SUPPLY CHAIN MANAGEMENT PROFESSIONAL
10th Jan 2016 | Volume 1- No.9 | Rs.200
Moving Beyond Risk Supply Chain Resilience
TECHNOLOGY
Robotics – Pushing the Efficiency Frontier
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STRATEGY SUMMIT
LSP FOCUS
28
30
Building Supply Chain Alignment in a New Networked World
Delivering More With Less
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editorial
SUPPLY CHAIN MANAGEMENT PROFESSIONAL
Publisher Jayaram Govindan Nair Jayaram.nair@scmp.in Mobile:9821732929 Editor Girish V S girish.vs@scmp.in Graphic Designer Sidhi Jadhav sidhi.jadhav@scmp.in 022 60020157
Lead, Kindly Light, Amidst the Encircling Gloom
Advertising Riddhi Solanki riddhi.solanki@scmp.in 022 60020157 Bhavi Shah bhavi.shah@scmp.in 022 60020159
and its c ohorts are w aging a b rutal w ar on one side, and on the oc c asions. N ot the b est w ay to start a N ew Y ear.
The structural imbalances that face us cannot be resolved with short term measures. Hope the government stays true to the course.
The single hope w e hav e is to ac c elerate our ow n grow th. The b suc c eed.
GIRISH V S E ditor girish. v s@ sc mp. in
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enign
Administration & Subscription Sanjay Gupta sanjay.gupta@scmp.in 022 60020156 Editorial Advisory Board Dr. John Gattorna Dr. Mahender Singh Dr. Rakesh Singh Media Group D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (W), Mumbai 400062. INDIA. Printed and Published by Jayaram Govindan Nair on behalf of B2B Media Group. Printed at Kalakshi Printing Works, 205 Gopal House IB Patel Road Goregaon (E) Mumbai 63 and Published at D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (West), Mumbai 400062. INDIA. 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 publisher. Such written permission of the 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 the future editions. Opinions reflected in the publication are those of writers. The publisher assumes no responsibilities for return of unsolicited material or material lost or damaged in transit. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only. Annual Subscription Rate: INDIA: Rs. 2000/Editorial Partner:
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content Lead Story Building a Resilient Supply Chain
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Summit Building Supply Chain Alignment in a New Networked World
Dec. Jan 2016 Volume 1 No. 9
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SUPP MANALGY CHAIN P R O F E EMENT SSIO
Moving B eyo Supply Ch nd Risk ain Resilie nce
NAL
10 th Jan 201
6 | Volume
1- No.9 | Rs.2
00
TECHNOLOG
Y
Robotics – Push Efficiency Fron ing the tier
22
STRATEGY SUMMIT
Building Suppl y ment in a New Chain AlignNetworked World
28
06 SCM News
LSP FOCUS
Delivering Mor e With Less
30
Comments on Global Supply Chain News
HR Navigating through Market Transition in Asia - Darryl Judd
LSP Focus Delivering More With Less Praveen Somani
09 Lead Story
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Moving Beyond Risk - Supply Chain Resilience
22 Technology
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Robotics- the future of supply chains
26 Academic Advocacy An impact of manufacturing flexibility and technological dimensions of manufacturing strategy on improving supply chain responsiveness
Feature E-commerce: How it is changing supply chains & logistics
44 Industry Interface
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Tech Talk Technologies That Will Re-shape Supply Chains Interface Building Partnerships, Creating Value
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UBER-ising the Indian Truck Market – Part II
46 Tech Talk A Vision of Digital India – Jaipur Smart City
48 SCM Updates SCM news from India
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SCM News
Move Over 3-D Printing – 4-D is here We are yet to see widespread adoption of 3-D printing among manufacturers and consumers. However, Self Assembly Lab of MIT is developing a 4-D printer! Yes – 4-D. The fourth dimension here is time. Skylar Tibbits, who heads the Self Assembly Labs, defines self-assembly as: “a process by which disordered parts build an ordered structure through only local interactions.” In this world, parts find other parts and arrange themselves into objects. The energy that drives the process comes from “free” sources such as agitation and pneumatics that excite the systems. The problem with 3-D printing is a large build envelope for larger parts, His team is working with Stratasys Ltd, to incorporate self-assembly into the 3-D printing process. The team is developing multi-materials that can transform at a later time, when supplied with energy – any kind of energy – shaking, water, electricity, etc. Imagine a 3-D printer that prints out a sheet which can be transported to your home, where you spray water on it and it transforms into a chair, or table, or wardrobe. Imagine if you could then re-assemble them into alternate shapes if you feel bored, with probably a shake! No more manual assembly and odd sized shipping. And it does not need huge 3-D printers. Just a flat surface printer will do. Welcome to the 4-D world.
Re-Inventing Postal Organizations One sector that has rued e-mail is the mail and parcel delivery firms. Mail volumes have fallen dramatically over the past few years and there is no saving grace. The digitally enabled customer now has a different set of wants. Where, earlier, we would wait weeks for a letter, we now want immediate gratification. Globally, firms are now focusing on parcel delivery, services and supply chains. A recent survey by Accenture revealed that the digital customer wants three things – control over when, where and how their parcels are delivered, lockers or pick up locations that enable secure 24X7 pickup, including anonymous delivery and freedom to choose their deliver times, at different price points. According to the report, B2C will surpass Business to Business (B2B) in terms of parcel volumes in Asia and in North America. Two, B2C will continue to grow revenue at an estimated 6 percent per year in North America, 5 percent per year in Western Europe and nearly 14 percent per year in Asia-Pacific. Three, eighty percent of retailers see a positive and measurable impact on customer satisfaction by offering multiple delivery options to shoppers and seventy-seven percent of retailers aim to increase investment in delivery over the next two years.
IoT to Transform Trucking As technology matures, we will see rapid adoption of IoT in supply chains – a scenario where pallets will talk to trucks, containers will talk to trains, trucks will talk to each other. Imagine, as the truck moves along the roads, pallets, containers and trucks will send and receive information to central servers, providing an unprecedented visibility into supply chains. While attention has been focused on visibility into the supply chain and the trace and track capabilities, there are a few specific areas where IoT can help truckers. When connected with high-speed mobile data from sensors on trucks, truck owners can measure real-time fuel efficiency, and how drivers operate their vehicles - do they brake too late, or waste diesel. Apart from this, it can help optimize speed on routes, track driver routes, time spent loading and unloading and help improve fuel efficiency. Inputs from mobile devices like smartphones can help drivers route around construction or congested areas.
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Supply Chain Management Professional
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08-12-2015 PM 05:23:55
Moving Beyond Risk Supply Chain Resilience Supply chains are at the heart of the enterprise. If we accept that meeting the demands of a customer is the reason for a corporate, then supply chains are vital. There was a time when the supply chains were relatively simpler. You procured locally and sold locally. Today, the relentless pursuit of profits has forced firms to re-locate their manufacturing capabilities to countries where they have cheap labor and abundant raw material. They serve customers across the globe. With the result supply chains have become multi layered, complex, global phenomenon. Unfortunately, this increases the risk in supply chains. Due to this global foot print, supply chains are increasingly opaque and regulated. Today, firms are prone to supply disruptions – floods in Thailand caused auto manufacturers in US to cut back production. The Japanese Tsunami and earthquake had its repercussions in Brazil and Argentina. Three mega trends define supply chains of the future – increasing urbanization, scarcity of
resources and technology evolution. To survive and flourish in such volatile business environment, firms need to continually assess their supply chain resilience. A Business Continuity Report published in 2013 finds that 90% do not know if key suppliers have business continuity plans, 75% experience at least one major supply chain disruption a year and 42% experience a major disruption below tier 1 suppliers. The Supply Chain Risk Leadership Council defines “supply-chain risk” as the likelihood and consequence of events at any point in the end-to-end supply chain, from sources of raw materials to end use of customers. And “supply-chain risk management” as the coordination of activities to direct and control an enterprise’s end-to-end supply chain with regard to supply-chain risks. What then is supply chain resilience? Why do we need to start focusing on resilience? Supply Chain Resilience is a relatively undefined concept. It marks the ability of a supply chain
to return to its original state after a disruption. According to a World Economic Forum report, more than 80percent of companies are concerned about supply chain resilience. While supply chain risk management tries to mitigate the adverse fall out of a disruption, a resilient supply chain bounces back from disruptions quickly. Supply chain risk management is defense, while supply chain resilience is offence. A resilient supply chain focuses on sustained performance that can flexibly adapt to disruptions, and provides firms with the agility to outperform in the market. For this issue of SCMPro, we examine the concept of supply chain resilience. Not much attention has been devoted to creating resilient supply chains. We feel it is time to open up the debate on supply chain risk – and bring resilience on to the table. Time we designed resilient supply chains.
Supply SupplyChain ChainManagement ManagementProfessional Professional
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Lead Story
Driving Blindfold into Disaster Business Continuity Institute SUPPLY CHAIN RESILIENCE REPORT 2015
Currently on its seventh edition, the Supply Chain Resilience Report is an influential industry resource which tracks the origins, causes and consequences of supply chain disruption across industry sectors and regions worldwide. It also benchmarks business continuity (BC) arrangements in place - including the uptake of insurance - in different organizations which build supply chain resilience. It is one of the most comprehensive, practitioner led studies in the field. We bring you a synopsis from the report. You can read the report at http://www.thebci.org/index.php/about/newsroom#/news/driving-blindfold-into-disaster-137071 Nearly one in ten organizations are not aware of who their key suppliers are, leaving them open to severe disruption as they are unable to manage their supply chain effectively. That is according to a report published today by the Business Continuity Institute and supported by Zurich Insurance Group. The Supply Chain Resilience Report highlighted that seven in ten organizations admit to not having visibility over their full supply chain, and as the survey also revealed that half of disruptions occur below the
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preliminary tier 1 supplier of goods, this makes it extremely difficult to establish where an organization lies within its suppliers’ priorities. This could have major consequences when it comes to managing the supply chain and ensuring that disruptions are minimized, which is particularly important given that the report also found that 74% of organizations had suffered at least one disruption during the previous twelve months and that 14% had suffered cumulative losses of at least €1 million as a result.
Other findings of the report include: ● Unplanned IT and telecommunications outage (64%), cyber-attack and data breach (54%) and adverse weather (50%) are the top three causes of supply chain disruption. New entries to the top ten are: product quality incident (8th), business ethics incident (9th) and lack of credit (10th). ● The top five consequences of disruption are loss of productivity (58%), customer complaints (40%), increased cost of working
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(39%), loss of revenue (38%) and impaired service outcomes (36%). ● One third (33%) of respondents report high top management commitment to supply chain resilience, increasing from 29% last year. ● About 7 out of 10 respondents (68%) report having business continuity arrangements in place to deal with supply chain disruptions. Patrick Alcantara DBCI, Senior Research Associate at the BCI and author of the report, commented: “Recent incidents have shown us how supply chain disruptions can negatively impact an organization’s bottom line, reputation and
resilience. This year’s Supply Chain Resilience Report demonstrates how good practice can mitigate the worst effects of these disruptions. With findings consistently showing top management commitment as a key enabler of supply chain resilience, we encourage business leaders to take a closer look at their supply chains and champion good practice across their organizations.” Nick Wildgoose, Global Supply Chain Product Leader at Zurich Insurance Group, commented: “Through our work with customers in this area, we have found that increasing visibility along supply chains and resilience are major sources of competitive advantage. Top management leadership is the key to overcoming silo thinking about supply chains
within an organisation.” Now into its seventh year, the annual Supply Chain Resilience Report represents a long-standing working partnership between the BCI, Zurich Insurance Group and CIPS (Chartered Institute of Purchasing and Supply). It is now an influential and go-to industry resource that tracks the origins, causes and consequences of supply chain disruption across industry sectors and regions worldwide, as well as the overall evolution of risk. For example, the report has highlighted the greater risk of multitier exposure as well as simple direct supply chain exposure. You can download the complete report from: http://www.thebci.org
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Lead Story
A
Building
Resilient
Supply Chain
Supply Chain Resilience is an emerging discipline – but has been attracting attention of researchers and practioners alike. If the supply chain has to deliver the right product in the right quantity to the right customer at the right time, right place and right price, supply chains should be designed to withstand disruptions. Editor of Supply Chain Management Professional, Girish V S looks at the building blocks of a resilient supply chain.
