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[EXCLUSIVE[ Onno Boots
Italian Vipul Nanda CMD, Mercurio Pallia LOGISTICS TIMES July 2010Logistics
LOGISTICS TIMES July 2010
All about Transportation, Distribution & Infrastructure Volume 1: Issue No.8 * December 2010 Editor in Chief Raj Misra email@example.com Editor Ritwik Sinha firstname.lastname@example.org Consulting Editor Ramesh Kumar email@example.com Mumbai Bureau Rahul Kumar firstname.lastname@example.org Sub Editor Neha Richariya Photographer Anil Baral Design Consultant S. Athar Hussain Designer Kausar Syed Circulation & Distribution Kamruddin SaiďŹ Legal Advisor Rakesh Garg
COVER STORY The Italian Job
Editorial Advisory Board Paul Lim Founder & President, Supply Chain Asia Vinod Singhal Brady Family Professor of Operations Management, Georgia Institute of Technology, College of Management Kate Vitasek Faculty, Centre for Executive Education The University of Tennessee Prof. K S Pawar Nottingham University Business School Prof. Samir Srivastava Associate Professor, IIM-Lucknow Prof. Akhil Chandra Institute of Logistics & Aviation Mgt Sanjay Upendram Founder & Chairman, Amarthi Management Consulting Swaran Singh Soni Consultant (Oil Industry) Arif Siddiqui Chairman, Coign Consulting
Marketing & Sales Outthink Strategies Ph: 65177214, 26412476, 9818097385 Email: email@example.com Printer & Publisher Deepa Misra for
Doing the Right Thing E-77, West Vinod Nagar, Delhi -110092 Tel: +91 11 22478538-39, Fax: +91 11 22471764, Mumbai: +91 9322811550 Printed at Personal Graphics & Advertiser Pvt. Ltd. Y -22, Okhla Industrial Area-II, New Delhi-110020
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The small, big business An oxymoron ﬁgure of speech is always littered with some profound meaning. And as the title of this note underlines, the spotlight is on a certain small, big business. Let me explain to you since our cover story this time focuses on one such instance which is not merely about the fortune of a particular ﬁrm but also shows the possible churnings in that small segment with big ticket potential. That isμdirections it can take to do away with unorganized or fringe moorings. With Indian automobile market ﬁring on all cylinders, the role of LSPs purely indulging in car carriage or as an add on business is increasingly getting into the prominence. This is an activity which manufacturers mostly outsource to logistics players and going by an estimate, right now there are 10,000-12,000 car trailers operating in the Indian market providing connectivity support to over 1.5 million units manufacturing base. However, call it the baggage of the past, the pure service providers in this segment hardly have a brand reckoning in the overall logistics value chain in the country. The cover story of this edition is interesting in the sense that it closely examines the alliance between an Italian and Indian ﬁrm in the car carriage business (wherein the domestic partner has merged its nearly ﬁve decades old identity) and making an effort to roll over the process in a way that should be benchmarked against the best global practices in this segment. Needless to say, Gruppo Mercurio which is involved in this alliance, is now trying to bring in those critical differences in car carriage business (with the help of much experienced Indian partner) which nobody has very seriously pursued in this market so far. Of course, the Italian push is the ﬁrst serious effort made by an MNC with proven expertise in 3PL automobile logistics business in this country. Leaf through the cover story to understand the grand design of an internationally renowned company in the business of transporting cars. Given the kind of volume pressures which is there in the Indian market, we can safely say many such handshakes involving Indian experience and global expertise might well be waiting to happen. One of the operational cornerstones of Logistics Times is to talk to the leading representatives of the industry directly and not through those e-mails questionnaire which, more often than not, are so conveniently doctored. And, therefore, the essence of what that person actually means gets lost somewhere with only sugary stuff ﬁnally coming out from the other end. In this issue, we are featuring an exclusive conversation with Onno Boots, Regional Managing Director, TNT Asia and this happened after four months of relentless chasing by our consulting editor Ramesh Kumar. And the difference is there with Boots touching upon myriads of issues pertaining to TNT’s Indian operations in a completely no-holds-barred fashion. Hope you would enjoy reading this edition. Waiting for your feedback. Ritwik Sinha firstname.lastname@example.org
LOGISTICS TIMES May 2010
LOGISTICS TIMES May 2010
Onno Boots Managing Director Southeast Asia and India, TNT
LOGISTICS TIMES December 2010
China 5, India 4 ÎźRamesh Kumar
I must tell you this: Onno Boots is not an easy prey to catch.
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It took me helluva of time to pigeonhole him for a committed talk. Simply because, I don’t believe in email interviews. Why? Because, most of the time, the responses to my questionnaire are “manufactured” by the corp com honchos. A beautiful high resolution image of the person being interviewed is dished out. I stopped being a victim of this ‘high-handedness’ several autumns ago. Let me return to Onno Boots story. It all happened seven months ago when during a casual conversation with Gati Executive Director Harry Lagad, I mentioned TNT and his response was: “Have you met Onno Boots?” He was not on my horizon at that time. But I knew TNT’s presence in India. In fact, early this year I touched base with TNT India bosses and everything was fixed for a telephone interview. As luck would have it, I moved out of earlier editorial consultancy to set sailing on a different boat viz., LOGISTICS TIMES with a much broader vision and unique style of writing. So, the TNT story quietly died down. So, Harry’s query made me examine the TNT angle afresh. I asked Harry to “put me in touch with Onno”. Over the next 24 hours, emails flew thick from Harry’s Blackberry linking me with Onno in Singapore. Prompt response came saying that he visits India regularly and will meet soon. Nothing happened. I kept bombarding him with email after email about his “proposed travel plans to India”. Suddenly, the Supply Chain Asia Forum hosted at Singapore cropped up in July. I planned to be there through the good offices of Paul Lim, Founder & Chairman. Meeting with Onno face to
How important is India in TNT’s scheme of things?
Emerging markets are key to anyone’s strategy these days, and it is the same for TNT. Globally, we are focusing heavily on the BRIC countries, speciﬁcally China, India and Brazil, and have made good headway. In India, we acquired a local company called Speedage which we integrated into our global network. This allowed us to play a larger role in the domestic market.
747 is a key strategy of our business there. The Chinese GDP is also concentrated in just ﬁve cities. In India, however, it is spread across the country. Global strategy currently places more emphasis on China than India so at a push I would give China a 5 and India a strong 4. That said, I would very much like to reiterate that we are 100% committed to India and are determined to provide innovative supply chain solutions that can help local businesses thrive.
What kind of weightage does TNT gives to India on a scale of 1 (lowest) to 5 (highest)?
Recently you had a Board meeting in Bangalore. Any interesting decisions taken with regard to India?
India is a consumption market, meaning the domestic market is far greater and complex than the international. This is unlike China, however, where transport of manufactured ﬁnished goods for export to Europe through our Boeing
Yes, it was a good meeting and many
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things came out of it. The integration of Speedage into TNT has taken a couple of years, parts of which have been naturally challenging. Now, TNT’s domestic network in India is a professional platform like any other we have globally, with high standards of operation. We are stable in India and growing fast. Initial challenges are far behind us and we are looking at a bright future. This brings me to my second point. How do we connect India with our global network? In the ﬁrst phase, we have already set plans in motion to link India with our European network. In phase two, we will connect India with our Asian network. This is a long term growth strategy for our business, and we will be making concrete announcements around this very shortly. These announcements will allow us to grow our business here faster than we ever have before.
face in Singapore – the real power tower of logistics industry in this region – was fixed up. I was excited, honestly. Man proposes, but God disposes. Due to family emergenciies, I dropped out at the eleventh hour. The meeting fizzled out again. Am sure, he kept coming to India but we could not touch base with. One fine September morning, my inbox flashed a message from Onno saying that he would be in Bangalore for the company’s Board meeting and promised to squeeze time for me. At last, I felt. Again, it did not fructify because I was travelling and could not make it to Bangalore. I was cursing myself: What the hell is this. Why this is not happening? We don’t give up easily at LOGISTICS TIMES. I kept pursuing with the certainty that things will fall in place on their own accord. One fine morning, I get a call from Singapore confirming a teleinterview on such and such date and request for a questionnaire. Done. On the day of interview, I was at Rampur, 125 kilometres away from Simla, Himachal Pradesh on a visit to Adani Agri Fresh Limited’s apple procurement and processing state of the art facility. The call came through at 11 a.m. Singapore local time (8.30 a.m. IST). Luckily, the telelines were clear. Onno, I must admit, did not duck a single question. He responded promptly without any cajoling. He was frank. I enjoyed listening to his views on India, China, TNT’s India plans and the Indian team. When I prodded him whether he was operating India remotely from Singapore, his candidly reamarked: “You cannot manage India from a desk in Singapore”. Thanks, Onno!
Today we have more than 300 locations, and we are looking at developing closer links with Europe and the rest of Asia. Like everyone else, we are also preparing for the forthcoming GST change. This requires further investment to provide warehousing facilities in strategic locations to fuel growth. Over a period of time, TNT has shed a lot of activities due to hiving or sell off to others. Does TNT feel those decisions should have been avoided?
No, in fact I am a very strong supporter of those decisions. I will tell you why. TNT is very focused and strong at managing and running networks efﬁciently. We don’t believe that we can be everything to everyone. However, we do believe we can be exceedingly good at a number of things and we would like to excel in those
areas. Having identiﬁed such niche spots, we are investing heavily in those areas. I am sure that will become our unique selling point in the market. What these decisions have achieved is to help the company to completely focus on these areas and achieve excellence. How exactly has the global recession impacted your Indian ops?
