Rs 400 cr Late last month, Blue Dart Express declared its financial results for the first quarter (Q1) ending March 31, 2012, after its Board Meeting held in Mumbai.

The company has reported Rs 29.08 crores profit after tax for the quarter ended March 31, 2012. Income from operations for the quarter stood at Rs 410.91 crores, an increase of 22.17% over the corresponding quarter of the previous year.

Anil Khanna, Managing Director, Blue Dart Express Limited said, “Since inception, Blue Dart has focussed on being a customer centric brand and will continue to concentrate on delivering world-class service quality, experience and maintain our reliability quotient. Blue Dart will continue to focus on product innovation, reach expansion, transit time improvements, small town (Tier-II and III) activation and strengthening channels.”

LOGISTICS TIMES May 2012

NEWS BRIEFS

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NEWS BRIEFS

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FIEO welcomes decision on sugar export Reacting to the Government’s recent move to remove the cap on sugar exports and placing the product under the Open General license category, Rafeeque Ahmed, President, Federation of Indian Export Organizations (FIEO) said that such steps will definitely help to reduce the trade gap. At the same time, this will also enable exporters to send shipments of sugar, which was otherwise perishing in the go-downs and help sugar mills to clear the dues of farmers running in thousands of crores of rupees, added the FIEO Chief while complimenting the Government for this step.

He further added that India has vast potential of Agricultural Exports – a means to economic growth and national development. Agricultural exports will not only be a source of earning of foreign exchange but the stimulation of greater economic activity. He stated that stability in the export policy of such products is pivotal to sound export strategy. Exporters invest time and energy to explore market for their products and obtain export order in close competition.

However, sudden imposition of ban on export of the specified items have adverse impact like loss of established market and buyers, surrendering market to competitors, loosing image of reliable supplier and country, possibility of disputes between buyer and exporters and loss in earning foreign exchange, default in payment of loans to banks, etc. Ahmed suggested that warning may be issued well in advance regarding any restriction on price and quantity to avoid any such situation.

Management changes at Lufthansa Cargo Lufthansa Cargo is ringing the changes with new appointments to international managerial positions, which take effect in the coming weeks. Christian Haug, currently based in New York as Director USA Northeast has been appointed Director North & Central China in Shanghai, effective 1st July. He succeeds Peter Ullmayer, who is taking leave of absence as part of his transition into phased retirement.

Alexander Karst, previously Regional Director Sales for the Frankfurt market, is taking over as Director USA Northeast with effect from 1st July. His position as Regional Director Sales in Frankfurt will be taken over by Kay Wichmann, at present in charge of Customer Service in the Lufthansa Cargo sales division in Germany.

Michael Vorwerk, currently President of the Cargo Network Services Corporation (CNS), an IATA subsidiary, is to take over as Director Sales Development Germany, effective 1st August.

He will additionally assume responsibility as Board Representative Air Cargo Gateway Frankfurt. In that function, he is responsible for the strategic “Home base Frankfurt” project, which has been launched by Lufthansa Cargo to improve the attractiveness of the Frankfurt cargo hub and strengthen its position against European competitors, such as Amsterdam, Paris or Luxembourg. Lufthansa Cargo’s position at its home base is to be further developed in cooperation with forwarders, the airport operator Fraport, the authorities and politicians.

Angelika Kreil, previously Regional Manager Sales and Handling in Hamburg, is to take over as Director of Lufthansa Cargo’s Munich hub, with effect from 1st June 2012. At that post, she is also responsible for ongoing development of the Munich hub.

LOGISTICS TIMES May 2012

NEWS BRIEFS

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Fifth award in a row American Airlines Cargo has been recognized as “Best Cargo Airline in The Americas” for the fifth consecutive year by readers of Air Cargo News – a leading London-based publication. In this year’s Cargo Airline of the Year award poll, more than 25,000 votes were cast by supply chain professionals for their preferred global providers. Voting in the 29th annual competition was audited

by UK-based British International Freight Association (BIFA).

The trophy was presented at a gala dinner held in London on April 28 to Tristan Koch, American’s Managing Director – Cargo Sales for the Europe, Middle East and Africa (EMEA) region, who accepted the award on behalf of the airline.

“This is a truly remarkable achievement and a testament to the drive and commitment of our cargo teams around the world,” said Koch. “To win in the previous four years was a great honor. But to win this fifth award against a difficult market background for our company demonstrates that both our products and our teams are truly valued by the international air cargo community.”

American has expanded its investments in the cargo business in recent years, including infrastructure, fleet renewal and an expanded global network. In addition, the cargo business is aided by the airline’s focus on its five hub cities in the United States – which effectively serve as international cargo gateways to Asia, Europe and Latin America.

For the past year, the Cargo division has been strengthening ties with Japan Airlines as part of American’s joint business

with the Asian carrier. The partnership is providing streamlined network connections between the two airlines, with coordinated product features which provide seamless handling, as well as shipment tracking.

To serve the rapidly growing demand of pharmaceutical companies for temperature-controlled shipping solutions, the airline has recently invested in “cold-chain” infrastructure and extensive training around the world. These investments support American’s industry-leading handling practices, which facilitate the maintenance of prescribed temperature ranges during shipping.

Franz Edelman Award for TNT TNT Express has been awarded the 2012 Franz Edelman award for its “Global Optimization” program (GO), which uses advanced operations research methods to optimize the company’s transport network. TNT received the award from the Institute for Operations Research and the management Sciences (INFORMS) in Huntington Beach, California.

The Edelman award is considered the highest honor in the field of operations research, the discipline of applying advanced analytical methods such as modeling, to help make better decisions. TNT Express routinely uses such tools to enhance its transportation networks, resulting in more efficient routes and lower mileage.

“We are delighted to receive this award, which testifies to the sophistication and efficiency of TNT’s operations, “said TNT Express Managing Director Global Networks and Operations

Chris Goossens. “Using operations research helps TNT save costs, improve service to customers and develop manager’s skills”.

The awarded GO program covers multiple aspects of TNT’s operations, including site location planning, optimal truck routing, fleet management, and staff scheduling. TNT Express carried out 200 network optimization projects in 2011.

Since 2005, TNT express has saved 60 million kilometers of mileage and 54 million kg of CO2 emissions by optimizing its domestic networks in Germany, France, Spain and Italy.

In order to meet the demand for qualified operation managers, TNT Express has teamed up with the Tilburg University/ TiasNimbas Business School (Netherlands) to create the GO Academy, a two-year management development program in transportation network optimization. Since 2008, the training has been delivered to more than 200 managers from TNT.

LOGISTICS TIMES May 2012

NEWS BRIEFS

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Siemens and DB Schenker join hands Siemens and DB Schenker have agreed on a frame agreement for warehousing to enable the business relationship of the two partners within contract logistics at a global level.

Siemens is reorganising its warehousing set-up worldwide. The target is a high quality, flexible and cost efficient warehousing network. Siemens’ aim is to focus in the future on a fewer number of preferred suppliers, with whom the basic conditions for warehousing have been previously agreed. DB Schenker is the first Contract Logistics provider to sign a master frame agreement with Siemens.

The global frame agreement covers a set of terms and conditions and will be effective for all Siemens business units globally. Initiation

and closing of new contract logistics business will be handled under these defined conditions and will support the complete process. This contractual basis should enable faster and easier commercial negotiations and discussions of conditions as Siemens endeavor to optimise their global network.

Robert Walpole, Senior Vice President for Contract Logistics, DB Schenker, said, “This is a significant step in the development of our relationship and business basis. The Global Frame Agreement represents a clear commitment from both parties to work even more closely at a global level.

This will allow us to provide more customer-focused solutions for the Siemens Warehousing Network.”

New LTL service in Asia

CEVA Logistics recently announced the launch of its Less than Truck Load (LTL) service as part of CEVA Ground’s crossborder Roadfreight offering in Asia Pacific.

The LTL service will enhance CEVA’s existing cross-border solution which runs from Singapore to China with an average of 500 trips each month for various multinational customers in the region. CEVA’s cross-border service currently provides an integrated and cost effective solution for customers that need to balance speed and timely shipments throughout Asia with Full LOGISTICS TIMES May 2012

Truck Load (FTL) services. The new LTL services will leverage CEVA’s established FTL regional network to offer a wider range of services for its customers and greater choice between LTL and FTL for faster response and delivery times. CEVA Ground is already recognized as a market leader for domestic and cross-border ground transportation needs in China and this new offering will build on the knowledge and capabilities gained in this territory.

The LTL service will launch with three initial cross-border lanes: from Shenzhen, China to Penang, Malaysia; Ho Chi Minh, Vietnam to Shenzhen in China, and Singapore to Kuala Lumpur, Malaysia. These lanes are heavily travelled routes and critical links in companies’ supply chains.

Norm Mummery, Senior Vice President, Regional Operations, for Asia Pacific said: “We are very pleased with the success we have had since launching our cross-border Roadfreight solution last year. Our integrated Roadfreight services are now further enhanced to meet our customers’ varying needs with the addition of the LTL offering. Intra Asia freight movements continue to be a rising trend in line with the economic growth in the region and CEVA’s local expertise enables us to deliver greater value to our customers, offering reliability, speed, the highest security standards and world-class Freight Management systems and processes.”