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Lead Story The biggest risk to a business could be the supply chain. Business strategy of the day includes outsourcing, global supply base and distributed manufacturing footprint. As firms try to rationalize their procurement and production, they introduce complexity and multiple entities into their supply chains. Management today need to assess the impact of their strategy on their supply chain vulnerabilities. To insure the business from these vulnerabilities, firms need to design resilience into their supply chains. There are a few basics that need to exist for a supply chain resilience program to take off. One, the top management need to be risk aware and the employees need to understand their role and contribution to the risk score of their organization. Two, risk should be an integral part of supply chain management in the firm and three the managers should be aware that changes in business strategy can change the supply chain risk profiles. The Guiding Principles There cannot be a generic template for supply chain resilience. It is dependent on the degree of responsiveness to achieve operational excellence. However, we can identify a few basic guiding principles. One, when designing their supply chains, firms should embed supply chain risk perceptions into the supply chain structure. Supply chains are usually designed for reducing cost or improving customer satisfaction. Resilience is never a part of the objectives. However, as the supply chains grow complex, firms will have to include resilience as an objective function. To achieve this, firms need to map their entire supply chain – not just the adjacent nodes. Doing this will help them identify the pain points, constraints and critical paths. Constraints are the infrastructure challenges – lack of road, rail or port capacity. Two, firms need to map their
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sourcing strategy – while single source can be a good way to improve economies of scale, they are counterproductive from resilience point of view. One integral part of supplier evaluation should be the suppliers risk awareness. Three, include resilience principles in supply chain design. A single 3PL service provider may be able to provide lower costs. But introduces very high dependence, and reduces resilience. Firms need to plan manufacturing flexibility into their operations. Excess capacity boosts resilience within the chain. This was seen during the Tsunami and earthquake that decimated parts of Japan, destroying a number of auto part manufacturers who were sole suppliers to manufacturers like Toyota. Toyota lost 20 percent in annual sales and slipped from the number one slot globally. Similarly, a large consumer durable manufacturer was once threatened with a workers agitation. The management assessed the impact of the agitation as 25 percent of sales. However, an additional capacity at a plant in another state helped the firm limit its damage to 5 percent. Collaborate to Improve Resilience There is a lack of trust between the user and the supply chain service provider. Rarely do both entities sit together to plan capacities. The result is poor visibility into the supply chain. Supply chain collaboration is a way to improve resilience. As firms gain information on demand for their product and its volatility, or the bottlenecks in its distribution network, they can incorporate them into the supply chain design, providing alternatives. The success of Zara, the apparel firm, can be attributed to its ability to respond quickly to changes in demand. Ericsson lost out to Nokia because its ability to survive the disruption to its supply of chips due to a fire in the chip manufacturing facility of Royal Phillips Electronics
at New Mexico. Two sides of the resilience spectrum. Modern supply chains need to be designed for flexibility and agility. Agility is a function of visibility and velocity. Collaboration improves visibility, allowing free flow of information across the supply chain. However the biggest stumbling block to visibility is the siloed operations within the firm! A related concept is supply chain velocity. Supply chains are getting faster and longer. In physics, velocity is a measurement of the rate and direction of change in an object’s position. Velocity is speed with direction. In supply chain, it is the complete cycle of product design to store shelf. Firms try to reduce time it takes from product concept to the store. But success depends on how quickly the firm can react to information flowing up and down the supply chain. Free flow of information helps the firm improve its velocity, enabling it to respond quickly to the changes in its supply chain. Reducing non-value added lead times can significantly improve velocity.
However, as the supply chains grow complex, firms will have to include resilience as an objective function Supply chain resilience starts with business strategy and is reflected in the operational and tactical decisions in the supply chain. Indian companies need to start designing resilience into their supply chains. In the aftermath of the earthquake and tsunami in Japan, Toyota redesigned its supply chain by consolidating its components and insisted that its suppliers set up a second facility in a location in a different seismic zone. A lesson well learnt.
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Challenges toResilience Enterprises have realized the complexities of their global supply chains. And the attendant increase in supply chain risks. Across the globe, some of the largest firms have started to focus on the next step – designing resilience into their supply chains. But it is not an easy task. A program for supply chain resilience assumes a risk management culture in the organization. We look at the challenges to rolling out a supply chain resilience program in a firm.
Supply chains are prone to disruptions. Some from internal causes and some due to external factors. Large supply disruptions due to natural disasters leave no time for an organization to change their supply plans. To survive, firms need to be able to instantaneously rejig their supply chains. This means firms need to have a system in place that will scan the ecosystem for probable changes, develop scenarios, attach probabilities to these scenarios, develop mitigation plans and then develop capability to adjust their supply chains to recalibrate itself when a disruption happens. This goes beyond the commonly understood domain of risk management. To remain competitive, firms need to move to the next level.
Globally firms have started supply chain resilience programs. The Challenges In simple terms, supply chain resilience marks the ability of the supply chain to return to its normal stage after a disruption, in a very short period of time. However, as firms look at ways to improve resilience, the old belief system – that a supply chain has to be lowest cost – comes up. The fear that introducing resilience in a supply chain will increase costs is a very real one. Academic researchers have shown that resilience and efficiency can co-exist. In fact, in most cases they are complementary. The rising complexities of supply chains will Supply Chain Management Professional
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Lead Story force managers to focus more on supply chain risk and thereafter create a resilience program. The number one challenge to a successful resilience program is the existing mindset of the management and supply chain managers. A second major challenge is to balance lean vs. redundancy debate. For years, we have fine-tuned our supply chains to such an extent, that we have eliminated all kinds of duplication. It is recognized that while designing a lean supply chain, managers confront the causes of frequent disruptions, and design some degree of reliability into the systems. But in some cases it can amplify the risks. But, lean supply chains can shut down in hours – and there is no precedent to help firms recover. The famed Just-InTime model from Toyota is very good in normal times. But when disruptions happen, they amplify the effects. The floods in Thailand in 2011 is a case in point. The table below lists the impact of the floods on major auto manufacturers. Predictably, the loss varies by manufacturer. Toyota required 42 days to resume operations; Nissan resumed operations in 29 days and Honda, required 174 days to resume Production. Post the floods in Thailand, auto manufacturers changed their supply chain strategy to include at least one of following measures: ● Increase the inventory to have enough stock for at least a month ● Multi-sourcing strategy that involves not only sourcing parts from different suppliers but from different regions. ● Climatic de-risking of supply chain at geographic locations that are least impacted due to natural disasters. Just-In-Time is efficient in normal times. But during disruption, it can magnify the impact. Firms need to examine the feasibility of de-risking
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their supply chain to avoid large losses. For example Honda in India has increased its localization after the Thailand floods. A third challenge is the trend to concentrate freight by Node, Corridor and Cluster. To optimize costs, LSPs tend to adopt a hub and spoke model, with a few major transshipment nodes. This increases the vulnerabilities of the supply chain. For example, if the unrest in Middle East were to increase, spilling over into the Gulf Strait, it could affect Dubai port, disrupting a large section of trade flows. Or take the example of MSC Napoli, which was beached near the southern England coast in Jan 2007. It was carrying 160 tons of Nickel – reported to be 2 percent of the metal held in London Metal Exchange Warehouse. The result – Nickel prices shot up – topping at USD 36,300/- per ton. And since it is mainly used in the manufacture of steel, steel prices too increased. An example of concentration risk. From a resilience point of view, it is better to avoid such concentration of goods.
LSP’s to reduce prices will result in them choosing the least cost option – which may turn out to be a high risk option. The entities in the chain have to sit across and decide on the optimal chain – one that will enable the firm to reduce the impact of a disruption, or at least one that has fall back options. Resilience cannot be achieved in isolation. It is the outcome of all players working together in lock step to ensure smooth production and distribution. Supply chain Resilience programs can assist in aligning organizational priorities to mitigate the potential losses due to global supply chain disruptions. And as we increase our global footprint, we will have to think of resilience – no one would want to live with disruptions in a VUCA world.You can download the complete report from: http:// www.thebci.org
A fourth challenge is the lack of IT penetration in supply chains. Visibility into the supply chain is the first step to track potential disruption. Real time information gives advance warning of problems and enables de-centralized solutions. A classic example of the use of information in creating resilience is the Nokia - Ericsson chip disaster. Before firms can think of resilience, they need to invest in appropriate technology that will allow them insights into their supply chains, both upstream and downstream. A fifth challenge is the lack of trust between different entities in the supply chains. To ensure resilience, the entities in the supply chain need to collaborate with a common goal – maximize supply chain surplus. But the often adversarial positions taken by entities mean they could be working at cross purposes. Forcing
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Risk Based Internal Audit The Emerging Paradigm Warehousing, like other businesses has its own share of risks. Some are obvious and some are not. While management attention is focused on the big risks, the lesser risks have a tendency to slip under the radar. And throw up some nasty surprises. As with any stream of risk management, the first step is to gather data about the risks the warehouse faces. Understanding the risk is the first step to mitigating it. The Editor of SCMPro, Girish V S takes a look at Risk Based Internal Audit in a warehouse. A warehouse faces multiple types of risk. One set of risks stem from the infrastructure – fire, theft, damage to goods, improper storage, employee health and safety. The second set of risks stem from the processes followed in the warehouse – popularly called operational risk. A third set of risk stems from the business. Each of them need to be addressed differently. Of these, the business risk is the domain of the management and is linked to strategy. Infrastructure related risks – not having the right kind of infrastructure to support a product or process can create huge inefficiencies and cost escalations. Infrastructure risks are much more easily addressed – for example, in the agri-warehousing space, Warehouse Development Regulatory Authority has come out with a checklist for warehouses who wish to get accredited as per WDRA norms. This
includes plinth height, demarcation between stacks, firefighting equipments, electrical wiring and fittings, assay equipments etc. The basic minimum infrastructure for a warehouse has been established. At the same time, warehouse consultants have started the process of defining the minimum standards for a warehouse. This is available in the form of a pre-occupation site audit checklist. Infrastructure risk can be easily addressed by adequate investments. The ability to invest the right amounts to create best in class warehouse is dependent on the developer’s vision for the business. Addressing Process Risk The first step to streamlining processes within a warehouse is to define a set of standard operating procedures to be followed. In India, apart from the guidelines in place for a warehouse catering to exchange accredited warehouses, there are few standard processes defined – either
by the regulator or any other industry body. One area where warehouses are behind the curve is in stock reconciliation – between the physical and system maintained stock. As a service provider, the warehouse needs to assure service takers that the stocks as stated are really in the warehouse. A stock audit should be typically performed by a neutral third party. At the same time, the warehouse should have the ability to spot changes in patterns of arrivals and dispatches. The warehouse should have a system of alerts which will be triggered by any unusual pattern of in-bound or out-bound movement of products. It should be recognized that any defined process carries the risk of non-compliance with it. Operators tend to deviate from a process quite often. Not all these process deviations are bad. But the management should have the ability Supply Chain Management Professional
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Lead Story to audit these process changes and see if there is any negative impact on the operations. Which essentially means the warehouse management should adopt a system of risk based internal audits. Risk Based Internal Audit A warehouse manager does not have control over the goods coming into or out of the warehouse. But she is responsible for the storage and care of the materials in the warehouse. This includes right storage conditions, processes and quantity and quality of stock. Moreover, there is a wide range in the effectiveness of processes within a warehouse. This calls for an effective way to control and manage the processes. Risk based internal auditing (RBIA) as a methodology that links internal auditing to an organization’s overall risk management framework. RBIA allows internal audit to provide assurance to the board that risk management processes are managing risks effectively, in relation to the risk appetite. RBIA seeks to improve the management oversight of risk in the warehouse. Why RBIA
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risks. Stage 3: Individual audit assignments
to them and three - complete, accurate and appropriate reporting and classification of risks.
Risk Governance Framework
Implementing RBIA
Does RBIA deliver value to a warehouse? Like any risk management process, a well implemented RBIA will deliver several advantages to a warehouse. It will reassure the service taker that the WSP has identified and responded to risks proactively. It also will help the WSP avoid knee jerk reactions to incidents, allowing it to carefully calibrate the response to the risk incident. It also helps the WSP to monitor residual risks and develop mitigation strategies in line with the threat perception. Apart from monitoring threat perceptions, RBIA will help the WSP monitor the response to risk events, and ensure the operations continue smoothly and efficiently. It also brings in the discipline of incident reporting and measuring the impact of mitigation strategies.
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This enables internal audit to provide the service taker and the board with assurance they need on three areas: one – if the design and implementation of Risk management processes are effective; two management of those risks classified as ‘key’, including the effectiveness of the controls and other responses
The Chartered Institute of Internal Auditors of UK and Ireland have listed a three step process for implementing RBIA. This includes: Stage 1: Assessing risk maturity Obtaining an overview of the extent to which the board and management determine, assess, manage and monitor risks. This provides an indication of the reliability of the risk register for audit planning purposes. Stage 2: Periodic audit planning Identifying the assurance and consulting assignments for a specific period, usually annual, by identifying and prioritizing all those areas on which the board requires objective assurance, including the risk management processes, the management of key risks, and the recording and reporting of
Carrying out individual risk based assignments to provide assurance on part of the risk management framework, including on the mitigation of individual or groups of risks
RBIA represents the apex of risk management capabilities of a warehouse. Before an organization rolls out an RBIA system, they need to have a strong risk management system in place. Most Indian warehouses lack formal risk management functions. Most warehouses in India are promoter driven. Before undertaking RBIA, at the very least, they need to segregate management and ownership issues! A typical Board for a warehouse will be the promoter, his wife or children and friends. As a first step, these warehouses need to broad base their boards and bring in outsiders as independent directors. NCDEX, the commodity exchange has made it mandatory for the warehouses accredited with it to have a risk management framework, including risk governance.