Even during the worst periods of the global recession, the Indian economy retained some forward impetus. Since the economy was more focused on domestic business, our business did not decline. On the contrary, we grew year-on-year.
What is TNT’s focus in 2010 and 2011? How you plan to achieve those goals?
We will focus next year on strengthening links between India and our European network and expanding our reach domestically. We will look to procure larger base loads from customers, leveraging our multinational client base looking for Indian solutions. With the exception of DHL, we are the only service provider with a fully-owned, branded and controlled domestic network in India. We will also prepare to take advantage of the forthcoming GST change by investing in warehousing facilities at strategic locations. You have been associated with TNT for a long time and looking after India from your Singapore perch. What you consider as your
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crowning glory during your tenure of India supervision in the Asia Pacific region?
My crowning glory? That sounds like Hollywood to me! If I look back, I would have to say the successful integration of an Indian company into TNT was a great accomplishment. Let me put it another way. It was clear that a European point of view would not be the most efﬁcient in this case. We had to take off our European hat and adjust to the Indian way of doing business. That has given us a huge amount of traction. We did a 180 degree turn and adjusted our western standards to accommodate the needs of India. I believe that has contributed to our biggest success.
What is your biggest blunder you’ve committed in India?
There are certainly many challenges to doing business in India. When we ﬁrst entered the domestic market, we adopted twin strategies, namely, organic and acquired growth through mergers and acquisitions. Straight away we looked at integration and how best to apply our global systems and standards. We were rushing through initially to achieve this goal. We quickly found out that India is
totally different. You need to take a very speciﬁc approach to do business. At that point, we reversed our strategy and abandoned the European way of thinking and opted to adopt an Indian approach to doing business. This saw our success rate climb exponentially. In this way, we turned our weakness into our strength. What are the biggest challenges TNT faces in India?
Only one thing, my friend. That is, road safety. It is very challenging in India. Globally, TNT wants to operate responsibly: that is, responsible to the environment and people and community. In a rapidly growing economy like India lacking in adequate infrastructure, road safety is an
Harry Lagad reminisces his association with Onna Boots
Passion for Porsche & Siberian Huskies Its not many times that one picks up a phone and calls up a person on the other side of the globe and coolly seeks a loan of 1 million Euros. That too, in 2005, when, 1 Million Euros had a much more higher value than what it would be today ! But, that is precisely what I did on that evening of March 2005, when I called up the HQ of TNT in Amsterdam and asked to be connected to Onno Boots.
LOGISTICS TIMES December 2010
I was heading up TNT Logistics in India and due to strategic reasons, the company had decided not to invest further in India and were seeking to close down the operations, unless I could find sufficient justifications to keep the country going and was able to substantiate it with good numbers. Onno Boots, was then, the Head of TNT’s Global Key Accounts and was probably, one of the key persons within TNT, who had the authority to invest if there was a good global key account which would lead to business opportunities. In those days, I was in discussions with two of the largest global pharma companies based in India and there was a good chance that we could seal the deal on a complete contract logistics solution. History says, that while Onno, with all his good heart, wanted to support me, coughing up 1 million Euros on a priority wasn’t going to be easy. TNT Logistics soon closed down its India operations and I moved out to take up a new role with Nokia. Heading up Nokia’s APAC Supply Chain, I soon settled down in Singapore. It wasn’t long before one fine day, I was most surprised to get a call from none other, but Onno Boots himself. You see, one never knows in business,
issue. What we have done in this regard is to invest quite substantially to improve road safety standards in terms of technological support, providing dormitories for our drivers en route, better equipment at warehouses material handling, provisioning new vehicles and speciﬁc training on road safety with relevance to local road conditions. Our efforts have resulted in a sharp decline in the number of road accidents involving TNT. Having said that, road safety will continue to remain one of the top challenges because the infrastructure facilities continue to lag behind the growth of the Indian economy.
friendly nation, what vital steps you would initiate?
An integrated infrastructure plan is the need of the hour. Road safety is an outcome of that. This plan will facilitate and enable the domestic market to tap the country’s economic potential. For accelerated growth, I would try to look at customs and other allied services and a uniﬁed set of rules so that different interpretations are avoided across various state borders. If this happens, logistics companies will
Given a chance to redo the policy framework to make India logistics-
when the shoe can be on the other foot quickly. Nokia was TNT’s major key account globally and APAC shipped the highest amount of Air Freight. Suddenly, I was being courted!! Onno and I have been in touch ever since that fateful call in 2005. Onno was transfered to head up TNT’s South Asia and India Business in 2006. Over the period of these years, I have come to know Onno both personally as well as professionally. A shrewd businessman, Onno is an entrepreneur par excellence! If TNT’s key Account Management position today commands over a 1 billion euro worth of business, its because of this tall, lanky and extremely engaging, deal making operator, called Onno Boots. Known for his most immaculate dress style, and his racy Porsche (Onno boldly flaunts the best of Italian cut suits and boots!) Onno is a simpleton at heart. I have spent numerous pleasant evenings with Onno and I can assure you that once in his threadbare jeans and flip-flops, he is one who is pleasantly at home enjoying the satays at one of Singapore’s many roadside stalls. Onno is a man of the wild, someone who loves nature. He shares with me his dream of the house he will retire in, deep in the woods, high up on the mountains, with nothing but his dogs for company. Oh yes, Onno has a passion for fast cars and his dogs. I have lost count of just how many he has (dogs, I mean, not cars!), but the last time I saw, he had 4 Siberian Huskies, frolicking around him. On a Sunday morning, Onno can always be found packing his dogs in the back of his 4WD and heading to the seaside for their weekend exercise. If not, then you are most likely to find him curled up comfortably on his cane lounge in his backyard
become the massive driving force and in my view, this can help India to become much bigger than China provided we address these issues in the next couple of years. 3PL is making inroads among Indian business community. What’s TNT’s experience or exposure?
We do provide 3PL and 4PL services to large multinational clients. Obviously we have 3PL, 4PL solutions leveraged out of our global expertise – particularly in telecom, pharmaceutical and automotive. This is reﬂected in our Indian business. DHL, FedEx are on a more aggressive note in India. So also Gati, TCI and
veranda, reading a business book or doing his most favourite of all activities, playing with Apple iPad. You see, Onno is also one of the most Tech savvy persons I have seen and his sense for technology has made him design some of the most cutting edge solutions for the pharma industry. I was with Onno recently in Mumbai. Onno, almost school boyishly excited, was explaining to me his plans for landing the Big Bird (TNT’s Jumbo Freighter ) in India in the next couple of months. I know, this was his dream and I am sure, he will see this project bring in not only good revenues for TNT’s business in India but also give his numerous Key Account customers, some cutting advantages in their global supply chain. I can almost see the glint in his eyes, as he eyes yet another opportunity! Good luck, Onno! You deserve it mate! Yo!
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Safexpress - the domestic biggies. How do you rate these rivals (both multinational and domestic players)? Is TNT trying to match or overpower them in any of the areas?
I don’t agree with the ﬁrst statement. We may not be very vocal about marketing our services in India, but we are focused on building a world class business and developing a stable and robust platform upon which we can invest. DHL, with Blue Dart in its fold, is a formidable player. A good company, no doubt about it, and a formidable competitor. That said, TNT is, by far, the leader in Europe. Our air and road network is the largest and our density spread is huge. Once we connect our Indian customers with our European network where we have seamless connection, it will be a big plus. With regard to domestic companies, many of these have had more than 25 years to build density and reach. Over the past 3 – 4 years, TNT has gone a long way to close the gap between the domestic leaders. As a multinational, you must be trying to usher in some of the global best practices in India. How successful are you in this endeavour? Put it differently, how severe was the resistance from Indian hands to accept your global standards?
As I said earlier, this question has two different answers. You have to watch out that you do not enforce best practices from outside. Practices fetching better results outside India may not necessarily get you the same results in India. You have to really understand the Indian market: we have to understand what works and what does not work. There is no blueprint that can be implemented here. Given our expertise in global telecom, pharmaceutical and automotive, we have tried to implement the same in India so that we can provide global standards across the world. We were successful with many large India-based companies. What is your management structure in India? I get a feeling that you do a lot of remote control operations from Singapore?
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We have a full blown management structure in India. We have a Managing Director and functional team running TNT India. We have teams: from operation to sales to customer service, corporate social responsibility etc. I spend a lot of time in India. So do our regional directors from Singapore in terms of understanding the market and driving the initiatives with the local management team. All this we do to keep moving and investing in the right areas. Am sure TNT is investing in India to improve its top line. Can you quantify?
Over the past ﬁve years, we have invested quite a bit. Four years ago, we made a major acquisition with a high degree of investment to develop a very large domestic platform to add strength to our international business. However, over the past two years, we have become a little more cautious with our investment. Two years ago, we had invested 6-7 per cent of our turnover. This year, we have done something close to 10 per cent. This will continue to roll over in the next 3 to 5 years. Obviously, we are also investing ahead of the regulatory changes happening in these markets. We will continue to invest to increase our footprint across the country. What is your average growth rate in your Indian operations?
We have achieved strong double digit growth over the past few years. Speciﬁcally our road express wing is posting excellent high growth due to the growing economy. Last year, we stepped up our international connectivity with India – particularly the European continent. This segment is growing in excess of 25 per cent. Our domestic road freight express is growing over 30 per cent. We are seeing both these areas posting accelerated growth. Automotive, Pharmaceutical and Retail are gaining a lot of importance among LSPs in India. What’s your
take on this?
