Lt may 2015 net pdf

LOGISTICS TIMES INDIA’S MOST VALUED SUPPLY CHAIN MAGAZINE

May 2015, `50

What are they doing?

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INDUSTRIAL ENGINEERS @ 3PLs:

Logistics Times

Volume V Issue 11, May 2015

IN THIS ISSUE...

Editor-in-Chief Raj Misra rajmisra@logisticstimes.net Editor Ritwik Sinha ritwik@logisticstimes.net Editorial Advisor Ramesh Kumar supplychaindia@gmail.com Business Head S K Hussain hussain@logisticstimes.net Design Head Shahla Alam Circulation Head Sushil Sharma Photographer Kausar Legal Advisor Rakesh Garg

Editorial Advisor Board Paul Lim Fopunder & President, Supply Chain Asia Pawanesh Kohli CEO/Chief Advisor, NCCD Wayne Hunt MD, AsiaPac Executive Insights Pte Ltd, Singapore Harry Lagad Executive Director, 7 Hills Global Consulting P Ltd Kate Vitasek Faculty, University of Tennessee College of Business Administration Samir Srivastava Professor, IIM Lucknow Prof Akhil Chandra Institute of Logistics & Aviation Management

Marketing Coordinator Ph:011-22478538-39, 9990473003 advt@logisticstimes.net Printer & Publisher Deepa Misra for

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What are they INDUSTRIAL ENGINEERS @ 3PLs:

doing?

COLUMN 20 GUEST 3D Printing and its Implications

for the Global Logistics Industry

CHAT 28 QUICK Customer is demanding better

handling of sophisticated equipments

48 EVENT Hactl scoops Air Cargo Handling Agent of the Year award

Regular

34 INTERVIEW CHARLES, Who?

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Company News News Briefs Bang Bang DHL Report Perspective Transportation Logistics & Litreture Last Page

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09 10 27 30 42 44 46 50

EDITOR’S NOTE Ritwik Sinha

New turf for industrial warriors

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remember meeting a veteran of Indian hospitality sector early this year who firmly pronounced that businesses are no different from regular battles. “You have to raise your workforce like soldiers who have to constantly fight with your rivals or enemies (competition) while pursuing the common objective of protecting your customers’ base.” Personally I found it a very apt analogy.

As history reveals, there are innumerable interesting strategic tactics which are often deployed in mega battles. A specific army could well be joined by the soldiers of friendly partners if they have a common enemy to fight. The cover feature presented in this edition precisely talks about a similar trend. At the present juncture, it may not be too obvious to everyone but nevertheless it has started happening. Industrial engineers traditionally involved only with the manufacturing processes have begun extending their knowledge and skillsets in designing supply chain models also. The confirmation of this trend comes from two of the senior most representatives of the Indian supply chain fraternity - Vikram Mansukhani, Head-Business Development & Corporate Services, Drive India Enterprise Solutions and Sushil Rathi, Senior Vice President, Mahindra Logistics – who have contributed to the cover feature sharing their thoughts on the growing importance of industrial engineers in supply chain operations.

The major takeaways emerging from the cover feature can be classified as: industrial engineers are an elite brand of professionals; their involvement often results from either the collaboration between the manufacturers and the supply chain service provider in the sensitive cases or the leading supply chain firms themselves are getting them on the board to undertake assignments which are just not ordinary. One of the contributor has called them “messiahs of transformation who have changed the way leading established logistics and supply chain companies run their operations globally.” And they ensure that proper processes are put in place (management by design and not by destiny) while chasing a whole bunch of supply chain related activities and perceived excellence about them. These may include - order dispatch accuracy, order turnaround time, delivery lead times, damage ratios, pilferage ratios, space optimization, productivity at each of the work levels, material handling equipment utilization, etc.

The article clearly underlines that while pursuing major supply chain operations with your regular worforce, you always have the hope to come out trump at the end of the day. But if you have industrial engineers in your troupe, you are always better prepared to turn those hopes into a reality. And herein lies the critical difference which the leading supply chain companies have begun to embrace and endorse now.

Waiting for your response

ritwik@logisticstimes.net or 9810315416

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May 2015 LOGISTICS TIMES

COMPANY NEWS

FSC launches integrated Cold Chain services in Mehsana

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uture Supply Chain Solutions (FSC), domestic logistics major and a Future Group company, recently unveiled its cold chain facilities at Mehsana, Gujarat. The newly launched integrated Cold storage warehouse is a state of art facility, marking Future Supply Chain Solution expansion into the fast growing cold chain logistics industry.

With this addition, FSC has a complete suite of products which can service any kind of supply chain need.

State-of-the-art Cold Chain facilities are currently operational in Delhi, Kashipur, Mehsana, Mumbai, Chennai, Bengaluru and Tumkur. FSC has planned to build further capacities in Delhi, Mumbai and Hyderabad. These Cold Chain facilities are WMS enabled with storage area ranging from minus 30 to plus 25 degrees Celsius and best-in-class mechanisms for temperature monitoring and control. Some of the state-of-the-art features include Mobile Racking, GPS based temperature recording, Auto dock levelers and PLC controlled operation and performance monitoring system for refrigeration plant.

Speaking on the occasion, Anshuman Singh, MD & CEO, Future Supply Chain Anshuman Singh Solutions Ltd, MD & CEO Future Supply Chain Solutions Ltd “The launch of FSC cold chain services is milestone addition in our logistic solutions for customers and complements our existing modern technology and automation based supply chain capability in Food and FMCG domain.�

All India Primary, Secondary and Last Mile Distribution services are given to customers through more than 175 owned reefer vehicles, with a plan to add more number of vehicles across chilled and frozen segments. These vehicles are GPS enabled and fitted with state-of-the-art gratings, double leaf-insulated doors and temperature monitoring and control mechanisms.

Future Supply Chains which was set up in 2007 is credited with modernizing

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supply chain in India by Indianising and indegenising global best practices in Infrastructure, technology, automation, processes systems, knowhow and expertise. FSC’s modern supply chain networks brings raw materials, vendors, transportation mediums, manufacturers, plants, warehouses, finished goods, distribution centres, stockists and the market place under one single platform.

FSC has made significant Investments in developing GST ready Logistics Parks, state-of-the-art warehouses and transport hubs and branches to create a seamless supply network across India. This network is further integrated by industry leading softwares to provide visibility across the supply chain.

FSC provides modern warehousing services through its network of Logistics Parks and modern Built-to-Suit warehouses across all major locations in India. This service is further integrated with Express which delivers to more than 12000 pin-codes across India within Industry leading transit times.

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NEWS BRIEFS

Setting up of Cold Storage Facilities As per a recent government release, under a pilot project called “Kisan Vision Project�, Container Corporation of India (CONCOR), Central Warehousing Corporation (CWC) and Central Railside Warehouse Company (CRWC) have been asked to provide infrastructure at a number of locations in the country in addition to Azadpur in Delhi on Indian Railways to encourage development of facilities for setting up of cold storage and temperature controlled perishable cargo centers as well as developing agri - retail outlets to be allotted to different parties through Public private partnership (PPP) mode.

The details and the present status of the said projects are as under: z Nasik (Maharashtra): The centre is located at Nasik in Nasik District of Maharashtra. The centre is functional with effect from 23.02.2013. z New Jalpaiguri (West Bengal): The perishable cargo centre at Bagdogra airport was taken over by CONCOR on 22.02.2011 from Siliguri Jalpaiguri Development Authority (SJDA) which was functional. Under the provision of agreement signed between SJDA & CONCOR, SJDA was required to obtain requisite license from State Government authorities. SJDA was not able to obtain the same and the facility is intended to be returned back. z Singur (West Bengal): The Perishable Cargo Centre was made functional on 18.12.2011. However, due to very low utilization, the service provider has abandoned the contract. Expression of interest for fresh contract for operation and maintenance of the facility has been floated. z Dankuni (West Bengal): CRWC has been entrusted with the responsibility of developing Perishable Cargo Centre at Dankuni. z Mecheda/ Murshidabad (West Bengal): The Perishable Cargo Centre at Murshidabad (in lieu of Mecheda) has not been found viable as per study taken by CONCOR.

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In addition, Central Railside Warehouse Company Limited (CRWC) has been entrusted to carry out the preliminary work such as surveys pertaining to availability of land, feasibility; layout plans, etc for construction of temperature controlled storages at 10 locations: Vatva, Vishakhapatnam, Badagara, Udhna, Cheriyanad, Bhivandi Road, Azara, Navlur, Kalamboli and Yashwantpura in the country to boost rail movement of fruits and vegetables in different parts of the country. CRWC has been allowed a maximum of two years of gestation period from the date of executing individual agreement with the Railways

May 2015 LOGISTICS TIMES

for construction and operationalizati on on the ware houses complex.

At Nasik 3257.78 metric tonnes cut flowers and fruits were stored during the last year.

The Perishable Cargo Centre (PCC) at Kela Godown, New Ajadpur is located in the vicinity of Adarsh Nagar Station where huge quantity of banana is coming by rail.

The storage is able to provide the linkage to banana/mango traders to keep these fruits in cold store chambers/ripening chambers which are being transported by rail/road.

This information was given by the Minister of State for Railways Manoj Sinha in written reply to a question in Rajya Sabha recently.

DTDC unveils new co-branded Logo

DTDC has launched its new co-branded logo that was unveiled by marquee cricketers of the Sunrisers Hyderabad recently. According to a company release, DTDC has embarked upon the journey of transforming its identity through a strategic partnership with Geopost’s DPDgroup - Europe’s second largest Parcels Delivery player. The brand

name is now being rechristened to DTDC Express Limited as the company focuses to enhance their expertise in the logistics industry under their Vision 2020 programme.

DTDC being the official logistics partner of the Sunrisers Hyderabad for IPL Season8 invited star cricketers David Warner, Trent Boult , Bhuvneshwar Kumar, Dale Steyn and Eoin Morgan to unveil the new logo. “Our rebranding and rechristening coincides with the firm’s global Vision 2020 strategy which is about repositioning DTDC as a complete express logistics player

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in the markets we operate in. It echoes our aspiration to focus on qualities that make us different from our competitors and more valuable to our customers”, said Abhishek Chakraborty, Executive Director DTDC. On the partnership with Sunrisers Hyderabad he added, “We are happy to partner with and support one of the best teams of the IPL. This will ensure a good brand recall for us and we are looking at a range of interesting activities. We want to make the most of this association.”

Through the vision 2020, DTDC is aiming to create India’s most integrated parcel network focused on express distribution, 3PL and ecommerce solutions with a comprehensive global reach.

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NEWS BRIEFS

Retail industry to become US $ 2.1 trillion business by 2025 Leading industry body, Confederation of Indian Industry (CII) has envisaged that the retail market in India will touch US $ 1.2 Trillion by 2020 and US $ 2.1 Trillion by 2025 from the present level of US $ 550 billion, generating 10-12 million jobs in next decade.

According to a report titled “The Indian Retail Medley” released jointly by CII and Wazir Advisors at the Conference on Retail themed as ‘Decoding the Future of Retail’ organised by Confederation of Indian Industry (CII) in New Delhi recently, “The organized retail in India is expected to grow 7 folds and online retail 26 folds, while the unorganized retail will continue to dominate”.

The report further highlighted that the sector will get a transformational push with an aggressive collaboration between the organized, unorganized and online retail growth, driven by India’s demographics with huge young and tech savvy population (500 million below 25 years), rising incomes and demand levels, urbanisation, attitudinal shifts and above all, a phenomenal and continuous rise in internet penetration across the country with the government’s commitment to digitization”.

“It is estimated there would be 550 million net users in India by 2018, as also the face of the internet user will change dramatically, with higher penetration to the tune of 210 million in rural areas.

The online retail would provide a superb platform to the unorganised retail to reach out to the consumers across markets in tier 3 & tier 4 cities”, further highlighted the report.

“Time is absolutely opportune to ‘Make in India for Retail in India, with our country being one of the fastest growing and most dynamic retail markets in the world. We must produce and sell in India. There is however a dire need to strengthen our supply chain management, identification of the

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consumers’ needs, trained and skilled manpower and streamlining of our taxation system”, highlighted Adesh Gupta, Chairman, CII Retail 2015 & Promoter, Liberty Group.