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Reducing Systemic Risk In Agri – Warehousing It is estimated that 40 percent of the Agri produce in India is wasted before it reaches the fork. There are a number of reasons that contribute to this state of affairs. One of the biggest contributing factors is the absence of a modern agri warehousing system. In an extensive chat with Girish V S, Editor SCMPro, Raj Benahalkar, Chief Strategy and Risk Officer, NCDEX speaks about the steps taken to create a safer, reliable warehousing system for the Agri Commodity Markets. Warehousing in the Agri-commodity market is a crucial element in assuring fair returns to the farmer and ensuring food security for the nation. There have been many issues with regard to agri-commodity warehouses – in terms of quality, storage conditions, service quality, and delivery assurance. The recent scam in National Spot Exchange Limited was a manifestation of the ills of the warehousing sector – the trades were not backed by stocks.
Raj Benahalkar, Chief Strategy and Risk Officer, NCDEX
The extant regulations state that you have to have compulsory delivery of the commodity at the expiry of the contract. This meant there should be an ecosystem of warehousing. There are around 800 warehouses across 15 states of India, which are
affiliated to NCDEX. Even as an exchange we were not fully equipped to handle this kind of complexity. To top it, most of the people came from financial sector. The exchange set up the National Collateral Management Limited (NCML) – a pioneering effort. For seven to eight years NCDEX struggled to put the whole piece together. There were quite a number of challenges – the foremost was the reputation of the promoters – they were generally believed to be sub-par. Here were infrastructure issues, quality of warehouses were poor. Most of these warehouses were 50 to 100 KM from the cities, making inspection difficult. The employees were poorly paid, making the cost of frauds was low – with a minor amount one could cart away a Supply Chain Management Professional
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Lead Story couple of truckloads of commodities. Essentially the system was riddled with loopholes and integrity was suspect. That is when NCDEX took it upon itself to clean up the system. The best way to resolve an issue is to go back to the basics. T0 start with we visited at least ten percent of the warehouses to understand their operations and challenges. Then we sat with all the promoters and senior management of the warehouses, talked to the regulators. This data, along with the complaint history of eight years or so formed the info bank. We realized that there are some regulatory and legal challenges. Every state has different rules, and even within a state, each mandi followed divergent policies. Indore and Dewas – which are 50 KM apart have different laws! Warehousing and logistics was one area that touched almost all departments of NCDEX. We collected information from all these departments as to what they felt was the problem, and their suggested solution. Naturally, there was a gap between what the customers said and what our departments said. We had to reconcile them. We started looking at the customer complaints for patterns. Five issues came out very clearly – they comprised 85 percent of the complaints. We set up crack teams to solve these five problems. These were related to the quality, quantity, the time the commodity comes into the warehouse and it leaves the warehouse and operational issues. Within eight weeks we had some solutions and processes around these five areas. In three months’ time we could see a dramatic fall in the number of complaints. The turnaround time for resolving complaints which used to be 55 days came down to 27 days, subsequently it came down to 11 days and is now 7 days. While we addressed the operational issues, we had yet to address the
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critical issue of integrity. Everywhere people said – what happens if the promoter runs off with the commodity? His skin the game was not there. We started work on the integrity part. We started by contacting our counterparts in the US and checking with them their approach towards modernizing and reforming their markets, and the challenges they faced. This gave us a strong footing to reform the integrity issue. The initial net worth criteria for a warehouse service provider was just INR three crores. Against this three crores, the guy had three hundred crores of stock. We increased the capital to INR ten crores, and subsequently to INR 50 crores. That was one part of it – increasing their skin in the game. We then introduced a fit and proper criteria – who can be a warehouse service provider can become a warehouse with the exchange. We did not want every Tom Dick and Harry to become service providers to the exchange. We then introduced guidelines on corporate structure of the warehouse service provider. We then put in place a corporate governance structure for these firms. Before a commodity is placed in the warehouse, the WSP knows that such and such commodity is coming in. And that a player has contracted for space at the warehouse, from which he intends to do cash and carry arbitrage at the exchange. This information could be used to front run positions, creating conflict of interest. We included clauses on conflict of interest in our contracts. The next step was to create a very detailed operational process – right from the time the commodity comes in, to the storage, the safekeeping, fumigation, till the point it goes out. And at the time of delivery out of the warehouse, if there are issues, those should be addressed. We included customer service guidelines, very detailed customer grievance redressal mechanism. We brought in disclosure requirements – and these
disclosures had to be made under penalty for perjury. This was an issue – a lot of WSPs had a problem with the penalty clause. They were used to a two page balance sheet. This was not acceptable to us. It took us some time to bring them around. From the risk management perspective, we insisted on a security deposit. We created a layered security deposit from two percent to five percent based on the value of the stocks. We strengthened the insurance norms – the kind of insurance they need to have, the coverage, the valuation methodology. In addition they have to inform us of the risks they are taking on the non-exchange business of theirs. If the risks in the nonexchange business are so substantial that they can take the WSP down, then the customers of the exchange would be in trouble. We insist that these risks are also disclosed to the exchange. After a series of rigorous internal debates we created these detailed norms of all aspects of a WSP. The next step was implementing them. We realized that all these were a big ask from the WSP, who were used to doing business in a lax environment. We personally sat with each WSP – we shared the draft with them, and tried to understand what their pain points are. Across the board, the penalty for perjury was a pain point. They were wary of an inadvertent mistake being held against them. Some had issues with the cost – these measures would drive up costs. The WSPs agreed to abide by the rules, but did not want the penalty in the contract. And we wanted that clause. It gives us the legal handle to go after violators. Some had issues with the corporate structure – they were in the nature of partnerships. They would have to dissolve their partnership and create a corporate structure. WSPs would have to hire professional managers. It was a challenge for them to find such professionals and
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The employees were poorly paid, making the cost of frauds was low – with a minor amount one could cart away a couple of truckloads of commodities
These were vetted by two independent lawyers. We tightened the roles and responsibilities of the WSP. We were insistent on the legal provisions – we may not use them indiscriminately, but we wanted to have the ability to use it. And that is a credible threat. We also gave them time to implement these norms – some wanted more time to evolve a corporate structure, while others
them to issue a circular. With FMC merging with SEBI, it has become SEBI circular. Now we had regulatory backing. These norms we evolved became industry standard. We are now working with WDRA – the warehouse regulator to accept these guidelines. Since SEBI has issued this as a notice, there is no scope for regulatory arbitrage. If not, it would become a race to the bottom. A WSP who commits a fraud in another exchange could cause trouble for our customers. We pre-empted the collateral damage by going to FMC/ SEBI, who in turn issued guidelines to all the exchanges. We ensured that the key norms of ours were in the FMC guidelines too.
wanted more time to raise their net worth. We helped them make the transition by accommodating them, rather than shove it down their throats.
the professional managers had to learn to work with family managed businesses. We had a buy in from all the WSPs – we converted each one of them. Interestingly, the promoter managed WSPs were the first to come around – they saw the benefits of these processes. To increase business, they were willing to adopt these practices. But the professionally run companies had a problem. Eventually we got them around, and got the new agreement signed.
One issue here was – this was a bilateral agreement between the exchange and the WSP. There was nothing from WDRA. It does not have the regulatory backing. We then took these norms to FMC and got
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These norms collectively have managed to bring down the systemic risk of the Indian warehousing system, at least from the exchange perspective.
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Technology
Robotics Pushing the Efficiency Frontier
Automation in warehousing is taking a giant leap forward. From the initial days of material handling equipments, to automated storage and retrieval systems, to now robotics – automation is pushing the frontiers in efficiency. With the ability to work in hostile environments, to performing repetitive tasks without fatigue, robots have started their incursion into warehouses. So much that Amazon decided to acquire a robot maker Kiva systems. Closer home, an Indian robotics startup – Grey Orange has developed robotic systems for warehouses. Yaduvendra Singh, Global head of Sales & Marketing Grey Orange Pte. Ltd. on Robotics in Warehouses.
Yaduvendra Singh, Global head of Sales & Marketing, Grey Orange Pte. Ltd.
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There are two facets to a supply chain – one is transportation and the other warehousing. Transportation is best left to the Government. However, warehousing is a green field area in India. Whatever industry you take – FMCG, Pharma, retail etc., there is a huge amount of automation in the manufacturing process. Quite a few manufacturing industries – like the automobile industry – have become highly automated. But the moment the finished product comes out of the factory, it becomes scarily human dependent – irrespective of the mode of transportation, or even when it is sitting in a warehouse. Whether it is goods coming into a warehouse, put away ate a storage location or being dispatched to the store, all these processes are human dependent. This is not the scenario globally. Globally, enterprises have realized that efficiencies can be derived by optimizing their supply chain. Things are changing – there is a realization
among Indian firms that they need to bring in better automation in their warehouses. It is an open opportunity now. On the Automation Trajectory in Warehouses The Indian warehousing sector still under the misconception that labor is both abundant and cheap in India. That is true as far as unskilled labor is concerned. But skilled manpower is in short supply. It is a humungous challenge for firms to find skilled labor, or upgrade their skills and then struggle to retain them. Since warehouses are designed in the sweet spot of supply chain, there may be abundant skilled manpower in certain areas of the country, in most parts of India, this is a challenge. Indian firms have realized this and the use of automation within a warehouse is slowly increasing. The pace of automation has increased from the basic forklifts and RGVs, to now increased use of robotics
Supply Chain Management Professional
16-Jan-16 4:30:25 PM
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Mentors V S Girish Executive Director, ISCM
Dr. John Gattorna Global Supply Chain ‘Thought Leader’ and Author - Adjunct Professor, Sydney
Dr. Vaidy Jayaraman Associate Professor, University of Miami.
Dr. Mahender Singh Chief Executive Officer/Rector, Malaysia Institute for Supply Chain Innovation
Dr. Antony Paulraj Globalization Professor in Supply Chain Management at University of Southern Denmark
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Dr. Ioannis N Lagoudis Assistant Professor, Malaysia Institute for Supply Chain Innovation
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Technology and intelligent and semi-intelligent systems of warehousing. Which is where a sortation system or a goodsto-man delivery systems come in. As implementation of WMS increased, a need was felt for a warehouse control system (WCS) A WMS coordinates the inventory aspects of a warehouse, while a WCS is a gobetween the WMS and the physical machine. Warehousing is not an easy task. A wrong shipment or delayed shipment can result in customer dissatisfaction and lost orders. There a few reasons why higher degree of automation has not happened in India. One – the proliferation of global firms has not yet happened. Second – there is very little work being done in India to address these issues. There are a few operations that are common and consistent between all warehouses. For example, inbound is a time consuming activity. Within the warehouse there are problems with picking, not following protocols like FIFO, First Manufactured First out (FMFO) or First Expiry, First out (FEFO) in the case of Pharma industry. Humans have a tendency to not follow these practices. This leads to wrong shipments, challenges in reverse logistics, all of which add to the cost. Which provides a cogent argument for introducing robotics in warehouses. On ROI for Robotics It will not be appropriate to comment about other manufacturers. Grey Orange is able to demonstrate a ROI of between 18 to 30 months for most industries. It varies from industry to industry and situation to situation. This is as good as it gets with automation. Typically, in manufacturing sector, for automation, customers are happy with an ROI of 60 months. The trend today is omni-channel. Gone are the days of single channel distribution models. As omni channel becomes mainstream, supply chain
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also has to re-model itself to the new way of working. This increases the complexity of operations, increasing the demand for automation. There is no right answer to retrofitting automation into an existing warehouse. An AS/RS kind of system, which is disruptive, needs a huge footprint. For such systems, the existing operations have to be shut before implementation of the new system. On the other hand, s system like Butler from Grey Orange, can be easily implemented in existing warehouses. On the Kind of Warehouses Suitable for Robotics A robotic system like Butler hits the sweet spot in warehouses that deal with multiple SKUs, minimum being a 1000 plus and where combining operations are very important. For example, a pharma warehouse will ship multiple SKUs, in varying quantities to its distributors. When they have to service hundreds of such distributors, the complexity increases. The warehouse staff needs to pick the right SKUs, in the right quantities, and combine them while following the rigid guidelines of FEFO. This is a prime application for robotics. Similarly, e-commerce is another apt sector. A, e-commerce firm receives thousands of orders a day. It is observed that a typical customer will not place another order till she receives the shipment. If the warehouse takes four days to ship an order, they are delaying the propensity for a repeat order. And is there is a wrong shipment, apart from the cost of reverse logistics, she may cancel the order and buy from someone else. Remember, Indian e-commerce customers are not loyal, and will shift to other players for very minor reasons. The chances of error in a robotic pick is less than one percent, and that too due to human error – where she picks the wrong product, in spite of all the help technology can provide. Butler uses both positive
and negative affinity to reduce errors. For example, positive affinity is when a mobile and its accessories will be stored together – the chances of a customer buying a mobile and accessories is high. Negative affinity is storing shirts from different labels at different locations to reduce pick errors. The system is horizontally and vertically scalable, where the user can add more butlers to handle increase in business or increase the Mobile Storage Units to increase storage capacity. Butlers have an inbuilt seven layer safety and security system. The Face of Robotics in Warehouses Grey Orange, an Indian robotics firm has developed a home grown robotics system for warehouses – called the Butler. A Butler system employs machine learning intelligence in its pick process. It works on the principle of SWARM mechanics – in which multiple Butlers work together to optimize the pick process to minimize the effort in picking and combining. Butler works on 52 variables to help optimize pick and combine, over a period of time, so that there is 100 percent accuracy. Being a robotic system, it does not need any downtime, can work 24X7. In the unforeseen circumstance of a temporary disruption to one unit, the system re-distributes the work amongst the other available Butlers, to ensure uninterrupted service, at peak efficiency. These units have a feature called “opportunity charging” – where, during a lull in the operations, the units plug themselves for charge. The Butler system and its control unit – the Butler Control System – can start off with a small footprint, and expand as business grows. It can grow easily with the requirements. The Butler system can be deployed with a mere three to four months future outlook – not the three year outlook of other automation systems.