The whole market has enormous potential. Dramatic changes are on the cards making it attractive for many large ﬁrms, thus attracting a lot more foreign investment. I understand that entire consultancy outﬁts are engaged by large multinationals in automotive, pharmaceutical and retail segments to understand the supply chain strategy. With regulatory changes in the ofﬁng, many multinationals may opt for four or ﬁve inventory holding points in India. This will bring about a massive change to our industry. The requirement for transportation will accelerate. The requirement for speed and reliability across the country will increase. Naturally, globally applied standards will be an advantage for many multinationals. We provide all of that. We are sector leader in pharmaceutical. Therefore, we are going to play an important role in India taking advantage of the new regulations. We are conﬁdent of dominating in this sphere. What is TNT’s brand management strategy? Put it differently, how are you wooing your potential clients? India is a price sensitive market. So what USP you are promising to enrol them as your client?
Here again, we have two responses. We have very strong international business and very strong domestic business. From the international business perspective, our USP is our connectivity to Europe and China. We have one of the largest networks in China. On the domestic front, we are committed to building a very large, very strong domestic brand with high growth standards. India isn’t yet exposed to some international practice. We promise our clients to bring best practice in those segments. What’s your vision for India?
We want to be the recognised service provider with highest operational and safety standards. This includes responsibility standards as well. It is very easy to make these statements, but very difﬁcult to implement in India. It calls for a maturity of infrastructure. We wanted to do it. We want to be the number one service provider for the domestic road express segment in India.
Takeaways from With multi-brand retailing to open up as promised by Prime Minister Manmohan Singh , retail multinationals like Wal-Mart, Metro and Carrefour are waiting in the wings to enter India in a big way. Global Supply Chain Management is bound to get utmost attention in our country which is long over due, according to Prof. Akhil Chandra of Institute of Logistics & Aviation Management. In an era of globalization, global supply chain management is contributing most significantly towards GDP of every country through enhanced efficiency and productivity of the nations. The world is said to be a global village or rather flat. The national boundaries and barriers have been destroyed through internet and PC driven globalization in today’s knowledge based economy. This was pointed out in a lucid manner by three times winner of the Pulitzer Prize Thomas. L. Friedman in his famous book ‘The World is flat’. In fact global supply chain management coupled with Information technology and telecommunications opened floodgates of progress for developing countries so as to come at par with developed countries. How Wal-Mart managed it Company like Wal-Mart applied the rules of global supply chain management successfully and rose to become number one company in the world after beating big conglomerates like K-Mart and Sears in their own game. Wal-Mart chose their
suppliers globally from countries like China and Far East and cut down its procurement and manufacturing costs and could sell every item cheaper than their nearest competitor. Wal-Mart carried out computerization with heavy use of Enterprise Resource Planning software throughout their value chain and shared the customer’s information liberally with their suppliers, distributors and dealers through IT networks resulting into complete transparency throughout their value chain. The information concerning the buying behaviour of customer, purchase orders, prices and inventory flowed both way along the value chain resulting into reduction of inventory carrying costs both for finished goods and raw material. WalMart could thus supply what customer exactly wanted at the right place, at the right time and at the right price. With customer centric approach, WalMart set up huge distribution centres in every city where merchandise in cartons
were received from various suppliers chosen globally shipped by sea, air or rail road and trucks and then unloaded on the network of conveyer belts installed at the distribution centres. The merchandise was redistributed despatching and transporting it once again to the various malls located throughout the city. The history of content of the cartons was identified by RFID tags with information like country of origin, technical details of the content, source and destination, expiry dates of the goods inside and temperature to be maintained. This enabled the concerned handling staff to properly prioritize the cartons carrying perishable items or items like medicines and deliver it to Malls before the expiry date. This way they could make most of the items including FMCG goods always available on the shelves for the customers who came to Wal-Mart in huge numbers because of lower prices being offered. Wal-Mart was also ahead of their competitors in reducing the lost sales LOGISTICS TIMES December 2010
arising due to non availability of goods on the shelves. Global supply chain management is now imitated by most of the companies in the world after the success story of Wal-Mart who starting from a small place called Bentonville, Arkansas in United States is now worldâ€™s largest company in the world with innovative approach of Sam Walton , the man behind the success of Wal-Mart. Today the supply chain is no longer contained within countries borders, but encompasses all nations, whether they are vendors, manufacturers or customers. Boeing which is a premier aviation multinational manufacturing aircrafts is able to assemble the Aircrafts in 3 days flat while outsourcing most of the parts and components from suppliers located far and wide throughput the world. It takes LOGISTICS TIMES December 2010
advantage of best of what is available in different countries in terms of best of research and development facilities, cheap labor, skill set and technology and coordinates its value chain amazingly well to maximize its production delivering aircrafts of topmost quality in an unparalleled innovative approach. In the past decade China has become a global economic leader and will soon be the worldâ€™s largest economy. Economists predict that the few of the current developing nations will be some of the most important economic powers in the next decade practicing global supply chain. India has opened its economy after 1991 and is now recognised as among fastest developing countries. Goldman Sachs, the leading Investment bank in one of their report has categorised India among the
BRIC countries (Brazil, Russia, China and India) , which are to be watched seriously due to their potential of competing with developed countries in next decade.
Cultural nuances Further companies will have to give due regards to cultural differences existing in various countries involving social, religious and ethical beliefs prevalent in each country and adjust themselves accordingly. American businesses have sometimes failed in countries such as Japan which has a very difficult business environment to the US. Companies can overcome these barriers by using local agents to sell the products in a foreign nation or by licensing their products. The licensing of a product is sometimes more beneficial as it allows the licensing company to terminate the agreement if
the products fails to be marketed or sold appropriately. Joint ventures can also be a way of entering a new market. By using a partner company’s local expertise the product can have a greater opportunity for success.
had the Chinese toy manufacturers studied closely the product life cycle management up to the stage of consumption. In global supply chain management, companies as such can ill afford to ignore green supply chain.
Respect for Green
Importance of Infrastructure
Further all over the world there is a growing realization of making world green by avoiding the harmful effects on the environment due to pollution caused on air, water and soil during process of extraction, manufacturing operation, physical distribution and logistics by sea, air, road and rail and consumption of the end product by consumers. Multinationals all over the world are focussing on Green supply chain management involving negotiating policies with suppliers and customers resulting in better alignment of business processes and principles so as to improve the environment and ecology. Wal-Mart, world’s largest retailer enforces his suppliers to follow green supply chain policies making it mandatory on his suppliers to revaluate the material content and adopt environmental practices so much so that it refuses to do business with defaulters who do not follow green practices and environmental management systems. Green supply chain management mitigates risks and speeds up innovations. Recently Chinese toys were banned by America including other countries as they were found hazardous to children due to harmful ingredients used in making of the toys. Such risks could have been avoided
Infrastructure in terms of good port facilities both for sea and air route, mobility on roads and good telecommunication infrastructure plays a vital role in handling global supply chain. Wal-Mart used satellite communication very effectively in terms of VSATs installed in every store in reaching their Chinese and Taiwanese suppliers sharing the information such as inventory, customer’s buying behaviour and Sales data. Apart from that they used ERP software with modules like warehouse management system, transport management system, supplier relationship management and customer relationship management system to name a few. They forced their suppliers to adopt EDI (Electronic data Interchange) saving on time and improving responsiveness to the customer’s needs.
Indian Scenario Indian business conglomerates are now expanding their operations beyond the frontier of the nation and many like Tatas, Reliance and Bharti Group have taken over foreign companies. In this background of Indian expansion of trade in foreign countries, Global supply
Chain management shall play a very vital role towards long term sustenance and growth of Indian business. As the global supply chain becomes more complex with every passing year, companies must adapt to this change and incorporate them into their supply chain strategies. This change could mean using vendors from developing nations or exporting goods to new markets. Companies that have traditionally operated within national or regional trading groups may feel ill-equipped to extend their global supply chain. Such closed door operations without knowing what is happening elsewhere in the world can be fatal and even shall be detrimental to their survival if they are unable to select and manage a foreign vendor or not knowing how to sell items in a new country. On the infrastructure front in India so much is happening with improvement of airports at Delhi, Mumbai and Bangalore and Aviation cargo hub at Nagpur and privatisation of sea ports and Rail networks. Telecommunication infrastructure with Wi-Max and 3 G facilities in the country shall improve the connectivity and solve last mile problems for Logistics 3 PL Companies giving impetus to international connectivity as well. Indian Companies are now more receptive to ERP implementation with companies like SAP, Oracle and the home grown software companies. Time ahead is interesting to watch in India as Indian companies are bound to join global supply chain conglomerates.