NEWS BRIEFS

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New Headquarters IJS Global, the worldwide, world-class logistics service provider, recently held an opening ceremony and launch event for its new world headquarters in Amsterdam.

In front of more than 200 invited guests and dignitaries, Jos Nijhuis, President Schiphol Group alongside IJS Global’s CEO, Sjoerd van Loon and Chairman, Henk Hartong officially opened the building.

Situated in a prime location right on the airport and alongside the main A4 motorway, the new facility more than triples IJS Global’s warehousing space to over 5,400 square metres, provides additional office accommodation (2000 sq metres) at the same time as providing easier access and manoeuvring for customer vehicles through the incorporation of 20 truck docks.

“In just our sixth year of operation it is a tremendous testament to the work of our global team that we are now able to move our world headquarters into a building such as this.

We have specifically chosen to develop an existing building rather than going for a green-field site in order to minimise the environmental impact of our move. At the same time we have specified a refurbishment which incorporates the most modern technology to ensure that our environmental

footprint impact is minimised. All the lighting within the facility is LED based with daylight dimmers, we have no traditional radiators on the walls, the heating system cools or heats only when there are workers in the room and we have had extra thick windows installed to ensure maximum insulation combined with excellent sound-proofing,” stated Sjoerd van Loon.

“Through the move to these new premises IJS Global will be able to operate more efficiently and we now have both our head office and our main Dutch facility situated in the ideal location at Schiphol Airport to grow our business,” he added.

Eric Herman is new Global CCO for Damco Effective from May beginning, Eric Herman has moved to a position as Global Chief Commercial Officer for Damco, the logistics arm of A.P. Moller-Maersk Group. According to a company release, he will take overall responsibility for Damco’s global commercial activities. Aged 46, Eric Herman has 19 years of commercial experience and a strong execution record, which is exactly what Damco is looking for, Damco CEO Rolf HabbenJansen maintained. “I am very happy to have Eric on board and I am convinced that he will be a strong addition to our commercial team and to our global leadership team”.

Eric Herman joins Damco at a time of steady progress and high expectations, especially in growth markets. With a USD 2.8 bn. turnover in 2011, Damco has set out on an ambitious growth path, to become a major player in the global logistics industry.

The challenge facing the new Global CCO is to help Damco to continue delivering superior value to the customers, to grow faster than the market, as well as growing volumes significantly, while further improving profitability.

“I am excited to join Damco at this time. Damco has come a long way already, but the potential for further strengthening customer partnerships and growing Damco’s position as a logistics provider is huge. I am looking forward to get started”, Eric Herman said.

LOGISTICS TIMES May 2012

PERSPECTIVE

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Organised vs unorganised…

- Malcolm Monterio CEO (South Asia), DHL Express

LOGISTICS TIMES May 2012

In the whole logistics space, there are different estimates pertaining to the presence and share of unorganised players. While I would not indulge in any guesstimates on this, there is no doubt that the unorganised quotient is on a very high side. Probably to an alarming proportion. And this could be a major reason for our logistics cost being so high - about 13 percent spend of the GDP. In many countries which are looked upon as matured markets, this share is mostly around 8-9 percent.

One could just imagine the staggering price all stakeholders in economic value chain have to cumulatively pay because of this difference of 4-5 percent in logistics spend share to GDP. High unorganised quotient notwithstanding, the definition of the unorganised itself is very hazy. The way I understand it and my perspective on unorganised is that these players are small and do not always fully comply with the legalities that are mandatory for our line of business. They are mostly transporters who are present in every nook and corner of the country. They are mostly defined by very small team and usually lack the high end expertise. They operate on a very low cost and hardly follow minimum wages rules. They find registeration process and the laws of compliance very cumbersome and , therefore, try to stay away from any formal recognition. They probably best reflect that typical Indian ‘chalta hai’ attitude which we so often talk about. But yes, as an operator he does know some basic facilitation especially in the domain of transportation of goods.

Though stiff necked observers would like to believe that this organised vs unorganised equation in the logistics

business would contniue to maintain some sort of status quo for a long time, I view it differently. As I see it today, over last few years an almost silent churning has come into the play wherein unorgainsed players are showing willingness to move to the organised segment. And I will explain why its happening? The primary trigger point, of course, is pressure from the demand side. We are finding customers getting increasingly very demanding on the services front. The unorganised players usually dabble in very low cost, are not very reliable and lack the expertise. So they become untouchables for customers when an urgent or critical assignment has to be undertaken. This is something which unorganised players are realising and this could become the basis for a major turnaround in the not so distant future. Customers especially from manufacturing and high end services sector would demand quality services and would always show preference for players from the organised space who can deliver on their exacting standards GST itself will be playing a major role in diluting unorganised sector’s presence in our line of business. The mechanism of the GST would be such that it would only allow organised players to operate, as it will require full compliance with all legal formalities and is expected to have stringent documentation and registration requirements. So those who would like to keep their journey going and not to be flushed out, switching over to the organised camp would be ‘the’ solution. Infrastructure is another area where future prospects foretell scneario changing drastically. Going by the basic grains of the pronounced 12th plan, huge money would be spent in creating hard

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infrastructure - highways, ports, etc. This would ultimately necessiate improvement in the expertise to make the most of opportunities emerging out of improved infrastructure. I don’t think, unorganised or smaller players would fail to read the writing on the wall after a considerable degree of facelift is given to the hard infrastructure.

Another reason why unorganised quotient would be gradually slashed in the logistics business is the emergence of e-commerce and B2C mode of transaction. You would increasingly see orders made on the net and payments made online. We are increasingly noticing online demand on an upswing even in tier-2 and tier-3 markets and this would give a push to the lot of smaller local players to adopt more agile means and processes to cater to their respective catchment areas.

So there is a combination of factors which probably foretell that the share of organised business would enhance. I almost find it inevitable for the simple reason that trickle down theory is bound to work here as well. High end services like international logistics services can only be undertaken by organised sector firms because there is a lot of visibility, need for compliance with customs and other at the border agencies. Thus, such services cannot be undertaken by unorganised players. The overwhelming presence of the unorganized sector is on the domestic side, especially in the intracity movements. But in that space, the strong element of awareness is emerging that transportation and distribution modalities have to improve significantly.

Especially when it comes to the seamless transaction of farm produce. And I see no reason why this realisation would not utlimately result in change in the scene?

I strongly believe that logistics inefficiency that exists in India today with logistics spends accounting for 13-14 percent share of GDP would come down in the medium to long run. It would come down as infrastructure improves and logistical operations even at grass root levels become more organised. More unorganised players would like to get into the mainstream club to stay afloat and

grow. GST, as I said, would be the biggest differentiator of facilitating trade and it would usher in a new era of doing things in our line of business.

One final point. We often come across hard predictions by some doomsayers that unorganised players with presence in distant corners of such a geographically vast country would be ultimately phased out. I don’t buy this theory at all. These players have their own unique positioning and their utility can’t be ruled out. When it comes to the last mile connectivity especially in tier-2 and tier-3 locations, it would be difficult for even large-scale organised players to beat them. You will need these players. The solution, therefore, lies in making them partners.

For instance, when you see organisations

These players have their own unique positioning. When it comes to the last mile connectivity especially in tier-2 and tier-3 locations, it would be difficult for even large-scale organised players to beat them. You will need these players.

The solution, therefore, lies in making them partners. like ours, we are expanding into these markets. But when we expand there, we will not set up our facilities everywhere.

So we will have to join hands with these players. And how would it happen? We will definitely train them to align with our standards to the maximum possible extent.

This trend, I believe, is going to become very strong in the Indian logistics space as all big players have this inherent desire to fan out rapidly. So the way I look at the future trends, smaller regional players would not vanish, they would become more organised may be in partnership with biggies of the game, significantly improve their operational standards and there could be serious consolidation happening at the regional level. All’s good for Indian logistics css business.

LOGISTICS TIMES May 2012

CARSTENÊS CALL

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The need of an integrated Air Cargo Policy

Carsten Hernig, Regional Director (South Asia & Middle East), Lufthansa Cargo

LOGISTICS TIMES May 2012

Many essays have been written on the phenomenal economic growth and the future potential of India. Possibly as many thoughts have been presented to point out the ideal geographical location of India between Europe and the Far East.

There is absolutely no doubt about both facts the growth potential as well as the geographical location between the old European economies and the new mega economies of the Asian continent.

In consequence to these findings, The Indian government has done a lot in recent years to invest in infrastructures bringing the country forward to enable further growth and positioning in international trade.

Ever since, the air cargo volumes have shown a steady growth and even though they currently only represent less than three percent of the moved volumes, they do account for approximately 30 percent of the value. In other words, air cargo is an essential element of the value of India’s global trade relations.

In accordance with the further orientation of Indian manufacturing versus high tech and high value goods, the importance of air cargo and along with it the importance for the trade value

will further increase. So all in all one could say everything is fine, perspectives are great and there is not much to worry about.