“Further, India is expected to become the world’s fastest growing e-commerce market on the back of robust investment activity in the sector and the rapid increase in internet users. It is expected that India’s e-commerce market will grow from US$ 2.9 billion in 2013 to over US$ 100 billion by 2020. There is enough demand, and the challenge would be how to reach the consumers, both from connectivity and logistics perspective. The online retail can reach

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Tier 4-6 areas much better than offline channel, giving it a bigger advantage.

Collaboration between both organized and unorganized retail companies could be the real game changer”, he added.

“It is imperative that the retailers take advantage of digital retail channels (e-commerce), which would enable them to spend less money on real estate while reaching more customers in tier-2 and tier-3 cities. Nevertheless, the long term outlook for the industry remains to be positive on the back of rising incomes, favourable demographics, entry of foreign players and increasing urbanization”, shared Mukesh Mathur, Executive Director, Oracle India.

Indian Online Luxury market to touch USD 35 billion by 2016 Indians are likely to spend USD 35 billion on online luxury stores by 2016, compared to USD 8 billion in 2012 growing at an compound annual growth rate of about 25%, due to rise in disposable incomes, expansion of modern retailing and influence of western culture, reveals a recently conducted ASSOCHAM study.

Releasing the paper, a senior official of the chamber said, “Luxury shoppers are wellconnected digitally and it becomes easier for brands to showcase themselves online.

Online path helps brand to educate potential consumers about luxury products.

With deals or discounts, cash-on-delivery, EMI schemes and easy return policies, online shopping has offered luxury brands a new platform to engage and entice customers, said the study paper. The major key growth drivers are rising income level which leads to a change in spending patterns and creating good business opportunities in India. The official said, earlier only youngsters were experimenting with buying stuff from internet. Now, even the mature customer is also getting accustomed to e-commerce.

Luxury products sold online include apparels, stylish accessories, watches and high end electronics. Most of these products are offered for sale at online portals at a price that is incomparable and certainly benefits the middle class audience too, adds the study.

With more than 140 million internet users, India is the third largest internet market in the world. The rising middleclass is the biggest driver of the online retail growth. As per the findings, with more than 75% of the internet users under the age of 35, India is one of the world’s youngest internet populations.

E-commerce is expanding the Indian luxury market, as online access and competitive pricing bring hitherto unattainable brands and products within the reach of consumers in the country’s lower-tier cities, the official added.

The global online luxury market is predicted to more than double between now and 2020 as major brands continue to increase their range availability on the web, with pure-plays set to outpace the sector as a whole.

The optimistic outlook is anticipated to continue in the luxury sector spanning products such as apparels, home decor, pens, watches, jewellery, wines & spirits,

spas and even yachts - a heady mix of both lifestyle and individuality-defining products.

Apparel, Cars and electronics are among the most attractive segments across the Indian market. The Benzs, BMWs, Rolls Royces, Audis, Jaguars are not rare sights in metros.

According to study, the luxury designer clothing market in India grew 35% to Rs 13,230 crore in 2012 and likely to touch Rs. 32,000 crore by the end of 2015. Luxury electronic gadgets growing at 38.5%, and the luxury jewellery market at 42%.

Some of the significant players who performed well in 2014 included – GUCCI, Christian Dior, Louis Vuitton, Ocean Style Yachting, Canali India, L’Oreal Luxe India,

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LVMH India, Judith Leiber, The Phenix Mills, The SPA Group, Geetanjali Group, The Bauers, Starwood Asia Pacific Hotels & Resorts, Da Milano Leathers, Reliance Brands, Hidesign and others.

Indian consumers’ love for luxury brands and these platforms offering them at discounted rates has also led to people taking to the online shopping platforms, adds the paper.

The multi-brand top-end and high-street luxury online showroom deals in brands such as Apple, Bang & Olufsen, Tag Heuer, Omega, Satya Paul, Just Cavalli, Rosenthal and Callaway. The site also offers services such as premium travel, hotels, shopping, nightlife, health and beauty etc.

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NEWS BRIEFS

Adani Ports reports a cargo jump of 28 %

Early this month, Adani Ports and Special Economic Zone Limited (“APSEZ”), announced the financial results for the fourth quarter and year ended March 31,

2015.Consolidated cargo across all ports handled by the company was 144 MMT in FY15, an increase of 28%, over corresponding period last year.

Adani ports at Mundra handled 111 MMT cargo in FY15 thereby continuing its leadership as the largest commercial port business in India. The Mundra port registered a 10% growth in FY15 compared to 5% aggregate cargo growth at all major ports.

Also, in case of containers, the Mundra port handled 2.72 Million TEUs in

FY15 as against 2.39 Million TEU’s in corresponding to same period last year resulting in a 14 % growth as compared to growth of 7% aggregate growth in container volumes at all the major ports.

Consolidated cargo handled by the company was 36 MMT in Q4FY15, an increase of 26%, over corresponding quarter last year. Adani ports at Mundra handled 27 MMT cargo.

Meanwhile, the consolidated total income of the company increased by 24% to Rs.6,838 crores in FY15 as compared to Rs.5,514 crores in the corresponding period last year and consolidated EBIDTA increased by 27% to Rs. 4,588 crores in the current year as compared to Rs. 3,604 crores in corresponding period last year. The consolidated PAT for the current year increased by 33% to Rs 2,314 crores, as compared to Rs 1,740 crores in corresponding period last year.

Essar Ports takes over Visakhapatnam Port Trust’s iron ore handling complex In a significant recent development, Essar Ports announced taking over of Vishakhapatnam Port Trust’s (VPT) Iron Ore Handling Complex on a BuildOperate-Transfer (BOT) basis, for a period of 30 years. Essar Vizag Terminals, a wholly owned subsidiary of EPL, will comprise three berths (two outer harbour berths and one inner harbour berth) with a combined capacity of 23 Million Tonnes per Annum (MTPA) which will be developed in two phases.

“Enhancing the cargo handling capacity and mechanization of port facilities for efficient management is crucial for long term sustenance. We are very sure that Essar will develop the OHC facility with latest state-of art handling facilities and achieve higher loading rate thereby reducing the overall turn around by at least 50%”- M.T. Krishna Babu, Chairman, Vizag Port Trust.

The project will be developed at a cost of Rs. 1200 crore over a period of three years, and will cover the upgradation of Outer

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Harbour Berths (OB I & II) in Phase I and mechanization of inner harbour berth (WQ-I) in Phase II. With the takeover of the outer berths, the operation and upgradation of the terminal will be carried out simultaneously.

Commenting on the development, Rajiv Agarwal, CEO & Managing Director, Essar Ports, said: “The facility is well placed to cater to both the domestic and

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international steel Industry. It will serve major iron ore consuming countries like China, Japan, Korea in addition to coastal movement within India. The facility has dedicated rail connectivity to India’s iron ore mining belt. This, along with the mechanized CQ III facility in Paradip port, will take Essar Port’s total east-coast, iron ore handling capacity to 39 MTPA.”

AISATS deploys new Ground Support Equipment Air India SATS Airport Services has further invested 57 crore rupees in new Ground Support Equipment (GSE) at the Delhi IGI Airport (DEL). This investment is part of the 85 crore rupees invested in GSE by AISATS in the past one year. The GSE deployed will not only enhance service delivery standards but also improve operational efficiency and compliance with local airport regulations.

AISATS currently handles around 50% of scheduled flights daily at DEL, India’s busiest airport. Some key factors that contribute to the high service standards at DEL are on-time performance of airlines, professional customer services and smooth passenger handling - right from check-in to boarding and from disembarkation to timely baggage presentation and handling service. To ensure seamless services and improved faster turnaround time without compromising safety, AISATS has deployed a whole range of newly-acquired motorized and non-motorised handling equipment including Baggage Tractors, Ambulift, Air Starter Units, Ground Power Units, Lower/Main Deck Loaders, Aircraft Pushback units, Tarmac Coaches, Toilet and Water Bowsers, Conveyor Belt

Loaders, Baggage Trolleys, Container Trailers and Pallet Dollies.

These equipment will not only ensure smooth handling of flight operations but will also enhance AISATS’ capability to handle wider range of aircraft and potential new customer airlines.

Willy Ko, CEO, AISATS said, “20th April 2015 marked the 5th Anniversary for AISATS as a company providing airport ground and cargo handling services in India. This latest enhancement in

our quality service offering in Delhi is in consonance with our commitment towards innovation and efficiency, while never compromising on safety and operational excellence. The massive plough back of 160 crores Rupees into our operations is a demonstration of AISATS’ full commitment to its customer airlines too. Our current customer and potential customers can appreciate the partnership with us just as we value the partnership with them.”

Zero Error Distribution Centre by Wellness Forever Wellness Forever, a leading Mumbai based retail pharmacy chain, recently launched its Zero Error Distribution Centre (ZEDC), a completely automated state-of-the-art warehousing facility for Pharma, Lifestyle, Wellness, FMCG products, strategically located in the logistics park near Bhiwandi on MumbaiNashik highway.

Spread across over 1,00,000 sq.ft.,the technologically advanced facility will cover company’s supply chain for Maharashtra. The ZEDC (Zero Error Distribution Centre) is designed and equipped with future ready technologies with entirely automated ready-made backend. Addressing industry inefficiencies

related to supply-chain management and cold-chain management, the new facility has been launched with an aim of providing error free distribution, increase dependability, provide complete ownership of back-end operations to improve supply chain and to eliminate any possibility of spurious drugs, as well as optimize efficiency with Punch-toPack time of less than one hour.

The ZEDC will employ over 200 skilled professionals at the facility. The centre has two separate jumbo-size walk-in Cold-Rooms spread across 40,000 sq.ft of ambient temperature equipped with advanced cold chain infrastructure to efficiently manage storage and supply of

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temperature sensitive products including vaccines, anti-cancer drugs, biological products and blood products.

Commenting on the launch of ZEDC Gulshan Bakhtiani, Co-Founder and Director, Finance & Strategy, Wellness Forever said, “Supply chain management and efficacy are critical aspects in pharmaceuticals as it affects human lives, giving no scope of errors. Our Zero Error Distribution Centre is “Re-designed to Re-define” the same”.

The company plans to open more 2 more ZEDC centres in Karnataka and Goa in the next 18 Months to augment its expansion plans.

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Gateway Distriparks net profit for Q4FY15 up 21.1 %

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ateway Distriparks has announced record profits for the year ended 31 March 2015.

During the year, GDL Group (CFS + Rail + Cold Chain) net profit increased by 38.2% over the previous year from Rs 135.8 cr. to Rs 187.8 cr. Q4 net profit increased (Y-o-Y) by 21.1% to Rs 48.8 cr.

Group’s EBITDA for Q4 increased from Rs 67.6 cr. to Rs 92.8 cr., whilst EBITDA for the whole year increased from Rs 264.8 crores to Rs 355.4 crores. In line with the robust operating numbers, PBT increased from Rs 166.2 crores to Rs 238.4 crores whilst PAT increased from Rs 135.8 crores to Rs 187.8 crores.

Consolidated audited results excluded the numbers for

Snowman (Except the 40 % interest in net profit) which, on its listing during the year, ceased to be a subsidiary. The Group’s Balance Sheet also strengthened substantially in view of the better performance.

All three businesses performed better in Q4. The container freight business saw profit after tax but before minority interest increase 29% to Rs 18.4 crores. The best performance came from Rail operations where PBT and PAT increased by almost 100% to Rs 119.2 crores and Rs 104.9 crores respectively.

Snowman also saw growth but not at the same levels. PBT and PAT grew by 7.6% and 10% respectively. As this company continues to expand, capital outlays are incurred which affect the company’s bottom line. The good reception which the market gave to Snowman which was listed during the year manifests the confidence in the growth in the cold chain sector going forward. Snowman will be adding 30,000 pallets in FY16 to the 85,500 pallets it now has. It will continue to expand as it explores new businesses and new niches for its established area of its activities.

Shell rimula launches ‘sach honge sapne’ campaign Shell Lubricants, recently launched ‘Sach Honge Sapne’ campaign for trucker communities across 16 focus markets in India. With the contest tagline ‘Mere Sapne Kare Sach, Meri Bachat Ka Sathi’ Shell Rimula aims to cherish truckers community with a contest that is especially designed to give voice to the truckers dreams and give one lucky winner a chance to make his dream come true.

