SCMPr
n KNOWLEDGE n STRATEGY n BEST PRACTICE n TRENDS n human resource
Supply Chain Management Professional
July 2013
Vol. 1窶年o. 5 `150
An Agenda for Change Ports as an Economic Unit on its own, provides lifeline for trade in the country. Pg.14
In This Issue Academic Advocacy Modelling Supply Chain Dynamics Page...8
Column Competitive Strategy for Future Page...36
Feature Frontiers in Supply Chain Educatione Page...46
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editorial
Stalled Infrastructure W Girish V S Executive Editor
e are bringing out this issue in the back drop of a colossal tragedy. And as expected, the government was caught flat footed. The simple task of collecting material for relief from across the country and channelizing them to the affected people showed us how poor the state of our logistics sector is! Truck loads of goods were stuck at Dehradun and other collection points because the roads were washed away! Would it have been possible for helicopters which were returning empty to ferry these goods! We think so. Our hearts are with the people who suffered loss of life and property. As a part of the SCM industry, it is our collective responsibility to come up with a plan for ensuring regular supplies in the face of gravest of disaster. As Supply Chain professionals, we are taught to think of the risks in our supply chain and develop mitigation plans. Can we as an industry, come up with a plan for ensuring supply chain functioning in the face of national disasters? We believe so. Google map shows us every lane and by-lane in towns. Each one of us has some bit of information of the road connectivity across the country. Can we pool it and enhance the reach of Google Maps. This one step will help us plan alternate networks. The 12th Five year plan has an ambitious target of USD 1 Trillion investment in infrastructure. This should be seen in the backdrop of our achievement so far. Every major initiative – be it the road ways, the railways, ports, all of them are moving at a snail’s pace. More than the quantum, we need more effective implementation. That and transparency in the process. Unfortunately for us, this will degenerate into a get rich quick process by the politicians and the bureaucrats. Once again, we will have to rely on the judiciary to pull this chestnut out of the fire. In the meanwhile, let us all do our bit to take the Indian Supply Chain sector to global standards. Happy Reading
Executive Editor
SCMPr
July 2013
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Contents July 2013
06 Insight >> Parsing Holds Key to Better Sales & operations.
36 Academic Advocacy >> Modeling Supply Chain Dynamics: A Multiagent Approach.
36 As/RS Feature >> Intelligent Warehousing System: Latest Developments in the area of ASRS.
43 Column >> Brian Miles: Getting the best value from your cold store.
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Single Worldwide
S&OP Multiple Regional Source
Source Multiple Shared Sourcing
Dedicated Regional Source
46 education Special >> Frontiers in Supply Chain Education.
14 lead story
SCMPr Executive Publisher Jayaram Nair jayaram.nair@scmp.in EDITORIAL Executive Editor Girish V S girish.vs@scmp.in Consultant Editor Dr. Rakesh singh rakesh.singh@scmp.in CREATIVE & Production Head Shivasankaran Pillai shiva.pillai@scmp.in advertising Soney Mathew soney.mathew@scmp.in
Lead story on challenges and prospects for Indian ports and how crisis in shipping Industry effects the growth plan.
55 Human Resource >> Darryl Judd discusses the next generation of talent management practices for SCM Industry.
57 event report >> SCMPro - Pharma Supply Chain Summit: Unlocking the potential for Higher Growth.
Rashid Iqbal-Director rashid.iqbal@scmp.in Media Group 211/1, Sona Udyog, Parsi Panchayat Road, Andheri (East), Mumbai -400069 INDIA.
Printed and published by Jayaram Nair on behalf of B2B Media Group. Printed at SAP Print Solutions Pvt. Ltd, 28 Laxmi Ind. Estate, Lower Parel, Mumbai - 400 705, India and published at 211/1, Sona Udyog, Parshi Panchayat Rd., Andheri (E), Mumbai - 400069. No part of this publication may be reproduced or transmitted in any form or by any means including photocopying or scanning without the prior permission of the publishers. Such written permission must also be obtained from the publisher before any part of the publication is stored in a retrieval system of any nature. No liabilities can be accepted for inaccuracies of any description, although the publishers would be pleased to receive amendments for possible inclusion in future editions. Opinions reflected in the publication are those of the writers. The publisher assumes no responsibilities for return of unsolicited material or material lost or damaged in transit. All correspondence should be addressed to B2B Media Group. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only. ANNUAL SUBSCRIPTION RATE INDIA: `1,800/-
Academic Partner
SCMPr
July 2013
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insight
Single Worldwide Source
S&OP
Multiple Shared Sourcing
Multiple Regional Source
Dedicated Regional Source
Parsing Holds Key to Better S&OP
For many global companies, a single Sales & Operations Planning process across the enterprise is no longer optimum. What’s needed instead are multiple processes tailored to individual business units and regions.
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Dr. Lapide is a lecturer at the University of Massachusetts’ Boston Campus and is an MIT Research Affiliate. He welcomes comments on his columns at llapide@ mit.edu.
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rowth in globalization and consumerism has led to complex supply chains that support the sales of broader and shorter lifecycle products into more and more countries. At the same time, supply lines are longer as companies manufacture and source on an anywhere-in-the-world basis. These developments have rendered the use of a single Sales and Operations Planning (S&OP) process unwieldy and cumbersome. Thus, as with any complex task, the S&OP process often needs to be parsed in order to “divide-and-conquer.” But in doing so, there’s an important caveat: you need to carefully consolidate the individual plans to get an accurate global enterprise view. Research supports this view of S&OP. In 2006, a medical devices manufacturer asked MIT to research how S&OP processes could be effectively applied across its global business units (BUs). At the time the company was running two S&OP processes—one for each of its two BUs, which were focused on different products. It wanted to know whether two was best, whether one might be better, or should the S&OP processes be parsed even further. The research questions became the topic of a Master’s thesis by Christopher M. Honstain, titled Sales and Operations Planning in a Global Business. A number of practitioners and industry experts from consulting and software firms were interviewed. In addition, the research-
ers examined the S&OP practices of three specific companies: a consumer-product goods (CPG) company, a pharmaceutical company, and a petro-chemical company. The CPG Company had some best practices in global S&OP. It conducted over 90 monthly S&OP processes around the world and divided the process along BU, product group, and geographical dimensions. The company clustered business entities to best represent “pure” profit-and-loss (P&L) centers in which demand-supply planning decisions could be made assuming a unique set of supplying plants for each demand cluster. For each business unit there was a BUbased process owner. In addition, there was a corporate-wide process owner responsible for coordinating efforts, as well as providing rough process guidelines, self-assessment tools, and assistance in assessing the performance of each process. The finance organization consolidated and harmonized the S&OP plans to provide corporate executives with a consolidated enterprise-wide plan. Other research we conducted confirmed the need to parse S&OP processes, focusing on supply-demand characteristics. Demand characteristics include geography, channels, and product demand patterns; supply characteristics include sourcing, production, and distribution resources. The research also underscored the need to consolidate parsed plans in order to “harmonize” them whenever there is limited world-
insight wide supply, and to ensure they are aligned to meet corporate goals and objectives. (Harmonizing in this context involves making sure that plans are consistent, non-conflicting, and supportive.) The processes should follow a common set of rough guidelines and have a consistent set of process performance objectives. Otherwise, plans would not be “apples-to- apples”, making consolidation difficult or impossible. A problem uncovered during the research was the disconnect that often existed between marketing and finance organizations. This was manifested in the frequent misalignment of financial versus S&OP plans. To correct this, finance organizations need to get more involved in the processes, so that S&OP plans can be more precisely translated into financial terms.
Recommended Parsing Criteria
Within the supply chain, the characteristics of the manufacturing sites are the deciding factors for the number of S&OP processes.
A global S&OP process ought to be parsed into multiple processes so that each represents a pure P&L center (at least to the extent possible). Honstain in his thesis offers this observation: “Within the supply chain, the characteristics of the manufacturing sites are the deciding factors for the number of S&OP processes. The specific characteristics that are important are the number of plants within each region, whether the plant is dedicated to the region or it is shared between the regions, and whether or not the plant is centrally controlled or decentralized.” “Regions” are business units or marketing/sales territories, typically defined as North America, South America, EMEA (Europe, Middle East, and Africa), and Asia. Criteria on how to parse a global S&OP process vary depending on four supply-based scenarios: Single Worldwide Source: This is the simplest scenario in which one—and only one— plant supplies product on a global basis to all regions. Under this scenario, one S&OP process suffices and there is little reason to break it up. Multiple Regional Source: Under this scenario, multiple plants around the world supply product. However, only one plant is dedicated to supply product to each region. A plant may supply multiple regions, but no other plant serves them. Parsing the S&OP is recommended under this scenario. Each S&OP process would be defined to include
all regions that have common product supply. The demand forecasts for these regions would be consolidated, thereby establishing a pure P&L center for each S&OP process. Dedicated Regional Source: Under this scenario, multiple plants throughout the world supply product. However, each plant is dedicated to supply product to one and only one region; that is, plants do not supply multiple regions. Under this scenario, each region would conduct its own independent S&OP process as a pure P&L center. Multiple Shared Sourcing: This scenario is complex, yet it is the most prevalent. There are multiple plants throughout the world that supply product and each region can be served by one or more plants. This is the most complex scenario because supply is shared among regions. Centralized management is required to ensure that global enterprise goals and objectives are met when there is contention among regions for constrained product supply. Each region with a supply source should run its own S&OP process under this scenario. Regions that don’t have a supply source in them should be grouped into regions that do. The outputs from the individual processes would become the inputs to an executive-level S&OP process that consolidates them to develop the enterprise-wide global plan.
Consolidated View Needed Since most global companies are comprised of some combination of the four supply scenarios described above, consolidating and harmonizing multiple S&OP plans at an executive level is critical for obtaining a global picture of the future. As part of this, companies need to accurately translate their unit-based (i.e., non-monetized) plans into financial plans so as to align S&OP plans with enterprise-wide goals and objectives. Whenever I’ve discussed parsing a global S&OP process, I’ve talked about the cautionary Humpty Dumpty nursery rhyme. When he fell off the wall, “all the King’s horses, and all the King’s men, couldn’t put Humpty together again.” In S&OP, you can use the criteria discussed above to parse your global S&OP process. But if you don’t parse correctly, like Humpty Dumpty, it is not an easy task to put the S&OP plans back together again. So be careful! SCMPr
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n KNOWLEDGE
n STRATEGY
n BEST PRACTICE
n TRENDS
n human resource
Modeling Supply Chain Dynamics:
A Multiagent Approach
A global economy and increase in customer expectations in terms of cost and services have put a premium on effective supply chain reengineering. It is essential to perform risk-benefit analysis of reengineering alternatives before making a final decision. Simulation provides an effective pragmatic approach to detailed analysis and evaluation of supply chain design and management alternatives. However, the utility of this methodology is hampered by the time and effort required to develop models with sufficient fidelity to the actual supply chain of interest. In this paper, we describe a supply chain modeling framework designed to overcome this difficulty. Jayashankar M. Swaminathan Walter A. Haas School of Business, University of California, Berkeley, CA 94720, email: msj@haas.berkeley.edu Stephen F. Smith and Norman M. Sadeh The Robotics Institute, Carnegie Mellon University, Pittsburgh, PA 15213, email: sfs@ri.cmu.edu and sadeh@ri.cmu.edu 8 SCMPr
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Academic Advocacy
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supply chain can be defined as a network of autonomous or semiautonomous business entities collectively responsible for procurement, manufacturing and distribution activities associated with one or more families of related products. Different entities in a supply chain operate subject to different sets of constraints and objectives. However, these entities are highly interdependent when it comes to improving performance of the supply chain in terms of objectives such as on-time delivery, quality assurance, and cost minimization. As a result, performance of any entity in a supply chain depends on the performance of others, and their willingness and ability to coordinate activities within the supply chain. A global economy and increase in customer expectations regarding cost and service have influenced manufacturers to strive to improve processes within their supply chains, often referred to as supply chain reengineering (Swaminathan, 1996). For example, Hewlett Packard’s Vancouver division reduced inventory costs by approximately 18% for HP Deskjet printers through delayed product differentiation (Billington, 1994). Similarly, National Semiconductor has managed to reduce delivery time, increase sales, and reduce distribution cost through effective supply chain reengineering (Henkoff, 1994). Supply chain reengineering efforts have the potential to impact performance in a big way. Often they are undertaken with only a probabilistic view of the future, and it is essential to perform a detailed risk analysis before adopting a new process. In addition, many times these reengineering efforts are made under politically and emotionally charged circumstances. As a result, decision sup-
port tools that can analyze various alternatives can be very useful in impartially quantifying gains and helping the organization make the right decision (Feigin, An, Connors, & Crawford, 1996). In most organizations, reengineering decisions are generally based on either qualitative analysis (such as benchmarking) or customized simulation analysis. This is because complex interactions between different entities and the multitiered structure of supply chains make it difficult to utilize closed form analytical solutions. Benchmarking solutions provide insights into current trends but are not prescriptive. This leaves simulation as the only viable platform for detailed analy-
sis for alternative solutions. However, there are two major problems associated with building customized simulation models: (1) they take a long time to develop and, (2) they are very specific and have limited reuse. The author’s aim in this paper is to provide a flexible and reusable modeling and simulation framework that enables rapid development of customized decision support tools for supply chain management. It is essential to understand important issues and common processes in different types of supply chains to develop a generic, modular, and reusable framework. The framework suggested n this paper is based on supply chain studies conducted in three distinct domains: a
Supply Chain Network Direction of Flow of Demand
Direction of Flow of Product
Manufacturers Tier-I Suppliers Tier-II Suppliers
Distribution Centers
Retailers Customer Zones
Raw Material Vendor
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Academic Advocacy Agent Architecture P
Incoming
Event Selection
Priorities (Q)
R
State (S) Message Handleer
Message
I
Commitments
Objectives
O Message
Outgoing
vertically integrated supply chain of a global computer manufacturer; a Japanese automotive supply chain that is less tightly coupled; and an inter-organizational supply chain in the U.S. grocery industry. These supply chains differ in terms of centers of decision making, heterogeneity in the supply chain, and relationship with suppliers. In the supply chain for the computer manufacturer the decisionmaking process was centralized to a great extent, few suppliers were extremely important whereas others were mainly controlled by the manufacturer, and a major part of the supply chain was owned by the manufacturer. In the Japanese automotive supply chain, the manufacturer had a greater control over external suppliers and in some cases partially owned them. However, suppliers made independent decisions many times and the supply chain involved different companies, though all worked according to the guidelines set by the manufacturer. In the grocery supply chain, manufacturers and retailers were equally 10 SCMPr
Domain Knowledge (D)
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powerful and sometimes had conflicting interests. The decision making was decentralized and different organizations (operating under different industrial envi-
ronments) were part of the same supply chain. Despite these differences, a number of processes were common to these supply chains. The authors identified these processes and have developed a library of software components for modeling them. The library consists of two main categories—structural elements and control elements. Structural elements (like retailer, distribution center, manufacturer, supplier, and transportation vehicles) are used to model production and transportation of products. Control elements are used to specify various control policies (related to information, demand, supply, and material flow) that govern product flow within the supply chain. Given this base of primitives, an executable simulation model of a given supply chain is constructed by instantiating and relating appropriate structural and control elements. The framework allows
Standard distribution Centre Orders
Orders Retailer - 1
Manufacturer-A
Manufacturer-B
Retailer - 2
Distribution Centre
Manufacturer-C
Inventory
Retailer - 3 Product Flow
p a r t s t o o Help B t n e m e g a n a M n i a h C Supply
have If you feel you p insights acquired dee pply Chain to help the Su bootstrap professionals ge, the their knowled pply Chain Institute of Su nt invites you & Manageme ssociate to join us as A areas of: Faculty in the ons Specializati Chain Supply Management anagement Risk M siness Agri Bu d Planning & Deman Forecasting Warehousing rtation Transpo Chain Audit Supply g & Logistics Shippin Chain Network Supply Design ogistics Retail L Sustainability
What will you help us do Helping professionals learn Guide students in live projects Evaluate student performance Research and Analysis About ISCM: The Institute of Supply Chain & Management (ISCM) is the leading forum for supply chain professionals to share best practices, strategic insights and business challenges and explore the innovations in Supply Chain Management in India. ISCM is one of the leading institutes in the area of Supply Chain Management in India. It offers full time and part-time post graduate programs and specialized management development programs in the area of supply chain and business forecasting. The programs offered by ISCM are highly respected and recognized in corporate sector for employment.