Supply Chain Management Professional
16-Jan-16 4:30:27 PM
I nitiativ e
Join India’s Premier Community of Supply Chain Professionals
ISCM and SCM Pro announce the launch of India’s first exclusive community for supply chain management and logistics professionals.
As a member of ISCM community, you get privileged access to: ◊ Round Tables: Thought-provoking discussions and information on topics most relevant to supply chain managers. ◊ A free subscription of SCMPro – a thought leader-ship magazine for the SCM Professional ◊ 50% discount on Special Publications ◊ 20% discount for ISCM’s events ◊ Access to white papers and other research material from our faculty team and other affiliated professionals.
Who should Join? Supply Chain Professionals, Students, Academicians, Consultants, Government Officials involved with SCM and logistics can be part of this initiative. We value the efforts, knowledge and commitment of all members and encourage all to participate in these activities.
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Academic Advocacy
An impact of manufacturing flexibility and technological dimensions of manufacturing strategy on improving supply chain responsiveness: Business environment perspective Minkyun Kima, Sogang Business School, 35 Baekbeom-ro, Mapo-gu, Seoul, Korea; Nallan C. Suresh, Department of Operations Management & Strategy, 326F Jacobs Center, School of Management, SUNY at Buffalo, Buffalo, NY 14260, USA and Canan Kocabasoglu-Hillmer, Cass Business School, City University London,106 Bunhill Row, London, EC1Y 8TZ, United Kingdom Supply chain risks can be devastating to a firm. In this months academic advocacy, we look at a paper published by Minkyun Kima, Nallan C. Suresh and Canan Kocabasoglu-Hillmer which looks at the impact of manufacturing flexibility and technological dimensions of manufacturing strategy on responsiveness in the supply chain. A unique aspect of this paper is that it looks at responsiveness from a customer’s perspective. The paper was published in International Journal of Production Research, 2013. Academic literature has a number of examples of supply chain risk management. A number of trends define modern supply chains. Pressure on margins forced many firms to locate their manufacturing location across the globe. In step with this, supplies were also sourced from globally dispersed entities. In addition, fickle customer likes forces firms to cut down time to market. To be successful, firms need to be agile and responsive. These trends introduced a number of risks in a supply chain. Managers were forced to prioritize these risks. Supply chain managers were forced to be selective while responding to these risks. Past researchers looked at the impact of internal and external integrations to manage supply chain risks, or the impact of information sharing and collaborations to reduce supply chain risks. The authors look at the significance of manufacturing flexibility and manufacturing
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strategy to improve supply chain resilience. It also investigates how manufacturing strategy and flexibility implemented by supply chain managers lead to improvement of supply chain responsiveness. It empirically examines the link between manufacturing flexibility and technology dimensions of manufacturing strategy and how these two impact supply chain responsiveness. The research focuses on the following questions: ● What impact do technological dimensions of manufacturing strategy have on manufacturing flexibility and supply chain responsiveness? ● What impact does manufacturing flexibility have on supply chain responsiveness? ● What impact does the business environment have on the
relationship between market flexibility and supply chain responsiveness? ● What impact does a hierarchy of manufacturing flexibility make on supply chain responsiveness? This researches sent a structured questionnaire to 1950 professionals from the manufacturing sector, of which they obtained 144 usable forms. This study provides some empirical evidences that e-procurement, AMT and market flexibility play a crucial role in improving supply chain responsiveness. But AMT and e-procurement do not have a direct impact on new product and market flexibility. This report finds that to improve supply chain responsiveness, managers need to manufacturing flexibility and technology dimensions.
Supply Chain Management Professional
16-Jan-16 4:32:54 PM
Comprehensive Event Focusing on Logistics Infrastructure & Service Development
19/20/21 May 2016 Bombay Exhibition Centre Goregaon (E), Mumbai, Maharashtra www.IndiaLogisticsExpo.com
The exhibition for Supply Chain & Logistics Professionals to discover Latest Services & Innovation to improve efficiency in the Logistics Sector in India. Supported By
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2nd ISCM Supply Chain Strategy Summit
Building Supply Chain Alignment in a New Networked World The Institute of Supply Chain Management is organizing the second ISCM Supply chain Summit in February 2016, Mumbai. The first summit saw a carefully selected audience of senior supply chain professionals come together to listen to an array of stellar speakers from across the globe, the notable speakers being Dr. John Gattorna, Dr. Mahender Singh and Dr. Vaidy Jayaraman. The 2016 summit is planned as a bigger and better event. We bring you a peek into the event.
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The ISCM Supply Chain strategy summit is a thought leadership event, conceptualized to bring senior supply chain professionals and service providers to discuss and debate the emerging paradigms in supply chain. ISCM recognizes that quality of participation is critical to the success of a summit. To ensure high quality of discussions, the attendance is restricted to invited professionals only. The invitation to the summit will ensure participation is limited to executives who we feel can materially contribute to the debate. Every person at the Summit will be there by personal invitation - the ‘best-of-the-best’ businesses
minds. The ‘rest’ will have to look after themselves. Some of the finest minds in business and academia will generate high octane discussion over four sessions. The theme for the 2nd ISCM Supply Chain Strategy Summit is “Building Supply Chain Alignment in a New Networked World” The world around us is changing fast. Technology convergence of Social Media, Mobile Devices, Analytics and Cloud Computing are changing the business paradigm. The current buzz in the industry is “digital”. In
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keeping with this thrust towards digital businesses, ISCM chose to base its summit on the theme of “Building Supply Chain Alignment in a New Networked World”. It brings together two major forces that will shape supply chains – Supply Chain Alignment and Digital Business Models. The world is an increasingly networked place. If supply chains were complex in the old world, the new emerging global ecosystem has exponentially increased the complexity of our supply chains. Today, a disturbance in one country can quickly send ripples through your supply chains. The 2nd ISCM Supply Chain Strategy Summit 2016 explores this emerging paradigm. Design and operation of contemporary supply chains plays a major role in the performance of the enterprise. Supply chains have out grown the one size fit all approach. The need of the hour is to define customer driven supply chain – the demand chain – based on design thinking principles. The 2nd India Supply Chain Strategy Summit will explore the contours of the emerging paradigm in supply chains, and the changes it brings to the enterprise. The summit is structured around four sessions, each focusing on a major topic of interest to the Indian supply chain professional. Key Note - Building Supply Chain Alignment in a Digital World The convergence of Supply chain and digital technology enables transform supply chains into a flexible, agile, collaborative structure. A globally inter-connected supply chain network needs data, visibility, and speed - the new paradigm of ‘digitization’. This has enabled firms to move away from traditional one-size-fits-all supply chain, to omni channel design. Today customers want to access products and services through channels they find convenient. The fulfillment can be through different supply chains according to their specific
preferences and propensity to pay. The result: happier customers, serviced to their satisfaction; and happier enterprises because the new finely tuned alignment allows them to achieve better margins while serving customers (through lower costs-to-serve and higher sales revenues). This session will cover the emerging supply chain in a digital world. Impact of Macroeconomic and Geopolitical Trends on Supply Chains Two major forces will influence trade of goods and service – the emerging macroeconomic scenario around the world and the geopolitical alignments among nations. From the fall in oil prices to the interest rate hike in US, from the volatile situation in the Middle East to the Chinese aggression, Dr. Singh will weave a tapestry of how these changes will shape supply chains. This session will explore the geopolitical and macroeconomic forces that will shape the supply chain of the future. Campaign Supply Chain Supply chains that enable construction of gigantic projects are usually ignored. But as India prepares to invest USD one trillion over the next five years in infrastructure, it is time we look at the campaign supply chains closely. The unique feature of campaign supply chain is its size - it is huge in terms of scale, complexity and cost, not to mention time frames. Dr. Gattorna will speak about bridging the gap between the supply base and project customers. Aligning Your Supply Chain to Bottom of Pyramid Realities Rural markets provide a vast opportunity for MNCs in India. In the past companies have been flirting with rural markets without much commitment. However, in large parts of the country, products are pulled through the chain. This address
looks at aligning supply chain to the realities of an infrastructure deficient, poorly networked, dispersed and low value proposition bottom of the pyramid market. CEO Panel - Challenge of Globalization – Charting our Growth Path Growing globally can be tricky. This panel provides a chance to hear CEOs of some of India’s best companies talk about how they are meeting the challenges of globalization, how they have set their growth agenda, how supply chain capabilities have impacted results, and where the next wave of growth will most challenge their organizations. Entering highgrowth markets has been a primary focus, but many executives are now debating how to best scale their operating models and sustain their success. CEO Panel - Planning for the Unforeseen - Coping with Disruptions Disruptions, delays, systems failures, inaccurate foreecasts and poor capacity planning can derail the best laid plans. For instance, if JIT principles are taken too far, and stocks of components and finished goods in the pipeline are reduced to very low levels to cut costs, it will become susceptible to even the smallest disruption in supply or fluctuation in demand. In these situations, it is prudent to hold reserves of inventory along the supply chain in different stages of completion. This in-built redundancy costs money, but has to be offset against the cost of lost sales and lost customers through non-supply. The panel will surface and debate such strategies. Let us use this occasion to help define the new emerging paradigm of digital supply chains, aligned to business strategy, and push the envelope in our domain.
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LSP Focus
Delivering More With Less
Praveen Somani, Director, Inland Group
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LSP Focus is where SCMPro interacts with the CEO of a LSP to bring you insights into the sector and the thought process among service provider CEOs. In this issue, we bring you an interview with Praveen Somani, Director, Inland Group.