The unique proposition of Shell Rimula is that it aims to be truckers’ Savings Partner. Shell Rimula products provide better wear control/protection. The company claims it leads to better engine performance and a longer engine life which in turn leads to savings. Rimula R4 with CI4+ technology reduces engine wear by upto 61% and Rimula R3X with CH4 does so by upto 35%.

Speaking on the launch, Mansi Madan

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Tripathy, Chief Marketing Officer, Shell Lubricants India said, “We’re happy to launch this exciting campaign that can help us create direct and real world connect with trucking community across India. The hardworking trucking community is seldom recognized and hence our campaign’s objective is to give them a platform and an opportunity to fulfill their dreams. With our technologically advanced products, we strive to get them more savings for a better future.”

The campaign harnesses a combination of radio activation and on-ground activities to connect with the hardworking trucker community across Shell’s focus markets.

The radio leg of the campaign has been kicked off in collaboration with BIG FM radio to amplify the contest, call for entries (on-ground & IVR), and play the chosen winning trucker stories across cities.

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NEWS BRIEFS

CEVA makes major investment in Australia and New Zealand

CEVA Logistics has set afoot construction of a new 166,000 sq m ‘super site’ at Truganina, west of Melbourne, which will be the centerpiece of CEVA’s growth plans in Australia and New Zealand.

Casey Fisher, Managing Director of CEVA in Australia and New Zealand, said: “This announcement showcases our intention to keep making substantial investments in property assets in Australia and New

Zealand. Our new Truganina ‘super site’ builds on a range of other property developments we have underway in both countries, which will help us grow and keep meeting the growing needs of CEVA customers across diverse business sectors” CEVA’s new, multi user facility in the rapidly growing and strategic Truganina area will include four warehouses with a combined footprint of over 72,000 sq m, hardstand areas of some 76,500 sq m (comprising a 17,500 sq m loading and staging area for car carrying operations and a 59,000 sq m external storage and maneuvering area), an awning area of 15,600 sq m and a combined office workspace area of 2,000 sq m, with surrounding land. As the largest CEVA facility in Australia, it is ideally located

to support Industrial, Automotive and Consumer and Retail customers through its excellent access to Melbourne’s road and rail network, the Port of Melbourne and Melbourne International Airport.

“I am very excited about this investment which will further boost our growth plans in Australia and New Zealand, and the competitive, multimodal advantage this will enable us to offer our customers,” Fisher said. “As well as Truganina, we are adding to our extensive existing network of sites with a new and almost-complete 30,000 sq m car carrying and international freight management site at Pinkenba in Queensland, a 5,500 sq m extension to our Auckland facility in New Zealand, a new 34,000 sq m Contract Logistics and international freight multi user facility at Hazelmere in Western Australia and plans are at an advanced stage to build a bespoke car carrying facility, also in Western Australia.”

DB Schenker Rail UK and CEMEX UK celebrate breaking record DB Schenker Rail UK and its long standing customer CEMEX have made history after despatching over 2 million tonnes of aggregates by rail from Dove Holes Quarry in Derbyshire during 2014.

This is a record for the quarry, in the High Peak district, and represents a more than 20% increase on 2013.The companies celebrated at a special event at the quarry recently when DB Schenker’s 60039 was officially named Dove Holes.

Les Morris, DB Schenker Rail UK’s Head of Sales, said: “We are proud to name loco 60039 ‘Dove Holes’ in recognition of the record amount of aggregates moved from the quarry by rail in 2014.

“We are delighted be working with CEMEX--- to despatch greater amounts of aggregates than ever before, helping them to achieve their aspirations in the construction market, which is seeing a big resurgence. The environmental benefit is

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also significant.

Two million tonnes of aggregates despatched by rail is equivalent to more than 65,000 HGV movements r e m o v e d from the UK’s congested road network.”

Neil Farmer, Aggregates Director, who performed the naming ceremony, said: “We are delighted to have a loco named after our biggest quarry in the country. Moving aggregates by rail has many advantages, both to the communities in which we operate but also on the environment. It enables us to get the material into the heart of the towns and cities without adding

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trucks onto our busy roads. Aggregates are an essential part of construction providing the ‘backbone’ to concrete for houses, hospitals, roads and the built environment.

We hope ‘Dove Holes’ covers many successful rail miles in the future.” The aggregates despatched from the quarry by rail are delivered to 13 destinations across Great Britain.

Thomson Reuters launches new ONESOURCE

Thomson Reuters recently today announced the launch of ONESOURCE Global Trade which it claims to be “ world’s first truly global trade automation and management solution. ” Taneli Ruda, MD, Thomson Reuters Global Trade Management commented, “This solution enables multinational corporations to tie together key supply chain information

to gain complete visibility of their endto-end global trade process —reducing risk, maintaining regulatory compliance, enabling quick and accurate movement, and maximizing profit.”

He further emphasized that MNCs must manage and account for increasingly large and complex supply chain structure as international trade represents nearly half

of global GDP: the value of all traded good and services has increased by more than 500% in the past 20 years and while in 1994, there were 100 free trade agreements (FTAs), there are more than 371 now.

Thomson Reuters ONESOURCE Global Trade solution promises to combine workflow tools with real-time information and analysis. It offers six modules and multiple country editions. Modules include Exporter and Importer workflow tools, and information and analysis modules for Foreign Trade Agreements, Special Programs, Restricted Party Screening (RPS) and Trade Finance. ONESOURCE Global Trade has been localized for Brazil, Argentina, and Mexico and Thomson Reuters is currently localizing the solution for a large number of additional countries including India and China.

New logistics venture to create Lambert St.Louis cargo gateway A newly-launched logistics venture, which will create an international gateway at Lambert St. Louis International Airport, aims to focus on trade between Mexico and the US. Bi-National Gateway Terminal has taken a 20-year lease on a 49-acre site on the edge of one of the airport’s four runways, where it will construct a major cargo handling facility. On completion, the new terminal will serve multimodal cargo needs and be equipped to handle perishables, live animals, high value shipments, express and general cargo with an initial focus on Mexico and Latin America.

The trade relationship between the US and Mexico is constantly expanding and the aim of the new facility is to provide a solution to the traditional delays and congestion experienced by importers and exporters.

Says Bi-National Cargo Terminal’s founder and President Ricardo Nicolopulos: “Mexico is the third largest trade partner with the USA, and we aim to improve the flow of cargo moving between these two

major markets. Ultimately, we intend to provide a link between the Americas and all major world markets.

The site for the new facility is being leased to Bi-National Cargo Terminal

by Lambert St. Louis International Airport. Bi-National Cargo Terminal

May 2015 LOGISTICS TIMES

plans to begin construction by the summer of 2015, and is expected to complete phase 1 within 30 months.

The facility will consist of 500,000 sq ft of terminal,and 1 million sq ft of cargo ramp and support infrastructure for airlines using the facility.

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GUEST COLUMN Jasjit Sethi

3D Printing and its Implications for the Global Logistics Industry

Jasjit Sethi

CEO TCI Supply Chain Solutions

T

3D printing also known as addictive manufacturing was originally developed as an automated method of producing prototypes. 3D printing has the potential to become the single most disruptive phenomenon to impact global industries since assembly lines were introduced in the early 20th Century. The impact of 3D printing for the logistics industry is certainly a most debated topic today.

he evolution of new technologies could bring revolution to production techniques which, in turn, results in significant proportion of manufacturing becoming automated and removing reliance on large and costly workforce. This could lead in reversal of the trend of globalization which has characterized industry and consumption over the last few decades, itself predicated on the trade-off between transportation and the labour costs.

For industries such as the automotive and life sciences, it was predicted that 3D printing would start to become a supplementary way to manufacturing parts which would add new complexity to supporting logistics as it would be

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necessary to smooth integration.

IMPACT OF 3D PRINTING IN GLOBAL LOGISTICS: In a recently completed study of the potential impact of 3D printing on supply chains, it was found that a “softwaredefined supply chain” using 3D printers and open-source designs will usher in a new era of dramatically reduced lead times and lower costs, in part through the elimination of capital investments such as molds, casts and machine tools. Goods which are produced in other countries could be near sourced and this will lead to reduction in the shipping and air cargo volumes. This would also lead to reduction in warehouse requirement as mass customized products usually result

May 2015 LOGISTICS TIMES

in fall in inventory levels as goods are made in order.

There would be fewer opportunities for logistics suppliers to be involved in companies’ upstream supply chains, as manufacturing processes are increasingly re-bundled within a single facility. Tiers of component suppliers are done away with, as is the need for supplier villages, line side supply, etc. A major new sector of the logistics industry would emerge dealing with the storage and movement of the raw materials which ‘feed’ the 3D Printers.

As 3D Printers become more affordable to the general public, the home delivery market of these materials would increase.

The service parts logistics sector would be one of the first to be affected. At present, an astronomical sum is spent on holding

stock to supply products as diverse as cars to x-ray machines. In some cases huge amount of redundancy is built into supply chains to enable parts to be dispatched in a very short timescale to get machines up and running again as fast as possible.

It doesn’t take much imagination to understand the benefits for a service parts engineer of being able to download a part design from an online library, 3D Print it and then fit it within a very short time window. This would make global and national parts warehouses as well as forward stock locations unnecessary to fulfilling customer needs. It will accelerate a shift from “push supply chains” to “pull supply chains.” With 3D printing, the long production runs for mass production will often give way to limited production runs for customer-driven mass customization and build-to-order products.

With 3D printing, manufacturing will become more agile and will be better able to react to customer demands. This means there will be less work-in-progress and finished product in transport and in stock and less obsolescence of existing stock.

Although the cost per unit may be higher, with reduced storage and less outdated product, the overall supply chain system costs may be lower than that of traditional manufacturing supply chains.

Opportunities: The 3D technology enables many new supply chain models such as: z Streamlined logistics model: Manufacturers use 3D printing at their own sites, reducing inventory levels and warehousing requirements.

This is most suitable for items in the inventory “long tail” or where further finishing, assembly or testing is needed before the product or part is shipped. z Customer-managed inventory: This is an extension of vendor managed inventory model, where suppliers installing 3D printing at customer site, providing software design for products and parts to be manufactured on demand. This model could also see the customer acquire a printer with suppliers providing the design data for the printers to produce on a license or

pay-per-print basis. z 3D printing hub: Firms will offer a 3D printing service locally or remotely.

To cite an example, last year USP announced installing several Stratasys printers at its sites across the USA to provide this service, whereby consumers and businesses can obtain printed products on submission of their design.

These new models, whether partially or fully adopted as the technology matures, will have a tangible impact on the cost and capability of supply chains. Closer provision of parts, such as through installing printers at client sites, will drastically reduce delivery times and increase on-time, in-full and e-fulfillment indices. Supply chain networks will be simplified, with a reduction in warehousing needs enabled by a reduction in inventory levels.

3D EVOLUTION & THE FUTURE LOGISTICS COMPANY The biggest change induced by 3D printing may happen in global value chains and logistics. Nobody knows what is really going to happen, but it is wise to keep the eyes open and be ready for change.

The dynamic change in the Supply Chain will lead to the evolution of new type of Logistics Company which will resemble a “4PL”, or service management company.

The new logistics company will design solutions which comprise demand planning, manufacturing, delivery, next market monitoring, service parts management and return and recycle services. In a nutshell, they will become a company of product life cycle management service provider. 3D printing can change the classic mass-production paradigm that bigger is better, production is global and supply chains are highly complex.The global supply chain has been shaped by rules of mass production because the cost of unit production goes down, but with 3D printing that is no longer true.

Conclusion: If 3D printing takes off, then manufacturing, and consequently global

May 2015 LOGISTICS TIMES

The biggest change induced by 3D printing may happen in global value chains and logistics.

Nobody

knows

what is really going to happen, but it is wise to keep the eyes open and be ready for change. logistics, will be transformed. According to a recent survey, many supply chain experts have predicted that 3D printing will play a key role in logistics industries.

As more and more research into the application of the 3D printing becomes available, SCM predicts that it will play a much more prominent role in future supply chains, and it will take less than 10 years for the method to be implemented much more widely.

The Service Parts Logistics industry will be either transformed or decimated by 3D manufacturing - or perhaps both. With growth in 3D printing it is believed that some third-party logistics providers will be hard hit (businesses will print what they need). It is also been estimated that by 2020 3D printing and production will comprise up to 20% of the supply chain.

