Vol. 02 | Issue 07 | OCTOBER 2011 ` 100/-
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FEAST ON THE FEST DEMAND FESTIVALS and holidays – religious or secular – are generally good times for retailers, provided they successfully manage the potential pitfalls of doing so much business in such a short span of time. For many retailers, a good ‘festive season’ brings in a vast majority of their profits; conversely of course, getting it wrong can have damaging long-term impacts. Retail success at such times, with the right products at the right prices, provides both, retail trading success and an enhanced reputation. Festivals, of course, vary in their emphasis and significance both, generally and specifically, to individuals. For some, it may be a time of devotion and reflection, whereas for others it is a break from the routine. But all such major festivals and holidays disrupt the normal trading pattern. Whether it is Navratra, Diwali, Ramadan, Christmas or New Year, festive times pose challenges, and, at the same time, offer retailers opportunities. During such occasions, consumers are looking for specific goods associated with the festive event as well as the ‘normal’ general products & services. Products may be needed to offer as gifts to family and friends. And extra (and special) food may be needed for meals and during feasts. Some purchases may be very personal and require considerable planning; others may come from standard ranges. Other gifts may be dictated by the fads and fashions of the year, which, in turn, create supply and demand mismatches. Consumers may be suffused with goodwill about the festival or holiday and this can carry over to their purchases and shopping behaviours. If we unpick retail trading, then we can see that much of the success comes from the ability to manage the supply chain and to meet these peak and different demands. More particularly, success is about getting three elements right viz., product, people, processes, and melding these into a fourth success criterion i.e., personality. If we take a ‘product’, then it is obvious that the retail buyers have done their preparation well in advance and brought the products that consumers will demand. In some cases, this is a volume decision (how much extra do we need?), but in others, it involves anticipating consumer trends often months or years ahead (what is going to be this year’s ‘hot’ item?). Getting the right product is, however, only part of the battle. These products have to be stored/stocked much before the season’s arrival and then moved quickly and accurately to replenish stocks at the store level. If the stock cannot be bought or accessed appropriately, then customers will not be satisfied and will instead go elsewhere. Product availability, at such times, may be more important to consumers than any existing loyalty to retailers. But of course, overstocking and being left with too much merchandise, particularly if it is perishable or potentially obsolete, generates its own problems of disposal. Get it right and you may earn loyalty for the future. So here’s wishing you a very successful and logistically smooth festive season as you gear to feast on the fest demands. Festivals and holidays are vital times for retailers, not only in terms of profit, but also reputation. But they require correct management of products, processes and people. This should not be left to chance. So get to the minutest detail, to the smallest problem only to earn the biggest gift for yourself…the smile of your satisfied customer!
Archana Tiwari-Nayudu email@example.com OCTOBER 2011 • SMART LOGISTICS • 5
VOL. 02, NO. 07
SPECIAL FOCUS: RETAIL SUPPLY CHAIN Retail Trends: Experience The Magic Of Retail SCM When one visits any retail store, it is often assumed that the desired goods or products will always be available at the store. But what is it that makes this pre-conceived notion a reality? The answer is retail SCM… The growing and evolving demands of customers have ensured that retailers work towards making their supply chains more ﬂexible. With similar challenges to arise in time to come, retail supply chain is set to witness some promising trends.
Retail Supply Chain Technology Getting a DNA Makeover
Home Delivery Optimising Last Mile Connectivity
Compliance Optimisation Technology Enhancing Supply Chain Visibility
Retail Chain Distribution Models Perfecting The Supply Chain To Gain Market Share
One ‘Q’ Many Views Gearing Up For The Festive ‘Dhamaka’
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POLICIES & REGULATIONS Duty Drawback Scheme Are We Ready For The Transition Phase?
STRATEGY Indian Warehousing Market Sharpening Skills To Enhance Competitiveness
Waypay Pay Fuel Bills The e-way
Smart Truck Fuel Efﬁciency At Its Best
6 Ways To Get The Basics Right
TIPS & TRICKS Lift Trucks Best Practices
TECHNOLOGY & INNOVATIONS
ALSO IN THIS ISSUE 5
VIEWPOINT NEWS, VIEWS & ANALYSIS Latest Happenings In The World Of Logistics
IN CONVERSATION WITH ‘Change Is The Only Constant In Retail’ Rajkiran Kanagala, Head – Business Development, TCI Supply Chain Solutions
Ojhar Air Cargo Hub: A Runway To Success IMO Announcement: Stricter Norms For Ships
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PRICE TRENDS PRODUCT UPTATE
INSIGHTS & OUTLOOK Inventory Optimisation Bridging the Gap between CFOs & SCM
Inventory Management Stocking It Right
EVENT REPORT Workshop on ‘Future Supply Chain Strategies – The Way Ahead’ Of Communion & Concrete Ideas Auto Supply Chain Forum An Attempt To Become Agile & Responsive
PRODUCT & ADVERTISERS’ INDEX Multi Echelon Inventory Optimisation A Win-win Strategy
PRODUCT & ADVERTISERS’ INQUIRY FORM
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KOTTAYAM PORT & CONTAINER TERMINAL TO BE OPERATIONAL SOON THE Kottayam Port and Container Terminal (KPACT), promoted by Kerala-based South India Chamber of Commerce and Industry, will commence operations soon. This initiative has been taken to tap the immense potential of inland navigation in Kerala. A consortium comprising Aries Logistics Ventures and AGIL Freight Logistics for the handling and operational side of the ICD and container terminal has been appointed by KPACT Services. Kerala Industrial Infrastructure Development Corporation (KINFRA) will be setting up an export promotion
HANJIN SHIPPING STRIKES MULTI-MILLION DOLLAR DEAL WITH KOSPO HANJIN Shipping has signed a 15-year consecutive voyage contract (CVC) with Korea Southern Power (KOSPO). Two capesize vessels will be deployed in the transportation of 2.2 million tonne of soft coal annually for 15 years, with one contract commencing next year and the other in 2015. Total transport volume is estimated to be around 33 million tonne on total revenues of approximately KRW360 billion ($322.4 million). These ships will be transporting soft coal to Korea from various origins, including Indonesia, Australia and Canada. “It is very encouraging that we secured this contract in the midst of the current market situation. We are confident that our continuous success in obtaining long-term contracts with the world’s major customers will provide firm ground for the growth of our bulk business,” Hanjin officials informed. The carrier also revealed that it is attempting to form new businesses with various partners to develop a stronger presence in the break bulk market.
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industrial park in the 68 acre adjacent to the terminal. The first phase of the ICD and minor port are being set up with the overall objective of providing infrastructure facilities for the movement of Customscleared stuffed export containers originating from the central districts of Kerala such as Kottayam, Idukki and Pathanamthitta. According to officials, there are about 1,500 exporters in these districts and nearly 24,500TEU are being transported to the port by road. An ICD at Kottayam will help increase export activities from these three districts.
The aim of the project is to facilitate and induce exports from the central parts of the state and promote cargo consolidation & inland navigation. It will be the first multimodal ICD in India utilising inland navigation. Total logistics cost can be reduced by using road as the mode of transport to Vallarpadam from Kottayam. The Directorate-General of Systems, Customs and Central Excise has allotted ICD, Kottayam the location code ‘INKYM6’. And KPACT has obtained transhipment permit from the Cochin Customs as the transporter.
MAERSK LINE’S UNIQUE DAILY MAERSK SERVICE TO BOOST TRADE BETWEEN ASIA & NORTH EUROPE DAILY Maersk, Maersk Line’s new service on the Asia-North Europe trade lane, is expected to dramatically change the way shipping is done. It offers a daily cut-off at the same time every day, seven days a week, and always with the exact same transportation time. Containerised cargo will now be delivered with unprecedented frequency and reliability, according to an official release. A daily service between Asia and North Europe with reliable on-time delivery will change liner shipping forever. Till now, customers have had to adjust their production schedules and supply chains to accommodate shipping lines’ unreliability, as they have never been able to trust that their cargo would be on time. In the newly launched service, the engine behind Daily Maersk is 70 vessels operating a daily service between four ports in Asia (Ningbo, Shanghai, Yantian and Tanjung Pelepas) and three ports in Europe (Felixstowe, Rotterdam and Bremerhaven) in what amounts to a giant ocean conveyor belt for the world’s busiest trade lane. Regardless of which of the four Asian ports the cargo is loaded at, the transportation time – from cut-off
to cargo availability – is fixed. Daily cut-offs mean that cargo can be shipped immediately after production without the need for storage. Maersk Line promises that cargo at the other end will be available for pick up on the agreed date. To underline that Maersk Line means business and how firmly the company believes in Daily Maersk, the promise is backed up with monetary compensation, should customers’ containers not arrive on time. This promise is a first in the shipping industry. “We set out to design a service that takes the stress out of our customers’ lives, to change shipping from the weakest to the strongest link in the supply chain. After all, shipping is only around two per cent of our customers’ total cost. And yet unreliability has until now forced them to shape their production plans and inventory around it,” says Eivind Kolding, CEO, Maersk Line.
GUJARAT PLANS `12,000 CR AHMEDABAD-GANDHINAGAR METRO BY 2015
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PLAN FOR $1.5 BILLION INDIAN TERMINAL BACK ON TRACK PLANS to build a $1.5-billion container terminal at the Jawaharlal Nehru Port, also known as Nhava Sheva, got back on track after the consortium of Singapore’s PSA International and India’s ABG Group received the contract from port management. The fate of the terminal that will double the capacity of India’s largest port was uncertain in recent months due to a string of litigations filed by disqualified bidders. The project, considered largest foreign direct investment in the Indian port sector, will double the port’s capacity to 8 million TEU from 4.1 million TEU. The terminal is one in a series of capacity improvement plans that the port authority has lined up for implementation over the next 10 years with an anticipated total investment of about $3 billion to handle a projected significant growth in traffic volume.
The port’s congestion has spurred ocean container carriers to impose bottleneck surcharges and shippers to divert cargo to other ports. Projects in the pipeline include the development of a fifth terminal, for which the authority recently called for bids for preparation of master plans from global engineering consultants. The port currently has three container terminals, which cumulatively handled about 4.3 million TEU in fiscal 2011 ended March 31. According to latest estimates, traffic is likely to reach 11 million TEU by fiscal 2016 and about 23 million TEU by 2025. The PSA-ABG consortium, which operates container facilities at the ports of Kolkata and Kandla, will offer a 50.8 per cent share of revenue as annual royalty to the landlord port. PSA also operates a terminal at the southeastern Port of Tuticorin in a joint venture with Chennai-based, Sical Group.
TNT EXPRESS APPOINTS GERRY POWER AS MANAGING DIRECTOR FOR INDIA TNT Express, one of the world’s largest express delivery companies, has appointed Gerry Power as its MD for India. In this role, Power is responsible for driving business growth and profitability for TNT Express India’s operations. Based in TNT India’s head office in Bangalore, Power will report to Michael Drake, MD – Asia Pacific, TNT. Drake said, “We are delighted to have Power as our MD for India. Power is highly-respected within TNT and possesses vast experience in country management. He has successfully managed our business in Vietnam and Malaysia. We have full confidence in his ability to grow TNT’s business in India.” Power said, “I am excited and looking forward to take on this new role. The focus going forward is to deliver a robust growth strategy, which will further consolidate the business progress to date but deliver a framework to fast track growth.” Power began his career with TNT Express in 1985 and has risen through the ranks over his 26-year career with the company. Prior to his current appointment, Power was the MD of TNT Malaysia (and Brunei), Vietnam and IndoChina. He was also the Regional Operations Manager, TNT, Asia. Power has held several senior management positions in the UK, Amsterdam, Europe and Asia, giving him a broad experience across the business.
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NAFTA TRADE GROWS 18.1% IN JULY THE value of cross-border surface trade between the US, Canada and Mexico rose 18.1 per cent year-on-year in July, the Transportation Department said. Cross-border trade value declined 6.7 per cent from June. Month-to-month changes can be affected by seasonal variations and other factors. US-Canada trade totalled $42.5 billion, up 17 per cent year-on-year. US-Mexico trade increased 19.7 per cent to $29.9 billion. The value of cross-border trade in July was up 40.4 per cent from its recession level of July 2009, but was only one per cent above its July 2008 level.
IATA UPGRADES ITS INDUSTRY PROFIT EXPECTATION FOR 2011 TO $6.9 BILLION
TAKE SOLUTIONS APPOINTS JOHN LEVEY AS VICE PRESIDENT – SALES TAKE Solutions, a leader in the Supply Chain Management (SCM) and Life Sciences (LS) domains, recently announced the appointment of John Levey as VP – Sales for its Supply Chain business. With more than 20 years of sales leadership experience in the software industry, John will oversee the growth of TAKE’s sales team and the acceleration of global expansion efforts across the company’s supply chain division, including vertical markets – food/beverage, high-tech manufacturing, oil/gas, pharmaceuticals, and automotive. With TAKE recognised as a trusted leader in the Oracle EBS arena, he will play an integral role in helping manufacturers and distributors better streamline their supply chains. “We are seeing manufacturers and distributors across geographies shifting to make supply chain execution more cost-efficient and collaborative,” said Matt Walker, Executive Vice President of Supply Chain, TAKE Solutions, adding, “John joins us at a time when collaboration tools, enterprise mobility and packaged service offerings are gaining momentum as ‘must-haves’ to streamline supply chain execution. John’s extensive industry experience will be enormously valuable for not only the company, but for our customers as well.”
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ARSHIYA INTERNATIONAL PARTNERS WITH TATA BLUESCOPE ARSHIYA International, an Indian integrated supply chain and logistics infrastructure solutions company and Tata BlueScope Steel, a 50:50 joint venture between Tata Steel and the Building Solutions provider BlueScope Steel, have come together to build first-of-its-kind state-of-the-art warehouses at India’s first Free Trade and Warehousing Zone (FTWZ) developed and operated by Arshiya International in Panvel, near Mumbai. For the massive warehousing project covering a total plan area of 5.45 lakh sqft, Tata BlueScope Building Solutions has designed, manufactured, supplied and erected five BUTLERTM Buildings. These high-quality building systems have been supplied with state-of-the-art MR-24 roof system, which is warranted for 10 years leakproof performance. They have
a bold architectural form and offer superior functionalities that include higher column-free space, two additional levels of mezzanine floors for perishable and high-value goods storage, better ergonomic design, etc. Commenting on the partnership, Ajay S Mittal, Group Chairman & MD, Arshiya International, said, “Warehousing being at the lowest rung in the chain never saw quality investments. Over the years, this has became a practice and companies never cared to look at warehouses beyond storage and think of the value they bring in maintaining product sanctity, reducing cost & improving overall efficiency.” Mittal adds, “FTWZ, state-of-theart warehouses and our partnership will create a revolution in the way logistics infrastructure is developed and operated
CENTRAL WAREHOUSING TO ADD CAPACITY THE Central Warehousing Corporation (CWC) has proposed to construct an additional capacity of 2.09 lakh tonne for storing food grains, up from the present 113 lakh tonne in the current fiscal. BB Pattanaik, Chairman & MD, CWC, said that additional capacity would be created in 11 states at an investment of `78 crore. Apart from this, CWC plans to build two multi-storeyed warehouses in Delhi and convert two godowns currently used by Food Corporation of India at Bamanheri (Uttar Pradesh) and Nabha (Punjab) into private freight terminals according to the present policy of the Railways Ministry, said Pattanaik. CWC has also proposed to set up a land customs station at Ghojadanga in West Bengal, for which 17 acre of land valued at `1.1 crore has been identified. “West Bengal Government is to acquire the land and hand it over to CWC, and we have already paid 50 per cent of the land cost to the State
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Government,” added Pattanaik. In 2010-11, CWC achieved record profit before tax at `203.73 crore against `163.88 crore in the previous year, more than 24 per cent growth on a turnover of `1,029.55 crore (`987.95 crore). Pattanaik attributed this growth to the construction of a new capacity of 1.45 lakh tonne during the year and improvement of occupancy to 88 per cent (85 per cent). In 2010-11, CWC handled 10 per cent more containers at 12.32 lakh TEU. Throughput of its 272 container trains running between the inland container depots at Loni, Ghaziabad, and several west-coast ports, such as Jawaharlal Nehru Port Trust, Mundra and Pipava, at 25,562 TEUs yielded a record revenue of `51.55 crore. It also handled 1.76 lakh trucks at the truck terminal at Petrapole, West Bengal, on the India-Bangladesh border and earned a revenue of ` 2.95 crore during 201011, said Pattanaik.
in India. With India’s emergence as the second-fastest developing economy and to leverage the opportunity, we believe that there can be no better partner than Tata BlueScope Steel Ltd. to help build these pioneering logistics infrastructure.” Harish Pathak, MD, Tata BlueScope Steel, commented, “The Building Solutions division of Tata BlueScope Steel is committed towards the overall growth of the metal buildings industry in India. We always take pride in staying ahead in quality and leveraging the global expertise of our brands in order to cater to the unique challenges of the metal buildings sector.”
DP WORLD TO EXPAND JEBEL ALI PORT SCI TO INVEST `3,700 CRORE TO GET 24 NEW VESSELS AN amount of `3,700 crore is being invested by the state-run Shipping Corporation of India to get 24 new vessels across categories. These vessels are being equally spread across categories like bulk carriers, crude carriers, etc. and other such vessels through which the company works. BK Mandal, Director – Finance, SCI, gave more details at the the company’s 61st annual general meeting. “Our capital expenditure for 2011-12 is `3,700 crore and this will be used for acquiring 24 vessels,” Mandal said. “The is exclusive of the 29 ships that are already under construction at various yards. They are expected to be delivered in the next four years,” Mandal added. As of now, SCI does not have any plans of entering the inland passenger service business.
US CONTAINER IMPORTS FELL 1.5% IN AUGUST
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FIGHTING AGAINST FUEL COSTS, SHIPPING GIANTS SHIFT FROM CORE BUSINESSES TOP
shipping companies like Shipping Corporation of India and Great Eastern Shipping are exploring opportunities in offshore services, dredging and even coal mining. This is being done in the wake of rising fuel prices and freight rates. “We have to de-risk ourselves from the capital-intensive shipping business and focus on something that relies more on human capital,” said Ravi K Sheth, MD, Greatship (India), the offshore business of Great Eastern Shipping. These companies have stepped up investments in offshore oil exploration support services in the past few months. Mercator Lines, the second-largest private operator, is also exploring other opportunities – the
APRIL-AUGUST 2011 SEES A 10.09% INCREASE IN RAILWAYS COMMODITY-WISE FREIGHT REVENUE A whopping 10.09 per cent hike in revenue generation has been demonstrated by the Indian Railways. They have generated `27,025 crore of revenue earnings from commodity-wise freight traffic during April-August 2011 as compared to `24,547 crore in the same period last year. A break-up of the total earnings of `5,204 crore from commodity-wise freight traffic during the month of August 2011 shows that `2,038 crore has come from the transportation of 34.20 mn tonne of coal, followed by `740 crore from 8.94 mn tonne of iron ore for exports, steel plants and for other domestic users. There is also an increase in 3.78 per cent in the commodity-wise freight traffic. The Indian Railways carried 389 mn tonne of commodity-wise freight traffic during April-August 2011 as compared to 366.74 mn tonne carried in the same period last year.
most recent one being buying a coal mine in Indonesia. Many firms are diversifying into shipbuilding and container freight stations along with offshore and dredging business. In the last two months, bunker fuel rates have shot up by 62.5 per cent to $650 in comparison to last year. At the same time, the Baltic Dry Index (BDI), which measures the cost of moving raw materials by sea, has been extremely volatile. In 2008, it had dropped 90 per cent when the global financial crisis set in. Talks of the Shipping Corporation of India expanding its offshore business along with creating a subsidiary are doing the rounds.
NATIONAL REGISTER AND TRANSPORT PORTAL AIMS TO ENHANCE TECHNOLOGY ADOPTION IN ROAD TRANSPORT IN July 2011, Union Minister for Road, Transport and Highways Dr CP Joshi had launched the National Registry and Transport Portal, which aims at the large-scale introduction of information and communication technology (ICT) in the road transport sector. At the 8th meeting of the consultative committee of Members of Parliament attached to the ministry, Dr Joshi declared that the ICT has been introduced in various government departments under the National eGovernment Plan (NeGP) to enhance the image of the government as well as to improve the service delivery time. He stated that about 95 per cent of data with RTOs of all the 35 states and union territories have been replicated at National Register (NR). This data, in turn, can now be available at both, State Register (SR) and NR. This would be helpful in providing various G2G, G2C and G2B services as well as be of help to various agencies such as law enforcement agencies.
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GUJARAT MARITIME BOARD INVITES BIDS FOR THE DEVELOPMENT OF NARGOL PORT FOUR leading corporate groups – Essar, Sterlite-Vedanta, Gammon India and consortium of Israel Port Company, Cargo Motors – now remain in the race for developing Gujarat Maritime Board’s (GMB’s) proposed greenfield port off Nargol village in south Gujarat. GMB wants to develop Nargol Port in public private partnership (PPP) model. As of now, Gujarat has four private ports and by 2015, the state plans to increase it to 11. The technical bids for the project were opened on the September 21, 2011, and the price bids will open over the next few days. It was a battle between 18 other companies, including Adani Group, GMR Infra, Lanco Infra, Hindustan Construction and Sterling Biotech. The other 14 companies did not submit Request For Proposal (RFP) and therefore, these four companies were left in the race for the Nargol Port development project. GMB has just opened the bid and it will evaluate now. For approval, the bids will be sent to Gujarat Industrial Development Board (GIDB) and Gujarat Government. Vadinar Oil Terminal is the subsidiary company with which Essar has submitted a bid. The Letter of Intent (LoI) will be given to one of the four companies after this procedure. The estimated investment for the project is said to be `750 crore. The proposed Nargol Port is 140 km from Mumbai near Surat and is at a strategic location.
