VIEW FROM THE TOP
MD, TNT INDIA
EFFICIENT USE OF INTERCHANGE WILL HOLD “I believe that India needs to fast track its customs process and speed of clearance to match quality of execution, etc.,” opines Abhik Mitra, MD, TNT India, in conversation with SELECTING THE RIGHT STRATEGIES
ADDRESSING ISSUES
The growth of logistics in India will be supported by two main aspects. It includes the ability to have a dense network that allows reaching the secondary and tertiary towns of the country. Additionally, companies should be in close connection with their customer and their customers’ customer. Although strategy selection is the key to successful logistics, the more important factor is strategy execution. Focussing on the customer and his needs helps in deriving a great strategy. The strategy of a company into shipping, road transportation and small courier company may not be identical in terms of the assets it uses, types of goods it moves, etc. But, its purpose is to transport goods from one place to another at the lowest possible cost while supporting the customers’ needs. Hence, the real issue is to understand the customers’ needs and then work on one’s plans around them. The market is huge and continues to grow, but in the future, successful companies will be using simple strategies with a focus on their customers. They will execute the strategies in a convincing manner, with a focus on people and processes. While planes, trucks, land, and investments are important, they only serve as enablers to the business, and not the key differentiators for success.
Infrastructure continues to be a big dampener in India. It includes roads, airports, container fright stations and the ability to clear goods from airports, ports and railway stations. Looking at the geography of India, the use of rail, and road are all critical to logistics. It is not good enough to move goods from one place to another and then get stuck because the roads beyond that point do not allow movement of heavy traffic. On the other hand, efficient use of electronic data interchange (EDI) will hold good for the industry. Overall, considerable work has been done and we, as express industry, have played a central role in that. But I still believe that India needs to fast track its customs process and speed of goods clearance to match with that of the rest of the world, and also improve it in terms of speed of decision making, quality of execution, etc.
GOVERNMENT SUPPORT Our experience in the domestic markets or international shipments has been quite positive. Thus, from TNT’s perspective, India tops the list of countries to grow and invest in. There are several areas where the government needs to focus and work on. The Goods and Service Tax (GST) implementation will be the key to this, provided a quick decision is made on the date of its implementation, followed by a flawless implementation of the same.
34 • SMART LOGISTICS • FEBRUARY 2011
IMPACT OF GST IMPLEMENTATION Successful implementation of GST will see the supply chain dynamics changing for many players, such as fast moving consumer goods (FMCG) and pharmaceuticals, wherein people will move from large number of warehouses to bigger warehouses at lesser number of locations. The supply chain cost will be a key determinant of the entire process, rather than tax-based issues. Today, the Indian supply chain is decided not by the supply chain or customer requirements, but on what is best from a tax perspective. This will bring tax-based issues to an end. Moreover, we expect increased loads on the primary modes of transport, while secondary & tertiary modes of transport will have to improve further. There will be more pressure on players like us to become more secure on the last mile. This will help the last mile become more professional than what it is at present.
ADOPTION OF LAST MILE STRATEGIES The last mile is becoming increasingly important. However, flawless delivery of the last mile is extremely important. To achieve last mile connectivity, electronics and technology solutions will be beneficial in future. With the deployment of such smart solutions, users will be able to track their consignment till the time it does not reach the destination. Hence, speed and reliability are the key factors to ascertain the same. Thus, we need the right people, the right processes, and right technology to support these activities.
ACHIEVING COST EFFICIENCY Logistics is a scaled business. This means, the bigger a company becomes, the lower the cost per unit should be. In such a case, one can negotiate on the basis of growth of unit costs. Secondly, IT will be a cost increasing factor, which needs to be managed. Also, the cost of organisation structure is important because manpower is important. Last but not the least, claim liability is one of the biggest factors concerning logistics companies. The most important thing here is to have the service capability to deliver what is promised – to avoid claims for damages, delays, etc., from customers.
IDEAL SUPPLY CHAIN INFRASTRUCTURE The overall supply chain infrastructure should also focus on utilising India’s long coastline. Given the excellent rail network available, the Railways also need to be effectively used. Looking at these modes of transport – along with road and air – the issue is to make all these functional and in sync with each other. Also, it is not enough to just move a ship from one place to another, but also to load it correctly at the source and unload it faster at the destination. Thus, end-to-end services need to be looked at.