By shaving weeks off manufacturing times and at-home production, this technology may reverse the trend of low-cost global manufacturing outsourcing, distribution (parts warehouses and forward stock locations will become unnecessary), production, and retailing – posing a threat to the global transportation industry.

Although many supply networks will likely be altered, some supply chains and distribution networks would still remain intact, due to the rapid growth in business and home need for raw materials to feed the 3D printers. Birth of a new logistics sector for storage and movement of these powders and supplies, recycling, and waste disposal is also anticipated.

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COVER FEATURE

INDUSTRIAL ENGIN

What are th The way tasks are accomplished

there is a certain amount of specia Logistics and supply chain arena is and masters in this once unheard manufacturing facilities irrespectiv Vikram Mansukhani

quietly revolutionizing the way bus warehouse stacking or meeting Innovatively. Through Value Mapp are ready to embrace lean philos roping in industrial engineering di LOGISTICS TIMES

invited two

Development & Corporate Service Sushil Rathi 22

Rathi, Senior Vice President, Mahi May 2015 LOGISTICS TIMES

INEERS @ 3PLs

they doing? ed are no longer what it used to. With changing times,

ecialization creeping in. Call it sophistication or whatever. a is no exception. More students are enrolling for degree ard of domain. Unlike in the past, as one walks through ctive of the vertical third party logistics (3PL) honchos are business is being conducted: be it packaging, line feeding, ng incredible timelines. How? Thinking imaginatively. apping. Through Time and Motion Study. Manufacturers losophy in every sphere possible, thus forcing 3PLs are

g disciplinarians as part of their team.

wo 3PL stalwarts Vikram Mansukhani, Head-Business

vices, Drive India Enterprise Solutions Limited and Sushil ahindra Logistics to shed light on this phenomenon.

May 2015 LOGISTICS TIMES

23

COVER FEATURE

War of Management Destiny vs. Design Vikram Mansukhani* Head – Business Development & Corporate Services, Drive India Enteprise Solutions Ltd

The victorious strategist only seeks battle after the victory has been won, whereas he who is destined todefeat first fights and afterwards looks for victory.

- Sun Tzu Chinese military general, strategist and philosopher and the author of the Art of War Lived: c.500– 320. B.C.

commonly deployed in the manufacturing sector, over the years these messiahs of transformation have changed the way leading established logistics and supply

Utilization, Vehicle Optimization, Route Optimization.

While most purists believe that through sheer experience all of this is easily

chain companies run their operations globally.

Some of the common key performance indices in logistics are Order Dispatch Accuracy, Order Turnaround Time, Delivery Lead Times, Damage Ratios, Pilferage Ratios, Space Optimization, Productivity at each of the work levels, Material Handling Equipment

achieved, a discerning eye can quickly make the difference between management by destiny and management by design.

In each of the parameters mentioned, there is enough room for operators to create a buffer based on sheer experience.

However when this is challenged based on hard facts and figures, there is always significant “shaving” of the flab and

The logistics and supply chain business is very akin to fighting a battle - a battle of limited resources; limited time; varied geographies; ever growing customer expectations; changing and complex regulations; limitless competition; and ever growing innovation and a need for harnessing cutting edge IT platforms!

Unless we plan to maximize the output from our limited resources by very clearly establishing who or what, how much and when to deploy, we would stare defeat in the eye quite clearly. To do so it is absolutely critical to have an objective view of the scope of job at hand, knowledge of the specific operation, a clear view of the resources available and a mind that is solution and innovation oriented, bereft of any baggage.

Such a talent though difficult to find and adopt to each operating area, have most often lead to improved operating margins, safe work environment, clearly understood work instructions and happy customers.

This elite band of strategists/warriors are known as industrial engineers. More

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May 2015 LOGISTICS TIMES

improvement in efficiencies.

I remember from an earlier assignment, how when we were asked to deliver international shipments across high traffic density cities of Mumbai and New Delhi, prior to 9AM (for documents) and by 12 noon (for non-documents). These shipments were being imported into the two cities between midnight and 4:30 A.M., needed to be customs-cleared, sent to delivery centers from the airport and then for final delivery.

The task no doubt seemed imposing and the first reaction was to reject the proposal.

As soon as the messiahs of transformation (industrial engineering folks) got wind of the project they approached is with a MUST DO attitude and started looking

drivers to be rostered and a supervisor was to coordinate these deliveries on a close watch.

However, to start with we did not have visibility to this critically required data.

The industrial engineering team in India started working with the exporting countries and a plan to get an advanced manifest based on export customs clearance, helped us get the required data which was then used to plan the resources required for delivery the next day.

While the deliveries started off, we were faced with an abysmal delivery performance of 55% within time for the first eight weeks. Further probing showed that shipments that had duties levied on them and needed payment at the time of

at all the bottlenecks. In order to make this possible it was important that the operations staff knew at least a night before, what was the volume of shipments and to which areas these were to be delivered. Based on the same, number and type of vehicles were to be made available by 7 A.M. at the delivery centers, adequate in center staff, on road delivery staff and

delivery were resulting in service failures as the recipients were either not available or had not keep the monies ready in the absence of a pre-alert.

Again, the industrial engineering team swung into action and defined a process of pre-rating to be done by the import customs clearance team at Mumbai and Delhi. Based on this, customers

May 2015 LOGISTICS TIMES

started receiving calls for Cash On Delivery shipments the evening before the shipment arrived. With constant process improvements, heightened customerservice standards and a ‘MUST Do’ approach the transformation resulted into 95% plus on time deliveries.

What was even for rewarding was that the operating team itself was now more open to process changes, challenging service requirements and working closely with Industrial Engineering to deliver a much higher quality of satisfaction to the customers.

In another even more recent case, one of the warehouses for a fast moving consumer goods company was finding it very difficult to meet the order processing timelines due to the extremely large number of SKUs stored within the warehouse, the small size of product and a frequent change in workforce at that facility. With the help of industrial engineering solutions, the layout of the warehouse was changed, stacking was optimized, storage tags introduced and the workforce was trained to meet the requirements. From a operation that was close to shut down, the location won the best performing facility award from the customer!

As Sun Tzu said , we could either go into our daily lives (assignments) hoping to come out successful or prepared to being victorious. With the right tools, strategy and implementation the only variable that remains is your competitor’s level of preparedness and God’s will to allow you to succeed!

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COVER FEATURE

How to bite a chocolate elephant?...

One bite at a time!

Sushil Rathi – Senior Vice President, SCM, Mahindra Logistics Limited The fundamental reason why manufacturing companies outsource their logistics functions to third party logistics providers is that this allows them to focus on their core competencies and ensure smooth and effective functioning of their logistics operations without investing the time and the resources to gain expertise in that area.

Third party logistics service providers are expected to be effective & efficient from the point of view of cost, productivity & efficiency. In this pursuit, the 3PLs put enormous efforts in finding ways and means for offering tangible as well as intangible benefits without compromising quality.

Time & motion study and value stream mapping are among the resources in industrial engineering that are most relevant to logistics. Time & motion study decides an ideal deployment of resources for any kind of activity or sub activity. It also decides the critical path in the process and the bottleneck area to be overcome for ensuring a seamless process flow. Various kinds of quantitative & qualitative analysis tools like pareto analysis, fishbone diagram, whywhy analysis, PDCA, Kapa & so on help in identifying defects and taking decisions on process or activity changes.

Value stream mapping is a process of mapping each activity or sub activity and the time taken for each tool to map the entire process end-to-end. Here, non-value adding activities are identified & eliminated and the dependencies are highlighted to make the process as well as the activities more effective.

These are the ideal resources to remodel various business processes or models.

They are also ideal for solutions design and for any activity which is proposed to

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be insourced or outsourced.

The responsibility of achieving effectiveness with these resourcesis better left to the new generation of industrial engineers who are well trained and exposed to using various tools and methodologies to achieve the objectives. With an engineering background, they are equipped to not only handle process flow & resource model, but also develop various tools & equipments or modify existing ones for making processes and activities more effective &

May 2015 LOGISTICS TIMES

result-oriented.

Box to go with Sethi’ peace The same is true when nibbling away at reducing lead time. A value stream map identifies opportunities through the build up of work in process which exists between operations in a process. But remember that chocolate elephants are not completely eaten, but to be nibbled at.

Or put it differently, the work in process should not be reduced to zero. The plan is to make it ‘lean’, not ‘anorexic’. Got it?

BANG BANG

It’s old school thinking, Harry!

E

very company which has not innovated or adapted while being on peak is bound to fail over a period. Look at companies like IBM, Microsoft, Nokia - were are leading in their space for long time.

But see how Apple came and captured the market - this is true for Apple too - if they don’t keep on innovating. The other consideration is the environment - today’s Internet reach and capacity has increased multi folds.

This gives the convenience for the customers to buy online - unlike few years back - where people tried e-com but failed - as they were too early. Today’s customers want range/variety, best price and convenient delivery models - this is provided by ecom today.

With technology enhancement - it has made it easier to go to market - using cloud, mobile, data analytics and open source communities. IT guys have solved most of the supply chain challenges and are still solving by coming up with new business models.

The traditional logistics companies failed to realise this - and are now trying to get into ecom along with delivery - like DHL. The overall e-com penetration is still around 15-25% - there is huge scope for business growth. In this, everybody will

May 2015 LOGISTICS TIMES

get their share - even the small kirana stores to big hyper malls will benefit by e-com - through marketplace model.

I don’t agree there is 35% returns - i have worked with Tesco for 5 years - the returns are just below 5% and nobody bothers to handle it - as they have more opportunity on demand side to scale.

But it will hit saturation over years - with guys who have mastered this art will remain - others will merge.

- Name withheld at the request of author

CORRECTION We had stated that ICD Tughlakabad is choc-a-block and there was no mention of any congestion in “Associated container” (this also is not the name of any ICD) . Therefore, you are requested to issue the necessary corrigendum and advice.

Deepak Kanuga VP-Sales & Marketing, Hind Terminals

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QUICK CHAT Vivek Arya

Vivek Arya, MD, Rhenus Logistics India

Customer is demanding better handling of sophisticated equipments

The Indian arm of the German world leader Rhenus Logistics recently introduced its renowned Hi-Tech logistics in India. The services include an integrated offering to manage transportation of sophisticated machines like ATMs, computer servers, data centers, medical diagnostic machines such as the CT Scans, MRI Scanners, X-Ray Machines, etc. The launch comes immediately after the teaming up of India and Germany during the Hannover Fair and the visit of Prime Minister Narendra Modi to Germany. In a conversation with Ritwik Sinha, the MD of Rhenus Logistics India Vivek Arya explains the key highlights of the new service. Edited excerpts: 28

May 2015 LOGISTICS TIMES

Let me begin with a very basic question: how would you define your Hi-tech logistics solutions?

What are its key attributes?

Hi Tech Logistics Solutions include an integrated offering to manage transportation of sophisticated machines like ATMs, computer servers, medical diagnostic machines such as the CT Scans, MRI Scanners, X-Ray Machines, etc. The new service from Rhenus Logistics offer end-to-end solutions and include suitable packaging, transportation from seller’s factory to the nearest port, shipping into India, upto the installation and training in the buyers premises. Since most of such products are imported, the Hi-Tech logistics is addressing a huge gap in the specialised transportation and delivery.

This level of integration is being offered for the first time in India.

The key difference is that our people know the product and how they need to be handled and moved.

Is it only targeted for financial and medical services or the scope goes much beyond those sectors?

The banking sector and the medical sectors are the ones customers immediately benefit from our services. Our scope of service also extends in telecom sector, automated vending machines, gaming machines and also in office environment such as copy machines or even large digital signage boards.

Rhenus Logistics is giving prominence to healthcare sector and plans to extend its services for banking, retail, fitness & wellness, IT and data storage industry.

You are also claiming to help in the final installation of these machines. For this, have you created your own pool of specialized manpower?

Yes, the business we are in needs trained staff. So we use own staff which is trained by ourselves or if and where required together with our customers.

Rhenus Logistics India has been training technicians since past two years to help them become certified engineers,

Rhenus Logistics, an integrated Logistics Company which has an annual turnover of Euro 4 billion globally. In India, Rhenus is a Joint Venture with the “Arya” Family which has been in the business of Domestic Transport & logistics services for over six decades. especially for their medical customers.

In how many other Asian countries you are offering these solutions? And what has been the experience?

