November 2015 by Jayaram Nair

SUPPLY CHAIN MANAGEMENT PROFESSIONAL

10th Nov 2015 | Volume 1- No.8 | Rs.200

Pe r

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LEAD STORY

s n i ha ctiv C y l e s on p p Global Su

Global Supply Chain – Designed in India

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HUMAN RESOURCES

FEATURE

The role of Human Resources and Training in addressing Skill Gaps in the Logistics Sectors

Service Level Agreement - How does it impact Business?

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editorial For Country’s Sake Let the Parliament Function Another election is over. And yet another session of the Parliament will soon begin. The feel good about the economy has to now translate into a palpable development on ground. And crucial to this is the GST bill. And a raft of other reforms stuck in parliament. We are one country who does not need an external threat. Our narrow minded politicians are the biggest threat. Reforms are stuck in parliament over who The structural will get credit. The opposition does not wish to allow the imbalances that government to walk away with the credit for bringing about face us cannot growth. Our politicians do not think of the country. They think be resolved about their own petty interests. We are no more intolerant with short term than we were. Instead of wasting time on endless debates on measures. Hope tolerance, we need to get on with the business of reforms.

the government The government speaks about country first. I hope the stays true to opposition too puts country first. Else, generations to come, the course. we will curse the politicians who sacrificed the country on the altar of their own self interests. For one – show some intelligence- put your country first.

As ever, we look forward to your support – and hope you find reading our selection informative. Happy Reading

GIRISH V S Editor

girish.vs@scmp.in

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 Advertising Riddhi Solanki riddhi.solanki@scmp.in 022 60020157 Bhavi Shah bhavi.shah@scmp.in 022 60020159 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 Feature

Nov 2015 | Volume 1 | No. 8

06 SCM News

Globalizing Supply Chains

34 Feature

Lead story -

Creating Blue Oceans in the Delivery Space

Feature

Supply Chain: An enabler to improve bottom line of an organization

39 Tech Talk

Robotics- the future of supply chains

24 Human Resources

The role of Human Resources and Training in addressing Skill Gaps in the Warehouse and Logistics Sectors

28 Deutsche Post DHL Report

41 Feature

Delivering Tomorrow: Logistics 2050

Service Level Agreement (SLA)

How does it impact Business?

41 Feature UBER - ising the

Enterprise Focus

Indian Truck

Crafting the Perfect Entrance

Market - Part I

48 SCM Updates

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SCM News

World Shipping Council Outlines Supply Chain Strategies for 2016 In an address before the Pacific Transportation Association in Oakland this week, Christopher L. Koch, former president and CEO of the World Shipping Council (WSC) outlined how container lines are dealing with the world’s biggest transportation challenges. These include the effects of mega-ships, environmental stewardship, trade lane overcapacity, and new regulatory regimes. “The strategies being used to compete have obviously evolved over the past several years,” he allows. “Most carrier-shipper commercial relationships are price driven, and the nature of the business makes it difficult for a carrier to offer anything but a service the customer sees largely as a fungible commodity. Those carriers that tried to differentiate themselves by providing higher cost, but premium, service have had a tough time making those higher operating costs pay off. Higher cost services struggle to attract enough cargo at rates needed to cover those higher costs. As a result, carriers have had little choice but to focus on cost-savings and increased efficiency as their strategy.” Hesaid.

Panama Canal Traffic Jam Easing Whatwe face on the roads in India is now manifesting itself in the seas! Panama Canal - the short cut between Atlantic and Pacific Oceans was facing a traffic jam. According to reports, ships were waiting for close to ten days for their turn to cross the canal - in contrast to the norm of 24 to 36 hours. The jam created concerns that it would delay the arrival of consumer goods ahead of the holiday shopping season. The Canal Authority said in a statement that it has reduced the number of waiting ships by 40% and it has brought down wait times to four days or less by adding extra staff and postponing some maintenance work. It is reported that oOne container shipping line has suspended a route that passed through the canal. William Thayer, a supply chain expert with Olam Corp believes that retail and wholesale shippers are sitting on large inventories, reducing the impact of the extra wait for goods stuck at the canal.

We Like it Free Everybody likes something free. Deloitte’s annual holiday survey of consumer spending intentions and trends reveals that consumers will prefer free deliver as opposed to on-time deliver this holiday season. According to the report, “Consumers value their time as much as dollars saved,” says Rod Sides, vice chairman, Deloitte LLP and retail and distribution practice leader. “So when it comes to shipping their holiday purchases bought online, they are expecting free shipping and they want options to get it delivered quickly.”

Latin America Demands Better Emphasizing the role of air cargo movement in ushering in better economic growth, The International Air Transport Association (IATA) has asked the governments to work together with the industry to boost air cargo movement. Tony Tyler, IATA’s Director General and CEO, said “Inadequate aviation infrastructure is an economic handicap. We forecast regional demand in cargo and services, yet, key airports in Argentina, Brazil, Colombia, Ecuador, Mexico, and Peru already face growth constraints.”IATA believes governments in Latin America should reform taxes and charges policies that impose crippling costs on the industry and overall economy.

Some highlights of the findings are: • Free shipping is the top priority for shoppers when it comes to retail policies with 72% of responding consumers planning to take full advantage of the perk. • Nearly 9 in 10 shoppers (87%) prioritized free shipping over fast shipping (13%) when purchasing gifts online. • In fact, 60% of consumers think they could order after Dec. 17 – just one week prior to Christmas Eve – and still receive free shipping. • Despite shoppers expecting free shipping to be fast, they are not willing to pay much to expedite their shipping. On average, respondents were willing to pay only an additional $5.10 for same-day delivery.

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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: A Round Tables: Thought-provoking discussions and information on topics most relevant to supply chain managers. A A free subscription of SCMPro – a thought leadership magazine for the SCM Professional A 50% discount on Special Publications A 20% discount for ISCM’s events A 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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Initiative

29-Sep-15 2:51:49 PM

Globalizing Supply Chains For the first time in recent history, India over took China in its growth. A significant reason is the sharp slowdown in China. China is poised to move into a middle income country. This will bring with it sharply higher labor costs. An economy that has built itself on cheap labor construct is faced with the dilemma of change. At the same time, India represents an alternative to the China narrative – a large economy with the resources to transform itself into an alternate factory to the world. These developments hold great significance to supply chains. The Indian supply chain will have to integrate itself with the global supply chain. For this edition of SCMPro, we decided to explore the contours of a global supply chain.

Global supply chain – a complex web of manufacturing locations, suppliers, transportation and logistics players, service providers, IT firms, and devices – which acts in a coordinated dance to deliver products to consumers across the globe. Propelled by the “make in India” campaign and the favorable tailwinds, the Indian supply chain sector has to adapt fast to global standards.

A number of megatrends define the global supply chain – macroeconomic dynamics, sustainability concerns, technology trends like IoT and SMAC, and volatile customer preferences. Each of these megatrends adds complexity to the supply chain. Complexity here refers to the fact that these impose constraints on the entities and their relationships in the supply chain. In a complex global supply chain, the

entities and their relationship are dynamic. This imposes additional costs on the chain. Successful supply chains have to integrate a high degree of complexity to succeed. Therefore, it is imperative that we understand the forces that shape these megatrends, if we have to tailor our supply chains. A core element of the global supply chain is the manufacturing footprint. The first decision on manufacturing Supply Chain Management Professional - NOVEMBER 2015

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Lead Story footprint was defined by cost advantages. This has given way to concepts like mass customization, just-in-sequence supply, and assembly of vendor parts. Global supply chain management involves not only the efficient movement of goods in a supply chain, but also the strategic decisions such as product production location, the customer allocation to distribution facilities and the design of sourcing, production and distribution processes. As India becomes a part of the global manufacturing network, Indian firms will have to think along these lines. In the following pages we attempt to identify a few core issues that define a global supply chain. We hope our selection represents the action points for the Indian supply chain sector. We start our series by examining the home grown wisdom of LiladarPasoo – an Indian 3PL service provider who, by sheer necessity, was compelled to create a global supply chain for one of its customer, thereby proving that successful global supply chains need not beak the bank. A can do spirit and the ability to show value to the customer is all that it takes.

values, organizational behavior and local laws and regulations. As we go global, we need to understand the nuances of managing risks in a globalized environment. The fourth article looks at the complexities of the new networked world calls for a constant reassessment of the constituents of a supply chain. Enterprises need to monitor the transportation networks and tweak processes to capitalize on the opportunities. The very success of “Make in India” will depend on our ability to adapt to these trends. The fifth article examines the macro-economic drivers of growth and contractions are unpredictable. In this situation an efficient, fast and agile global supply chain is a strategic asset to an enterprise. Enterprises have to organize their supply chains as efficiently as possible. Supply chains have to be flexible and efficient – characteristics previously thought to be opposites.

The sixth article deals with food supply chains. India is today the largest or second largest producer and consumer of quite a few food products – pulses, wheat, potato, onion, tomato, banana, mango – the list is long. Yet we are also the largest importers of many food products. Processed food is one of the fastest growing export commodity from India. We need to integrate our food supply chain with the global food supply chains to ensure food security. We warp up the series with a look at a global next practice in warehousing – the necessity of using a systematic evaluation of the suitability of a warehouse before a service taker occupies it. These articles represent a cross section of views on integration of India with the global supply chains. We hope you find it good reading.

In the next article, Editor of SCMPro, Girish V S takes a look at the impact of technology and rising customer expectations on globalized supply chain. Two irresistible forces are shaping the supply chain in a globalized world – one is technology. The other rising customer expectation – from across the supply chain. These twin forces will affect the design of the supply chain and its complexity. The third article examines Risk Management in domestic supply chains is a nascent field. It means having to understand the vulnerabilities of every entity in the chain. A difficult task at any rate. But as supply chains go global, a few other factors add to the complexity - differences in culture, language,

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Global Supply Chain Designed in India Globalization is not a new phenomenon. For ages we have been buying and selling across the world. From primary commodities to value added products. Hence, our supply chains too have been global. A global supply chain is not a new phenomenon. It is as old as global trade. The difference today is the use of technology and the speed with which the supply chain reacts to localized events. SCMPro kicks off the global supply chain theme by interviewing Rajesh Mehta, Executive Director, LP (INDIA) LOGISTICS PVT. LTD. on the phenomenon of global supply chains.

Rajesh Mehta, Executive Director, LP (INDIA) LOGISTICS PVT. LTD.