ANTI-DUMPING DUTY IMPOSED ON MORPHOLINE IMPORTS FROM CHINA, US & EU
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DAMCO SUCCESSFULLY HANDLES PROJECT CARGO MOVEMENT OF 52 TONNE DAMCO Airfreight recently added another milestone in its portfolio of managing complex air cargo shipments as it successfully handled the project cargo movement of a single piece compressor weighing 52 tonne. The task was carried out for Jindal Steel & Power (JSPL), one of India’s largest steel manufacturer, from the plant in Orissa to the final delivery point in Germany. The shipment was completed using an Antonov 124, the world’s largest commercially viable cargo aircraft. The aircraft loaded with the cargo departed from Kolkata airport and arrived in Berlin on the same day. It has been safely delivered to the customer’s premises in Germany. This was one of the largest single-piece export shipments handled and one of the first instances of the Antonov 124 being
used for export shipments from the Kolkata airport. The entire project included not only air movement but also the landside movement from the customer’s plant in Orissa on a 12-axle hydraulic trailer. Commenting on the same, Alok Kumar, Senior DGM – Imports, JSPL, remarked, “I would like to thank the Damco team for the relentless efforts made in arranging air-freighting of this compressor in a chartered Antonov 124 from Kolkata airport to Berlin in spite of the short time frame. I appreciate the seamless coordination done by the team between the different agencies involved in the execution of smooth handling of cargo and documents at both ends.” Elaborating on adding value to JSPL’s project, Purnendu Shekhar, Chief Commercial Officer, Damco
SHREE SHUBHAM LOGISTICS TO EXPAND COMMODITY WAREHOUSING IN 3 STATES SHREE Shubham Logistics (SSLL), a group company of Kalpataru Power Transmission, would expand commodity warehousing in Maharashtra, Madhya Pradesh, Gujarat and Rajasthan, as part of its plan to expand its footprint across the country. The move would create an additional storage capacity of around 3.30 lakh MT with an investment of around `200 crore. A total floor plate area of around 2.0 million sqft will be developed. SSLL would be the first private company to have its own infrastructure spread across the states of Rajasthan, Gujarat, Madhya Pradesh and Maharashtra. SSLL is developing Agri Logistics Parks at Latur, Akola, Jalgaon, Nagpur and Sangli in Mahahashtra, Pratapgarh in Rajasthan and Ujjain, Dewas, Neemuch, Itarsi, Sagar, Ganjbasoda, Vidhisha, Harda in Madhya Pradesh. There will be a total of 14 dry storage units and two cold storage units in Nagpur and Sangli. All the agri logistics parks will have a
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minimum storage capacity of around 20,000 metric tonne with the facilities like storage & preservation, weighing, cleaning, grading & sorting units, kisaan bazaar, bank extension counters to facilitate commodity financing, commodity exchange platforms, testing & certification, disposal services through its retail & exports department, etc. SSLL’s aim will be to provide a complete commodity value chain to its customers. Currently, SSLL is operating and managing 3.6 million sqft of area in Rajasthan and Gujarat and will be developing an additional two million sqft in Phase II in Madhya Pradesh and Maharashtra. So, the company will have around 5.60 million sqft under its umbrella. Post Phase 2 expansion, SSLL plans to expand its footprints in Bihar, Andhra Pradesh, Delhi, Punjab, Haryana and Uttar Pradesh in Phase III at about 15-20 locations to create an additional storage capacity of around 4 lakh metric tonne.
South Asia, said, “We are glad that we could enable JSPL to meet its delivery timeliness reliably and safely through a tailor-made solution. This illustrates Damco’s unique approach in addressing the customers’ challenges through specific solutions that can be executed quickly and efficiently. Our customers are working with a global supply chain in a highly competitive environment and have their own unique challenges to meet. In such a scenario, we are happy to have added value to JSPL in this project by using our experience, global network and good relations with various supply chain stakeholders.”
“K” LINE INDIA TO COMMENCE MANAGEMENT OF BULK CARRIER OPERATIONS IN INDIA TRADE WARSHIPS FOR THE INDIAN NAVY TALKS are on for a joint venture between Pipavav Defence and Offshore Engineering Company (formerly Pipavav Shipyard) with state-run Mazagaon Dock (MDL) for building warships for the Indian Navy. This is the first time that a private sector company has been selected by the Defence Ministrycontrolled PSU to build warships together. The Board has recognised this as the ‘Golden Day’ in the corporate history of the company as far as the proposed partnership is concerned... The Board further recognised that this will be a game changer and will help the company scale new heights, the filing said. Pipavav is on a roll after getting a government clearance in March for building warships and submarines for the Navy. The company has also got foreign partners like US-based Northrop Grumann and UK-based Babcock Group to increase its presence in the defence segment.
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NEED TO RATIONALISE TAXES TO BOOST CONFIDENCE IN FOREIGN INVESTORS THE Department of Economic Affairs has come out with suggestions to rationalise the tax regime to make the Indian shipping sector more competitive. A working paper on ‘Policy for India’s Service Sector’, prepared by the Department, has pointed out that Indian shipping is currently subjected to 12 direct/indirect taxes over and above the tonnage tax, thereby increasing the effective tax rate, of around 2 per cent under the tonnage regime, to around 9 per cent. These taxes include corporate tax on interest and other income, MAT (Minimum Alternative Tax) on profit on sale of vessels, dividend distribution tax, and seafarers’ taxation cost to employers. Today, there is a need to strengthen Indian fleet by rationalising the taxes in shipping sector. Studies show a positive contribution by the Indian Shipping industry to the Indian economy with
a 1 per cent change in Gross Tonnage (GT) likely to bring about 0.0068 per cent change in GDP. While trade has increased, the shipping industry has not kept pace with it. The strength of the Indian fleet is 9.3 million gross tonnage as on 01.04.2009. Out of this, about 4 million GT (or 44 per cent) are likely to be scrapped over the next 5 years due to the completion of commercial life as well as on account of IMO regulation for phasing out single hull tankers coming into force by 2010. This would require an estimated investment of US$ 4-5 billion. Though the Indian shipping industry has benefited due to the introduction of tonnage tax, Indian flag vessels are gradually diminishing and even Indian owners are increasingly opting to own vessels outside India by paying, virtually zero tax, employing shipboard personnel of any nationality, while accessing India’s booming cargo base.
DOUBLE-STACK CONTAINER TRAINS TO RUN BETWEEN GURGAON-MUNDRA WITH the aim of giving a boost to the transportation of cars, steel and consumer goods, Indian Railways has decided to run double-stack container trains between Gurgaon and Mundra Port in Gujarat. “All the necessary preparations, including approval from Research Designs and Standards Organisation and safety clearance to run the double-stack container train in this route, are complete now,” said a senior Railway Ministry official. The 19-feet-high double-stack train will ensure fast clearance of containers from the port, thereby increasing the port’s traffic handling capacity. “The double-stack container service will give a boost to the transportation of cars, steel, medicines and consumer goods for export & import in the 1,198km-long Gurgaon-Mundra route,” he said. There has been a constant demand from the industry for such trains as it saves time in moving goods and reduces haulage charge for the operator. The GurgaonMundra section will be the second route to have double-stack container service in Indian Railways. The first double-stack train became operational in March 2006 between the 950km-long Jaipur-Pipavav route by Western Railway. The volume of traffic will be increased once the Gurgaon-Mundra route is operational, said the official. Railways are expected to be carrying about 34 million tonne of goods in double-stack trains in the current fiscal.
CHARTERED LOGISTICS DIVERSIFIES INTO SEA AND RAIL LOGISTICS SEGMENT
TNT ACQUIRES ARC INDIA (SPEEDAGE EXPRESS CARGO SERVICES)
L O G I S T I C S
FREIGHT RATES DIP FOLLOWING EASY AVAILABILITY OF TRUCKS THE freight rates for 10 metric tonne load recently dropped by up to `1,000 in the local truck transport market following the easy availability of trucks against restricted cargo movements. Transporters said that apart from easy availability of trucks, poor cargo movements mainly brought down the freight rates. Delhi to Mysore, Pondicherry and Banglore rates dropped by `1,000 each to `54,000, `50,000 & `49,000, respectively. Similarly, the rates to Pune, Coimbatore and Kochi fell by `1,000 each to `26,000, `53,000 & `59,000. Thiruvananthapuram, Kolkata and Goa freights also went down by `1,000 each to `65,000, `24,000 & `36,000, respectively.
L&T’S SHIPYARD TO BECOME OPERATIONAL BY JANUARY 2012 LARSEN & TOUBRO (L&T), in association with the Tamil Nadu Industrial Development Corporation, is setting a shipyard with an investment of `4,000 crore for the first phase. Engineering major L&T’s shipyard which is being set up at Kattupalli is set to become operational soon. The shipyard would enable India to compete globally with foreign countries like Japan and Korea in building large-sized warships, car carriers and submarines, said MV Kotwal, Board Member & President – Heavy Engineering, L&T. During the consultative meeting, ‘Vision 2025 (Industries)’ discussion, Kotwal declared that the company had invested `4,000 crore in the first phase of the yard, which is spread across 1,250 acre. “It is going to be a monster of facilities... It can handle 18,000 tonne ships and right now, the (work on) ship-lift is nearing completion... it will be operational by January 2012,” he said.
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NEWS ANALYSIS OJHAR AIR CARGO HUB
A RUNWAY TO
Long waiting time, overcrowded cargo hubs are some of the apt adjectives that describe the plight of the major metropolitan airports of India today. Removing such inefﬁciencies demand alternate cargo nodes that not only decongest the major hubs, but also prove to be cost-efﬁcient for the ultimate customer… ﬁlling this void is the recently developed Ojhar air cargo hub at Nashik. Going by the strong line-up of promoters of the Ojhar air cargo hub, this surely is going to be a major breakthrough for the Indian logistics industry in terms of developing a one-stop solution for domestic as well as overseas customers in years to come… PRERNA SHARMA INDIAN logistics infrastructure has been undergoing a major transformation and how! The recent development of some of the state-of-the-art projects has substantiated India’s stance towards building a strong supply chain network. While private players hold the fort in making this happen, this time it is the public private partnership (PPP) that is presenting a classic model of a future-ready air cargo hub. Here, we are talking about the recently developed Ojhar air cargo hub at Nashik, which has been touted as the alternative cargo destination to decongest Mumbai airport. HALCON, a joint working group between Hindustan Aeronautics (HAL) and Container Corporation of India (CONCOR) along with the terminal operator – Clarion Solutions, part of India’s leading shipping & logistics conglomerate – Transworld Group, has made this project a reality. The infrastructure developed by HAL at Ojhar will now be utilised for export and import activities by facilitating air cargo services from its Nashik base situated in Maharashtra. The entire state-of-the-art facility is managed and operated by Clarion Solutions, which has been assigned the role of a terminal operator, ground handling
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operator and regulated agent. Commenting on the dream project, Ganesh Krishnan, CEO, Clarion Solutions, says, “We strongly believe that Nashik has the potential to become a hub for air cargo services in western India. Being situated at the centre of various industry verticals and its proximity to the MumbaiAgra National highway, has made Ojhar airport in Nashik a viable alternative solution for EXIM trade.” Apart from being the wine capital of India, Nashik is also one of the major agriculture belts of Maharashtra. Considering the distance and connectivity, Nashik seems to be the right choice for an alternate air cargo hub. This not only means more business opportunities for the local populace of Nashik, but also a connecting point for the many manufacturers based in and around Nashik. Commenting on why the industry needs an alternative air cargo hub in the western part of the country, V Kiran Kumar, CEO, HALCON, emphasises, “We are all metro-centric today.
We have to make strategic locations at various places so that we can create a congestion-free environ within India for all our customers on a customised basis. In this way, we will be able to provide hassle-free solutions, which, in turn, will facilitate overseas trade. To become competent in the global market, we need to upgrade our infrastructure on all fronts, be it air, road, rail or port.” “Ojhar airport will act as a cost-effective, single window clearance facility for the importers and exporters community across various industry segments in Maharashtra. It will also help in decongesting the existing air cargo complexes that are presently struggling for the desired space in and around the state,” Krishnan adds.
THE STRATEGIC FIT The presence of the biggies in the business in this project assures the commitment levels and the kind of opportunities that this hub is going to offer companies at large. Discussing the investments made by HAL at Ojhar airport and the
associated benefits, PV Deshmukh, MD – MIG, HAL, says, “Ojhar airport is extremely well equipped and capable of handling AN-124, which is the heaviest aircraft in the world. We have invested nearly `70 crore to upgrade the existing infrastructure, like creating additional parking space, enhancing the Fire Category from CAT V to CAT X, which, as per ICAO standard for airports, is the maximum fire category that any airport has, apart from offering medical facilities, etc., thus making Ojhar a desired destination for air cargo services.” According to V Ramnarayan, Vice Chairman, Transworld Group of Companies, “The rapid growth of industry and commerce in India mandates high-quality logistics support for the transportation of goods within the country and to international markets. Through the facility at HALCON, Nashik, Clarion Solutions is poised to provide such services to customers.” Adding further, Kiran Kumar says, “HALCON’s state-of-the-art dry port facilities and services coupled with HAL’s well-equipped infrastructure is a unique combination with a vision to make the airport an air cargo hub in the map of western India.” Explaining how this tumultuous task finally became a reality, Kiran Kumar reminisces, “Handling a greenfield project, like Ojhar airport, right from scratch has been a challenging task as we had to bridge the gap between the existing and the desired infrastructure. Developing a cargo hub that not only meets the domestic demand, but also aids EXIM, had become the need of the hour... We started our operations in 2008 with sea cargo. With this project, we are gradually moving into air cargo. Ojhar airport is expected to handle a capacity of 70,000-80,000 tonne per annum and is expected to grow by 20 per cent year-on-year.”
ALLIED ADVANTAGES The facility at Ojhar airport comprises of a full-fledged air cargo complex,
warehousing, integrated packing centre for perishables, cold storage, screening, unitising or palletisation, comprehensive ground handling services for airlines, CCTV surveillance, barcoding, labelling, 100 per cent power back up and customs with EDI linkage. Technological solutions by Kale Consultants have been deployed in the cargo hub. Delving on allied advantages, deshmukh says, “The airport facility has modern radar, ATC, MET services, airport aides, parking space and, most
Maharashtra. The Nashik railway station has more than 55 trains passing through daily, which is clearly indicative of its connection to Mumbai, Aurangabad, Nanded, Hyderabad, Bhopal, Agra, Gwalior, Delhi, Nagpur, Kolkata, Jamshedpur, Guwahati, Jammu, Madgaon, Mangalore, etc. “Ojhar airport, being dedicatedly operational for air cargo services, will help to decongest the traffic at Mumbai airport, which currently offers both, air cargo and passenger services. It will also boost the EXIM trade in
Ojhar airport, being dedicatedly operational for air cargo services, will help to decongest the trafﬁc at Mumbai airport. It will also boost the EXIM trade in the state, as exporters of vegetables, ﬂowers, fruits, automobile, pharma, FMCGs, etc. will stand to beneﬁt since they would be able to directly export their goods from Nashik instead of going all the way to Mumbai. PV DESHMUKH, MD – MIG, HAL importantly, night landing facility. Being strategically located and having state-of-the-art infrastructure, Ojhar airport offers an edge, in view of the congestion that every airline faces today at Mumbai airport, especially when it comes to night parking, landing and cargo movement.” Ojhar airport has strategic benefits in terms of location and state-of-the-art infrastructure, thus making it a desired hub for air cargo services in western India. The strategic location of the airport gives it an edge over other air cargo complexes in Maharashtra. The Mumbai-Agra National Highway (NH3) runs through Nashik. The city comprises of four-lane expressway (under construction), which will enhance connectivity to Mumbai. The airport also enjoys the road connectivity through other highways connecting key cities like Surat, Aurangabad, Mumbai, Pune, Ahmednagar, Dhule, Indore, Bhopal, Vadodara, Nagpur and Goa, among others. The airport is also poised better in terms of rail connectivity as compared to any other air cargo complex in
the state, as exporters of vegetables, flowers, fruits, automobile, pharma, engineering products, FMCGs, etc. will stand to benefit since they would be able to directly export their goods from Nashik instead of going all the way to Mumbai,” Deshmukh adds.
SKY-HIGH GROWTH PROSPECTS HALCON is the first-of-its-kind facility in India, which is equipped with an air cargo complex, sea cargo complex, centre for perishable cargo as well as an integrated pack-house that is adjacent to the airport. Krishnan says, “With this hub, we want to inform the industry at large that there are opportunities for all of us to capitalise on. Just by blaming the government for infrastructural inefficiencies is not going to sort any issue. The industry needs to work in tandem to get state-ofthe-art infrastructure. This partnership is really going to ring in a new era for not only the air cargo segment, but also for the entire logistics industry to efficiently harmonise multimodal transportation.” firstname.lastname@example.org
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NEWS ANALYSIS IMO ANNOUNCEMENT
New emission norms set up by the International Maritime Organization have caused quite a stir in the Indian shipping industry, their main concern being increase in overall ship operating costs. But the buck does not stop here, there is more coming around the bend. Experts offer their insights into these impacts... SHRADHA MOHANTY A much needed aggressive move was made by the International Maritime Organization (IMO) – the universal governing body, which lays down rules & regulations for shipping processes worldwide – to preserve the marine environment. The directive, passed earlier this month, makes it mandatory for ships to reduce the quantity of sulphur and nitrogen oxide used in the fuel of tanker vessels.
SINKING UNDER COST PRESSURES “While IMO’s announcements are welcome from the perspective of reducing environmental pollution, the impact on the global and regional shipping industry will be challenging,” says Manish Saigal, Executive Director, National Industry Head – Transport and Logistics, Advisory Services, KPMG India. Already under the pressure of low freight rates and high fuel prices, the Indian shipping industry is going to face further expenditures. Given that fuel cost typically rises with reduction in sulphur content, these norms are likely to increase the overall ship operating cost. The announcement by Shipping Corporation of India (SCI) that it would perhaps need to spend over a crore per ship to reduce sulphur content in the bunker fuel is a glaring instance of the impact that IMO’s recent announcement may finally translate into.
“The increased cost pressure is likely to relatively affect the dynamics more in those shipping markets or trade lanes where margins are comparatively small,” explains Saigal.
BENCHMARKS SET “If you have good combustion of their fuels, this pollution decreases. Sulphur is something which is available in the fuel in its natural state, but nitrous oxide compound is something which depends on the size of the engine or on what temperature the fuel is burning. So, they need some extractors,” explains Capt Rahul Pathak, Principal Consultant, Mantrana Maritime Advisory. Hence, they either have to install a new variant of engine or they may have to attach an extractor, which will extract all the carbon dioxide (CO2) and other emissions. Alternatively, an attachment to the exhaust system,
which acts as a filter, will also help. These norms are expected to be laid on those ships having a gross weight tonnage of 400 tonne and above. At present, the prescribed limit for sulphur oxide is 4.5 per cent which is required to be reduced to 3.5 per cent. Over the next two decades, this limit will be further curtailed to about 0.5 per cent after a detailed discussion in 2018.
NOT JUST SULPHUR AND NITROGEN Next year, January will also see mandates being laid down for CO2 emissions from these vessels. “The United Nations Framework Convention on Climate Change had introduced a formula to measure CO2 emissions from ships. This was forwarded to IMO to set up a law for such industry-related emissions,” says Pathak. “However, after having collected such data for all the ships, they have found out that the maritime industry is a very small contributor to the global CO2 emissions. Rather, it is the airlines, which contribute a sizeable amount. Shipping only contributes 2.7 per cent to the global CO2,” he explains. Whether this will add to cost pressures is yet to be seen.
STRICTER NORMS FOR SHIPS
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”Going forward, it is expected that the increased operational cost will be incorporated in the freight cost charged to shippers and end users. This will mean costlier sea freight charges,” adds Saigal. This trend will perhaps only become more intense in the next 10-15 years with the IMO announcing stricter emission norms, like further reduction of sulphur content. email@example.com
TECH TRACK IT TRENDS IN LOGISTICS
Numerex launches FASTrack fleet tracking, monitoring and theft recovery solution NUMEREX Corp, a leading single source provider of secure machine-tomachine (M2M) products & services, recently announced the launch of FASTrack Fleet, a new solution for fleet and mobile asset management. FASTrack Fleet integrates a configurable web-based application with a variety of monitoring devices that can connect via satellite or cellular. The power to aggregate, analyse and take action on data collected from a wide variety of vehicles & assets in one integrated application console is a much-needed tool for managing the increasingly complex fleet and logistics operations. Beyond standard vehicle tracking and telemetry features, FASTrack Fleet also includes a sophisticated business rules platform
designed to help enterprises manage their mobile assets effectively and efficiently. This platform is configurable to produce both, exception reports such as geo-fencing or speed violation reports as well as summary reports of aggregated vehicle data such as idle time reporting. Another major benefit for fleet owners is a more intuitive webbased administration console, which allows the configuration of various rules and user privileges, including blocking users from certain application modes or functions. Numerex continues to develop feature enhancements for the FASTrack Fleet that will enable value-added resellers (VARs) to further differentiate and provide their customers with a uniquely configurable solution. One of the first
OnAsset launches latest version of M2M-based Vision Software Platform VISION is a software as a service (SaaS)-based solution that provides shippers with 24x7 visibility on the whereabouts and condition of their high-value assets in the supply chain. It features intuitive mapping with custom data overlays that show the state, location & status history of assets being tracked by OnAsset SENTRY devices in real-time. “Our SENTRY asset tracking devices provide a wealth of data, and the Vision platform enables customers to interpret the data and turn it into actionable intelligence in the event of an alert during transit,” says Chris Robison, VP – Development & Professional Services, OnAsset Intelligence. “The latest version of Vision incorporates functionality that is specifically designed to work the way that shippers and logistics providers work. Much more than just ‘dots-on-
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a-map’, Vision is a business-centric tool that helps companies secure their supply chain and reduce their transportation costs,” Robison added. The OnAsset service leverages machine-to-machine (M2M) technology to look at a variety of factors. For example, if an M2M device on a palette or box registers excessive shock that is typically a sign of theft, said Nikki Cuban, VP – Marketing & Business Development, OnAsset. In this case, companies can take steps to check the cargo and call the police, if needed. This capability has already registered big returns for some of the companies using the OnAsset solution, including one business that was able to recover more than $1 million in stolen goods, Cuban explained. OnAsset devices can also provide information on humidity, temperature, pressure and light relative to a shipment.
enhancements for the US version will be an ignition-disable function, which allows the system administrator to remotely disable a vehicle’s starter. This prevents the engine from restarting once the vehicle is parked and turned off until the ignition is re-enabled in the application. “After researching our customers’ needs and the evolution of the market, we have developed a game-changing solution for the industry,” said Darren Koenig, VP – Marketing & Products, Numerex. “Centralising the management of complex data from a variety of devices while simplifying the administration of different user roles enables FASTrack Fleet to drive an immediate return on investment for our customers,” Koenig added.
Agility & Nokia launch supply chain initiative to reduce logistics costs GLOBAL logistics provider Agility and Nokia, have launched a new supply chain initiative, which resulted in reductions in transport cost, end-toend transit time & carbon emissions. As part of the process, data on inventory is captured in advance, so that the Nokia factory can start the receiving process as soon as the shipment is airborne. Special handling arrangements at the Nokia factory then enable break down of one large unit in less than an hour. Both the companies have expanded the programme to include mainland China. Robert Srumf, Director, Global Logistics Service Provider Management & Inbound Logistics, Nokia, said that from the economic & ecological standpoints, this approach creates a double win by decreasing cost as well as CO2 emissions.