Unfortunately the ground reality is quite different. We are all aware of the still existing infrastructure and process restrictions, which are yet to be improved. However this shall not be the focus of this column because many opinions have already been published on the matter.

I would rather like to raise the question, where do we stand - given the above mentioned importance of air cargo for India’s trade - in terms of a strategic development plan or policy for air cargo for the country?

I do see a number of very important issues, which do require an alignment and a “game plan” in the sense of a policy in order to achieve the maximum benefit for the country and its trade.

To begin with there is the topic of infrastructure, which - as said above - shall not be discussed here.

With reference to the geographic position, there is the strategic question, whether India has the potential to develop into a hub between east and west offering shorter flight distances

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and hence faster connections than some of the competing airports in the Gulf. Some Indian airport operators have invested significantly in setting up an appropriate surrounding.

Unfortunately we are still lacking the processes to enable the functioning of a big scale cargo hub in the country. By and large transit shipments from domestic to international or even international to international are not smoothly possible. Given the fact that airports are improving but supporting processes are not, a coherent air cargo policy in this regard seems to be lacking till date.

Another point to be raised, which needs to be an integral part of any air cargo policy is the structure of fees and taxes at the airports.

The increase of airport fees will make Indian airports far less attractive in the international competition of air cargo hubs. In particular since they do already face a disadvantage due to the high cost of fuel. Profitable and sustainable airport management can only be achieved through additional business and not through making little business more expensive.

Another analysis to be conducted when drawing out an air cargo policy is certainly to identify the storage and transportation needs of the particular Indian industries. Let me raise two examples here. First the Indian Pharma industry is contributing largely to the growth of the country. Pharmaceutical shipments do have specific requirements for transportation as we all know. The cool chain has to be unbroken

and cooling facilities need to be in place at the airports. Despite the importance of the industry only two Indian airports do have state of the art facilities and the land transportation of bonded cool containers to and from the factories is still not possible. The second example is a matter of concern to all high tech products such as mobile phones, tablets etc.

I am talking about the problem of pilferage, which still is a problem in Indian airports and again does harm to the competitiveness of India as a global production place for such devices.

These two examples illustrate how important relatively small elements as part of a policy can influence the competitive positioning of India in a globalised economy and competing production sites.

I believe every reader would find some more points to add to the list of topics which need to be resolved to enable further growth. I further believe that the Indian nation has all interest to complete this list of obstacles on small and large scale and define a policy for air cargo and to maximize the impact of resolving these issues on the nations economic development into perspective and measurement. Once this policy is agreed and finalized, I am sure that this will enable faster decisions based on a much wider scope of integral economic development. Air Cargo is an essential element of the nation’s development. It deserves the appropriate focus and a clear integral policy.

LOGISTICS TIMES May 2012

INTERVIEW

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LOGISTICS TIMES May 2012

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❝India is a tough market for supply chain solutions

❞

US-based Manhattan Associates has emerged as a serious name in the area of advanced supply chainsolutions in last twenty yeras. The company has a strong linkage with India as its second largest global hub is operating out of Bangalore.

Jeff Baum, VP (Asia Pacific), Manhattan Associates was recently in capital and had a free-wheeling conversation with Ritwik Sinha explaining company’s strategy and standpoint on a host of supply chain related issues. Excerpts from the conservation...

LOGISTICS TIMES May 2012

INTERVIEW

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Let me begin with a very simple question. Please take me through to your two decade old journey and give me a sense of your operational profile globally.

Manhattan Associates has a very strong presence in the US and Canada. We are also expanding in Latin America. From these pockets, we generate about 80 percent of our business right now. Lot of businesses are done with the leading firms when they plan to roll out their services globally, whether it is Starbucks, Adidas, and many other such companies.

Europe has become an important market for us. We started operating in Europe in 1998 and quickly grew to be a market leader there even as it is a fragmented market. Particularly, we have very strong presence in UK, France, and also central European countries. We have good partnership in the Middle-East, South Africa, Eastern Europe and Russia. In Asia- Pacific, we have our second largest office in Bangalore. We have 900 people in Bangalore and about 1000 people in the US and then we have people in China, Japan, Singapore, Australia, etc. In Asia, we have been active in association with partners for last ten years.

Which are the major markets for you in terms of contribution to your sales?

US, UK, France, China and Australia are our prominent markets. Presently, our revenue break up could be: Americas80 percent, Europe – 12-13 percent and remaining mostly from Asia Pacific.

Its quite baffling for me. If I look at the statistics as mentioned by you, Manhattan Associates has somewhat equal headcount in Americas and Asia- Pacific present mostly in India. But then there is so much of gap in terms of contribution to your kitty from these geographical packets. It almost seems to be a very serious imbalance.

I wouldn’t say its imbalance. It could rather be described as focus. Basically teams in India and other locations LOGISTICS TIMES May 2012

in Asia-Pacific support our global businesses. For example, we have a large customer operating around the world.

But the revenue from them would be captured in the region where project is rooted. So India is global service center of our business driving research and development and providing most of our quality control across global customer support. We have a mechanism wherein teams get allocated across the different markets. So even though there are 900 people in India, large proportion is focused on the Americas and some other markets.

I think the primary reason could be our own heritage. India is a big part of our culture. In order to set up a large technology center, attract talents in various segments we were somewhat familiar with the business environment in Bangalore.

Would you please elaborate the meaning of India being part of your culture?

Originally, there were four founders of this firm in the early days and three of them were from India. The fourth partner was from the United States. That

FDI, GST and other regulatory issues are things to be watched out. We would like to see some momentum building up there.

Foreign investments in the future would depend a great deal on these pending issues.

So you have somewhat a backend support base in India?

Yes. When we set up Asia-Pacific, we had done that with the mindset that India would play much larger role in not only back office but also as a customer facing and in offering our services all through Asia- Pacific. So India plays a larger role on prject basis and much larger contribution on revenue and services in our Asia-Pacific business too.

I have noticed most of the MNCs originating from west and dealing in logistics services prefer to have their Asian hub in Singapore. What was the reason to choose India?

team of four continued in the business from 1990 to 1998 when we went public.

Deepak Raghavan is still a board member and involved in the business. From that standpoint, India has always been a pivotal part of our focus. We knew about the offshore development and Indian development centers and also there were some incentives from India from a technology park on taxation front which we found very attractive to set up a hub here. The success of our team and the way they have contributed to our growth is beyond our expectations.

Now let me draw your attention to your offerings. Your primary

25

expertise lies in offering advanced applications. Right?

We do offer advanced applications but we also do solutions for emerging markets.

In a country like India and if I specifically speak about logistics and supply chain, players by and large tend to ignore the utility of advanced applications. This is particularly true of middle-rung and small players who look at expenditure in them as burden.

Its not easy to sell them. I believe that this trend must be true of other Asian markets as well.

We find that India is often defined as one of the toughest markets for advanced supply chain solutions. First of all, the question, I guess, is: how do we attack it? I would say, we don’t. We rather focus on tier- 1 or the companies which really want to differentiate with the technology. We believe that tier-2 and

tier-3 and the emerging companies, they would eventually come. But that would take some time and that would also be the function of some regulatory changes which would encourage them to embrace technology. But right now, their prime concentration is to compete on cost. In many cases, they are not worried about supply chain. They are rather focused on product centric or manufacturing centric issues than global supply chain issues.

Manhattan in India, to tell you candidly, is foucsed on MNCs or the companies which have a ready mind to upgrade their technological applications.

Your advanced WMS is a key product. Now India is a country which has a warehouse capacity of around 125 million square feet but nearly 80 percent of them is shared by government agencies. Have you ever made an attempt to sell your WMS to agencies like FCI, Central

Warehousing Corporation (CWC), etc.?

No, we havn’t yet. Its an interesting question. There are many countries in the world where we have worked with government agencies. In China, for exapmle, we deal with a lot of state enterprises. At several locations where we deal with government agencies, we often set up special selling teams with real understanding of the local market. One of the things with Manhattan stronly believes in is: with the global demand for solutions and success in business we have got to focus our resources where companies are going advanced. Right now, our business is driven by global brands which prefer advanced supply chain capabilities around the world.

These companies are mainly in retail or multi-channel e-commerce space. Their operations are complex and they are eager for advanced solutions.

LOGISTICS TIMES May 2012

INTERVIEW

26

From the standpoint of your business, tell me two most encouraging and disappointing signs you notice in the Indian ecosystem?

The encouraging thing is everytime I come to India (and I have been a regular visitor in last one decade), I have noticed a strong pool of talent, with passion and strong urge for growth. Our team itself reflects all these qualities. Secondly, what excites me is the macro-economic side of things wherein consumerism is growing rapidly. There is a very large pool of middle-class which means tremendous opportunity for companies to provide better service to those consumers.

And these trends drive our business.

This market is simply offering great opportunities. The frustration mainly for us is for years we have been only talking about FDI opening up in areas like retail.

We believe that when that happens, there would be serious challenges for local players as global players would bring in consistent systems and processes they have adopted in other successful markets.

FDI, GST and other regulatory issues are things to be watched out. We would like to see some momentum building up there. Foreign investments in the future would depend a great deal on the just cited pending issues.