LP (INDIA) LOGISTICS PVT. LTD. is a 96 year old logistics player â&#x20AC;&#x201C; long before the word logistics, leave aside 3PL and supply chains were invented. The firm had a simple motto â&#x20AC;&#x201C; to be of service to its customers. Innovate, re-imagine and deliver. A simple motto. The firm has been a part of the global supply chain for more than

three decades. The new found fancy for global logistics is in practice quite old. Ever since trade startedbe it the silk route of China or the spice route of Middle East, India has been a part of the global trade and therefore global supply chains. The change we see today is more about the use of technology, our ability to Supply Chain Management Professional - NOVEMBER 2015

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Lead Story we customs cleared it and moved to our warehouse. We had a team of welders who would then assemble the dome, under the supervision of the main contractor. The challenge was in the size of the dome. The parts used to come in open topped containers. We had to re-design our warehouse to accommodate the height of the dome. We were liable for any damage. This was a case where we became a factory – welding parts to create a finished product. The trick was in choreographing the arrival of parts in such a way that we did not stock these huge pieces in our warehouse for long. This was a combination of freight forwarding, customs clearing, transportation, warehousing and fabrication.

respond to changes in the customer demand, the speed with which we have to respond and the value added services that we can provide our customers. The only issue here is that the customer does not consider us as a partner who can add value to the business. We are glorified transport operators. For example, fifteen years ago, one of our customers was facing a unique problem. He was a clock manufacturer, sourcing parts from across the world. In manufacturing, a product can be held up for wat of a simple screw. The customer had a procurement team that was proactive in identifying sources and procuring them well in advance. Wewere the customs clearing agent for this customer. The parts would be shipped to India, we would clear it and send it to their warehouses. Yet, production was frequently stalled as one or the other component was missing. When we came to know if it, we went to them with a simple solution. The problem was not with the last mile, but the first mile. Our solution was simple – have a warehouse in a location – say Singapore. Get the sellers to ship the components to this warehouse in Singapore. We would then ensure

that all components that are required to produce a specific model are packed into a container and shipped to India. All we did was synchronize the movement of parts. None of the concepts we used were innovative. We addressed the operational misgivings about the concept. The customer felt that introducing an intermediary in form of a warehouse would increase the operational costs, add to the transit time and decrease productivity. The real trade off here was a ten percent increase in cost versus smooth production run. The lesson here was more on the need to change the mindset of the supply chain managers. Not global supply chains. The beauty of this solution was that we did not own the warehouse in Singapore. Today, in true spirit of globalization, we are present in 170 countries – through collaboration, some exclusive, others semiexclusive. Another example of innovation in global logistics is our work for T2 terminal of the Mumbai airport. The huge dome you see was handled by us. The procurement was from across the world, and the parts of the dome were shipped to NahvaSheva, where

Our challenge in global supply chains has been preparing our teams to think and act globally. Wehad to move on from being a service provider to actually being a part of the supply chain – to identify the kinks in the global supply chain and come up with innovative solutions to them, and then moving on to value addition to the customer. Unfortunately, change is very slow. We still are seen as a narrow service provider. However, the real challenge in creating a truly global supply chain footprint in India is the customer’s unwillingness to pay. As long as the Indian logistics service provider is seen as a necessary evil, we will continue to be underutilized. This mindset extends even to the multi nationals who come to India – the discussion is on cost reduction. Not on deliverables and value addition. As Indian firms we have the ability and the network to deliver superlative advantages to the customers across the globe. We use the best to use technology. We have some of the best talent available. And we have a long history of service. The firm which can add value to the customer will be the winner in a global scenario. And the Indian ethos of customer first will surely help us be global players.

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Lead Story

Intelligent Digital Supply Chain Two irresistible forces are shaping the supply chain in a globalized world – one is technology. The other rising customer expectation – from across the supply chain. These twin forces will affect the design of the supply chain and its complexity. Editor of SCMPro, Girish V S takes a look at the impact of technology and rising customer expectations on globalized supply chain. It is estimated that by 2020, we will generate 44 zetabytes of data – generated by billions of users, trillions of devices – around 200 billion estimated to be IoT enabled – and millions of apps. Customers expect instant gratification and complete visibility. Firms have to master the art of using this mass of data to understand the emerging needs of customers. And then fulfill it. The problem is not one of failure – but that of irrelevance – firms which cannot meet the customer expectations will not be relevant in such a marketplace. How does this affect the supply chain? On the ground, the nice simple linear supply chains we are used to is giving way to complex, connected and dynamic value chains, where flexibility and agility are the key words. A complex web of suppliers from across the world feed an equally distributed manufacturing footprint to service customers across the globe. The raw material, finished goods and reverse supply chains are now interconnected and global.

At one end of the spectrum, we have customers who are globalized and googlized – who latch on to trends from across the globe, and on the other end we have firms who run traditional supply chains. With 80 percent of the supply chain activity residing outside the enterprise, we have to find ways to connect and identify useful data to drive high impact decisions. As technology improves and enterprises learn to use data from their supply chains, we will see a shift from metrics driven analytics, which just report the status of the business to cognitive analytics, where we will be able to make sense of unstructured and ambiguous data - the ability to analyze multiple disparate pieces of data, which in isolation may not lead to any significant findings, but in congruence offer valuable insights and findings. This is where the power of analytics meets the unstructured world of

social media. Enterprise supply chains will monitor what customers and potential customers are talking about, and use it to understand and analyze its influence on demand. Studies by analytics firms show that incorporating data from social media into analytics to predict future shipments improves forecast accuracy by 16 percent. As IoT takes off, a way to integrate digital technology into supply chain is in the areas of shortage visibility – enterprises will be able to get an integrated picture of the shortages, their causes, the impact, the worst offenders across sources, and plan their production accordingly. A task that today takes up more than 50 percent of the managers time. Digital supply chains will help the manager spend just 5 percent of the time on analytics, and the rest 95 percent on action that will help the firm avoid shortages and wrong deliveries. Supply chains in a globalized world will have to learn this art.

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Managing Risk in Global Supply Chains Risk Management in domestic supply chains is a nascent field. It means having to understand the vulnerabilities of every entity in the chain. A difficult task at any rate. But as supply chains go global, a few other factors add to the complexity differences in culture, language, values, organizational behavior and local laws and regulations. As we go global, we need to understand the nuances of managing risks in a globalized environment. Editor of SCMPro, Girish V S takes a look at the risks in a global supply chain.

Supply chain risk management is defined as â&#x20AC;&#x153;the implementation of strategies to manage both every day and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuityâ&#x20AC;? A supply chain is a network of enterprises, spread across the globe, collaborating to produce goods and services for customers. It assumes that there is a perfect alignment between these enterprises. Each entity in the chain has to react to developments in coordination with the others. Seems straightforward on the face of it. But if we factor in the multiple relationship each enterprise has, and the need to calibrate responses accordingly, it becomes tricky. The same vendor may be producing components for Honda, General Motors and Fiat located in four different countries. The vendor is a part of three global supply chains.

And has to align with three different workstyles, risk appetites, and ways to respond. This can quickly become a nightmare.

can all add up. And all of these introduce new risks.

Global Outsourcing

As long as the supplier, the manufacturer and the customer are in the same or contiguous geographic zone, the manufacturer can arrange the movement of goods and services in a coordinated manner to ensure mandated production levels. In case of any disruption, the manufacturer retains the ability to quickly intervene and avert possible delays. The manufacturer, the supplier and the customer are aware of the business ecosystem and managers are ingrained to think about it. The organization is fully prepared to meet any challenge. For example, an Indian wire manufacturer has factored in the delays in transport from the factory to all major cities in the country, and comfortably ensures product

The immense pressure to reduce costs has pushed firms to seek suppliers in countries where they will be able to extract cost reductions. The argument may start with labor arbitrage or sometimes raw material availability. This is what drove firms to invest in China. But quickly a few challenges became obvious. The cost of labor in China is rising. In 2003, the labor cost in urban manufacturing sector was RMB 12700/- or USD 1534/-. In 2010 it was RMB 31000/- or USD 4579/- and in 2014 it was RMB 56339/- or USD 9000/-. Labor arbitrage can quickly disappear. Apart from this, travel costs, logistics costs, translation services, licenses, fees, legal costs,

Risks in a Global Supply Chain

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Lead Story availability.He is aware of the delays in road transport. If the same manufacturer were to source the wires from say China, the managers would not be as comfortable with the schedules. As suppliers and/or customers move out of the country, the manager has to factor in quite a few new factors. These risks are nicely captured by an article in IVEY Business Journal titled â&#x20AC;&#x153;How to manage risk in a global supply chainâ&#x20AC;? as below.

Culture Gap The first new risk that arises from a globalized supply chain is the culture Gap. For example, the cultural differences between Indian and American managers are quite stark. The American manager is more bothered about the quality and timeliness of the job, while the Indian manager is more hierarchy oriented and will not state an opinion unless asked for. A simple example from an un-related field â&#x20AC;&#x201C; IT is the training on dining etiquettes given to fresh IT engineers before relocating them overseas. A consensus oriented Indian manager may not be

effective in a competitive western set up.Cultural sensitization is very important. Distance and Time Distance and time can be a major problem when it comes to resolving issues. The US and India are roughly 13500 KM apart. In addition there is a 10 to 12 hour difference in time zones. When USA awakes, we will be winding up. Managers across these time zones need to adjust their working hours to accommodate

these differences. If our customers are from the US, the senior management needs to be available during their day time to resolve issues. Multiple time zones obstruct efficient trouble-shooting and follow up from remote locations Alignment between Entities As supply chains go global, we need to realize that we may not be the only or most important customer to the vendor. The vendor may have other commitments and priorities. Managing a supply chain where the different entities have different priorities is a challenge. For

example, rest and employee safety are a major issue for an American fleet operator. The wellbeing of the driver is a priority for the fleet owner. Contrast it to the Indian fleet owner, where the driver has to live in his truck till the goods are delivered. Unless the entities work out the priorities upfront, there will be many disappointments. As these risks add up, they can pose a significant cost to the enterprise. Managers need to spend time and

effort to understand the cultural and operational dynamics in each location. Belgium and Denmark are both in Europe, but Belgium is very risk averse, while Denmark is open to risk. Similarly, in Belgium people show an ability to adapt traditions easily to changed conditions, a strong propensity to save and invest, thriftiness, and perseverance in achieving results.Danes on the other hand exhibit great respect for traditions, a relatively small propensity to save for the future, and a focus on achieving quick results. Managers need to understand these differences.

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Design Elements in Global Supply Chains The complexities of the new networked world calls for a constant reassessment of the constituents of a supply chain. Enterprises need to monitor the transportation networks and tweak processes to capitalize on the opportunities. The very success of â&#x20AC;&#x153;Make in Indiaâ&#x20AC;? will depend on our ability to adapt to these trends. The research team at SCMPro takes a look at some of the considerations that are driving supply chain network designs today. As the global business ecosystem evolves, enterprises are forced to re-think their supply chain networks. There was a time when offshoring to China or some other cheap destination was the order of the day. As global currencies reverse their trends, as labor arbitrages are no longer viable, as concerns about quality of support and protection of IPR emerge, firms are relooking at their network designs. To survive in this emerging market place, we need to spot the trends. The Trend towards Re-Shoring As labor arbitrage disappears, and as capital efficiency decreases, firms will look towards re-locating their manufacturing base â&#x20AC;&#x201C; as evidence by the USD five billion investment by Foxconn in India. These trends will become more visible as time goes by. For Indian enterprises, this means thinking of expansion into locations like Mexico or South Africa to tap into US or African markets. Transport Infrastructure Infrastructure will drive costs and efficiencies. For example, the Panama Canal is a bottleneck in global transportation. And its proposed expansion has the potential to alter transportation costs. The dedicated freight corridor in India has the potential to change

the internal transport dynamics, pushing more freight on to rails. Enterprises need to evaluate these changes and adapt their networks. Regulations Changes in regulations are a constant challenge. We are relaxed about EHS laws. But in a global supply chain, we need to be aware of the constraints it places on our ability to deliver on time. The HOS rules for drivers in the US will restrict their operation hours. Managers need to be aware of these constraints in their network design. The impending implementation of GST has the potential to drastically change the current operational set up. Enterprises will be able to rationalize their network based on true business costs and not on tax breaks. Fuel Costs We are currently in a benign fuel cost regime. But fuel cost volatility can hit us any time in the future. A major factor in network design is fuel cost. Customer Preferences Technology and the race to be responsive is forcing firms to offer same day and even intra-day delivery to their customers. Customers are now used to fast delivery. This places a strain on the delivery networks of firms. Enterprises need to change

their delivery points. For example, Amazon is using the local kirana shop as their delivery point for groceries. Called Express Delivery Service, it plans to deliver goods within four hours. Enterprises need to integrate innovative designs in their network to accommodate customer preferences. Disruptions and Delays There is the case of a global chemical company analyzing where they should locate new plants to serve a global customer base. In an unexpected development, the firm had to close its facility in Egypt due to political unrest. The question was - can any of the existing plants produce the products that were currently being manufactured in Egypt and how customer demand was going to be impacted. Supply chain network design models can be a great tool for identifying risks and creating contingency plans in both the short and long term. The new normal is the VUCA world. To stay relevant, firms need to constantly re-apprise their supply networks by setting up robust processes for evaluating their networks and its ability to respond to events.