We offer these services where they are mostly needed and customers see the benefit of a service also meeting compliance regulations. We have experience in Singapore, in Hong Kong, and also in Macau.

If I talk of sheer timing in terms of introduction of this solution, has it been triggered by your belief that a new high-growth curve is shaping in India?

Yes definitely, the market in India is growing rapidly and the customer is demanding better handling of such equipment. With the government’s vision expressed through ‘national health assurance mission’, we expect the demand to increase exponentially from across the country.

India runs a huge investment programme to modernize existing infrastructure. We are very optimistic by the way India is trying to address her logistics challenges by focusing on infrastructure. For a logistics player to succeed here, you need a perfect blend of global expertise and local knowledge.

How would you explain your

May 2015 LOGISTICS TIMES

overall Indian profile in terms of services, solutions and also the scale which you attained in India?

Rhenus Logistics, an integrated Logistics Company which has an annual turnover of Euro 4 billion globally. In India, Rhenus is a Joint Venture with the “Arya” Family which has been in the business of Domestic Transport & logistics services for over six decades.

Rhenus India is an ISO 9001:2008 certified company and is active in all modes of transport which is road, rail, air and ocean.

They also provide Customs Brokerage, Project Logistics & Warehousing Services to their customers through both dedicated and shared facilities. Their services cover the entire process chain; from procurement of raw materials to distribution of finished products. They also provide in-plant services by helping their customers outsource some of their internal processes.

Currently Rhenus Group in India employs more than 1000 employees across 50 locations in the country and are growing over 50% year on year. With professionally qualified employees across verticals, Rhenus India provides logistics solutions for a large variety of shipments encompassing almost all industry segments including chemicals, petrochemicals, automotive, pharmaceuticals and electronic goods to name a few.

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REPORT DHL

Going Direct:Bold Strategy For Healthcare Supply Chains DHL Supply Chain has recently released a comprehensive report on the new distribution dynamics of pharma products. The report which has authored by Lisa Harrington, Senior Research Fellow of the Supply Chain Management Center at the Robert H. Smith School of Business, University of Maryland, explores the concept of the integrated D2M channel strategy and why it represents a strategic opportunity for healthcare manufacturers for certain products and in specific situations. It also looks at what is driving manufacturers to consider a direct solution, provides advice on evaluating where and when such a strategy makes sense and presents a case study example of D2M at work. Excerpts from the report: 30

May 2015 LOGISTICS TIMES

P

roducers of pharmaceutical products and medical devices have long tied their success to the development of innovative products. Now they are under pressure to apply the same bold approach to moving their products to market. While known for pioneering drug development and advanced technology, the life sciences and healthcare industry remains remarkably tradition-bound when it comes to getting product into the hands of its customers, be they hospitals, pharmacies or consumers.

Healthcare manufacturers still rely, in large part, on a distribution model that has not changed in decades – despite the fact that the state of the art in supply chain management has evolved radically.

The traditional go-to-market model for healthcare manufacturers has relied primarily on a wholesaler model in which the manufacturer hands over ownership and control of its product to a tier of intermediaries. This system has enabled companies to concentrate on research and development (R&D), manufacturing and marketing. While it has worked well, it may not be the best model for manufacturers in the future.

Why? Because a host of new market forces is converging to change the business paradigm for manufacturers. The cost of drug development is soaring, causing margins to shrink at an alarming rate. The expiration of patent protection for certain lucrative drugs, with the resulting flood of generics, presents yet another challenge.

At the same time, a rise in the number of large-scale mergers is putting pressure on surviving manufacturers, which are also facing the growing market power of wholesalers and pharmacies.

To future-proof their businesses, healthcare manufacturers are beginning to distribute direct to the customer in targeted markets and for certain product

types. In these specific instances, the manufacturer assumes full, direct control of distribution to the customer in a directto-market (D2M) channel, bypassing the traditional hand-off to an intermediate wholesaler.

A D2M strategy represents a bold departure from the status quo healthcare product distribution model. For certain products, it offers potentially powerful benefits, including improved margins, visibility into actual sales, consumption and usage, and direct control of the orderto-cash cycle.

MARKET DYNAMICS AND DRIVING TRENDS The healthcare manufacturing industry is under siege, buffeted by a set of market dynamics not previously encountered. C

OST PRESSURES AND RISING FINANCIAL RISK Pharmaceutical manufacturers now face a mounting array of cost and financial risk pressures in the new day-to-day of global business. The first – cost pressure – stems from the fact that the universally rising cost of healthcare is prompting payers (governments, insurers and consumers) to play a larger role in the purchasing equation.

“Payers’ collective buying clout – and hence their ability to demand cost reductions – is formidable and growing,” notes Michael Bebbington, Vice President, Global Product Development, Life Sciences and Healthcare, DHL Supply Chain. “They are all focused on one thing – paying less.”

This is particularly true in light of the fact that the cost for many of today’s new drugs has skyrocketed as pharma companies shift their product portfolios away from a primary reliance on small molecule/chemical pharmaceuticals towards more structurally complex biotechnology drugs. A single treatment cost of $1,000 per dose is not uncommon; and annual per-patient treatment costs can reach $100,000.

Spending on these new biotechnology drugs is growing dramatically worldwide.

In the United States, for example,

expenditure on these new specialty drugs is expected to quadruple between now and 2020.

WHOLESALER, MANUFACTURER AND PHARMACY CONSOLIDATION The past five years have witnessed global and regional consolidation among wholesalers, healthcare manufacturers and pharmacies, with companies around the world engaging in large-scale takeovers.

On the pharmacy side, for example, the merger of Walgreens and Alliance Boots in 2014 gave the global pharmacy giant a presence in more than 25 countries. The new company, Walgreens Boots Alliance Inc., also purchased an equity position in U.S. wholesaler AmerisourceBergen. As a result, the company is now the world’s largest purchaser of prescription drugs, giving it tremendous buying power and the clout to pressure manufacturers to reduce prices. This runs in parallel with the trend of payer pressure for lower costs.

Manufacturers have also escalated their merger and acquisition (M&A) activity, particularly in the area of large global pharma companies buying up smaller biotech and biologics firms. In 2014, for example, deals worth $200 billion were announced. While some of the M&A activity was driven by tax conversion

May 2015 LOGISTICS TIMES

opportunities, the longer-term strategy behind this activity focused on acquiring – versus organically developing – an upand-coming product pipeline.

NEW TRACK AND TRACE REGULATIONS Counterfeiting, particularly in emerging markets, poses another threat to healthcare manufacturers. The World Health Organization estimates that one in every 10 drug products in poorer nations is counterfeit. The problem is rife, due to the number of points in the traditional wholesalerbased supply chain where counterfeits can be introduced.

Many countries are passing new governmental regulations requiring manufacturers and their supply chain partners to track products throughout the supply chain, starting from the manufacturing plant To counter this growing concern, many countries are passing new governmental regulations requiring manufacturers and their supply chain partners to track products throughout the supply chain, starting from the manufacturing plant and ending with final consumption.

Although these regulations help protect the end consumer, they are adding costs and complexities to all those involved in the pharma supply chain.

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REPORT DHL D2M – A STRATEGY FOR CHANGING TIMES The market dynamics are having a direct impact on the performance of medical manufacturers. In order to combat the mounting pressures, manufacturers are looking at different opportunities to reduce costs and improve margins. These include:

Streamlining the supply chain As payer mergers and consolidations continue to place downward pressure on pricing strategies, manufacturers are looking at ways to streamline their supply chain by reducing the number of intermediaries.

Gaining ownership of the customer relationship With the increasing negative effect of the patent cliff, manufacturers want to increase their connection with end customers to help influence sales, increase product loyalty, and importantly, improve patient adherence to correct product usage.

Obtaining direct access to sales data and market intelligence Manufacturers are often left in the dark as to actual sales, forcing them to rely on purchased third-party aggregate sales data for their marketing intelligence. This lack of visibility makes it very difficult to make the correct commercial and supply chain decisions

Improving security and product protection With the increasing costs of new drugs, the impact of theft and counterfeiting can be detrimental to a manufacturer.

By reducing the number of handlings and touchpoints, it becomes easier to secure the supply chain and provide greater visibility into the chain of custody.

Controlling the e-commerce sales channel To prevent the introduction of fraud and counterfeiting, manufacturers are

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looking to establish a direct relationship with patients. This helps build product loyalty and monitor patient adherence and outcomes. It also reduces the chance they will turn to unauthorized websites for their drug and healthcare needs.

To take advantage of these opportunities, healthcare manufacturers have begun to implement a new supply chain strategy, direct to market distribution, which allows them to capitalize on improving margins, streamlining the supply chain and solidifying relationships with their end customers. More specifically, manufacturers are considering two versions of direct distribution: Direct to market (D2M), serving pharmacies, healthcare institutions and other providers Direct to patient (D2P), covering both home care and e-commerce channels.

“Revenue from the sale of a pharmaceutical product typically has to be divided between a manufacturer, a distributor, a pharmacy and a jurisdiction (in the form of taxes and discounts),” notes Accenture in a recent healthcare industry report. “Selfevidently, to stay profitable… companies need to retain as much as possible of the sales prices.” One way to achieve this

May 2015 LOGISTICS TIMES

objective is to bypass wholesalers and serve customers directly. Some of the world’s largest drug companies, including AstraZeneca, GlaxoSmithKline, Novartis and Pfizer, have switched some of their drugs to direct channels in certain markets. However, the practice is still in the early stages of adoption according to a 2015 benchmarking study by Worldwide Business Research (WBR). For instance, nearly 70 percent of respondents in the study do not currently have any directto-patient channels in place. However, due to the increasing market pressures, a growing number of manufacturers are actively considering the issue (Figure 2).

Advances in information systems and logistics make a D2M business model easier to implement today than even five years ago. As a report from the Organization for Economic Co-operation and Development explains, “Full-line wholesalers have traditionally played a fundamental role in offering retail pharmacies the option of working with a few providers instead of a myriad of manufacturers, thus reducing their administrative burden and operating costs. However, having multiple providers has become less burdensome for pharmacies with advancements in IT and logistics.”There

is no doubt that there is room in the supply chain for both direct and distributor channels, but the challenge is knowing which one will provide the optimal solution.

WHEN AND WHERE TO DEPLOY D2M “There is no question that going direct is a big strategic decision for a healthcare manufacturer,” acknowledges Michael Terhoeven, Vice President Strategy and Development for Life Sciences and Healthcare, DHL Customer Solutions & Innovation. “But the time is right for considering it. 30 percent of the price for an innovative product is generated after the product leaves the manufacturing plant. As downward pressure on pricing increases worldwide, manufacturers are realizing they could capture greater margins if they take control of what happens to their product after it leaves the production plant.”

The key question for companies, though, is in which markets and for which customers they should consider a direct channel strategy.

Also, should they adopt a full direct model or a blended one, in which wholesalers continue to play a modified but still important role? Answering these questions requires the consideration of many variables, and is situation-specific, Terhoeven notes.

However, there are four key areas to consider when evaluating the options.

Will greater connectivity with the end customer or pharmacist help influence sales?

For example, when a drug migrates from patent to generic the risk of lost sales increases as markets and customers have lower cost alternatives. By going direct, the original manufacturer can help to preserve and manage its brand equity through a direct relationship with pharmacists and customers.

This helps build brand loyalty and mitigate the inevitable loss of sales revenues.

What is the value and margin of product?

Distributors trade on the value of the product, taking a percentage of the value as their fee for services. Thus, with the significantly higher value of specialty products, like oncology or orphan drugs,

distributors gain a significant share of the products’ bottom line contribution.

By going direct, manufacturers are able to recapture these margin points. In addition, since these products are typically administered at a smaller number of select hospitals, manufacturers can more easily manage the administering relationships and ensure product is used in a manner that assures adherence to protocol and produces the optimal patient outcome.

A manufacturer may capture increased value by going direct to tier 1 hospital customers that provide the largest revenue streams to the manufacturer. “As a manufacturer,” explains Terhoeven, “I’d want to eliminate the intermediary in these customer relationships, so I capture a greater percentage of total revenues. For tier 2 and 3 hospitals, I may still leave that business with the wholesalers.”

Is there an already established supply chain, or is this a new product or a new market with no established supply chain?

When new products are brought to market, either through the over-thecounter (OTC) or prescription channels, manufacturers have the opportunity to choose the best distribution channel for

May 2015 LOGISTICS TIMES

maximizing profit and serving customers – to create the optimal channel from scratch rather than be tied to an existing channel strategy designed for existing products.