C/o. Durgadevi Saraf Institute of Management Studies, R. S. Campus, S. V. Road, Malad (W), Mumbai – 400 064 Email:info@iscmindia.net Website:www.iscmindia.net
Academic Advocacy development of models to address issues related to configuration, coordination, and contracts. Configuration deals with issues related to the network structure of a supply chain based on factors such as lead time, transportation cost, and currency fluctuations. Coordination deals with routine activities in a supply chain such as materials flow, distribution, inventory control, and information exchange. Contracts control material flow over a longer horizon based on factors such as supplier reliability, number of suppliers, quantity discounts, demand forecast mechanisms, and flexibility to change commitments. Multi-agent computational environments are suitable for studying classes of coordination issues involving multiple autonomous or semiautonomous optimizing agents where knowledge is dis-
tributed and agents communicate through messages. Because supply chain management is fundamentally concerned with coherence among multiple decision makers, a multi-agent modeling framework based on explicit communication between constituent agents (such as manufacturers, suppliers, distributors) is a natural choice. The model uses structural elements as heterogeneous agents that utilize control elements in order to communicate and control the flow of products within the supply chain. This approach emphasizes models that capture the locality that typically exists with respect to the purview, operating constraints, and objectives of individual supply chain entities, and thus promotes simultaneous analysis of supply chain performance from a variety of organizational perspectives. The modular archi-
tecture of the framework enables one to develop executable models for different situations with limited additional effort. A typical supply chain faces uncertainty in terms of supply, demand, and process. This framework reduces the effort involved in modeling various alternatives and measuring their performance through simulation under different assumptions about uncertainties. This eases the ability of decision makers to quantitatively assess the risk and benefits associated with various supply chain reengineering alternatives. In this paper, the authors describe their framework in its current state and provide examples to demonstrate how issues relevant to supply chain management can be analyzed using it. In the paper, the authors review the existing research and approach-
Structure of Supply Chain Library Supply Chain Elements
Structural Elements
Production
Retailer
Manufacturer
Distributor
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Transportation
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Controll Elements
Flow
Vehicles Loading
Supplier
Inventory
Centralised
Routing
Demand
Forecast
Decentralised
Supply
Contracts
Marketing
Information
Periodic
Real-time
Academic Advocacy Cross Docking Orders Retailer - 1 Manufacturer-A
es and describe multi-agent framework in greater detail. In addition, the paper identifies key elements required to model supply chain dynamics. The authors present a cross-docking prototype from the grocery chain industry too.
CONCLUSIONS
Manufacturer-B
Retailer - 2 Sorting Cross Docking
Manufacturer-C
Retailer - 3
Inventory
Product Flow
Inventory Servicability Application BOM, Demand, Lead Time, Transportation Tim, Supply Chain Network, Cost, Supplier Reliability
Sypply Chain Data
Customer Service
Inventory Levels Simulation
Fill Rates, Inventory Costs, Work-In-Progress, Order Turnaround Time
Optimisation
As manufacturers attempt to increase supply chain performance, there is a critical need to gain a deeper understanding of the impact of decisions on their operations as well as those of their partners. Simulation has been found to be one of the popular and suitable mechanisms for understanding supply chain dynamics. Many times supply chain reengineering decisions are made with a probabilistic view of the future. As a result, there is a necessity for decision support tools that can help managers to understand the costs, benefits, and risks associated with various alternatives. In this paper, the authors have described a simulation-based framework for developing customized supply chain models from a library of software components. These components capture generic supply chain processes and concepts, thereby promoting modular construction and reuse of models for a wide range of applications. Using these components, it is possible to incorporate supply, process, and demand uncertainty as well as to integrate analytic and heuristic decision procedures. The approach underscores the importance of models in which different entities in the supply chain operate subject to their own local constraints and objectives, and have different local views of the world. This multi-agent approach enables performance to be analyzed from a variety of organizational perspectives. SCMPr
July 2013
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lead story Lead
Ports
An Agenda for Change
Ports as an Economic Unit on its own, provides lifeline for trade in the country. Girish V.S., Executive Editor looks at port infrastructure in India and some challenges faced by Indian ports.
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lead story
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port is an economic unit. It provides a transfer service as opposed to producing a product by a manufacturing firm. As the lifeline of trade of the country, ports are central to the economy. Ports provide an interface between the ocean transport and land-based transport. They represent a promising sector for India, given the country’s 7,516 KM long coastline, robust economic growth, abundant raw material, cost-competitive workforce and a strategic location on the trade map. The port infrastructure in India constitutes of 13 major ports and 187 non-major ports. Out of the total non-major ports, only about 48 are operational; while the rest are only fishing harbors. SCMPro takes a look at the Port infrastructure in India and some of the challenges that ports face. We start the series with “The Economics of Ports.” This article examines methodologies for evaluating the economic performance of a port. The performance of a port can be evaluated from the point of technical efficiency, cost efficiency and effectiveness by comparing
the port’s actual throughput with its economic technically efficient, cost efficient and effectiveness optimum throughput, respectively. In “Shipping in Crisis” we take a look at the shipping industry and its impact on ports. The overcapacity situation and slow recovery of demand had, not only depressed charter rates to historical lows after 2008, but also players’ margin, leaving many with insufficient fund to service their loans. And when the shipping industry sneezes, ports catch a cold. In “Hinterland Strategies”, we take a look at the need for better hinterland co-ordination in Ports. Port authorities generally focus on the development of the local port area, ignoring the development of port hinterland. In “Sustainability in Ports” we examine challenges of sustainability to Port operations. The proximity to sensitive resources inherently challenges ports to operate in a sustainable manner. The negative environmental impacts of ports are increasing with their ever-increasing cargo volumes. Populated port communities, in particular, are placing greater pressure on ports to negate or lessen their environmental impacts. We analyze the issues in “Intermodal Transport for Ports in India”. Ports depend on their hinterland for business – both for incoming and outgoing. To do their job effectively, ports require an excellent supporting network of rail and road infrastructure to be able to offer cost competitive solutions to its clients. We take a look at the existing connectivity of Indian Ports and the necessity to develop an intermodal transportation network as a first step to decongest Indian Ports.
SCMPr
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lead story
The Economics of Ports This article examines methodologies for evaluating the economic performance of a port. The performance of a port can be evaluated from the point of technical efficiency, cost efficiency and effectiveness by comparing the port’s actual throughput with its economic technically efficient, cost efficient and effectiveness optimum throughput, respectively. The port’s economic performance may also be evaluated by comparing the actual values of its performance indicators to their standard benchmarks for similar ports across the world. If the actual values converge or diverge from the benchmarks over a period, the port’s performance with respect to that economic objective has improved or deteriorated.
A
port is an “engine” for economic development by providing employment, worker incomes, business earnings, and taxes. Like we do for any other firm, it is necessary to evaluate a port as an economic entity. A port provides an economic service - facilitating the transfer of goods from one place to another. The amount of this transfer service is referred to as the port’s throughput, i.e., the number of containers (or tons of cargo) and passengers moved through the port. Ports utilize resources such as labor, capital goods (like cranes) and infrastructure (like wharfs) in transferring cargo and passengers to and from vessels. If the port seeks to be technically efficient, it will seek to maximize its throughput in the employment of a given level of resources. The crucial question that arises in evaluating a port’s perform-
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ance is how to measure performance. Should a port’s performance be evaluated relative to its performance over time (a single-port approach) or relative to the performance of other ports (a multi-port approach)? Should the performance be evaluated from engineering or an economics perspective? Ports have traditionally been evaluated by comparing their actual and rated throughputs (measured in tonnage or number of containers handled or number of passengers handled) under specified conditions. If a port’s actual throughput approaches (departs from) its rated throughput over time, we conclude that its performance has improved (deteriorated) over the periods. Engineering optimum throughputs have typically been used in such evaluations, defined as the maximum throughput that a port can physically handle under certain conditions.
lead story In an environment in which ports have their own captive hinterlands and are not competing with one another, an engineering performance evaluation methodology of comparing actual and engineering optimum throughputs may be adequate. But when ports compete with one another - either in the same country or not(India and Sri Lankan ports) - and where shippers and carriers are part of the port-selection process, a port has to worry about whether it can physically handle the cargo volumes and also whether it can compete for the cargo. In such a competitive environment, port time-related costs in addition to port charges incurred by shippers and carriers are important determinants in port selection. For example, the average cost of shipping a blackberry mobile handset through Malaysia is around 60 Cents against a cost of USD 7 if it were to be shipped through ports in India! Any wonder why the landed costs in India are higher. Since port cargo remains in the shipper’s inventory (assuming the shipper retains ownership), the shipper incurs time-related inventory (or logistics) costs in port; water and inland carriers also incur port time-related costs, e.g. depreciation and insurance costs on their ships and vehicles while in port. A port can reduce these time-related costs by reducing the time that the cargo of shippers and the ships and vehicles of carriers are in port, i.e. by improving the quality of its service. During a recent visit to Westport in Port Klang, Malaysia, it was observed that the port currently has a turnaround time of 12 hours for a ship. In India, the ship will not be able to find a berth in that time. These costs build up and distort the economics of the port. If a port’s performance in a competitive environment is evaluated by comparing actual and optimum throughputs, an economic (rather than the engineering) optimum throughput should be utilized. A port’s economic optimum throughput is that throughput for which the port achieves an economic objective, e.g. maximizing port profits. An alternative methodology to that of comparing actual and optimum throughputs for evaluating the performance of a port is one that makes use of port performance indicators. From an economics perspective, port performance indicators are choice variables (i.e. variables whose values are under the control of port management) for optimizing the port’s economic objective. If the economic objective is to maximize profits, port management would select values for the port indicators that would result in maximum profits for the port. These values of the performance indicators have been referred to in the literature as performance indicator standards (or benchmarks). If the actual values of the port’s performance indicators approach (depart from) their respective standards over time,
the port’s performance – with respect to its economic objective – have improved (deteriorated) over time. Both these port performance evaluation methodologies, comparing actual and optimum throughputs and comparing actual values and standards of performance indicators, are consistent with one another. For example, if the port’s economic objective is to maximize profits, the port’s economic optimum throughput can be determined by substituting the standards for the performance indicators. The determination of a port’s economic optimum throughput and its performance indicators, as mentioned above, requires an estimate the port’s economic objective. For example, to obtain a port’s profit, the port’s throughput demand must be known or estimated. However, economic objectives are not likely to be known with certainty. Further, available data may not be sufficient to obtain reliable estimates of these, nor to obtain reliable estimates of the port’s economic optimum throughput and performance indicator standards. Port managements will use performance indicators to evaluate their performance. A privately owned port’s economic objective may be to maximize profits, and the port management would select values for the port indicators that would result in the maximization of the port’s profits. On the other hand, government owned ports may have a different objective - the economic operating objective might be to maximize throughput subject to a zero operating deficit (where port revenue equals cost) or subject to a maximum operating deficit (where port revenue is less than cost) that is to be subsidized by government. These indicator values are the port’s performance indicator benchmarks. A port in a competitive environment is not only concerned with whether it is technically efficient and also cost efficient but also whether it is effective in providing throughput. Effectiveness is measured as how well the port utilizes its available resources to provide throughput service to its users – carriers and shippers. Economic operating objectives of a port may be classified as either efficiency or effectiveness objectives. For example, port efficiency operating objectives include the technical efficiency objective of maximizing throughput in the employment of a given level of resources and the cost efficiency objective of minimizing cost in the provision of a given level of throughput. In order for a port to be effective, it must be efficient – i.e., it must be cost efficient which in turn requires that it must be technically efficient. For example, if a port has the effectiveness operating objective of maximizing profits and is cost inefficient, it can obtain greater profits for the same level of throughput service by lowering its costs to become cost efficient. It should be recognized that a port can be cost efficient without being effective. SCMPr
July 2013
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lead story
Shipping in Crisis The shipping industry is still facing headwinds. Global trade is yet to recover from event the 2011 levels. The shipping industry is the worst hit since the global crisis that started in 2008. It also has the dubious honor of being the slowest to recover from the crisis. In the heady days of growth from 2003 to 2008, global shipping saw a surge in volumes. This boosted charter rates. And when the going is good, no one wants to look too closely at the markets. The period saw a rush among the cash rich players to place huge orders for new ships – both in numbers and size. A few years later, from around 2009, these new ships started to enter the market. The same time saw, arguably, the worst crisis to hit the world. This skewed the demand supply patterns and sent charter rates plummeting. The overcapacity situation and slow recovery of demand had, not only depressed charter rates to historical lows after 2008, but also players’ margin, leaving many with insufficient fund to service their loans. And when the shipping industry sneezes, ports catch a cold. We take a look at the shipping industry and its impact on ports.