There is a strong perception about India today that on the economic governance front, it is presently besiged by some kind of policy paralysis where the push to next spell of reforms has been held back. You have cited that in the previous response. In this kind of scenario, will there be any change in stance of a company like yours which had stepped in this country a decade back with high hopes?

We are very pragmatic about India. We have not invested in massive sales force and we are not over-invested. We have been very patient. But India is a very valuable service center to provide us our software and services for the world. And we would continue to expand this base.

We have not built our business model LOGISTICS TIMES May 2012

to cater to the domestic market as such.

We are certainly a long-haul player and the such momentary spells of what you say policy paralysis would not affect our business plans. We are ready to wait for the more opportune moment.

GST is being looked upon as an ultimate panacea by logistics and supply chain players. But do you think in a gepgraphically vast country like India, it would not be easy to implement?

Its probably the first hurdle. The success

produce.

One final point. You have a sizeable presence in terms of headcount and backend support system which you have built for your global operations. How do you envisage your India story unfolding in next three years when probably not much would be happening in terms of policy push if doomsayers are to be believed?

There are two parts of it: demand side and the supply side. Globally, we are

We focus on tier- 1 or the companies which really want to differentiate with the technology. We believe that tier-2 and tier-3 and the emerging companies, they would adopt technology. But that would take some time and that would also be the function of some regulatory changes which would encourage them to embrace technology.

of GST would be function of other factors too. You still have road infrastructure, fuel cost, long transportation time, etc. These are the issues which need to be attended too. One of the things which I think is interesting in learning more about India is just how challenging is the cold chain scenario in the country when we talk about logistics space. How much is quality fruits produced? And how much of it is handled appropriately? I think, it’s a very small percentage. And that necessiates applying good supply chain practices in trying to better handle these precious

expanding and that makes us believe that our Indian operations would get in a more exciting mode given the kind of support system we have put in place.

And as I said, it would be independent of demand for our solutions in the domestic circuit. We would be growing in AsiaPacific and it would be nice that India is the big part of this regional puzzle for us.

Like in acquisition of more customers and in forging new strategic relationships in the region. Our growth plan in India is totally independent of whether FDI and GST push comes or not.

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LOGISTICS TIMES May 2012

29

Manufacturing Push & Logistical Puzzles Present policy paralysis notwithsatnding, the broader objective of the Government for the just commenced 12th plan period is to make manufacturing a much stronger component of our GDP. The proposition, however, seriously entails radical transformation of existing logistics operational regime to support anykind of manufacturing upsurge.

Professor Akhil Chndra of Institute of Logistics & Aviation Management argues the case...

LOGISTICS TIMES May 2012

COVER FEATURE

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With the recent successful launch of Agni-5 missile with its range more than 5000 Km, India has joined the select club of nations like U.S. , China, France and Russia. However, to be entitled to be called a super power, India has to catch up with these developed nations on many fronts . One such desired area is definitely manufacturing. China in order to become a real super power improved itself drastically in area of manufacturing with astonishing results. So much so that with its sustained efforts, it became a global manufacturing hub.

Manufacturing in India is still a mere 15 percent of the country’s GDP while it is 34 per cent for China and 40 per cent for Thailand . Eleventh five year plan targeted growth in manufacturing at 10 to 11 percent but actual performance remained only about 7.7 percent. Government of India (GOI) has as such rightly put lot of emphasis on manufacturing in its 12th five year plan ( year 2012-2017) by targeting a growth of 12 to 14 per cent. As per the 12th national manufacturing plan, the 2.0 to 4.0 per cent differential over the medium term growth rate of the overall economy will enable manufacturing to contribute at least 25.0 per cent of GDP by year 2025.

This shall help to provide a large portion of additional employment opportunities to India’s increasing number of youth.

While the services sector has been growing fast, it alone cannot absorb the 250 million additional income-seekers that are expected to join the workforce in the next 15 years. Unless manufacturing becomes an engine of growth, providing at least 100 million additional decent jobs, urban-rural gap will further widen and it will be difficult for India’s growth to be inclusive. Further India’s balance of trade can not be balanced any longer just by increasing raw material exports and importing finished goods and the export basket must include much larger volume of manufactured goods.

However to reach this ambitious target, a lot needs to be done in the direction of improving country’s infrastructure to produce quality products and be competitive globally. What is required LOGISTICS TIMES May 2012

as such by manufacturing companies is working on optimum cost and improvement in quality, efficiency and speed to response to customer’s needs in the global market place. In all these directions both inbound logistics and outbound logistics as shown in figure 1 face unprecedented challenges and can make major contributions if tackled in a planned manner.

National manufacturing plan has identified following sectors as priority sectors for the 12th five year plan.

1. Sectors that will create large employment • Textiles and Garments • Leather and Footwear • Gems and Jewellery • Food Processing Industries • Handlooms and Handicrafts

As

per

the

4. Manufacturing-Technology sectors for Energy Security • Solar Energy • Clean Coal Technologies • Nuclear power generation 5. Capital equipment for India’s Infrastructure Growth • Heavy electrical equipment • Heavy transport, earth moving and mining equipment 6. Sectors where India has competitive advantage • Automotive Sector • Pharmaceuticals and Medical Equipment 7. MSME sector The base for the Manufacturing Sector— employment and enterprise generation.

12th

national

manufacturing plan, the 2 to 4 per cent differential over the medium term growth rate of the overall economy will enable manufacturing to contribute at least 25 per cent of GDP by year 2025.

2. Sectors that will deepen technology capabilities in Manufacturing • Machine tools • IT Hardware and Electronics 3. Sectors that will provide Strategic Security • Telecommunication equipment • Aerospace • Shipping • Defence Equipment

Among the above sectors, automotive, heavy electrical equipment, pharmaceutical and medical equipment, machine tools, telecommunication, aerospace, shipping and defence equipment etc have quite a complex manufacturing and as such objectives like cost minimization to remain competitive, attainment of speed, efficiency, quality and responsiveness to customers are more challenging and equally is the contribution of inbound and outbound logistics extremely critical.

While GOI is taking suitable steps in

31

Logistics & SCM: Basic Understanding

various directions like creating trained manpower, encouraging industryacademia interfacing and improving logistics infrastructure in the direction of road, shipping and aviation with emphasis on public and private partnership, we shall look more closely into the challenges which are offered to manufacturing and logistics industry and to new and existing logistics players. I must point out here that the challenges are also new opportunities to the new and existing players and if they are able to embrace the challenges successfully , they have a big opportunity to reap the benefits as early birds giving them sustenance to become long term players. What one needs to remember is that in such an environment, manufacturing companies, logistics players, suppliers, dealers and Retailers have to strive through teamwork to a perfect supply chain order that is getting the right product to the right customer at the right time, in the right condition and at the right cost.

For manufacturing companies to succeed, handling inbound logistics by is of paramount importance and quite

Manufacturing companies would need to work on optimum cost and improvement in quality, efficiency and speed to response to customer’s needs in the global market place.

In all these directions both inbound logistics and outbound logistics face unprecedented challenges. critical. While there are enough outbound logistics players in the country handling transportation and warehousing of finished goods, there are only few inbound logistics players helping manufacturing companies and can be counted on fingers. It is a common knowledge that lack of one critical component during manufacturing can bring entire

manufacturing activities to a screeching halt. As such ensuring faster availability of material and components at the right time for manufacturing companies become an essential factor and as such manufacturing companies must choose their logistics partner very carefully.

I would like to call inbound logistics players as better half of manufacturing LOGISTICS TIMES May 2012

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companies as such marriage must take place between the two for a long term relationship which would be mutually beneficial.

Globally such strong relationships have helped companies like Toyota, Ford, Chrysler and many more with their 3 PL partners like DHL, Ryder, Schneider Logistics , GEFCO and VASCOR ltd etc evolve cost optimizations in their inbound and outbound logistics increasing their profits and customers/dealers’ delight .

Further consider the following facts.

Logistics in manufacturing industry is the most important function after product development as there is a significant volume of goods movement, both inbound (components and material sourcing) and outbound (product distribution).

On the inbound side, 3PL service providers ensure timely delivery of materials in the required quantities to meet daily production schedules and can play a major role in the order processing of manufacturing companies.

On the outbound side, they play a significant role in satisfying dealers as last mile activity by ensuring timely consignment delivery to dealers increasing responsiveness and providing them a safe and reliable service. They also play value added logistics functions such as packing, labelling , quality checking and pre-inspection activities.

Now that the manufacturing in India has to grow rapidly , the time is just ripe for third party logistics providers to integrate

For manufacturing companies to succeed, handling inbound logistics is of paramount importance and quite critical. While there are enough outbound logistics players in the country, there are only few inbound logistics players helping manufacturing companies and can be counted on fingers.

LOGISTICS TIMES May 2012

their logistics operations both inbound and outbound into the supply chain of the manufacturing companies to create a win-win situation for both the parties to maximise their ROI through cost optimization and improvement in service levels to their customers and dealers.

Here one should keep in mind that

technology can play a very crucial role in ensuring success and as such inbound and Outbound logistics players who understand the importance of technology such as implementation of ERP, Information technology, RFID, automation etc and are ready to make investments in these areas stand a greater

33

chance of success.