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Lead Story

Next Generation Supply Chain Macro-economic drivers of growth and contractions are unpredictable. In this situation an efficient, fast and agile global supply chain is a strategic asset to an enterprise.Enterprises have to organize their supply chains as efficiently as possible. Supply chains have to be flexible and efficient – characteristics previously thought to be opposites. Welcome to the next generation supply chain. SCMPro takes a look at the next generation supply chain. Global outlook, and local agility is the emerging paradigm for supply chains. Supply chains need to balance the twin goals of being responsive – keeping the decision making closer to the customer and efficient – centralizing functions to claim scale advantages. How enterprises manage this will determine their success. Supply chain planners have an ally in technology to create the next generation supply chain. Managers have to harness it in a creative, cost effective and productive way. The supply chain planner has to balance between reducing cost and providing best in class service. Between improving service levels or reducing inventory, between tailored products or standard products. The customer demand is straight forward – fast, cheap, reliable, tailored product with best in class service. What then defines the next generation supply chain? Data Rich The next generation supply chain will be data rich. Technologies like IoT, mobile devices and RFID will create a profusion of data, allowing unprecedented access into the supply chain. Track and trace will be a standard practice and visibility

complete. This will allow firms to develop insights into the speed of consumption in each location, at any specific time. This will allow enterprises to optimize their supply chains based on real time data.

delivery in the US. (It is banned in India.) The winner will be the network that can marry speed with efficiency.

Agile Supply chains will become agile to respond to developments in real time. Both demand and supply are dynamic. Traditional supply chains function by choosing speed over cost, or vice versa. The next generation supply chain will be able to manage speed and efficiency. This canbe achieved by developing broad collaboration with the supply chain elements, postponing the final assembly as close to the customer order as possible, and plan for contingencies.

The internet and mobile has compressed the world. Enterprises need to develop the capability to deliver anywhere in the world. Platforms like Alibaba allow SMEs to sell across the world. At the same time it allows logistics players to pick up an deliver too. Truly global supply chains will allow companies to not only deliver, but also make sure that the global supply chain can react at a local level. If a part made in US is needed in India, the supply chain will know how to create local hubs, avoiding shipping products all over the globe.

Quick Delivery

Resilient

At an age when the customer desires instant gratification – to get delivery at the least possible time frame, supply chains need to develop capabilities to cover the last mile quickly. Amazon has initiated a process to use the local kirana shop as the delivery source. WOW express is using bicycle based delivery for packages that weigh up to 10 KGs. Google and Amazon are trying drone

The next generation supply chain will be able to cope with disruptions and delays by identifying potential problems in advance through data modelling and research. The goal will be continued service.

Global

The next generation global supply chain will be agile, resilient, global, ensuring fast delivery and maintaining efficiency.

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Globalization of Food Supply Chains– Impact on Food Security India is today the largest or second largest producer and consumer of quite a few food products – pulses, wheat, potato, onion, tomato, banana, mango – the list is long. Yet we are also the largest importers of many food products. Processed food is one of the fastest growing export commodity from India. We need to integrate our food supply chain with the global food supply chains to ensure food security. SCMPro takes a look at the impact of globalization on Indian food supply chain.

The Indian food processing industry accounts for 32 per cent of the country’s total food market, 14 per cent of manufacturing GDP, 13 per cent of India’s exports and six per cent of total industrial investment. According to IBEF, “the Indian food industry is poised for huge growth, increasing its contribution to world food trade every year. In India, the food sector has emerged as a highgrowth and high-profit sector due to its immense potential for value addition, particularly within the food processing industry.”The total food production in India is likely to double in the next 10 years with the country’s domestic food market estimated to reach US$ 258 billion by 2015.To achieve this growth, we need to re-imagine our food supply chains - from transport, warehouses, cold storage and handling. It is estimated that 40 percent of the

food we produce is wasted. We waste as much wheat in a year as what Australia produces. This wastage can be attributed to poor supply chain.We need to incorporate better practices – a simple thing like using reusable plastic bins to transport produce instead of gunny bags has the potential to reduce food damage in transit. A major challenge to our food supply chain is track and trace – the ability to trace the individual ingredients right down to the farm where it originated from. India needs to implement ways to ensure such visibility if it has to increase its exports. This is a mandatory requirement in developed countries.A second major challenge is integration among the various entities in the supply chain.Each entity has to realize their role and be honest and sincere in disclosing any

lapses from their end, which has the potential to compromise the quality of the product. To help the industry, there are a number of voluntary food safety certification systems available. The core principle running through them all is a rigorous implementation of the available tools. Yes – the tools to ensure supply chain performance including temperature controllers on transportation vessels, temperature monitoring systems in storage rooms, and security cameras - is available today. We need to take a rigorous approach to using the tools. And if by some miracle, we are able to increase our domestic production, we will be in a position to export food products. Which again means integrating with global supply chains. Either way, this is one challenge we need to meet. Supply Chain Management Professional - NOVEMBER 2015

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Lead Story

Making the Glove Fit Pre Occupation Site Audit Any series on global supply chain is incomplete without a mention about warehousing. A warehouse is a focal point for product and data flow between the producer and consumer. Warehousing becomes important for global supply chains as it is a pre-positioning point for producers to meet customer needs. The crux of a warehouse is, how it fits into the strategic objectives of the firm hiring the warehouse. In this article, Arif Siddiqui – Founder & CEO of Coign Consulting spells out the contours of a global best practice that has to be on the mandatory checklist of any firm leasing a warehouse – a pre occupation site audit (POSA).

We are in a build anywhere, sell everywhere world. The supply chains too reflect this changed thought. A global warehouse helps firms sell everywhere with an optimized cost structure. However, it is not all that simple. A warehouse is usually constructed by a firm, based on a very broad understanding of the requirement.

Arif Siddiqui, Founder & CEO, Coign Consulting

Over the past several years, we have been seeing occupiers of warehouses – the third party logistics service providers and the manufacturers who have leased out a warehouse for their own operations – whom we will label as occupiers – do so with a simple mandate “I need x thousand square feet of space.” This was the

mandate to the broker. The only questions asked were – what is the location preference. The only value added question a broker would ask is what material would be stored in it. This was more to check if the warehouse was to be used for storing hazardous chemicals. With this mandate, the broker would shortlist a few sites and get back to the occupier. The occupier would then make a site visit. Apart from data on basic construction and dimensions, the broker will not be able to add any other information – like what is the stability of the structure, the design load of the floor, the plinth height, the ratio of the length vs. breadth, the number of doors, provision for

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They have not evolved by design. They have evolved due to the fact that better building material is available. Not because the occupier has gone into every detail of the design and architecture, electrical, mechanical and fire safety aspects before leasing out the warehouse. A lot of these warehouses have been copycat warehouses – copy the looks of the nearest warehouse. A number of architects who design warehouses have no functional knowledge of design. There is a concept called “built to suit” or BTS. In BTS, you do not have to specify the plinth house of a warehouse. Because a truck is a truck and its dimensions are standard. Similarly, there are a number of standardized elements which should be apart of the building process. For example, a fire hydrant system need not be specified because it is a part of a standardized system. Standardization of warehouse design is absent in India. Therefore we have to specify every little detail.

emergency door, how would a truck come in, would a 40 feet container easily back up to the docks, can the site handle the large volume of trucks that keep coming in, the amenities like rest and recover rooms, sanitation and hygiene provisions, office space – none of these factors would be brought into consideration while the occupier chooses a warehouse. And end up hiring a warehouse. This is the usual practice. Periodically, the occupier keeps shifting his warehouse, more from a cosmetic appeal angle rather than functionality. And that is how warehouses have evolved in India.

The warehouse owners were getting their warehouses designed by architects who had no knowledge of warehouse operations or processes. And you end up with a warehouse which is four walls and a roof. The design was from a cost saving perspective rather than functionality. The warehouses were constructed from a developer’s perspective and not a user’s perspective. And therefore this warehouse would be left with a number of handicaps. Once the occupier moves into the warehouse, she would discover the absence of a number of vital specifications that are a must have for her. She will have to spend a lot of money to address these handicaps. At this stage, some of these omissions could be addressed, but most cannot as it is a hardwired building. For example if she finds there are too many columns in the warehouse that impedes movement of men and material, nothing can be done about it! You end up with a

number of issues as they pertain to the structure of the warehouse. And after having spent additional sums, you are stuck. You cannot take any of these changes when you vacate the warehouse. This is a scenario that continues to exist even today. The way out of this conundrum is to conduct a Pre Occupation Site Audit (POSA). Not all occupiers can demand a built to suit warehouse since requires a critical volume. POSA will help firms who wish to hire a warehouse and wish to move in at the earliest. With POSA, the broker will shortlist a few sites based on the basic information provided by the occupier and submit to an audit. POSA auditor then evaluate the warehouse based on a rigorous set of parameters, based on the occupier requirements. This is an exhaustive list of parameters. In addition, it also checks for any specific requirements of the occupier. Apart from the external parameters, there are a number of internal parameters which are checked, based on the processes to be used by the occupier. This list is derived after a series of interactions with the occupier to understand the position of the warehouse in the overall hierarchy of the supply chain. This includes usage patterns, who will visit the warehouse – the customer, senior management or just trucks. Based on these parameters, the warehouse will be evaluated for fitment. The result will be a list of modifications that will have to be done before the lease is signed. It also focuses attention on the type of expenses involved in adapting the warehouse to the intended processes. POSA is an attempt to tailor the warehouse to the user processes, and make the user aware of the pitfalls of each option, so that they can pick the warehouse that is suitable for their specific operations.

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Pre se

MASTER CLASS

22nd Jan 2016 | Orchid, Mumbai

â&#x20AC;&#x153;Creating a Resilient EnterpriseManaging Risks in supply Chainâ&#x20AC;?

Master Class Leader Dr. Mahender Singh

Dr. Mahender Singh is Director Transportation & Logistics, MIT Global SCALE Network in Asia at Massachusetts Institute of Technology (MIT), He has over two decades of professional career spanning roles, functions and industries, working globally alongside amazing people to create value and learn. He is constantly looking for new ideas to solve problems through experimentation.

Agenda

Who should attend? The Master Class is aimed at senior supply chain professionals who have the responsibility to design the supply chains for their organizations, including CFOs, VP Supply Chain, Insurance/Risk Management Professionals, Supply Chain Directors/ Managers.