M
aritime transport was impacted by the economic crisis and the declining volume of sea transport reflects the downturn of international trade. According to report by Moody’s Investor Services, the global shipping slump is expected to last well into 2013 as a glut of vessels and a growing credit squeeze challenge even the toughest companies in the seaborne sector. Shipping companies, especially in the oil tanker and dry bulk sectors, already hit by worsening economic
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turmoil, weak earnings and oversupply ordered in the good times now face tighter financing as banks cut their exposure to risky and dollar denominated assets such as ship finance to meet tougher capital rules. Enormous global overcapacity is proving a formidable headwind to growth expectations. World trade has been falling since 2010 and the world is awash in overcapacity and oversupply: this is the same “huge misjudgment of the market” embedded in overly optimistic stock prices today.
lead story According to Thomas Wybierek, a shipping analyst at Norddeutsche Landesbank Girozentrale, “The shipping industry suffers from overcapacity and there are more mega-ships coming into the market this year. Furthermore, Chinese growth is below expectations, the euro zone is stuck in crisis and there are no stimuli from the US.” A classic example of the shipping crisis spilling over into the port sector is Germany’s newest and deepest shipping port – JadeWeserPort - which sits nearly empty due to the global slowdown in the container shipping trade. The port was completed in September 2012 and has handled around 33000 containers since – a far cry from the annual 2.7 million forecast when government embarked on the 1 billion-euro ($1.3 billion) project a decade ago. Another new port put on ice is Cai Mep Port in Vietnam. Capacity at Cai Mep, the modern, deepwater port in Vietnam is hopelessly under used due – at present Cai Mep - which has an annual capacity of 7 million teu - handles just 1M teu The Global Port Development Report 2012 published by SISI recently points out that 2012 has been a year of intensive readjustment for port industry. The Report shows that against the backdrop of the European debt crisis, the growth in global port throughput declined on a quarterly basis in 2012 despite a rapid rally in Q1, with an annual increase of only 4.8 per cent, lower than those of 2010 (14 per cent) and 2011 (7.3 per cent), indicating an obviously sluggish performance. In particular, emerging economies which used to shore up global port throughput lost steam and saw a plummeting growth. The austerity plans, shrinking consumption and insufficient market confidence put European ports on the brink of stagnation literally, with major ports like Antwerp Port, Hamburg Port and Marseilles Port registering a 1 per cent decline in throughput growth. The world’s Top 20 ports showed vastly diverging performances: Eight of them recorded slow (less than 3 per cent) or negative growth (three of the top 20!), which were mostly first-tier hub ports with high throughput records or export-oriented ports along major shipping routes. These ports lost their momentum under the influence of global economic downturn and higher trade barrier. Tianjin Port, Busan Port, Ningbo-Zhoushan Port and Qingdao Port stayed in the middle with a growth rate of 3-10 per cent. These ports maintained stable growth over the past year thanks to the abundant cargo flow from hinterland, sound cargo canvassing capacity and enabling services. Another eight ports, mostly dry bulk terminals in Asia and Australia, registered a 20 SCMPr
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double-digit growth on account of the robust demand of China and Korea for coal and iron ore despite the overall bleak environment. However, major container ports in the world were mired in depression in 2012. The Y-o-Y growth in global container throughput shrank by nearly 50% from the level of 2010 to 3.96% lower than the ten-year average and the lowest except those of the crisis-hit years. The trends for the year show major container ports in the world are facing a unprecedented harsh time and are nowhere near recovery. Ports in Europe are the worst hit, with a negative growth in containers handled. The Port of Rotterdam, for example, with a stagnant throughput of 11.87 million TEU, got kicked out of the top ten slot by Tianjin Port in China. And despite the bleak industrial environment, major North American ports registered a marginal growth of 2.3%, driven by the modest expansion of manufacturing industry in the US. Another major trend that emerges is with ships becoming larger and larger, global ports may fall into two groups: hub ports and feeder ports. India with its shallow ports will get increasingly pushed into a feeder port status. In 2013, in an effective manner, various countries will successively step up their economic reform, implement a new round of easing monetary policies and industry support programs, further strengthen the infrastructure construction in terms of transport facilities and real estates, and promote regional cooperation by accession to the ASEAN and the Trans-Pacific Partnership Agreement. Such policy packages may effectively shore up the port industry. It is predicted that global port throughput and container throughput will maintain a modest growth of over 5%. To be specific, stimulated by the economic recovery, European ports are likely to see a return to stability, with a limited growth of less than 3%. With global economic, trade and shipping centers moving eastward, China and Southeast Asia have witnessed rapid economic and trade development and made heavy investments in port construction, leaving some regions perplexed in capacity surplus. Therefore, sought-after destinations of terminal construction and investment may be gradually shifted from Asia to Latin America and Africa. The world’s largest cargo ship - the brand new “Alexander von Humboldt” has been a tourist attraction in Hamburg harbor for days: The almost 400-meterlong (1,312-foot-long) giant belongs to the French shipping company CMA CGM and can hold close to 16,000 containers. Hope the ship can be put its rightful use -to transport containers! 20
COLD CHAIN INDIA Managing logistics for temperature sensitive products is a complex process in India. A major challenge is in storage and transportation due to varying climatic conditions and inadequate infrastructure. Products such as Dairy & Ice Cream, Frozen Foods, Agricultural, Pharma/Healthcare, Poultry & Sea-foods, etc need specialized temperature control treatment throughout the period of transit. While the manufacturers may have stateof-the-art cold chain facility, they need to work closely with their Logistics Service Providers (LSPs) to upgrade their supply chain/ logistics infrastructure ensuring a seamless logistics process as the product moves through the supply chain. SCMPro’s August 2013 edition will publish a special report on the State Of Cold Chain Logistics In India. The feature will provide a unique platform for industry experts actively involved in temperature sensitive logistics to share their experience on topics such as existing infrastructure, temperature control solutions & technologies, etc. The idea is to educate the readers about the transforming Cold Chain landscape issues and how to leverage their core competencies for achieving full growth potential.
SCMPr
For editorial inputs contact: +91 22 60020121 or drop a mail to info@scmp.in To advertise in the feature, ask for the media pack on +91 22 60020122 or info@scmp.in
lead story
Hinterland
Strategies Port authorities generally focus on the development of the local port area, ignoring the development of port hinterland. A set of players - shippers, forwarders, barge and rail operators – are the bridge between the port and the hinterland. It is becoming increasingly apparent that a ports competitive position depends on its hinterland networks. This has forced port managements to take an active part in the hinterland. This new role has already been suggested by different academics. However, limited empirical evidence exists of port authorities taking stakes in inland terminals or developing transport services. The development of inland ports and logistical zones appear to be an emerging situation. Still, port managements tend to be reluctant to undertake partnerships with inland ports, mostly out of concern of losing value added activities. There is a fear that inland ports may promote port competition by offering access to new freight corridors and can thus challenge the fundamental hinterland of a port and its related cargo. SCMPro takes a look at the need for better hinterland co-ordination in Ports.
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lead story
H
interland connectivity is clearly a factor of fundamental importance in the economic development and competitiveness of ports and is one of the most significant variables affecting the viability of any port. Ports are an integral part of a chain of transport links that move cargo from the manufacturer to the consumer. The development of the hinterland of a port depends on the connectivity of the port with its hinterland. Hinterland connectivity across the globe acts as a vital link to the supply chain. But in India it is a weak link. Interestingly, a report by the Committee of Secretaries on “Road, Rail connectivity of Major ports” goes on to say “With infusion of new technology and capacity building, the cumulative/ total capacity available at ports matches the current requirement. However, ports are unable to handle additional traffic because of slow evacuation of cargoes from the ports. Thus, despite having adequate capacity and modern handling facilities, the ports are not able to ensure a quicker turnaround of ships (present average turnaround time at major ports is 3.42 days). This undermines the competitiveness of Indian ports visà-vis other ports in the neighborhood. Therefore, it is important that connectivity of Major Ports with the hinterland is augmented not only to ensure smooth
Connectivity Hinterland to Port
Land Based Infrastructure
+
Backup Area
+
flow of traffic at the present level but also to meet the requirements of projected increase in traffic.” The problem is not new. But the willingness to implement the same is lacking. As a result of the growth spurt in cargo volume registered by the ports , enhanced port connectivity has become essential to facilitate improved port performance. Congestions near the ports are a common phenomenon. This problem is further aggravated by poor rail and road connectivity / capacity. National Highways Authority of India (NHAI) has the mandate for providing road connectivity to the major ports. The port connectivity project was included under Phase I of the National Highways Development Program (NHDP). It is a sad reflection that the 37 KM long road along the Surathkal - Nantur section that was begun in June 2005 is yet to be completed.
The main challenges to Port Hinterland connectivity in India are: Congested & Poor Quality of Indian Roads - India routinely sees recurrent congestion on almost quarter of roads, leading to high fuel consumption and increasing environment pollution. Another major challenge is the different rates of taxes between the states. As goods transit from state to state, navigating the tax maze can be a daunting task.
Equipments/ Berth/Handling Rate
+
Port Infrastructure
Draft
=
Output of Port
Marine Infrastrucure
Not Bad
Good & Can be Improved
Bad
Haldia Port
Not Bad
Good & Can be Improved
Poor
Paradip Port
Very Bad
Good
Gopalpur
Excellent
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lead story
Strategies Used by Port Authorities to Coordinate their Hinterland Globalization and the growing complexity of supply chains are inciting port authorities to undertake strategies aiming at a better level of coordination of their hinterland: n Usage of incentives. Coordinate operations of freight actors so that the usage of transport chains and the underlying assets is more optimal. It can involve using a preferential rate structure for customers that provide a minimum volume or that meet a level of reliability. Others will be incited to follow since the reward is a lower cost access to the infrastructures. n Inter-firm alliances. Concerns two types of alliances. The first is vertical integration (along transport chains) where, for instance, a maritime shipping company and a terminal operator can agree to better coordinate their services. The second is horizontal integration (between competitors) where, for instance an equipment or container pool can be established to improve the level of asset utilization. n Organizational scope. Vertical integration process where an actor decides to penetrate a new market to expand or add value to its activities. For instance, a maritime shipping company can be involved in port terminal operations. Also, a port authority could be involved in the development an inland port as a strategy to alleviate congestion and expand to market potential of its hinterland. n Collective actions. A series of strategies under the leadership of the port authority such as the setting of public / private partnerships to create a logistic zone. Each actor contributes within its realm of expertise. The development of port community systems is also a collective action that is receiving attention.
Another major challenge is the poor access to rural areas - India has an extensive road network (at least on paper), but 40 per cent of our villages are cut off during monsoons. Even in urban settings, monsoons spell doom for roads. When the roads are down, railways can step in to ensure connectivity. But Indian Railways is facing a severe capacity constraint - there are not enough rakes to move goods and often goods are stuck at rail yards for want of empty carriages to move them. To add to the woes, freight tariffs have been kept high to subsidize passenger traffic. A fourth challenge s the urban congestion - urban centers are severely congested, leading to a slow evacuation of goods from the ports. And to cap it all, ports are congested - with increasing port traffic, Indian ports need to ramp up capacity and productivity. While researching for this article, we came across a comparison between Port Headland in Australia and Haldia, Paradip, Gopalpur Ports in India by Mantrana Maritime Advisory Pvt. Ltd.. The comparison tells a lot out our hinterland connectivity. Port Hedland Australia is the largest bulk mineral export port in the world. It has a certified capacity of 495 Mtpa & trade worth 40Bn$p.a. With excellent planning, development and wide network of Hinterland connection directly to mines and a huge rail network owned by mines, huge conveyor and excellent load/discharge rate. Compare this with the three Indian ports!
www.scmp.in ...live supply chain 24 SCMPr
July 2013
Industry Portal for the Supply Chain Professional
lead story
Sustainability in The overall port capacity in India is expected to grow at a CAGR of 16.4% from 930 million tons in FY11 to 3,126 million tons in FY20. The capacity at non-major ports is projected to expand at a faster CAGR of 20.7% and is expected to increase from 370 million tons in the FY 2011-12 to 1,666 million tons by 2020. This means an increase in port activity and as a consequence, pollution. Ports worldwide are facing environmental challenges while facilitating maritime trade. Ports are intermodal facilities located in urban locales. They exist at the land-water interface and hence face a few unique sustainability issues. Ports often operate in close proximity to sensitive aquatic resources including wetlands. The proximity to sensitive resources inherently challenges ports to operate in a sustainable manner. The negative environmental impacts of ports are increasing with their ever-increasing cargo volumes. Populated port communities, in particular, are placing greater pressure on ports to negate or lessen their environmental impacts. SCM Pro takes a look at sustainability issues in Ports. 26 SCMPr
July 2013
Ports
lead story
S
ustainability has been defined as “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.� Ports operate in urban settings and are an integral part of the urban communities they are located in. Because of their location amidst populated areas, they need to maintain environment quality and ensure their operations and expansions take place with minimal impact on surrounding communities. The operations of a port cover a range of activities. Goods and commodities travel to and from ports. Most products are shipped in large metal boxes called containers. Some are trucked in as bulk cargo. These
are transported to ports via trucks or rail. Once they reach the port, they are loaded onto large ships by cranes and other bulk loading systems. Goods arriving on ships are off-loaded by cranes and then transported via truck or rail to their destination. Therefore, ports share many of the same environmental concerns as the road and rail sectors. Air quality, noise, storm water management, and solid waste management issues plague ports as well. Ports also contain buildings so LEED principles apply to ports as well. A major difference between the ports and other transportation sectors is the need to dredge the sea bed to maintain channel depths and to deepen channels to provide sufficient depths for ships to navigate. Dredging needs
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lead story
The Managing the Environmental Sustainability of Ports (MESP) Project in Europe The MESP project proposes, on the short term, to: n Reduce pollution sources in ports and nearby urban areas; n Define methodologies, technologies and procedures adaptable to different port contexts and transferable in Mediterranean context; n Reinforce competences of public-decision makers and local administrators, particularly regarding the communication between people in charge of management and planning of port and nearby urban areas; n Guarantee environmental, economical and social sustainability in every expected actions, outputs and results. That permits to reach the port sustainability target; n To retrain degraded and unhealthy port areas and to give back to citizens, tourists and workers an healthier and usable environment and, on the long term, to: n Create a long lasting cooperation network, that in a first time involves partners and then other Mediterranean ports interesting in sustainable development of their areas, infrastructures and procedures; n Formulate legislative tools giving the starting point for the creation of a common law for Mediterranean ports. In this way best-practice exchange and collaboration between research institutions around the development of sustainable approach and technologies in port ambit will be favourite. n Create certification processes for procedures and tools that allow objectively to value the sustainability of ports and the authority of persons in charge of their installation, management and maintenance. Source: mesp.org
to be conducted using best environment management practices such as environmental buckets, water quality monitoring, avoidance of dredging during sensitive time periods for aquatic resources, etc. to minimize impacts on sensitive resources. These apart, dredged sediments can be reused for landfill cover. These sediments may be contaminated and therefore volatilization of contaminants and leaching of contaminants from the sediments into the landfill site ecosystem or waterways should be evaluated. Storm water management practices to prevent contaminated runoff from the dredged sediment entering the waterway become ecologically important. Water pollution at ports may be associated with the disposal of vessel ballast water and waste, the use of vessel antifouling paints and vessel oil spillage. Port air pollution may arise from emissions from vessels, trucks, cargo-handling equipment, and railroad locomotives while in port. Maintenance and repair of waterfront structures must be appropriately permitted and done in compliance with applicable environmental regulations. Fueling operations for ships and trucks may result in spills which can 28 SCMPr
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enter the waterway. The use of spill prevention methods and compliance with spill prevention regulations and storage tank regulations are important to prevent spills from coming in contact with the waterway.