CHALLENGES TO LOGISTICS COMPANIES (3PL SERVICE PROVIDERS) We shall now discuss more closely to see what are the challenges for the logistics companies ( 3PL service providers) to provide impetus to manufacturing.

1.

Technology resources In the new environment, there is a challenge to 3PL service providers to sharpen their information system capability, automation and ICT capabilities and their accessibility to technical knowhow through tieups, foreign collaborations.

They must widely embrace technology covering mobile solutions that enable surface and airfreight operators to communicate while shipments are in transit; route optimization and navigation software; and customer-facing solutions offering tracking and tracing capabilities.

Technology should not be used by them merely for technology sake.

They must create enterprisewide visibility, control conformance to shipping instructions, and monitor carriers’ performances in pickups and deliveries.

They must continuously get involved in for continued process improvements that control costs and ensure ongoing efficiency.

The mantra for manufacturing companies while outsourcing their inbound and outbound logistics to 3PL service

provider should be: focus on your core competence and reap the benefits of third party infrastructure by outsourcing to parties who have specialized expertise and experience in these areas.

3.

Challenge

of

increasing

Logistics in manufacturing industry is the most important function after product development as there is a significant volume of goods movement, both inbound (components and material sourcing) and outbound (product distribution).

2. Customization and Flexibility 3PL providers should rise to the occasion to be flexible in accommodating emergency and contingency requirements of manufacturing companies.

They should have their backup plans in active mode including manpower, routes and network resources.

LOGISTICS TIMES May 2012

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companies greatly increases.

In a present globalized scenario he has to have capability to handle inbound and outbound multi-modal logistics involving domestic and foreign vendors. His access and proximity to sea port and airports and material handling capabilities, his fleet strength are important considerations. He must be able to tackle expedited deliveries.

Whether he can run Milk runs to help optimize transportation and production?

Manufacturers and logistics provider both can operate efficiently by increasing the frequency of runs to multiple suppliers, which reduces the lot size of each move, allowing the transporter to fill trucks.

3PL providers should rise to the occasion to be flexible in accommodating contingency requirements of manufacturing companies. They should have their back-up plans including manpower, routes and network resources. resource strength in terms of manpower and network resources.

3PL companies shall have to hone up their manpower resources in terms of their motivation level, skill set with professional development program.

Remember that in a service segment in which logistics providers operate, 4Ps unlike in marketing mean people, people, people and people.

4. Industry knowledge and expertise 3PL service providers shall have to accept challenge of providing relevant LOGISTICS TIMES May 2012

experience with different type of products, technology integration, geographic area and their routes, and other specific needs.

If the need be, they have to be receptive to enter into foreign collaborations.

5. Challenge of enhancing operational strengths 3PL service providers must serve multiple product markets where compliance, safety, and cargo security are required.

If one logistics provider can meet the needs of a diverse base of customers, each with its own challenges and industry requirements, then the chances of a successful partnership with manufacturing

6. Commitment to tight delivery schedules and safety of products Stock-out is a dreaded word for manufacturers and dealers and it can only be avoided by commitment of 3PL partner to time schedules for end to end delivery, safety and reliability. “To be more efficient 3PL providers must enhance the velocity to inbound parts and smaller shipments picked up and delivered more frequently to keep inventory low. Logistics is a key foundation of the complex manufacturing systems as such if 3PL partner does not move material efficiently and in small lots then manufacturers might lose many of the benefits in their lean production systems requirement.

Challenges for manufacturing companies There are challenges equally for manufacturing companies in terms of coordination with their third party logistics providers both for inbound and outbound logistics, material management, purchase and dispatch departments.

Manufacturing companies shall have to create a dedicated SCM (Supply Chain Management). Many manufacturing companies still handle different parts of supply chain in silos through different departments like outbound logistics being handled by marketing, production planning under manufacturing and material and inbound logistics by sourcing department losing the larger picture of

35

being customer centric and ultimately customer requirements are not met. And when the customer suffers, blame game starts where marketing department would blame production and production blaming in turn sourcing department. This must end and manufacturing companies should start a fresh by bringing all departments like planning, logistics, material under single department of SCM which shall be fully accountable for meeting the customer’s requirements.

Further I am enumerating some more challenges for the manufacturing companies which are as under Change the culture of ‘push sales’ to ‘pull based production and supply system’ where suppliers would have to supply only what is required, whenever required , based on actual consumption meaning thereby frequent supplies of small quantities each time Change the culture in different departments in manufacturing from ‘my department’ to ‘our customer’ approach Change management involving changes in MOPs (measures of performance), Performance management system, Planning process, Execution process, ERP,MIS and communication system, etc.

Focus on supply chain management system and integration of all relevant departments under one banner as explained above and IT enabled end to end supply chain planning On line visibility of the stocks through IT connectivity to reduce inventory costs Implementation of KANBAN for pull based procurement E-Tracking of transportation vehicles Introduction of lean manufacturing

environment with a total quality management approach throughout the Production With increased globalization and increased competition and demand uncertainty , challenge of making their supply chains more nimble, responsive, reliable and cost-efficient for taking advantage of windows of opportunities.

SCM department to ensure that there were no stock outs irrespective of the changes in demand Vs forecast.

Introduce supply chain visibility with permissible access to your suppliers and customers building a long term relationship of trusts and partnership.

Complex manufacturers face a variety of challenges made difficult by the complexity of their products and manufacturing processes. Best in class complex manufacturers have to create a collaborative environment to integrate functionality to produce quality, speed and agility. The end result provides visibility from initial engineering design through manufacturing , to quality control and customer service leading to

more profitable business and grater customer satisfaction.

Last but not the least, it is the innovation by manufacturing companies through their research and development teams which shall matter most creating new cost effective and quality products. A major difference between manufacturing in India and China is the Chinese love for continuous innovation in almost every low and high end product which has made them manufacturing darling of developed countries. Indians too have to create an environment where innovations are suitably rewarded by Government and private companies and research in universities should not limited merely to awarding PHDs and writing research papers in journals. Any research which has no monetary value for benefit of the society and which industry can not make use of it or purchase is basically garbage for all practical purposes. In this direction, Industry-Academia interfacing must be encouraged with flow of knowledge both ways to be really effective and fruitful to bring out new and innovative products to give much sought after impetus to manufacturing in India.

LOGISTICS TIMES May 2012

AUTOMATION

36

Next “Buzz” in the Indian Market In the Indian context, a warehouse has generally been perceived as a “godown” where things are stored for a period of time and then transferred to the next location or to the final customer. Historically, all the major activities carried out inside a warehouse have been highly labor-intensive and the level of automation Omar Hassan has been minimal or nonSenior Consultant existent. Due to the fact that ThinkLink Supply Chain most “godowns” are small in size (5,000 to 25,000 square feet), companies have been able to carry out their operations manually and manage peaks in demand by adding head count if and when required. until recently, large warehouses were very rare because of little demand for storage of high volume products. However, the tides have turned and a new dawn has begun in the Indian logistics and warehousing world.

With diverse and increasing consumer demands, large number of SKUs and ordering frequency increasing more than ever before, companies are facing the need of shifting to bigger and better storage facilities. A pivotal component of these facilities is the availability of world class technology that facilitates efficient handling, storage, fulfilment, and processing of customer orders. The need for the right products at the right time at the consumer’s doorstep has put tremendous pressure on the logistics and supply chain stakeholders. Whether at the sourcing and manufacturing level, movement and storage level, or finally at the point of end delivery, the effort and the need for being lean is a high priority for organizations. The traditional “godowns” can no longer support the operations that are demanded at a warehouse and simply increasing the head count is unfortunately not the answer.

One of the major proportions of India’s economy is constituted by logistics and transport which accounts for about 13% of the country’s GDP. Due to a tremendous growth potential, India is being touted as the land of opportunity for logistics service providers all over the world. While the Indian growth story seems very promising, it has opened up a huge arena for companies (large and small) to develop and implement worldclass solutions that would put India at a different platform of growth and sustainability.

Until very recently, Indian companies were adverse to the idea LOGISTICS TIMES May 2012

37

of investing in high-tech logistics and warehouse automation solutions. The general consensus among all the big players was that investing in these solutions would not be worthwhile and the return would not be realized for many years to come.

However, with rising land and labour costs, unavailability of skilled manpower and the competition to hit the market first has made organizations come “out of their comfort zone” and re-think their long-held belief. More and more companies have

started approaching logistics and factory automation solution providers to discuss the need for automating their operations.

Some of the major industries that have started exploring the idea of automation include automotive, retail, e-commerce, 3PL, FMCG and the likes.

The fact that a well-planned automated facility can help increase the throughput levels by over 70% and storage capacity by 4050% is an excellent proposition for companies in the Indian eco-

More and more companies have started

approaching

logistics

and factory automation solution providers to discuss the need for automating their operations.

Some of the major industries that have started exploring the idea of automation include automotive, retail, e-commerce, 3PL, FMCG and the likes. system. It would be appropriate to say that automated warehouses are optimized, intelligent and completely interconnected facilities designed to drive out costs and inefficiencies and, fortunately, Indian companies have started to gain traction towards that belief.