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Car Carrier specs What do you want in your car carrier trailer? According to Shivam Arren, CEO, Kailash Rolfo India, car carrying business is a serious business. The number of cars which get dispatched on a daily basis is already mind boggling and it is only going to increase in the near future. Safe transport for cars is thus becoming a high priority for all key players in the industry. So what does the user want in the car carrier trailer? When you ask this question to different users you will be surprised by the varied answers you will get. By users here I mean the end user who is the transporter and his driver, the actual user that is the OEMs as well the enabling user which is the government of India representing more than 1.2 billion people and their safety on road. The transporters want to the know how many cars you can pack in, because higher the number of cars, higher will be the revenue for them per trip. They would also want a lower cost of maintenance of the trailers and better tyre life. The OEMs are concerned about the safety of the cars as well with the number of cars being transported in a trailer which is within the regulatory limits of the law. The last concern should be the most important for OEMs because they are suppose to be the law abiding citizens of the country being part of large and ethical corporate houses or MNCs which abide by law in their own home countries. The third user which is the government and its agencies does know exactly what they want and what is correct but are poor at implementing. They have come out with some notices and regulatory framework which can make the roads safer and last longer but as to when these regulations LOGISTICS TIMES December 2010
will come into force is anyone’s guess. So what does the user wants? • Regulation for Length of SemiTrailer: 18.75 meters or more? Hopefully a well timed regulation will tell. • Number of cars: 10 cars • Safety of the cars being transported given that almost 8% of cars get damaged while being transported to dealers or during loading and unloading in a trailer • Lower cost of maintenance and enhanced tyre life to reduce operating costs
Safety of driving the trailer on road – safety of the trailer and cars and that of other vehicles on road All these functionalities which is part of the wish list can be achieved. I think it is primary responsibility of the trailer manufacturers to always keep innovating and give the market a better product in terms of quality. It is our moral and professional responsibility to provide these solutions to our customers. But these solutions can be only implemented when all stakeholders of the industry come together – government, OEMs, transporters and the manufacturers.
Sustainable Supply Chain Management (SSCM) is the buzzword today after the quality revolution of the 1980s and the supply chain revolution of the 1990s. As supply chains and businesses start focusing on â€˜Planet, People and Profitsâ€™ simultaneously, sustainability is emerging as the new metric for supply chains, writes Prof Samir K Srivastava of IIM-Lucknow.
Doing The Right Thing
sustainable supply chain seizes value-creation opportunities and offers significant competitive advantages for early adopters and process innovators. Managers need to integrate sustainability goals, practices and cognitions into dayto-day supply chain management. This requires monitoring internal operations of firms and those of other stakeholders from an altogether different perspective. Deepening environmental concerns and perceptions of increased risk to health and safety of community residents from supply chain activities have led to a significant increase in interest at the intersection of environmental management and supply chains. There is a need for fundamental change in the way we produce, consume and exchange goods and services. Environmentally conscious actions are no longer seen as challenges and contrary to financial considerations. In fact, they can be the basis for successful firms and supply chains. SSCM is a management strategy that follows economic, environmental and LOGISTICS TIMES December 2010
social aims throughout the supply chain and is gaining popularity among society, governments and industry.
systems and technologies as well as the way business is conducted.
EMS Regime Balancing Act The notion of sustainability is mainly related to maintaining ecological balance. An emergent sustainable supply chain is the one that performs well on both traditional measures of profit and loss as well as on an expanded conceptualization of performance that includes social and natural dimensions. It simultaneously considers and balances economic, environmental and social goals from a microeconomic standpoint. Sustainable Supply Chains mainly focus their activities towards eco-efficiency, reducing material requirements of goods and services, reducing energy inputs to goods and services, reducing toxic dispersion, enhancing material recyclability, extending product durability, increasing service intensity of goods and services and maximizing sustainable use of renewable resources. In recent years, there has been a rapid increase of corporate initiatives and academic publications on SSCM. Proactive practices have been implemented through various Rs (Reduce, Re-use, Rework, Refurbish, Reclaim, Recycle, Remanufacture, Reverse logistics, etc.). Firms are moving towards integrating environmental thinking into core operations from material sourcing through product design, manufacturing, distribution, delivery, and end-of-life recycling. In the emerging value-creation model, implementing green initiatives along a supply chain is increasingly seen as instruments for raising productivity, enhancing customer and supplier relations, supporting innovation and enabling growth. Most major firms are now focusing on the environmental burden of their supply chain processes by recognizing some of the contemporary environmental dimensions such as carbon emissions, energy and natural resources consumption. Green has become a common term to portray or convey the environmentallyfriendly image of products, processes, LOGISTICS TIMES December 2010
Nowadays, most progressive firms follow the environment management principles in the form of standardized Environment Management Systems (EMS) such as British Standard for EMS BS7750, the EU eco-management and audit scheme and the international standard ISO 14000. They also follow EMAS, Global Sullivan Principle, ICC Charter and OECD guidelines. However, such policies and
procedures represent efforts to improve environmental performance only within the organizationâ€™s operational boundaries rather than being extended throughout the supply chain. From a strategy perspective, four key stakeholder groups are emerging in sustainable supply chains. These are the policy makers and regulators who set the broad macro rules of the game; the value-adders in the overall production and transformation process namely, the suppliers, producers and distributors who cater to consumer demands within
Indian Scenario Bayer India has decided to follow a Product Stewardship Code to make health, safety and environment an integral part of designing, using, recycling and disposing of products. Amarnath Enviroplast Limited has developed a wood substitute called Ecowud from thermoplastic and jute waste. Maruti Suzuki India Limited has already established Indiaâ€™s largest certified used car dealer network. Every TrueValue car is re-conditioned to Maruti Suzuki standards in dealer workshops by trained mechanics using only genuine parts. This is a simplified version of the repair and refurbishment activity. Recently, Maruti Suzuki India Limited has launched A-star, a truly green car. It reflects a focus on world-class environmental compatibility and comfort. It has an all new Euro 5-compliant 1.0-litre aluminium petrol engine with CO2 emissions lower than those of European competitors. The car also meets the European ELV norms, which implies that 85 per cent of the car is recyclable. In addition, it is free from hazardous materials like Lead, Cadmium, Mercury and Chromium. A-star delivered a record mileage of 19.6 kilometers per litre of petrol; the best in class ARAI certified fuel efficiency, among cars in India. The firm has achieved 100 thousand units cumulative export of A-star in less than a year since its first shipment to Europe in January 2009. Tata Group too has taken several steps to cut carbon emissions across its firms and value chains. Tata Steel aims to reduce CO2 emissions at its Jamshedpur plant from 1.8 tonne to 1.7 tonne per ton of liquid steel by 2012. Global benchmark is 1.5 tonne per ton. Tata Motors is introducing Indica EV, an electric car. It is also setting eco-friendly showrooms using natural materials. Indian Hotels is creating eco-rooms which will have energy-efficient mini-bars, organic bed-linen and recycled paper napkins. More than two years ago, Wipro adopted the Global Reporting Initiative (GRI) framework for reporting on all the three aspects of sustainability - ecological, social and economic. In September 2010, the Indian outsourcing major Wipro was chosen by Dow Jones Sustainability Index, the first global indexes tracking the financial performance of the leading sustainability as its member. The selection was done on the basis of an exhaustive, rigorous evaluation of Wiproâ€™s sustainability performance on several dimensions like ecological sustainability, supplier standards, digital inclusion, corporate governance, innovation in sustainability. The Global DJSI for 2010 comprises 318 firms from around the world.
LOGISTICS TIMES December 2010
of CO2 from entering the atmosphere. Moreover, the firm anticipates $3.4 billion in direct savings and roughly $11 billion in savings across the supply chain. Major firms like eBay, Google, Staples, WalMart, The Coca Cola Company, Bank of America and FedEx have already started using energy efficient bloom boxes.
the macro business environment; the all-important consumers who create the actual demand and consume goods and services; and finally, pressure groups and NGOs who of late have been as important. Globalization, WTO requirements and depleting natural resources are likely to lead to much stricter regulations and guidelines by the regulatory authorities. The level of consumer awareness of environmental issues is increasing rapidly. This will lead to customers’ preference for green products as well as products and services from suppliers with green supply chain management processes.
Innovatory Track More sustainable products by technological innovations are likely to emerge. This, in turn, will force the supply chains to become sustainable. Further, the rules that govern the attractiveness of recovery/ reuse of products, materials and components are undergoing changes at the local, state, national and global levels. In addition to traditional brokers, many firms are now selling this material LOGISTICS TIMES December 2010
through on-line and traditional auctions. So, from aspect of eco-centricity a sustainable supply chain explicitly includes nongovernmental agencies (NGOs), community members and even competitors that traditional chains either ignored or treated as adversaries. At policy making level, India has adopted a National Plan of Action on Climate Change as a positive step towards mitigating carbon emission levels. Improving energy efficiency and adopting clean coal technology is a central theme in the low carbon strategy. It has increased its renewable energy target to 14 GW by 2012. Union budget 2010-11 has a series of ‘green’ initiatives designed to boost environment-friendly energy and emission-free transport. Further, the government wants to use energy-efficient technology and all power plants may have to be based on supercritical technology. At firm level, Wal-Mart, which in 2005 launched a sweeping business sustainability strategy, recently set the goal of a 5 percent reduction in packaging by 2013. The retail giant expects the cut in packaging will save 667,000 metric tons
One of the biggest challenges before the field of SSCM is extending the historical `common wisdom’ about managing supply chains. Much research, management education, and practical application has focused on buffering the supply chain operations from external influences, including the natural environment, in order to improve efficiencies, reduce cost and enhance quality. A fundamental question arises about how to pursue SSCM across different stakeholders in a supply chain: should this be considered a separate stream with its own strategic framework, or should sustainability issues be integrated into existing operation supply chain management frameworks and areas? While the complexity of sustainability issues might favour the former approach, the greatest contributions can be achieved by pursuing opportunities within a more integrative framework. Presently, many governments are rewarding firms that adopt green strategies and are creating new regulations that penalize those firms that do not. Various incentives should be extended to industry consortia and firms for developing/ promoting environment conscious products and processes. The level of public awareness about sustainability, prevalent and emergent technologies and the environment needs to be increased. Various fora may be utilised for it. The government and regulatory authorities need to set up and spruce certain regulations to protect the environment (such as for process and product emissions). For example, in Indian context, organizations like Centre for Science and Environment (CSE), Confederation of Industry (CII) and Federation of Indian Chamber of Commerce and Industry (FICCI) may
be involved along with NGOs in terms of policy proposal formulation and feedback. Industry specific and national level models may be developed for supplier managed inventories and operations and for waste segregation and recycling. These will result in enhanced co-operation and collaboration and higher efficiencies. The industry and academia should collaborate to come up with technological innovations to address SSCM issues. These resulting will have long-term positive impacts. Effective approaches for data sharing within and across the industries need to be developed. Industry consortia may go for intra-nets. For example, existing networks like CII, FICCI, etc. may be utilized and Internet may be leveraged to achieve more cooperation and collaboration.