Sustainability in India Sustainability as a concept is not come into the corporate India mainstream practice. The reasons for this seeming lack of interest are not hard to find. There are quite a few reasons - lack of awareness of sustainability issues, lack of concern, and most important, the lack of regulatory mandates for sustainability. As per the current maritime regulations and laws, there is no specific mandate that a port should employ only sustainable development methods in port operations and development. However, we hope that as we continue our development, and mature as an industry, we will adopt some of the best practices from the top ports across the globe. There are a few bright spots emerging in India. The CVR group which is developing the Krishnapatanam Port has a slew of sustainable initiatives like developing a green belt around the port, protection and development of mangroves, rainwater harvesting, reuse of treated water, sewage treatment, dust suppression using water sprinklers in cargo storage yards. mechanized cargo handling, using covered conveyors for dust generating cargo, etc. IL&FS Maritime Infrastructure Company Limited, which develops port infrastructure looks at environmental issues while developing ports. IMICL addresses the environmental and social issues in their projects. In one of their projects, the earmarked waterfront included a river mouth and adjoining lands, some of which were used by the local fishermen for fishing. During the layout plan, the river mouth and other such areas were excluded as an environmental and social issue mitigation measure. What gives us some hope is that during the sixth Vibrant Gujarat Summit 2013, of the 63 MoUs for the development of Gujarat ports, eight were signed towards development of Green ports. Let us hope that such positive initiatives are the norm rather than an exception. According to Mr. Saibal De, the CEO Ports at IMICL, “Implementation of green concepts could positively affect project parameters during development. Best practices followed during design, engineering, and procurement stages can bring about accrued benefits over the long term. They can also reduce life cycle cost for equipment, contingency costs on account of implementation. And when there is a demand for “Green Port” label, the port would get positioned better over other competing ports”. Amen to that.
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lead story
Intermodal Transport for Ports in India Ports depend on their hinterland for business – both for incoming and outgoing. To do their job effectively, ports require an excellent supporting network of rail and road infrastructure to be able to offer cost competitive solutions to its clients. While most of the ports in India are connected through rail and road, there are issues related to the quality of the inland network. This acts as a stumbling block in attracting more cargo and prevents seamless evacuation of cargo. It is imperative that with the development of growth centers like ports and industries, the supporting infrastructure of roads and railways must also be upgraded to reap the benefits of development driven by the ports. SCM Pro takes a look at the existing connectivity of Indian Ports and the necessity to develop an intermodal transportation network as a first step to decongest Indian Ports.
“I
ntermodal” in transportation means that a container can be moved from one mode of transport to another - from ship, to rail, to truck - without unloading and reloading the contents of the container. This method reduces cargo handling, improves security, reduces damage and loss, and allows freight to be transported faster. However, effective evacuation of the cargo to and from the port is critical for an inter-modal network to function smoothly. Delay in any one node will cause a pile
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up of goods. Depending on the type of cargo, different players are involved– for certain bulk cargoes, railways are the preferred mode of transportation. For manufactured goods and products, firms prefer movement by road because of the inherent advantages road provides in terms of flexibility in dispatches and possibility of door delivery. In recent years, containerization of non-bulk and non-liquid cargo has increased globally as well as in India. Most manufactured cargo and even bulk cargo for
lead story international as well as domestic trade move in containers. According to figures released by Indian Ports Association, the number of TEUs handled has been fairly static from 2007-08 to 2009-10 (when figures are last available!) The total TEUs handled in 2007-08 was 6.71 million, while in 2009-10 it was 6.87 million TEUs. As the trend of containerization increases, hopefully, multi-modal transport of cargo will assume increasing significance.
The Need for Inter-Modal Transport A transportation system in the new business environment has to transform itself from a static network that links origins and destinations, into a flexible system able to quickly adapt to constant fluctuations of origins and destinations. Intermodal logistics is designed to cut transit times, decongest transport modes and reduce logistics cost. A report by Deloitte estimates that intermodal logistics can potentially reduce transit times by 40-50 per cent. Realizing the role of intermodal transport in export competitiveness of firms in India, the Government came out with the Multimodal Transport Act, 1993 specifically aimed at increasing exports from India. However, for intermodal logistics to deliver, three major challenges have to be surmounted – the challenge of Regulation, Infrastructure and Technology. Regulatory reforms: The world has recognized the potential for inter-modal transport. India too wants to get on to the bandwagon. However, the pathetic road connectivity and the lack of high speed dedicated freight corridors across the country are a sad reflection of the
Types of Intermodal Logistics systems Apart from the ubiquitous containers Intermodal transport has a few interesting variants: Lighter Aboard Ship: LASH transport is the combination of deep sea and inland waterway transportation. Barges operating on inland waterways can be loaded onto a LASH and carried across sea to the destination port. Subsequently, the unloaded barge can carry cargo further to the hinterland. Piggyback / Trailer train: This is a system of unitised multimodal land transportation, a combination of transport by road and rail. It combines the speed and reliability of rail on long hauls with the door-to-door flexibility of road transport for collection and delivery. The goods are packed in trailers and hauled by tractors to the railway station. At the station, the trailers are moved onto railway flat cars and the transport tractors, which stay behind, are then disconnected. At destination, tractors again haul the trailers to the warehouses of the consignee. Sea train: This is another innovation in the multimodal transport system. It comprises a seagoing ship equipped for carrying a train of railroad cars so that geographically separated rail systems can be connected by the use of an ocean carrier. Roll-on/Roll-off: This mode combines different means of transportation (sea and road), and is used most often with new automobiles, which are shipped by sea and them simply driven off the vessel to the importer’s warehouse.
potential gone waste. The regulatory oversight is cumbersome – four different ministries and their attendant bureaucrats with overlapping powers render decision making a slow process. The Multimodal Transportation of Goods Act 1993 was enacted with the purpose
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lead story of developing this segment of logistics and regulating the MTOs. Intermodal/Multimodal transport operations need to be regulated by a single regulator, or else with a nodal regulator, with an objective of controlled development of the sector, driving growth while mitigating possible risks. Generally, controls may be placed on licensing, pricing, contracting and service standards. For the growth of international intermodal transport, necessary changes are required in the customs procedures and export-import procedures among others. An exporter needs to fill in 15 forms for a permit for export! Probably, this is to increase employment! For domestic transport, changes in Cabotage laws, octroi levies (The LBT is an interesting development), roll
rate of 10 per cent, while big infrastructure projects like the dedicated freight corridors, conceptualized in the mid of last decade, are still under development! Intermodal/Multimodal transport builds on the operational efficiencies of the country’s transport system. Without adequate infrastructure, the incremental benefits of intermodal transport will be negligible. According to a study done by IIM Kolkata, a truck going from Delhi to Bangalore averaged only 21 kilometers per hour and had to stop up to 38 times in the entire journey either to pay toll tax or Octroi or for document verification. Necessary infrastructure development to provide for compatibility between modes, less friction costs, low dwell times, less pilferage and increase in containerization is basic to growth of intermodal transport. Investment in technology: taking up from the IIM study, a simple toll collection using near field communication can save the trucker time and speed up the journey. Similarly, it is possible to extend the e-freight initiative of the air cargo industry, to the inland trade too. It should be possible to pay octori and other taxes online by the consignor or consignee. An Intermodal/Multimodal operator enters into a single contract with the shipper, but multiple contracts with transporters, customs agents, ports / airports, railways, warehouse operators and other related entities. The voluminous documentation requirements and need to coordinate with a number of parties creates a need for appropriate information technology support. Additionally, the transport and warehousing technology must itself be up-to-date to facilitate accurate tracking of shipments and reduce logistics cost and time.
Container traffic in India is growing at an average rate of 1o%, while big infrastructure projects like the dedicated freight corridors, conceptualized in the mid of last decade, are still under development! Intermodal/ Multimodal transport builds on the operational efficiencies of the country’s transport system. out of GST, privatization of railways, including routes, are the need of the hour. According to Mr. Anand Sheth, Immediate past president of AMTOI, “The procedural differences in different customs stations in India are also a challenge. So is the issue of laws and public notices being issued without consultation with the trade, adding up to the woes of the operators. The Indian operators also do not have a level-playing field vis-à-vis their counterparts in Europe and the US, in many areas like taxation, etc. and this makes Indian companies more expensive.” Many operators believe that this Act favors the shippers more than the transporters and places more liabilities on the transporters. Further the MTO license needs to be renewed every year instead of a single lifetime license as in the case of private rail operators. Infrastructure development: The growth in infrastructure lags behind the growth in container trade. Container traffic in India is growing at an average 32 SCMPr
July 2013
The unfinished agenda The potential for inter-modal transport is enormous. The need of the hour is to create a nodal agency that will oversee the development of the sector. The 12th five year plan by the government promises UD on Trillion investments in infrastructure – an amount equal to more than half our GDP! We need the political will and the ability to attract FDI in these projects. But the cumbersome land acquisition process will deter even the most diehard India fan. Time to look at our processes if we are to attract investments.
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The Port of
Choice D
ighi Port is being developed by Balaji Infra Projects Ltd (BIPL) under a 50 year “Build, Own, Operate, Share, Transfer (BOOST)� Concession Agreement signed with the Maharashtra Maritime Board, the Government of Maharashtra, to develop, operate, finance and maintain the Port. Dighi Port, the first and the largest Greenfield port of Maharashtra, is being developed as a multipurpose, multi-cargo, all-weather port with deep draught, direct berthing facilities and modern cargo handling equipments with adequate stack yards and warehousing facilities, back up areas with an ample land bank of approximately 1500 acres.
Strategic Location The port is located on the banks of the Rajpuri Creek, in the Raigad District of Maharashtra. The unique feature of the port is its ideal location within a natural harbour and exclusive channel offering a depth of 12.5m, making it one of the deepest ports in Maharashtra. Meticulous planning from the onset with cargo handling terminals on either banks of the creek, gives the port the unique advantage of handling all types of cargo in all weather conditions. The port is located at a distance of 42 nautical miles (NM) from Mumbai Port and 170kms south of Mumbai by road. The port is connected by the State Highways to the National Highway 17, which is 45kms from the port. The nearest Konkan Railway Rail Head Indapur - Mangaon is 47kms from the port.
The Port
Dighi Port is being developed on the two banks of the Rajpuri Creek l The South Bank (Dighi Side) l The North Bank (Agardanda Side) Under Phase 1 development, the South Bank offers 2 multi-purpose berths measuring 650m in length and a depth of 12.5m. Both berths on the South Bank berths are operational and are equipped with multi-purpose Gottwald Mobile
Harbour Cranes for the efficient handling of cargo. The port plans to handle bulk, break-bulk cargo such as agri products, bauxite, cement, clinker, coal, fertilizer, steel etc. and liquid cargo at the South Bank. The port has handled over approximately 1.25 million MTs of cargo in the last year. Under Phase 1 development, the North Bank will offer 3 multi-purpose berths having a total quay length of 1100m and an alongside depth of 12.5m. Piling work for the berths is already in progress and the first berth is likely to be ready by last quarter of 2012. The remaining 2 berths will be ready by the third quarter of calendar year 2013. The North Bank will primarily be used for handling containers and other clean cargo.
Total installed capacity in Phase 1 will be 30 million tonnes. In Phase 2, the port will offer a depth of 16m and will have a capacity to handle 60 million MTs of cargo. On completion of Phase 3, Dighi Port will offer a depth of 20m and will have a capacity to handle 90 million MTs of cargo.
Connectivity Road Both banks of the port are connected to the National Highway NH 17 via 5 State Highways. The North Bank is connected to National Highway via State Highways (SH) 92, 96 and 90 and the South Bank is connected to National Highway via SH 97 and 98. Joint inspection and survey of the State Highways (SH) has been completed by PWD and Dighi Port Ltd. Land for 2 laning of roads with paved shoulder is available across all State Highways effectively giving a 4 lane facility service to the port. NHAI commissioned study through Feedback Ventures to upgrade SH 97 & SH 92 to 4 lane and 6 lane. Further, work on the 4 laning of NH 17 is currently in progress. All development works as per previous schedule has been completed and permission has been received from PWD to develop the State Highway on BOT basis.
Rail Dighi Port Limited has received an approval from Ministry of Railways (MoR) to develop the railway siding at the port under the ‘Private Rail Siding (PRS)’ model. The port will be connected to the nearest Konkan Railway Head Indapur – Mangaon, which is at a distance of 47kms.
Special Economic Zone (SEZ) and Free Trade Warehousing Zone (FTWZ) - Dighi Dighi Port is designed to provide multiple facilities unlike other traditional ports. These facilities will be the value added components such as the Special Economic Zone (SEZ) inclusive of a Free Trade Warehousing Zone (FTWZ) which shall further enhance the potentiality of the development for the industrial community along with a rail and road network.