Volkswagen’s Passat relies on Leuze RFID VOLKSWAGEN’S successful Passat saloon and coupe is built at Emden on the north-west coast of Germany. Its press shop supplies 20,000 parts each day & relies on Leuze electronic for identification of its pressings using radio frequency identification (RFID). To efficiently utilise the press shop’s two large 73,000 KN presses that operate at a speed of up to 15 strokes per minute, requires a smooth material flow system and very high machine availability downstream. A fundamental component of the material flow control is the RFID system from Leuze electronic. Once steel coils have been cut, the sheets are stacked onto the pallets, where each of these pallets is fitted with an RFID transponder. The assignment of the quality and product data of the pallet’s load into
the RFID tag is an early stage in the process of ensuring the traceability of each pressed part that goes back through the production, steps all the way to the coil. The RFID identification system also enables transparency in the material flow because it is dynamic and able to support automated interim storage, like, for example, when the cut sheets are temporarily stored in a heavy load shelving system. This flexibility contributes to the optimisation of the material flow to match the production demand. At the next step of the manufacturing process, when the sheet material is ready to be stamped in the presses, the RFID reader automatically captures the data from the transponder on the pallet. There is an application-specific challenge facing the RFID system in a
Damco launches CO2 tracker
DAMCO, a leading world provider of freight forwarding and supply chain management solutions, has begun providing customers with an online calculation of carbon dioxide (CO2) emissions. The new information is available online at ‘myDamco,’ the browser-based customer interface with Damco. This service enables Damco customers to track CO2 emissions for all products shipped by ocean and air. “Our customers are faced with increasing requirements for more efficient and sustainable supply chains. Experience shows that greening your supply chain can reduce logistics cost and emissions from your inbound supply chain by up to 15 per cent. Online visibility of CO2 emissions will enable you to take earlier corrective action if operations are not in sync with your carbon reduction and efficiency goals,” said Erling Johns Nielsen, Global Head – Supply Chain Development, Damco. Every single shipment can be measured in ‘track and trace’ functionality. A customer can, for instance, quickly evaluate emissions from an air freight shipment, or form an overview of the top 10 emissions separated by mode of transportation, origin and country destination, based on reports from this new online tool. Damco was one of the first companies to meet the demand for a green mindset in the supply chain. “Our participation in global supply chain carbon initiatives, such as the Clean Cargo Working Group and Green House Gas Protocol Scope 3 Guidelines, speaks for our commitment in this field, and our aim to become our customers’ advisor in matters of supply chain sustainability,” said Martin Thaysen, Global Chief Commercial Officer, Damco.
press shop, because high-power magnets are used within a press feed system to fan out the sheets slightly for pick-up. This causes an extreme magnetic load for the pulsating magnetic field of the RFID system and hence, transponders have an application-specific design and are built into special plastic housings. A different process within the materials handling system that relies on Leuze electronic is the interim storage area, where pallets are handled by automated high-bay stacker cranes. The highest possible levels of reliability are required to ensure continuous material flow within the automotive industry. Therefore, Leuze electronic carefully designs and manufactures its sensors to provide a performance reserve thus enabling reliable operation in real-world applications.
Global Supply Risk Monitor(SM) to manage supply chain risks NEO Group Inc. recently launched Global Supply Risk Monitor(SM), a unique risk management system exclusively created for the global sourcing industry. “It is the global services outsourcing industry’s first ever comprehensive risk management system to proactively identify, monitor and report services supply chain risks, thereby ensuring that global corporations can sustain and enhance their gains from outsourcing,” said Atul Vashistha, Chairman, Neo Group. “Global Supply Risk Monitor(SM) is a unique web-based product that enables clients to monitor, predict and manage various risks in their services supply chain – captive centres and outsourced services such as ITO, BPO, KPO – across 50+ countries, 100+ cities and 500+ suppliers, in real-time. New locations and suppliers are being added on a daily basis,” Vashistha added. Neo Group, through its over 12 years of global services industry experience & expertise, developed this proactive risk monitoring system through extensive interactions with top industry leaders and immense research. According to Sudeep Misra, Head – Marketing, Neo Group, “Global Supply Risk Monitor(SM) is fully ready now. Current clients who have used this service for over a year and have helped us improve the product include global leaders from financial services, high-tech, semiconductor, life sciences and consumer products.” Compiled by Sumedha Mahorey OCTOBER 2011 • SMART LOGISTICS • 19
TECHNOLOGY & INNOVATIONS WAYPAY
PAY FUEL BILLS THE e-WAY Technology has opened up a plethora of opportunities as well as simpliﬁed the way we do business. One such initiative in this regard is the launch of WAYPAY Purchase Management System. This service offered by PayMate will not only ease the way billing happens at fuel stations, but will also prevent fraudulent transactions. PRERNA SHARMA till date. Providing a perspective on the same, Ajay Adiseshann, Founder & MD, PayMate, says, “The ubiquity of mobile phones, the high use of cash for fuel payments provides us with an exciting opportunity to move transactions to the electronic format. Our solution for fleet owners in the transportation sector provides an easy to use platform. By way of which, drivers can make payments at fuel stations using their phones.” THE recent upsurge in the logistics activities have attracted the attention of various companies. In order to tap this lucrative opportunity, companies are deploying innovative ways to simplify the logistics functions and, in turn, facilitate the smooth movement of goods. One such initiative in this regard is the introduction of eletronic platform for transporters to pay fuel bills. WAYPAY Purchase Management System (PMS) is a breakthrough technology that eliminates the need for carrying cash, which facilitates the prevention of fraudulent transactions. It is a convenient service and its comprehensive reporting enables fleet operators to receive real-time reports and set purchase controls. The WAYPAY service was first launched in June 2011 by PayMate in collaboration with Mahaventures. This service is currently operational on routes between Pune and Bengaluru. A total of 50 fleet operators and 300 petrol pumps have tied up with WAYPAY
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THE GENESIS Previously, the products offered to fleet operators were smart card-based and needed a swiping terminal. The swiping terminals were usually ‘out of order’ or in poor working condition due to maintenance issues caused by inaccessibility and, in some instances, these swiping terminals were located along remote highways. After analysing the problems that fleet operators faced with the products offered, PayMate created a system called WAYPAY that has helped simplify payments for fleet operators without the use of any external hardware. The WAYPAY system does not require any wired connectivity or special instruments such as the point of sale (POS) terminals, thus eliminating accessibility issues as well as the need for system maintenance. On how he managed to convince his first few clients, Adiseshann comments, “There is always a degree of resistance like in most cases. But the value
proposition of taking cash out of the transaction flow means lesser risks for fleet owners and seamless, transparent and real-time reporting for them as well. This gives them more than just a payment mechanism without any hardware investments. Getting it right with the early adopters is the key to taking this mainstream.”
THE INVENTOR The credit for such an invention goes to PayMate, which is a mobile payment platform. PayMate is the first-of-itskind mobile payment platform, which lets you link your mobile phone to a bank account, credit card or a prepaid account – turning your mobile phone into a secure payment tool to be used anytime, anywhere. To this, Adiseshann claims, “We are the largest mobile payment players in the country with
Benefits of using WAYPAY • It works on all handsets. The service is compatible with basic mobile phones that have the bare minimum SMS and IVR functions No need to carry any cash, card, voucher or paper slips No need to maintain purchase records as the system records it electronically No threat of loss or damage or misuse while handling Decrease in time needed to settle the expenditure account.
Registration & Payment Process 1 Transporters register their vehicles’ and drivers’ mobile numbers with WAYPAY 2 Each driver’s mobile number will be registered against each vehicle number 3 A login identity (ID) and password is provided on successful registration 4 The transporter then needs to set purchase limits and load the required funds to a prepaid account 5 For every transaction, the driver needs to call WAYPAY IVR from his registered mobile number and punch in his PIN 6 The dealer will also need to punch in the driver’s number and amount on the WAYPAY IVR 7 On confirmation, the driver will receive the purchased item (fuel, tyres, batteries, service centre bills, etc.) from the dealer 8 The money will be transferred from the transporter’s WAYPAY account to the dealer’s account. close to two million customers. We have over 30 banks in our ecosystems and 15,000 retailers. This is the consumer side of our business. We believe that mobiles provide a convenient way for users to transact without cash at any given point in time irrespective of where they are located. It is certainly
a great value proposition in today’s day and age.” Throwing light on the business-to-business (B2B) aspect, he adds, “We believe that there are businesses in India, which are largely cash driven. Here, we have tried to move cash-based transactions onto the electronic platform. This ultimately
brings in efficiency because electronic transactions are cheaper to process.”
VISTAS OF OPPORTUNITY The tremendous growth in the Indian economy has a direct impact on the fortunes of the logistics industry. Justifying this, Adiseshann says, “We have always been looking at opportunities where we can apply mobile technology to move cash on an electronic platform. We feel that there is no better place than India, which is a trillion-dollar economy with 8 trillion in cash flows and a large part of them being cash transactions, to capitalise on the dynamic prospects.” Talking of the expansion plans, he informs, “We have begun it in the western region of the country and plan to extend it to the south next before moving on to the north of India.” With such promising innovations taking shape, the Indian logistics industry is surely slated to track the next growth trajectory.
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OCTOBER 2011 • SMART LOGISTICS • 21
TECHNOLOGY & INNOVATIONS SMART TRUCK
FUEL EFFICIENCY AT ITS BEST The abrupt spike in fuel prices and the dire need to go green has been putting pressure on logistics companies to come up with innovative solutions that are not only fuel efﬁcient, but also ensure reduction in carbon footprint. One such recent innovation is Smart Truck… This is one of the signiﬁcant innovations for the Indian logistics industry in terms of improving service quality, reducing costs & time as well as CO2 emissions in emerging market conditions. PRERNA SHARMA CRAFTED by DHL Solutions & Innovations (DSI), the Smart Truck is an ‘intelligent’ pickup and delivery vehicle that combines a number of innovative technologies, including a route planner. Piloted by Blue Dart in India, it is designed to provide solutions to urban logistics challenges such as traffic restrictions, density & clogging, while ensuring environmental protection and fulfilling customers’ needs for ontime delivery. These intelligent pick-up and delivery vehicles compute delivery deadlines to calculate the ideal sequence for shipments and use real-time GPS to avoid jams & optimise routings, thereby enabling flexibility and last-minute pickups. This allows the DHL Smart Truck to spend more time on the road to perform its pickup and delivery services. The Smart Truck technology also enables a more efficient sorting process by synchronising the data and physical flow, while real-time communications and visibility of services avoid ‘missed’ pickups
22 • SMART LOGISTICS • OCTOBER 2011
and delayed deliveries. Together, this provides better customer service and a more cost-effective operation as a result of optimum use of vehicles with less wasted miles. On the company’s GoGreen initiative, Jerry Hsu, CEO, DHL Express Asia Pacific, said, “DHL’s GoGreen programme motivates us to continually address issues that affect the environment and seek innovative solutions to reduce our carbon footprint while providing better services to our customers. In fast-growing, emerging markets, such as India, those needs are critical and will grow as the world continues to urbanise and megacities continue to proliferate. To ease congestion, improve services and reduce pollution, we need solutions that will have a positive impact on the environment, such as the DHL Smart Truck.”
THE CONCEPTUALISATION The Smart Truck solution was developed
Features & functionalities Smart Truck’s innovative technology deals with special areas of interest such as geo data, address data, map data, traffic information and planning constraints. Smart Truck helps in tour optimisation, thereby resulting in: • Reduction of morning throughput time for the operations processes • Increase in productive time on the road • Daily amendment of number of tours depending on actual volumes • Daily calculation of optimal tour cut • Permanent calculation of stop sequence. by DHL Solutions & Innovations (DSI) in Germany, alongside the following partners: German Federal Ministry of Economics and Technology, Deutsches Zentrum für Luft- und Raumfahrt (German Aerospace Centre), Deutsches Forschungszentrum für Künstliche Intelligenz (German Research Centre for Artificial Intelligence), Viaboxx, Motorola, Quintiq and Infoware. Talking of customer perception, Dr Keith Ulrich, VP, DHL Solutions & Innovations (DSI), said, “What
matters the most to our customers is the absolute punctuality in pickup and delivery. We believe that as we pilot the system in more cities and fine-tune the technology, the system will become enormously valuable in fast-changing cities in the emerging markets. It will prove to be an accurate planning tool for the megacities of today & tomorrow. By optimising routes and reducing CO2 emissions, DHL is also contributing towards improving the quality of city
Delivery metrics: Operational • Tour duration - Reduction by 5% • Stops per hour - Increase by 10% • Reduction of cost by at least 10% Warehouse metrics: Reduction of the average turnaround time in the warehouse by 10% life.” Emphasising on the need for this kind of a vehicle in the Indian market, Anil Khanna, MD, Blue Dart Express, opines, “Smart Truck, the intelligent pickup and delivery vehicle, which computes delivery deadlines to calculate the ideal sequence for shipments and also uses real-time GPS to avoid jams & optimise routings, was identified as a good and innovative technology to meet logistical challenges like traffic restrictions, density and clogging.” On choosing Bengaluru to launch the Smart Truck, Khanna informs, “India, one of the fastest growing countries, is a challenging metropolitan area. The country’s urban cities throw up the mentioned challenges. Hence, we decided on Bengaluru – the IT capital of India – as the ideal choice for the pilot study. With this pilot study, we can transfer an already proofed effective system to megacities and emerging markets. We can also ensure environmental protection while meeting customers’ needs. Also, Bengaluru houses the largest Blue Dart-DHL hub, which is spread across an area of 2,25,000sqft.” He adds, “Adapting Smart Truck technology to work in a city like Bengaluru will have far reaching
LAUNCHED IN GERMANY IN 2010, DHL SMART TRUCK REDUCED THE NUMBER OF MILES TRAVELLED BY 15% AND THE LENGTH OF AVERAGE ROUTE BY 8% DURING ITS PILOT STAGE, THUS REDUCING BOTH FUEL CONSUMPTION AND CO2 EMISSIONS. positive benefits for our clients; the city’s economy; the environment and, in the long-term, for all emerging markets. The Blue Dart Smart Truck pilot, as it is known as in Bengaluru, will cover all Asia-Pacific inbound shipments on five routes in the city, with the system sorting deliveries to reduce errors and increase visibility. This gives customers an accurate delivery time. To successfully launch the pilot here, we have made adaptations to the original system to additionally overcome problems with the consignees’ addresses and lack of postal codes.”
CHANGING THE DYNAMICS OF INDIAN LOGISTICS India is the second country after Germany to possess this technology. The Smart Truck is bound to help
Benefits of Smart Truck: Customers • Brings dynamism and flexibility into pickup and delivery operations • Leverages added value by providing full transparency along the supply chain for all involved parties • Enables new innovative products & services • The system does the sorting which ensures a simplified and less errorprone inbound process • Visibility of operations increases and hence, the customer can be updated of the expected time of delivery. Environment • There is reduction in CO2 emissions and transport costs due to dynamic tour planning • The planning engine can be customised to set a condition for the number of stops for a said route.
Blue Dart increase its tour performance and will prove to be beneficial on various grounds. It is a revolutionary technology in logistics and is specially designed to change the face of logistics in India. As the industry witnesses consolidation and cutthroat competition, service providers need to continuously innovate to meet the customers’ evolving requirements. Smart Truck is an example of this commitment, which Blue-DHL offers to its customers. Talking of the paradigm shift that it is about to bring in, Khanna avers, “At Blue Dart, we are highly possessive of our customers and their businesses. From this ownership stem all the strategies that work in our favour in comparison to our competitors, the latest of this is the launch of Smart Truck. The Smart Truck will also help us meet our customer commitments in terms of timely delivery, especially in our Time Definite Delivery (TDD) products like TDD 10.30 am and TDD 12 noon. The smart technology will allow us sufficient leeway in terms of manoeuvring traffic and route optimisation thereby reaching our customers faster.” Commenting on the company’s expansion plans, Khanna states, “After Bengaluru, we would like to take the Smart Truck across the nation. The Smart Truck will definitely be rolled out to more urban centres, which face problems like environmental pollution, increasing traffic congestion and rising customers expectations. A plan stating which cities the Smart Truck would be extended to has been worked out. We will announce the names soon.” firstname.lastname@example.org
OCTOBER 2011 • SMART LOGISTICS • 23
PRICE TRENDS ROAD FREIGHT INDEX CHART FOR SEPTEMBER 2011 IRFI TREND FOR SEPTEMBER 2011: The RFI stood at 175 points for the month of September 2011, which is a 1% increase in comparison to the same period last year.
ZONAL FREIGHT TRENDS The overall freight rates have increased slightly by 0.22% as compared to the previous month. The freight rates from Ex-Mumbai rates have registered the highest increase in rates by 1.52%; whereas Ex-Chennai rates have registered the highest decrease in rates by 1.65% as compared to other metros. The freight rates from Ex-Mumbai are high due to the tomato season at Nashik.
TRENDS FOR SEPTEMBER (Y-o-Y) 172
The cumulative sales of commercial Index trend for six years vehicles registered a growth of 17.80% for April-August 2011 as compared to the same period last year and the production grew at 12.67% in the month of August 2011 as compare dto August 2010. Medium & heavy commercial vehicles grew at 7.07% and light commercial vehicles grew at 27.44%.
FORECAST FOR OCTOBER 2011: The RFI in October 2010 over October 2009 had registered an increase of 3 points. With the onset of the festival season, volumes and freight rates will see an increase in the upcoming months.
Indian Road Freight Index (IRFI), a service introduced by Transport Corporation of India (TCI), is an index of weighted average lorry freight rates across various routes, calculated based on the route density and the dynamic freight rates of routes across the country. Knowledge Partner: Transport Corporation of India (TCI); website: www.tcil.com; e-mail: email@example.com
24 • SMART LOGISTICS • OCTOBER 2011
IN CONVERSATION WITH HEAD – BUSINESS DEVELOPMENT, TCI SUPPLY CHAIN SOLUTIONS
CHANGE IS THE ONLY CONSTANT
“We are on our toes and up to the challenge to service the huge market,” says Rajkiran Kanagala, Head – Business Development, Transport Corporation of India (TCI) Supply Chain Solutions, during a one-to-one with Sumedha Mahorey. Excerpts... YOUR STINT AT TCI...
I joined Transport Corporation of India (TCI) around five years back and I currently head the national business development of TCI’s Supply Chain Solutions Division. This division primarily provides supply chain solutions, third party logistics (3PL) & fourth party logistics (4PL) logistics solutions and warehousing to the industries of various verticals like automobiles, consumer products, retail, pharmaceuticals, telecommunication and hi-tech industries that focus on engineering and electronics. We work with customers on inbound, outbound, warehousing, reverse logistics and 3PL processes. The main service portfolio that we offer our customers includes partnering, knowing their processes, pain areas and then, primarily offering them end-to-end solutions i.e., linking vendors to the distribution centres and customers & vice versa. This is how we define our engagements with our customers. But technology plays a crucial role here. Our systems are IT driven, which ensures that over a period of time, dependence on people is gradually reduced, especially when it comes to performing repetitive activities.
CHALLENGES FACED WHEN DEALING WITH CUSTOMERS For each company, we have a different supply chain. In addition, we deal with geographical challenges & demographics, which we tackle through customisation and partnership with our customers. However, for this, we need to understand the day-to-day issues that the customer is facing and then do cross learning. Today, a retail supply chain can learn from an automotive supply chain, an automotive supply chain can learn from a hi-tech supply chain. Besides, automotive supply chain is the prime driver of good practices in India. Take, for example, barcoding that is used for inbound auto logistics. It ideally could be extended to retail. In fact, we have already started working on that front. All our product cases are aggregated in a crossed dock environment and then delivered to a distribution centre or a store. Besides, such processes could be incorporated from other verticals. This, in turn, helps us build on our expertise
26 • SMART LOGISTICS • OCTOBER 2011
in various sectors. But we are not the only ones who stand to gain from this. Our customers also benefit. Thus, as we grow in the business, we build and evolve the process over a period of time. Nonetheless, the biggest challenge remains domain knowledge. How fast we, as service providers, can understand our customers’ needs and how fast our customers can transfer the knowledge to us are factors that will help us form win-win relationships.
THE BLUEPRINT OF SUPPLY CHAIN DESIGN The blueprint of a supply chain design is not a single company’s job; it is a partnership. Initially, our customers make their own demands. But eventually, the processes get customised based on our experiences of executing the function as well as learning from other industries. Subsequently, the tweaking begins i.e., the evolution process of a particular design begins. But designs will keep evolving as retail is very dynamic. Change is the only constant in retail.
YOUR PREPAREDNESS FOR THE FESTIVE SEASON TCI has been in the logistics space for more than 50 years. We have seen many festive seasons across all the sectors as well as geographies. We have also seen many market ups and down. But with a network of more than 1,200 offices, 7,000 trucks plying a day, more than 5,000 professionals and a warehousing space of over 9 million sqft, TCI is well-equipped to deal with additional loads during the festive season.
CURBING COST THE TCI WAY We emphasise on processes and technologies substituting people. Today, people cost, fuel cost, rentals as well as inflation are up and the challenge lies in bringing the cost down. Typically, there are two ways of achieving this. Firstly, if we are able to fuel a customer’s sales, then the cost comes down. Secondly, if we become
an enabler of sales, then we become a good supply chain company. The second factor is activity-based costing. How do we ascertain the exact cost for a particular activity, rather than considering a generic cost is one of the main considerations to reduce cost in the supply chain.
DEALING WITH COMPETITORS We respect everyone and value their contribution towards the industry. We feel that all of us together have a large market to service. In this space, we definitely learn from each other. We welcome competition as it helps everyone to grow. If a competitor builds international practices to tackle competition from international players, we also learn from the move. That is why, the more the merrier in this space. We are on our toes and up to the challenge to service the huge market.
EXPANSION PLANS TCI has always followed its customer’s footprints. In fact, our global expansion is a derived output resulting from a customer’s requirement. We have TCI Global to offer end-to-end solutions to our customers abroad. In addition, we have also made certain plans keeping in mind the Goods and Service Tax (GST), which will be implemented soon.