Ecological Footprint To lower the environmental damage of business, firms and their supply
chains need to examine their “ecological footprint”. Ecological footprint converts the products and services we use into global hectares and measures the pressure we exert on nature to satisfy our lifestyle demands. At the organizational level, responsibility for sustainability cannot be given to a separate entity; it must be part of everyone’s job, starting with top management. A tangible commitment to sustainability may be in the form of a written environmental policy. Organizations that have an innovation capability and a managerial orientation toward sustainability will carry out two unique sets of activities. First, they will reconceptualise various stakeholders in their supply chain. Rather than viewing NGOs and the like as adversaries, sustainable supply chains will leverage the skills and abilities of these non-traditional chain members. Secondly, they will try to ensure that this new chain is efficient and
effective. To conclude, the traditional green initiatives are generally associated with many weaknesses and problems. We need to take new initiatives and look for innovative approaches. Research and practices in sustainable supply chain management to date may be considered compartmentalized. More integrative contributions are needed in the longer term, including intra- and inter-firm diffusion of best practices, green technology transfer and environmental performance measurement. The focus today should be on first finding out ‘The Right Thing to Do’ and subsequently ‘Doing the Thing Right’. Therefore, stakeholders should look towards converting the imperative greening/ sustainability mandate into an opportunity. A good dictum for them could be “Think Global, Act Local” as this may help in addressing avoidable supply chain complexities.
LOGISTICS TIMES December 2010
MERCURIO PALLIA LOGISTICS:
The Italian Job for Indian car market
LOGISTICS TIMES December 2010
With Indian automobile industry firing on all cylinders, the initial bout of Gruppo Mercurio’s alliance with home grown Pallia Transport has seen a windfall. And encouraged by better than expected results, the JV entity is now seeking new scales, of course, with the globally benchmarked operational skill which is the calling card of Italian company in auto logistics market. Ritwik Sinha reports:
uddenness of growth can script alliances of unusual kind. Or if unusual is too strong an expression, then probably the mellowed version would be – something which was unimaginable in not so distant past. Want the proof, then here is one. A domestic transportation ﬁrm called Pallia arising out of a non-descript place (of the same name) near Nepal border in Uttar Pradesh in 1980’s goes through the rigormole (mostly of the nature of lesser business opportunities) of ﬁrst two decades building up a small scale. In between around 2003, the company had taken a conscious decision of shifting its entire focus to operate car trailers. In 2007, a chanced meeting of Pallia’s supremo Vipul Nanda (during his trip to Italy) with the top brass of Gruppo Mercurio opened up a new avenue. Almost on a golden platter. The 130 million Euro Italian ﬁrm much known for its expertise in transporting ﬁnished vehicles in European and also South American markets, joined hands with Pallia in an arrangement wherein the latter merged its identity paving the way for the emergence of a new joint venture (JV) entity called Mercurio Pallia. And if the words of Nanda and Italian ofﬁcials involved in the JV are to be believed, the alliance has produced results in last one and a half years which have been beyond their imagination. Almost in multiples of ﬁve on key parameters like revenue and volume. ‘Suddenness of growth’ theory plays a critical role in shaping this story
manifesting how an MNC can do wonders if it has found a local partner with the perfect understanding of the market. And this holds true for other way round scenario also. Coming back to the sectoral picture, during the early part of the decade, when the theory was largely propounded that India has landed in the league of emerging economies who would spearhead the waves of global economy in this century, the expectations of the car market size by 2015 was broadly around 1.5 million. But the voracious appetite of the Indian aspirational class has seen this number being achieved six years before the expected ﬁnishing line. Barring that slight blip due to extreme slowdown conditions in 2008, Indian automobile sector has been on ﬁre growing by a hefty over 20 percent trajectory during the larger part of this decade. And going by the projections, by 2015 India would become a three million car market in terms of domestic consumption while the total car manufacturing capacity would be in the range of over ﬁve million. Of course, by then India would have become a major exporting automobile market as well especially in the mid-segment. Nothing surprising, most of the global auto manufacturers have positioned themselves on the Indian turf vying with scores of formidable domestic counterparts. Now, the situation mentioned above, if this is not a golden opportunity for Gruppo Mercurio with its proven expertise in 3PL services to the automobile industry, then what else golden opportunity could be?
For the records, Italy-based GM SPA has a pole ranking in the automotive logistics sector in the European market as well as in some other pockets including South America. It offers end-to-end automotive supply chain solutions including logistics, stock yard management and pre delivery inspection. The group has a ﬂeet of over 435 owned trailers and trucks and 600 contracted vehicles. Their operations are present across Italy, France, Netherlands, Czech Republic, Slovakia, Lithuania, Germany, Argentina, Chile and now India via the joint venture company. Their clients include leading global automotive companies like General Motors, Fiat, Honda, Suzuki and Renault. Andrea Guido Conti, President of Gruppo Mercurio and director of Mercurio Pallia conﬁrms that the Italian company had read the writing on the wall well in advance pertaining to merging opportunities in India and were scouting for partners even before Pallia came into the picture. “We were looking for partners and discussing with some players in India but we found Vipual and his company as perfect ﬁt for us,” he says. Today with the partnership inching close to two years mark, both Vipul and Conti have nothing to complain about. In fact, as JV is maturing, what is increasingly engulﬁng them is a greater sense of urgency. To be more well entrenched in the Indian market to cope with the challenge of mounting volumes , almost on every month basis now. LOGISTICS TIMES December 2010
“We want to become a complete 3PL player in car transportation” In a candid interview with LT, 40 year old Vipul Nanda, CMD of Mercurio Pallia, talks about the evolution of Pallia Transport and the way it has assumed a new character after the Italian job has come into the play. Please give me a sense of Pallia’s history. Where from it has come and eventually reached to a stage wherein a major global player in automobile logistics has joined hands with you? Pallia Transport was started by my father and uncle in a place called Pallia (which is close to Nepal border) in 1961. The basic job at that time was to provide those small transport solutions to the farmers like transportation of fertilizers and farm equipments. In 1984, my father shifted base to Delhi primarily because of Maruti Udyog Limited which was our ﬁrst customer. Because of them we started this car carrier transportation business and initially we also did CKD transportation for them from Kandla Port. In fact, during those days, 90 percent of Maruti components used to come from Japan. But if you talk about pure car carriage business, this is something we started in 2003. That year we made a decision that now we have to focus on this segment because we saw great opportunity. In 2003, Mahindra had come up with Scorpio and we grew with them because they were our ﬁrst major client and they are still with us. And then Honda, Hyundai and General Motors also came in. For GM, we have been the leading transporter right from the beginning. How did this JV with Mercurio happen? In 2007, in one of my trips to Europe which was meant more to promote my wine business, luckily I met Mercurio ofﬁcials and we felt we share common vision on many things but particularly on opportunities in the Indian market. As a result, this JV materialized and became operational on 15th March, 2009. And at that time, we were LOGISTICS TIMES December 2010
doing about 2500 cars a month. But within a span of one and a half year, we are now doing about 10,000 cars. In some recent months, we have done even more than that. What all Mercurio has brought on the table? Capital is very important and they have brought capital. The capital base of the company is around Rs 40 crore which was brought in by both the partners. We also put in our existing business in the company. And then obviously the new operational systems also came into the place like the reporting system. We are also looking at new opportunities. With their help, we are trying to enter into a new area of transportation of automobiles that is transportation of trucks on trucks. This is one thing which we have started with them. We are trying to improve our efﬁciencies and trying to become a branded transport organization. It could turn into a reality. With their help, we can go into other areas where we don’t have expertise. Like railways. You should be hearing very shortly about our railways project. And we are also working on coastal shipping with them. Plus the compound management, stockyard management, etc. A total 3PL system is what we are aiming at. The kind of volume jump you are suggesting, has that made you the largest player in the country in your segment? We are doing 10,000 to 11,000 cars every month. That should deﬁnitely place us in leading players’ league. There are other companies also which are doing very well like DGFC, Chetak Transport, etc. Are your partners surprised with the
kind of growth you have seen in such a short span? Yes, they are pleasantly surprised. Growth in last 18 months has been spectacular. Nobody had anticipated this kind of growth when we had gone through that temporary recessionary phase mostly in 2008. Things started improving in 2009 and
after April, we have not seen a month when there hasn’t been a robust growth. And you agree that this Italian connection has helped you considerably in registering this kind of windfall? Yes, of course. Past two years have been the most satisfying spell. Most of the players in my business ask me even today how did you manage to get them? I think it was destiny.
“India, the heart of our business in Asia” Andrea Guido Conti, President of Gruppo Mercurio and Director of Mercurio Pallia, clearly underlines that India would be the fulcrum around which the company intends to build strength in Asian markets. To begin with, give me a sense of Mercurio’s history and its global operational profile. Which are the pockets/regions in the world where the company has a strong presence? How would you explain the areas of expertise of the company?