Delhi Mumbai Industrial Corridor (DMIC) & Dedicated Freight Corridor (DFC) Dighi port is the final node of the DMIC and is being developed as a multi-modal logistic hub. Setting up of an industrial city namely ‘Dighi Industrial City’ near the port under the DMIC is in the anvil.
In the state of Maharashtra, the DMIC will have industrial parks, i.e. manufacturing zones for food processing, light manufacturing and heavy manufacturing. It will also have multimodal and logistics supports as well as distribution networks. Investment proposed in Dighi port as part of DMIC is expected to be around US$ 2 billion and it will facilitate investment of US $ 6 billion in creation of industrial and multimodal logistics hubs in the state of Maharashtra. Dighi Port will cater to a large number of Industrial Clusters such as, Dighi Industrial area, Vile Bhagad, Pune Nashik, Igatpuri, Sinar, Roha and Chiplun industrial region. Industrial clusters developed under the DMIC in close proximity to Dighi Port are Vile Bhagad (Steel, Power & Project Equipment), Pune–Chakan (Automobiles, Agriculture, Chemicals and Ancillaries) and Nashik–Sinnar (Power, Agriculture and Ancillaries). It has also been proposed to include Dighi Port as a part of the DFC, a Special Purpose Vehicle set up under the administrative control of the Ministry of Railways.
Dighi Port Area – National Investment and Manufacturing Zone (NIMZ) The Dighi Port Area has been identified as a one of the 7 Mega National Investment and Manufacturing Zones under Government of India’s new Manufacturing Policy. A total area of 230sq.km allocated for the development of the Manufacturing Zone in Dighi Port Area. The NIMZ’s will entail an investment of US Dollars 5 billion and will include support infrastructure and services like Multi-modal Logistic Hubs, Container Freight Stations (CFS), Inland Container Depots (ICDs), Warehousing, Cold Storages, Cargo Distribution etc.
Dighi on Completion The Port on completion will be an integrated infrastructure initiative with few parallels. It has the potential to become the centre of marine business initiative, thanks to its world-class infrastructure and end-to-end logistics solutions. Dighi Port has a total waterfront of 5kms with a capacity to build up to 18 berths to handle up to 90 million tonnes of cargo. The port has plans to increase the existing depth phase wise up to 20m.
Dighi – The Port of Choice With the gateway ports in Mumbai currently working at full capacity and even at stretched capacity, Dighi Port with its strategic location and well planned infrastructure is geared and ready to handle the cargo generating from North, West and Central India in a hassle free and economically viable manner. Dighi Port offers entire value chain under one umbrella.
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Innovations in Supply Chain Competitive Strategy for Future The surest path to competitive advantage is through innovation and faster we move on this more certain better for our business says Anil Sathe.
H Anil S. Sathe Senior General Manager, Supply Chain (Products Business), Blue Star.
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ow many matches that we need to organize for a 7 round knock-out tournament like Wimbledon? Sometime back I asked this question in our training program and the participants started working by adding matches in each round till final. Actually, answer can found in seconds. In knock out tournament, a player can win many times but lose only once and in the end there is only one undefeated. So answer is, number of players minus one. Friends, today most of us face the same challenge, i.e. provide customer what he wants and do everything to deliver in time. Despite each one of us giving more than 100%, why do we observe that only few succeed.
Over the years, companies adopting innovative approach to enter market, and then supporting it with innovative supply chain, have gained competitive advantage Innovation in supply chain may strike at the design level, e.g. in deciding framework of supply chain, or at the process level e.g. in deciding implementation of parts of the designed supply chain. Technology evolution often combined with innovation offers opportunities for supply chain innovation at both design and implementation levels. We also observe that supply chains are changing radically as a result of technology adoption, perhaps not fast enough in some countries, where over-regulation and an unsupportive infrastructure act as deterrent.
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Innovation may take place at the design level, in the kind of supply chain to be adopted, or at the process level deciding how parts of the designed supply chain shall be implemented.
Today, innovation is all around us. More companies are outsourcing parts of their supply chains, which being an innovative in itself prompts further innovation by 1) spreading best practices more quickly through centers of excellence, and; 2) enabling manufacturers to focus on core activities-creating and marketing products that delight customers. What do we anticipate in future? Well, it has always been rather difficult to predict; but we can foresee some developments that will drive innovation. n The sustained movement of people into urban areas, with simultaneous markets expansion in rural areas can radically alter the depth /width of the supply chain and its complexities, warranting changes in the way we collate information and execute orders. n The rising role of the cloud and digitization of products that till recently required physical supply chains. n The sustained growth and influence of mobile phones on all facets of our lives. n Social media’s influence. n Huge information base / data available with customers. n Increasing need to provide end-of-life solutions to products that we put in market . Thus, I see a lot of potential in in terms of innovative new products / services and the supply chain optimizations that will be needed to get them to market ahead of the competition. Successful innovations require hard work and creative thinking. To move business along the road to supply chain improvement, the change initiator / agent
can start a journey with some simple ideas illustrated below: Variation: Apply “Self-serve Operations” concept to your business and think of ‘What are you doing for your customers which otherwise they would have done for themselves.. Also, consider whether there are things that customers could be inclined to do, so that customers opts for your service / product which is on offering for them. All the web-check in processes as well as electronic fund transfers are examples of this.
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Reversal: Outline a current process, then reverse it. Vendor-managed inventory is a classic example. It was once a retailer’s responsibility to manage inventory; now vendors do it.
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“What if?” Ask questions like what if you need to serve my customer differently? Or what if you did not have your current infrastructure? The answers to these questions might surprise you and lead to some of your best innovations. Sharing of infrastructure within competitors has already begun in few sectors
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Starting over: If you were redesigning you product or service, what changes would you make? Would those changes affect your personally. Would they alter your competition? Would they change your customer base, locations, or resources?
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Halve your resources: Allocation decisions define priorities. Budgeting is not an exact science, however, and this exercise defines needs versus “niceto-haves.” This process will identify preconceived notions, erroneous assumptions, blind spots, and protectionism.
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As a summary, supply chains have dynamic natures, multiple moving parts, and situational variables; they are ripe for innovation. Feedback /suggestions /comments are most welcome on mail ID feedback_scmexcellence@yahoo.com
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feature As/rs
AS /RS - Intelligent Warehousing System Automated storage and retrieval systems (AS/RS) are inventory management systems widely used in manufacturing facilities, distribution centers, and warehouses throughout the world. AS/RS allow intensive storage of materials and improves the supply chain performance, assuring more available volume for storage, lower labor costs and higher handling throughput of warehousing. Team SCM Pro takes a look behind the scenes to bring you the latest developments in Automated storage and retrieval systems.
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utomated Storage and Retrieval Systems are becoming increasingly important in modern warehousing environment. Especially land costs are driving up warehousing costs. Warehousing needs two major inputs–land (for storage space) and labor. Both are scarce resources. If we move the warehouse to a remote location to reduce land cost, we run up against scarce
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labor. One way of optimizing both labor and land is to go in for an automated storage and retrieval system. Automated Storage and Retrieval Systems have many advantages. They provide warehouses with increased inventory control and tracking, including greater flexibility to accommodate changing storage requirements. These Automated Storage and Retrieval Systems comprise
of modular subsystems that can be easily replaced to minimize downtime and extend the service life of the overall system. They also reduce labor costs, lowering necessary workforce requirements, increasing workplace safety, and removing personnel from difficult working conditions (such as cold food storage environments). Perhaps most significantly, however, Automated Storage and
feature as/rs Flaws in Present System n Less accuracy n Time consuming n Labor cost n Large paperwork n Wasted of storage space n Dependent on warehouse personal
Retrieval Systems can produce major savings in inventory storage costs, as vastly improved warehouse space utilization–both vertically and horizontally–creating greater storage density.
for maintenance and updating of various subsystems. These capital expenses can tempt some business owners to cut financial corners, buying “bargain” systems that are ill-equipped for extensive, long-term use. In many cases, such decisions can end up costing far more in the long run. When disruptions occur, the impact can be devastating to small and mid-sized businesses. The toll of interrupted
AS/RS service extends from the measurable (lost production and shipping revenue, increased labor costs for repair) to the intangible (diminished workforce confidence in the company’s operations, downgraded client confidence). As a result, businesses are urged to examine the long-term implications of their choices when they incorporate an automated storage and retrieval system into their operations.
Top View of AS/RS with Aisle Capitive Crane Aisles
Conditions That Are Favorable To AS/RS The environments in which AS/RS can offer the greatest benefit are cold storage, frozen foods, Retail, Automotive, Electrical & Electronics, and Clothing, and those in which very strict item tracking is necessary.
Installation Concerns As they involve significant investment, AS/RS requires a rigoros design phase where the system capacity and throughput are determined. Design parameters like rack configuration - single or doubl depth and the number of aisles and cranes and the location of the input/output point need to be determined. Once implemented, control decisions like storage policies, batching, dwell point and sequencing need to be determined. The cost of purchasing and implementing an effective automated storage/retrieval system is significant, encompassing everything from pre-purchase analysis of supply chain and inventory management needs to the actual purchase price of AS/ RS equipment and software. In addition, experts in the use and maintenance of AS/RS systems note that companies often experience significant ongoing costs
Crane Path of Crane
Pick/Drop station Canadian Journal on Artificial Intelligence, Machine Learning and Pattern Recognition Vol. 3 No. 2, March 2012.
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feature As/rs AS/RS Design Issues The AS/RS design needs to consider a range of issues such as system configuration, travel time estimation, storage assignment, dwellpoint location, and request sequencing. We look at some of these issues more closely.
Dwell point positioning The dwell point in an AS/RS is the position where the S/R machine stays when the system is idle. The dwell point should be carefully selected so that the expected travel time to the position of the first transaction after the idle period is minimized. An effective dwell point strategy may reduce the response times of the AS/RS, since the S/R machine typically performs a sequence of operations following an idle period. Hence, if the first operation is advanced, then all operations within the sequence are completed earlier. There are three common dwell point policies for AS/RS. Return to middle (dwell point) policy: under this policy, the Horizontal Platform machine returns to middle of tier upon finishing a job
Howard Zollinger, the founder and president of Zollinger Associates lists ten conditions where an AS/RS installation may be most successfully installed: n Two or three shifts n Critical inventory levels n Production flexibility is essential n Joint storage of parts and tools n High land cost areas n No limit on building height n Skilled technicians are on-staff or available n High value parts or assemblies are used n The number of stock keeping units (SKUs) in not large n Tight existing site space in which an AS/RS installation may eliminate the need to move
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Elements of AS/RS Racks are typically metal structures with locations that can accommodate loads (e.g., pallets) that need to be stored. Cranes are the fully automated storage and retrieval machines that can autonomously move, pick up and drop off loads. Aisles are formed by the empty spaces between the racks, where the cranes can move. An input/output point (I/O-point) is a location where retrieved loads are dropped off, and where incoming loads are picked up for storage. Pick positions are places where people are working to remove individual items from a retrieved load before the load is sent back into the system.
and the Vertical Platform returns to middle of handover station upon finishing a job. Return to start (dwell point) policy: the Vertical Platform returns to the input/output station and the Horizontal Platform returns to the handover station upon finishing a job. Stay dwell point policy: the platforms remain where they are after completing a storage and retrieval operation, (The platforms will stay where they are at the end of each operation until they are required for another operation later).
Expected Travel Time Development of expected traveltime (i.e., average travel time) models for S/R machines is another area of research. After each operation, the crane comes to rest at a specified point in the AS/RS. The throughput of the system depends on two factors– the handling time and the travel time. The handling time is the time taken by the crane to pick up or deposit an item into a storage slot. This is a constant for an AS/RS. Travel time, on the other hand is the time taken by the crane to move from it dwell point to the pick up or drop location. Minimizing travel time improves throughput. The travel time de-
pends on two factors: the assignment of the storage locations and the sequencing decision.
Request sequencing Request sequencing -planning the order in which storage and retrieval requests are performed is critical in AS/RS performance. It is generally assumed that storage decisions are made on a first come, first served rule while the retrieval decisions can be done randomly. Some of the popular sequencing policies are block sequencing–where the storage and retrieval requests are separated into blocks. Then a single block of storage and a block of retrieval are sequenced without taking into account the locations that become available during execution of the S/R for that block. The other policy is dynamic sequencing–where the list is updated every time a new request is added. The third policy is generalized sequencing where a complete block of requests is sequenced but only the first command cycle is executed. Executing any of these sequencing requires two parameters. The first parameter is the “sequencing horizon” or the length of the next block to sequence. The second parameter is the “frozen horizon” or the number of command cycles that the crane will execute before re-sequencing.
feature as/rs n How
Advantages n High density of storage by utilizing the cubic space available and with the help of narrow aisles. n Tighter inventory control through computerization resulting in higher inventory accuracy. n Reduced access in the aisles, improving the security of the material. n Increased space utilization via random storage versus dedicated space allocated to different parts. n Ability to tie the storage system to the manufacturing and the distribution systems via computer control, permitting a higher level of system performance. n Better utilization of storage and retrieval equipment. n Reduction in manpower. n Improved labor productivity
Lesson for Indian Companies The lesson to Indian companies should be that automation has, and will, continue to be a significant part of warehousing. Companies, worldwide, have achieved significant operational efficiencies by adopting the right technologies. The economic liberalization In India has heralded a phase of unprecedented growth and possibilities in manufacturing. The one area that can no longer be ignored by Indian companies is warehousing, when modernization plans are drawn up. The proper way to approach automation in warehousing is not by asking, “Is automation right for me”? Rather the questions should be “What is the correct level of automation”? “How is it justified”?, and “How will automation be phased in”? The introduction of automation in warehousing should be a foregone conclusion. The approach and technology best suited for an individual company will depend on their requirements. This will require an appropriate level of planning for warehouse automation. The correct approach to plan for warehouse automation is to develop a Warehouse Strategic Master Plan (WSMP). The WSMP pro-
will order volumes change? Will inventory levels change? n Will inventory turn rates change? n What new types of material will be present? n
vides the future direction for the warehouse over a five or ten-year period. It addresses the facilities, staffing, equipment, inventory, and throughout required to meet the corporate business plan. The role of warehouse automation is a significant portion of a WSMP. The automation plan should be regarded as one component of a broader view and not a separate end unto itself.