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How is the role of a 3PL service Provider evolving? Can you help us understand its role in the future logistics, and services evolving around this concept? What is your roadmap? a) 3PL services refers to bundling of multiple service options like transportation, warehousing, stocking, invoicing, kitting and even freight forwarding to customers with various need based options of scaling up b) The role of 3PL is continuously evolving, it started with Vanilla warehousing, then to premium warehousing, In-plant Logistics, Inventory control, etc. 3PL is like a binding agent for Primary Transportation as well as Secondary Transportation. c) The role today and future is ever expanding, companies are looking at integrated approaches to ensure that they can focus on the core of production and marketing or pure marketing, where in all other processes gets outsourced. This enables them to also put in performance benchmarks which can be ensured through 3PL service providers. With the dynamics of trade changing quickly with advent of e-commerce, the 3PL module helps them to be flexible and adaptable to changed requirements. Today 3PL companies not only offer the basic integrated services but also offer value based, which includes production plan support, demand forecasting, reverse logistics, etc. d) The Road map consists from Raw Material Stores Management integrated with FG Inventory Management. Inland has already started offering 3PL services to its customers from basic warehousing to in-plant warehousing and invoicing, and even reverse logistics. Inland looks to offer its 3PL activity in the future to be bench marked as % working capital employed vis-à-vis loss of sales of the customers. The company is aggressively looking at increasing its focus to sharing knowledge with its customers and be their knowledge partners What is your approach to sustainability in Supply Chains? Supply chain sustainability refers to managing the environmental, social and economic impact during the entire life cycle of the supply chain. Inland’s focus is to be the knowledge partner and offer complete solutions from Raw Materials management to finished goods inventory
management. In the past Inland invariably does time and motion study for its customers to identify bottlenecks, which not only converts to financial savings but also helps in smooth movements with reduced consumption of energy. This has been from modification in the layout, box designing and even ERP controls According to you what are the essentials in a 3PL - customer relationship? Is it changing? Most essential part in today’s 3PL needs with respect to customer relationship has been changing very rapidly. Unlike yesteryears, today awareness of the deliverables has become key, and 3PL service providers need to be prepared for offering the service matrix worked out. Everyone wants customers to be satisfied and to that extent are willing to reduce inefficiency in the system and control costs. However, another important part to 3PL is a revenue model, which many have forgotten and the logistics market is flush with investment model, which makes it difficult for many to sustain How do you help your customers manage SCM risk? In our SCM offerings, IWL manages the inventory module to ensure proper availability of FG at the required location and in case of planned production inefficiency – move smaller lots of FG with committed delivery times. As part of the ERP/ WMS, the variance reports our shared with the customers for better demand forecasting and production planning As CEO, what are your concerns - that which keeps you awake at nights? Continuously evolving needs of the clients which are based on their customer needs has made the industry very dynamic, which makes it exciting and challenging. However, with the advent of disruptive solutions what keeps the buzz going Supply Chain Management Professional
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LSP Focus is what or how we can offer our customers better and economical services day in day out. It is the “pull system“ that makes us think of how to deliver one shipment to the clients customer at optimum cost with minimum transit time and still retain sustainable margin
b) This will also be a year where companies will be conducting the necessary logistics study and mapping for being ready for the implementation of GST. As they would want to serve the customers as a single market with best transit times to avoid any loss of sales.
What areas would you like to see more technology penetration?
c) The Government and the RBI has been on a financial governance drive and controlled inflation is also a good sign for the economy to recover. In addition, for the implementation of GST to be smooth, a number of areas have been touched with new guidelines which will further strengthen the industry, whether it is online approvals, e-toll systems, new highways network expansion, etc.
Today the need of the customers have become more dynamic, companies are looking at same day deliveries, which need continuous technological upgradation. We wish RFID rewritable tags were sustainable in costs to optimize on time and cost with correct analysis. Allowing us to give timely feedback as well as to gain respect from the client for the service delivered with value added margins. Are there any challenges on the talent front? How are you addressing them? The logistics industry today is very fragmented and still unorganized. The attractiveness to the industry is still missing, which makes it difficult to attract skilled talent. IWL has been continuously training its team members to be able to adapt to new service models. Inland is working on developing internal “Inland Centre of Excellence” which will provide regular year round training with minimum training hours for each function/ position. Further, we are looking for CII accreditation for the 3PL services, to better our Co’s image, which, then will also help in attracting talent. What is your outlook for 2016-17? a) 2016-17, was expected to be turnaround year for the Logistics industry, however, the delay in implementation of GST has served to be a dampener. However, looking at the government resolve for implementing in 2017 finally, will ensure renewed interest in the sector.
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What are your challenges in maximizing revenues? Due to low “barriers of entry”, the logistics industry is fragmented and highly unorganized. As per our own assessment the organized sector handles close to 20% of the entire logistics cost in the GDP, which is way less than the counterparts in the western economy. This has a significant impact on the margins, and also stifles new investments. Further, the industry is still to get a “Industry status Tag”, which will make it easier to raise funds Limited talent with limited skills is another concern for the industry where opportunities are high but at times not able to take it forward due to paucity of skill set Are there any speed breakers in the growth of logistics sector? How do we deal with them? a) Attracting needed professional talent is one of the biggest speed breaker b) For organized players, strong tie-ups with knowledge based companies of India and abroad, is going to increase credibility and attractiveness.
Route management is a factor which could possibly lower logistics costs. What has been your experience? Any management is a discipline and so is route management. Fixed Day Dispatch Schedule will reduce logistics cost. However, to maintain FDD discipline has to be enforced with necessary patience to arrive at the desired goals. However, It has been found FDD is the first casualty when business is down or there is change of guard at the top What is your key focus for now? Last mile delivery at optimum costs/ time CSR is a growing focus for large firms. What is your approach to CSR? Inland group has been actively involved with CSR activities since the last 20 years where in the group got recognized for its approach with the Dadabhai Naoroji International Award, UP Ratna Puraskaar to its erstwhile Patriarch, Late Sh Chunnilal Somani. In the year 2009, the group embarked on setting up state of the art“Chunnilal Somani Trauma Care Centre” with complete diagnostic setup and dedicated to citizens of India, and was most important handed over to the Government of Rajasthan and Government of India. For Inland, CSR is not restricted to Humans only, our Chairman has initiated multiple drives and planted savanna grass for Gowshala and also planted more than 4000 trees. The group has been supporting multiple cow sheds for improvement in diet/ up keep and management. From being informal support for education initiatives, the group is also instituting a fixed program for education support to children for higher studies These norms collectively have managed to bring down the systemic risk of the Indian warehousing system, at least from the exchange perspective.
Supply Chain Management Professional
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Human Resources
Navigating Through Market Transition in Asia
How to grasp opportunities and meet new challenges in a transitioning economy Our world is certainly changing faster and more profoundly than ever before. Technology, Consumer Behaviour, Manufacturing, and Security have all affected our economies on a daily basis. Without doubt, we are living in interesting times. Rather than argue over whether the world economies are recovering or contracting, maybe we should be taking a slightly different view. That it is in transition, which is more of a neutral position, allowing both challenges and opportunities to be equally considered. The Asian and subcontinent marketplaces are shifting to a new state that is improving living standards, but which augur even greater uncertainty. It is this ambiguity, which many of us are finding hard to navigate, particularly in relation to managing labor and skill shortages.
2016. These factors particularly in Asia are currently driven by positive demographic factors (the average population age and the pace of urbanisation), the political policies being pursued by individual countries, and growing private consumption expenditure in the region.
Consider this, manufacturing across the world is slumping, as is global trade. Emerging markets, and commodities, are tanking. Yet, in contrast, developed stocks are in decent shape (even after a few rough weeks) and service sectors are booming.
Beyond these Marco trends, the fabric of how consumers connect with business is changing with the advent of the mobile shopper. Now mobility is the key to many retailers’ success or failure.
Money remains cheap around with many of the world’s central banks remain committed to an easy monetary policy, with nominal rates sitting at or around zero.
Darryl Judd, COO, Logistics Executive
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Despite the challenges presented by the global economic slowdown, demand in Asia has been a constant. The recovery of the Indian economy is well on track and signs are positives that this will continue into
I saw the impact of mobile shoppers in the worlds largest e-commerce market recently with the China Singles Days recording the largest ever one day buying spree ever seen – 10 million packages in just the first hour of sales shipped and sales topping in excess of USD$10 Million! Online, retail sales in China reached $425 Billion in 2014. They are estimated to reach $560 Billion in 2015. As a comparison, in the US
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$305 Billion was reached in 2014 and $349 Billion is expected for 2015, according to recent McKinsey and KPMG reports. Even more astoundingly, this growth will mean that in 2015, 12% of Chinese retail sales will be e-commerce versus 7% in US. In India, more than US$3 billion of funding has gone into online marketplaces this year alone, as – commerce retailers expand and scale up rapidly across the country. While Flipkart and Snapdeal stole the limelight in 2015, along with their global rival Amazon, the Alibababacked Paytm who emerged as the stars in 2015. A number of niche sites also attracted eager investors to grow fast. This grow has fueled a logistics boom that has seen the likes of Indian last mile provider Connect India develop from nothing to being a UPS backed and supported business that will connect more than 50,000 locations inside the next 12 months. E-commerce has expanded over the past decade, due to the continued advances of information technology and greater Internet connectivity. There is still a huge potential for further growth in e-commerce sales in Asia as they are predicted to grow from US$525 Billion this year to in excess of US$1 Trillion by 2017. It is not the number that is important but the incredibly swift timeframe by which this is occurring. And yet, despite all the fireworks online, ecommerce still accounts for less than 1 percent of total retail sales in India, compared to 12 percent in China. Highlighting the growth projection that India when fully connected with mobility will experience. Of course, such a speedy expansion brings its challenges. A good example of this is how the Chinese Government is rapidly adjusting processes and policies in order to get a handle on the influx of BIG DATA on new, previously invisible consumers,
many of whom have never stepped foot in a shopping mall. In the next 10 years, 500 million new households in Asia will emerge as middleclass. They will have access to electricity for the first time, further driving consumer demand. Think about that: the first oven, dryer, dishwasher, and mobile phone. If we look at the statistics, there are over 600 million smartphone users in China today, whilst there were over 650 million Internet users estimated in the country in 2014. In India this number will increase to over 400 million Internet users by the end of the year, overtaking the US to be second only to China. This emerging middle class is also partly due to incomes increasing because of a tight labour market. The introduction of minimum wage legislation, inline with other first world countries, will extend the creation of a middleclass even further and be a huge boost for India and China’s sustained growth. According to the EIU’s projection, China is set to overtake the US for the first time ever as the country with the world’s highest volume of sales during 2013 and although Indian consumers are far more conservative buyers than their shopaholic Chinese compatriots, B2C sales this year will be in excess of US$25bn. However, it does not just stop at the consumers. The way we work and how employers and employees relate to each other is changing. The trickle of employers abandoning traditionally defined benefit pensions is becoming a flood. Employees are now taking control and making decisions about their own investments. This is further changing the financial landscape and increasing risk. Conversely, while the quality of goods is improving, prices are declining. Even before robotics, innovation, and disruptive technology, we have seen
productivity initiatives reduce the amount of labor needed in manufacturing. Technology is also affecting whitecollar jobs, enabling the ‘sharing’ services that reduce the slack and the need for fresh production. Whilst it can be argued that much of this is good for business, it does have a negative effect on economies that rely on manufacturing with cheap labour. However, due to labor shortages, China is no longer a provider of a cheap labor force. As its economy has largely been built on being the factory to the world it is now required to change its strategy. It is now consequently in a race to reinvent itself as a service led economy. China’s credit fuelled overinvestment in commodities and its by slowdown exasperates that trend. One of the outcomes of the recently signed Trans Pacific Partnership (TPP) free trade agreement, which covers 40% of world trade and ASEAN’s AEC (ASEAN Economic Cooperation) agreement, will mean that China may find itself locked out of a large part of its traditional market. This will make the initiatives like the SILK BELT Road project increasingly more important. In conclusion, there are challenges ahead and yet clearly still multitudes of opportunities there for the taking in Asia. Macro-trends in Asia have remained very solid, as can be demonstrated by the resilient performance of both the region’s industrial output and the volume of retail sales. Last, but not least, the key challenge for supply chain and logistics leaders is how to nurture their staff through this change. Labour shortages due to market volatility will only continue. Change must be embraced as a normalised state of play. An accepted state of transition can provide opportunities through good leadership, and a welltrained, agile workforce to drive a company’s success to the next level.
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Feature
E-commerce How it is changing Supply Chains & Logistics The core principles of logistics companies is reliable service and costeffectiveness. This is what their customers look for. This is also, the basis on of operational design of logistics companies. In this context, the approach of e-commerce companies is something of a puzzle.