Master Class + Summit ` 30,000 + Taxes

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` 20,000/- + Taxes

Time 08:30-09:00 09:00-10:30 10:30-11:00 11:00-12:30 12:30-13:30 13:30-15:00 15:00-15:30 15:30-17:00 17:00-17:30

Agenda Registration & Coffee Introductory comments and expectations Morning break Operational strategies Lunch Tactical Challenges Afternoon break Strategic Issues Review, feedback, & closure

Our Partners

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SUPPLY CHAIN STRATEGY SUMMIT 23rd Jan 2016 | Orchid, Mumbai “Building Supply Chain Alignment in a New Networked World”

Agenda ●● Key Note Address - Building Supply Chain Alignment in a Digital World ●● CEO Panel - Challenge of Globalization – Charting our Growth Path

Who should attend? India’s most important gathering of supply chain leaders, including: CXO’s and senior supply chain professionals from sourcing, Distribution, Transportation, Planning, Demand Management, Supplier Relations, Quality and Regulations

15,000/- + Taxes

●● Women in Supply Chain - Breaking the Fortress

Key Speakers

●● Geo-Political Dynamics and Challenges to Logistics ●● Campaign Supply Chain ●● Design Elements of a Warehouse in a Networked World ●● CEO Panel - Planning for the Unforeseen - Coping with Disruptions ●● CXO Panel - Make in India - Piecing the Jigsaw ●● Aligning Your Supply Chain to Bottom of Pyramid Realities

Key Note

Dr. Mahender Singh,

Director Transportation & Logistics, MIT Global SCALE Network, USA

Key Speakers

Special Address

Dr. George Ioannou

Director, School of Business, Athens University

Special Address Dr. Rakesh Singh Director IMT Dubai

Special Address

Dr. John Gattorna

Arif Siddiqui

S Sivakumar

Supply Chain ‘Thought Leader’ & Author

Founder Coign Consulting

Chief Executive- Agri Businesses, ITC Ltd.

For Further Information Contact us: To Partner with us: Riddhi.solanki@scmp.in, To Register: Bhavi.shah@scmp.in Tel.: 022 60020156/ 57/ 58, W.: www.ss.iscmindia.com

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Feature

Supply Chain

An enabler to improve bottom line of an organization. The biggest nightmare for a CEO is stock out situation. No one wants to lose sales because of stock outs. The practice of holding higher inventory creates what is called the Bull Whip Effect. This raises inventory costs and reduces profitability. A crucial ingredient for better inventory management is demand forecasting. Shaik Asad Parwez, Head, Supply Chain, Racold Thermo Ltd writes about ways to reduce wastage in supply chains. A well-managed supply chain is crucial in todayâ&#x20AC;&#x2122;s competitive environment. The number one goal for any supply chain is to deliver the goods meeting the 5Râ&#x20AC;&#x2122;s (Right Product, Right Time, Right Place, Right Price and Right Quality). There is a risk at every stage and nobody wants to fail, resulting in a stock out situation. All this depends on the level of the accuracy of the forecast being received from the commercial team

Shaik Asad Parwez, Head, Supply Chain, Racold Thermo Ltd

which is a challenge for them. Poor forecast will lead to stock out situation while an optimistic forecast will lead to excess inventory. The forecast accuracy is essential to have a very dynamic flow of information across the chain. This is the reason for which emphasis is given on the S&OP process and it should be the heart of the business operation. The foundation of an effective S&OP process is the trust amongst all stakeholders and jointly arriving at an action plan. Companies are becoming quick, flexible by using their visibility within the supply chain as a competitive advantage. Reducing costs by driving down excessive inventory on hand has become a critical priority for companies in present economy. Hence improving supply chain visibility has

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become a key strategy in managing the supply chain. The whole value chain has to contribute to make an organization profitable. The stakeholders across the value chain keeps on holding inventory right from the manufacturer, vendors, distributor, wholesaler, dealers, retailers etc. There is no link with the customer as to what he actually wants. The front end of the supply chain has to be in touch with the customers while the back end with the manufacturer / vendor. This will ensure that the supply chain delivers what the customer wants . I feel in the present Indian scenario if one can eliminate the wastages in the supply chain, that itself can lead to improving the bottom line of an organization. The wastages are mainly contributed due to inaccurate forecast accuracy and month end

skewness. The below mentioned points highlights some of the areas by which we can eliminate these wastages: 1. Improve forecast accuracy – The stakeholders like the distributors, dealers, retailers should also be part of this exercise, i.e. the forecast collection should happen bottom up, the data point should be from the point of consumption. The logic is simple that you supply what sells. By this process we actually deliver what is selling the most as a result seasonality, economic condition all gets covered. By this the availability is good and the stocks are also under control. ●● The quality of inventory will improve. ●● The inventory turns will increase.

●● The return on capital employed improves. ●● There is reduction in non/slow moving inventory. ●● The raw material planning can be done efficiently with availability of material having the most lead time available appropriately. ●● The company can go to the extent of implementing vendor managed inventory also if we have proper visibility. ●● No opportunity loss due to nonavailability of material. ●● Faster service to the customer leading to customer delight. 2. Month end skewness – A typical Indian mindset that we wake up in the final call. Companies are working across sector on this

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Feature

major challenge, how to reduce month end skewness. I think in this case also the stake holders should be involved. We need to build trust with the stakeholdes. We need to assure them that we will supply them what they need and not pump them up with material which are unsold for them just to meet the companies target. This will help them in reducing their working capital. He will get more turns and increase their profitability which in turn affects our bottom line. ●● The concept of weekly order cycle can be introduced. ●● The warehouse space can be utilized efficiently as the

warehouse will only be a transit point where the materials are unloaded and dispatched to the customers as per their orders. The material is not lying for long in the warehouse; hence one can manage with lesser space. ●● Primary transportation can be managed using bigger container as it can be unloaded in the warehouses leading to reduction in per pcs cost. ●● There is no detention of vehicles which normally happens due to month end skewness as only inflow of material is there till the last week and out flow happens

only in the last few days of the month. ●● The secondary transportation cost can be reduced by increasing the order size of the customer and for upcountry dispatches route planning can be worked upon. With seamless access and visibility into the supply chain, the organizations can reduce cost and improvement on the working capital and inventory. Organization can unlock new levels of efficiency, service, customer satisfaction and profitability across the supply chain and organization.

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Human Resources

The role of Human Resources and Training in addressing Skill Gaps in the Warehouse and Logistics Sectors How a trained workforce can ramp up results? In the constant drive to squeeze out greater efficiencies from the supply chain, employee productivity is now being recognized as an important driver. And the first step in enhancing employee productivity is training. Darryl Judd lists why the HR department has a huge role to play in addressing the skill gaps in the warehouse and logistics sectors

Darryl Judd, COO, Logistics Executive

Even though all companies try to cut their costs, most find this goal, along with reducing customer order times, a challenge that remains out of their reach. For many, improved warehouse and distribution centre productivity remains a goal and not a reality.

or wages. The pressures therefore, to meet expectations in productivity, are constant. In fact, these stresses are increasing, as warehouses become an integral part of the company offering.

There is constant pressure placed on companies to improve their warehouse efficiencies, due to competitive customer demands, which are constantly challenged by s dynamic changes in warehouse costs. These costs can range from fuel fluctuations to increases in rent

ERP system, or the latest WMS (Warehouse Management System); however, it is only when attention is drawn to the whole picture that there can be sustainable improvements made. Gone are the days when the warehouse function sits as a silo adjunct, at the back end of

They may have the most expensive

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the company’s delivery. In today’s competitive climate, the warehouse is intrinsically connected to the rest of the supply chain. Warehouse services provide an important part of the agile, efficient product to market offering and can be the deciding factor, not just in a company’s success, but its survival. People are the intrinsic feature that ties all the different elements in a warehouse together. An efficient workforce can be the deciding factor that brings in results but this can only be achieved if staff are adequately trained and focused on shared goals. It is important therefore to take a step back and look at efficiencies and productivity in the warehouse from a different angle by examining the importance that a well-trained and focused workforce can have on improving efficiencies. On a macro level, the logistics function is of more importance than ever as it underpins a growing economy and India is one of the fastest growing markets in the world. The Indian GDP is growing steadily at 5 to 6% compare to the world GDP growth rate of only 3%. Initiatives like “Make in India”, launched by Prime Minister Narendra Modi in 2014 to encourage international, as well as local, enterprises to manufacture their products in India have also contributed to an increase in foreign investment and trade. It is actually Modi’s ambition for India to surpass other countries like China and the United States to become a premium trade and manufacturing hub. Despite India’s rapid growth the country’s infrastructure network will be insufficient as freight movement increases about three times in the coming years and this shortfall will put India’s growth risk.

The bottom line is that a skilled workforce is required to run a sophisticated logistics system and the number of skilled professionals required is rapidly increasing. The movement of the Indian logistics sector, which has grown from a low level to a complex third-party, supply chain management system requires a better skilled workforce. There is a dramatic skill gap, which has consequently been identified in India, with a shortfall in skilled warehouse professionals. The only way for this skill gap to be addressed is through training. For this reason training should be given high priority. It needs to be aligned with corporate objectives and goals and the training function’s role needs to be acknowledged as a value added resource that sustains competitive advantage. It is therefore important that there is investment in the logistics workforce. A skilled workforce can be developed by improving the service conditions and by providing training for employees. This improvement in service conditions will attract more people to join the logistics industry and will also increase retention rates. Attracting more people will provide better options in recruitment, thereby increasing skilled labor.An investment in training costs will therefore created a skilled workforce that is better equipped, through training, to make efficient and effective decisions. A skilled workforce can significantly reduce logistics cost time and make a warehouse more reliable and safe. A reduction in time cost losses and accidents would improve the reliability of the logistics system and improve profits. Therefore, an investment in the human resources training function will lead to a more improved system and inevitably pay for itself.However, to ensure success, logistics companies need to ensure that a strong commitment to addressing human resources

challenges and improving the sector’s skills is dedicated from the top down. This needs to be rolled down from the executive level that can empower their management staff to concentrate on training the workforce and recruiting skilled labor. By focusing on improving working conditions and the welfare of employees, they will create a flow on effect whereby they will be indirectly be benefiting the image of the sector and attract better talent. This will create an upward spiral of improvement. Aligning your managers and staff to a company culture committed to inquiry, responsibility, partnership, and customer satisfaction can significantly affect not just warehouse productivity but also the logistics industry as a whole. Leadership is also of key importance in communicating to workers the organizational goals and the processes to achieve them is one key to effective warehousing operations. When managers fail to create an environment of open and clear communication, employee productivity suffers, resulting in high turnover and wasted resources. A better than average warehouse efficiency result, otherwise known as Best in Class can be achieved by diligently attending to the needs of warehouse employees and ensuring they have they have what they need to be successful. Best in Class warehouses are those that are better than their peers are, across industries, in meeting efficiency and productivity targets. Ultimately this makes their companies a more competitive, agile, and efficient, offering in meeting industry demands. Though it is undeniably a daunting task, this endresult is surely the most compelling reason to put a good training and hr management system in place within your organisation today.

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Deutsche Post DHL Report

Delivering Tomorrow: Logistics 2050 Deutsche Post DHL released a study on the future. Scenario study “Delivering Tomorrow: Logistics 2050” outlines five visions of the future and their impact on trade and business. Results based on the expectations and projections of 42 experts with a wide range of professional backgrounds. SCMPro brings you a summary of the report released.