Developing a WSMP is a methodical, five-step process 1 Conduct Operational Assessment: The first step is to understand the present status of warehouse operations. Data should be collected on the following: Customer Service Layout Control Systems Equipment Methods Inventory Accuracy Equipment Utilization Space Utilization Building Facilities Labour Productivity Housekeeping and Safety Warehouse strengths and weaknesses should be identified. 2. Define Future Requirements: Once the present operation has been analyzed, future warehouse requirements should be determined. This can be accomplished by examining a business forecast. A five-year projection is needed to answer the following questions:
3. Develop Alternatives: Once present warehouse weaknesses and future requirements are known, various approaches to warehouse automation can now be considered and budget investment and operation costs can be developed. Potential savings in space and labour should be determined. 4. Evaluate Alternatives: For each alternative, an economic analysis should be performed. In addition, a qualitative analysis should be performed to consider issues, such as safety and ergonomics, that cannot be expressed in economic terms. The method of warehouse automation that is best suited to the particular operation and that is most justifiable can then be selected. 5. Document the WSMP: A written description of the WSMP. including alternative analysis, should be developed. The document should cover facility layouts, specify staffing levels, and detail equipment and system descriptions. Once written, it can be presented to senior management to obtain funding and support. Using the WSMP approach provides a systematic method of properly confronting warehouse automation. The process provides clear direction as to the degree and type of automation to implement for any specific application. As the pace of warehousing quickens and customers demand better service, those who take a systems approach to warehousing and warehousing automation will be the ones best prepared to meet the challenges of the future. SCMPr
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casestudy as/rs
Technology that Delivers:
AS/RS at INTAS Pharmaceuticals Ltd. The Client
Godrej Efacec Scope of Supply for Intas Project
INTAS Pharmaceutical Ltd. is a leading vertically integrated Indian Pharmaceutical company committed on delivering affordable and innovative pharmaceutical solutions. The company headquartered at Ahmedabad has an extensive presence in more than 60 countries worldwide with turnover of USD 650mn.
t Solution Conceptualization & Design t 2 nos. dedicated Stacker Crane
(28 mtrs tall) t 6760 Storage locations double
deep system t Mechanical & Electrical Aisle
Equipment
The Requirement To cater to the ever increasing demand for its products, INTAS Pharma decided to set up one of the largest pharmaceuticals plant at Special Economic Zone (SEZ) in Ahmedabad. Since the plan was to set up state of art facility along with a warehouse that provides dense storage, high throughput and seamless material flow, M/s Intas decided to call the AS/RS technology experts M/s Godrej Efacec. While working meticulously with the client, to meet the storage requirements comfortably, two separate warehouses for Storage Capacity of 3240 & 3520 pallets locations for FG/SPM and RM/PPM respectively were planned. The Input to the warehouse was 24x7 and the Output was in one shift of 8 hrs. Throughput requirement of 80 pallets/hour was derived from detailed input/output calculations for timely fulfillment of orders during peak dispatches.
Key Benefits of the Solution l Dense Storage allowing more space for production. l Increased Efficiency due to high speed operations. l Consistent High system uptime l Real time & Accurate Inventory Control l MIS Reports l E ase of operations through integration with ERP l Manpower savings
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t PLC Control System t Warehouse Management System t Integration with SAP t Project Management t Training & Manuals AS / RS File Photo
which accommodated 6760 pallet locations and delivered phenomenally high throughput of 80 pallets/hour with 2 dedicated Automated Stacker Cranes.
“Godrej Efacec AS/RS provided the much needed Dense Storage and High Throughput. The system meets Selection of Right Partner INTAS selected Godrej Efacec Automation & all our requirements.” Robotics Ltd. over major international & local – A D Bhimani competition for the two AS/RS installations (Sr. GM & Plant Head during viz. FG/SPM & RM/PPMAuto Warehouse. handover of system) Godrej Efacec an Indo-European joint The Solution Since INTAS has been allotted land in SEZ, actual foot print available for development was less. INTAS has planned to build a mega manufacturing facility and thus faced major space constraints for warehouse to support the desired inventory. Secondly, throughput demand on warehouse was significantly high & integration with ERP was a must to ensure faster & flawless operation. After a thorough study and evaluating multiple warehousing solutions, it was obvious that only Automated Storage & Retrieval System (AS/RS) could deliver the desired results for INTAS. Hence, INTAS opted for the latest & best warehousing technology viz. AS/RS. Two AS/RS warehouses of 60m (L) x 7m (W) x 28m (H) were planned & built
venture is the pioneer and leading supplier of AS/RS in India. The company has successfully designed, supplied, installed & commissioned AS/RS for many Pharmaceutical companies and thereby well versed with the Good Automated Manufacturing Practice (GAMP) and offers customized software and control systems that are designed for adherence to US FDA validation norms which are of prime significance for Pharmaceutical companies. Godrej Efacec Warehouse Management Software (WMS) works seamlessly upwards with ERP and downwards with Bar Code and material flow system. (The article has been provided by Mr. Shakti Choube who Heads Sales & Marketing function at M/s Godrej Efacec Automation & Robotics Ltd.)
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Getting the Best Value from Your Cold Store The key to designing any new Cold Store is to plan the storage system design at the Greenfield Site stage, says Brian Miles.
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Brian G Miles Brian Miles is the Regional Managing Director of Schaefer Systems International Pte Ltd.
s Asian economies rebound from the Global Financial crisis, most are in a far stronger position than pre crisis, their GDP ‘s are up, employment levels are high, most countries are posting positive growth factors. MNC’s are ramping up production to meet higher demands, disposable incomes rise and life style changes are taking place, not least eating habits. The days of daily shopping at the wet market, is now being replaced by regular visits to the cold store, where sales of frozen foods are rapidly growing, To service this growing demand for frozen food, a new industry of cold store operators is growing throughout Asia. These operators are moving away from the smaller custom built units, and are building, multi user units with goods stored on pallets with a variety of cold store cells to accommodate a wide range of frozen goods, in varying temperatures up to -30C The cost of running a cold store can be up to 10 times the cost of an ambient warehouse, therefore careful planning is necessary to obtain the optimal return on this investment. With the growth of the Cold Supply Chain, a number of European and American cold store operators are moving into Asia, bringing with them the latest technology.
Invariably these systems are designed to max out use of the footprint and available height. This means moving away from the more conventional racking systems such as Double Deep and Drive in racks, to systems, which will provide increased pallet locations, as well as offering the facility for individual case picking is necessary. The key to designing any new Cold Store is to plan the storage system design at the Greenfield Site stage, where the dimensions of Cold Store suit the system to be used. It is still surprising that we see designs on the drawing board, which do not consider critical dimensions of the racking system. European operators have realized that size matters, for example a 15,000 pallet cold store only requires marginally more electricity to run than a 30,000 pallet store, at the same temperature, provide both rooms have the same number of doors. The positioning of doors and access to the cold room with airlocks can have a significant bearing on the power consumed, for high activity cold stores the use of pallet conveyors delivering pallets in and out of the cold store, with operatives using heated cab trucks can reduce cold air loss and substantially increase operational efficiency. The use of smaller personnel doors, in the larger stores have now become regular feature. Investment in high quality fast reaction SCMPr
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Singapore currently has the highest cold room at 30+m high in South East Asia, with an aisle changing AS/RS; similar systems have been installed in Vietnam and China although not to the same height. 44 SCMPr
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doors, which open and close automatically can reduce air movement into the coldroom, and ice forming By far the most popular storage option for the Modern Cold Store is Mobile pallet racking, where banks of Selective Pallet Racking are mounted on electrically driven mobile bases, set on tracks inlaid to the concrete surface. In Europe over 80 per cent of cold stores now, use Mobile racking system. In Asia, customers have also been fast to appreciate the benefits of these systems, with one supplier having built over 50 installations in Asia over the last 8 years With the use of adjustable pallet racking, the end user has 100 per cent selectivity of every pallet, with lower levels available for case picking. Albeit at the expense of access aisles, as only one aisle is available per block, which could consist of as many as 5-8 double entry racks. This requires some careful assessment of pallet movements and casepicking requirements per hour / day, as only one truck can practically work in one aisle. Previously considered operationally too slow, new hand held controls with RF (Radio Frequency) operation on the materials handling equipment, allow the racks to be moved immediately the reach truck exits the aisle, with an average time of less than 1 minute to reopen the next aisle, double pallet cycles of 20-25 pallet movements per hour is achievable. The use of Mobile pallet Racking, which was once considered one the most expensive options, has proved to be extremely cost effective, particularly so for a new Greenfield sites, where the cold room can be designed to suit the optimum operational features of Mobile Racking. All the cost of mobile racking is in the first 2m therefore Cold Store Consultants should be encouraged to max out the height to suit their Material Handling equipment, typically 12m+ for a reach truck operation or 16+m for Very Narrow Aisle. Optimum rack lengths are between 30-40m, too short rack runs will require more movement of the racks. Mobile racks are now offered with a number of safety features protecting pedestrian and fork lift access, they can be fitted with automatic zone picking features which
will subdivide the operational aisle into 2 or 3 smaller aisles for case picking. Night parking is another feature when the cold store is non- operational, it allows the aisle to be divided equally between all aisles to permit airflow when racks are stationary. Another important feature of Mobile racks is that the aisle lighting can be fitted to the rack, which only lights when the aisle is opened, this can reduce the use of power, and reduce energy and heat created. Using high-energy 250-watt bulbs over conventional 400-watt ceiling fittings, which can require another 200 watts to reduce the heat; it is possible to reduce the cost of lighting in the cold store by up to 80 per cent. Whilst flow racks remain a popular choice for operations which handle high numbers of homogenous product but with limited Sku’s (line items) requiring first in first out (FIFO), their cost per pallet location can be prohibitive. Channel Storage using an electrically operated satellite, which operates on a rail set below the pallet is an excellent economical solution. The satellite, which is operated by the Material Handling driver, can automatically store or retrieve to both first in last out and first in first out designs. It has a shuffle mode which will again automatically shuffle pallets from the on load to the off load position, it will can undertake an inventory count of the number of pallets stored per channel. Though most system uses rechargeable batteries, Schaefer have introduced a system, which works from a direct rack power supply, which suits high activity stores working 24/7. Batteries can lose about 25 per cent of their power capacity when working at extreme temperatures, so this alternative system is now very popular in cold stores particularly stores designed with Automated Storage and Retrieval System (AS/RS) systems. Singapore currently has the highest cold room at 30+m high in South East Asia, with an aisle changing AS/RS; similar systems have been installed in Vietnam and China although not to the same height. These systems provide full-automated storage, which can operate 24 hour a day, they can be provided with picking tunnels to allow, operatives to work at the lower levels case picking to pallets or belt conveyors. 44
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n BEST PRACTICE
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Frontiers in Supply Chain Education Any organizations require professional Supply Chain Manager, who can effectively understand and manage multi-layered, multi modal, integrated global operations both, Internally and their supply chain partners. SCMPro evaluates current SCM education Options in India.