In order to support the Indian companies travel the automation journey, world leading logistics automation companies have entered the Indian market. The preferred mode of operation in the Indian market seems to be working with an Indian partner/ integrator that understands the local nuances and can take project responsibility while leveraging world class technology provided by the automation partner.

Components of an Automated Warehouse or a DC While Indian companies embark on the automation journey, it is important to understand the different components that form the backbone of an automated warehouse or a DC. Utilizing innovative new technology, these automated systems are designed to accommodate a range of different businesses requirements.

LOGISTICS TIMES May 2012

AUTOMATION

38

An ASRS (Automated Storage and Retrieval System) can be an excellent choice for a warehouse in which storing inventory at maximum capacity is crucial. These systems come equipped with computercontrolled modules that make storing and accessing inventory quicker and more efficient.

A Sorting and Conveyor System is ideal for businesses that have a large amount of orders being sorted before they can be packed and shipped to multiple locations. This technology uses conveyor belts that operate with efficient power and low operating costs and can save your company both time and money while processing orders.

Carousel Systems may be the most common automation solution used across warehouses and DCs. These systems generally come in two forms, horizontal and vertical. Horizontal carousels are known for their strength, speed and efficiency in delivering packages, while vertical carousels are designed to deliver their items using safe and convenient methods.

Order Picking Systems such as Pick-to-light and Put-to-light are the most common picking systems. The order picker has to just follow the lights and pick or replenish stock as directed. This helps in reduction of manual errors and improves speed and order lead time.

Warehouse Control System (WCS) forms the brain of automation technology. The purpose of a WCS is to facilitate controls of the automation systems across the facility while interfacing with customer’s ERP and WMS. Key Questions Some of the key questions that companies should ask while evaluating automation as an option are: What level of automation do I need?

What are the different automation options I should look at?

What are the potential benefits that I could achieve by implementing automation solutions?

What is my ROI on this project?

How do I select the right automation provider?

LOGISTICS TIMES May 2012

What are the potential risks and how do I mitigate them?

Conclusion Indian economy is witnessing a boom and with this consumer demands are at an all time high. It is about time that companies think out-of-the-box and start investing in technologies that would add great value to their operations and make them future-ready. Automation has and will be a vital component of warehousing and logistics worldwide. The recent acquisition of Kiva Systems Inc. by Amazon to bring more robotic technology to the e-commerce company’s giant network of warehouses is an excellent example of automation being a pivotal part of logistics and warehousing industry. It is essential that Indian players buckle up rapidly and catch up with the rest of the world.

Fortunately, world leading automation solution providers have entered the Indian market and companies have many options to choose from. The bottom line is that the technology and level of automation best suited for an individual company will depend on their requirements and utmost planning, validation, and revalidation should be performed to select solutions that would add value to an organization’s overall goals and business strategy in the long run.

MEDIA PARTNER

TECHNOLOGY

40

Demystifying M2M Ashish Gulati Country Manager, Telit India

LOGISTICS TIMES May 2012

Imagine if there was a way to let our cars talk to the nearest parking lot to find out empty slots and help us guide our way easily to find a parking slot. Or for that matter, if your umbrella had the power to inform you about the weather forecast so that you go out prepared. Or your refrigerator ordering pizza and coke cans. How about switching on your air conditioner at home, even while you are on your way back from office, so that you can walk into a cool home in a scorching summer day.

What may seem like science fiction-is fast becoming a reality today. Yes – with concepts like Internet-of-Things (IOT) fast emerging as the next wave of technology to hit our world, it is all becoming a reality. IOT, which is essentially a concept powered by Machineto-Machine (M2M) technologies. The concept is basically an integration of sensors and sophisticated electronics that help machines (that we use on a daily basis) to communicate with each other wirelessly.

The concept draws its foundations from that fact that there is information everywhere, at our homes, our own bodies, our offices, and even in our environment – but the most difficult challenge is to access and assimilate this information and put them to use in making our lives more efficient and comfortable. But with the advent of M2M technologies the challenge of gathering relevant information from our surroundings and putting them to use is fast emerging as a global trend today.

While for a normal person, it makes life more comfortable, for businesses it opens up innumerable vistas for creating new

services and products.

It also opens up huge market opportunity for teleco’s across the world as these M2M technologies rely mostly on the existing wireless networks for communication.

India, which is witnessing a telecom revolution, is uniquely positioned to reap the benefits of M2M technologies.

Even though telecom companies are expanding fervently in India rolling out 3G networks, there is immense revenue pressures from voice based services as the call rates are amongst the lowest in the world. The emerging M2M market in India represents a huge potential for telecom service providers as they can start offering a host of data based services to their customers.

Having said this, there are a number of M2M applications that will find relevance and acceptance in the Indian market.

These applications have the potential to have long term impact not only in the form of economic gains but also have the potential to mitigate environmental concerns to some extent. Let us look at some of the applications that can have a long term impact in the Indian market.

India is on a fast track to achieve energy security for itself and the government has made major plans in this direction by planning billions of dollars worth of investment into the power sector. One of the major concerns that the government is trying to address is the issue of T&D (transmission & distribution) and commercial losses in the power sector.

Today almost 40 per cent of the power that is generated in India is lost due to these losses, resulting in wastage of a valuable resource such as power. This

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corresponding carbon footprint is not justifying the consumption or the use of the power creating a disparity in the equilibrium.

A majority of the T&D losses can be attributed to the inability of the utilities to put a check on pilferage and theft of electricity, which is rampant. This is mostly due to the use of archival power monitoring systems which are based on outdated technologies. For instance, the conventional electro-mechanical meters used for both household and commercial consumers introduce a high degree of risk of power pilferage and theft into the system due to many reasons.

In such a scenario smart metering concepts like introduction of wireless AMRs based on M2M technologies can alleviate such issues to a great extent. Wireless M2M AMRs utilize existing GSM/ Cellular networks to communicate automatically with the command center of the utilities. This is the latest wave that has hit the utilities sector across the world. For electric utilities, the ability to access real-time data from remote assets is changing the way that utilities operate their business. As these utilities move toward a more centralized operational control model, data communication starts to play a more pivotal role in the overall operation of utilities’ electric distribution systems. Everyday more and more utilities across the world are turning to wireless technologies to improve operations and decision making in the delivery of various customer services, including electric, gas, water, etc.

Aside of that, India is also making a major push towards enabling financial inclusion for the masses. It is a gargantuan effort in a huge and diverse country such as India.

Given the fact that financial infrastructure cannot be practically built to reach out to far flung areas, micro-finance and rural banking institutions are increasingly turning to rely on wireless M2M enabled technologies to make it a reality. One of the major issues with traditional microfinancing models was the reconciliation of accounts on a real time basis along with huge administrative costs due to a great deal of manual intervention. This aspect defeated the very purpose of micro-

Logistics operators can cut down of fuel costs and prevent unnecessary wear and tear of vehicle by remotely getting vehicular and driver information through M2M devices fitted inside the vehicles which will wirelessly provide information to fleet management systems. finance as the cost was being passed on to the end-user, which resulted in a lot of negative publicity on the sector due to suicides by some of the borrowers in some states. Some of the more technology savvy micro finance institution turned to handheld wireless POS (point of sale) device to bring down administrative costs and more importantly use it for immediate reconciliation of accounts at the central server of the banks making the business more feasible. These handheld POS terminals were enabled by M2M modules and used the existing GSM/CDMA networks to communicate with the central server wirelessly and securely.

Other than this M2M also has many applications in the area of agriculture.

One of the key applications is to manage irrigation water resources more efficiently and cost effectively to bring down costs and reduce wastage. Using an array of sensor that detect the humidity levels in the atmosphere and the soil, M2M modules can be used to control the

dispersal of water to the required level, instead of following a traditional routine of irrigating fields which results in wasteful use of a valuable resource such as water.

This has got the potential to mitigate long term ecological and environmental impact due to wastage of water.

Similarly, logistics operators can cut down of fuel costs and prevent unnecessary wear and tear of vehicle by remotely getting vehicular and driver information through M2M devices fitted inside the vehicles which will wirelessly provide information to fleet management systems at the operations office. This will not only make fleet operators more competitive but will also reduce their carbon footprint due to efficient management of routes and better maintenance of vehicles.

While these are some significant examples how M2M technologies will benefit the Indian market, there are many more possibilities which will emerge in the time to come.

LOGISTICS TIMES May 2012

STUDY PAPER

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Future of 4PL in India This study paper was prepared by a team of supply chain students from University of Petroleum and Energy Studies, Dehradun which participated in ‘Logistics Talent Hunt’ held in Delhi in April. The paper highlights and compares 3PL and 4PL services and underlines the possible developments in emergence of 4PL as the preferred services platform in the country in the coming years. Excerpts: Abstract: Manufacturers are not able to pay much attention to their transportation needs, relying on the conventional way of calling up truck operators and getting the best rate. Thus, the firms end up paying a lot of money on transportation simply because of poor planning on distribution.