Scenario 1: Untamed Economy – Impending Collapse The world in the year 2050 The world is characterized by unchecked materialism and consumption. The paradigm of quantitative growth predominates and the concept of sustainable development has been rejected. Trade barriers have been eliminated and global trade flourishes. Global economic power has shifted to Asia and the former “emerging” countries have surpassed the West. A global transportation supergrid ensures the rapid exchange of goods between the various centers of consumption. This untamed economy, propelled by unsustainable lifestyles and the uncontrolled exploitation of natural resources, carries the seeds of its own demise: as massive climate change inches closer, natural disasters occur more often and frequently disrupt supply chains. Implications for the logistics industry From the perspective of the logistics industry, these developments lead to a massive increase in demand

for logistics and transport services. Companies are even outsourcing their production processes to logistics companies. While climate change has opened up shorter and more efficient trade routes through the Arctic ice, the increase of extreme weather events causes repeated disruptions to the supply chain and raises capital costs for logistics companies. Disaster response and contingency planning becomes more important as the number of natural disasters around the world continues to rise. The growing scarcity of energy resources, higher energy prices and costlier raw materials mean smaller profit margins. As a result, not only offshoring but also nearshoring are common business strategies.

Scenario 2: Mega-efficiency in Megacities The world in the year 2050 In this world, megacities are both the main drivers and beneficiaries of a paradigm shift towards green growth. To overcome the challenges of expanding urban structures, such as congestion and emissions, they have become collaboration

champions, fostering open trade and global governance models in partnership with supranational institutions. Rural regions have been left behind and the nation-state no longer plays the dominant role it once did. Robotics has revolutionized the world of production and services. Consumers have switched from product ownership to rent-and-use consumption. Highly efficient traffic concepts, including underground cargo transport and new solutions for public transport, have relieved congestion. Zero-emission automated plants have helped to cut carbon emissions. A global “supergrid” transport network with mega transporters, including trucks, ships and aircraft, as well as space transporters, has opened important trade connections between the megacities of the world. Implications for the logistics industry The logistics industry is entrusted to run city logistics, utilities, as well as system services for airports, hospitals, shopping malls and construction sites, along with part of the public transport infrastructure. It also manages the complex logistics planning and operations

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for advanced manufacturing tasks. In contrast to the situation in cities, the logistics services available in remote rural areas are poor. In larger villages, central collection stations are the main delivery option for products ordered online. In response to “dematerialization” of consumption, logistics companies offer an array of renting and sharing services, as well as secure data transfer. Thus, advanced logistics services not only encompass the fast and reliable delivery of goods, but also the safe transfer of information and knowledge.

Scenario 3: Customized Lifestyles The world in the year 2050 In this world, individualization and personalized consumption are pervasive. Consumers are empowered to create, design and develop their own products. This leads to a rise in regional trade streams, with only raw materials and data still flowing globally. Customization and regional production are complemented by decentralized energy systems and infrastructure. New production

technologies such as 3D printers accelerate the customization trend and allow developing countries to leapfrog classical industrial production patterns. However, the growth in production of personalized products has increased the overall consumption of energy and raw materials, which puts the earth’s climate on course for a 3.5°C temperature increase by the end of the century. Implications for the logistics industry The growing importance of 3D printing has a significant impact Supply Chain Management Professional - NOVEMBER 2015

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Deutsche Post DHL Report on the logistics industry. Logistics providers transport raw materials for 3D printing cartridge manufacturers, deliver the 3D printing cartridges, collect old products and recycle them. Several logistics providers have expanded into the online fabbing market. The implications for logistics include a vastly reduced need for long-distance transportation of final and semi-final goods due to the localization of value chains. At the same time, logistics providers organize entire physical value chains. In 2050, the logistics industry consists of an online and offline segment. The offline segment integrates the transport of raw materials into manufacturing logistics and reverse logistics. The online segment ensures secure data transfer and secure data retail in online shops. Strong regional logistics capabilities and a high quality last-mile network become important success factors because of the decentralized organization of production.

Scenario 4: Paralyzing Protectionism The world in the year 2050 In this world, economic hardship combined with the rise of nationalism and protectionist barriers has reversed globalization. Resources are scarce, technological development is stagnating and economies are faltering. Global trade volumes are down after most countries have raised protectionist barriers. Trade suffers from a lack of investment in infrastructure development and maintenance. High energy prices and dramatic resource scarcity fuel international conflicts over resource deposits. Under these circumstances, there are no international efforts to reduce greenhouse gas emissions and the earth’s climate is on track for a 3.5°C temperature increase by the end of the century.

Implications for the logistics industry The decline of world trade and the resulting regionalization of supply chains are major challenges for the logistics industry. The average transport distance has been shortened. Ocean freight becomes less important, while the significance of regional road and rail transport is on the rise. Shorter and less complex regional supply chains reduce the demand for elaborate and sophisticated logistics solutions. What many call a “devaluation of the logistics industry” results in fewer customized solutions and an increase in standardized services. Strong regional providers emerge, maintaining excellent connections to governments and public administrations. Governments view logistics as an industry of strategic importance. Relations between some blocs and countries are extremely strained, and logistics providers in bloc-free countries act as intermediaries in international trade brokerage. The growing complexity and length of the customs clearing process increase the demand for specialized customs brokerage and consulting services.

Scenario 5: Global Resilience – Local Adaptation The world in the year 2050 This is a world initially characterized by high levels of consumption thanks to cheap, automated production. However, accelerated climate change and the resulting increase in natural disasters is causing disruptions of lean production structures as well as repeated supply failures for all kinds of goods. Thus, the new economic paradigm is no longer about maximizing efficiency, but reducing vulnerability and creating robust, resilient structures. This radical

move towards redundant systems of production and a change from global to regionalized supply chains allow the global economy to better weather troubling times. Implications for the logistics industry The security-conscious world in 2050, with its regionalized trade structures, relies on a logistics sector that ensures supply security as a top priority. High-performance backup infrastructure guarantees reliable transport even in unstable and hazardous times. However, such extensive backup systems are capital-intensive and conflict with the aim of carbon reduction. To counter this effect and find a balance between energy efficiency and supply chain resilience, sophisticated logistics planning is used to achieve high capacity utilization. Instead of complex just-in-time delivery processes, huge warehouse facilities located close to the manufacturer play a large role and are considered indispensable buffers. Disruptions and natural disasters occur more frequently in many parts of the world and providing fast relief operations is considered a high-priority as well as profitable business for logistics providers. The increased focus on long-lasting products contributes to demand growth for the service and maintenance of domestic technologies. Thus, logistics providers combine the operation of the last mile with offering technical services on the spot, such as the collection of used products for the purpose of recycling scarce resources. The complete report can be downloaded from:

http://www.dpdhl.com/en/ logistics_around_us/future_ studies/delivering_tomorrow_ logistics_2050.html

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Feature

Creating Blue Oceans in the Delivery Space

E-commerce is growing and is reported to grow ten fold in the next five years. If e-commerce walks away with the glamor, the back end delivery guys make the system work. It is the humble delivery boy who is the core of the industry. WOW Express is a new start-up in the e-commerce delivery space. Editor of SCMPro, Girish V S caught up with Sandeep Padoshi, Co-Founder and Director of WOW Express to find out what makes it tick. How would you describe your business model?

Sandeep Padoshi, Co-Founder and Director WOW Express

We are a technology enabled, customized delivery solution provider. We are not in the e-commerce space. And therefore we are not burning cash to acquire customers. We provide customized, quality, on-time, reliable and predictable delivery service to our customers. And luckily for us, as our customers grow, so will our share of their business. What counts in

We marry technology with innovation to derive value to our customers. One such low technology, but impact innovation is the use of bicycles for delivery

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delivery is hassle free service. For example, we have a 30 percent share of Paytm’s first mile delivery business. And they are happy with us. As they grow, so will we. What are the innovations brought in by you in delivery space? E-commerce is set to grow 10 fold over the next five years. It is believed to be a USD 100 billion industry by 2020. If we work back and calculate the number of delivery boys required

to service this volume, we will need a 20 fold increase in delivery guys – which approximately works out to four million guys – this is the industry requirement. This means we will need 4 million motorcycles for these guys – a tall order. The only way out is if we innovate. The way forward may be bicycles.

to feel a part of the firm. Our delivery boys start their day with breakfast at the branch – the breakfast varies by region. We believe this has contributed to lower churn – we have less than 10 percent attrition. We are a year old – and of the eight guys we started with, six are still with us. In an industry where guys move for Rs.

WOW express is a unique endeavor. It marries technology with innovation to derive value to our customers. One such low technology, but impact innovation is the use of bicycles for delivery. The Department of Posts has been using it for years. But that has been it. We have adapted bicycle for delivery – we call them rushers. We have around 80 rushers at present. We have provided them with 18 geared sport cycles, ad complete cycling gear. These rushers cover a range of three to five KM. It is a short distance. We have a van which carries the parcels parked in a location. The rushers will fill their packs from the van and effect deliveries. At present, a rusher ca carry 10 KGs in his pack. We are designing a saddle which will help them carry heavier loads. This has interested customer interest. The rushers use the same smart phone apps our bike and van based delivery guys use – the deliveries are pushed on to their handsets, and they take digital acknowledgment on their phones. This model is environment friendly. We are planning to use this to create interest in cycling. Who knows, we may even organize a cyclathon. This also helps provide employment to those who wish to become delivery guys. Normal industry practice is – the bike belongs to the delivery guy, the company pays a per kilometer charge. If you cannot afford to buy a bike, you can start off as a bicycle delivery boy and then buy a bike later on.

What this means is, if our customer wants a pick up or delivery within the next 2 to 4 hours, or in later phases within 30 minutes, we should be able to do it

Another novel idea we have started is “Breakfast at Branch” – In delivery industry, the delivery guys are the face of the company. And they need

200 more, this is an achievement. We are a technology enabled delivery firm. We are process driven and everything is systems driven. We have the technology.We feel that technology will not be a differentiator for long.Today anyone who has the money to invest can buy better technology. We realize that. We will have to bring in such differentiators that will leverage the technology DNA we have. We are sure competition will soon launch similar services. What are the challenges technology pose? Smaller players like us have to keep upgrading our technology base to keep ourselves in the race. And unfortunately, technology is evolving at a rapid pace. This means we need to commit more resources to stay in the race. Cost certainly is a challenge. On the other hand, while we use technology to reduce manpower – not the delivery guys – we need people to manage technology. This is certainly an issue. But apart from this, usage of technology is an issue. That is what we are trying to do. Technology is just an enabler. Its usage determines Supply Chain Management Professional - NOVEMBER 2015

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Feature how efficient you are. We can provide an app to a guy. But if he does not use it during his delivery, the technology is not of much use. It is using technology to the full extent that is important. Each of our service marshals go through a mandatory two day training before they hit the streets. To encouragethemto use technology, we have an incentive system tied to the usage of the apps. If they use the app 100 percent, they get an incentive. We believe the differentiator isin the use of technology. We are in the process of building an analytic engine that will run on the delivery data we collect every day. We plan to use this data to provide better service to our customers. We can use the data to identify days of the week when the delivery load is higher, and plan to augment our delivery capacity on those days. Or we can identify good customers, who have a good payment track record and convert them from a Cash on delivery to card on delivery. This will be good both for us and the seller â&#x20AC;&#x201C; cash handling will reduce.The challenge is not technology, but the intelligence with which we use it. We wish to be known for our use of technology, not what technology we own. Are there any technology you wish to experiment with?

next 2 to 4 hours, or in later phases within 30 minutes, we should be able to do it. Hyperlocal players exist in the food, grocery and electronic products delivery space. The on-line seller would have a tie-up with a number of point of sale shops across the country. An order will be routed by the on-line seller to us, asking us to pick up the product from a location nearest to the customer and deliver it. This is a point to point delivery. The traditional e-commerce is a hub and spoke model. Hyperlocal is intra-city, or locality specific. Right now we are talking of two to four hour delivery. But we see half hour guaranteed delivery requirements coming up! This will change e-commerce as we know it. How do you choose technology? There are a mix of factors that go into determining the technology base for a firm. WOW Express is a startup. We believe that the crucial pieces of technology have to be owned by us. The technology is not crucial per se. But data is crucial. The outcome of the data is very crucial. These two have to belong to us. The analytic engine we are building Is proprietary to us. For the last mile, we work with a third part technology provider on a pay per use basis â&#x20AC;&#x201C; essentially a SaaS

model. For the first mile, which is a unique product is being developed exclusively for us. It is a mix of our own technology and outsourced pieces. As we grow, we will still want to follow the same model as it helps us. Own the crucial parts and hire the generic parts is our approach. Are you seeing any disruptive technologies emerging? There are quite a few disruptive technologies emerging. In the e-commerce delivery space, hyperlocal technology is a disruptive one. A couple of years ago the technology that powered Ola and Uber were not there. The only recourse we had was our own vehicles. To be able to see your delivery moving towards you on a google map will change the face of delivery. We are trying to bring that into the delivery space in India. A simple technology like the GPRS, if used imaginatively can be a disruptor. We use trucks for our line haul. The bags that go into these trucks has a GPRS device inside it. This enables us to track the back. Loss in transit is history to us. We are exploring a similar solution for air parcels. The batteries in the GPRS device are a safety hazard here. We need to get over this hurdle.