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Education special
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n an article in Wall Street Journal on June 5th, The Hot New M.B.A.: Supply-Chain Management” Teresa McCarthy, director of Bryant’s global supply chain management program says “Employers don’t want cobbled-together courses; they want a real, content-laden supply-chain program.” Truly said. For long, India Inc. has been looking at areas of cost reduction along traditional lines – in purchases, consumption and utilities. However, one of the major contributors of costs and inefficiencies for India Inc. is the supply chain. A McKinsey report states that “the waste caused by poor logistics will be around 5% of the GDP by 2020. If tackled in an integrated and coordinated manner, this can be reduced by half and India’s transport fuel requirement reduced by 15 to 20 per cent.” One of the reasons for this state of affairs is the current education ecosystem in Supply Chain. The increasing irrelevance of the traditional functional perspective used in business education and the changing economic forces have mandated that industry abandon the vertical, functional division of the organization which follows the traditional procurement, manufacturing, and physical distribution operations in favor of a more horizontal, crossfunctional structure that emphasizes process management. Firms are redefining logistics to encompass the integration of all these activities to achieve coordinated planning, implementation, and control of goods, services, and information flows throughout the firm. Supply Chain Management can be re-defined as “Extending logistical integration to include management of logistics networks both within and across company boundaries to generate cost savings and/or better customer service over the total chain of organizations involved in supply, production, and delivery of final goods for consumption is termed supply chain management (SCM)” In a survey done by Clinton et al. report strong agreement (mean of 4.4 on a 1 to 5 scale) with the following statement: “My firm has increased its organizational commitment to a more com-
prehensive integrated supply chain during the past two years.” In a related question, more than 34 percent of the sample firms reported that they now have an executive position with the words “supply chain” in the title. Slowly, but surely, supply chain management is attracting the attention it needs. And specializations in SCM are now catching up. Supply chain organizations require professionals who can effectively understand and manage multi-layered, multi modal, integrated global operations both
Symbiosis Institute of Operations Management Program Objective: To Train the Engineers to become the Technomanagers by giving them a Industry and global exposure. Subjects : Operations Management, Supply Chain Management, Project Management as core subjects Program highlights: Operations as Core curriculum: Faculty with rich Industry and Academic experience, Program structure has got consistent national awards, Regular update of curriculum to align with the practice & Student exchange programs. Interactions with Industries, Global b-schools and Universities. Facilitiating the Global certifications from APICS, ISM. Having good placement record. Holistic development of the Individual by imparting the soft skills and personality development programs. Eligiblity: Only Engineers (B.E/BTech) in any field - having interest in Operations area. For criteria: Pls check for the updates in www.siom.in Duration: 4 Semester / 2 years Course start date: Normally 1st week of June How to apply: Through Symbiosis National Aptitude Test (SNAP) only. (2nd week of Dec) Advt for SNAP can be expected in Sept /October for the same. Pls refer www.siom.in Contact: Tel No: (0253) 2391750 / 2376108 Fax: (0253) 2379959, Email: admissions@siom.in
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Education PGDM – SpecializationSpecial in Logistics and Supply Chain Management from DSIMS PGDM – Specialization in Logistics and Supply Chain Management from DSIMS Program Objective: Program Objective: This Operations and Supply Chain Management program is designed to introduce the key concepts needed to This Operations and Supply Chain Management program is designed to introduce the key concepts needed to enable a business to organize and run an efficient Supply Chain. enable to organize and an efficient and SupplySupply Chain. Chain Management from DSIMS PGDMa business – Specialization inrunLogistics The program looks at contemporary issues in Operations and Supply Chain Management and creates a deep
The program looks at contemporary issues in Operations and Supply Chain Management and creates a deep Program Objective: understanding of the issues involved. It equips the participants with a good understanding of the ground level understanding of the issues involved. It equips theisparticipants with a good understanding of the ground level This Operations and Supply Management to global introduce the key concepts needed to enable a business situation and enables himChain to take decisionsprogram keeping indesigned mind the impact of the decisions. situation and enables him to take decisions keeping in mind the global impact of the decisions. to organize and run an efficient Supply Chain. Overall, the program would lead the participant to adopt an integrated approach create a competitive The program looks at contemporary in Operations Supply Chain Management andand creates a deep Overall, the program would lead issues the participant to and adopt an integrated approach and create a understanding competitive advantage for the organization. of the issues involved. It equips the participants with a good understanding of the ground level situation and enables him to advantage for the organization. take decisions keeping in mind the global impact of the decisions. Subjects Overall, the program would lead the participant to adopt an integrated approach and create a competitive advantage for the Subjects organization. The PGDM is a two year program, organized around six trimesters, spread across the two years. To help bring The PGDM is a two year program, organized around six trimesters, spread across the two years. To help bring Subjects: all students to a common and level playing field, DSIMS offers a two week long Boot Camp that focuses on all PGDM students a common and organized level playing field, offers a two week long Camp focuses on The is a to two year program, around sixDSIMS trimesters, spread two Boot years. To helpthat bring all students basics of Finance, Quantitative Techniques, Communication Skills,across Use ofthe office productivity tools like Excel, to a basics of Finance, Quantitative Techniques, Communication Skills,that Usefocuses of office productivity toolsQuantitative like Excel, Techcommon and level playing field, DSIMS offers a two week long Boot Camp on basics of Finance, Word and Power Point. Word and Power Point. niques, Communication Skills, Use of office productivity tools like Excel, Word and Power Point. First Year Year Subjects First First YearSubjects Subjects
Trimester 1 Trimester 1 Organizational Psychology Organizational Psychology Statistics Statistics Financial Accounting Financial Accounting Macro Economics for Business Macro Economics for Business Marketing & Sales I Marketing & Sales I Theory of Business Theory of Business Income Tax Income Tax
Trimester 2 Trimester 2 Organization Behavior Organization Behavior Uncertainty, Data and Models Uncertainty, Data and Models Cost and Management Accounting Cost and Management Accounting Prices and Markets Prices and Markets Marketing & Sales II Marketing & Sales II Operations Management Operations Management Legal Environment of Business (Tax) Legal Environment of Business (Tax)
Trimester 3 Trimester 3 Human Resources Management Human Resources Management Corporate Strategy Corporate Strategy Financial Management Financial Management Business Analytics Business Analytics Geo-Politics and Business Geo-Politics and Business Strategic Operations Strategic Operations IT in Business IT in Business
Second Second Year Year Subjects Subjects
Second Year Subjects
Trimester 4 Trimester 4
Warehousing Warehousing International Logistics International Logistics Process Management and BPR Process Management and BPR Production Planning and Control Production Planning and Control Quality Management Quality Management Service Operations and Retailing Service Operations and Retailing
Trimester 5 Trimester 5
Trimester 6 Trimester 6
Transportation Transportation Supply Chain Management Supply Chain Management World Class Manufacturing World Class Manufacturing Network Modelling Network Modelling IT for Supply Chain IT for Supply Chain Operations for Service Providers Operations for Service Providers
Business Forecasting and Demand Planning Business Forecasting and Demand Planning Enterprise Planning Systems Enterprise Planning Systems Operations Strategy Operations Strategy Risk Management Risk Management Factory Physics and Process Simulation Factory Physics and Process Simulation Sustainability and Green Supply Chain Sustainability and Green Supply Chain
Eligibility Program Highlights Apart from an industry ready course, eminent faculty pool and To be eligible for admission, you must meet the following Highlights requirements: aProgram contemporary curriculum, the PGDM offers a few unique Program Highlights l Have a Bachelor’s degree in any discipline from a recognized features that distinguishes it. University with minimum 50% marks in final year/semester. For the first time in the Indian management education, Apart from an industry ready course, eminent faculty pool and a contemporary curriculum, the Apart from an industry course, eminent pool and a contemporary curriculum, the l GMAT/CAT/CMAT/ATMA score * two unique features are offered ready by DSIMS – The once a week faculty PGDM immersion offers a few unique features that distinguishes it. other entrance exam recognized by AICTE. l Any industry where you are mentored by an industry PGDM offers a few unique features that distinguishes it. expert and a MiM which equips you with a wider perspective Durations than you would otherwise develop. For the first time in the Indian management education, two unique features are offered by DSIMS – The once a week the first time in the Indian management education, two unique features are offered by DSIMS – The once a week lFor Industry Immersion Two years full time industry where you are mentored by an industry expert and a MiM which equips you with a wider l industry MiM immersion immersion where you are mentored by an industry expert and a MiM which equips you with a wider l Rural Immersion Course Start date perspective than you would otherwise develop. perspective than you would otherwise develop. l International Immersion 16th August 2013 l Seminars and Conclaves in each functional area How to apply These initiatives jointly offer you an advantage that no other Applications can be either purchased from the institute office course can offer. To know more about our initiatives, please or downloaded from www.dsims.org.in. Filled in applications keep browsing through our links above. should be sent to the institute.
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Education special within enterprises and between their supply chain partners. This is true all across the globe. The principal concerns of the senior logistics managers SCM Pro has met over the past few months cite inability to find employees trained in integrated SCM – employees who can systematically coordinate the of activities and processes of procurement, production, and delivery of products and services to maximize customer satisfaction - as their major concern.
What ails Supply Chain Education? One of the biggest challenges for a holistic SCM education is the inability of academicians to break out of the “functional silos” they are so used to. In many B-Schools, faculty in purchasing, operations management, and logistics and transportation operate independently. This results in duplication of classes. Another issue with education in India is the tendency to create an omnibus course curriculum, with the emphasis on the breadth rather than depth of courses. The result is a student who enters her career as a jack of all trades and master of none. At the same time, the current curriculum design for Supply Chain Management does not permit investigation into current topics with any detail. In most colleges, faculty members are not comfortable teaching in areas beyond their expertise. This is perfectly fine at the first glance, but the demands of post modern industry is for a professional who has an integrated view of supply chains and is able to bring is expertise across a broader realm of issues. The current curriculum is not integration oriented. We get a functionally brilliant professional, but who fails when she has to create and maintain partnerships with vendors, customers, and service providers. All the Supply Chain professionals we spoke to want programs that have a multidisciplinary approach that can integrate fundamental product and process technologies with the business aspects of logistics and operations - an integrated curriculum that incorporates all aspects of the value chain. MSU business faculties enjoy a rich history of cross-functional collaboration. The first step toward integration was the creation in 1978 of a program in materials and logistics management that emphasized the relationships among procurement, production, and logistics. The program used common courses as the foundation for students majoring or concentrating in these three areas. It was an improvement over a strictly functional perspective, but still did not achieve a high level of integration. There was topic overlap, and concepts were functionally oriented. For example, the procurement view of the supply chain emphasized
Welingkar Institute of Management (We School) Post Graduate Program in Supply Chain Management (PGP-SCM) Objective of the program: This program will develop skills for the professionals to optimize organization profitability through effective management of supply chain encompassing the below given essentials: 1. Developing fundamental understanding of the basic flow of material in the supply chain 2. Learn the skills to leverage the advantage of proper supply chain. 3. Enhance ones skill to design result oriented strategies of supply chain. Subjects offered SEMESTER I SEMESTER II Principles of Management Stores Management Organizational Behaviour Logistics and Distribution Management Business Communication World Class manufacturing Production Management Global Supply Chain Management and Outsourced Manufacturing Purchasing and Materials ERP and web-based Supply Management Chain Management Program Highlights: 1. Course curriculum is designed based on professional inputs from diverse fields. This includes both industry and academia. 2. Content of the course is planned with an affluent theoretical and practical approach. 3. Comfort of a working professional has been taken into consideration with distance learning and Sunday classes. 4. This course can be adapted by all fresher, supervisors, Jr level executives and middle level Managers who wish to build their career in SCM. Eligibility: 1. Graduate in any faculty from a recognized University 2. Final year degree students awaiting results can apply for the above programs. 3. Note: HSC with 2 years work experience and Diploma holder (SSC plus 3 years / HSC plus 2 years) can also take admission for Certificate Program in Supply Chain Management (CSM) Duration: 11 Months Course commencement: PG / Certificate Programs will commence twice a year (July & January). How to apply: The candidate can apply to this program through our website www.welingkaronline.org or else they can visit the institute on the below given address. Contact: Prin. L. N. Welingkar Institute of Management Development and Research. L. N. Road, Next to R. A. Podar College, Matunga (C.Rly.), Mumbai – 400019. Tel: 022- 24198600 Extn : 8155 / 8156 / 8157 / 8158 / 8161 / 8162. Prashant: 9892595456 Email: autonomous@welingkar.org
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Advertorial
Advertorial
University of Petroleum & Energy Studies Tell something about UPES – Courses and the Cutting Edge? Born out of a unique vision, UPES is India's first energy university and Asia's first and only energy & core sector university. UGC and NAAC recognized, UPES offers over 46 graduate, postgraduate and doctoral programs to more than 5000 students in the high growth sectors of oil & gas, power, aviation, shipping, automobile, infrastructure, electronics, IT and logistics & supply chain. The Centre for Continuing Education (CCE) at UPES offers executive programs through distance learning mode for the working professionals. What is the general criterion for admission and which are the various options available to a student? The CCE programs are open to working professionals from the energy sector and allied industry with a minimum work experience of 2 years and at least 50% marks at the graduation level. CCE offers MBA in Oil & Gas, Power, Logistics & Supply Chain and Aviation Management for working professionals and also the part-time doctoral programs in the same domains. All these programs are for three years each. Are the courses being offered have acceptance universally including the corporate world? Yes indeed. CCE today has approximately 2500 students pursuing their executive MBA or part-time doctoral programs, and all these candidates are currently employed in the
and pursue higher education as a full-time activity. And the process to choose the best or I will say the most relevant distance learning school is to check its accreditations and approvals and its background and academic vigor in offering the desired distance learning programs. Is bank loan and scholarships available to distance learners? UPES doesn’t offer any scholarships or bank loans for its distance learning programs. Dr. Parag Diwan, Vice Chancellor
sector at various levels, and are either sponsored by their respective organizations or are pursuing the program in order to enhance their education for better prospects in the current organizations. Are students benefiting from online education, is the technology available today makes the process worthwhile? CCE doesn’t offer these programs through on-line mode as of now but would be launching the e-learning module shortly. Comment on the accreditation bodies in India and the process to choose the best distance learning school? I think the role all the accreditation bodies are playing in India is quite pivotal. It has not only strengthened the part-time education system, it has also given confidence to people who can’t afford to leave their jobs
Is distance education of high quality? What is the future of eLearning? Yes, UPES takes pride in offering its distance learning programs and has in the process constituted the centre for continuing education as one of its centers of excellence in the university system. In order to offer quality education through distance learning, CCE today has a separate and independent team of professionals working in it, with an exclusive website and a marketing and communication office premises. With more and more people joining the internet bandwagon, e-learning is the future, especially with working professionals operating out of remote locations and transferable jobs, e-learning is the mantra and also the lone survivor. But the only worry is about the bandwidth, or the quality of IT services provided by the e-learning institutes to its students.
Education Special
EPGPSCM EPGPSCM from from ISCM ISCM
Program Objective Program Objective
EPGPSCM from ISCMthe working The The EPGPSCM EPGPSCM is is an an executive executive education education program program aimed aimed at at providing providing the working executive executive aa chance chance to to learn how to run a well oiled supply chain program. The course is aimed at the practicing manager and Program Objective learn how to run a well oiled supply chain program. The course is aimed at the practicing manager and The EPGPSCM involve is an executive education program aimed at providing the working executive a chance to learn how to run a well hence hence will will involve judgment judgment of of the the students. students. oiled supply chain program. The course is aimed at the practicing manager and hence will involve judgment of the students.
Subjects Subjects Subjects
Sr. Sr. No No 1 1 2 2 3 3 4 4 5 5 6 6
Term Term II Business Business Economics Economics Human Resource Human Resource Management Management Statistics for Managerial Statistics for Managerial Decision Decision Making Making Marketing and Sales Management Marketing and Sales Management Basic Basic Finance Finance for for Non Non Finance Finance Theory of Business Theory of Business
Term Term II II Basics of SCM Basics of SCM Third Third Party Party and and Fourth Fourth Party Party Logistics Logistics Operations of Service Providers Operations of Service Providers Warehousing Warehousing & & Transportation Transportation Management Management Technology in SCM Technology in SCM Understanding Understanding Strategy Strategy
Sr. Sr. No No 1 1 2 2 3 3 4 4 5 5 6 6
Term Term III III Integrated Integrated Logistics Logistics Service Service Providers Providers Operations Management Operations Management Sales Sales & & Distribution Distribution in in SCM SCM Strategic Profitability Management Strategic Profitability Management Strategic Strategic Sourcing Sourcing Supply Chain Supply Chain Network Network Design Design
Term Term IV IV Supply Supply Chain Chain Risk Risk Management Management Forecasting & Demand Forecasting & Demand Planning Planning Shipping & Air Logistics Shipping & Air Logistics Retail Retail Logistics Logistics Legal & Legal & Tax Tax Aspects Aspects in in SCM SCM Supply Chain Simulation Supply Chain Simulation
Seminars and Workshops 7. To understand barriers companies face during the implemenSeminars and Workshops Seminars and To supplement theWorkshops curriculum, students have to attend a few tation of new supply chain strategies workshops and seminars. Students will have to attend these To the curriculum, students have to attend a few workshops events to complete the course. Some ofstudents the areashave covered be: a few Eligibility To supplement supplement curriculum, to will attend workshops and and seminars. seminars. Students Students will will have have to attend these events to complete the course. Some of the areas covered will be: Project 1. management Students who wish to enroll for EPGPSCM have to meet the folto attend these events to complete the course. Some of the areas covered will be: 2. Communication Skills lowing eligibility criteria: 1. management 3. Humanitarian 1. A graduate in any discipline 1. Project ProjectLogistics management 4. Sustainability and Green Operations 2. Working knowledge of computers 2. Communication Skills
2. Communication Skills 3. Humanitarian 3. Highlights Humanitarian Logistics Logistics Program 4. Sustainability and 4. Sustainability and Green Green Operations Operations
Duration 1 To develop an understanding of key drivers of supply chain Eleven Months Week end program. Classes will be held for two performance and the relationship with other functions of the days a week – Saturday and Sunday. company such as marketing, HR and finance. The timings are: Program Highlights 2.Program To impartHighlights analytical and problem solving skills necessary to Saturdays – 4.30 PM to 9.00 PM develop solutions for a variety of supply chain management and Sundays – 9.30 AM to 2.00 PM 1. To an understanding of drivers supply chain performance and the relationship logistics including an the use of IT in supply chain optimization. dateperformance and the relationship 1. issues To develop develop understanding of key key drivers of of Course supplyStart chain with other functions of the company such as marketing, HR and 3 To understand the complexity and intra-firm 17th August 2013finance. with other functionsofofinter-firm the company such as marketing, HR and finance. coordination in implementing firm wide programs 4. To develop the ability to design and formulate integrated sup- How to apply ply chain strategy and logistics systems, tuned to suit corpoInterested candidates are requested to either down load the rate strategy, market requirements and competitive realities. brochure from the institute’s partner website at www.dsims.org. 5. To understand which information should be exchanged in a supply in location or buy the same from our partner office at: chain and how it should be used to benefit the entire supply chain. Durgadevi Saraf Institute of Management Studies, 6. To identify improvement opportunities that exist within sup1st Floor, S V Road, Malad West, Mumbai 400064 ply chains in different industries and to quantify the improveOn Monday to Saturday, between 10.00 AM and 6.00 PM, by ments that different strategies offer. paying a fee of Rs. 1000.