In December, I placed an order with one of the large e-commerce websites for a new toolbox. Being on the website, I also ordered a spray can of a cleaning agent and, at the last minute, tossed in a pen as well. Given the order value, the shipment was free of cost. When the items were actually delivered to my home, there were three separate deliveries. The first to arrive was the pen – in a large box, delivered at home on a Tata ACE. The other two items arrived two days later, on the same day, in separate deliveries. This seems to fly in the face of one of the core operating principles of logistics companies – that of having an efficiency focus. Without that, there is a question of sustainability. Can e-commerce companies continue to supply goods with such service levels, at such cost? As a client once commented – “My people believe in servicing the customer at any cost. That doesn’t work for me. I need them to service the customer at the right cost!” Urban congestion & rural reach
Mr. Alagu Balaraman, Partner & Managing Director, CGN Global, India
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Two decades ago, what is termed modern trade was trying to woo customers away from traditional kirana stores. They did this by emphasising the superior buying experience of modern formats and lower prices due to bulk buying. It has been a long journey and in
this time they have pulled about 8% of sales away from traditional corner stores. On a retail base of $ 520 billion (estimated by the RAIEY study of 2014), that would be a market of approximately $ 42 billion. Today, e-commerce companies are doing the same to them, by saving customers the difficulty of travelling to the store and lower prices. In current day urban India, the need to travel to a shopping centre or mall, is not a simple task. With average metro travel speeds reduced to 10 km per hour or less, consumers lose too much time in transit. This is coupled with parking difficulties, if they have used their own vehicle. Given this level of urban congestion, shopping from home does have its advantages. For smaller towns, it is an issue of access. Since brick and mortar retail is an investment intensive operation, it is more economical to extend online sales than create new stores. Shopping online gives people in these towns a quicker service and wider choice. Also, they will have the benefit of having their orders delivered to them. Just as modern trade met an important need of the Indian consumer over the past two decades, so too does e-commerce meet an important consumer need today. Moreover, as consumers get
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accustomed to online browsing, online transacting and home delivery, they are not going to take lightly to having to travel to stores for every need. E-commerce is here to stay. The other side of sustainability Most urban centres in India are a commuter’s nightmare. Where earlier people joked about the local trains of what was then Bombay, today every city has its own traffic woes. There is widespread acceptance that our extremely poor and insufficient public transport systems are at the core of the problem. It is to fight such traffic that people prefer to order from home and have goods delivered to them at home. This home delivery model is rapidly growing. From e-commerce retailers to hyperlocal delivery companies, everyone delivers at home. The “uberisation” of the economy is leading to more and more people and vehicles plying the streets to meet the needs of people in their homes. This would be a good thing to reduce traffic congestion. If a single vehicle can meet the needs of 5 to 10 households in a single trip, it means that one vehicle replaced 5 to 10 others. This is both an economic cost saving as well as a reduction in traffic congestion and pollution levels. Similarly, if those same 5 to 10 households don’t have one or more people walking into a retail outlet, there is a saving expensive retail space and the environmental load of air conditioning. Today, these are important factors as we move to being an increasingly consumption driven country. This is true in theory. Today, the numbers still do not bear this out. E-commerce in India is still a tiny fraction of organised retail. Recent estimates have put the e-commerce industry at around $3.5 billion. This is less than 10% of organised retail and much less than 1% of all retail. So, if you were thinking that e-commerce will change traffic
patterns or pollution levels, there is a long wait ahead. The bottled up delivery problem Many e-commerce companies are establishing their own delivery networks. Or, they are partnering with logistics players who are offering them access to existing networks. In the US, the last mile continues to be the most difficult and expensive leg in the delivery chain. So, while the bulk of deliveries are happening over Fedex, UPS or the postal service, companies are continuing to search for new options. Amazon has started using its distribution centers, coupled with a private fleet to make deliveries. Others are looking to crowdsourced delivery systems. The concept of personalised delivery at scale is obviously still evolving, even in a relatively more evolved market like the USA. In India, we have a long way to go before stabilising on how to deal with this new phenomenon of individual home deliveries in bulk. A recent experiment has been that of hyperlocals. Initially positioning themselves as online retailers and third-party delivery services for restaurants, the model has proven difficult to scale and, therefore, to sustain. Yet, there is still a significant need. The existing model is a pressure cooker situation, with costs not truly realised. This is indicated by the attrition rate among the delivery boys, which is operating in the 3050% levels. Either costs will have to go up or workloads will have to reduce, effectively driving unit cost up again. Direction of the solution When looking for a solution to a new cost effective delivery model, we should look at both organisation and innovation. Most logistics systems across the world and throughout history have been organised to operate on shared infrastructure. The most expensive investment in road transport is the road itself. Likewise, for rail it is the
laying of the tracks. When countries first moved to a communication system, the postal system was a public infrastructure. Today, the Internet is the same. The PC industry really started to grow when open standards allowed different players to specialise in different areas. Some specialised in making chips, others in hard disks and yet others in software. Similarly, this industry should move to models of specialisation with different players catering to different needs. An e-retailer should focus on retailing and process design to ensure customer experience, not in execution of logistics operations. This will become even more critical as e-retailers spread their wings and cross national boundaries. It is likely we will see increasingly strong networks of logistics players catering to the world of e-retail. Secondly, technology will play a significant role. The early experiments by Amazon to use drone are just that – experiments. It is possible that airborne drones will set new standards for small parcel delivery. Today, last mile delivery is extremely labour intensive. At one time, no one thought bank cashiers could be replaced by ATMs. Similarly, it is not unlikely that people will get their parcels from a machine at their doorstep. Ubiquitous tracking and pin point delivery can also make a difference. In a world where people are trackable based on their phones and GPS, it is not impossible to imagine a company offering to drop off a parcel on their way home, at a bus stop or a commonly visited grocery store. Pick up lockers already exist in parts of the world. By clubbing it with modern technology the utilisation rate of those lockers can be increased dramatically. There is likely to be a lot of change in the area of logistics and the world is already moving towards it. It will be interesting to see how industry evolves as it goes forward. Supply Chain Management Professional
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Tech Talk
That Will
Re-shape
The supply chain sector in India is buffeted by rapid changes – forces of globalization, Sustainability, rising customer expectations and talent crunch. The one factor that helps build supply chain competitiveness – technology – is evolving with greater rapidity. In this issue of Tech Talk, Mr. Sanchit Jain, CEO DreamOrbit speaks about some of the emerging technology paradigms that will re-define supply chains. Technology trends that you cannot ignore.
Mr. Sanchit Jain, CEO, DreamOrbit
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Supply Chains
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What are the technology adoption trends you are seeing in SCM? The industry is now more receptive to the idea. We have been seeing a lot of trends, but the top 3 that i can list from top of my head is: • Analytics and Business Intelligence: The time when saving all records in an excel sheet has passed. Business owners and leadership want more control on their data. We have been working on all kinds of Business Intelligence projects where reporting engine has to built upon existing SCM tool or implementing full-scale Big Data solution along with data visualization dashboards. • Cloudification and Mobility: For a stable supply chain operations, the software have to break the walls and follow the shipment tills its delivery point. A Mobile App with cloud as a backend is what this industry has started demanding for. A solution that could take updates from every person handling the package and be consolidated at one place in the cloud. • RFID and Barcode Scanning: These are the new techniques for managing large assignments incoming or outgoing through supply chain points. It is very hard to first manually process a package on papers and then later audit it. Most of our clients have already adopted this technology as a part of Warehouse and Inventory Management solutions • IoT and IoE IoT- Internet of Things is a part of IoE - Internet of Everything. The concept is though there in the market for a little time now, but many organizations have started giving limited features around M2M connected solution as part
of overall system. For example, recently we built an IoT feature where the ignition of truck engine would trigger an event “start of trip” on the logistics management system. Before this, the option was given to truck drivers through mobile application. Our customer found that the driver were fudging with the start times. We easily resolved this by simply adding an IoT feature.
Lack of common platform for collaboration and building communities With their current disparate systems and lack of a unified informational model, companies cannot enable massively scalable informationsharing or build collaborative communities across their network of partners. • Garbage in, garbage out
What are the top five data challenges in Big Data in Supply chains?
• The quality of data feeds in supply chains is a significant problem. There are two fundamental issues:
Having worked extensively with logistics and supply chain companies, we have heard them complain majorly regarding the following challenges as they manage big global data in the supply chain:
• Common data standards don’t exist
Eighty percent of the supply chain data set is outside the enterprise Only 20 percent of a supply-chain data set is internal and 80 percent is contributed by external partners. All of these data transactions are distributed across multiple enterprise systems in different companies with no easy way to determine the single version of the truth. Supply chains in different industries use radically different models The supply chain of a major electronics manufacturer is very different from the supply chain of an apparel/ footwear company. They have very different drivers, business models and business rules. However, both these different supply chains use a common service provider community including truckers, carriers, customs brokers and consolidators. Because of the silo’ed nature of IT infrastructure, the benefits of fixing a data feed for one customer in one industry does not flow to another industry even though the data feed is common across both industries.
• The data source origins are not reliable across all customers • Most companies are supply-chain data blind Because 80 percent of the data is outside their own ERP systems of record, most companies are supply-chain data blind. As a result, companies lack a unified view of how the product is moving through the supply chain. They need to be able to triangulate across multiple constituencies. With data distributed across multiple platforms and ERP systems across many partners, it’s difficult, if not impossible, to get a unified view of the supply-chain truth. How can Big Data improve Logistics and Transportation Performance? Big data and advanced analytics are being integrated into optimization tools, demand forecasting, integrated business planning and supplier collaboration & risk analytics at a quickening pace 64% of supply chain executives consider big data analytics a disruptive and important technology, setting the foundation for long-term change management in their organizations Using geo-analytics based on big data to merge and optimize delivery networks Supply Chain Management Professional
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Tech Talk Big data is having an impact on organizations’ reaction time to supply chain issues (41%), increased supply chain efficiency of 10% or greater (36%), and greater integration across the supply chain (36%) Embedding big data analytics in operations leads to a 4.25x improvement in order-to-cycle delivery times, and a 2.6x improvement in supply chain efficiency of 10% or greater Greater contextual intelligence of how supply chain tactics, strategies and operations are influencing financial objectives Traceability and recalls are by nature data-intensive, making big data’s contribution potentially significant How do current tools and technology support companies’ use of big data? There are many technologies and solutions available to extract the existing data, notwithstanding its size, work on this data and produce metrics that you would like to see. The entire open source Hadoop and Hive ecosystem is well equipped to handle this. Microsoft has release Cortana, a cloud based analytics solution, which is path breaking. How will Mobility affect supply chain management? For a highly unpredictable sector, mobility bridges the time gap between “cause and effect” and saves time by making business operate in real-time. The suppliers work on slim margin and have too many competitors. And then there is constant pressure of exceeding customer expectations. The day-today operation challenges add on to this pressure. In such scenario, automating your business process using a reliable technology is the only solution therefore; mobility is a boon to this volatile SCM industry. 1. Mobility makes the supply chain
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streamlined and leaner 2. Helps access Data and Information anytime anywhere 3. Improves visibility and traceability 4. Increased productivity from floor managers and increased shipping accuracy for consumers What are the building blocks we need to have in place before we can use the IoT in supply chains? Absolutely nothing on top of a basic system. A database server on premise or cloud to store, an internet connection and a basic management software, that is all. Nowadays businesses already have a basic It infrastructure in place. With IoT-based solutions, human resources don’t have to be computer or mobile friendly, because IoT minimizes human interventions. The machine would talk to machine directly without any human observation required. Our machines and equipments already come with smart chips and embedded sensors. IoT solution triggers a physical event with that data signal. Nowadays all material handling devices come with embedded sensors, microchips and carry a “bit of intelligence” within. The objects for example a container, equipment or a product is also marked with a code or serial number. All these equipments and objects when connected using internet can accumulate substantial intelligence and be used for automation too.
management, order and invoice management tools and fleet and transportation management tools. For instance, If your company has already built and deployed a fleet management software in-premise. It can be hosted on a cloud within weeks and can be accessed across all your offices just on a simple browser. Moreover, scalability and handling multiple users is not a problem that has to be pondered about. Cloud service providers release updates regularly as a part of service, which keeps your IT infrastructure maintenance problems at bay. Technology changes very rapidlywhat advice do you have for firms who are planning IT enablement of their operations? The technology at backend is changing rapidly, but it necessarily doesn’t have to affect the user interface. Our advice to IT Operations team of all size companies are: Go for a flexible and scalable architecture that scales both up and down based on the requirement. Keep afirst approach to leverage out of ever-improving technology landscape.
Going forward, the Warehouse systems will become more important. What we need to do is only reconceptualize the architecture of Warehouse Management System by making the existing sensors and data signals a part of the overall software solutions. What applications in the logistics services landscape are cloud ready? Every application in logistics services can be made cloud ready including warehouse and inventory
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Building Partnerships, Creating Value
Th spac e India n lo e is a pa set to u gistics num rad nd be foot r of firm igm sh ergo prin i t are s with ft – a – wi g in t lob th in g the aim he coun al lob try of and al best bringin g prac way the valu custom s of eng tices, e a e exce to them r and a ging ddin . We rpts g brin from with g Man Leif Vo the inte you e r a Asia ging D lcker, C view irect luste , Ge o odis r Ove r – Sout h rsea s Pv t. Ltd.