One of the technology innovations we would like to tryout is hyperlocal. (Hyperlocal connotes information oriented around a well-defined community with its primary focus directed toward the concerns of the population in that community. It refers to the emergent ecology of data (including textual content), aggregators, publication mechanism and user interactions and behaviors which center on a resident of a location and the business.) In simpler terms, it is point to point delivery. We wish to build on-demand delivery and hyperlocal delivery in our business. What this means is, if our customer wants a pick up or delivery within the

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Crafting the Perfect Entrance

How right technology can create better warehouses?

The Enterprise Focus series looks at a firm in the supply chain domain and explores the USP of the firm. As a part of our Enterprise focus series, Girish V S, Editor, SCMPro had a candid interaction with Samir Gandhi, Director, Gandhi Automations Pvt. Ltd.

Samir Gandhi, Director, Gandhi Automations Pvt. Ltd.

Can you brief about your product range and their applications? We design, manufacture, supply, install and maintain highly sophisticated industrial and commercial doors and loading bay equipment. The doors meet various objectives like temperature control, dust ingress, noise control, maintain hygienic conditions etc. at the same time allows seamless traffic of Forklifts, Pallet trucks etc. All our products are based on European and American technology that conform to very high standards of safety. Our Dock Levelers also adhere to the most advanced concept. The prefabricated solutions for the quick construction of loading bays allows a cut by 60% of the construction time of pits and dramatically reduces the need of man labour.

of scheduled maintenance and safeguard. Regular programmed inspections and maintenance safeguards functionality, increases the product life, reduces operational cost and environmental impact. For this our skilled service engineers take care of urgent repairs as well as scheduled maintenance and installations. With our service engineers and support technicians in metros and regional areas, we are well equipped to respond to every call reassuring you that there is a qualified Gandhi engineer close in your area. We have patents for some of our product designs thus giving the customers unique products. Gandhi Automations today is synonymous with good quality and a name to reckon with.

Our product range includes High Speed Industrial Doors, Clean Room High Speed Doors, Sectional Overhead Doors, Dock Levelers, Dock Shelters, Rolling Shutters, Fire Rated Rolling Shutters, Fire Sliding Doors, Swing Doors, Aircraft Hangar Doors and Shipyard Doors, Swing Gates, Sliding Gates, Retractable Gates and Boom Barriers.

Can you elaborate on your manufacturing locations, location of plants, investments, technology & human resources? Gandhi Automations is headquartered in Mumbai, the commercial capital of India. The company has state of the art manufacturing and warehouse facility of 300,000 sq. ft. in Bhiwandi. With offices in 23 major cities of India and a strong team of more than 500 people, we have a strong national presence and international footprint.

What are the specific advantages of using your products? We are the leaders in Entrance Automation and Loading Bay segment with a market share of more 70% in India. Our products are innovative, high-quality, safe and energy efficient. Our passion and commitment to quality propels us to continuously thrive to do better for our customers by exceeding their requirements and expectations. Gandhi Automations is committed to provide excellent customer service by prompt response to customer queries. Our customer care team is available to our customers 24 X 7. We understand the importance

For engineering innovations â&#x20AC;&#x201C; what is your companyâ&#x20AC;&#x2122;s focus on R & D? Gandhi Automations has successfully evolved into an innovative company catering to all kinds of needs. We have an extremely talented inhouse research and development team which designs customized solutions for our customers. Our product engineering team uses the latest software in combination with technologically advanced Supply Supply Chain Chain Management Management Professional Professional -- NOVEMBER NOVEMBER 2015 2015

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Enterprise Focus machinery to provide our customers with an unmatched experience in entrance automation and loading bay equipment. What are the quality assurance measures taken by Gandhi Automations? Quality is a key driver of progress for us and is an integral part of every process we undertake, from R&D to product delivery. Our quality policies are constantly upgraded to exceed our customer’s requirements and expectations. Gandhi Automations is committed to delivering highquality products and services to its customers and continuously strives to improve in all aspects. Our products and services are geared towards ensuring that every delivery to the client passes through our stringent quality measures. This policy has engendered a work culture that exhibits a no-compromise attitude towards quality. The company has more than 1, 00,000 installations worldwide certified to ISO 9001:2008 quality management system by TUV Nord and all products manufactured are CE marked. What are the Key drivers of your industry? Indian industry has started giving emphasis on the technology updates and industry norms. To address the issue of power crunch we face, more and more of energy efficient products are being manufactured. Along with the need for user friendly operations, entrance automation systems are the latest technological solution. It gives comfort, swiftness and above all security, the prerequisite benchmark. Our products contribute majorly towards these criteria’s. The development of electronics and the PLCs used in our products is being researched constantly for energy efficiency. What are the Growth prospects of your industry in India? The market for our industry has been growing at a steady pace over the past couple of years in India. Entrance automation and loading

bays have become a common sight in several types of industries nowadays. Rapid industrialization and the steady growth of the commercial realty sector have been behind this growth. The thrust being given to the manufacturing sector is what has brought this product category into sharp focus. With several Special Economic Zones (SEZs), National Manufacturing Investment Zones (NMIZs) being announced, apart from the various industrial corridors that have been proposed, it is not surprising that Entrance Automation and Loading Bay industry is rapidly growing. The market that has been tapped till now is only the tip of the iceberg. With a ready made market available, this could be one product category which could witness double digit growth rates over the next decade. What are the marketing strategies that has led to the success of your products in India? Our strategy is not to appoint dealers for marketing and selling our products. All our contacts with the clients are done directly by our staff themselves. We believe that a dealer will never be able to service a client with the same passion as we do. In this industry the model of appointing dealers to service a client is an absolutely unsuccessful one which ultimately results in the client being unhappy. What are the significant hievements in company’s history? Since its inception Gandhi Automations is continuously working on improving the products offered to clients and services attached to it. To support this mission the company has set up a 300,000 sq. ft. state of the art manufacturing and warehousing facility in Bhiwandi. Expansion is a key strategy with Gandhi Automations. Our principal focus is not only offering quality products but also on providing outstanding customer service for which we have a dedicated customer service team available 24 x7. Today we are not just the leading Entrance

Automations Company but are infact the number one company in this segment. We are number one in Entrance Automations and hold the same rank when it comes to vehicle loading automations. We also have strength in warehouse related items like loading bay equipment. We started with manufacturing of manual rolling shutters then went on to importing automations for rolling shutters. That was the first decisive step in bringing in advanced automations. From then onwards, we gradually enlarged our product portfolio – Automated Gates, Barriers, Doors, etc. Around the year 2000, we introduced products which are primarily used in Logistics and Warehouse operations like Dock Levelers, Dock Shelters, Sectional Overhead Doors, etc. One thing led to another and we began to design doors and gates using the latest structural and mechanical engineering software and this is how we grew. What are the key strategic moves that have engineered the success of the company? We constantly strive to grow. Our strategy is to focus on some of our key areas of operation. It is all about offering technologically advanced products to our customers. We understand the needs of our clients and offer them the best product along with high levels of service. The Indian economy is bound to rise to the peak which would result into higher demands for goods in the market. It is just a matter of time and patience to see India achieving a fairly reasonable percentage of GDP growth rate. During these optimistic times Gandhi Automations has already undertaken expansion at various stages. We are having 3,00,000 sq. ft. of manufacturing and warehouse at Bhiwandi where we carry out our manufacturing process. Apart from catering to the Indian market we have also been exporting our products to America, Far East, Middle East, Europe and Africa.

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Robotics - The Future of Supply Chains If there is one area of an enterprise operations that is ideal for robotics it is robotics. Any repetitive and monotonous job can be done better by robots. Does this mean we will soon see robots taking the place of humans in the supply chain? Or is robotics still very far away? Editor of SCMPro, Girish V S takes a look at the future of robotics – and their place in supply chain management. Across the developed world, monotonous and repetitive jobs that do not require human judgment are being consigned to robots. Amazon acquired robotics manufacturer Kiva Systems for USD 775 million in 2012. Since then Kiva robots have become the busiest employees at Amazon. Where earlier people used to walk miles to pick up orders, today robots bring the shelves to a stationery picker, who picks the right component and the robot takes the shelf back for storage. The role of the human employee is restricted to picking up and placing it on the dispatch rack. The reason is, robotic hands are still not able to grasp odd shaped items firmly, nor can they handle variety. But not for long. Engineers at MIT have found a way to make industrial robots nimbler without the need for huge investments in complex robotic limbs. Using a technique called

“extrinsic dexterity” researchers are creating a robotic arm that can adjust its grip based on the object being picked up, automatically calibrating the force needed to do so. Welcome to the age of robotics.