However, things are changing with the entry of foreign companies that, usually, have strong logistics support. This and the increasing realization of the importance of timely delivery of materials and products are slowly changing the way companies are looking at logistics.

In this context outsourcing of logistics makes a lot of sense for Indian firms which do not have a professionally run logistics division. It will free companies from the worry of getting materials on time or distributing their products within and outside the country.

Though India is still an emergin7 g market in manufacturing, the LOGISTICS TIMES May 2012

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presence of many multinational logistics firms is slowly changing the way products and materials are distributed.In the last fivesix years, some of these firms introduced 3PL (third party logistics providers) in India and have now gone a step further by introducing 4PL (fourth party logistics providers). The latter, the most sought after by firms abroad, are slowly becoming popular among large Indian firms, say logistics experts.

In 4PL, logistics is controlled by a service provider that does not own the assets to carry out logistics activities but outsources to subcontractors, the 3PL. Leading Indian firms in various sectors no doubt have huge outlays on logistics. Sectors such as cement, FMCG, electronics,

consumer durables, and automobiles spend over Rs 2,000 crores each every year .

Other major industries with a sizeable logistics cost include pharmaceuticals (Rs 700 crore), food processing (Rs 200 crore) and paints (Rs 250 crore).

While the 3PL concept has been around in India for some time, MNC and large companies are now going a step further and want to outsource their entire logistics to a 4PL. “To cut the logistics cost, Indian companies in many sectors would be forced to go for a 4PL,” say experts.

Globally, about 75 per cent of the Fortune 100 companies and about 45 per cent of Fortune 500 firms have now gone in for 4PLs. OUTSOURCING Businesses outsource for many and varied reasons-increase shareholder value, reduce costs, business transformation, improve operations, overcome lack of internal capabilities, keep up with competitors, gain competitive advantage, improve capabilities, increase sales, improve service, reduce inventory, increase inventory velocity and turns, mitigate capital investment, improve cash flow, turn fixed costs into variable costs and other benefits, both tangible and intangible. To the maximum, and if done correctly, outsourcing and business process outsourcing can be used to create a viable virtual corporation.

3PL Third-party logistics provider is a company which supplies outsourced logistic services. Providers usually are specialized in warehousing, inventory, fulfillment, and transportation. The services provided are able to be customized depending on the customer’s needs and demands of delivery for their product.

4PL Where traditional 3PL providers mainly focus on transportation and logistics, 4PLs, provide a wide range of value-added services that can range from business process analysis to hand work such as assembly, packaging and configuration. The lines of distinction between 3PLs and 4PLs are, at best, blurry. There has been a move in recent years by traditional 3PLs to provide more value-added types of 4PL services in an effort to enter into higher margin types of business.

3PL providers provide logistics services with their own assets.

For example, a distribution service provider which uses its own resources, e.g. workers, to pack final products for distributing to different markets as per customer’s request is seen as a 3PL provider.

4PL providers provide broader logistics/supply chain services.

They assemble the resources, capabilities and technology of their own organizations (i.e. their resources) and other organizations (e.g. through agreements) to design, build up and run more comprehensive supply chains.

One can interpret that 4PL: Deal with business process and linkages as well as individual LOGISTICS TIMES May 2012

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activities Not all of the services provided by 4PL providers are owned by themselves.

3PLs have led the way in logistics outsourcing. Drawing on its core business, whether it be forwarding, trucking or warehousing, they moved into providing other services for customers. Creation of a 3PL presented a way for a commodity-service logistics provider to move into higher margin, bundled services.

Customers, anxious to reduce costs, want what 3PLs have to offer. The potential market opportunity for outsourced logistics service providers, whether domestic, international and/or global is huge.

But something has happened on the yellow-brick road. The reasons are varied, but the bottom line is many have failed at their own business transformation. Some 3PLs have not moved past their core commodity service to become true multi-service providers. Or international 3PLs have not understood how to provide domestic services; or domestic ones have not succeeded at venturing into international logistics services.

Others have failed to differentiate themselves against the competition.

Certain 3PLs have not done a good job positioning and defining them in the marketplace. Or the parent company has not given them the resources, especially sales and sales leads, to penetrate even their existing customers. And, sundry have commoditized their 3PL service, as a result undoing the very purpose of their 3PL. These setbacks have slowed down the growth of some 3PLs in terms of both customer retention, especially, and new customers. Fragmentation of the 3PL sector reflects both the uncertainty of how 3PLs view themselves and the diversity of customer needs. Shippers share some accountability with an overemphasis on cost reduction as the key metric and without a clear definition of their requirements for services they need and how it will all work within their company. They looked for silver bullets and quick answers to complex needs.

Using a 4PL, fourth party logistics service provider, is different than the traditional 3PL. 4PL’s combine process, technology and process to manage. The 4PL is a Business Process Outsourcing, BPO. This lead logistics provider will bring value and a reengineered approach to the customer’s need. A 4PL is neutral and will manage

the logistics process, regardless of what carriers, forwarders or warehouses are used. The 4PL can and will even manage 3PLs that a customer uses.

Business process outsourcing is traditional outsourcing and more.

Outsourcing is often taking a set of work, tasks, responsibilities or functions and transferring them to an outside service provider. Business Processing Outsourcing (BPO) involves that and more. A BPO service provider brings a different perspective, knowledge, experience and technology to the existing function and can and will work with the firm to reengineer it into an improved or new process. It is an outcome-based result, not just a pure cost reduction issue. The new process will interact or be integrated into the company in a way that can bring value, even bottom line and shareholder benefits, to the client.

A good 4PL will have the shipper perspective and experience in what he does and offers to prospective customers. That

Where traditional 3PL providers mainly focus on transportation and logistics, 4PLs, provide a wide range of value-added services that can range from business process analysis to hand work such as assembly, packaging and configuration.

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means a better understanding of the complexity of the customer’s requirements, present viable solutions and to have customer satisfaction and retention.

The firm sees the relationship, not a chunk of freight. Instead the BPO provider seeks incentives and metrics to define the relationship and collaborates with each customer as to goals and outcomes. A 4PL wants to position itself as an extension of and part of its customer. This BPO provider recognizes the role of and need for information technology in managing the process.

Success of 4PL The success of 4PL would be result of both the strategic and tactical capabilities. It should have real world logistics experience, especially on the A good 4PL will have the shipper perspective “shipper”/customer side. Experience sees the real issues and hidden and experience in what he does and offers agendas that are present. They also give you the ability to develop the to prospective customers. That means a process, people and technology that are needed because they have “been better understanding of the complexity of there, done that”. They understand the customer’s requirements, present viable meeting the needs of their clients because they have managed and been solutions and to have customer satisfaction responsible for logistics.

A 4PL, with real world supply chain and retention. experience, can present a way for customers to take control of their supply chains. They can structure Much outsourcing is work related. Handle warehousing. the relationship and the process in a way that best meets the Handle shipments. Not manage them. This matter is part requirements of the customer, rather than the customer having of the next evolution of outsourcing and where the 3PL will to accept what the outsourcing provider has to offer. have to migrate-and where the 4PL is already positioned.

3) The outsource service provider, to truly meet the needs of his customer, should be neutral. 4PLs should be neutral if 3PL vs 4PL. they are to manage the process. 3PLs, especially those which When it comes to outsourcing, there are three questions and are asset-based struggle to be neutral. 3PLs which seek to underlying issues. push shipments through their transport contracts or through 1) Do you outsource a function their warehouses are not neutral. versus outsource a process? 3PLs target the function. They want to handle containers/shipments/freight, not the The use of third party logistics providers has grown dramatically transport management process, for example. The true need over the last several years and has increasingly become an is the process, which is what the 4PL targets. Is there really effective way to reduce costs and spread risks for traditional, a process in place--or a series of standalone transactions? vertically integrated firms.

What is the present process? How does it work? Where does it fail? Where are the gaps? Where are the redundancies? The The economic advantages of supply chain process crosses organizational lines. It runs using 3PL suppliers are: horizontal in a vertical organization.

1) Elimination of infrastructure investments.

2) Do you outsource work/tasks or do you outsource managing? 2) Access to world-class processes, products, services or LOGISTICS TIMES May 2012

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technologies 3) Improved ability to react quickly to changes in business environments 4) Risk sharing 5) Better cash-flow 6) Reduction of operating costs 7) Exchange of fixed costs with variable costs 8) Access to resources not available in one’s own organization As customers grow accustomed to using the services of a 3-PL provider for certain activities such as transportation and warehousing, they become better candidates for a broader range of service offerings, or value-added services.

Examples of value-added services provided by 3PL providers are: 1) Pick and pack 2) Marking, tagging, and labeling 3) Product returns and reverse distribution 4) Packaging and repackaging 5) Salvage and scrap disposal 6) Telemarketing 3PL is an extension of trucking, warehousing, and distribution. It is the provision of these products under one roof, with the aim of taking over some of the associated functions such as stock keeping and documentation. 3PL services also include basic functions comprising physical activities such as transportation, warehousing, line haul and the rental of material handling equipment.

However, the task of providing a full outsource solution comprising different services from one service provider is difficult. It is, therefore, not surprising that opportunities are created for 4PL service providers to assist companies in coordinating all the different 3PL activities, which are provided by different service providers.