DEMAND TRENDS FOR 3PL Our customers are now demanding the implementation of track and trace technology. This technology ensures that there is no shortage of cases from the vendor to the distribution centre to the store. It also ensures that there is no mix-match of stock keeping units (SKUs). Apart from this, another demand trend that 3PLs are witnessing is that the order fill rate, if not 100 per cent, should at least be 99 per cent. Besides, there is a demand for scan in and scan out processes. Also, many new technologies in the area of asset management have also come in to ensure that assets like a moving truck,
PERSONAL My motivation point Anything, which can be created from scratch My inspiration Real Life: Amitabh Bachchan, Narayan Murthy, Harsha Bhogle Fiction: Sherlock Holmes, Phantom Most challenging task International business development i.e., getting a client for an Indian company always remains challenging. Five things that I check before signing a deal or partnership • If there exists total trust and commitment between the persons signing the agreement or deal • Exit clauses • Clause on inventory • Key performance indicators (KPIs) • Scope for amendment of clauses, service level agreements (SLAs), KPIs, commercials Message for aspiring professionals Learn from your heroes and tread on their path. crate, carrier or a utensil is tapped. For example, for one of our clients in the food supply chain, we had to keep a track of the movement of utensils on a day-to-day basis.
GROWTH AVENUES FOR 3PL With the increase in the numbers of professionals as well as international players entering this business, the 3PL industry is growing rapidly. The future is certainly bright for the 3PL industry and our customers believe that the supply chain will play a critical role in future. firstname.lastname@example.org
OCTOBER 2011 • SMART LOGISTICS • 27
SPECIAL FOCUS RETAIL TRENDS
RETAILERS today are highly aware of a product’s demand-supply situation. They can even be termed as regulators in this segment as they are able to organise and manage the supply chain in a manner that achieves the objective of consistent attendance of their products as well as ensure minimum inventory across maximum possible segments for any commodity. This is where the importance of retail supply chain comes in. It not only helps a retailer satisfy this very objective, but also supports his growth and development, which, in turn, helps him further achieve customer satisfaction. A country, like India, that is characterised by diverse geographic conditions, different consumption patterns of customers having varied tastes & preferences and various levels of infrastructure growth, has further fragmented the retail sector. This has made it very difficult for retail logistics service providers to efficiently manage their supply chain to reach all parts of the country with an aim to continuously fulfill the commitments made to retailers. India has been ranked as the fourth most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm, AT Kearney, in its Global Retail Development Index (GRDI) 2011. It has a vast retail network of about 12 million outlets, which is spread across the geographic boundaries of the country. The entry of large third party logistics (3PL) players like DRS Group, Gati, DHL, OM Logistics and Safexpress has led to significant improvement and organisation within the retail supply chain in the country.
ON THE MOVE Primarily driven by the booming
28 • SMART LOGISTICS • OCTOBER 2011
Illustration By Sanjay Dalvi
MAGIC OF RETAIL SCM
When one visits any retail store, it is often assumed that the desired goods or products will always be available at the store. But what is it that makes this pre-conceived notion a reality? The answer is retail SCM… The growing and evolving demands of customers have ensured that retailers work towards making their supply chains more ﬂexible. With similar challenges to arise in time to come, retail supply chain is set to witness some promising trends.
economy, infrastructure, increasing levels of disposable incomes, the retail sector in India has witnessed a sharp growth. This, in turn, has led to higher purchasing power, changing lifestyles, growth of the middle-class segment and development of the India’s tier II & III cities. Industry reports claim that the country’s retail sector is currently ranked the fifth-largest on a global scale, contributing to over five per cent of the country’s GDP. The Indian retail sector is primarily characterised by organised and unorganised retail. Organised retail includes supermarkets, hypermarkets, malls and other large retail businesses. The unorganised retail constitutes the traditional street markets and kirana stores, which are highly fragmented. The Indian retail sector is evolving and is doing well in terms of growth and quality, says Ganapathi. Reports claim that presently, organised retail in India constitutes about 4-5 per cent of the retail market and highlights the huge untapped potential India has in this segment. According to estimates made by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), organised retail in the urban market is growing at a rate of 20-25 per cent. Currently, rural organised retail in India is at nascent stage and barely constitutes two per cent of the total organised retail. But the industry expects it to grow over 10 per cent by
2013. Some of the major players in the organised sector include Pantaloons, Tata Group and Reliance.
FDI IN RETAIL The Indian Government currently allows 51 per cent of foreign direct investment (FDI) in the single-brand retail. If the proposal permitting 100 per cent FDI in multi-brand retail is cleared, it will not only offer a boost for the growth & development of the Indian retail sector, but will also increase the scope of the services to be offered by retail logistics service providers. There has been a lack of investment in the logistics side of the retail chain, which has led to an inefficient market mechanism. According to reports, the lack of organised back end infrastructure results in a wastage of about 40 per cent of the farm or agri-produce worth `50,000 crore every year. Globally, India is the second-largest producer of fruits and vegetables. But 40 per cent of the produce goes waste due to the absence of adequate cold storage facilities and power infrastructure. In such a scenario, opening up the retail sector will prove beneficial. Government reports say that there are only 5,386 stand-alone cold storages, which brings the total capacity to 23.6 million MT, 80 per cent of which is used only for potatoes. This will help in the development & implementation of a supply chain based on international mechanisms and standards. Further, the step towards allowing FDI in multi-brand retail is expected to bring in modern & advanced technology and management know-how, which will work in India’s favour. From the supply chain’s perspective, 100 per cent FDI in retail is going to bring in a big change, says Ganapathi, adding that, as suppliers, a lot of intermediation, like stockists and distributors, will be out of the picture and the consumer will get the best price and the best possible goods & products on time.
MAJOR TRENDS IN RETAIL SCM
THE ONLINE RETAIL INDUSTRY IN INDIA IS Traditionally, retail SCM has been LIKELY TO BE WORTH `7,000 CRORE BY 2015 primarily concerned DUE TO EASY AVAILABILITY OF BROADBAND with transportation and SERVICES AND INCREASING INTERNET storage. However, the PENETRATION ACROSS THE COUNTRY. new and modern supply chain models, which Commenting on the various trends have come into existence to satisfy the witnessed in retail supply chain, SL evolving needs and demands of the Ganapathi, COO, NTL Logistics Plus customers, have expanded the scope India, says, “Organised retail will give of the retail logistics service providers brand owners a lot of options as it will beyond the traditional services that have a catalogue format, a dot com were being offered. At present, some format, a large source format and even of the value-added services offered by a small source format. By bringing all logistics providers include: the revolutions together, it will offer • Inbound and outbound suppliers a lot of sales as well as market transportation coverage options. Secondly, rotation • Warehousing facility of funds will ensure that definite • Packaging and labelling payment dates are in place. This, in • Tracking and tracing the goods turn, will ensure that the structure • Inventory management will be organised and thus, help us • Providing a quality checking forecast and ensure that we can plan mechanism in advance for our own procurement, • Planning for cost control manufacture, etc.” • Distribution of merchandise Going forward, as the country • Reverse handling and flow of urbanises and prospers, it has become products (in some cases). the need of the hour for the Indian While commenting on the trends, retail sector to get organised at the Nihar Parida, COO – SCM, Uniworld earliest. This growth should be duly Logistics, says, “The biggest trend that supported by a state-of-the-art supply the industry is witnessing is moving chain network. Commenting on the towards organised retailing. We future plans, Ganapathi says that NTL would like to extend our collaboration Logistics mainly focusses on white in making this a reality sooner than goods and will continue to do so. The later. This will ensure that growth of consumerism in white goods refurbishment takes place automatically. itself is 24 per cent per annum. Thanks to the advent of technological “We would like to focus on the solutions, the moment a product white goods segment, ensure timely goes off the shelf, the warehouse delivery and set up warehouses in gets to know that the store needs different parts of the country. Attaining refurbishment. Depending on the automated warehouses; IT-linked demand trends, the refurbishment warehouses with secondary transport can take place on a weekly basis or a capabilities are things we will work daily basis in case of festive season. towards,” Ganapathi concludes. These Moreover, since it is neatly packed, upcoming trends reflect a very rosy there is lesser work to be done at the picture for the retail logistics service store level.” Emphasising on the need providers. The key now lies in gearing to design warehouses like stores, he up for the growth phase... says that our warehouses should be designed in sync with the shelf of a retailer’s store. email@example.com OCTOBER 2011 • SMART LOGISTICS • 29
SPECIAL FOCUS RETAIL SUPPLY CHAIN TECHNOLOGY
DNA MAKEOVER The traditional retail supply chain, which faced stock outs and high inventory, is fast becoming a scene of the past. With retail giants fast adopting latest technologies like RFID, WMS, TMS coupled with physical automation like conveyor belts, forklifts, voice-enabled equipment and data integration software in their supply chains; accuracy, efﬁciency and reduced dependence on manpower has been achieved. Apart from faster reaction to variant demand, technology today is also supporting the decision making process. A look at the changing DNA of the retail supply chain... SUMEDHA MAHOREY GROWING incomes and the changing lifestyle scenario have increased the middle-class’ purchasing power. This, in turn, has made a retailer’s job challenging and, at the same time, exciting. Birthdays, festivals or marriage, irrespective of the occasion, most shoppers head to Big Bazaar, Shoppers Stop, Reliance Trends and Globus among other stores. While the choices for the consumers are many, a retailer is left with only one option – gearing up to meet the needs of the millions of footfalls he witnesses during the festive season. With multiple targets like reducing time to market due to shorter product lifecycles, achieving greater product variety causing more fluctuation in demand calls, high responsiveness in supply chains and sufficing the need for shorter lead times, a retailer needs to be on his toes to meet deadlines. An effective, agile and fast adapting supply chain could be the key solution to this retailer’s dilemma. But in this era, every company already possesses an effective, agile and fast adapting supply chain. In such a scenario, what could be that one differentiating factor that would not only reduce cost in the long run, but also create opportunities for the retailer to increase volumes without increasing the cost of infrastructure? The answer to this question is investing in technology. While this may seem
30 • SMART LOGISTICS • OCTOBER 2011
to be a costly option, a recent trend witnessed in the Indian retail supply chain has proved that companies have become forthright and consider technology and automation as a cost-cutting option in the long run.
AUTOMATION: THE KEY TO FASTER TURNAROUND Latest technologies like radio frequency identification (RFID), automation and software like Warehouse Management System (WMS), Transportation Management System (TMS), conveyor belts, racking systems, put-to-light, etc. have marked their presence in Indian retail supply chains. With multiple applications and advantages, technology has now made its way into boardroom meetings and strategy & planning departments. The advantages of implementing the latest technologies are many. Elaborating on the same, Sougato Shome, GM – SCM, Future Supply Chains, says, “We use technology in the supply chain to increase efficiency & accuracy and reduce dependence on time-consuming manual processes. With technology in place, activities that are repetitive can be automated & mechanised. It can be done individually in a much faster and accurate manner.” “Currently, we are using the WMS & put-to-light – an automated sortation system that uses light commands to direct products. We
are also looking at multilevel conveyors, which will automate the inbound and outbound processes. Once the physical activity within the warehouse is automated, fastest turnover, in terms of faster service through the warehouse, will be achieved,” he adds. Automation has helped retail supply chains strategically. Sougato opines, “In India, pricing is becoming more critical for the sustenance and growth of the organised retail market. The more an organised retailer grows, the more will be the load on the supply chain to increase throughput, accuracy and reduce cost. We use technology in the supply chain to address these challenges.” Elaborating on the load factor, Sougato adds, “In retail supply chain, we handle various stock keeping units (SKUs). When volumes increase, they can increase in terms of more quantity per SKU. Also, when a retailer thinks of expanding his reach, he thinks about more stores covering new catchment areas. This increases the scope of the warehouse supporting the retail store in the sense that the warehouse needs to handle more volumes, potentially more SKUs and definitely more stores. The use of automation and technology enables all the above from the same warehouse.” Highlighting the role of technology in their supply chain, Satish Tambe, DGM – Manufacturing & Design,
Voltas Material Handling, explains, “As far as the supply chain of Voltas is concerned, a major change has occurred after the implementation of latest technologies. We have implemented a system which will offer our suppliers real-time information of the material that is required in the production process and replenish the stocks whenever required.” He adds, “Both our plants are connected with the SAP system. As the order comes from the customer, it is logged into the SAP system. This is based on the sales and distribution model on which the quarter planning is based. We run the MRP system and get the output in the purchase requisition (PR) stage. The PR is then converted into a purchase order (PO) and is visible to the suppliers. They, in turn, meet the demand generated.” In a similar vein, Veneeth Purushotaman, IT – Head, HyperCity, adds, “We have introduced two important projects – point of sale and revamp of planogram software. Planogramming has helped us improve our store layout as well as inventory optimisation.”
NEED FOR AUTOMATION As the need to ensure traceability of products among manufacturers and customers grows, the wide use of technology for product & material visibility has become a must. Stressing on the need for automation, Sougato says, “In a centralised model, the throughput expectations from a warehouse increases dramatically with the increase in demand. In this situation, where the supply chain cost determines whether the retailer is generating profits, the supply chain becomes very critical to retail. Supply chain cost, as a percentage of sale, should keep on decreasing gradually. This can be attained by ensuring that the supply chain resources do not increase – a primary consideration that drives technology.” “Technology can be costly in the initial stages, but over a period of time, it helps increase the throughput from the
same warehouse and enhances accuracy in the dispatch of the stock. This, in turn, eliminates a lot of unnecessary wastage and costs present in the system, thereby bringing down the cost of the entire supply chain,” he adds.
TECHNOLOGY DEVELOPMENT Automation, technology or software is now customised as per the requirement of the supply chain and designed in-house by a consultant who understands the intricacies of the work flow. Training and implementation follow through. Explaining the technology development process at Future Supply Chains, Sougato articulates, “The design team along with experts finalises the automation blueprint after which we approach automation vendors and discuss the requirement. After several rounds of discussions, automation vendors are finalised. They then set up the automation along with a core internal group who are in the process trained to fully handle the automation.” “The automation and the software service provider will be there to handhold the core group for an agreed period of time. Then they hand over the operations to this core team comprising of project, IT and
Satish avers, “The initial challenges that we faced while adopting the new system was that the people who work on systems like SAP require training and knowledge. Another challenge we faced was that employees thought that if the machine does their work, they would lose their jobs. But this is not the case. The implementation of automation is basically the question of integrity of data and its accuracy.” To this, Veneeth adds, “Technology is certainly not a challenge. It is an enabler and will always remain an enabler, not a substitute.” However, perfecting technology for a certain process might also become a challenge, but in the long run, the advantages derived are much beyond expectation. Col Vijay Nair, GM – Supply Chain, HyperCity Retail, avers, “We had to implement and upgrade the WMS nearly 10 times before the required results were derived.”
AUTOMISATION: A DISTINCT FUTURE? With multiple technologies for various operations, retail supply chains in India have many opportunities to explore, but the dream of a completely automated supply chain is still a scene out of a sci-fi flick. Karthik Kappuswamy, GM – SCM, Spencer’s Retail, believes,
Technology can be costly in the initial stages, but over a period of time, it helps increase the throughput from the same warehouse and enhances accuracy in the dispatch of the stock. This, in turn, eliminates unnecessary wastage and costs present in the system, thereby bringing down the cost of the entire supply chain. SOUGATO SHOME, GM – SCM, FUTURE SUPPLY CHAINS operations team members. This team designs a comprehensive training module to train the employees who are going to handle the automated operations in the warehouse. There is continuous training for the operations teams which helps in maintaining the continuity of operations,” he explains.
IMPLEMENTING TECHNOLOGY Many believe that the implementation of new technology has its own challenges like cost, training and labour issues.
“Distribution centres in India are still labour intensive and it is a long time before robots are implemented in warehouses.” With technology entering the DNA of supply chains worldwide, Indian retail is not far behind. Using technology as the backbone, dynamic supply chains with 100 per cent efficiency can definitely suffice the multiple needs of over a billion people. firstname.lastname@example.org
OCTOBER 2011 • SMART LOGISTICS • 31
SPECIAL FOCUS HOME DELIVERY
OPTIMISING CONNECTIVITY To stay competitive while retaining proﬁtability, successful home delivery requires personalised and effective customer service and highly efﬁcient transportation operations. Home delivery technology solutions usually focus either on customers or on operational efﬁciency. Hence, it is important to deal with the problem as a whole. Addressing half the problem runs the risk of either providing great customer service at unproﬁtable or unsustainable costs, or running an efﬁcient operation that fails to provide differentiated service. IT is often said that the ‘last mile’ of the supply chain is the toughest. Nowhere is this statement truer than in retail home delivery – the final step in the supply chain. Stiff competition drives demand for higher levels of customer service combined with pressures to cut or maintain operating costs. Meanwhile, the service demands involved in delivering to the customer’s home contribute to higher costs that must be effectively managed. To win market share, the home delivery service provider must win customers through service and to remain profitable, it must deliver that service efficiently.
KEY ATTRIBUTES TO WINNING CUSTOMER SERVICE Convenience Customer convenience means having a choice. The more the options, the more likely is the customer to select a convenient delivery appointment. Customer service includes consideration of delivery appointment windows. The smaller the appointment window, the lesser time the customer will spend waiting for the delivery. Therefore,
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smaller time windows are more convenient. Speed How long is the turnaround time between initial order placement and actual delivery? For most consumers, the shorter the time between order and delivery, the better. Reliability Can the customer expect to receive the correct items ordered, at the right time and in the condition promised? Typically, this is interpreted as ‘Do not be late!’ However, it actually means ensuring the delivery of the correct inventory items, in proper working order and, in some instances, with the appropriately skilled delivery personnel who can perform the installation. Predictability While reliability means performing in a consistent way, predictability means when things go wrong, the customer should be notified. Exceptions are a fact of life. The sooner a customer is notified of an exception and offered a proposed remedy, the better. The earlier a late delivery or no-show is predicted and communicated to the customer, the less inconvenient the exception becomes. The most damaging service violations occur when customers are not notified and communication only happens at the customer’s initiative. In other words, from the consumer’s perspective, ‘Deliver what I ordered
when I want it delivered at a time convenient to my busy schedule, requiring minimal waiting on my part, as quickly as possible. Make sure that you reliably deliver what I ordered when you promised, and, if circumstances prevent you from delivering on time, notify me as early as possible.’ Upholding core values, including convenience, speed, reliability and predictability, can help ensure happy customers, build customer loyalty, generate positive word of mouth and, ultimately, drive market share. The challenge before a retailer is to balance this type of service level and profitability.
HOW TO DELIVER CUSTOMER SERVICE EFFICIENTLY AND PROFITABLY • Route productivity: Control and reduce transportation costs by maximising the number of revenue-producing stops a driver makes and minimising the non-revenue producing time spent while driving, obtaining directions, etc. Route efficiency is often obtained by clustering customer stops geographically with little regard to customer convenience. The challenge for retailers is to achieve high
levels of customer service while maintaining route productivity and efficiency. • Minimising missed deliveries: Missed delivery is a much more serious issue than a customer service problem. A missed delivery (customer no-show, wrong or damaged inventory, missed time window) wastes the driver’s time and usually requires rescheduling a second trip. It may also involve unloading and reloading inventory. • Managing driver performance: The best plans are only as effective as their execution. Best practices in delivery fleet management enable the management to monitor, measure and ultimately, manage driver compliance with the plan. • Yield management: Not all customers are equal. The ability to differentiate customers by their revenue, profitability and long-term value, plus the ability to provide differentiated delivery service levels based on those values helps delivery service providers maximise revenue yield and promote customer loyalty thereby promoting profitability. • Efficient delivery and route planning: Streamlining the efforts required to plan and execute the delivery schedule can help yield efficiency improvements. This includes tasks such as: – Scheduling delivery appointments – Finding and validating customer locations – Assigning delivery orders to drivers and trucks – Sequencing stops in accordance with delivery appointment commitments – Providing driving directions from stop to stop. Routing, mobile and telematics solutions suites can facilitate addressing the specific needs of home delivery retailers and service providers by reducing transportation costs,
improving productivity and providing high levels of customer service. The solutions that can help by adding value to three key steps in the home delivery business process include:
STEP 1: POINT OF SALE/ORDER A delivery appointment scheduling solution enables optimised (profitable/ least cost) delivery appointment scheduling in real time. How it works? When a customer places an order, the solution checks the existing delivery schedule and offers configurable delivery day/time options. The options can be limited based on feasibility and profitability among other factors.
Upholding core values, including convenience, speed, reliability and predictability, can help ensure happy customers, build customer loyalty, generate positive word of mouth and, ultimately, drive market share. The challenge before a retailer is to balance this type of service level and proﬁtability.
bucketing systems, the new solution enables users to see which slots are actually available. Reliability: Since the solution provides visibility of the actual schedule and filters out slots that are not feasible, delivery appointment promises are more reliable. No commitments that cannot be fulfilled need to be made. Productivity: The solution enables retailers to offer their customers convenient appointment options within the parameters of operational efficiency. The sales or customer service representative can make better decisions in scheduling delivery appointments that promote operational efficiency. Deliveries: The solution has the intelligence to prohibit appointment commitments that are infeasible, thereby reducing missed deliveries due to missed time windows. Yield management: The solution is configurable to support different levels of service based on different customer or order attributes, thus enabling retailers to provide premium service levels to highly valued customers.
STEP 2: DELIVERY SERVICE PLANNING These delivery appointment window options are presented to the sales or customer service representative, or to the customer, over the Internet. Address verification checks the customer’s address and ensures that it can be found and validated in the road network. Benefits Customer convenience: The customer can choose a convenient delivery window from among the viable options available. Speed: Turnaround is accelerated because: • The delivery appointment is established and assigned more quickly at the point of sale/order • In real time, the solution determines the next available viable appointment slots. In contrast with estimates produced by less sophisticated
This routing planning solution helps build least-cost delivery service schedules, route assignments and sequences so that companies can execute delivery appointment commitments in accordance with business rules. How it works? After a delivery appointment is scheduled, it is added to the schedule repository. With this solution, planners and dispatchers can see the entire schedule, review route assignments & stop sequences, and make any warranted changes to the schedule. The solution generates route sheets, turn-by-turn driving directions and other reports. Benefits Productivity: Profit-based route optimisation engine and visual tools let schedule planners and dispatchers create productive & profitable delivery
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Home delivery, continued
schedulers to minimise transportation, labour, fuel and equipment costs. Efficient planning: The solution automates time-consuming planning and execution tasks, including customer address geocoding & verification, route assignment, stop sequencing and turn-by-turn driving directions. Companies can use it to generate pick lists that conform to route assignments and stop sequences. Deliveries: The forward predictability provided by the solution enables planners to see the downstream consequences of schedule changes. It highlights stops that may be in jeopardy of schedule violations, which enables planners to create realistic schedules that maximise on-time performance. Customer communications: After customers make a delivery appointment commitment, they often want to confirm the appointment and verify that their orders are scheduled for on-time delivery. In addition, home delivery service providers want to ensure that the customer is aware of the appointment and will be available to accept delivery. The integrated interactive voice response (IVR) functionality of the solution can alert customers about the pending deliveries and can help them cancel or reschedule a delivery. Once a delivery appointment order is confirmed and assigned, the order information can be exported to IVR, which automatically places an outbound call to the customer to confirm to remind him of the appointment. Alternatively, customer service representatives can call the customer. Its benefits include: Customer convenience, confidence, reliability and predictability: Proactive validation to the customer builds confidence in the service provider and enables the customer to plan accordingly. The dynamic use of IVR also promotes predictability, thereby providing the customer with an updated and accurate prediction of arrival time.