At the moment, as you know, we are an Italian company very well positioned in our market with a share of 22 percent. We are present in several countries in Europe like France, G e r m a n y, Holland,
Po l o n i a , Slovakia, Spain, Serbia and Bulgaria. We do quite a lot of international transport in Europe and we link several countries. Mercurio was founded by my father in 1957 as a general cargo company and in early 1969, we started with car transportation thanks to Peugeot Italy. In 1979, after my father’s death I took over the management moving all our interest on to the car business. Our ﬁrst branch in Europe was opened in 1987, France and
second one was Poland in 1992. In 1995 we prepared a ﬁrst programme global expansion and development and in 2004, the second and last leg was executed. India was in second leg of our programme. You decided to come to India in 2006. What were those basic assumptions behind this decision?
We found it very interesting and important country with a big potential growth. In fact, all Asiatic area offers huge opportunity. I am told that even before Pallia came into the picture, you had begun negotiating with other players in India. What really got you to forge an alliance with Pallia?
results and it proves the point that we have a great chance of growth ahead. Is it true that India is like a stepping stone for you in making penetration in other Asian markets? If true, then what is the broader strategy you would adopt?
India represents the heart and the brain of our network in Asia. I would like to say that we consider ourselves an Indian company with Asian interest; more than an European company. We now have an ofﬁce in Singapore from were we are designing our network and how to link with India . It is too early to give you detailed information but we are quite sure to open new branches in the area.
Yes, we tried to approach some companies for our project but eventually felt that Pallia under the stewardship of Vipul Nanda was the best option for us. I was really impressed with his interest to develop and grow the company. Equally appealing was his concerns for issues related with the drivers who are such a vital organ for our operations.
Is there any strong possibility of bringing in external financial agency like a PE firm to back you up on investments on your projects in India? The parental group already has a strong alignment with PE investment?
Now that you are operating as a JV entity, how do you manage the show on a day-to-day basis?
Finally, over a period of next two to five years, how do you envisage Mercurio Pallia evolving - from the standpoints of building up strength in the Indian market as well as strategically supporting your global operations?
I would say, we are not doing much in that strict day-to-day sense. I would prefer to say that some ofﬁcials from Mercurio and Vipul are working in conjunction and adding real value to our operations. I am told that ever since this company has started functioning, there has been a growth in multiple of times and not percentage on all important parameters. What is your assessment of the performance? Has it surprised you?
We are very, very happy with the initial
At the moment, I would not prefer to comment on this.
We are an Indian company and we are fully interested to develop the business to new scales. Our ﬁrst goal will be to follow the needs of our client. We must be very, very careful about providing quality services to our clients. Our client must be sure about us and we must be very reliable. I think that our expansion in term of market share will only happen after three years from now. LOGISTICS TIMES December 2010
“We are weighing options for rail connectivity” Sandiip Bhatia, Director, SB Consulting Services who is working on a feasibility report on adding railways linkage to Gruppo Mercurio’s services proﬁle tells the various options which are being vetted upon. Gruppo Mercurio’s intent to add railways link to their profile is a very interesting and also a very promising proposition. Afterll, the company’s aim is to eventually become a complete solution provider to the car manufacturers and here having a vibrant railways connectivity for the transportation of cars for its clients would put it in different league. If we look at the robust global models in this line of business, its railways and shipping which undertakes main haulage or major chunk of volume. Even Mercurio’s proven strength in Europe is a function of its in between miles connectivity in Europe. And this is something, the joint venture entity aims to emulate in India. My agency has been hired to do a feasibility report for the railways linkage for Gruppo Mercurio ( we are working on it for nearly six months now) and first of all we are assessing the weak spots in car transportation of the manufacturers who happen to be major clients of the company. The study of the location of the clients (manufacturing plants) and their probable connectivity points in terms of delivery is the major concentration. For instance, we are noticing that manufacturers in North are facing distribution problems in South and vice versa. Shortcomings of this nature is the fulcrum around which we intend to provide our railway linked solutions. We clearly have two options to take forward this project.
Building on mutual leveraging Its purely a case of mutual leveraging. In Pallia, Mercurio found a local partner which has in its DNA car trailing business (Read Vipul Nanda’s interview wherein he underlines that his father had shifted company’s base to Delhi in 1980’s to serve Maruti in its formative years) whereas in Mercurio, the Indian partner has found the route to attain brand recognition and fulﬁll its dreams of becoming a 3PL player for automobile industry in the real sense of the term. And then there have been other beneﬁts too like fresh pumping of much desired capital for expansion and consolidation in the Indian automobile transportation space. “Capital is very important and they have brought capital. The capital base of the company is around Rs 40 crores which was brought in by both the partners. LOGISTICS TIMES December 2010
Firstly, we can go directly with railways. Or we can go ahead with any private container train operator who can pitch in as joint-venture partner. As per policy provisions, for extensive car transportation a separate license would be required and none of the present operator has that kind of approval. There are issues like customized wagons which will be required wherein maximum number of cars should be transported to make the business commercially viable. And then there is the issue of creating automobile hubs near railways yards which the policy permits but has not been availed by any player so far. So we are weighing all options and are in talks with both – railways as well as private operators. But broadly we have decided that as and when this project rolls, we will begin with stockyards strategically located in the country (near Gurgaon, Mumbai and Chennai). There are two components of the feasibility report we are working upon – options and designing. Its difficult to say at this stage what could be the possible size of investment for this project. To a considerable extent, the investment quantum would also depend upon the final approval of designing options. I think, from henceforth, even if our efforts move smoothly, it would take anywhere between one to two years for this project to really shape up and get in the up and running. But whenever it happens, the advantages it would accrue to Gruppo Mercurio would be huge. (As told to RS)
We have put in our existing business in the company. And then obviously new operational systems have also come into the place. With their help, we are trying to enter into a new area of transportation of automobiles that is transportation of trucks on trucks. This is one thing which we have started with them. We are obviously also trying to emerge a branded transport organization,” says Vipul Nanda, CMD, Mercurio Pallia. Now this is something which is clearly a rarity in the Indian market. With Italian involvement, a new structural style has also evolved tending to induce that much-needed professional quotient in the operations with induction of professionals like Sanjeev Tripathi as Chief Operating Ofﬁcer (COO). Vipul with his hard boiled over two decades of experience of the Indian market continues to spearhead the new entity
but he himself admits that now his role is more tilted towards marketing activities and expanding the client base. The day to day worries are now taken care of by a new set of professionals at the helm in conjunction with ofﬁcials at Gruppo Mercurio who have some ofﬁciating footing in the joint venture. “ I would prefer to say that the people from Mercurio and Vipul are working together and are adding the real value,” Conti adds (read his interview).
Impact of Italian Association Probably no other term than ‘the windfall’ would qualify the kind of growth the company the claims to have witnessed ever since it came into existence in 2009. A growth trajectory which is simply sweeping in nature and ferocious to the extent that even Vipul sees hands of providence in it and thanks his stars for
LOGISTICS TIMES December 2010
having managed to rope in a formidable player like Mercurio. “From a small topline base of Rs 20 crore before JV came into existence, we are likely to clock Rs 100 crore in 2010-11 which we further aspire to double in next two years,” Vipul underlines adding that past one and half years has been the most satisfying spell of his life. And if his words are to be believed, then he has all the reasons to feel so. It has been a period of exponential growth for the company on all fronts – be it ﬂeet expansion or increase in volumes. Simply put, it has purely been a dream spell. First, take a look at the ﬂeet. When the JV had formalized, Pallia had a size of around 100 trailers. But since then, there has been an addition of nearly ﬁve times which also includes the hired component. “When we had started this joint-venture, we had a ﬂeet of 100 trailers of our own. And we didn’t have any attached trailer at that point in time. After the joint venture, we acquired two transport companies – Dynamic Movers and V K Carriers. Both were Gurgaon based. And because of these acquisitions, 100 more trailers came in. During the ﬁrst year of our joint venture, we added another 100 of our own. And then one of the biggest car carrier in the country – Jamuna Transport of Kolkata – its being run by us for last one year after the dispute between its promoters. And they have a ﬂeet of 250 trailers. So on a combined basis, we have a ﬂeet of 550 trailers. So you look at the jump- it has grown from 100 to 550 in ﬂat 16 months,” Vipul points out. In a market which has an estimated car trailers in the range of 10,000-12,000, a sudden ﬁve fold jump in the ﬂeet of a single player is bound to put it on a higher pedestal in a robust economic environment. Meanwhile, the composition of different categories of trailers in Mercurio Pallia’s ﬂeet broadly reads as: 18.75 meters (120), 12 meters truck (40) and then 22 meters trucks (280). In addition, the company has added about six-seven truck carriers in its ﬂeet which have been designed by Mercurio. The volume story too has been no less skyrocketing in nature. Today company claims to be transporting over 10,000 LOGISTICS TIMES December 2010
cars everything from a small base of 2000 about two years back. “Ever since, we have started working under the JV umbrella, we have not not seen a month when there hasn’t been a robust growth,” Vipul adds. As a cumulative impact of the incredible growth in three critical parameters of volumes, ﬂeet and topline, the company now claims to have landed in the league of front ranking car carriers in the company from being not even in the top ten list two years back. From the perspective of Italian promoters, the initial bout of Indian experience has clearly been a case of dream debut. “ We are very, very happy the way the business has evolved and we are anticipating much greater opportunity in the future,” Conti maintains . Last but not the least, there has been a sudden and signiﬁcant addition in the list of Mercurio Pallia’s client list ever since Italian job came into the play. Sanjeev Tripathi who comes with an experience of 18 years in various domains of Indian logistics space testiﬁes. “Pallia had its operational base even before this JV. But in a sense, it was quite restricted because we had only three –four clients which we were dealing with like Mahindra, Maruti, and Honda and volumes were very low..” But today, the company also has
with it other automobile heavyweights like Huyndai, Toyota, Nissan and Tata Motors. It is also the major carrier of cars produced by General Motors and today 15-20 percent of its total volume in India is taken care of by Mercurio Pallia when it comes to delivering between two points within the country.