In many emerging markets, there is no strong, established distribution network.

Going direct may be the best way to market in these growing economies.

How important is security to product distribution?

With the cost of new drugs skyrocketing, and as new track-and-trace regulations take effect around the world, it becomes essential for manufacturers and their supply chain partners to be able to trace product from point of manufacturing to point of consumption. A direct channel helps streamline the distribution path, thereby reducing the number of handoffs in the channel and providing the level of visibility required by the new regulations With the increase of e-commerce sales, taking greater control of this distribution channel helps in fighting against the introduction of counterfeit product into the supply chain by ensuring a secure, verified and tracked product flow from manufacturer to consumer.

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INTERVIEW Charles Devlin D’Costa

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May 2015 LOGISTICS TIMES

CHARLES, Who? May 2015 LOGISTICS TIMES

35

INTERVIEW Charles Devlin D’Costa

‘Hi, I am Charles .... Charles Devlin D’Costa,’ said the man with a tied pony tail at the spacious front hall of Radisson Blu, Mahipalpur, New Delhi on an April post-lunch time.

With a leather laptog bag – made of crocodile hide? – lying by his side.

He stood up. Must be six feet. Not too dark. Not too white. Wheatish complexion? hmmm. Fuggedit. How does it matter? Am I here to judge a fashion parade? Or to probe his grey cells on his accomplishments in logistics and supply chain sphere?

I told to myself: “shut up” and added, “Focus, buddy, on the work at hand!”

We quietly moved into the almost empty coffee area and found a quiet corner - more to avoid noisy disruptions in neighbouring sofas so that the recording of our conversation would be smooth.

“I’m Charles .... Charles Devlin D’Costa!” It’s him again.

The first name Charles instantly brought back memories of my childhood Dharmendra of Hollywood .... Charles Bronson... the gutsy action hero of 1970s and 1980s.

Or the Mumbai based but 36

internationally renowned architect Charles Correa ... It is altogether a different matter that his prowess did not impress me, but always felt that he made ugly buildings!

Or the globally notorious criminal ....

Charles Sobhraj, whom the Mumbai police trapped in Goa and put him behind bar for his globa and Indian shenanigans once for all in early 1980s.

Strangely, Prince Charles never figured in my mind screen.

“How come?” asks the hippie-looking person seated hardly a feet away from me in flesh-and-blood.

Dunno, I muttered.

Suddenly recollected the French President Charles De Gaulle and shared that valuable input with my guest - or host am yet to decipher.

(Who pays the final check before exiting the hotel will decide this puzzle!)

“Oh, you remember the criminal quickly but not the Prez!” he uttered with genuine mirth at my inability to recall the French Prez.

I was a bit confused about his appearance. Why, you ask? His profile on Whatsapp depicted him

May 2015 LOGISTICS TIMES

like a Rockstar. In fact, I told my photographer colleague, “Put a guitar in his arms and he would be a perfect one: like Ranbir Kapoor”.

What I see here: no wavy hair. No guitar. a docile guy - as if waiting in the reception before being called inside for the final interview by the gang of you-know-what who will decide your fate.

Yes, a bit disappointed. I tell him that.

He laughs.

“I love music. .... I play the guitar.”

Wow. I was spot on. My pre-meet image of his was 100% correct.

“So, why don’t you unbundle your pony and permit it dance?” I coax him.

He laughs again.

Come on, I goad him.

“I can’t. I am meeting you in my professional capacity – not as bass guitarist!”

This disciplined pony-tailed professional of Goan stock, but born and brought up in Kolkota with an English degree to the boot, took to logistics right from the word go. Yes, he is a campus-recruit. By whom?

What are his likes and dislikes? What objective in life is? Nearing 44th birthday in a few months’ time, this fish-and-football crazy Goancum-Kolkotan opens up to share his journey non-stop over the next couple of hours.

What did he tell me? Curious, no?

Check out below...

Ramesh Kumar: What’s your birth date?

Charles D’Costa: Today is 22 April. Had it been the 22 September, I would have asked you to buy me a cake. This was in 1972, in Kolkata.

in Calcutta and I colleged out of St. Xavier’sCollege.

How did you – a Goan – land up in Bengal?

The story goes like my lineage was actually from Goa. That’s the reason I have the D’Costa surname. Since I was from Goa and my grandparents are settled in Calcutta and my parents were born and brought up there, I too was born & schooled in Calcutta. I have spent most of my academic years and part of my professional life in Calcutta. I schooled out of St. Thomas Boys High School

Another big name in the making?

Hopefully, yes of course. Life has been good so far and I have been enjoying every step of it. Incidentally St. Xavier’s College has also been the place that I keep going back to because the Alumni is very strong and at the same time there is a good connect because people out of St. Xavier’s in Calcutta are spread all over the world today and that help me connect with the variety of people who are there and have grown into whatever they are

Like Ashok Gupta of Chairman of IRC India?

Yeah. All the big names....

May 2015 LOGISTICS TIMES

doing today.

You and your transportation connect?

I look back very fondly at my childhood more importantly because of transportation. The faintest memory that I can have of transportation was as far as I was five years old when my grandfather gave me a collection of books: there were 3 books and these were these hard paged books that you would give a child so that they do not get destroyed. There were these beautiful colorful pictures of airplanes, trucks and ships. By the way, I was not fond of guns, but more into toys that had wheels. I would turn them upside down, try to repair them, break them up, put them out together. It was always

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INTERVIEW Charles Devlin D’Costa

wheels for me.

Well, perhaps that might have been the transportation connect you are talking about. That maybe helped (me) more in terms of knowing about transportation: different forms. How is it that the whole world turns because of transportation?

Childhood dreams or fascination is one thing. But how did you get into transportation as a career?

Before I could get my graduation results, there was an opportunity with DHL Express. Actually it was Airfreight Ltd in 1996 owned by Cyrus Gazdar. DHL was the foreign international brand that they were selling apart from the domestic business that they were doing. I got in as a Customer Services Executive in 1996 and my job was to book waybills and take customer enquiries. I learnt my ropes there at Camac Street office. Subsequently, I moved to handling backline customer services which was the communication desk with all overseas issues. I did manage key accounts and to a certain extent even the customer automation because I had a little bit of an advantage in terms of information technology. That’s when I realized that there was a very clear pathway of progress and probably I was enjoying what I was doing; getting immense satisfaction performing to the utmost which is the reason why people were trying me out for different things and it was progressively an upward movement.

I also got to be the team leader of customer services. Between 1996 to 2000, the first four years of my career, the problem was actually a “collective thinking” which was

38

in vogue which was not really matching what the management’s. There was a disconnect between management and the rest.

Also because of the transition process from AFL to DHL happening. There was insecurity and the challenge of opting for DHL or AFL. I got pulled into DHL Express. DHL also inherited the collective thinking process and the incumbent challenges with workers.

What was the AFL and DHL split in terms of workforce?

The crème de la crème went to DHL. People who were good and experts with international business opted for DHL. Others decided to stay with AFL. Both companies co-existed with separate offices, separate facilities, separate teams and separate management. The initial years post-split were tough.

Given the criticality of the situation, there was a leadership vacuum and that’s where I stood up to stake claim to lead. The worst sufferer was our clients. If Indian operations were moving in one direction, Calcutta moved differently. Transparency in relationship between management and workforce was the sore point. Once DHL management approved of my taking charge, the first thing that I did was actually meet people to find out who they are what they are about, how long have they been in this and what are their priorities.

I became a friend first and manager later. So I decided to shake everybody’s hand and tell them there is no partition, because what I have realized in my team

May 2015 LOGISTICS TIMES

that I was the only person who was non unionized and I had a 120 co workers who were unionized, so I am up against the sea.

For me I found friendliness in the union, I found people who could understand what I wanted, I found people who knew what I was all about. So the first thing that I actually did in Calcutta was to ask them to play a game of football.

Football diplomacy?

Yes, it was as simple as that. There are two things that really go well in Calcutta: football and fish - the same is for Goans.

I said, let’s play football and let’s eat fish.

So we went out on a Sunday. 106 out of 120 workers turned up for the football game! Here’s the catch. I had a whistle around the neck and they listened to me every time I blew it! They began to listen to me… We begin to play together and in office work also as a team. I never looked back after that.

You understand the criticality of people….

I have realized in operations we don’t have machinery. People are our machinery. If you keep your people happy, the organization will be happy.Customers will also be happy. Within a year after the football game, almost everyone was on board and in alignment with company policy.

As Service Centre Manager, I handled Calcutta and Guwahati, Bhuwaneshwar and Jamshedpur which were basically the satellite locations. It was around that time, AFL exited and Blue Dart entered as a service participant to DHL.

How long you were with DHL? Close to 12 years. During this period I was awarded the Chairman’s Award for Excellence in Performance in 1999: I received that award was because of the kind of grit that I had in terms of getting things done. DHL was responsible for cultivating me and making me whoever I am today and I am continuously indebted to DHL for that. I was awarded the Asia Pacific Employee of the year 2003-4 for my focus in people development and for the kind of transformation that had taken place and for having set examples.

I was also heavily into training and development.

You believe in God? I have always been lucky that wherever I have stayed the church was always a stone throw away from my house. Even today, I stay opposite a church in Delhi; when I was in Calcutta I grew up in a place called Kiderpur - again opposite the church and that’s where I schooled also, when I got married I moved to Park Circus, walking distance from the church.

Jesus wanted to have you in his arm’s length always...

(Laughs) What were your takeaways from DHL? The DHL way of doing things, I felt, made a big difference in the country. DHL is a very people centric organization and I had the good fortune of championing some of these initiatives.

What made you to exit DHL and go to Safexpress?

After 12 years, I realized that I perhaps know 250 countries across the world. I probably know the import and export laws of everything that was done what is it that I really don’t know. In 2008, I felt, enough of global exposure. Let me find what India is all about. That’s when I moved into Safexpress.

What was it moving from a professionally managed DHL to an owner-driven Safexpress? Was there any cultural shock?

Frankly speaking, there was a huge amount of admiration for Mr. Pawan Jain and I will give you my reasons for it.Most of the transportation companies that are there today are started small. For instance, if you take DHL it started off as a small little experienced initiative by three friends viz., Adrian Dalsey, Larry Hillbloom and Robert Lynn. They started transporting documents in cycles. It all depends on how the organization transforms itself and whether there is a willingness to transform. I did see that willingness in Safexpress.

What was your first interaction with Safexpress honchos like?

When I decided to exit DHL, I began pondering. My choices were clear. Either I move to the country level and do the same thing that I am going or move out of the country or move out of the company.

I decided to do something different: like I said India was what I wanted to do because I could clearly see the huge amount that

May 2015 LOGISTICS TIMES

was undone in India. If you look at DHL, it is very strategically doing business out of service participants but present in 12 locations. What’s it going to be like in a company which handles more than 250 locations and how complicated will it be? was my thought process.

You have a liking for complications….

Yes, I love complications. I love disorganized chaos, and it’s my forte to simplify it all..

What’s was it like shaking hands with Safexpress Chairman for the first time?

I flew down from Calcutta and interviewed by the HR head for a regional level role for eastern India. I told him that I was looking for something big and larger. Certainly, not a regional role. He understood the situation and arranged a one-on-one with the Chairman the same day. If my memory serves right, it was September 21. Must have spent a few hours in his company. I almost missed my flight back home and I drove back in his own chauffeur-driven car to the airport!

Was it “Goodbye, DHL!”, pack up for Safexpress quickly?

No. It did take some time because there were processes which I didn’t want to leave behind undone in DHL. I wanted to bring a proper closure so there were things that I was already committed to. Soon, Chairman’s son Rubal Jain flew down to Calcutta to share his vision and felt that our wave lengths were similar. Before

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INTERVIEW Charles Devlin D’Costa

leaving DHL, I met Malcolm Monteiro to convey my decision. Incidentally, like Mr. Pawan Jain, he also had a career stint in Calcutta. After a short family vacation, I came into Safexpress in January 2008.

So what was the brief given to you at Safexpress?

When I joined I found that they were doing a lot of things but a lot of people were also multi-tasking. What I wanted to do was to put things into perspective – that is, giving defined roles and responsibility.