The interesting fact is – robotics is being used by small and medium sized enterprises in the US to reduce humans. The report ‘Robots and the “New” Supply Chain: 2015-2020’ from Robotics Business Review, reveals that an SME firm is using Supply Chain Management Professional - NOVEMBER 2015

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Tech Talk a cheap robot that costs around USD 25000/- but can work for 2000 hours non-stop for sorting plastic in their factory. Humans cannot work like this. And at the prevailing labor rates of USD 9 per hour, it would cost the firm USD 19000/- for the same output. Which means the ROI from robotics is now very attractive. Robots can now work alongside humans, and will continue to work even when the human worker takes a break. Non-stop production anyone? As consumers expect immediate fulfillment, firms need to tailor their supply chains to send products out at a very rapid speed and with accuracy. Amazon estimated that they will be getting 426 orders every second during its Black Friday sales. A feat it cannot manage without robotics. Employees at some robot-equipped warehouses are expected to pick and scan at least 300 items an hour, compared with 100 under the old system. Closer home, Flipkart and Snapdeal, with a fraction of the order volumes were overwhelmed! The case for robotics is not to benchmark it against cost of humans, but against the cost of shipments delayed and highly frustrated customers. Robots will remove people from the monotonous and strenuous jobs – like palletizing, loading etc and allow them to be employed in other more responsible roles. Yes there will be a reduction in employment. But people will find employment in other more lucrative areas. Else progress will not be possible and we would be moving on palanquins. Approaching it in another way, a robot can work in the same job for years, before it

has to be replaced. Compare it to the huge turnover among supply chain employees, and suddenly robots look attractive. Rising labor costs, EHS concerns, shortage of trained manpower combined with rising sales and impatient customers will emerge as the drivers in robotics – not the traditional ROI calculations. India still has a huge inefficiencies in its supply chain. Therefore cost savings from supply chain efficiency metrics are real and palpable. But as firms seek to drive down costs and at the same time improve efficiency, robotics will come into play. Adam Robinson in his article “The Exploding Use of Robotics in Logistics and Manufacturing” writes “Robotics also impact the efficiency and analysis of supply chain processes. Robotics can sort through incoming and outgoing packages faster, place them on the appropriate shelves, or shipping containers, and ensure the packages do not have any defects, which would cause unnecessary returns or delays in the order fulfillment process. Robots may also detect issues arising around them. For example, robotics could be used to prevent a

truckload of merchandise leaving the warehouse if a wreck has occurred several miles away. Alternatively, robotics could provide the drivers with an alternative route prior to leaving. This may sound nearly identical the use of the IoT in supply chain processes. However, robotics would be comparable to the physical action that takes place following the identification of inefficiency. Therefore, robotics can be applied to the software aspects of supply chain processes, even though human input may still be necessary.” Todays robots can work alongside humans, adapt to the real world work environment, can be quickly redeployed and most important, come with lower ROI. Robotics has evolved to a point where in-house personnel can manually train the robot for the tasks it will perform; it also can be retrained and deployed for a variety of jobs across the factory floor. All these developments are not consigned to US and Europe. Closer home, Grey Orange, a robotic startup by two BITS alumni is providing home grown robotic solutions to Indian customers. Hop across and have fun with robots in your supply chain.

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Service

Level Agreement

How does it impact Business?

As India integrates with global supply chain networks, customers expect the same level of service from their Indian service provider. And these expectations are codified in a contract called the Service Level Agreement (SLA). An SLA clearly defines the scope, quality, timeframes and responsibilities of the entities involved. A welldefined SLA can avoid any misunderstandings between the parties, and help the firms focus on the output. Jeevan Rao Sahib, CEO, Indelox Services Pvt. Ltd. on how SLA’s can impact your business.

In the recent times there is increasing recognition of term called SLA ( Service Level Agreement) which in very simple terms is expression of expectations in minimal parameters which are critical to sustain the deliverables from a service provider to the contracted Customer Business.

efficient and optimum service quality and to meet Business objectives. Many contracts suffer because of lack of setting expectation with complete awareness of the end result or goal in mind while examining the parameters that go in the SLA.

It can take months to understand, negotiate, a complex SLA/ document, as you go back and forth with your logistics provider so the document becomes a “win-win” for both parties

Jeevan Rao Sahib, CEO, Indelox Services Pvt. Ltd

Usually they are measurable in numbers. Many service providers have an established document which is part of the contract with the participation that the customer has to provide that is required for

Data so collected forms foundation for healthy comparison, of the actual capability in existing service provider and also with that of an outsider who can be potential vendor. Supply Chain Management Professional - NOVEMBER 2015

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Feature Some important underlying principles, for establishing SLA. To agree and set forth an agenda to measure the performance under the service contract, it is imperative to understand the necessity for identifying areas that impact the service, and the larger Business objectives. This principle will guide through the period of contract that will allow for review if the objectives are achieved or need correction. Collaboration If the objective is to be realized in wholesome manner collaboration is required as both parties have to synchronize the effort. To this end it is necessary to trust each other’s intent and capability. As the objectives accepted are common an environment of belief in each other and a spirit of GIVE AND TAKE for both to WIN is a prerequisite. Transparency Any relation to sustain over time has to remain open and fair to transact without fear and in the best interest. Both parties have to identify methods of sharing information either routine or of importance, which is clear and effective, escalation matrix, conflict resolution Clarity of Target All parameters to have a set target to meet so that a high level of accuracy and efficiency is consistently met. Measurement methods, periodicity, data collection, source of data, acceptable tolerances in variance are explicitly captured in the agreement. Periodic Review To maintain healthy relation and trust in each other review of the deliverables with reasons for variance is to be discussed in free and open atmosphere so that solutions are arrived at with in a joint effort for a mutual benefitting reward. Communication Communication should be as frequent as possible at every leveloperating, project, focal person

of both parties are to constantly exchange information. It is critical that both are aware of hierarchy on either side. Language used in communication should set a tone for voluntary participation and not set in a manner which conveys that anyone is superior. Any words of complaint and negative tone will only demotivate and demoralize the members on the front. Continuous Improvement One of the goals should be Continuous Improvement with organization support for infrastructure and resources to ensure the success of the joint effort to meet the objectives. Cost Reduction is another major goal to be achieved out of process improvement. Mere volume will not enable reduction in the cost to the extent a change in process and operation can bring in. Incremental Processes improvement on daily basis will greatly contribute to overall change. Value Stream Mapping (VSM) will be a great contributor to this end. Knowledge building, awareness of new technology, development in practice all form part of learning for improvement and the cost of such effort are investments, to be rewarded with higher fee. Sharing of Reward Gains made through collaboration are to be shared. Meeting targets, exceeding target should not go unrecognized and un-rewarded. Continuous Improvement or Kaizen cost reduction will follow. Rewards will be reaped by both parties. Established tools are to be used as well to, improve, solve problems and gain opportunities. A responsible management of SLA requires a very matured approach with open mind to build success out of partnership. The understanding and assumption here is that the selection of the service provider has been done and considered with every care. Success of the relation

and achieving the goal largely depends on the mutual appreciation, recognition of complimentary strength in the team, for making the relation a success and setting new standards for successive periods. Some examples of basic metrics or Key Performance Indicators (KPIs) that SLAs may specify include: ●● Rate of receipt and put away. ●● Pick rates. ●● Pick accuracy. ●● Dispatch accuracy, transit damage. ●● Transit Delivery time. ●● Quality of Housekeeping. ●● Material handling practice. ●● Record and Data accuracy. ●● Knowledge on the principles of the services. ●● Identify areas for Joint Study and improvements, wish list depending on Business plans. ●● IT and the efficiency of the utilization. System stability and behaviour There are many more parameters that can be added to this basic SLA agreement. The more such factors are added, the more difficult the negotiation process and also sustaining relation. It can take months to understand, negotiate, a complex SLA/ document, as you go back and forth with your logistics provider so the document becomes a “win-win” for both parties. Ideally the SLA are to be short list. After the SLA is agreed and signed off by both the party, its contents need to be reviewed monthly to begin with, and quarterly thereafter when the confidence level increase. Largely the success of the program and the agreement depends on the commitment to success than attempting to take command of each other, which will be detrimental to the agreed terms.

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Supply Chain Training Join us to experience a series of relevant short duration Management Development Programs (MDPs) In-company MDP –where the corporate conducts an MDP for their employees – here the curriculum can be modified to suit the corporate requirement. No other outside participant will be allowed to attend these programs

ISCM has designed and structured programs with contemporary curricula in the areas of: • Supply Chain Management • Business Forecasting & Demand Planning • Tools for Quality Enhancement • Future of Logistics

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Feature

UBER-ising the Indian Truck Market – Part I With the onset of the millennium, Internet had started to replace the brick and mortar ‘agent’ to become the chosen platform for matchmaking between buyers and sellers. In the last 25 years, aided by a growth in mobile and personal computer usage, internet has transformed buyer behavior for every possible human need. Kaushik Mondal, Senior Project Manager, Miebach Consulting writes about the next paradigm in truck operations. We carry part one of this two part article in this issue.

Transportation and Online Exchange Like most other sectors use of online exchange platforms in Indian Transportation sector were incubated in B2C segment with online ticketing platforms like IRCTC, MakeMyTrip, ClearTrip, etc. These platforms offered a low cost option against the brick and mortar ‘agents’ who demanded high commissions; and provided the convenience of booking a ticket from your personal computer as well. Two other success stories were the inter-city bus segment with redbus. com and the intra-city cab services with Uber, Ola and Taxiforsure.

proportion of Indian trucking market, especially for long haul (typically 500 kms or higher), is dependent on what the industry calls a “Market Truck”. These are trucks which have moved from location A to B without a defined plan for the return haul. Being a long distance lane, returning empty is not a viable option; typically these trucks are owned by small truck owners who might not have a strong network in a distant place (point B) to find a load for the return haul.

Is there a similar opportunity in the Cargo Transport sector?

Kaushik Mondal, Senior Project Manager, Miebach Consulting

The need for an intermediary irrespective of its platform occurs when large number of players exists on both supply and demand side. Indian trucking market because of its high fragmentation is definitely a segment which relies heavily on the intermediaries. A major

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As shown in Figure 1, typically in these cases the truck owners would approach the brokers as a point of contact to link up with transporters who have collected demand from Shippers in location B for lane B to A. Some key salient features of this ecosystem are: ●● Transporter does not always own the trucks (asset-lite), its primary role is that of a financer who upfront pays 70-80% of the cost of delivery to the truck owner and receives the same later from the shipper as per payment terms. It also acts as a guarantor of service to the shipper in terms of timely delivery, ensuring zero pilferage etc. ●● The spot price is the result of pure arbitration between supply of trucks vs demand from shippers on that particular day for that particular lane. ●● TRUST and RELATIONSHIP are two key words in the process. ●● It is difficult to clearly define roles of each stakeholder in this system; on a case to case basis the transporter might act as the truck owner, it might be able to act as a broker and contact truck owners directly. ●● From a functional point of view four distinct entities emerge. One who creates the demand (shipper), one who provides the truck (trucker), one who finances the deal (currently in most cases the transporter) and finally the one who provides a platform to bring all the stakeholders together (a role which is partially played by the brokers today). Irrespective of the definitions, the result of such a network is very high level of information asymmetry. Neither the demand creator, nor the supplier is sure about the market price, and both feels the intermediaries are actually enjoying the larger share of the pie.

The Opportunity – Why online? An online platform is undoubtedly the best answer to bridge this information gap. Platforms like OLX and QUIKR (in a different category) are successfully operating and enabling direct contact between the buyer and seller and eliminating the intermediary. Similarly, in a trucking online exchange shippers can raise their demand with details of the consignment, destination and delivery dates; truck owners in parallel can post their truck availabilities with relevant details for a given lane and time. Conceptually this kind of a platform connecting the truck owners to the shippers should encourage both parties to switch from a traditional system to the transparent process of direct price negotiation. In a traditional paper based system this is an infeasible process due to the sheer volume of paper work, however an intelligent IT platform can simplify and automate much of the information flow and approval process to make the daily spot tendering a viable option. The Initiatives

attempts have been made to create this kind of matchmaking platform for the Indian cargo transport market. In terms of service offering majority of the players operate as pure matchmakers which are similar to OLX/ QUIKR; loads or trucks can be posted online with possibility of receiving truckload matching alerts. Along with the online platform, many of the players are also offering a mobile app and call center support. Players like freightbazar.com, transportbazar. com, truckadda.com. loadkhoj.com, freightbazaar.com (with two ‘a’s) can be grouped into this category. Apart from ad revenues, some of these platforms also command subscription based fees. In addition to the matchmakers there are a few other online services currently available in India. One

In terms of service offering majority of the players operate as pure matchmakers which are similar to OLX/QUIKR of them is the Indian Road Freight Index (IRFI) offered by Transport Corporation of India (TCI) Limited. IRFI is an index of weighted average truck freight rates across 50 busiest routes in India, which together accounts for around 80 per cent of the road freight in the country.