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Deliveries: An automated IVR follow-up can confirm the appointment and enable the customer to reschedule if necessary thereby reducing the probability of customer no-shows.
STEP 3: MANAGING THE DELIVERY SERVICE – EXECUTION Once plans are created, routes are assigned and customers are notified, the vehicle heads to its destination. Mobile and telematics solutions help home delivery service providers ensure that the drivers execute the schedule according to plan. They assist drivers in meeting service commitments. How it works? After the plan is created and routes are assigned, drivers log into the mobile solution via a cell phone, personal
Routing, mobile and telematics solutions suites can facilitate addressing the speciﬁc needs of home delivery retailers and service providers by reducing transportation costs, improving productivity and providing high levels of customer service. digital assistant (PDA) or an in-vehicle unit. The driver’s route assignments, stop details and audible turn-by-turn driving directions are available on the device. Automatic global positioning system (GPS)-generated status updates from the field report on the driver’s position and progress. The solution also reports customer stop arrivals, departures and exceptions. These updates from the field are displayed for the dispatcher, customer service representative or supervisor in both, a map view and a chronological text view. As status updates are received, downstream the estimated time of arrivals (ETAs) automatically recalculate. The dispatcher is alerted to any predicted schedule exceptions and has the ability to proactively change
schedule assignments. Dispatchers can react to real-world events and predicted violations by changing assignments or sequences. Benefits Reliability and predictability: Real-time schedule visibility helps improve on-time performance by enabling dispatchers and supervisors to predict potential violations and take action to assist drivers to meet service commitments. If an exception is unavoidable, this forward predictability enables the service provider to alert the customer in advance. Based upon the customer’s preference, the order may be delivered late or the dispatcher can cancel the stop and reschedule for another day. Productivity: With the ability to view schedule events in real time and track assets, service providers can better manage compliance with the plan. Industry studies indicate that driver performance and productivity improve with the deployment of such tools. Access to key performance indicator (KPI) comparisons of planned versus actual performance (mileage, time, customer service, etc.) also helps identify areas for driver or dispatcher improvement and can prevent driver fraud. Reports: Robust reporting tools extract relevant logistics data, including schedule plans and actual performance, to help managers measure performance from the service and operational efficiency criteria for continuous improvement.
INTEGRATED SOLUTION A complete solution for the retail home delivery service provider is a must. This solution could be attained by integrating customer-facing solutions, such as appointment-booking with fleet management tools, including route optimisation and advanced tracking and mobile & telematics functionality. Courtesy: The Descartes Systems Group Inc.
COMPLIANCE OPTIMISATION TECHNOLOGY SPECIAL FOCUS
ENHANCING SUPPLY CHAIN VISIBILITY Managing hundreds of vendors for each shipment is certainly a daunting task for every retailer. Tracking rule violations, documenting the problem, communicating the same with the vendor, calculating the ‘chargeback’ and other steps in the process can lead to confusion and make the retailer falter. To redress these issues, solution providers have created a compliance optimisation technology. Installing this technology, has not only helped improve vendor performance, but also enhanced total supply chain visibility. DOZENS of retailers, and in some cases, other companies such as wholesalers and manufacturers, manage ‘vendor compliance programmes’ under which their suppliers are required to follow a set of rules for each purchase order or shipment. Those rules can cover a lot of territory, from on-time shipping requirements to the use of specific modes and carriers depending on shipment details, labelling and price ticketing specifications among others. These retailer requirements are generally summarised in a ‘Vendor Requirements Guide’ or similarly named document, which, in some
cases, can run into dozens of pages and contain dozens of different rules. The Vendor Compliance Federation (VCF) says it tracks around 225 different retailers with individual compliance guides.
THE FLOW THROUGH PROCESS In most cases, retailers assign financial penalties to a vendor if he fails to meet the rules set forth in their compliance documents. These penalties – often called chargebacks – are designed to offset the retailer cost for correcting the error or oversight or incurring other financial impacts. For example,
if the vendor fails to price ticket the goods or mismarks them, say with the wrong price, the retailer must spend time and money inside the distribution centre (DC) to ticket those goods. Also, if a vendor uses a different mode or carrier than the one indicated by the routing guide, that could lead to higher than necessary transportation costs. However, the actual practice of implementing vendor compliance rules and chargeback policies varies widely across the retail sector. Just as importantly, many issues with vendors lead to delays in getting merchandise to the store floor. Many
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Compliance optimisation technology, continued
retailers use the ‘flow through’ or cross dock distribution processes that move inbound receipts rapidly to outbound doors. Late shipments obviously impact planned store deliveries, but so can problems with labelling or ticketing, inaccurate advance ship notices (ASNs) and other problems that cause the merchandise to stop rather than flow through. Failure to get the merchandise to the store floor as planned can lead to lost sales for both, the retailer and vendor.
COMPLIANCE MANAGEMENT TECHNOLOGY Retailers can easily have hundreds if not several thousand different vendors. Managing rules compliance across all these vendors for each shipment is a daunting task. Trying to track rule violations, documenting the problem, communicating the same with the vendor, calculating the ‘chargeback’ and other steps in the process manually places a significant burden on distribution, transportation, IT and other areas of the supply chain. It can also lead to errors and confusion or frustration from the vendors, who may not trust the system and the penalties. To address these limitations, a few solution providers have developed software that is often referred to as ‘compliance optimisation’ or ‘compliance management’ technology. These types of solutions are available from a small number of specialty vendors, often as a ‘service’ rather than as an installed piece of software, and in a limited form from a handful of warehouse management system (WMS) providers. Some retailers have also internally built their own compliance optimisation solutions.
solutions perform? In general, retailers or others can expect the following types of capabilities: • A data warehouse of all compliance related information and transactions • The ability to model the specific rules and scenarios relative to a company’s published vendor requirements • The ability to capture vendor
Failure to get the merchandise to the store ﬂoor as planned can lead to lost sales for both, the retailer and vendor. performance automatically or through associate data capture and compare that performance to the programmed rule sets (e.g., did the vendor choose the right mode and carrier for this shipment based on the routing guide?) • The ability to automatically calculate any vendor chargebacks based on all the above for compliance violations • The ability to automatically communicate a violation to a vendor (typically, via email) that documents the specific issue and provides supporting information, photographs, documents, etc. • The ability to generate a variety of reports across vendors and shipments.
ITS FUNCTIONS What functions do these compliance optimisation
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Improvement in Supply Chain Processes
PROBLEMS RETAILERS WERE LOOKING TO SOLVE In order to better understand how retailers specifically saw the value of this type of software solution, a survey was conducted. In an attempt to try to understand the kind of problems that retailers were trying to solve when they decided to use the compliance optimisation solution, respondents were presented with a series of potential problems. While improving shipment accuracy and the related category of reducing DC ‘problem shipments’ topped the list, each cited by 85 per cent of respondents, the remaining 77 per cent of respondents cited ‘poor fill rates’. Late shipments, carrier routing issues, ‘floor ready’ issues and problems with labelling & documentation also scored high. Also, 54 per cent of respondents cited ‘cost to track compliance manually/with existing systems’ as a problem to be solved with a new compliance optimisation solution. While that was tied for the low spot with ASN/EDI problems, it implies that more than half the respondents either had built an internal system that just could not keep up or needed too much maintenance, or else the company had looked at building a compliance tool internally and found it would be too expensive or take too long.
IMPROVEMENT AREAS To get a sense of how well the supply chain or logistics improvements resulting from the compliance programme were recognised within the company using a scale of 1-5 evaluation methodology – with 1 being a very high level of improvement, 5 being a low level. Perhaps, somewhat surprisingly, respondents said that general company executives had the greatest recognition of the benefits of the programme, with
an average score of 1.85, just ahead of others in the supply chain and in finance, each with an average of 1.92. Recognition from merchandising was also strong, scoring just over 2.0.
32% Soft Goods/Apparel:
VALUE OF COMPLIANCE OPTIMISATION CAPABILITIES Retailers were finally asked for an overall rating of the value of the Compliance Networks’, compliance optimisation software provider, solution. The results were very strong for this compliance optimisation provider. Almost 100 per cent of the respondents said that they have experienced either very high value or payback from the system. No respondent picked either of the other two categories, which represented modest or limited value. “This solution does exactly what it is supposed to do and does it well,” one respondent noted. Another said, “It is the ability to automate all these processes behind
Type of Retailer
the scenes that makes it valuable for us.” The consistency of the responses across that pool indicate that the strong majority of Compliance Networks’ customers find excellent value in the solution and its individual capabilities. The core of the problem retailers are looking to solve and where the heart of the value lies comes from the basic capability to automate significant portions of a vendor compliance process that can be very labour intensive
without strong supporting technology. That labour intensity not only adds to the cost of the vendor compliance programme and limits its effectiveness, but also creates delays in communications with vendors and leads to errors & other issues that combined can cause relationship problems with vendors related to the programme. It appears that most retailers recognise that automating this process is critical for the success of a compliance programme, and that many have moved to the Compliance Networks’ solution after finding that an in-house developed solution is either not robust enough or too difficult to maintain over time. Retail sector leaders are using this information to improve vendor performance, develop scorecard programmes, and enhance their total supply chain visibility. Courtesy: CSCO (Chief Supply Chain Officer) Insights
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OCTOBER 2011 • SMART LOGISTICS • 37
SPECIAL FOCUS RETAIL CHAIN DISTRIBUTION MODELS
Illustration By Sanjay Dalvi
PERFECTING THE SUPPLY CHAIN TO GAIN MARKET SHARE
For a retailer, it is all about selecting the right distribution system as his choice could have a direct bearing on the quality of service offered to the customer and the cost of service. The system not only has to reduce costs, but also add to a company’s bottom line system wide. The direct store delivery and centralised distribution systems are the two preferred choices for retailers. But before ﬁnalising on which distribution system to implement, a retailer has to consider factors such as store density in the identiﬁed service area, manufacturers’/vendors’ distribution infrastructure and capabilities, store format & location and cost consideration among others. It is only after considering these factors and weighing the pros and cons that a retailer should ﬁnalise on a distribution system, which will help him emerge a winner in the marketplace. A decision regarding the selection of a distribution system for store replenishment is highly critical as it has a far reaching impact on the business. This impact could be in terms of both – the quality of service offered to the customer and the cost of service. At one end is the 100 per cent availability of all products on the shelf, while at the other end is the lowest cost incurred to ensure the same. The adopted distribution system should address both these parameters and should be capable of striking a balance between availability and cost.
store, thereby bypassing a retailer’s distribution centre. • Centralised Distribution (CD): This network describes the flow of goods from the manufacturer’s distribution network to a distribution centre (DC). The replenishment orders of the multiple outlets are then processed, consolidated and delivered to the outlets at the DC.
DECISION DRIVERS Before analysing the pros and cons of various systems, it is important to understand how the following factors drive the decision: Store density in the identified service area Setting up a standalone back end system is a costly proposition. There should be sufficient number of stores
DISTRIBUTION MODELS Distribution modelling is one of the most discussed and debated subjects in the retail sector. The following two systems are often discussed and compared: • Direct Store Delivery (DSD): This is used to describe a method of delivering products from a supplier or distributor directly to a retail
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Figure 1: Pictorial representation of Direct Store Delivery and Centralised Distribution models
to be serviced in the identified area so that the back end cost is spread across more stores and hence, optimised. It should be physically feasible to service the area identified within a reasonable time i.e., the order to delivery cycle needs to be reasonable. Thus, the radius within which the stores fall is an important consideration. As a thumb rule, the transit time below 12 hours is a desirable expectation. A cost-benefit analysis of both the systems i.e., DSD v/s CD is a must. While taking the decision, immediate future store opening plans also need to factored in. Manufacturers’/vendors’ distribution infrastructure and capabilities Reliability and consistent deliveries to the stores are critical. Generally, major manufacturers and vendors operate through a structured distribution channel. The challenge arises when one deals with a medium or a minor vendor or one’s stores are not within the urban township. In such a scenario, the vendor needs to be flexible to meet the business challenges, particularly during the start up stage. Store format The size and format of the store impacts the replenishment system. For example, a large sized cash & carry format ordering in bulk will have captive storage facility. In such a case, a DSD could be a good option. But the same may not be the case with a small format store. Store location Another important factor, which influences the distribution system selection, is the store location. If there are restrictions and constraints in free access to the stores, then a DSD may not be an efficient system and multiple small frequent deliveries may not be an option. In most of the cases, the vendor’s delivery timings clash with business hours and interrupt the focus on the front end. In such a case, a CD will be a good option as suitable delivery timings could be worked around the constraints.
Profile of the merchandise The profile of the merchandise in terms of volumes, freshness, shelf life, size & shape, handling challenges, etc. plays an important role in the choice of the delivery system. Cost consideration Retailing is a low margin business, driven by volumes and saving on all-round costs is an integral part of building a sustainable business. Hence, any decision on the distribution system cannot be taken without doing a cost-benefit exercise. The cost to be considered for this purpose is the overall system cost in the supply chain i.e., the cost of all the stakeholders like the manufacturer, vendor, DC, vendor’s distribution channel, stores, etc. This is because irrespective of whoever incurs costs in the system, the end customer ends up paying for it.
FLOW THROUGH OR CROSS DOCKING Flow through or cross docking is a bridge between the DSD & CD model used in the back end to bring in efficiency and cost savings. Here, the vendor packs & labels the merchandise for the individual stores and then directly delivers to the DCs. At the DC, they are unloaded and then simply cross docked and loaded to the outbound vehicle. This saves space, working capital, time, efforts and minimises documentation. High-value products, seasonal merchandise, promotion items, etc. could be routed through this system.
GLOBAL PRACTICES Let us understand how various major global retailers handle the store deliveries: Walmart Any discussion on retail needs to start with Walmart, the US$422 billion world’s No. 1 retailer. It is widely known that Walmart is innovative and efficient in its back end & front end. In fact, its USP of ‘Every Day Low Price’ brings to the fore its better purchasing and supply chain competitiveness. The key to a retailer’s success is his ability
to drive costs out of the supply chain and manage it efficiently. Many supply chain experts refer to Walmart as a supply chain-driven company that also has retail stores. The first Walmart store opened in 1962 and the first DC in 1970. From there on, till today, it successfully continues to work with the CD model with some level of fine-tuning for different countries, locations and markets. Walmart confined to its time-tested distribution model when it entered India with an arrangement with the Bharti Group in 2007. All its small format retail stores in the entire northern region were serviced out of
McDonald’s Success Story Apart from the food & grocery retailers, there are many other segments where the Centralised Distribution model has been successfully implemented. Quick Service Restaurants (QSR) and some foodservice segments use such a system. McDonald’s, the global leader in QSR business, is a case study. They operate under this system in all the global markets. In India, too, they started with the centralised model right from Day 1, when they opened their first outlet in 1995. Initially, they operated out of two Distribution Centres (DCs) – one in the north and the other in the west. Today, about 240-odd McDonald’s outlets are serviced out of these two DCs and another two satellites hubs at Bengaluru and Kolkata. Ever improving inventory turns, reducing supply chain cost per outlet, consistent and predictable deliveries to outlets, comfort and convenience to vendors, faster new openings, full customer focus at the outlets and happy customers are the major benefits McDonald’s enjoys. In fact, the back end supply chain efficiency gives it an edge over its competitors.
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Retail chain distribution models, continued
Considerations Centralised Distribution Economical because of consolidated volumes Lower system inventory and better turns due to predictable & consistent deliveries. Multipoint inventory build up avoided Better, as dedicated professionals available to focus on back end and deliverables to stores
Illustration By Sanjay Dalvi
Single delivery – minimum interruptions and paper work at the store. Leaves more time for the store personnel to focus on customer Lower cost – Single delivery/multiple store drops/full truck load
Direct Store Delivery Inbound logistics cost – delivery from the supplier Inventory levels
Product availability on store shelf Delivery to store – interruptions to store operations Outbound transportation cost – store delivery
Higher cost, split volumes, less than full truck load & multiple deliveries. Could be a choice at the start up stage when outlet numbers are low Higher system inventory because of safety stocking at every outlet Store staffs’ responsibilities split between front end customer and back end supplies Multiple deliveries – more time spent at the back end
WINNING FORMULA Multiple deliveries – higher cost
Figure 2: Pros and cons of Centralised Distribution and Direct Store Delivery models
the 80,000sqft central DC at Banur in Punjab. This centre included a facility to store and handle temperaturecontrolled merchandise too. Vegetables & fruits were exceptions, which were shipped out of a separate collection and consolidation centres. Initially, for the first two years, all the stores in northern region, including those in NCR, Rajasthan, UP, Uttarakhand, etc. were serviced out of the Banur DC. Though the operation at the DC is outsourced, Walmart controls and intensively oversees the functioning. Later, it added two more DCs – one in NCR and another one in Bengaluru. Carrefour The €101-billion French retailer is No.2 in the world in terms of generating revenue. It opened its first store in 1958. Like Walmart, Carrefour’s stores depend on the supplies from the central DC. Carrefour also uses their centralised consolidation centres, which are designed for smaller suppliers. These suppliers ship their goods to a consolidation centre run by one of Carrefour’s third party logistic (3PL)
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revenue. It opened its first store in the UK in 1929. Like other leaders, Telco too follows the CD process to service its stores with some localisation for specific markets. Tesco has a limited presence in India. In 2008, it announced their intention to invest in India and tied up with Tata Group’s Trent to open Star Bazaar hypermarket stores, which are predominantly serviced through a CD centre. All other leaders like Metro AG, Target, SPAR, etc. conceptually adopt the CD model with suitable modifications required to match the format or the local market needs.
partners instead of directly shipping it to a Carrefour DC. Smaller suppliers whose goods do not sell through quickly in stores present problems to retailers. The retailer can take truckload shipment, but then, it has to store the goods in warehouses for a longer period of time, thus incurring increased inventory carrying costs and spoilage. The retailer could also take less-thantruckload shipments, which raises the cost of the goods, clutters the DC yard, and makes the receiving process more labour intensive. However, if a consolidation centre covers a broad enough region, both the goals can be achieved. The consolidation centre can receive full truckload shipments more frequently. The merchandise from the consolidation centres flows through the DCs to the stores against specific orders. Carrefour’s India entry is constrained by FDI regulations. Its visibility is limited to one wholesale cash & carry in Delhi. Tesco Tesco, the £61-billion retailer, is the third largest in the world in terms of
The Indian breed of organised retailers like Reliance, More, Big Bazaar/Food Bazaar, etc. follow the same CD model. Though the model is conceptually established, the operational stability is yet to be achieved. The full benefit of such a system will accrue only after perfecting the operation. The unorganised retailers in India, who are now in majority, still use the DSD model and have achieved success. It is rightly believed that over a period of time, organised retailers will emerge stronger with the benefit gained from perfecting their supply chain, marketing and management. The CD system is a proven model for retailers. But its effectiveness depends on the rigidity of the implementation and its interface with technology. Depending on the local realities, some work around may be essential, especially in a start up environment. No concept is complete unless it cuts costs, saves money and adds to the bottom line, system wide. All decisions need to be fit within this parameter. Understanding, tracking and computing the realistic costs then gains prime importance. But incurring additional cost in the beginning to build a viable system for the future is the call of the day. Many leaders have taken this route before emerging winners in the marketplace. H Shriram, MD, ImpelPro SCM Solutions
SPECIAL FOCUS ONE ‘Q’ MANY VIEWS
Come festive season and the entire industry starts preparing itself to meet the customers’ needs. With such a humongous task at hand, the responsibility of logistics service providers grows manifold. Gauging the demand patterns, engaging with the customers and planning well in advance are some of the key factors that would ensure 3PLs’ readiness to serve the ever-growing market needs. Here are some steps the industry is taking to deal with the peak demands this festive season… SUMEDHA MAHOREY Initially, we struggled to handle the load, especially during the festive season. But over the last couple of years, after we implemented warehouse management system (WMS) & put-tolight system, we were able to handle much more volumes. With the same manpower, it became possible for us to turn out almost 1.5-2 times the output that we usually did in average time. That is how we have managed to come to terms with handling peak season without increasing manpower or physical sustenance. With an extended shift, we have been able to handle two times the volume that we were otherwise able to do on an average. So, the festive season is no more a problem, as now, we have installed systems that have helped us tide over the peak season.
The planning for the peak season starts with product development and the forecast for the season. We also need to gauge the product response, especially if the same product has been launched earlier in Barista using different ingredients. When dealing with ingredients, we consider factors like import requirements, availability of ingredients in India and the replenishment schedule. We also consider the theme of the launch – winter or summer apart from the magnitude of the launch.
Our peak season starts from Diwali and goes up to December as it is a major ‘gifting’ season. We prepare our supply chain based on the number of stores. We usually plan 30-40 per cent more than the normal month’s consumption. The inventory, including imports, is planned six months before the season. Some of the key considerations made before planning for the festive season are forecasting, number of stores and the opening of new stores, specific seasonal products, etc.