As General Manager (Operations), I was given full freedom. “Go and meet our own people and understand them and India. When you are confident enough, participate and sort things out” was the personal advice from the Chairman.

It was a good experience. That is when I wrote KPIs for all. Until then, it probably existed but in an unwritten form. When I did that I found that there were a lot of strong people who came with a lot of traditional thinking and there were also a new crew that was there -very alert and quick to change. The seniors were a bit slow but I had to ensure that everyone was my team and everybody does what they are assigned to do. Yet, to bring speed to tasks I was going to drive we decided to hire people from MDI, Gurgaon. We also brought in people from ex-army men who would bring in a lot of standards, discipline, understanding, clarity, and a lot of “can do” spirit.

I found that may be 80 percent of the business was actually through eight locations in India: sort of G-8 and decided to place my people into these

40

G-8 locations so that they can efficiently manage the crew and loads that we required to spin out. , From this G-8, we strategically went on to add or annex eight more locations which were not very prominent in business but were very vital in terms of a strategic hub between 2-3 states; for example, Beraguda, Salem, Indore, Nagpur etc. for the sheer fact of them being shoulders for the entire sub continent.

Then I brought in people from business schools in the first year itself. I took them under my wings and personally groomed them as “managers of tomorrow”.

However, the difference was that people from business schools did not have the grassroot experience. To compensate that lack of experience, these MBAs were asked to know their roots: told them to throw off their MBA hats and start loading vehicles for three months, and handle documents for another three months..

Did they appreciate that?

Of course, they were shocked but surprised too. There was a huge excitement because they are going to know their own country: a lot of travel. A bunch of them are doing fabulously today across India. Am really proud of them.

How much of DHL experience came in handy at SafExpress?

A lot. DHL has been a very peopleoriented company and have ensured that people are trained in soft skills regularly.

The only difference is there are people who would apply and some people would probably take a training as a training.

May 2015 LOGISTICS TIMES

Nothing more. I have always applied whatever I have learnt and that’s really is responsible for me doing the things that I have been doing today.

At DHL, they would also recruit MBAs who would grow into roles in the company.

Can I do it here? There was a lot of young blood infusion and the whole atmosphere began to change. But, there were some hitches. Some of the seniors were feeling insecure and uncertain about their roles and future. One question they had was: Who is this Charles? Kaunsa kamal ka phool hai ye? When that happened, I could see it in people’s faces. I decided to interact and make them participate.

Fifteen hardcore people from across the country were picked up, brought them to Delhi and told them, “You’re my Lead India team and I have got three jobs for you: audit, train and crisis-management.

Pick anything you want.”

Those who felt left out got an opportunity and through that I started driving change.

They were the best. Experience taught them everything under the sun: none can teach others the nuances and intricacies like them. When it comes to audit, who would know better about the crookedest way by which things could get done or undone; crisis-management is something like second nature to them. Seniors taken care of and the new MBAs too. What about those in the middle with no seniority or no MBA? We started a fast track program that benefitted this segment a great deal.

A structured grooming policy…

My first initiative in terms of operational performance is managing and mentoring.

Safexpress is a distribution company.

However, KPIs and processes were not very clear. On a visit to a hub near Delhi, a manager was very proud his warehouse filled with consignments of very reputed brands. My first question to him: why are they lying here? Are they not supposed to be moving out quickly? As a countrywide campaign, we set the goal of Let’s Get Freedom by August 15, 2008. Empty our floors. Then our focus shifted to creating an agile network – well connected but time-defined. Can we start demanding performance out of our associates? Can we create indices that we can be measured and monitored? Can we start making sure that our customer expectations are matched? It was sort of revolution those days. Since I had an excellent team that listened and sweared by me, it was a wonderful experience and exposure to all of us.

You were lucky to get such people…

It was hard work. I came from a training and development background. My meetings with managers were actually a training-cum-meeting because everybody was needed to be made aware. I used to speak to my team the whole day, calling batches after batches. Travel to meet people right down to the last man. I met almost everyone of them that worked with me at Safexpress. During those 15=20 minute one to one interactions, trying to know what they are about and lovingly guide them. I think that’s what made me connect with people and help me get things done very fast.

There was also this huge need to take the infrastructure to the next level. Our first ever logistics park was opened in 2009.

We did a lot of modernization.

What were your learning in Safexpress?

If you look at it in terms of work, I would say everybody has the ability. They lack guidance today and nobody has got the time to guide everyone. So why not create people who can guide people. There is also another angle with regard to drivers.

We started respecting drivers first. He is very important and he comes to us with three priorities: my vehicle should be unloaded, I should have a load to leave, and I should get my money quickly.

Nothing else matters to him. He takes the trouble of crossing and all the sweat and blood, facing all the tragedies on the route to come and deliver that cargo to you. You cannot say that you don’t know him and be disrespectful. You should not say, “just stand in that corner and when I have time I will attend to you”. You have to respect them.

of course the difficulty in training, b) the monotony of the job.

During one of my interactions with Rubal Jain, I said since we have the facility why not create a hub which is manned by trainees - not by people who are employees but people who want to come and learn and there are people who want to learn. There is enough unemployment in India. Why don’t we start becoming more social to the cause and get people in and teach them for free? We debated.

The top management unhesitatingly sanctioned the creation of Indore as a Logistics park that will be managed by trainees. That’s how Safeducate came up.

We started working with Safe Educate in creating line training programs for operations: how to load a truck, how to check documents etc. We started training and certifying our own people. Over a period of time those certificates started having value it was an assured pathway to success: you gather seven certificates and you can be a manager. People started saying that I want to train, I want to do, I want to get into this project and I want to see my career grow. So that’s how Safeducate and Safexpress took up and fortunately I have been closely associated with all trainers in Safe Educate as well the training programs.

What about human resources talent crunch?

Yes, you’re right. There is a huge dearth of skilled people in this industry. It would be very difficult to get a new person to replace an experienced hand because a)

One rarely comes across someone as passionate about training in this ‘unsexy’ business of logistics like you. You will be an asset wherever you go. Thanks, Charles!

Thanks, Ramesh!

Unheard of such things in Safexpress before your advent?

Absolutely… Between 2009 and January this year, in seven years 22 logistics parks were created.

May 2015 LOGISTICS TIMES

41

PERSPECTIVE TRANSPORTATION

How China is trucking into the age of gas Alternative fuels are key to improving the security of energy supply, reducing the impact of transport on the environment and boosting EU competitiveness

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iquefied natural gas (LNG) carries the potential to displace diesel as cheaper and cleaner fuel for trucks and buses. With IFC’s help, China is leading the transportation sector into the Age of Gas. China’s rapid economic rise has come at a cost: pollution. As the world’s largest emitter of carbon dioxide — as well as air pollutants such as sulphur dioxide and nitrogen oxide — China has made transitioning to renewables and natural gas a key priority in achieving a more sustainable economy.

With challenge comes opportunity, and China has shown some leadership in moving toward a low-carbon future, becoming the world’s top renewables producer and clean energy investor. When it comes to the transportation sector, which accounts for more than 40 percent of China’s oil consumption, the country is also pioneering the development of a natural gas-powered trucking and busing system.

With cost and technology considerations putting renewable energy-powered transportation out of reach in the near

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term, natural gas represents a significant improvement over diesel fuel — emitting 30 percent less greenhouse gas and 95 percent less PM2.5 pollution, the small particles considered the greatest risk to health. It’s also cheaper, saving Chinese drivers between 30 percent and 40 percent on fuel.

“We see natural gas as an important transitional fuel away from oil-based fossil fuels, because natural gas is both cleaner and cheaper,” says Michael Lin Sheng, who leads the Asia oil and gas team for International Finance Corporation (IFC), a member of the World Bank Group that works with the private sector to support global development. “However, one of the challenges of expanding access to natural gas as a transport fuel has historically been the need for associated infrastructure, including pipeline networks.”

One solution that China, Europe, the U.S. and other countries are turning their attention to is liquefied natural gas (LNG), a liquid form of natural gas that is more cost efficient to transport over long distances through cryogenic vessels or road tankers to markets where pipelines do not exist. With increased fungibility and the independence from pipelines, natural gas (in the form of LNG) has become a viable, cleaner and competitive transport fuel to replace diesel, particularly in the heavy-duty trucking and long-haul busing sector.

Yet developing an LNG-based transport

May 2015 LOGISTICS TIMES

fuel market carries its own challenges, especially in building a network of fuelling stations to ensure the supply of LNG, when most of the trucks and buses on the road are powered by diesel or gasoline engines.

It’s a classic “chicken and egg” dilemma — the transport industry doesn’t want to convert to LNG without a secure and accessible supply, while the energy sector is hesitant to invest in infrastructure like fueling stations without clear demand, says Sheng.

That’s where the IFC comes in, providing financing and expertise to ease some of the first-mover risk of developing China’s LNG transport system. In 2013, the development institution provided a $150 million in financing to ENN Energy Holdings Limited., a leading gas distributor in China, to help develop an LNG fuelling network to provide LNG as a transport fuel to replace diesel along China’s major highways.

“IFC is here to support private sector companies to try to break the chicken-andegg cycle,” says Sheng. “Our investment was meant to encourage private-sector players, like ENN, to take the first mover advantage in the LNG refuelling sector, which we hope would eventually stimulate a broad conversion (from diesel) to natural gas. This will bring huge social and environment benefit to China.”

Through the investment, IFC is also demonstrating to the rest of the world the

potential of bringing the transportation sector into the Age of Gas, to capitalize on the benefits of cleaner and less expensive fuel options. Global gas demand, which currently amounts to about 70 percent of the oil market, could grow to match or even surpass the market share of oil and coal as the world’s primary source of energy by 2025.

The global market for natural gas vehicles is small but growing, expanding at an annual rate of 15 percent since 2008 to reach about 16 million — about 1 percent of the world’s automotive fleet — though only a million of those are buses and heavy-duty vehicles, which are more likely to be fueled by LNG. Cars and light-duty trucks are typically powered by compressed natural gas (CNG), a less dense fuel better suited for light vehicles in urban settings.

From an environmental perspective, the world’s natural gas vehicles are already displacing about 1.5 million barrels a day of oil that would have been used for gasoline or diesel, according to Morgan Stanley. That number could double — or even grow by another 5.6 million barrels a day, equivalent to China’s oil imports — by 2021, depending on whether there’s sufficient infrastructure and capital in place to achieve economies of scale.

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That’s what IFC is seeking to achieve in China, a country that has emerged as leader in utilizing LNG as a transport fuel — with more than 100,000 LNG powered vehicles on the road in 2014.

“China started late, but is catching up very quickly and passing the rest of the world in making LNG available as a transport fuel,” says Sheng.

The number of LNG fuelling stations are also expanding rapidly. At the end of 2012, China already had more than 700 stations, while the U.S. and Europe had less than 50 each. By the end of this year, China’s LNG fuelling network is expected to expand to 3,500 stations, from less than 2,000 in 2014, while LNG usage as transport fuel is forecast to grow by 30 to 40 percent a year over the next five years,” says Sheng. “Globally, there’s nowhere that’s comparable to what’s happening in China.”

Indeed, ENN Energy is taking the firstmover advantage to expand internationally, building LNG fueling stations in the U.S. and Europe. Sheng expects that to enable a broad adoption of LNG as a major transport fuel, government support and regulations would be key.

Europe is moving aggressively to support the development of its own LNG transport infrastructure, recently adopting a set of rules that would build a core network

rom an environmental perspective, the world’s natural gas vehicles are already displacing about 1.5 million barrels a day of oil that would have been used for gasoline or diesel, according to Morgan Stanley.

That number could double — or even grow by another 5.6 million barrels a day, equivalent to China’s oil imports — by 2021, depending on whether there’s sufficient infrastructure and capital in place to achieve economies of scale.

by 2025 with fuelling stations every 400 kilometers. “Alternative fuels are key to improving the security of energy supply, reducing the impact of transport on the environment and boosting EU competitiveness,” Siim Kallas, the EU transport commissioner, said in announcing the rules. “With these new rules, the EU provides long-awaited legal certainty for companies to start investing, and the possibility for economies of scale.”

The U.S. has been slower to adapt, despite enjoying the benefits of a shale gas boom. With an initial investment of $100 million, a profitable LNG fuelling network could be launched along California’s high-volume I-5 trucking corridor to help kickstart infrastructure development, according to a recent study by the Institute of Transportation Studies at the University of California Davis and Rice University.