In the past few years several Supply Chain Management Professional - NOVEMBER 2015

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International Relations

Focus Africa:

Enhancing India’s Trade and Investment Relations with Africa

Export-Import Bank of India (Exim Bank) organised a seminar titled “Focus Africa” on October 27, 2015, on the sidelines of the third edition of the India-Africa Forum Summit (IAFS) being held during October 26-29, 2015, in New Delhi. The Seminar which was inaugurated by Mr. Arun Jaitley, Hon’ble Union Minister for Finance, Corporate Affairs and Information & Broadcasting, Government of India saw the participation of senior level delegates from institutions and the Governments of around

54 African countries, including the ECOWAS Bank for Investment and Development, PTA Bank, BOAD, DBSA and Afrexim Bank, and senior representatives from the African and Indian business community. Emphasising on the strong Indian commitment on strengthening IndiaAfrica relations, Mr. Arun Jaitley, Hon’ble Union Minister for Finance, Corporate Affairs and Information & Broadcasting, Government of India, stated that this was the first time the IAFS has invited and involved 54

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countries of Africa, and commended Exim Bank for taking the initiative of organising the Seminar on Focus Africa. He further added that India, which has undertaken several measures to overcome the developmental challenges it faced over the years, is keen to share its developmental experiences and capabilities with partners in Africa. The Hon’ble Minister noted that while Indian investments were primarily in the infrastructure sector, construction, telecommunications and power, opportunities also existed in capacity building, agriculture and farming, and services sectors. He also highlighted the initiatives of the Government of India in promoting

A strategy to address the rising trade deficit would by focussing on India’s export potential to major countries in Africa with which India maintains the largest trade deficit closer cooperation with Africa and the recent initiative of setting up a Project Development Company in Africa by Exim Bank of India in association with ILFS, and State Bank of India together with the African Development Bank. Mr. Shaktikanta Das, Secretary, Department of Economic Affairs, Ministry of Finance, Government of India, in his opening remarks stated that India with Credit Lines of more than US$ 7 billion in Africa is trying to strengthen and build up economic and political relationships between India and African countries. Mr. Bashir M. IFO, President, ECOWAS Bank for Investment and Development, highlighted the huge infrastructure deficit faced by Africa. He opined that innovative ways of financing were needed for financing

this gap in infrastructure investment. Speaking on the occasion, Mr. Yaduvendra Mathur, CMD, Exim Bank, stated that the role of Government of India has been pivotal in creating an enabling environment for Indian entrepreneurs and investors in Africa. He also mentioned that there is a growing interest among Indian entrepreneurs to invest in African countries driven by the opportunities and potential for high growth in these markets. He highlighted that there is substantial scope for further cooperation in various sectors. During the Seminar, Exim Bank’s recent publication on “Enhancing India’s Trade Relations with Africa: A Brief Analysis” was released at the hands of Mr. Arun Jaitley, Hon’ble Union Minister for Finance, Corporate Affairs and Information & Broadcasting, GOI, in the presence of Mr. Yaduvendra Mathur, IAS, Chairman and Managing Director, Exim Bank of India; Mr. Shaktikanta Das, Secretary, Department of Economic Affairs, Ministry of Finance, Government of India; and Mr. Bashir M. IFO, President, ECOWAS Bank for Investment and Development. The study highlights that the recent years have witnessed tremendous increase and deepening of economic and cultural exchanges and cooperation between India and Africa. This can be gauged from the robust trends in India-Africa trade that witnessed a nine-fold rise to reach a new height, from US$ 8.2 billion in 2004 to US$ 75 billion in 2014. The study while analysing the robust trend in bilateral trade between India and Africa has also highlighted the rising trend in India’s trade deficit with Africa. Exim Bank’s Study delineates strategies to further enhance India’s trade with the African region, while addressing the rising trade deficit with Africa.

export potential to major countries in Africa with which India maintains the largest trade deficit, viz. Nigeria, Angola, Botswana, Gabon, Equatorial Guinea, Morocco, Cameroon, Guinea, South Africa and Côte d’Ivoire. The study has identified select commodities at the 6-digit level and 2-digit level in which India has

Government of India has been pivotal in creating an enabling environment for Indian entrepreneurs and investors in Africa potential for exports to 54 countries in Africa. Major commodities which have been identified, in which India could focus to enhance its trade with Africa, among others, include machinery and equipment’s, electronic equipment’s, transport vehicles, petroleum oils, and articles of iron or steel. Given India’s expertise in several manufactured products, and technology which is affordable and adaptable, African countries would also stand to gain with increased imports of such items from India. Moreover, matching India’s capability in high value-added production and manufacturing with an increasing import demand in Africa for such products and technology, could prove to be a win-win situation for both India and Africa. This would also help in further strengthening bilateral ties, and resulting in a mutually rewarding long-term partnership.

A strategy to address the rising trade deficit would by focussing on India’s Supply Chain Management Professional - NOVEMBER 2015

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SCM Updates

Logistics Executive Group announce a new partnership with Council of Supply Chain Management Professionals (CSCMP) Logistics Executive Group is very proud to announce a new partnership with a fellow industry leader, the Council of Supply Chain Management Professionals (CSCMP). The two entities will share their commitment to deliver state-of-the-art reliable and unparalleled services to the Logistics and Supply Chain industries. Their partnership serves as a testament to their mutual strengths and destined efforts to provide best in class services to their valuable members and clients in the industry on a global platform. Logistics Executive Group has been dedicated for over a decade to the development and enrichment of their global community of supply chain and logistics professionals. The addition of CSCMP’s outstanding global reputation will only strengthen this offering, as the continuing education of its members as sharing of best practices in industry is the cornerstone of CSCMP. CSCMP is the preeminent worldwide professional association dedicated to the advancement and dissemination of research and knowledge on supply chain management. Like Logistics Executive Group, CSCMP has a global reputation with over 8,500 members from 67 countries. “It is our pleasure to partner with an industry leader such as CSCMP which has a reputation for delivering best in class Supply Chain and Logistics Training and Development globally. This partnership will allow us to enhance our services to the professionals we support, through our joint networks. These training modules and academic courses are unique because unlike most academic offerings, they have a practical connection to industry, based on an appreciation of how actual hands-

on work experience can enhance learning. Professionals at all levels from trainee to high level Manager or Executive can undertake further study at any point during their careers. Training offerings are designed to accommodate the demands of full time professional work life. In fact, actual work experience will enrich study outcomes. Career opportunities can be established by networking within an environment that has close ties to industry, by building a closer connection with both academics in the field and other professionals in an open, collegiate environment” – commented Darryl Judd, COO of Logistics Executive Group. “So far the feedback we have had is extremely encouraging. Many of our clients have reported higher staff engagement and retention following their adoption of our training programs. Of course the benefits in learning for professionals are obvious, particularly as today’s Supply Chain and Logistics industry is challenging in its complexity and increasingly requiring professional navigation”. “Ultimately CSCMP courses are globally industry, recognised and will show any employer that the candidate truly comprehends how supply chain impacts within an organization. Each level builds upon the other, with the culmination of the implementation of a real world solution. There is no better experience than that!” commented Darryl Judd in summary. All SCMP course offerings can be accessed via the Logistics Executive Group’s Logistics Academy website.

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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

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The role of Human Resources and Training in addressing Skill Gaps in the Logistics Sectors

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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/-

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SCM Updates

WOW RUSH The New Kids on the block in the e-commerce delivery space “Wow Express“ islooking at capturing greener pastures quite literally . They recently launched“Wow Rush”, a sports bicycle based delivery service as a part of their Go-Greeninitiative in Mumbai. The delivery staff or “Rushers “as they are called are equipped with a state of theart 18 geared Sports Bicycle , complete with Bicycle Helmet, and other cyclinggear . What looked like the flag-off of a Cyclathon at Nariman point was actually thelaunch of the Wow Rush service. The event was flagged off by Marathi Movie Stars Umesh Kamat & Priya Bapat who are avid cyclists themselves. The event wasalso presided by Mr. Vijay Mansukhani, the MD of the ONIDA group who is alsoone of the early investors in Wow Express. “What WOW is doing is amazing. They are contributing to bringing back the zingin cycling. And at the same time contributing to the environment by reducingreliance on motorcycles which is the most commonly used by delivery companies.” Said Umesh Kamat , the acclaimed Marathi actor who is said to cycle 20 Kms every day. “This is an industry first where e-commerce deliveries are being deliveredon a sports bicycle and in this fashion. The post office has been doing this foryears but we are not only making it fashionable but also easy and safe. The geared cycle makes it easy to ride and the safety kit helps ensure safety of the Rushers. We plan to have about 2-4 Rushers in every branch of ours and they willexclusively make small and speedy deliveries. The Rushers are equipped withsmart phones and m-pos machines which make this a perfect combination of Tech enabled Eco-friendliness” said Sandeep Padoshi, Co-founder and Director of WOW Express. WOW Express will soon be launching WOW Rush in all other cities they arepresent across the country. Wow Express has marquee e-commerce companiessuch as PayTM , Rediff and Nykaa as its clients and are currently present in 8 citiesand are already processing 2 Lakh shipments every month.

Skills linked Entrepreneurship to be the Key for development Addressing a gathering of young entrepreneurs and representatives from the Industry and Start up ecosystem, the Minister of State (Independent Charge) for Skill Development and Entrepreneurship, Rajiv Pratap Rudy, today highlighted the significance of linking skills with entrepreneurship to enable a constructive framework bridging the existing gap between skills and employment. Delivering the keynote address at the launch of the Global Entrepreneurship Week organized by the 10000 Start Ups Initiative of the NASSCOM, Rudy emphasized on the necessity for young individuals to venture into the domain of entrepreneurship as well as for the existing entrepreneurs to mentor the enterprising ideas. Reiterating the paradigm shift caused by the Start Ups in the United States of America, he mentioned that technological advancement and digital connectivity would essentially be the key to entrepreneurship and economic development. Rudy further underlined the change in markets led by the upcoming start-ups that have provided an easy experience for customers in almost all sectors including real estate, travel, electronic goods, fashion, health, automobile etc. Sharing the enterprising example of a young man who has developed a convenient mechanism for people in rural and remote areas to access the range of products in the market through technology, Rudy encouraged the young and budding entrepreneurs to consider the diversity in markets and aim at building solutions for the masses. Highlighting the importance of creating entrepreneurial linkages to skills, Rudy suggested that while the Government is working towards facilitating a more friendly environment for small scale entrepreneurs through ease of business processes and convenience in access to funding through MUDRA and other financial scheme, the Venture Capitalists and Angel Investors in the industry should also realize the significance of upscaling small scale businesses and promote them through mentorship and expertise in the domain. Quoting the World Bank Study which mentions that only 5168 patents were granted in India as compared with 172113 in China, Rudy urged young individuals to look at the challenges and build innovative solutions to address them. Rudy reiterated his commitment in developing businesses and assured his full cooperation to any individual with an enterprising idea. He congratulated NASSCOM on the launch of their Entrepreneurship Week and acknowledged their Start Ups Initiative that aims at creating 10000 enterprises by 2023.

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