– Sandeep Sharma – Sougato Shome GM – SCM, Future Supply Chains
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VP – SCM & Product Development, Barista Coffee Company (Lavazza)
– Krishna Kumar R AVP – SCM, Mahindra Retail
We prepare for the festive season a month in advance in conjunction with our customers. All our customers have different strategies to capture greater market share. We need to understand their demand peaks and troughs. In this way, we would be able to understand their demand patterns and deliver as per their expectations. – Sarfraz Ahmad Khan GM – Strategic Business Initiative, Radhakrishna Foodland
Thanks to the theory of constraints model, we attain almost 30-40 per cent of our turnover during peak season. Usually, we operate on dynamic buffer management, which has been derived from the theory of constraints. Dynamic buffer management takes into consideration the expected demand & supply and accordingly the buffer is increased or decreased depending on which the supply will go to the front end. This will ensure that we do not incur any loss during sale. For seasonal planning, earlier we relied on forecasting and supply to the front end because of which, we ended up with unsold stocks and huge inventory. Now, we have adopted a buffer drain model. This model offers us a buffer during, which we replenish the regular sale, 15 days before the peak season based on factors like the sale, variants, last year’s performance, etc. So, we supply to the front end the right variant to the right place. – P Sukumaran
In case of festive seasons, demand outstrips supply. The demand goes up by at least 30-40 per cent with respect to electronic goods, consumer durables and to some extent, telecom devices. To be able to cater to the spike in the demand, we need to build up additional capacities in terms of warehouses, fleet and resources. – Vineet Kanaujia GM – Marketing, Safexpress
Head – SCM, Titan Industries
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INSIGHTS & OUTLOOK INVENTORY OPTIMISATION
BRIDGING THE GAP BETWEEN
CFOs SCM In today’s business climate, escalating customer service requirements and increased demand volatility are the top concerns of senior supply chain executives. The sophisticated discipline of inventory optimisation can transform an organisation’s supply chain performance and improve its bottom line by freeing up working capital and improving service levels for minimum cost. CFOs who understand these two powerful performance levers are natural choices to lead these game-changing inventory initiatives.
as a tough recession ends, a slowly growing economy causes upward pressure on inventory levels. Inventory strategy is crucial to good supply chain performance and availability of working capital. As the guardian of market value, no one is better positioned to transform supply chain management than the CFO. Given that CFOs have varying levels of experience with inventory optimisation (IO), every CFO should know the following facts: • Top concerns of senior supply chain executives are shifting to customer service requirements • The unique value of IO to the overall supply chain. How exactly
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does it reduce inventory and increase customer service? • ERP and Advanced Planning and Scheduling systems do not optimise inventory across the supply chain • Inventory optimisation can move the organisation to an entirely new trade-off curve between inventory cost and service level goals
• What role should the CFO play in IO initiatives? • The gap in business perspective and communication styles between supply chain practitioners & members of the senior staff must be bridged.
SUPPLY CHAIN: IMPERATIVE OR IMPOSSIBLE TO IMPROVE? The supply chain is a natural focus for CFOs. It determines where a major amount of cash flow will be derived and where a major amount of capital will be consumed. CFOs across the board agree that it is imperative to transform the supply chain into a highperformance competitive advantage. In fact, CFOs report that the top pressures driving their companies to improve supply chain management are:
• Escalating customer service demands or increased demand volatility • Rising complexity of managing a global business • Economic volatility • Rising supply chain management costs. Illustration By Sanjay Dalvi
CHIEF Financial Officers (CFOs) strongly believe that good supply chain performance is vital to attain financial success. Several studies reveal that a majority of CFOs believe that the supply chain is directly linked to their ability to meet corporate objectives. One-third of C-level supply chain executives view supply chain management as a market strategy differentiator. In 2009, the top 1,000 public companies saw days sales outstanding deteriorate by 10 per cent, while days payable outstanding and days inventory outstanding both increased sharply. Now,
Although cost savings through inventory reduction have traditionally been the No. 1 aim, today, the shift towards customer service performance is vital to ensure the success of the business. The analytical insights that IO delivers can tell the management the minimum cost to achieve a desired service level. Moving service levels up without overpaying for the improvement is a value that CFOs now require. But what a challenge it presents! Today’s supply chain network is a cross-functional, international and multi-stage, with many local functions managed by local rules and narrowly focussed key performance indicators (KPIs). Obstacles to improvement include internal resistance, too much cost and too little time. Clevel executives cite issues such as decentralised management, unclear lines of authority and a lack of senior
management leadership. That is why, despite the importance of a supply chain, over the years, polls have shown that many financial executives lack the confidence that their company can make major supply chain changes as and when necessary. CFOs believe that operational plans, including supply chain plans, are not well integrated with the corporate strategy. Still, as a CFO from the US food and beverage industry puts it, “We are not viewing the supply chain as a cost-saving opportunity as such; we are viewing it as a strategic asset.” Best in class performers have succeeded in integrating supply chain planning and execution to a greater extent. So, a practical strategy must be found to ‘transform the value of the supply chain’. Companies cannot significantly reduce inventory levels by chipping away at the mountain with a small chisel. CFOs see that clearly, and they also see an opportunity to take matters into their own hands.
THE CHAMPION IN THE CFO’S MIRROR Most CFOs agree that CFOs themselves are uniquely qualified to take the leadership role in supply chain initiatives. It is not a radical departure for the CFO to drive supply chain improvements… closer integration between financial leadership and supply chain operations produces valuable analytical advice, support and validation of improvements. Today 40 per cent or more of CFOs play an important role in supply chain decisions or lead the effort themselves. Among all members of the senior staff, only the CEO and CFO typically look at the entire business. The discipline of a CFO’s financial training provides a sound analytical framework with which to assess the impact of system-wide changes and CFOs have no vested interest in current modes of supply & distribution unlike sales and operations, for instance. The CFO’s combination of company-wide perspective and highly developed analytical skills are unique
qualifications to help drive the change. One consumer goods company’s CFO puts it well when he said, “An effective finance team helps an organisation see around the corners by framing the implications of the bets that are being made in a constantly changing game.”
HOW PERSPECTIVE DRIVES DIRECTIVE To lead a successful supply chain improvement initiative, a CFO must overcome organisational challenges. It helps to understand that operations teams within the organisation have a different perspective than the senior staff. While the CFO naturally responds to issues such as ‘revenue shortfall’, or perhaps, ‘poor inventory turns’; supply chain managers think in terms of service levels, lead times, expediting costs and the like. The level of aggregation is different.
Inventory Optimisation Leadership Tips Every CFO Should Know • • • • •
Unite the teams, connect the silos Not all inventory is created equal Keep the stakeholders focussed Encourage more enlightened KPIs Teach supply chain managers how executive managers think about major business decisions • Remind everyone that it is about achieving business goals over time and not just getting the lowest price. The CFO who sees the company through a non-supply chain filter may start from a need to know ‘Why we did not hit the revenue target?’ or ‘Why do we have so much inventory?’ Nothing focusses a CFO’s attention like analysts questioning how inventory turns stack up against the industry average during an earning’s call. Because operational complexity is usually hidden from C-level executives, who think in terms of product families, quarterly results, etc., gaps can appear between the goals of tightly focussed
function managers and the senior staff. To eliminate such gaps, CFOs have to understand the sources of value and cost in both, the internal and external supply chains. As one CFO points out, “Take the time to understand the whole value chain and not just focus on price.” But CFOs can be guilty of short-term obsessions, too, especially when told that pursuing long-term value will cost money in the short run. In a situation where many CFOs would say, “That is nice, but I just want the cash,’’ one CFO surprised the Vice President of materials management by taking a more patient position: the CFO opted to optimise value.
IT HELPS TO SPEAK THE SAME LANGUAGE In closing the gap between the finance frame of reference and the supply chain practitioner’s perspective, CFOs must understand the pressures on operations teams executing at the daily level (e.g. the individual retailer level), while supply chain managers have to understand that the CFO cannot afford to be down in the weeds and must remain laser-focussed on return on investment (ROI). CEOs and CFOs should remember that supply chain executives may have a hard time speaking their language. As one EVP of supply chain pointed out, “Every supply chain initiative is judged on economic profit. We look at how we can reduce working capital and cost while making sustained improvements in product availability. All of our initiatives must have a return greater than the weighted average cost of capital for our firm.” Supply chain managers must think in terms of concrete plans, couched in the ‘terminology of the boardroom’. It may take some extra training to get there. For supply chain professionals to speak like a ‘CFO’, they have got to think like one. They may need to be guided in terms of their proposals. Courtesy: Logility Voyager Solutions
OCTOBER 2011 • SMART LOGISTICS • 45
Illustration By Uttam Rane
INSIGHTS & OUTLOOK INVENTORY MANAGEMENT
On paper, there are tonnes of inventory management practices to follow. But in reality, it is a different story altogether. Improper implementation of such practices can pose vexing problems – ranging from operational inefﬁciency to customer dissatisfaction – to manufacturers and retailers alike. An interaction with 3PLs throws light on how to stock it right... SHRADHA MOHANTY INVENTORY management is all about specifying the size and placement of stocked goods. To manage the stocked goods at different locations within a facility or at multiple locations of a supply chain network, an inventory management practice is required. The trick is to have optimal level of inventory, which would ensure there is no overstocking or understocking. This, in turn, would facilitate smooth production and sales operation.
THE REAL DEAL If you flip through any management textbook, you will find several inventory management practices such as just-in-time (JIT), First In First Out (FIFO), Last In First Out (LIFO), Zero Inventory Production System (ZIPS), Activity-based Costing (ABC) analysis, Materials As Needed (MAN), Highest In First Out (HIFO). But most of them are not implemented in a textbook fashion. It all depends on the kind of products the company is dealing with and the sales strategy it has in place. There are quite a number
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of new practices, which are now doing the rounds. Commenting on these, Nihar Parida, COO – SCM, Uniworld Logistics, says, “We have tailor-made processes for each company. Quite often, it depends on the strategy that each company follows, as it is closely related to their sales.” Parida exemplifies it with Denso, an automobile parts manufacturer which follows JIT, and Acer, an IT company. He also throws light on certain industry trends, like the auto industry, which mostly follows Vendor Managed Inventory (VMI); pharmaceuticals, which goes by FIFO and cross docking, which mostly occurs in the fashion industry. “Today, the best practices are cross docking and JIT. It is all demand based today and in most cases, we have to make sure that we take care of FIFO,” he adds. Sudhir Patwardhan, CEO, PAT Consulting, however, believes, ‘different strokes for different folks’ is the mantra followed. “Each firm has its unique requirements. In this scenario, value stream mapping helps discover
root problem areas and in identifying a particular practice. There is no one-size-fits-all-formula,” he states. Other popular practices include Kanban, Transportation Pipeline Inventory model, Fixed Order Quantity model, Fixed Order Interval model and Materials & Resources Planning (MRP) model.
GETTING TECH TRENDY Software-based solutions are the need of the hour for any manufacturing and retailing firm to hasten inventory management. Throwing light this, Srinath Manda, Programme Manager – Transportation & Logistics, Frost & Sullivan, South Asia, Middle East and North Africa, explains, “Efficient inventory management requires a high degree of visibility and accuracy in the inflow, outflow & existing inventory stock. This is difficult to achieve through manual processes of inventory tracking. A software solution provides the capability and is therefore imperative in today’s scenario.” To this, Parida adds, “We have tied
up with a software company, which designs the warehouse management system (WMS) for us and customises it in a short span of time.” This way technology helps in planning and execution as it de-skills the job and helps initiate frequent corrective steps. Uniworld has invested almost `50 crore on modern equipment, canners, WMS and tracking systems in its three warehouses. “We are prudent in investing what the customer will need. We limit our forecasting to a maximum of two years on certain equipment and software, as India is going through a progressive supply chain and the scenario keeps changing every three months,” Parida elaborates. High level of visibility of inventory movement through the effective use of technology to track each unit’s flow at a given node or through the entire supply chain can also reduce the scope of pilferage. However, to achieve this, each participant in the supply chain needs to have the same level of commitment to deal with such losses. But heavy investment in software is not the be all and end all of everything. “One may achieve a lot without any substantial investment in software. Normal software tools, spread sheets, for example, also yield a lot of benefits,” says Patwardhan.
WHY PRACTICES FAIL? Many companies perceive inventory management as ‘storing & dispatching of goods’, which is required to give good service to customers. “They do not understand that inventory management is a strategic tool, which enables firms to sharpen their competitive edge. Companies need to be aware of its business significance,” says Patwardhan. On an average, inventories form 60 per cent of the current assets in most public limited companies in India. Hence, a sizeable amount of funds is tied to them. Managing such inventories well helps bring down costs. “Inventory practices also fail as most companies are averse
towards implementing established scientific guidelines, such as for managing safety stock,” Patwardhan says, adding, “As there is no clarity about how to apply these techniques, a lot of ‘gut-feel’-based decisions are taken, thereby resulting in chaotic conditions. A little bit of hand-holding on how these techniques can be used is necessary.” This can help in inventory reduction, which is where inventory analysis starts. However, there is a gross lack of awareness on the need to maintain inventory data accurately. Many companies would visit consultancies and third party logistics (3PLs) stating that they do not know how to accurately measure their inventory records. Hence, these companies need to have a system based on such metrics, which would enable continuous improvement.
PAIN POINTS ON BOTH SIDES For companies, identifying the correct patterns of inventory consumption and replenishing the inventory levels to match the consumption patterns is a big challenge. This requires a thorough analysis of consumption patterns as well as arriving at a robust demand forecast, which is flexible to accommodate any sudden fluctuations. There should also be visible involvement of the top management in such processes. On the other hand, for the 3PLs, the challenge is to adapt to changes in the company’s strategy. They also have to adapt to the market changes, which is major challenge. “We have to be flexible, but to what extent we do not know,” explains Parida. “The customer’s needs are rapidly changing. Hence, everybody wants to be the first one to adapt, as the customer would not wait. To find a partner who can adapt quickly is the biggest challenge today,” Parida says.
TAKING CORRECTIVE STEPS Some Practices and Models in vogue Just-in-Time (JIT) model is the most popular model of inventory management across industries today. It means that only the required quantity of inventory is delivered at the required time to the target recipients in the supply chain. Vendor Managed Inventory (VMI) is one of the recent models in inventory management. Here, the vendor maintains the required quantities of inventory of his customers (manufacturers) at his own premise and delivers it to the customers as per instructions. Cross docking is the practice of unloading materials from an incoming truck or railroad car and loading them directly onto outbound trucks, trailers, or rail cars or other such vehicles with little or no storage in between. Kanban is not essentially an inventory control system in itself. Rather, it is one of the ways in which JIT can be achieved.
The first step is to ensure quality. This way, inventories get passed quickly and effectively and the entire cycle runs smoothly. “Ensuring quality requires the setting up of stringent standards of measurement as a part of quality inspection such that it is accepted by all participants in the chain,” says Manda. Adhering to the economic order quantity level sourcing or JIT model sourcing at every stage of the supply chain at all times can eliminate additional load or wastage of inventory for companies. Lastly, high inventory is only a symptom of a major problem. Unfortunately, in many firms, high inventory is only considered a problem that is to be managed by the purchase department or store. Hence, all efforts are to be redirected towards finding out the root problems to bring effective inventory management full circle. firstname.lastname@example.org
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INSIGHTS & OUTLOOK MULTI ECHELON INVENTORY OPTIMISATION
A WIN-WIN STRATEGY Multi echelon inventory optimisation is like two levers – one of which frees up working capital and the other controls service levels. It is an approach that presents many opportunities for inventory optimisation. Taking the right approach can yield rewards on both sides of the inventory equation as well as ensure better customer service with less inventory. Using a true multi echelon approach is the ultimate win-win strategy for inventory management.
Inventory Level in $$
as illustrated in Figure 1. obsolescence rate) INVENTORY optimisation (IO) • Buffering work-in-progress at is a mature discipline that can both, crucial points before costly value-add transform an organisation’s supply SUPPLY CHAIN TO-DO LIST manufacturing steps. This reduces chain performance and improve the CFOs must understand and remember costs and increases flexibility. bottom line almost immediately. IO is certain key ‘ins and outs’ of IO. These Overall, by modifying stock buffers like having two powerful ‘performance include: and revamping policies & targets levers’, one of which frees up • ERP and Advanced Planning around the supply chain – all driven working capital, while the other Systems (APS) do not optimise by the company’s actual supply and controls service levels. inventory and are inadequate for demand history – a solid MEIO Multi echelon inventory setting inventory policies in today’s programme can create reductions of optimisation (MEIO) is driven by complex supply chain networks. 10-30 per cent in total inventory, thus advanced mathematical algorithms • An important aspect of best in freeing the millions in working capital that have been successfully deployed class IO programmes is mapping that have been trapped in excess stock in the field for more than a decade the locations, causes & costs of and carrying costs, which is one half of to accurately model inventory flows buffer stocks across all stages of the through the interdependent supply chain, thereby creating stages & locations of a supply a comprehensive view that can chain and analyse historical be shared by all stakeholders, behaviour under all conditions. regardless of function, The model is then used to department or geography. TODAY create an optimal configuration • IO tools recommend PHASE 1 of inventory buffers and modifications to buffers of PHASE 2 locations adequate to handle various types of inventory any degree of demand and – safety stock, pipeline stock, supply uncertainty, seasonality, etc. – through improved polices etc., while achieving desired and inventory targets. By PHASE 3 service levels for minimum implementing these changes cost. as a part of the normal supply 90% 99.8% From a chief financial chain management process, Service Level officer (CFO)’s perspective, Figure 1: The Efﬁciency Frontier service levels can be met. this amounts to analysis-based • CFOs must also understand the IO equation. expert guidance regarding how much that there is indeed a gap The other half involves the and where exactly inventory should in business perspective, key natural trade-off between service exist in the supply chain. In addition to performance indicators (KPIs) and level and inventory cost. The identifying the causes and types of excess even communication styles between trade-off relationship forms a curve that stock being held at various locations, supply chain practitioners and is often called the ‘efficiency frontier’. IO typically recommends specific members of the senior staff. The curve shows that, for any status strategies for postponing inventory Armed with a deeper understanding quo, it will always cost more to achieve at earlier stages of manufacturing & of the nature and benefits of IO, a higher service levels. But phased IO distribution processes. Postponement CFO is better prepared to lead the initiatives can change the status quo, can take two forms: organisation in a transformative IO thus creating a series of new curves • Pooling finished goods inventory to initiative. that deliver any desired service level at meet aggregated customer demand less cost than the former state allowed streams with less waste (i.e., lower Courtesy: Logility Voyager Solutions
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DUTY DRAWBACK SCHEME POLICIES & REGULATIONS
ARE WE READY FOR THE
The Finance Ministry had recently announced the broad contours of the new Duty Drawback Scheme that will come into effect from October 1, 2011. While the exact item wise rates will be notiﬁed soon, the fact is that India Inc. will have to live with lower drawback rates. THE government recently announced new rates for duty drawback or tax refunds on 4,000 export items for the current fiscal. This implies that exporters will now get a drawback on 4,000 items including those which are presently covered under the Duty Entitlement Passbook (DEPB) Scheme. While notifying the All Industry Rates of Duty Drawback for 2011-12, the Revenue Department said, “Most of the items, which are already covered under the duty drawback schedule, will suffer a minor reduction in the existing drawback rates.” The reduction is mainly on account of the reduction in basic Customs Duty on crude petroleum as well as a reduction in Central Excise Duty on diesel, it added. The new duty drawback rates will come into effect from October 1. The DEPB Scheme, which
is popular among exporters and covers about 1,100 items, expires on September 30. The benefits to exporters of these items under the Duty Drawback Scheme are lower by 1-3 per cent in comparison to the DEPB Scheme. However, while incorporating these DEPB items in the duty drawback schedule, care has been taken to classify them appropriately. According to industry sources, the reduction in refund rates amounts to withdrawal of the stimulus package given in 2008-09 after the global financial crisis. The government had
spent `8,700 crore last year on DEPB refunds on various items in sectors like engineering, chemical, pharma, textile and marine products. Though exports have shown a remarkable performance, growing by 54.2 per cent between April-August 2011 to US$134.5 billion, there are concerns that the momentum may not be sustained in the wake of increasing economic problems in the US and Europe.
SLATED IMPACT Saumitra Chaudhuri, Author, The Drawback Rates Report, said, “New
UNDER THE DUTY ENTITLEMENT PASS BOOK (DEPB) SCHEME, THE GOVERNMENT USED TO REIMBURSE EXPORTERS FOR `80 BILLION OF TAXES PAID ON IMPORTED SUPPLIES.
OCTOBER 2011 • SMART LOGISTICS • 49
Duty drawback scheme, continued
drawback rates could be worked out next year. We have a transitory rate, which is basically the old DEPB rate minus the ad hoc element capped at 5.5 per cent. In many cases, it is less than 5.5 per cent, in some cases, at 5.5 per cent for most products.” “For fixing the duty drawback rates, we require the exporters or the export promotion councils to coordinate with their members and provide detailed data. Those who have been using the Duty Drawback Scheme are familiar with the process and are able to respond to it in time, but those using DEPB found it difficult to do so as they had not done it in the past. Therefore, it took more time to figure out what we wanted. That is one of the reasons why it took so long to come up with rates for DEPB users,” he adds. Talking about the impact on the engineering sector, Chaudhari adds, “In the engineering sector, some would consider a bigger reduction, while some would consider a small reduction. It depends to a great extent on what the ad hoc increase allowed for them was and what was the starting rate. So, in some cases, it will be a three per cent decline, while in some cases, it may be a two per cent decline.” Meanwhile, unveiling the new scheme, Finance Secretary RS Gujral made it clear that the Duty Drawback Scheme had taken into consideration the concerns of India Inc. “For passenger cars, there were a couple of companies, which had taken a brand rate. But now, that brand rate has been converted to the all industry rate. For the other auto sector, be it the two wheelers, the four wheelers or the commercial vehicles, the calculation was done based upon the DEPB rate and DEPB rate minus the ad hoc element. Since that was working out as less than 5.5 per cent, we have retained it. Simultaneously for the auto sector, the value caps have been removed, which would, in turn, help them significantly,” Gujral elaborates. Talking of minor reduction in
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duty, he says, “For those migrating from the DEPB Scheme to the Duty Drawback Scheme, there is a slight reduction because one element was the ad hoc element; and that had to be discontinued. The second element was that if despite that, based upon the current Customs Duty, the DEPB rate would have been significantly lower, then we would have tried to cushion the impact and say that we will stick it to 5.5 per cent.”
INDUSTRY VOICES Sunil Khandelwal, CFO, Alok Industries, opines, “We are yet to get product wise details. Prima facie, there is a marginal reduction in the rates, but that should not be of much significance. This is because, when we deal in international markets, our customers factor in the incentives received. The very fact that incentives have changed will be factored into our
• All items, which are currently covered under the DEPB Scheme, will migrate or transit to the Duty Drawback Scheme. There is a duty drawback scheme that is currently prevailing, but the rates of that new drawback scheme have been altered. New items have been added on. As a consequence, the industry gets some relief on some rates that they have to incur. That list will now be 4,000 items long. • The rates will effectively be from 3-5.5 per cent. But for certain items, including textiles and some other items, it will be even as high as 10 per cent. • The big take away for India Inc. is that there will be minor reduction in the duty drawback rates for most items. But that reduction has been capped at 10 per cent of the existing duty drawback rate.
costing accordingly. We should be able to pass it on to the buyers.” Mahantesh Sabarad, Senior Analyst, Fortune Equity Brokers, says, “The new DEPB policy announcement is going to impact the two wheelers segment since this segment was utilising DEPB as far as exports incentives were concerned. Earlier, the DEPB rate was nine per cent and now, it will be 5.5 per cent,
The government had spent `8,700 crore last year on DEPB refunds on various items in sectors like engineering, chemical, pharma, textile and marine products. Exports have shown a remarkable performance, growing by 54.2 per cent between April-August 2011 to US$134.5 billion. which means that there will be earnings or profitability downgrade on stocks like Bajaj Auto and TVS Motors. However, it is important to see how the companies will react to this new rate. They have an opportunity to raise their export realisations by raising their prices, which would be a compensatory effect of that. Nevertheless, there will be a slight fall in their profitability on a year-on-year basis.”