“The U.S. is probably the most ideal place to use gas to replace diesel, because gas is so cheap,” says Sheng. He expects the transition to LNG as transport fuel will pick up elsewhere around the world as policy makers start to recognize the environmental benefits.

“The age of natural gas is coming,” he says, “and more and more people are becoming aware of that.”

T

he number of LNG fuelling stations are also expanding rapidly. At the end of 2012, China already had more than 700 stations, while the U.S. and Europe hhad less than 50 each. By the end of this year, China’s LNG fuelling network is expected to expand to 3,500 stations, from less than 2,000 in 2014, while L LNG usage as transport fuel is forecast to grow by 30 to 40 percent a year over the next ne five years,” says Sheng. “Globally, there’s nowhere that’s comparable to what’s happening in China.”

❝❞

May 2015 LOGISTICS TIMES

43

TRANSPORTATION RAIL

Not all that bad, Mr Debroy!

F R.C.Acharya

Former Member Railway Board

reight is the bread winner for any Railway system and India is no exception. Over 8,000 trains carrying three million tonnes a day though constituting only one-third of total number of trains run daily, contributes a massive two-thirds of Indian Railways’ (IR) earnings.

Bibek Debroy committee in its ‘Interim’ report has found that Indian Railways has had a mixed bag of success in its attempt to involve private players in logistics business to help increase its market share vis-a-vis road sector. ‘Own your wagon’ scheme launched with much fan fare in1992 allowed private sector to procure wagons either through IR or directly from approved wagon builders, which they would then own, and lease to IR, for which it was paid an annual lease charge linked to the procurement cost.

Though the scheme was revised, recast as the Wagon Investment Scheme in 2005, and once again as Liberalized Wagon Investment Scheme in 2008 etc. response was poor as returns were not upto the expectations of the private sector.

A Special Freight Train Operator Scheme (SFTO) launched in July 2010 for commodities aimed at increasing the share of Railways in non-conventional traffic, such as bulk cement, bulk fertilizers, fly ash etc. require Special Purpose Wagons.

A year later relaxing several conditions to make it more investor-friendly, including increasing the rebate period to 20 years and reducing registration fees etc. has yet to get the private sector interested.

Unfortunately Debroy committee’s premise that it is due to a lack of trust

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May 2015 LOGISTICS TIMES

between the private sector and IR, which only an independent regulator could provide, is perhaps not well founded. For interestingly this very scheme in its earlier ‘avatar’ had been a resounding success involving two major players.

Over two decades back Associated Cement Company (ACC) invested in a fleet of 125 type BCCN bottom discharge wagons with a carrying capacity of 60 tonnes moving bulk cement 600 kms. from its manufacturing facility at Wadi

to Kalamboil near Mumbai saving on transport and handling costs on about 75 million tonnes every month.

Similarly NALCO, (National Aliminum

grains etc. with volumes large enough to give sustained return for at least a couple of decades if not more, to fully recover their investments costs, and much more!

Compay), a public sector giant, moved alumina in bulk from Dhamanjodi to its plant to Vishakapatnam port for export.

It also uses rakes of bottom discharge wagons (type BTAP) which it owns, and still continues to do so on a regular basis for last three decades.

Perhaps some of the major private players have yet to zero onto a linkage between two stations involving transport of bulk product such as cement, fertilisers, food

The Automobile Freight Train Operator Scheme (AFTO) was introduced in July 2010 to increase IR’s share of market in the transportation of automobiles (two/ three-wheelers, cars and tractors), which at 5% is a fraction of other Railways such as in United States where 70% of such movement is on special double decker wagons giving economies of scale.

Modified in March 2013 to make it more investor-friendly by adding more cargo

May 2015 LOGISTICS TIMES

such as spare parts, knocked down units of automobiles, car shells, apart from finished vehicles, opened the scheme to car makers and simplified the rate structure etc.

However understandably only major players with volumes such as Maruti Logistics and APL Vascor have made significant investments in the scheme so far, saving on transport costs and reaching their cars in factory fresh condition to their valued customers.

Under a new Special Parcel Train Operator Scheme (SPTO) introduced in November 2014, private operators would be able to apply to procure Parcel Vans and run special point to point parcel trains much like the Container trains.

Similarly Private Freight Terminals (PFTs) introduced in 2010 and later revised in 2012 is with the objective of providing efficient and cost effective logistics services with a warehousing solution to end-users.

This is a new business opportunity for investors to augment presence in the logistics chain and gain access to handling third party cargo for which already 35 proposals from 22 companies have been received by IR. However despite misgivings about the private sector getting a square deal in the absence of an independent regulator, perhaps the most successful initiative so far has been in the area of transport of Container where no less than17 operators have taken license, contributing to CONCOR’s growth, moving a record 3.1 million TEUs in 2014-15.

In the process the private operators who now own a fleet of 139 rakes of container flats as compared to CONCOR’s 295, have also increased their share of the business to a healthy 26 %, and prospered from the win-win partnership with Railways.

45

LOGISTICS & LITERATURE

What Joe “Toll Global Logistics” Mustan read recently?

As I move around the corner co rooms of CEOs/CXOs of logistics & supply chain – when permitted, that is – my roving eyes try to catch what is occupying his/ her ‘private’ space: books, bo paintings, sculptures or whatever. whatever By and large, books occupy good amount am of space.

Seldom I query wheth whether those tomes have been ‘handled’ or perform the decorative function. In one particular case, I found a CXO using one of the best books being us used as his ‘mouse pad’! I have no issu issues.

Having said that, I strongly feel books are import important. Why? We are all livi living in an ever changing world world. As we know, change is the only permanent thing in the entire universe.

Hence it is necessary n to keep abreast of developments – be it or organisational or operationa operational or financial changes.

So, at LOGISTICS TIMES we decided to catch up with the target group – you, of course, the rreader of this page! – and ask what is tha that you’re reading NO NOW .... beyond dai daily newspapers, m magazines and oonline stuff (including l e n g t h y emails!)?

Our first cat catch is Juzar ‘Joe’ Mustan, Coun Country Manager & Director, Toll Global Log Logistics India.

46

May 2015 LOGISTICS TIMES

What’s he upto? Check out...

Book/s I am Reading now 1) 2)

The Fatal Shore by Robert Hughes Strategic Storytelling by Dave McKinsey sey

Picked up @ 1) 2)

The Fatal Shore @ Airport Bookstall Strategic Storytelling @ Online

Favourite Reading Time Late Evening

Favourite Reading Place Easy Chair at Home

Book Theme (100 words)

The Fatal Shore is the story of Australia’s birth bi th more than th 200 years ago. Robert Huges’ narrative is both authentic and engrossing. He uncovers the truths behind English’and’s infamous convict transportation program and provides an honest account of the challenges and compromises made by the country’s founding population.

Do You SHARE your books afterwards?

Yes, selectively.

If YES, do you track to whom you have given?

YES/ NO Yes.

What One Book You Want to Read, but not yet Hi folks, what are you waiting for?

Send yours too with the pix of book you’re reading, of course.

No... no, not as Proof of Delivery! But to make it more authentic.

Whose turn is it next? Keep guessing?

By the way, if readers of this LOGISTICS & LITERATURE wish to DONATE books they have already read for circulation among LOGISTICS TIMES’ readers, please do it. RIGHT NOW.

Yes, we are sowing the seeds of LT BOOKISTAN! Gyan parivartan or knowledge sharing is the highest form of DHARMA. The Giver does not lose anything while sharing. Very unique.

Did we not say at some point of time that “We Are Different?”

— Ramesh Kumar Write to me at supplychaindia@gmail.com for more details or clarifications.

May 2015 LOGISTICS TIMES

47

EVENTS

Hactl scoops Air Cargo Handling Agent of the Year award

Hong Kong Air Cargo Terminals Limited (Hactl) – the largest independent cargo handler at the world’s largest cargo hub – has received the Air Cargo Handling Agent of the Year award at the 2015 Air Cargo Week World Air Cargo Awards.

The award was based on the online voting of Air Cargo Week readers around the world. It was presented to Hactl Chief Executive Mark Whitehead, at a glittering gala ceremony in front of an audience of over 500 senior representatives of the air cargo industry, by David Kerr, Vice President of Etihad Cargo.

The event, held at the famous Bayerischer Hof Hotel, in the heart of Munich Germany, coincided with this year’s Air Cargo Europe and transport logistic exhibitions.

Logistics Company of the year award for Spear One of the key Contract Logistics service providers in India, Spear Logistics was awarded the Logistics Company of the year award by the prestigious Indian Institute of Materials Management (IIMM) at an event held in Pune recently. The program is held every year to recognise and promote professional excellence in materials and Supply chain management felicitating industry leaders and outstanding performers in the supply chain and logistics space.

Pune based Spear Logistics today has a national presence with over 23 offices and managing 2.60 million sq.ft.of warehousing space.

48

May 2015 LOGISTICS TIMES

Larry Coyne honoured with Lifetime Achievement Award Larry Coyne, Chief Executive Officer (CEO) and founder of all-cargo carrier Coyne Airways, has been honoured with a Lifetime Achievement Award.

Coyne, who founded Coyne Airways 22 years ago, picked up the Cargo Airline of the Year award at a dinner in central London, UK, on Saturday, 25th April 2015.

“I could not have known when I set up Coyne Airways from a spare room at home that we would grow to be in the top 100 cargo carriers serving thousands of customers around the globe,” said Coyne.

Cologne To Host Tiaca’s Next Air Cargo Professional Development Workshop TIACA’s next Air Cargo Professional Development Workshop, aimed at growing management skills for air cargo professionals, will take place in Cologne, Germany from 22nd to 24th June 2015.

The Workshop Program, designed by Strategic Aviation Solutions International (SASI), will give participants an appreciation of the entire air cargo supply-chain and the component sectors by encouraging discussion and the sharing of perspectives, as well as providing practical advice and insight.

“TIACA’s Program has already helped some of our industry’s brightest young professionals in the Netherlands, Sweden, Germany, and across Europe, and more recently South Africa,” said Doug Brittin, Secretary General, TIACA.

May 2015 LOGISTICS TIMES

49

LAST PAGE

ABRACADABRA RAMESH KUMAR

EDITORIAL ADVISOR supplychaindia@gmail.com

Crazy & Cute!

Look at the photo above. Something strange you notice? I do. ... Take a second look at the logo of FedEx. Has the global freight forwarder gone in for an image makeover with its logo font change?

Very artistic, no doubt.

Brush stroke as against the original insignia.

Before you jump to conclusions that the

50

logo has changed, let me reassure you that it has not. Then what? This is the ‘handiwork’ of Sara Marshal (Inset), a NewZealand based student who is on a ‘lettering project’ that reimagines the logos of faceless corporate brands using ‘hand-lettering’. Well, FedEx is not the only one she reimagined.

we all know. Why so many microphones thrust into her face almost? A temporary celebrity, sort. She took UPS to court in the United States for refusing to reallocate her for light duties during her pregnancy. Wow! A glimpse of her case: In 2006 when she working working with UPS and got pregnant, on her doctor’s advice not to lift anything beyond 20 kgs, she requested the UPS management for light duty assignment. UPS refused to fulfil her wish. She took leave of absence, delivered

pursued the case and now the Supreme Court through a 3-6 verdict redirected the lower court for a possible trial.

her child and returned to work. Later she left and sued the US parcel giant. Earlier a lower court threw her petition out citing that UPS did not contravene provisions of Pregnancy Discrimination Act. But the peeved Peggy

recapture them, but failed miserably. Traffic was held up for several hours as vehicles piled up for 3 km on either direction. Truly, a sting op, honey!

Un-bee-lievable!

Near Seattle, the city that houses Boeing among other giants, a million bees caused a massive traffic jam due to an overturned truck during day time. What was the count? 440 hives, each hive containing nothing less than 20,000 bees. Take out your calculators, please! Foam and water were sprayed to keep these busybees down and

Several iconic ones including Coca-Cola, Subway, Samsung, Skype, Burger Kings etc. Want to taste the outcome of her crazy ideas? Google out!

Peeved Peggy vs UPS

Know who this lady is? She’s Peggy Young. Former driver – yes, driver! – with the world’s largest parcel mover United Parcel Services or UPS as

May 2015 LOGISTICS TIMES

See you soon. Bye!

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