Leif Voelcker, Cluster Managing Director – South Asia, Geodis Overseas Pvt. Ltd Supply SupplyChain ChainManagement ManagementProfessional Professional
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Interface Are there any speed breakers in the growth of the logistics sector? How do we deal with them? There several major challenges affecting this sector, Sea port infrastructure needs to be refurbished and modernised to reduce bottlenecks. In addition, freight train capacity and frequency between Inland Container Depots and connecting sea ports needs to be increased. Improvements in both of these areas would raise productivity and reduce turnaround time. And we need to address the low availability of skilled workers and the low profit margins that affect the compensation benchmarks for a highly skilled work force. Our industry requires faster reformation and the implementation of infrastructure development projects to improve the ease of doing business in India. Continuous investment in learning and development for industry-specific skills is imperative in this demanding and fast moving industry. GEODIS’ management team is currently investing in this area, with a variety of platforms to help employees learn and grow within the organisation. Our online platforms offer training on the products and services we offer, as well as communication and management skills. We also encourage new ideas inside our organisation through activities such as our annual Innovation Masters Award (IMA) campaign. All employees can participate, and the winning idea becomes a global implementation project. What practices would you like to bring to India from your European operations? We would like to replicate the best practices of European customs procedures and handling. This includes the ability to provide online approvals and an interface between customs, the service provider and the customer to enable transparent information flow during each step
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of the process. We would also like to apply the European Contract Logistics business model to improve the warehousing and distribution landscape in India. This could help create effective pricing for our customers. 4PL is now being talked about. Can you help us understand its role in the future of logistics, and the services evolving around this concept? What is your road map? In a macroeconomic context, a 4 PL is a neutral client partner combining supply chain design, sourcing, integration and steering functions all along the value chain. GEODIS India’s 4PL model supports clients as they ‘break through’ from an operational logistics model toward strategic supply and demand management. It was driven by a need to transform due to a strategic change within the company to accelerate performance, refocus on core business and leverage the professional knowledge of a supply chain partner. For GEODIS, the key words in terms of 4PL are ‘optimisation’ and ‘transformation’. Our current environment now creates the perfect momentum to demonstrate how we can support change in our industry and grow our supply chain optimisation activities to increase market share in India. What is your approach to sustainability in Supply Chains? Green Logistics has emerged as a growing concern during the last few years across the globe, and we recognise that these evolving standards have an inevitable impact on our customer’s supply chain. GEODIS now uses a specialised team to analyse transportation flows and develop smart and environmentallyfriendly solutions. These solutions are adaptable to our customer’s priorities and business needs while helping them reduce their carbon footprint. For instance, we recently launched a program for several customers in Shanghai that uses
electric vehicles for short urban delivery rounds from local logistics centres to their doors. In India, this concept is still in the beginning stages and requires the framework and infrastructure to support this initiative. This will enable us to extend our environmentally-friendly services and replicating our expertise in India. According to you, what are the essentials in a 3PL - customer relationship? Is it changing? The most essential part of this relationship is knowledge of – and insight into – our clients’ business. We must understand their challenges, requirements and expectations, and then design solutions that address their concerns, enabling them to be more competitive in their business. Today’s major pressure comes from pricing, as India is a price-sensitive market. In the near future, we hope that the focus will shift beyond pricing towards complete, valueadding solutions to help increase the operational excellence. We are also observing a slow shift in relationship dynamics. Today customers are looking for a reliable partner who can support their growth and expansion. GEODIS’ vision is ‘to be the growth partner for our clients’ and our mission is to ‘help our clients succeed by overcoming their logistical constraints’. How do you help your customers manage SCM risk? Today’s supply chain managers face many challenges, as their companies strive to improve Supply Chain Management agility, improve operational excellence, and enhance their financial results. We work with the customer using a logical process from the ‘As-Is’ situation to an optimal ‘To-Be’ position. Then we develop a customised approach adapted to customer needs by leveraging our existing expertise and tools. Our offering
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focuses on three major areas. We provide customised advice, supply chain management and overall operational coordination. We ensure cost effectiveness through engineering and procurement skills. And we orchestrate various modes of transportation and suppliers, creating real-time shipment visibility with our Control Tower approach, which enables customers to effectively monitor performance and deal with disruptions in a timely manner. We also set clear KPIs to manage operational performance and identify areas for continuous improvement. Throughout all of this, our objective is to achieve total customer satisfaction by streamlining processes and innovative solutions to manage our customer’s future supply chain requirements. As Managing Director, what are your concerns? What keeps you awake at night? Climate change and the increase in air pollution, as well as the health and safety of our people. One of GEODIS’ 7 Golden rules is to ensure the safety of our people everywhere and at any time. Therefore, we take the necessary steps towards training and creating awareness in this area among our employees. Other concerns of mine include ramping up growth in India and increasing customer engagement to be their growth partner.
We recently introduced IRIS as a mobile application as well, to provide ease of access. IRIS has amazed our customers with its capabilities, and according to their feedback, this breakthrough technology is user friendly as it helps them achieve effective management of their dayto-day tasks. We would like to see the technology development in the Indian customs clearance process, to help reduce complexity, increase transparency and improve overall turnaround time throughout each step of the process. This will help increase efficiency and improve ease of doing business in India. Are there any challenges on the talent front? How are you addressing them? India is one of the fastest growing emerging countries in the world. The business environment is evolving, but there is a gap in the availability of qualified and skilled talent. We have taken the initiative to develop an online and offline training program to equip our people as they meet our customers’ growing expectations and service standards. We are also open to work with skilled people from different industries who can bring value to our industry and organisation.
Where do you see yourself in the future? What would be your focus? GEODIS will be the market leader in providing tailor-made solutions for Vertical Markets and the preferred growth partner for clients in India. In terms of the opportunities available in the Indian market, we have created a team of Vertical Market experts for Fashion & Lifestyle, Industrial, Hi-Tech, Automotive, Aviation, Luxury Hotel & Resorts and FMCG. This team is dedicated to building new opportunities and serving our clients with customised logistics services that suit their business needs. We are hopeful that the implementation of the Goods and Service Tax will increase the opportunities related to the contract logistics segment. We are also focusing on enhancing our presence in the international Industrial Projects and customs solutions. How can you create a culture of innovation within a logistics organization? One of the five values that help push our growth forward is ‘Innovation’. We continuously innovate, and we encourage our employees to share innovative ideas. For instance, we organise an annual internal competition called the Innovation Master Awards to stimulate innovative thinking and improve GEODIS performance, processes and products at all levels.
In what areas would you like to see more technology penetration? We are actively working to penetrate the global market through e-Solutions such as our Intelligent Real-Time Information System (IRIS). This unique, webbased tool enables customers to manage their booking online, monitor shipment milestones/ deviations through notifications, and track invoices. Customers can also search shipments using their own references (such as purchase order, invoice number, article/SKU, etc.). Supply Chain Management Professional
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Industry Interface
UBER-ising Indian Truck Market the
Part II
Why is the Online Trucking Exchange not garnering steam in India? Online platforms for commercial trucking are yet to taste similar success levels as their counterparts in passenger segment. It is worth mentioning a few players have already shut shop due to lack of momentum in change. There are 5 main reasons for high resistance to change: • Long payment terms • Guarantee of service • Use of technology • Information asymmetry • Fragmented Industry
Kaushik Mondal, Senior Project Manager, Miebach Consulting
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With the onset of the millennium, Internet had started Long Payment Terms to replace It is worth noting that an Uber or a Redbus the brick and operates in the B2C segment catering to thousands of retail consumers, whereas mortar ‘agent’ trucking is primarily a B2B sector; the to become the structural difference between the two is chosen platform in the financials. Whereas consumers for match-making pay upfront, with the exception of courier services, most shippers enjoy between buyers and long payment terms (ranging from sellers. In the last 15 to 90 days) from the transporter. 25 years, aided by a On the supply side however, brokers growth in mobile and and truck owners do not have access to such high working capital personal computer and need upfront payment. usage, internet has transformed buyer This is a key factor which prevents shippers from directly behavior for every working with a broker or a possible human need. truck owner. So any new Kaushik Mondal, Senior matchmaking platform Project Manager, Miebach between demand and supply also needs to provide a Consulting writes about mechanism to manage the the next paradigm in truck financing of the deal. operations. We carry part Guarantee of service two of this two part article The second key factor in this issue.
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from a shippers’ perspective is truck owners as well as the shippers on the proposition of collaborative the need for guarantee of service to redeem 100% efficiency out of the strategy offering value to all in terms of lead time and loss or system. stakeholders in the system including damage of cargo. Thus, shippers the transporter and the broker. The How to make it work? prefer to deal with known set of value proposition for the transporter transporters and not risk sending and brokers would be a larger pool To make the online exchange work, consignments through unknown of information and thus a potential it must offer value propositions to transporters. If shippers are for larger revenue; being an online all the stakeholders in the system not directly participating in the platform the information outreach over the traditional brick and mortar exchange, its capacity to work as an through a well-managed database system. For the shipper, the primary 3 Feature intermediary between truck owners would be far superior to a brick and interest is lowering the freight and transporters (replacing the brick without sacrificing the service levels mortar broker or transporter. This freigh ht without sacrificing the service levelss through leaast effort (teaam size etc.). might On the othe and mortar broker) the is limited. beer a more sustainable way for through least effort (team size etc.). online trucking exchanges to grow end of the spectrum, ffor the truck owners it is to receive th he market freeight on a reggular basis an nd On the other end of the spectrum, for A similar trend of working with in India rather than trying to disng of the truccks. The only CHANGE could access to largge avoid idlin way the EXC the truck owners it is d provide bot to receiveth is to have the known players only can be observed intermediate specific participants theyy key freight pool of d demand and supply, market challen nge on is to prioritize and b andbetw balance ween the two. a regular basis among transporters, brokers & truck in the value chain without clearly avoid idling of the trucks. The only Without aadequate sup , the shippers s would lose interest very soon and witthout demand, owners also. As mentioned earlier,pply of trucks, understanding its impact. wayiscuss. the EXCHANGE could provide since the backbonethe truck of the owners have system is nothing to d both is to have access to large pool TRUST & RELATIONSHIP, any process The final challenge would be of demand and supply, they key that creates the need of dealing with managing the operations and challenge ish toan prioritize balance explains waays in which online exchange e and cou uld perform. keeping ue To be a tru Figure 3 unknown entities would face verythe different the costs low. Indian between thewners (shown two. Without adequate hange needs t d the truck ow n in blue linkages) the exch high entry barriers.exchange between thee shipper and transportto market is very cost supply of trucks, the shippers would competitive have acceess to sufficie ent working capital. In thiss modus operrandi the exchange would be a commo on and one of the primary Use of technology lose interest very soon and without advantages of the industry is entity rep placing the traansporter as w well as the brroker. Low computer literacy of truck demand, the truck owners have low overheads of the small scale owners and small scale transporters nothing to discuss. players. Thus, to be competitive the also create a challenge to the online Fig 1: Possible Modus Operandi of the Exchange exchanges also need to be lean and Fig g 1: Possible Modus M Operan ndi of the Exch hange platform. However, the arrival of needs to keep a very tight control low cost smart-phones would allow on marketing budgets. Again a simple applications to be designed collaborative tactic might work, giving access to every fringe player in especially in the beginning; resource the market. sharing with existing players with full-fledged partnership or Information asymmetry franchising will boost the growth. Another trend which is common among all stakeholders is their reluctance to share their commercial information on an open forum. This is more of a mindset issue which needs to be broken for the online platforms to be successful
The Big Bang
Indian trucking is waiting for a disruptive innovation for a long time and online exchange can be the next big thing. Similar attempts in other parts of the world have taken Fragmented Industry off; in India we see success in other Last but not the least, the industry Figure 3 explains the different ways transport segments. However, even structure itself is unsuited to this d be to opera ate as a SUPEER BROKER. This is a comp plex mode of working baseed The otherr option could in which an online exchange could now one cannot expect overnight kind of disruptive innovation. Indian on the pro oposition of c collaborative strategy offe ering value to perform. To be a trueo all stakehold exchangeders in the syystem includin success.ng Since there is no large trucking industry isthe vulnerable transp porter and th he broker. Th he value prop t the transport ter and brokeers would be between theposition for shipper and the truck player in a the segment which can to many localized environmental owners (shown inlarger bluerevenue; linkages) change, the effort to make the larger pool of informaation and thus a potentia al for being the an onlinee drive platform th he factors which lead to inefficiencies. exchange needs to have access to stakeholders adapt to the exchange informatio on outreach tthrough a weell‐managed d database wou uld be far sup perior to a brick and mortar Trucking unions, informal linkages sufficient working capital. In this will be enormous. On the positive broker or transporter. This might bee a more susttainable way for online tru ucking exchan nges to grow in between transporters or brokers modus operandi the exchange would side, given that the large potential to local politicians, rent seeking be a common entity replacing the efforts will carry on; ultimately, behavior of the government transporter as well as the broker. the one entity which has the authorities (primarily in allowing steepest learning curve and highest overloading) are few of the many The other option could be to operate adaptability would come out as the problems that plague the industry. as a SUPER BROKER. This is a winner. This hinders both the small scale complex mode of working based Supply Chain Management Professional
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Tech Talk
A Vision of
Digital India JaipurSmart City
In 2015 the Prime Minister of India, Narendra Modi announced an ambitious plan to set up 100 smart cities in India. The mission is to promote sustainable and inclusive development that will serve as a role model for the rest of the country.
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In the month of December, the Editor of SCMPro, Girish V S attended a preview of the Jaipur Smart City project – a collaboration between Rajasthan Government, Jaipur Development Authority, CISCO and L&T. We bring you some insights.