THE TRANSITION PHASE The Finance Ministry has assured that while there will be a reduction in the entire list of items that are covered, that will be reviewed later and if there are changes that are required to be made, the government will be open to addressing the concerns of any sector. The new drawback rates could be worked out next year. Not only do they have to provide the calculations, they actually have to provide supporting data in the form of shipping bills & invoices and so on. They are simply not prepared for it this time around. Next time, they will probably be better prepared. Courtesy: www.moneycontrol.com
INDIAN WAREHOUSING MARKET STRATEGY
Image Courtesy: Arshiya FTWZ
SHARPENING SKILLS TO ENHANCE COMPETITIVENESS
The growth of sectors such as retail, automotive, manufacturing, etc., in India is expected to give rise to more integrated supply chains requiring better services, processes and storage facilities. Increasingly, warehouses are being used to serve several important functions, beyond mere storage of products, which requires warehouse service providers to expand their scope to include more sophisticated services. Measures such as skill development can be effective in increasing the competitiveness of Indian warehousing players. CHANGING business dynamics and the entry of global 3PLs have led to the remodelling of the supply chain including logistics and warehousing services in India. From a mere combination of transportation and storage services, logistics is fast emerging as a strategic function that involves end-to-end value-added solutions that improve efficiencies in the supply chain. Increasingly, warehouses are being used to serve several important functions beyond mere storage of products. This has made it imperative for warehousing players to overcome the challenges they face and to improve & sustain their competitiveness. Various measures such as skill development, policy initiatives and
government measures, IT adoption and increased investments in the sector can be effective in increasing the competitiveness of the warehousing players. There are several functions that warehouses perform today, apart from their general functions of being physical storage points, such as shipment consolidation, break bulk operations, processing/postponement,
By 2015, India will need approximately 35,000-40,000 warehouse managers. But there is no training institute, which can train people for managerial skills or cater to the needs of mid-level managers in the Indian warehousing sector.
assortments, stockpiling, product mixing, value addition, distribution, customer service, billing or invoicing and at times even order-taking, etc. Besides, several other core and noncore activities carried out by warehouse service providers include inventory management, proper handling practices including usage of warehousing equipment like stackers, pallet trucks, documentation management, communication management, etc. In the highly agile but complex environment of just-in-time and Kanban inventory management, the unpredictability of warehousing performance is unacceptable to customers. Any failure in the supply chain ultimately results in heavy losses to the manufacturer or sellers. However, warehousing has yet to accept the accountability and impact of non-performance at the warehousing end on the manufacturing side. The manufacturers and sellers are demanding clear service level agreements with the various intermediaries in the supply chain. The warehousing service level performance and its competitiveness will be highly dependent on the internal targets of their performance indicators. It will be important for warehousing players to measure and monitor their key performance indicators (KPIs) to ensure quality of service.
SKILL AND TALENT DEVELOPMENT Presently, the warehousing sector in India is in a highly fragmented state and comprises of numerous competitors ranging from small truckers to nonregistered business entities, which only offer some space for the storage of goods. A majority of the players in this sector include small entrepreneurs, who offer warehouses as a storage facility for a single or multiple companies in
OCTOBER 2011 â€˘ SMART LOGISTICS â€˘ 51
Indian warehousing market, continued
India. The emergence of the logistics industry in India and the compulsion to move away from traditional working methods are great opportunities for players to apply out-of-the-box thinking. However, this opportunity is plagued by many bottlenecks and one of the most critical is skill and talent deficiency. There is a huge gap in the knowledge and skill set requirement visà-vis availability. There are, in fact, very few professionals in the warehousing field in India and most of the activities – strategic or operational – are done by generalists. Issues regarding skill and talent exist in varying degrees in the warehousing sector in India. The core issues leading to the existing skill gaps in the sector include: • Rapidly evolving warehouse management processes and operational skill requirements • Absence of structured skill development initiatives • Limited experienced professionals • Poor facilities for on-the-job training • Lack of attraction for new recruits arising from inadequate working conditions • Relatively less attractive incentives and benefits. Going forward, due to the entry of international retailers and many global manufacturing players in India, combined with the changes in the tax regime, this sector is likely to experience consolidation and hence, large-scale warehouses. These developments will drive the need for value-added services associated with warehousing that require specialised skills like picking and packing, inventory management, stockpiling, shipment consolidation, break bulk operations, processing/ postponement, assortments, proper handling practices, including usage of warehousing equipment like stackers, pallet trucks, etc. and the ability to understand and use information & communication technology. The growth in the number of private container train operators
52 • SMART LOGISTICS • OCTOBER 2011
(PCTOs) in India has given a boost to the development of container freight stations (CFSs) and inland container depots (ICDs), which require specific operational skills of loading/ unloading, stuffing/destuffing, etc. at the operational level. Similarly, cold chains demand technically competent manpower capable of understanding the temperature and humidity control requirements & skill for operating sophisticated controlled atmosphere equipment. By 2015, India will need approximately 35,000-40,000 warehouse managers. But there is no training institute, which can train people for managerial skills or cater to the needs of mid-level managers in the Indian warehousing sector. The operational needs of the industry as Qualification and number of years of experience
Graduates with 5-7 years of industry experience
Diploma holders/ graduates with 4-5 years of experience
10th/12th pass with/ without experience
Figure 1: A snapshot of the proﬁle of people presently employed in the warehouse sector in India
far as skilled labour is concerned, will undergo a tremendous change because of India’s central position in the world economy. It will also raise training needs because of technological changes as well as evolving customer expectations. Several business schools offer executive development programmes, which impart theoretical know-how, but largely lack practical skills.
NEED FOR COLLABORATIVE APPROACH The growing warehousing sector has created huge opportunities for direct and indirect employment. It is up to the government, policymakers and private players to tap this opportunity and accelerate the growth rate of the mushrooming logistics industry. Various initiatives will have to be
undertaken to improve the skill level and develop talent in the warehousing sector in India. This will necessarily require a collaborative approach by various industry stakeholders. Leaders in the warehousing sector in India will need to pull together their resources to push for the establishment of a structured training infrastructure and provide incentives to employees for learning and development-related initiatives. The LSPs can also partner with management institutes and other organisations that can cater to operational as well as strategic knowhow of the middle and top management of such firms. Some stakeholders have taken actions to reduce skill gaps. The education company, Everonn Education of Chennai and Future Human Development (FDHL) of the Future Group have entered into a 50:50 joint venture (JV) to provide relevant training in supply chain management. The sustainable growth and development of manpower requires collaborative effort and commitment from industry leaders as well as the government. The government will need to support warehousing players in their initiatives and offer a more conducive environment by providing tax havens, funding facilities, upgrading infrastructure and accelerating the consolidation of the industry. The public private partnership (PPP) model can also be developed for building dedicated training institutes for the logistics industry. The National Skill Development Corporation (NSDC) can play a pivotal role in promoting skill development and organising vocational training for the workforce. With known success stories in various sectors, NSDC can foster private partnerships to bridge the skill and talent deficit in the warehousing sector. Courtesy: The article is an excerpt from the whitepaper, ‘Building Warehousing Competitiveness’ by PwC.
LIFT TRUCKS BEST PRACTICES TIPS & TRICKS
WAYS TO GET THE BASICS RIGHT Before you purchase or procure lift trucks to carry out operations on your premises, it is essential for you to be well versed with what you are speciﬁcally looking for in your material handling equipment. Here are some tips that will help you purchase a lift truck that best suits your needs... SHRADHA MOHANTY DEVELOPED sometime in the 1920s, the lift truck has today become an indispensable vehicle in manufacturing and warehousing operations. The market has a variety of lift trucks with different sets of configurations and options to offer. But before choosing a lift truck specific for a business, one needs to keep the following tips in mind: Before procurement, it is necessary to know the vertical lift height of the storage system or space where these machines will be used. One should also keep in mind the maximum fork height needed to stack or rack the loads. This would determine the capacity of the vehicle needed. Other than capacity, it is important to know the lift height as operations beyond 6 metre in height would require a height selector or height indicator. For operations beyond 10 metre in height, a camera system, like a mast mounted application, needs to be installed. Designed for indoors as well as smooth solid surfaces, cushion tyres are solid tyres with no tread pattern. Pneumatic tyres, on the other hand, require air and are designed for outdoors and uneven, loose or rugged surfaces. Such lift trucks also have higher ground clearance, which raises the centre of gravity. This means that it subsequently reduces its slated lift capacity. It is important to know for what kinds of operation the lift trucks are being procured. For instance, those engaged in heavy duty operations, would require lift trucks to be utilised 24X7 as compared to those using lift trucks for medium or low-intensive operations. Single, double, triple and quad are the types of masts available. This reflects the number of sections or stages the mast has. The lift height usually dictates the type of mast procured. It is also important to keep the height of entry and exit gates in mind before setting out to purchase the masts. Usually, performance tests are not required to be performed as manufacturers are already well versed with this particular product segment. Companies usually make some comparable mistakes in case of the above mentioned nitty-gritties. email@example.com With inputs from Chandrashekar R, GM, Maini Material Movement OCTOBER 2011 • SMART LOGISTICS • 53
This section gives information about products, equipment and services available in the market. If you know what you want. . . refer to Product Index on Page 66 to find it quickly
von Cranes oﬀers rack and pinion type elevators under technical collaboration with Ace Machinery UK. These elevators are specially designed to suit Indian conditions (clams the company). Special motors with high starting torque and rear-mounted brakes are provided. Helical gearboxes with high transmission eﬃciency are also provided. Support and reaction wheels are polyurethane coated for soft and noiseless ride. Centrifugally acting over speed governor is provided. All controls and limit switches provided are of standard companies only. The range mainly comprise of compact and standard range. Compact range is up to 750 kgs (8 passengers) and is mostly used in chimneys or towers. These lifts go normally up to 300 metres.
NetRack Enclosures Pvt Ltd, Bengaluru Karnataka. Tel: 080-3071 9172, Fax: 080-3071 9190 Email: firstname.lastname@example.org, Website: www.netrackindia.com An ISO 9001:2008 Certified Company
David Round, Inc - Ohio - USA Tel: +1-330-6561600, Fax: +1-330-6561601 Email: email@example.com, Website: www.davidround.com
54 • SMART LOGISTICS • OCTOBER 2011
ddycranes Engineers oﬀers double-girder EOT cranes that are manufactured keeping in mind the basic objectives, such as high quality, minimum maintenance and aesthetic appearance. These EOT cranes are classiﬁed as ITY U A Lavailable class I, II, III and IV. They are in capacities ranging from 1 ton to 100 tons. e Ostructural assembly basically A PTh PR VED comprises of two bridges girder ﬁ xed on two end carriages carried on forged steel wheels. Bridge girders are fabricated from high quality steel plates forming a rectangular box section. Internal surface is adequately sealed from the atmosphere by welding, thus preventing internal corrosion. The box type of girder construction has the following advantage over lattice and other types of construction: more torsion rigidity, streamlined & aesthetically pleasing appearance, ease of maintenance & cleaning, limited chances of damage to structure during transportation, etc. End carriages are fabricated from MS plates and provided with necessary diaphragm members. C
avid Round oﬀers stainless steel chain hoists (cleanroom hoists) that are available from 304 and 316 series stainless steel. These clean room hoist products are well-suited for lifting applications in wash-down, environmentally-controlled and corrosive processing environments. They are available in standard capacities up to 2 MT and feature sealed gearing, food grade lubrication and stainless steel hooks, chain, frames and trolleys. The hoists are designed for applications, which require USDA approved or food grade hoists. Additionally, these clean room hoist products are ideal for electronic clean rooms, biotechnology and pharmaceutical applications that require the cleanliness of stainless steel chain hoist construction. Unlike many products sold as cleanroom hoists, the stainless steel chain hoist products are not painted. Paint, and even FDA approved epoxies are not tolerated in many cleanroom environments, particularly pharmaceutical or electronics manufacturing. The clean room products always have housings of either 304 or 316 highly polished stainless steel.
DOUBLE-GIRDER EOT CRANES
Avon Cranes Pvt Ltd, Gurgaon, Haryana. Tel: 0124-2341026, Fax: 0124-2341197, Mob: 09810068561 Email: firstname.lastname@example.org, Website: www.avonindia.com
etRack Enclosures oﬀers FM and NRS-1 series general Y U A L I Tnetworking, electronics ﬂoor-mounted racks for small AV, telecom & lab application. Th ese A P P R O Vracks E D are manufactured out of steel sheet punched, formed, welded and powder coated with highest quality standards under stringent ISO 9001-2008 manufacturing & quality management system to ensure highest quality product. The standard for the racks conﬁ guration is welded frame integrated with side panel and vented top cover with fan mounting provision. These racks are associated with front glass door with lock & key and back metal door with lock & key and are free standing on ﬂoor with 4 nos caster wheels, 2 nos with brakes and 2 nos without brakes available from 6 RU to 42 RU variants with 600 & 800 depth conﬁguration. Small sized racks from 6 RU to 15 RU can be table-mounted with leveler legs/bush.
Eddycranes Engineers Pvt Ltd, Mumbai, Maharashtra. Tel: 022-2352 1798, Fax: 022-2352 1886 Email: email@example.com, Website: www.eddycranes.com An ISO 9001:2008 Certified Company
ivakaran Storage & Handling Systems manufactures and oﬀers storage solutions to customers through maximum storage capacity with optimal ﬂoor utilisation. Heavy-duty, medium and light-duty racks required for various industries and warehouse in India and abroad are manufactured. The product range includes: heavy-duty pallet racking systems, mobile & compact racking systems, slotted angle & multi-tier racks, mezzanine ﬂoors, display racks, light-duty racks, cable trays, bins, etc.
Divakaran Storage & Handling Systems Pvt Ltd, Umbergaon, Gujarat. Tel: 0260-2562103, Fax: 0260-2562189 Email: firstname.lastname@example.org
ilco Storage Systems manufactures and oﬀers plastic pallets. MNCs and corporate sector leading industries/ business houses, warehouses, logistic companies, exporters, retail super markets, publishers and pharma companies have taken space management and planned storage in a serious way. Planned storage helps in proper inventory control, maximum utilisation of space, saving of manpower. Instead of four godowns/stores one can have one godown with Pilco planned storage system and can avoid the cost of maintenance expenses of three godowns and ultimately increase the proﬁtability of the company. Pilco has introduced plastic pallets for all kinds of industries for material handling and storage in warehouses and racks. Special pallets for food industries for storage of ﬂour, rice, sugar, pulses, have been introduced. Exports cargo pallets are also available for one time use. Pilco Storage Systems Pvt Ltd, New Delhi. Tel: 011-2769 2602, Fax: 011-2769 2603, Mob: 09810074598 Email: email@example.com, Website: www.pilcoonline.com
HYDRAULIC PALLET STACKERS
andy hydraulic hand power lift pallet stackers manufactured by Technical Enterprises are introduced to meet the growing demand for low-priced stackers that oﬀer high quality, reliability and ease-of-operation, particularly, for lifting the load IM high or more. These pallet stackers can be tailor-made to suit customer’s special
requirements for height up to 2 to 3 metres. They can be used for loading/unloading the pallets and stacking the same in godown at diﬀerent levels in two or three layers. In hand-operated version lifting eﬀort has been kept to the minimum. Conveniently positioned foot pedal/wheel valve allows the operator to control the lowering speed with a stepless movement, hydraulically cushioned. The ram and plunger are ground and hard chrome-plated to avoid friction and rusting, while working out-doors. Speed and the eﬃciency with which the stackers enable the operator to lift and carry loads in works, make them ideal for process and engineering industries, as well as factories and warehouses. Technical Enterprises, Meerut, Uttar Pradesh. Tel: 0121-2440660, Fax: 0121-2440666 Email: firstname.lastname@example.org, Website: www.handyonnet.com
HYDRAULIC PALLET TRUCKS
andi-2 hydraulic pallet trucks oﬀered by Expert Equipments are reliable, compact and sturdy with lifting capacity of 1000, 2000 and 3000 kegs. The main body of these pallet trucks is designed and manufactured for maximum load bearing capacity, yet minimum deadweight from cold rolled/formed sections. These pallet trucks are available with cartridge type valves and hand lever controls. The full hydraulic system is with stationary seals avoiding conventional synthetic rubber moving seals. Wheels are ﬁtted with heavy-duty ball bearings. All moving components are precisely manufactured for maximum dust protection and ﬁtted with bearings and grease nipples, 250 degrees steering facility to make high maneuverable in conﬁ ned areas. Expert Equipments Pvt Ltd , Coimbatore, Tamil Nadu. Tel: 0422-2400190, Fax: 0422-2400517 Email: email@example.com, Website: www.expertequipments.com
HYDRAULIC PALLET TRUCKS
gromec manufactures and oﬀers hydraulic (big wheel) pallet trucks (model AGBW-300) that are specially designed for high pallet gaps and to move easily by pull-push on rough ﬂoors in the plant. These hydraulic pallet trucks can lift and transport the pallet of maximum 200 mm pallet gap. The pallet trucks are recommended where the ﬂoors are not in good condition. Their structure is sturdier than standard model. They are also quite easy to pull and push because of the large diameter rear wheels.
OCTOBER 2011 • SMART LOGISTICS • 55
Product update, continued
ELECTRICAL & MANUAL WINCHES
arco manufactures and oﬀers an extensive range of heavy-duty winches up to 50 tons capacity to suit diﬀerent site conditions and uses. These winches can perform hauling, lifting, well sinking and wagon shunting duties. All design are as per relevant IS standard and also as per IPSS, RSN or TISCO standards. The winches incorporate a high torque crane duty motor, 40 per cent CDF S4 duty coupled with spur-helical or worm reduction gearbox. Gearbox rotates the rope drum, which is supported on pedestals. An automatic electromagnetic or hydraulic thrustor brake is provided between the motor and the gearbox for holding the load. The winches are mounted on steel fabricated base frame and are controlled by push buttons, drum or master controllers. Direct drive is a dominant feature of the winches totally eliminating chains and sprockets and substantially increasing eﬃciency and reducing operating costs. Aarco, Kolkata, West Bengal. Tel: 033-237 9736, Fax: 033-2253431 Email: firstname.lastname@example.org
AUTOMATED STORAGE RETRIEVAL SYSTEMS
pace Magnum Equipments oﬀers automated vertical storage and retrieval systems (Stomat), for making storage neat, clean and eﬃcient. It is a vertical carousel wherein number of carriers are closely mounted on the twin endless chain moved by geared brake motor. The mechanised shelves rotate in the vertical plane in either direction. An electronic control with keypad to call numbered carrier and bin/ compartment makes the retrieval extremely quick. The control can be equipped with a memory to store information on the location of code numbered components. It can also be coupled to a central computer system for perfect inventory control. Stomat can be used almost anywhere, where storage is an important consideration, in engineering, electrical and electronic industries, and can also be used directly on shopﬂoor as intermediate storage as a standalone sophisticated storage and retrieval system. Space Magnum Equipments , Pune, Maharashtra. Tel: 020-2435 5895, Fax: 020-2435 8082 Email: email@example.com
56 • SMART LOGISTICS • OCTOBER 2011
HYDRAULIC PALLET TRUCKS
ay Equipment & Systems manufactures and oﬀers hydraulic pallet trucks (model HPT-25) that have lifting capacity of UALITY 2500 kgs. These pallet trucks are economical way for one person to moveAheavy pallet PPRO V E Dloads without the use of a fork lifts/ stackers. The ergonomic design has RO been tested for providing years of reliable usage. The pallet trucks include two articulating steering wheels & four front load wheels. Reinforced formed steel forks provide twice the strength of standard single formed forks. These hydraulic pallet trucks are equipped with internally mounted steel adjustable push rods. The spring loaded handle automatically returns to vertical position when not in use. Chrome plated hydraulic pump piston provides long seal life. L
Agromec, Meerut, Uttar Pradesh. Tel: 0121-2440660, Fax: 0121-2440770, Mob: 09837059058 Email: firstname.lastname@example.org, Website: www.agromecindia.net
Jay Equipment & Systems Pvt Ltd, Mumbai, Maharashtra. Tel: 022-2676 3552, Fax: 022-2676 3895, Mob: 09225141811 Email: email@example.com, Website: www.jayequipment.com An ISO 9001:2008 Certified Company
PALLET FLOW CONVEYORS
onmat Systems oﬀers pallet ﬂow conveyors. Flow storage consists of two elements, ie, a static rack structure and dynamic ﬂow rails. The ﬂow rails are a track/roller system set at a decline along the length of the rack. Flow rails allow loads to move by gravity from the loading end to the unloading end. Each ﬂow lane includes selfenergized speed controllers (brakes) to gently control the speed of movement within the ﬂow lanes. As a load is removed, the loads behind it move forward to the unloading position. The ﬂow system depth, height and width are limited only by the size of your facility and the capabilities of your material handling equipment. Flow storage solutions are used in situations where storage density and inventory rotation are priorities. The picking and replenishment aisles are separate. Gravity ﬂow conveying system along with transfer trolleys can also be provided. Conmat Systems Pvt Ltd, Vadodara, Gujarat. Tel: 0265-2647276, Fax: 0265-2630763, Mob: 09898870278 Email: firstname.lastname@example.org, Website: www.conmatindia.com
riends Engineering Works manufactures heavy-duty Derrick cranes that facilitate the handling of marble blocks at the quarry. The rational structure, ie, boom, central mast and rafters of these cranes are made out of heavyduty structural steel framework, duly stress-relieved. The base of
central mast is ﬁ xed to the hoist unit, which in turn rotates on specially designed thrust bearing, anchored to the central foot by means of bolts, grouted in concrete foundation or rock. The hoist unit comprises of special crane duty motor, connected to variable speed reducers and helical gearbox, duly coupled to a grooved steel drum. Hydrothruster brakes are used to control the smooth lifting of weight. The hoist unit rotates on specially designed thrust bearing by means of multiple stepdown gears, built into the hoist foot. The hook block is equipped with a forged steel forked revolving hook. Electric operations are controlled with push-button control units, independent from the position of hoist unit. Friends Engineering Works, Udaipur 313 001. Tel: 0294-2492200, Fax: 0294-2492201, Mob: 09829042424 Email: email@example.com, Website: www.friendseng.com
lmech Engineers manufactures and oﬀers EOT cranes that conform to class I, II, III and class IV heavy-duty applications as per IS:807-1976, IS:3177-1977, IS:41371967 wherever applicable. These cranes are manufactured from 0.5 tons to 100 tons capacity in single and double girder design. They oﬀer technologically advanced features, such as box-type girders for torsional rigidity and strength; tapered plate design for joining the girders to the end carriage to ensure smooth ﬂow of stresses; duly hardened forged wheels running on spherical roller bearings in L-type housing; geared couplings; high torque; crane duty; gear boxes, etc. The cranes are supplied with safety features consisting of brakes and limit switches in all motions, overload relays and single-phase preventers for all motors in control panel, etc. The EOT cranes are also available with pendent push-button controllers for operation from ﬂoor, or master controllers for operation from the driver’s cabin or with radio remote control arrangement.