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Education special suppliers, while the logistics view of the supply chain emphasized customers. One problem with a cross-departmental approach involves traditional university measurement systems. Since teaching lines are often allocated on the basis of credit-hour generation, there is strong incentive for a department to teach introductory courses and neglect advanced courses. In addition, assigning an introductory course to one department and faculty member results in a somewhat limited view, depending on the teacher’s academic focus and experience. If the instructor is charismatic, students tend to be drawn to the functional area of that faculty member, which further affects credithour generation and faculty line allocation. As in industry, traditional performance measures drive a functional orientation. Colleges in India should take a cue from their counterparts in the US who have joined the University Alliances program run by software company SAP AG, to give students hands-on training with the logistics technology they will be expected to use in the workplace. SAP has added more than 250 schools to the program in the past 18 months, and now counts more than 1,300 partner institutions.
A look at the future of SCM As we globalize and move up the value chain, our supply chains will need to be more integrative. And
the transformation should start from the curriculum for the budding professional. The major thrust of this approach is: n Understand the role of marketing segmentation, targeting, and positioning as an integrated pat of the value chain. n Acceptance of the fact that increasingly geography will become history – organizations would decide their plant locations, sourcing, and sales locations based on cost and competitiveness considerations rather than proximity. n Develop vertical coordination and integration between organizations and operations. In the absence of well developed courses in Supply Chain Management, Indian professionals tend to acquire a certification from institutions across the globe – like APICS, CPSM from ISM, and a host of domestic institutions, some of whom offer well differentiated courses. One mandatory requirement for SCM education is the use of Simulation in classroom to provide an integrated platform for understanding the nuances of a modern value chain. The combination of classroom learning, and internship with logistics firms, yields graduates who can excel in entry-level management positions and who understand how functional roles integrate with other activities, within and external to the firm. The overall goal is to produce graduates who can think systematically about the supply chain.
www.scmp.in ...think supply chain July 2013Professional 53 Pr Industry Portal for theSCM Supply Chain
Advertorial
Scope of Supply Chain Management The field of supply chain management has become tremendously important to companies in an increasingly competitive global marketplace. It is a network of suppliers, manufacturers, C&Fs, and distributors which focuses on transforming the raw material into semi finished or finished good and distributing the same to the end users. Supply chain management is important both in the physical goods industry as well as pure services industry. Management of supply chain is to facilitate flow of information, material, and services from the supplier to the final customer. SCM focuses on cementing the relationships between the supplier and the buyer. Supply chain management is essential to company success and customer satisfaction. In essence, supply chain management integrates supply and demand management within and across companies. SCM drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology. Continual advancement in information technology and the expanding IT infrastructure are introducing new opportunities to improve service and efficiencies, and given the amount of business value at stake, the opportunities are very high. It contributes to business performance by finding out ways to get goods to the customer better, faster and cheaper. SCM aims to improve the efficiency, productivity and profitability of the entire process. When the customer has direct access to global suppliers, the number of competing vendors in
any category is huge. Global markets have created stiff competition in the market place thereby compelling companies to maintain competitive prices. Thus, the ability to produce a given product at a lower cost can give any company tremendous competitive advantage irrespective of its geographical location. At the same time, increased volumes in the global market add substantially to the companies bottomline. SCM is all about achieving higher volumes and better service levels either by reducing or without having to raise costs. Supply chain managers are essentially the implementers of the procurement strategy, the manufacturing plan and the distribution scheme in alignment with the goals of the company. Since the industry realizes the extent to which the synergy of all these activities determines the overall profitability of any firm, a lot of effort is directed towards improving the efficiency of supply chain. Strategic Sourcing, tracking the material, Productivity Management, Total Quality Management (TQM), Enterprise Resource Planning (ERP) are the vital tools for successful implementation of SCM. With the ever increasing complexity of supply chain operations, organizations are seeking for specialized managers who are exclusively trained in supply chain management. We at Prin. L. N. Welingkar Institute of Management Development and Research Mumbai have designed this program keeping in mind the ever increasing demand of trained professionals.
n KNOWLEDGE
n STRATEGY
n BEST PRACTICE
n TRENDS
n human resource
Beyond the horizon The next Generation of Talent Management Practices Without doubt, people are the greatest creator of value in a company. In harmonizing products, services and business processes, it is people who become the value enablers. Without which, success is neither assured nor sustainable, writes Darryl Judd.
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n today’s business environment and the global economy, talent is the most strategic asset an organisation holds and without doubt, people are the greatest creator of value. In harmonizing products, services and business processes, it is people who become the value enablers. Without which, success is neither assured nor sustainable. Organisations that recognise and embrace the link between people, company performance and who actively invest in next generation talent management programs will lead the market in the long term. With this as backdrop, we must ask what is coming next and what
does this mean for organisations battling to attract and retain talent? According to a recent white paper from Oracle, the next generation of talent management practices and solutions will largely be driven by economic evolution, demographic changes and technology advancements . All of which make sense when we consider these factors and the dramatic manner in which they are influencing the way people work, companies are organized, and the way talent is sourced and managed. In today’s post GFC world, businesses have seen structural changes to the global economy. The long-term impact of these changes are only now
being felt. They impact ourin our ability to compete for the best people and theydrivechanges in talent management strategies. Thesechanges include; n The knowledge economy: The transition to a knowledge economy has transformed the way we value companies. Talent is now a required strategic asset. Key changes in the future include a continued blurring of the line between inside and outside talent that will result in an expansion of the talent management scope. n Globalisation:The top expansion prospects for global companies now include less traditional markets of the BRIC nations (Brazil, Russia, India and China) as well as Eastern SCMPr
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COO, Logistics Executive darrylj@ logisticsexecutve.com
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talent Europe, Mexico and the rest of emerging Asia—not the usual suspects. This continued expansion provides both challenges and opportunities around talent sourcing, talent utilisation, diversity and risk management. n Skills gaps and structural unemployment: An ever-increasing pace of change means organisations will face more structural unemployment challenges (an inability to redistribute pools of talent no longer required to locations where it is needed) and skill gap issues. As a result, reskilling and continuous learning cultures will become increasingly important, as will the ability to rapidly and accurately identify current skills and talent in the organisation. Demographic factors are also driving changes in talent management such as generation geographies, longer lifespans and workplace diversity. Baby Boomer retirement has been topof-mind for many years particularly in mature economies like the United States, however an even more significant demographic changes are happening outside the U.S, where population growth rates and aging populations are poised to stifle local economies. The ability for organisations to successfully tap into global talent or effectively move talent from areas of abundance to scarcity is becoming a strategic issue. It’s also no secret that we are living longer, however the aging of the global workforce is only half of the story. Increased health and longevity mean that seniors are working longer. This enables organisations to keep experienced team members into their retirement years. Whilst this is a significant benefit to ensuring retained human capital IP, it also complicates workforce planning and raises generational challenges related to long-term succession planning. Couple the above with an increasing workplace and team diversity, which is principally being fueled by globalization and demographic changes. A more diverse pool of talent affords new opportunities such as hiring workers who are underrepresented in the workforce of a particular country to gain competitive advantage. For all the benefits of diversity, it also can carry risks related to team cohesion, cultural bias, and initial productivity. 56 SCMPr
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There is also a dramatic increase in the traditional use of outside talent. The use of contingent workersis way up and will increase even more in the future. In the study undertaken by Oracle more than 35 per cent of employers planned to increase their use of contingent workers by 50 per cent or more and labor law firm Littler Mendelson believes that contingency employment could eventually represent 50 per cent of our workforce. As a comparison in 2003, contingentworkers represented just 13 per cent of the workforce. The blurring of the line between employees within the organization and those outside it is also drivingtalent management changes, particularly around sourcing, strategic workforce planning and employeeengagement. Given these changes, executives in leading companies are increasingly focused on talent management issues and workplace alignment, recognizing that talent, wherever it comes from, is their only sustainable competitive advantage. In an effort to turn challenge into opportunity, leading-edge organizations have increased their efforts to tap into wider talent markets and build a network of intellectual human capital engagement platforms that extend notonly to employees but also customers, partners and the public at large in an effort to create an extendedconnection to the potential talent. Employers are embracing workplace alignment principles and technology engagement platforms that extend beyond the traditional careers sites and are investing in rich web-enabled platforms that are easily integrated to the ever-increasing mobile technology platforms like smart-phones and tablets. This enables organisations to source and collaborate on knowledge work with any part of the world, tapping into a global talent pool. It’s not just employers watching these technology developments closely either. Increasingly potential employees are adopting new gadgets and technology in their personal lives. As such they will increasingly expect similar tools and levels of empowerment in their professional lives. They will judge employers by their commitment to employee enablement and the company’s ability to quickly transition from consumer technology to enterprise technology.
Organizations are increasingly deriving value from talent and that the future workforce planning is becoming a greater strategic asset to the company. Linking people to sustainable company performance with a coherent workplace alignment and engagement platforms will ensure connectivity to wider and a more diverse talent. In developing countries, one issue that technology cannot fix is the large number of youth workers now entering the workforce. The challenge that this creates is for companies that operate exclusively in developed countries, and yet it presents opportunities for larger multinationals that operate in both developed and developing countries. The capabilities of multinationals to successfully develop and transfer talent from areas of abundance to areasof scarcity in the short term, and to permanently relocate operations to areas of talent abundance in thelong term, will be important drivers of talent differentiation in the coming years. Smaller companies or those that require a local presence in a particular developed geography need to consider how to leverage and connect with talent in the developing world via technology, virtual presence, human capital partners and training organisations. It’s clear that organizations are increasingly deriving value from talent and that the future workforce planning is becoming a greater strategic asset to the company. Linking people to sustainable company performance with a coherent workplace alignment and engagement platforms will ensure connectivity to wider and a more diverse talent but once there is a recognition that it’s an investment that will drive profits for tomorrow.
event report
SCMPro - Pharma Supply Chain Summit 2013
“Unlocking the Potential for Higher Growth” ON June 14th 2013, over 60+ Supply Chain professionals from Pharma verticals and related Service provider stepped away from their day to day SCM duties to take part in one day Summit on Pharma Supply Chain Summit organised by SCMPro team.
BIG Fight: (L to R): Arif Siddiqui, Upendra Dinani, Manoj Lekhrajani, Ashu Gupta and Javin Bhinde
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he 1st edition of Pharma Supply Chain Summit - 2013 titled “UNLOCKING THE POTENTIAL FOR HIGHER GROWTH” organised by SCMPro and supported by Agility, Icertis and Tranfreez, was successfully concluded on 14th June at The Lalit, Mumbai. The one day event witnessed the crème of Supply Chain professionals from corporate such as Novartis, Bayer, Cipla, Bilcare, Watson,Aurobindo, Biocon etc along with select LSPs congregate to hear Industry Experts, Consultants and Academicians deliberate on the pain areas affecting the Pharma Supply Chain. The keynote presentation was by Dr. Rakesh Singh, Director DSIMS on ‘Challenges in Pharma Supply Chain. Dr. Singh
enlightened the delegates with current challenges faced by the industry. And also pointed out that India with one of the largest US FDI approved Pharmaceutical companies; need to be prepared to take advantage of the opportunities provided by the global business environment. Paul Good - CEO Agility, spoke on the critical topic of Managing Temperature Controlled Supply Chain in Pharma Vertical. He highlighted the importance of uninterrupted series of Supply Chain management processes to ensure the shelf life for Pharma products. The most appreciated session of the day was titled “Big Fight”, a panel discussion bringing together manufacturers, CFA’s and distributors together to deliberate on one of the most pressing pain points for the industry - on storage and distribution. The panel consisted of Ashu Gupta, AVP, Mylan Pharma, Javin Bhinde, Director, Syncore Consulting, Manoj Lekhrajani, CEO, Pharmapoint and Upendra Dinani, Director, D.Vijay Pharma. The discussion was moderated by Arif Siddiqui, founder, Coign Consulting. The discussion shed light on the various grey areas of storage and distribution, and the role each stakeholder plays in ensuring drugs reach the consumer in the right potency . Niranjan Umarane – Director, ICERTIS deliberated on ‘Transport Optimization to deliver superior supply chain performance’. The concluding session of the summit was on “Skill Set Requirement for the Industry”. The session started with a presentation SCMPr
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event report
Panel Discussion on ‘Skill Set Challenges for Pharma Supply Chain’: Prasad Deshpande, Narayan Rao CV, Rishabh Bindlish, Abhijit Chaudhuri and Dayanand Deshpande
Delegates Registrations
High Tea Networking
Keynote Presentation: Dr. Rakesh Singh, presenting “Challenges in Pharma Integrated Supply Chain”
58 SCMPr
July 2013
by Abhijit Chaudhuri, JMD, Milestone Consulting, followed by a panel discussion on the topic. The panel discussion was moderated by Rishabh Bindlish of Accenture and the panellists included Narayan Rao CV, Head Supply Chain , Aurobindo Pharma, Prasad Deshpande of Biocon, Dayanand Deshpande, of SynCore Consulting Group and Abhijit Chauduri - JMD of Milestone Consulting Group. Look out for the proceedings of the conference in our next issue of SCM Pro. 58
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