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Smart City – the new kid on the block – is an effort to create a sustainable and inclusive growth model for citizens. The Government of Rajasthan today has drafted its digital vision for the state supported by Cisco. Honorable Chief Minister of Rajasthan, Shrimati Vasundhara Raje’s vision of a digital future for Rajasthan depends on leveraging Information and Communication Technology (ICT) to enable good governance, a better quality of life and increased employment opportunities to its citizens. Rajasthan aims to digitize its services perhaps earlier than other states. Rajasthan aims to move beyond putting computers in government departments – it aims to provide its citizens a better quality of service, using the digital backbone. According to Smt. Vasundhara Raje, Honorable Chief Minister of Rajasthan, “My vision for the state is to digitally empower every citizen to enhance the quality of life, enable ease of doing business in the state and become an innovation and knowledge hub of the country. ‘Digital Rajasthan’ is a powerful platform to realize that vision. We envision Rajasthan as a role model for digital transformation for other states to follow.” Along with the other finer points of governance, the Rajasthan government aims to provide efficient, transparent and reliable governance - called Suraj or good governance. To ensure this, the government is working on being a digitally enabled state. The thrust of Digital Rajasthan is to bridge the digital divide. To help this, the Government is creating IT standards and benchmarks on three pillars- of confidentiality, integrity and availability. Rajasthan is one of the first states to have implemented an integrated e-governance framework. As part of the digital blueprint of the state of Rajasthan, the Jaipur Development Authority (JDA) is focused on developing smart city infrastructure in Jaipur to transform itself into a digital city of the future. In its first phase, the pink city of Jaipur has created digital infrastructure to offer citizens amenities including intelligent
kiosks, wireless broadband, safety and security services, traffic management and environmental updates. The smart city project aims to make the life of the ordinary citizen easy. For example, when fully implemented, citizens of Jaipur can pre-book a parking slot at the place they plan to visit, and be able to park easily when they arrive. Similarly, a series of smart cameras connected to a central control center can help law enforcement officers zoom into potential trouble spots, creating safer streets for its citizens. JDA has set up a City Infrastructure Management Centre as well as a Response Control Room to manage the city with greater efficiency and effectiveness. In Jaipur’s City Infrastructure Management Centre, nearly all the solutions are integrated into a digital platform. The digital platform built by JDA can aggregate data from various sensors and solutions conduct data analytics and support a number of urban services. In this phase, JDA has implemented the solutions in Jantarmantar, Amer, Albert Hall, Jal Mahal, Ram Niwas Bagh, Hawa Mahal, Central Park and Jawahar Circle; the next phase of implementation in another 25 sites will be completed by the end of February 2016. Through a smart city experience tour at Amer Fort, JDA and Cisco demonstrated how digital technology solutions will help citizens. The deployments featured at Amer Fort included connected parking, connected lighting, WiFi, interactive intelligent kiosks with environmental sensors, city surveillance for safety and security and Remote Expert for Government Services (REGS). These solutions were deployed as a real time application – and not as proof of concept. Tourism is a major attraction in Jaipur. The Smart City project can transform the tourist experience by allowing them to pre-book their entrance to monuments, print out the entry ticket, avoiding long queues at the ticket booths. It also lists all attractions in the state and interactively allows the tourist to plan their holiday. One of the initiatives is to cover the major
tourist spots, railway stations and hospitals with interactive kiosks. It will help the tourist book their transport – air, rail, bus and even cabs to travel around the city and state. Efficient and reliable transmission of electricity is a fundamental requirement for providing societies and economies with essential energy resources. As part of the digitization program, the state of Rajasthan has announced the smart grid initiative. The Energy Department of Rajasthan has now embarked upon creating three classes of transformations: upgradation and modernization of electrical transmission infrastructure, addition of the digital layer to leverage benefits of ICTs and deployment of smart solutions and tools for intelligent operations, which are the essence of the smart grid and are, needed to provide stable, secure and smart transmission grids. Today, the Rajasthan transmission system handles around 71,000 MU per annum of energy with transmission loss of 4.2%. The smart grid initiative will be leveraged to handle energy of around 100 BU per annum in the next 4-5 years, reduce transmission losses and ensure stable and reliable operation of the transmission grids capable of carrying large-scale renewable energy. Sanjay Malhotra, Principal Secretary, Energy Department, Government of Rajasthan says, “We are happy to inform you that we have embarked upon a comprehensive and scalable smart grid initiative in the state of Rajasthan with the objective of providing a reliable, stable and efficient grid. We have taken a thoughtful and innovative approach by identifying the business processes and functions to be targeted for efficiency improvements in the power sector. Towards this, we have initiated various projects under the smart grid platform such as laying of fiber optic backbone, Enterprise Resource Planning (ERP) and substation automation. This transformative project is an important step towards making the vision of ‘Digital Rajasthan’ a reality.”
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SCM Updates
JDA Launches New WMS Capabilities to Revolutionize Intelligent Omni-Channel Fulfillment In its continued mission to arm users with the capabilities needed to nimbly respond to today’s omni-channel warehouse operations challenges, JDA Software Group, Inc., today announced further enhancements to JDA® Warehouse Management – part of JDA’s Intelligent FulfillmentTM solution – building on the re-visioned user experience previously announced. JDA Warehouse Management is a comprehensive, real-time warehouse and distribution center management system that skillfully handles real-world disruptions, driving improved performance and competitive edge, maximized distribution center value and greater return on supply chain investment. JDA Warehouse Management now includes expanded persona-based user experiences extending beyond managerial and supervisory roles to operational and functional roles, a fully mobile-enabled framework, and optimized ease-ofuse via key enhancements to JDA Configuration Manager. These capabilities arm manufacturers, retailers, distributors and third party logistics providers (3PLs) with the information they need to quickly adapt to changes, optimizing and executing inventory, and maximizing tasks and resources strategically and responsively. “Over the past year, we’ve been laser-focused on extending the new persona-based user experience to the operational and functional level, giving users a solution that flexibly interacts in the way they need, based on their role or location. In fact, early adopters of our latest version are already in pilot mode or about to go live imminently, which not only speaks to the strength of the re-visioned user experience but to the bolstered ease-of-use capabilities that accelerates deployment times and speeds time-to-value,” said Fabrizio Brasca, vice president, solution strategy, Intelligent Fulfillment, JDA. “These new capabilities tie back to our commitment to delivering powerful enhancements across our portfolio as part of the JDA Intelligent Fulfillment strategy, which helps our customers thrive in an ever-changing, fastpaced omni-channel world.” Mobile-Ready Enhanced User Experience In keeping with JDA’s customer-centered vision, JDA Warehouse Management provides predictable information to solve critical challenges within the distribution center, while focusing on user empowerment and efficiency. JDA Warehouse Management provides persona-based control towers that empower warehouse workers to take control of their business processes, providing greater efficiency to the organization and higher job satisfaction to the worker. This enables workers to handle the most pressing warehouse operations issues immediately through intuitive workflows tailored to their role, while staying connected to overall warehouse operations’ performance. JDA has embedded mobility into all aspects of JDA Warehouse Management allowing users to flexibly respond to business demands both in and outside the facility without being locked down to a workstation. The ability to use JDA Warehouse Management no matter where they are, in the warehouse or on the road, allows managers to track and observe employees executing their work on the floor, while allowing warehouse associates to accomplish tasks using touch screens and visual guides on the floor.
CeMAT 2016 puts the spotlight on digitization and Automation The lead theme for CeMAT 2016 is Smart Supply Chain Solutions. In other words, the show, which runs from 31 May to 3 June in Hannover, Germany, will highlight the pivotal role of logistics in today’s increasingly digitized and integrated industrial value chains. Wolfgang Pech, Deutsche Messe’s Senior Vice President in charge of CeMAT, explains: “Logistics is growing in importance because accuracy and flexibility of supply are fundamental to the growing Industry 4.0 trend. Soon, all parts containers, racks, materials handling and transport systems and even the materials themselves will need to be intelligent so that they can communicate with their surroundings and with machines and robots.” This is where CeMAT comes in.
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r u o ! Y w t o e N G n o i t p i r c s b u S
SUPPLY CHAIN MANAGEMENT PROFESSIONAL
10th Nov 2015 | Volume 1- No.8 | Rs.200
Pe r
sp e
LEAD STORY
ctiv e s on
Global Supply Chain – Designed in India
SUPPLY CHAIN MANAGEMENT PROFESSIONAL
10th Jan 2016 | Volume 1- No.9 | Rs.200
Moving Beyond Risk Supply Chain Resilience
TECHNOLOGY
Robotics – Pushing the Efficiency Frontier
22
STRATEGY SUMMIT
Building Supply Chain Alignment in a New Networked World
28
LSP FOCUS
Delivering More With Less
30
Global Sup
s ain Ch ply
HUMAN RESOURCES
The role of Human Resources and Training in addressing Skill Gaps in the Logistics Sectors
FEATURE
Service Level Agreement - How does it impact Business?
SCMPro, India’s only Enterprise monthly magazine for Supply Chain Professionals from Service Users and Enterprise Service Providers. The magazine contains specialist articles, news and information designed to update the readers on the developments in supply chain industry. Specialized articles are contributed by the Industry leaders and Academicians. Besides, there are other updates published to keep the readers keep pace with the Industry. Published every month, the magazine is distributed to the readers through courier. Currently the print copy of the issue is available only for readers based in India. Cover Price Rs.200/11
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SCM Updates With its lead theme of Smart Supply Chain Solutions, CeMAT 2016 will present automation and integrated control solutions for tomorrow’s intelligent, digital logistics processes. The scope will extend far beyond mere logistics optimization solutions because the digitization trend is revolutionizing entire value chains and creating completely new business models. CeMAT has a vitally important role to play in this revolution because it is the only trade fair that provides a global perspective on the technology trends involved. For a global industry like intralogistics, there is simply no better platform for showcasing the latest amazing technologies to the world and keeping up with current trends and developments. CeMAT, the world’s leading trade fair for intralogistics and supply chain management, is held every two years. The upcoming CeMAT, which runs from 31 May to 3 June 2016, is expected to attract around 1,000 exhibitors from every corner of the globe. The biggest exhibiting nations, after Germany, are Belgium, China, France, the UK, Italy, the Netherlands, Sweden and Turkey. This high level of international participation is unparalleled in the logistics trade fair sector and is testimony to the strong industry relevance of the show’s underlying theme of Smart Supply Chain solutions. This year the packaging technology lineup at CeMAT 2016 will be bigger and better than ever, thanks to a partnership between Deutsche Messe and easyfairs GmbH that will see easyfair’s “Empack” and “Label&Print” shows co-staged with the Deutsche Messe’s Pick & Pack showcase. The premiere of this new joint showcase is expected to feature some 200 exhibitors and occupy about 10,000 square meters (107,600 sq. ft.) of exhibition space. It will trace the latest trends and innovations at every stage of packaging and highlight the role of packaging technology within the overall supply chain.
DB SCHENKER
opens its 2nd largest warehouse in India Schenker India Pvt. Ltd, part of DB Schenker, the transport and logistics division of Deutsche Bahn AG, has announced the opening of its biggest warehouse in India at Bhiwandi near Mumbai in western region. The 172,841 sqft (approx. 16,000 sqm) facility begins the operation with a staff of around 60 people by providing state-of-the-art warehousing operations for palletized and non-palletized cargo to the city and nearby areas. Two other large Schenker Logistics Centers covering 362,000 sqft (33,400 sqm) space are already operational in the area with modern supply chain capabilities. DB Schenker customers in the western region of India will now be served even better with a shorter response time, availability of products and seamless last mile deliveries to the destinations. Strategically located off National Highway no. 3 (Mumbai-Nashik Highway), the logistics centre features uninterrupted power back- up, advanced warehousing management and distribution system; enabling convenient end-to-end logistics solutions and valueadded services. The new warehouse management system facilitates customers with analysis of product supply, forecast and demand fulfillment, real-time data input, interface capabilities, web order placing, and many other customized functions ensuring a better visibility through the supply chain process. “Improving our services levels and adding value to the distribution system is our top priority.” – said Mr. Shrichand Chimnani, Director Logistics, Schenker India Pvt. Ltd. “The new warehouse will allow us to consolidate a smart distribution system for customers in the west region. The tactical location and modern infrastructure ensures the high efficiency level in our operations even in case of anticipated increase in product volumes in next few years.” “The new warehouse will enhance DB Schenker’s supply chain competence for key industries like healthcare, electronics, consumer, retail and aerospace in the western region. We have a vast customer base here and plan to gradually ramp up our distribution activities from this logistics center.” said Mr. K. Sankar, Director (Region West India), Schenker India Pvt. Ltd.
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