Elmech Engineers, Mumbai 400 034. Tel: 022-2352 1798, Fax: 022-2352 1886 Email: firstname.lastname@example.org, Website: www.elmechengineers.com
and maintain with low headroom, which gives maximum lift height. Totally enclosed oil bath lubricated gearbox ensure smooth and trouble-free operation. The 100 per cent fail-safe instant heavyduty automatic electromatic brakes are provided for easy operation. Hoist cranes, and cagelifts are also available with ﬂ ameproof electricals suitable for hazardous areas in chemical factories. Jayco Hoist and Cranes Mfg Co, Dist Thane 401 210. Tel: 0250-2390252, Fax: 0250-2390252, Mob: 09820157818 Email: email@example.com
M Engineers manufacture a unique assortment of jib cranes meant to serve many industrial purposes. These cranes can be used for material and machinery loading, small assembly jobs, localised ﬁttings, etc. They are designed in such a manner that they use minimum ﬂoor area and are lighter in weight. Hence these cranes reduce worker exhaustion and increase output of manpower. Technical speciﬁcations include: 1-ton capacity pillar mounted, CL-II/3177, height of lift 5 metres, angle of rotation 360-degrees, etc. V M Engineers, Dist Thane 421 506. Tel: 0251-2620265, Fax: 0251-2620266, Mob: 09702002725 Email: firstname.lastname@example.org
iking Engineers oﬀers jib cranes are built to consistently high speciﬁcations conforming to IS:807 and 3177. The jib arm is fabricated from heavy section I-beam and triangular truss construction for reducing deﬂection to acceptable limits. Jib post is held in bearing housing brackets at either end, brackets in turn anchored with main pillar with turned barrel bolts to ensure perfect alignment and ease assembly operations. Technical speciﬁcations include: lifting capacity of 250 kgs to 5000 kgs, rotation up to 360 degrees, boom radius up to 6 metres, etc. Hiking Engineers, Ahmedabad 382 443. Tel: 079-2573 3260, Fax: 079-2573 2091, Mob: 09427524899 Email: email@example.com, Website: www.hikingcrane.com
ELECTRIC WIRE ROPE HOISTS
ayco Hoists & Cranes Mfg Co a wide range of wire rope electric hoists upto 50 ton capacity and lifting height of up to 100 metres. These hoists are compact in design and built for continuous trouble-free operation. The hoists are easy-to-install
The information published in this section is as per the details furnished by the respective manufacturer/distributor. In any case, it does not represent the views of
OCTOBER 2011 • SMART LOGISTICS • 57
EVENT LIST TRADE SHOW TRACKER
17-19 NOVEMBER 2011
18 NOVEMBER 2011
28-29 NOVEMBER 2011
INDIA WAREHOUSING & LOGISTICS SHOW 2011 Focus: Warehousing & SCM Where: University Grounds, Ahmedabad Tel: 120-4273921 Web: www.manchcommunications.com
FOOD RETAIL & SUPPLY CHAIN AND AGRO LOGISTICS - SUMMIT & AWARDS ‘11 Focus: Food retail & agro SCM Where: Hotel Novotel, Mumbai Tel: 9819519284 E-mail: firstname.lastname@example.org
SUPPLY CHAIN MANAGEMENT IN OIL & GAS Focus: Oil & Gas Where: Holiday Inn Bloomsbury, London Tel: +44(0)20 7827 6156 E-mail: email@example.com Web: http://www.smi-online.co.uk
6-9 DECEMBER 2011
15-16 DECEMBER 2011
1-2 DECEMBER 2011
CeMAT INDIA 2011 Focus: Logistics, Plant & Machinery Where: Bangalore International Exhibition Centre, Bengaluru Tel No: +91 22 40050681/82 Email: firstname.lastname@example.org Web: www.cemat-india.com
COLD CHAIN SUMMIT 2011 Focus: Cold chain logistics Where: To be announced Tel: 011 24682230 E-mail: email@example.com
LOGIPHARMA ASIA 2011 Focus: Cold chain strategies Where: The Hilton, Singapore Tel No: +44 (0)20 7368 9400 Email: firstname.lastname@example.org Web: http://www.wbr.co.uk/
10-11 JANUARY 2012
27-29 JANUARY 2012
16-18 JANUARY 2012
SUPPLY CHAIN AND LOGISTICS SUMMIT ASIA 2012 Focus: Logistics & SCM Where: To be announced Tel: +44 (0)20 7202 7690 E-mail: email@example.com Web: http://www.sclasiasummit.com
COMPREHENSIVE PACKAGING EXPO (COMPACK) Focus: Logistics & Packaging Where: Palace Grounds, Bengaluru Tel No: 91-44-28604087/28603086 Email: firstname.lastname@example.org Web: www.plast-world.com
JUMP START 2012 Focus: Transportation, railroad, trucking Where: Renaissance Concourse Hotel, Atlanta, Georgia Tel: 800.845.8090 x 5802 E-mail: email@example.com Web: http://www.smc3.com/smc3/ jumpstart2012/index.htm
58 • SMART LOGISTICS • OCTOBER 2011
Vol. 01 | Issue 01 | APRIL 2010
Business Categories (Please tick one or more) FMCG Retail Pharma Automobile Machinery Logistics Textile Agro Product Bank Technology Electronics Engineering Chemical Construction Other (Please specify) _____________________________________ Business CDepartment Functional (Please specify at least one) Production Logistics Marketing IT Finance Sales Administration Tools & Equipments Purchase & Material Handling Other (Please specify)_______________________________________________________________________ Number of employees in firm/company ______________________Number of offices across India ______________ If Student (Please specify at least one)
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1-3 FEBRUARY 2012
6-7 FEBRUARY 2012
9-10 FEBRUARY 2012
AIR CARGO INDIA 2012 Focus: Logistics & air cargo market Where: Bombay Exhibition Centre, Mumbai Tel No: (91+22) 2757 0550/2757 5055 Email: email@example.com/aci@ stattimes.com Web: http://www.stattimes.com/aci2012
MILITARY LOGISTICS INDIA 2012 Focus: Defence supply chain Where: Manekshaw Centre, Delhi Cantonment, New Delhi Tel: +44 (0)1753 727011 Email: firstname.lastname@example.org
5TH INTERMODAL ASIA 2012 Focus: Container port and terminal operations Where: Intercontinental Melbourne The Rialto, Australia Tel: +60 87 426 022; Fax: +60 87 426 223 E-mail: email@example.com
14-18 MARCH 2012
13-15 MARCH 2012
29-30 MARCH 2012
INDIA AVIATION 2012 Focus: Aviation industry Where: Begumpet Airport, Hyderabad TTel: 011 32910417 Fax: 011 23359734 E-mail: firstname.lastname@example.org
TOC CONTAINER SUPPLY CHAIN ASIA 2012 Focus: Shipping and container cargo Where: Hong Kong Convention and Exhibition Centre (HKCEC) TTel No: +852 2582 8888 Email: email@example.com Web: www.hkcec.com.hk www.tocevents-asia.com
6TH INDIAN OCEAN PORTS & LOGISTICS Focus: Ports & logistics Where: Le Meridien, Mauritius Tel: +60 87 426 022 Fax: +60 87 426 223 E-mail: firstname.lastname@example.org
12-14 APRIL 2012
26 - 28 APRIL 2012
26 - 27 APRIL 2012
AERODROME INDIA 2012 Focus: Airport infrastructure, operations, security & connectivity Where: Bombay Exhibition Centre (BEC), Mumbai Tel: 80-25547169 Fax: 80-25542258
INDIA MATERIAL HANDLING & LOGISTICS SHOW 2012 Focus: Material handling solutions Where: India Expo Centre, Greater Noida Tel No: 9999164925 Email: email@example.com Website: www.indiawarehousingshow.com
7TH SOUTHERN ASIA PORTS, LOGISTICS & SHIPPING 2012 Focus: Container ports and terminal operations Where: Cinnamon Grand Colombo, Sri Lanka Tel: +60 87 426 022 Fax: +60 87 426 223 E-mail: firstname.lastname@example.org
OCTOBER 2011 • SMART LOGISTICS • 61
EVENT REPORT WORKSHOP ON ‘FUTURE SUPPLY CHAIN STRATEGIES – THE WAY AHEAD’
OF COMMUNION & CONCRETE IDEAS The industry on the move took a break… only to cover the distance and difference of perspectives between logistics service providers and end users regarding the future needs and challenges in logistics functions across industries. While a lot of discrepancies cropped up between these two worlds during the Frost & Sullivan second annual strategy workshop in Goa, the well steered discussions and practical workshop managed to get the industry and its players back on track with one vision, one mission and one anthem. ARCHANA TIWARI-NAYUDU BUILDING trust and collaboration between logistics service providers (LSPs) and end users is the critical need of the hour. This was the guiding thought at Frost & Sullivan’s second annual strategy workshop for the logistics sector titled, ‘Future Supply Chain Strategies – The Way Ahead’, held at the Zuri White Sands Resort, Goa, from September 14-16, 2011. Progressing from last year’s
workshop, this year’s workshop explored the critical areas of focus for the logistics sector along with the essential next steps which would help key industries such as automotive (auto components), healthcare, retail & electronics, IT and telecom achieve ideal future supply chains. The workshop emphasised on the need for a combined effort from the LSPs and end users. The workshop, which commenced
with a presentation from Frost & Sullivan on ‘Frost & Sullivan’s Perspectives on Future Supply Chain Strategies’, provided strategic insights from Frost & Sullivan’s research studies and set the context. The session explored the mega trends impacting the logistics industry, key logistics challenges requiring collective efforts by LSPs and end users, and the critical aspects in building a roadmap for efficient and
The industry’s Movers & Shakers toiled and tossed some path breaking ideas and solutions during the workshop. Here’s presenting the pearls of wisdom by way of solutions to some critical problems! Group 1: MEGATRENDS • Globalisation Challenge: Increased wages and salaries Solutions: - Use automation to increase ‘total productivity’ and decrease ‘total cost’ • Post GST Challenge: How to take advantage? Solutions: - Outsource 3PL Gain the expertise and redefine your warehouses based on the ‘Hub & Spoke’ model - Issue of ‘governance’ Cost and value add, state and federal-based Service Tax structure. • Dedicated Freight Corridors (DFC) Challenge: How to take advantage? Solutions: - LSPs need to consider investing in modern infrastructure facilities near ports, if possible, on a toll basis. • Multimodal Challenge: There is a lack of seamless integration of air, sea, rail and road Solutions: - LSPs need to consider investment in other modes of transport, if required on a toll basis. • Green Logistics Challenge: How to protect our environment? Solutions: - Work on ‘carbon credits’ using ‘collaborative’ methods, perform last mile delivery using ‘electric vehicles’. 62 • SMART LOGISTICS • OCTOBER 2011
Group 2: AUTOMOTIVE • Macroeconomic factors Challenge: Inability to match the fluctuations in demand Solution: - Develop a robust forecasting model covering national and state level savings data, seasonal trends and per capita income. • Outsourcing Challenge – Having complete logistics solutions from LSPs Solution: - Achieve cost + relationship + synergy through collaboration with LSPs - Services needed from 4PL coordination, in-plant logistics, own fleet and external logistics. • Critical success factors – Roadmap for achieving 15 per cent CAGR by 2020 - Information visibility across the chain and a collaborative approach from all stakeholders to provide information in real-time through IT integration. • Infrastructure development to address delays in deliveries - Investment by the LSPs (for e.g. vehicles in good condition). • Talent retention - Collaboration with B-schools for generation of suitable talent - Better pay structures.
Group 3: IT / ELECTRONICS • Challenges - Fragile nature of product (high damage percentage) - Post sale and reverse logistics infrastructure and resources not being in place - Information system for supply chain in field (non-urban sectors) is poor - Large service providers either have no or have poor infrastructure in non-urban areas - Franchisee reliability and delivery predictability in terms of timing and safety is very poor. • Opportunities and Solutions - Incentivise non-damage and timely services - LSPs should study and understand the post-sale and reverse logistics needs of industry - LSPs should provide standardised solutions, especially for remote sector logistics - Web-enabled information sharing infrastructure development for common use by multiple LSPs and end users for reducing the burden on the franchisee - On the whole, the IT electronics industry and LSPs should collaborate for designing and implementing industry-specific solutions.
Eminent dignitaries on the dais
Breakthrough session in progress
sustainable supply chains for the future. This was followed by an interactive panel discussion comprising renowned executives from LSPs and end users to enlighten the logistics fraternity on the need and the way forward in collaborative logistics. Subsequent sessions had leading LSPs present their perspectives on the logistics scenario for key end user industries. Furthermore, two intense activity workshops spread over two days were conducted. These workshops comprised of multidisciplinary expert groups with each involving a specific end user industry, logistics decision makers, LSPs and thought leaders. Group 4: RETAIL • Challenges - Lack of cold chain facilities - Non-existent infrastructure of the wholesale markets that lead to large amount of wastage - Fragmented production that lead to fragmented chains - Traders dominate the chain and so there is no transparency in pricing at the primary producer’s end. • Solutions - Cold chain storage to be set-up on PPP model - Tax holiday for cold chain/processing industry - Invest in infrastructure development Setting up distribution centres (packing, grading, sorting and cold storages) - Developing linkages with primary producers - Investment in the procurement areas.
These teams worked together to ideate, evaluate and define the most important challenges, solutions and initiatives for ideal future supply chains of the given industries. Anand Rangachary, MD, Frost & Sullivan, South Asia, Middle East and North Africa, who moderated the workshop sessions, said, “The most important and underlying factor that was established from the deliberations in the workshop sessions was that both LSPs and end users need to develop mutual trust and collaborate in their efforts to address identified challenges & thus, enhance the performance of both the partners.” Top logistics executives from leading
end user companies such as Tata Motors, Toyota Kirloskar, Mahindra Navistar, Fenner India, FederalMogul, Pricol, Apollo Tyres, Acer India, Blue Star Electronics, AlcatelLucent, Xerox, Samsung, Novartis, Abbott Laboratories, Dr Reddy’s Laboratories, Alkem Laboratories, Himalaya Healthcare, B Braun, Hypercity Retail, Mahindra Retail, Café Coffee Day, ITC, Globus, etc. participated in the workshop. Leading participant organisations among LSPs included Safexpress, Allcargo, CHEP, TCI, Uniworld Logistics, etc. email@example.com
Group 5: PHARMACEUTICALS • Challenges: - Strict regulations of different state/national level organisations which control the appointment/removal of a distributor. - All the damaged/expiry/near expiry goods present in the market have to be taken back by the company. Reverse logistics is a challenge. - Distribution hubs are run by local clearing & forwarding agents (C&FAs) and not professional LSP/3PLs. - Difficult to maintain the temperature of the product across the supply chain - High pricing pressures leave low margins for spending on logistics - Raw material import is an issue because of poor infrastructure of customs, congestion at port, lack of visibility throughout the chain. • Solutions and take aways: For Pharma Industry: - Well defined SOPs - Detailed process maps and activity charts - Need to coordinate with channel partners and LSPs to develop a suitable reverse logistics SOP - Development of specialised skill sets in logistics among channel partners (C&FA, etc.) through Internal and External SC Academy. For Logistics Service Providers: - Modernisation of infrastructure to meet temperature-controlled logistics across supply chain - Training for drivers on the aspect of dealing with Pharma products - LSPs can collaborate among themselves to make scale and pass on cost benefits to end users - Provide visibility of the consignment across chain through IT upgradation.
Group 6: SKILLS SCARCITY • Challenges: - Lack of domain knowledge & lack of training on job - Ineffective HR policies • Solutions and take aways: - Collaborate with academic institutes for expanding talent pool relevant to supply chain domain - Develop internal training units and systematic training programmes to create fresh graduates from institutes to meet an organisation’s skill requirements.
OCTOBER 2011 • SMART LOGISTICS • 63
EVENT REPORT AUTO SUPPLY CHAIN FORUM
AN ATTEMPT TO BECOME AGILE & RESPONSIVE Having witnessed external shocks such as the Japan earthquake and the fuel price hike, the Indian automotive industry has been able to sustain its growth momentum. The credit goes to a strong supply chain that has been able to withstand adversities and deliver the desired expectations. While the growth has been steady, a need was felt to further strengthen the supply chain links not only between manufacturers and users, but also between manufacturers & suppliers… To address the impending issues among the industry was the Auto Supply Chain Forum. Held on September 22, 2011, in Mumbai, with Smart Logistics as its media partner, the event saw the meeting of minds to develop seamless supply chain infrastructure in the country. PRERNA SHARMA Excellence’ wherein the panelists shared said that as an OEM, companies need THE Indian automotive industry is their views on the key to become agile. to take up the responsibility of planning one of the fastest growing industries Besides being a knowledge sharing for the long, mid and short-term. in the world. Manufacturing 11 platform, the forum brought forth the million vehicles annually, India is the best practices implemented by leading world’s second largest manufacturer COLLABORATING FOR SUCCESS automotive companies to cater to the of motorcycles and the fourth largest Stating that collaboration was the growing market needs. Offering a manufacturer of commercial vehicles. ultimate solution to drive efficiencies unique platform to discuss strategies The country is expected to become in the supply chain, Alan G Waller, in optimising auto supply chain and the seventh largest automobile market VP – Supply Chain Innovation, overcoming logistics challenges, the by 2016. This burgeoning growth Solving Efeso and International event delved upon the critical links of demands a seamless supply chain that President, CILT, delved in depth on the supply chain. aids in enhancing time to market the critical elements of collaboration capabilities. To capture the growth and how it could be achieved. “We Joy Panda, Head – Logistics, Behr momentum, KamiKaze B2B Media have been taught how to compete, but India, presented an innovative case recently hosted a day-long we have not been taught concurrent conference, how to collaborate.” With ‘Auto Supply Chain Forum’ this impressive remark, Alan in Mumbai. Being held concluded his presentation alongside the main event, and provided attendees some ‘Express, Logistics & Supply food for thought. Chain Conclave’, the Auto The entire forum Supply Chain Forum was had nine individual indeed a grand success. presentations that focussed It provided a networking on various topics such as platform for the auto SCM collaboration in practice, community to come forward SK Krishnan, VP – Demand Chain Management, Mahindra & Mahindra, benchmarking innovations and share their best practices. deliberates on the best practices as other eminent dignitaries look on for global freight flows, In essence, the forum truly lived up to redeploying the SCM business model study on the visionary SME (VSME) its theme, ‘Aligning People, Process & to become more competitive, supplier initiative, which has made the supply Business Strategy’. integration best practices, total crate chain more agile towards external management, etc. Having registered shocks. SK Krishnan, VP – Demand around 60 participants from the Chain Management, Mahindra & KEY TAKEAWAYS automotive SCM industry, the event Mahindra, on the other hand, talked With path-breaking sessions right from managed to get the best of auto about their demand chain management the word go, the forum focussed on supply chain professionals on one that helped them optimise the inventory various topics related to the automotive platform. These guiding thoughts are cost and ensure spare parts management supply chain & its demand trends. surely going to prove beneficial for the even in the most complex scenarios. The welcome note was delivered entire auto SCM fraternity to move to by Malay Shankar, National Business Jitendra Goyal, DGM – OEM & next phase of growth. Head, Drive India Enterprise Vehicle Logistics (Inbound), Toyota Solutions. The first session focussed Kirloskar Motor, discussed the on ‘Achieving Automotive Supplier importance of lean supply chain. He firstname.lastname@example.org
64 • SMART LOGISTICS • OCTOBER 2011
PRODUCT & ADVERTISERS’ INDEX
To know more about the products & advertisements featured in this magazine, write to us at email@example.com or call us on 022-3003 4640, and we will send your inquiries to the companies directly to help you source better. Products
Automated storage retrieval systems ................................................56
Floor-mounted racks ........................................................................54
Chain hoists .....................................................................................54
Hannover Fairs-2011 exhibition ......................................................65
Commercial vehicles .....................................................................BIC
Hydraulic pallet stackers ..................................................................55
Complete solutions for storage & materials ......................................3
Hydraulic pallet trucks ...............................................................55, 56
Container transporters .....................................................................66
Institute ......................................................................................... FIC
Jib cranes ..........................................................................................57
Derrick cranes ..................................................................................56
Logistics services ...................................................................... 17, BC
Double-girder EOT cranes ..............................................................54
Logistics solutions ............................................................................25
Electric wire rope hoists...................................................................57
Luxury coaches .................................................................................17
Electrical & manual winches ...........................................................56
Pallet flow conveyors ........................................................................56
Plastic pallets ....................................................................................55
Emerging India Awards-2011 .........................................................41
Storage solutions ..............................................................................55
EOT cranes ......................................................................................57
Warehousing services .......................................................................25
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Hannover Milano Fairs India Pvt Ltd
Mahindra & Mahindra Ltd (Auto)
Majha Transport Pvt Ltd
Safexpress Private Limited
Schaefer Systems International Pvt Ltd
Vijay Logistics Pvt Ltd
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66 • SMART LOGISTICS • OCTOBER 2011
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Hannover Fairs-2011 exhibition
Hydraulic pallet stackers
Complete solutions for storage & materials
Hydraulic pallet trucks
Double-girder EOT cranes
Electric wire rope hoists
Electrical & manual winches
Pallet flow conveyors
Emerging India Awards-2011
First Fold Here
Second Fold Here CNBC TV 18
Safexpress Private Limited
Hannover Milano Fairs India Pvt Ltd
Schaefer Systems International Pvt Ltd
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