Change in operational dynamics The sudden escalation in operational scale has not merely been the function of ﬂeet increase and exponential volume multiplication. A great deal of contribution has also come from change in operational dynamics where parameters have been adopted in alignment with Mercurio’s set benchmarks elsewhere. “These are operation related benchmarks which have been advised by Mercurio. Like a trailer should run a minimum of x number of kilometers every month, the dead mileage (meaning trailer coming empty) should not be more than a particular level, etc. Additionally, we have worked out a metrics wherein number of trailers at any given point in time in transit has been minimized to the prescribed level. We have, in fact, surpassed several parameters which they had set earlier. Now our trailers are running x plus kms
every month, the number of trailers in transit is minimum at any given point in time. For example, if we have 500 trailers, the number of trailers in transit is not more than one-ﬁfth anytime,” Tripathi explains. In addition, a minimum EBITA level has also been ﬁxed by the parental ﬁrm to ensure that ﬁnancial equilibrium stays in ﬁne fettle. For Tripathi, the commencement of Mercurio Pallia has almost been like that of a start up where rules for functional style has been rewritten. And the reﬁnement in operations has also been attained by bringing in a more qualiﬁed workforce.” Earlier we were not there in the pan-India picture. Now we have nearly 95 percent of clients covered, we have presence all over, we have opened new branches and more signiﬁcantly we have appointed new specialized manpower. We have added 20 people at the managerial level and 50 at the level of supervisors,” he underlines. The company today has a headcount of 150 excluding a strong component of drivers which number around 250 on its roll. The company is managing nine depots – Chennai, Bangalore, Pune, Nasik, Baroda, Gurgaon, Haridwar, Rudrapur, Faridabad with Chennai and Pune being added in last one and a half years. Not ﬁnding loads both ways during a certain trip has been a major bane for Indian car trailer operators. And this is an area where Tripathi asserts the company has worked assiduously. With expanded client base and depot units and a superlative workforce to man the operations, the company maintains that this gap has been ﬁlled to a considerable extent. “Today when we send our trailers to south or west or even east, we get return loads. It has been operational optimization in a way because earlier when we were sending our trailers to south, they were coming empty. From west, except for Halol and Nasik, they were coming back empty. Now the scene has changed,” Tripathi points out.
The grand design & preparedness Looking at the car carriage value chain
(L to R): Anand Khattar, CEO, Mercurio Pallia Autoworks and Sanjeev Tripathi, COO, Mercurio Pallia Logistics
in the operational sense, Mercurio Pallia almost has a captive expertise in the ‘ﬁrst mile and last mile’ connectivity segments. And its bringing in the middle component of services which comprise the larger grand design of the company now where it would be investing its resources in the future. The constituents of this mid level services in the value chain primarily comprise railways and ocean connectivity and also having a modern maintenance and fabrication center. In pure action terms, it’s the latter where maximum effort is visible. On a sprawling four acre campus in Rewari, Haryana just 40 km away from its ofﬁce in Gurgaon, the company is setting up an unit which will ﬁrstly indulge in maintenance of Mercurio Pallia’s growing ﬂeet and secondly it would comprise a robust assembly line for churning new trailers – a signiﬁcant portion of which would be absorbed by the company itself while others would be sold to the outside clients. Even Mercurio Pallia’s competitors. Vipul claims it is going to be ﬁrst of its kind facility in northern India which would give a decisive edge to the company’s operations. The unit would be operated by a new subsidiary called Mercurio Pallia Autoworks where Mercurio Pallia is a joint venture partner with Gruppo Mercurio. According to Anand Khattar, CEO of this new subsidiary, this unit is purely the case of vertical integration and would be vital to support company’s expansion plans. “ When logistics business is expanding, you need to have to have a proper infrastructure for maintenance, workshop,
proper back up for new vehicles, etc. This unit would be an excellent combination of all these in the sense that we have the workshop, the maintenance area and we have this fabrication unit under one roof. Workshop of this kind is the backbone for the kind of logistics operations we indulge in. If the trailers are in good shape, the vehicle turnaround time is lower and it means more business for us,” he outlines. Fabrication is another interesting aspect which has been added to this unit. Khattar explains the rationale in these words, “Fabrication area is very interesting. There is a plan to roll out a good volume of new vehicles in the coming years. So it makes more sense to have your own production line where you can make tailor made products as per OEMs requirements. In India, this activity is very unorganized as of now. Trailers are usually made on roadsides and delivery is always behind schedule which has its own economic cost.” The unit would perfectly supplement the expansion requirements of the company. According to Vipul, the company would be aiming to double its own ﬂeet size by 2012 end (with hired vehicle growth, company’s ﬂeet size could well be around 1000) and now with fabrication unit run by its own subsidiary, addition of trailers would happen much swiftly than ever before. Khattar claims that the fabrication unit would have a production capacity of around 340 trailers in the ﬁrst year and this capacity would be scalable. As per the original plan, nearly one-third of the total produce from this unit would be absorbed by Merucrio LOGISTICS TIMES December 2010
Pallia while remaining would be sold to clients outside. Excluding the price of the land, the total investments made in this project is over Rs six crore and the plant is expected to kickstart its operations by January end . Going ahead, this unit would have a second phase as well. “In phase two, we plan to add one more plant which would have bigger capacity. This second plant would be all about new technologies where you would have ultra modern machineries, new designs which we want to incorporate. Phase two would start in 2013. By 2014, it would become operational. It may be set up in a different location and projected investment could be Rs 15 crore,” Khattar shares the details. In Meruciro Pallia’s scheme of things, India is going to play a critical role – almost a stepping stone for penetrating into other Asian markets (Conti conﬁrms it in his interview). And according to Vipul, this unit could also churn out trailers to meet the rising demand in other Asian markets. “Supplying trailers to markets outside India is deﬁnitely there in the mind of Mercurio top brass. I won’t be surprised if this unit eventually becomes as much bigger as Mercurio Pallia. We expect it to become proﬁtable in the ﬁrst year itself,” he says candidly. With a decision almost made to use India, one of the most vibrant automobile markets in the world today, as the entry point for foray in other Asian markets, the other crucial part of the grand design of Mercurio Pallia, of course, is to strengthen its positioning in the Indian market. To truly attain the status of an efﬁcient 3PL service provider to the car manufacturers, something which is the calling card of Gruppo Mercurio in its stronghold pockets in Europe. And here the sole pursuit would be to ﬁll up that middle level services rung in the value chain by bringing in railways and ocean components. “With the help of our Italian partners, we can go into other areas where we don’t have expertise like railways. You should be hearing very shortly about our railways project. And we are also working on coastal shipping LOGISTICS TIMES December 2010
A view of the upcoming maintenance-cum-fabrication unit in Rewari, Haryana
with them. Coastal shipping of cars plus the compound management, stockyard management, etc – these are the areas we would eventually move into. A total 3PL system is what we are aiming at,” Vipul underlines. For railways connectivity, Mercurio Pallia has hired a consultant to prepare a feasibility report (Read box: We are weighing all options for rail services). But the larger plan is to hire wagons from private operators or undertake this project in conjunction with Indian Railways for transportation of vehicles. The time effective beneﬁts would be the real takeaway from this kind of service and would also facilitate the company to enhance its volume. “If we have railways option, we can do very large volume because we already specialize on the ﬁrst and last mile connectivity fronts. With the dedicated freight corridor coming up in the future, if we don’t start right now, we may lose out on a robust opportunity,” Vipul points out. The company, in fact, is already talking in terms of establishing three railway linkage compounds – near Gurgaon, near Mumbai and one somewhere between Chennai and Bangalore. On ocean linkage, the proposal is under consideration and would probably the last mile of Mercurio Pallia’s structural changes design in India, at least in the medium term. “ We are studying to link Gujarat with Kerala and Chennai with the eastern part of the country. Our Italian partners are keen on it,” Vipul informs. Meanwhile, the ocean transportation business too could be taken care of by a separate subsidiary with end -to -end solution being provided by Mercurio Pallia logistics. On the operational side, the mandate is to ﬁne tune the processes and subtly
bring in more technological inputs as well as better human management practices. “By 2011, we are planning to have a ﬂeet which would have 80 percent of vehicles just two-three years old. And all our trailers would be ﬁtted with tracking GPRS devices. In fact, we have already selected a vendor for that. We would have a dedicated tracking team with all the monitoring facilities online on 24x7 basis. Apart from that, we would have a training facility cum school for the drivers at Rewari unit. We want to create a pool of qualiﬁed drivers who would be supported with proper life insurance schemes and other facilities. In Italy, we have a commendable pool of drivers who have been with the company for last 10-15 years. We want to emulate that,” Tripathi says. So hypothetically speaking, if all pieces of this grand design fall into place as seamlessly as they have been envisaged, where would it lead the company in next few years? Tripathi responds, “The automobile industry is growing by 24-25 percent. And that kind of growth on the existing base which is not small would entail huge growth. Maruti is close to 1,00,000 cars per month, I think the projected industry volume would be 1.8 to 2 million in two years time. For us, the target would be to corner18-20 percent of car carriage market share in next three to ﬁve years and take our topline in the range of Rs 500 crore around 2015.” Conti does not indulge in issuing a guesstimate on the size of the business in near to medium terms but given the ﬁrm footing of Gruppo Mercurio in global auto logistics space and its grand design for Indian market, its top brass could hardly be thinking small in laying out an acclaimed Italian job on the Indian turf.