The use and spread of IT, including ERP, warehouse management system (WMS), tracking systems and net-based data exchange – will be inevitable and rapid.

India already has a leading edge in IT, which will be leveraged for logistics.

4PL Service Providers 4PLs represent the next stage of development in logistics service providers. Consequently, while the traditional activities of warehousing, inventory management and transportation may be given out to one 3PL, other processes like HRD, security and product development are done by other 3PLs. In effect, the activities done by a set of internal departments are now being carried out by a set of 3PLs. As a result the companies now have to deal with a whole set of 3PLs and each needs to be coordinated with and linked via personnel and IT. The number of transactions and the costs reduced are thus offset to a great extent by the cost and time of transacting with all these 3PLs. LOGISTICS TIMES May 2012

Today more and more business processes are being outsourced.

In the West, processes like bill payment, credit tracking, invoice generation, HRD, transport and warehousing are all being outsourced. Outsourcing of these activities may indeed add considerable value to the product, but on the flip side, even in a developed economy like the US, there are no 3PLs that offer every process with equal competence or reach.

The 4PL is an integrator that assembles the capital, technology and resources of its own organization and other organizations to design, build and run supply chains. The typical 4PL would eliminate complexity, share benefits of scale and capital and can drive innovation due to its overall view. In other words, a 4PL manages other 3PLs. The primary role of the 4PL is the management of complexity and time.

Two key distinctions make the concept of 4PL unique and set it apart from other supply chain outsourcing options available in the market today:

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A 4PL delivers a comprehensive supply chain solution A 4PL delivers value through the ability to have an impact on the entire supply chain.

In both these concepts, 4PLs have evolved because of constraints faced by the 3PLs. In other words, 4PL is the evolution of supply chain outsourcing. The convergence of technology and the rapid acceleration of e-capabilities have heightened the need for an over-arching integrator for supply of chain spanning activities.

4PL is a non-asset based logistics operator which has chosen to become an outsourcing specialist – assessing the entire supply chain and contracting those best able to provide the required services, all in order to reduce the customer’s investment in inventory.

4PL operators handle the client’s entire logistics function for optimum results. It is not just about reducing costs of warehousing and transport, but rather about managing the logistics functions and achieving optimization. 4PL consultants are being used to analyze certain areas and recommend solutions where processes can be optimized.

It follows naturally that 4PL service providers must become long-term partners, as they are directly involved in the business processes and strategies.

The 4PL service provider manages and coordinates the relationship between all the different activities of the consumer.

It must be able to strategize and manage all the different assets that are dedicated to a customer and, where possible, coordinate break-bulk distribution by co-loading different customers’ products on the same vehicle. This can be done when a 3PL service provider has a great number of customers, thus providing the critical mass to allow break-bulk distribution.

The 4PL planning in such a scenario plays a great role in reducing costs. In essence, the 4PL logistics provider is a supply chain integrator and assembles and manages the resources, capabilities and technology of its own organization with those of complimentary service providers to deliver a comprehensive supply chain solution.

The development of 4PL solutions leverages the capabilities of 3PL providers, technology service providers and business process managers to deliver a comprehensive supply chain solution through a centralized point of contact. The 4PL will integrate the client’s supply chain activities and supporting technologies across these “best of breed” service providers with the capabilities of its own organization.

The future of 4 party logistics Outsourcing in India is dependent on these criteria: 1) Use of IT: The use and spread of IT, including ERP, warehouse management system (WMS), tracking systems and net-based data exchange – will be inevitable and rapid.

India already has a leading edge in IT, which will be leveraged for logistics.

2) Alliances: Scale and reach are the vital ingredients for success in 3PL. Indian companies will increasingly look to alliances, joint ventures and mergers with multinationals or larger Indian logistics providers to attain critical mass. These

alliances will be dynamic: as and when required, companies will form alliances and break away when no longer required 3) Investment: A sustainable 4PL model will need money – money for infrastructure, IT, people, fulfilling of liabilities arising from failure to honor commitments and insurance claims. Financial institutions and banks will play a key role in this aspect. Logistics and supply chain today offer returns of 15-20%, which very few investments give, and this is what should draw Foreign Institutional Investors and banks.

4) Regulation: India’s current labor laws, laws of customs, excise, port formalities, service tax provisions etc prevent businesses from realizing a lot of value across the chain. Cheap and easy availability of labor also hampers the development of people on a long-term basis. There’s not enough time given to develop skills. Current labor laws bar layoffs, making it difficult to infuse fresh blood. However, all these will change as regulations are relaxed and enterprises hire people purely on the basis of need and not any social obligation. Logistics providers’ services will improve in all aspects of business in India, as awareness of their benefits spreads.

Consumer Relationship Management For logistics outsourcing arrangements to be successful they must include a strong emphasis on customer relationship management (CRM). This is different from what we typically think of as customer service. Customer service actions are ‘passive’ and are initiated after customers present their requirements, whereas CRM is ‘active’. It not only solves problems but also maintains close contacts. CRM relies on the integration of marketing and logistics customer service, and regards customer service as another marketing mode. Therefore, customer relationship management is sometimes referred to as “backstage marketing.”

Links between the components As services are customer-centered, the strategy, systems and people in the operations of service should also focus on the customer. Customers’ expectations are central to the design of service strategy of the firm. The line linking customer to people (service providers) signifies that people are extremely important in producing and delivering services to the customer.

The customer to systems link shows that the service operations/ delivery system should also be designed with the customer in mind. The strategy to system link means that the systems and procedures should follow from the service strategy. The systems should support the strategy.

The strategy to people link means that all the service providers (people in the service organization) should be well aware of the organization’s strategy.

The system to people link means that the service operations system and procedures should be people-friendly.

The only criterion that counts in evaluating a service quality is defined by the customers. Only customers can judge quality. All other judgments are essentially irrelevant.

Courtesy: T2P Consultants LOGISTICS TIMES May 2012

PRODUCT

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INDIA’S NO.1 ENTRANCE AUTOMATIONS & LOADING BAY EQUIPMENT COMPANY GANDHI AUTOMATIONS OFFERS

The wide range of Bolzoni Auramo lift tables, with their usual safety and reliability features provide an effective solution to most lifting problems. The safety of the operator during the use of our lift tables is paramount. Our tables comply with the European safety of machinery standards EN 292. Machinery Directive 98/37/EC and safety requirements for lift tables EN 1570.

All models include.

Aluminium safety bar, stopping descent of the platform on contact with obstructions.

Safety clearance between scissors to prevent trapping during operation.

Safety check valve to stop the lift table lowering in the unlikely event of the hose break .

Protection against overloading

Low voltage control box with up-down buttons and emergency stop.

Maintenance props(for safe maintenance operation) Removable lifting eyes to facilitate handling and lift table installation.

We have a wide range of tables and options available to meet different requirements.

Due to our wide experience we are able to provide customized solutions.

Type 1-E Ergo-lift single scissor for evenly distributed load.

Designed as a „work station‰ to provide improved ergonomic conditions to ensure the health , safety and comfort of the operator together with improved productivity.

Load applied : evenly distributed Top platform smooth surface

Max. 20 cycles per hour. One shift a day Single acting hydraulic cylinders with drainage Upper and lower travel limited by mechanical stops Self lubricating bearings on pivot points Hydraulic power pack inside the table provided with relief valve against overloading and compensated flow valve for controlled lowering speed Electrical equipment controlled by electronic system. With low voltage transformer and thermal overload protection Wide range of accessories available to achieve even higher safety functions where conditions require.

For further details, Contact: Gandhi Automations Pvt Ltd, 2nd Floor, Chawda Commercial Centre, Link Road, Malad(W) Mumbai 400064, Off : 022- 66720200/66720300(200 lines), Fax : 022-66720201, Email :- sales@geapl.co.in, Website : www.geapl.co.in LOGISTICS TIMES May 2012

Strong Growth: India Warehousing Show beckons!

Trade visitors from all over India made their way to Greater Noida, Delhi NCR for the 3rd India Warehousing Show. The show was open from 26 April to 28 April at India Expo Centre, and collocated with India Materials Handling and Logistics Show and India Cold Storage Show. On opening day, the event was inaugurated by Dinesh Rai, Chairman of Warehousing Development & Regulatory Authority (WDRA), R. K Sharma, Senior Deputy Director of National Horticulture Board and Mahendra Swarup, President of Federation of Cold Storage Associations of India.

A growth of 200 percent was noticed in comparison to the last edition of the event in terms of solutions and technology on display. At India Expo Centre, 227 exhibitors from 10 countries presented over 300 latest products and trends for the warehousing, materials handling, logistics, cold and supply chain industry.

The range of products and services at IWS 2012 was supplemented by a concurrently held India Warehousing Conference focusing on theme of “Developing Effective Strategies to Meet the Emerging Supply Chain Demand�. The two day conference presented the industry trends and discussed growth opportunities for the sectors.

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EVENTS

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Logistics Times was Media Partner of this event LOGISTICS LOG OGISTICS TIMES May 2012

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Regd No.: DL(E)-20/5380/2011-13