LOGISTICS TIMES July 2010
t A D i s c o nnec ? SC Security & Pharma:
There are many security issues within the pharmaceutical industryµcounterfeit drugs, theft, loss, pilferage, delays in shipment, contamination, patent infringement and more. What to do to solve some of these problems is the obvious question and challenge. However, while it appears that attacking just one fundamental vulnerability in the industry - the control of the product from the origin through its shipment to destinationwould result in many advantages, it simply is not done, or it is done in a manner sufficient to accomplish its purpose, observe Dr Jim Giermanski and Ian Schmehl*
ontrolling the supply chain not only protects the public, but also improves the bottom line. This analysis will focus on solving some, if not most, of the vulnerabilities associated with control and movement of pharmaceutical products within the supply chain, specifically: verification of container contents at origin, container temperature and internal environmental controls, access, tampering, movement monitoring, and authorized access at destination. Control of this type treats many risks from corruption to theft. Take for example, the role and negative impact on the industry and the public of counterfeit drugs.
A Problem: Counterfeiting With the advent of technology our lives have been made easier and our borders extended
through a globalized economy. Because of this global economy, it has become easier to introduce illegitimate pharmaceutical products. A harsh truth that we as a society must now face is that the pill prescribed by our doctors may no longer be what one thinks it is and thus not do what was hoped it would. Counterfeit pharmaceuticals are a growing threat to our society. The rise of illegal medications is not only alarming, but possibly deadly. This is a problem not unique to developing countries. It is well entrenched here in the United States. On June 15th of this year, “Fake Viagra” was found in the legitimate supply chain in Australia. This level of compromise to the supply chain is cause for alarm. To combat a problem the key is to first understand it – counterfeit pharmaceuticals is no different. “The U.S.-based Center for Medicine in the Public Interest predicts that counterfeit
*Dr. Jim Giermanski is Chairman, Powers Global Holdings Inc and Ian Schmehl is Director, Labor Relations, AT&T LOGISTICS TIMES December 2010
drug sales will reach $75 billion globally in 2010, an increase of more than 90% from 2005.” Secretary Tommy Thompson who served under President Bush, and Secretary Donna Shalala who served under President Clinton have both stated that they cannot certify the safety or cost-savings of imported prescription drugs from foreign countries. The World Health Organization says that up to 10% of medicines worldwide are counterfeit—a deadly hazard that could be costing the pharmaceutical industry $46 billion a year. On May 14 2010, the Miami Herald reported that “The FDA, along with Customs and Border Patrol and the U.S. Postal Service conducted at the Miami International Airport “Operation Safeguard,” which had dozens of agents pouring through piles of packages filled with illegal pharmaceutical drugs, dietary supplements and home remedies mailed from foreign countries.” Statistics and increased government enforcement underscore the need to understand better
counterfeit pharmaceutical operations, to identify solutions to protect citizens who want a prescription to address their needs, not a more serious problem that may have to be treated.
A Solution: Controlling the Global Supply Chain First While some claim that the unfettered access to pharmaceuticals through the internet is the problem, perhaps it really isn’t. Placing blame on the internet since the internet as a medium is efficient, effective, and global, may be off the mark. While it is true that social media have come to play a more prevalent role in access to illegitimate and often dangerous pharmaceuticals, the “Tweet” may not be the core issue. A routine tweet from a user can be troublesome for the industry. For instance, Phil Taylor of Securing Pharma wrote “A Canadian website classified as a rogue online pharmacy by LegitScript is using Twitter to advertise medicines, indicating the battle against the illegal medicines trade must also be fought on social media platforms.” True, but without controlling pharmaceutical trade and global access to unsecured drugs and medication, the internet would have a lesser role to play. The ability to monitor internet groups, sites, and communications is immensely difficult and trying to weigh the policing of the internet with the safety of the citizens is difficult if not impossible. There are no borders to this problem; there are no limits to its reach. In light of this, it seems the solution must begin and be maintained by supply chain security methods. There are supply chain solutions, from the simple security seal to the sophisticated smart container. So what exactly is needed? There are today “off the shelf ” smart container systems that can provide global control and maintain the integrity of the international and domestic pharmaceutical supply chain. What is needed is often unique to the producer and pharmaceutical cargo. If you are a pharmaceutical company like Pfizer, Inc., you may need to continuously monitor the container’s internal environment like temperature, and for its high-value cargo like Viagra, security against theft. Smart containers can also detect surreptitious
access for the purpose of stealing legitimate drugs or adding illegal drugs to the legitimate cargo of a reputable pharmaceutical company. In general, while different shippers, carriers, and consignees have different needs, the basic features of smart containers include the carrying of logistics and manifest data, container movement and location monitoring through historical and/or real-time reporting; detection and reporting of unauthorized access or breach through any portion of the container; internal environment monitoring and the reporting of temperature, excessive vibrations, and even the presence of foreign substances.
The Instruments of Control: Smart Containers Smart containers exist today and can mitigate and eliminate threats to the integrity of a pharmaceutical shipment. These solutions begin at the container’s stuffing, and remain through distribution to destination where the unloading is controlled. There are a number of different types of supply chain security measures that are implemented to combat counterfeiting, tampering and theft. Their sophistication ranges from simple reporting of location when it is interrogated by a land-based transceiver, typical of landbased, historical RFID (radio frequency identification) technologies; to tracking and
tracing features provided by satellite and cellular technologies; to actual real-time detection and reporting of a container’s internal environment and integrity; to the ultimate chain-of-custody system controlling and monitoring from origin to destination. Some containers are simply more intelligent than others because of how they are equipped and programmed. Each type provides a different benefit for varying users. For example, if you are a national retailer, you might want to know only the location of your container because of its potential role in inventory availability connected to your promotional events in different regional markets. Governments, however, may care only about the location of their sensitive or hazardous cargo. Yet other shippers want to ensure that the contents of their containers are not contaminated or deviate from a prescribed route of travel, called geo-fencing. For instance, a container programmed with geo-fencing detects a variance between where it should be and where it is, suggesting a hijacking or being sent to the wrong consignee or the wrong location. Each benefit is programmed based on the specific needs of the shipper, carrier, or consignee. Simple security seals can safeguard access, and deter theft and provide product safety. Their sophistication ranges from simple barrier seals to electronic seals which report LOGISTICS TIMES December 2010
location only when they are interrogated by an RFID (radio frequency identification) land-based transceiver; to tracking and tracing features provided by satellite and cellular technologies; to actual real-time detection and reporting of a container’s internal environment and integrity; to a chain-of-custody system from origin to destination. Container security providers offer different levels of sophistication and detail. Firms like TrakLok, LoJack, FreightWatch and GateKeeper offer electronic container security devices today. Barrier and electronic seals are also offered by Sealock. There are also advances in container design and construction. For instance, Cakeboxx offers a shipping container without doors. In fact, its uniqueness and applicability of all types of cargo will be highlighted by the World Customs Organization in its October 2010 edition of WCO News. The present smartest container has a sophisticated, comprehensive chain-ofcustody system that begins at the stuffing (loading) of the container at origin and maintains, monitors, and reports its integrity to the end of the global supply chain path at destination. Its process includes the human element in the supply chain. No system is 100% effective, and one cannot depend on technology alone. Because technology often overshadows the role of humans in security systems, container systems have to include the LOGISTICS TIMES December 2010
identification of the party responsible and personally accountable for final inspection of the cargo prior to the container’s sealing, dispatch and subsequent international movement to destination. Someone must necessarily be identified and responsible for confirming the cargo on the bill of lading or booking sheet, for activating the smart container system, and for locking the doors. This responsible party must be vetted with respect to integrity and competence. Equally, there must be a counterpart at destination. Both parties are electronically connected by a unique identifier to the smart container to complete the system. This is how it can work. An electronic activation key or equivalent that contains bill of lading and booking information, or information needed by Customs authorities, and other data such as the identity of the supervising and arming agent at origin and the final agent deactivating the system at destination is inserted into the container security hardware. Therefore at activation, the accountable party becomes an integral element in the smart container security system, and once the container is activated by using an electronic key protocol, these data can be read at almost any time during the container’s voyage by satellite communication. The activation also allows the smart container to notify appropriate parties of an unauthorized breach or to report the condition of the container or, depending on the sensors used, to report
the type of the cargo within the container and even to report its own hijacking. When a smart container is opened at destination by an equally accountable person and cargo is missing, and there were no breaches detected, recorded and reported, the accountable person at origin can face either disciplinary, or worse, criminal action by appropriate authorities. A worldwide control centers offer the capacity to serve as a third-party electronic record of the transaction recorded automatically in its servers. Thus, smartest container offers an electronic receipt of delivery, accomplished by the opening of the container by a person at destination approved and authorized to open the container, which is provided by another specialized electronic key protocol usable only with and by an authorized individual at the point of destination. In summary, a smart container provides the following benefits: • Electronically identifies the authorized personnel stuffing and securing the container, and accepts and report information like container/trailer number, booking data; • Carries and reports logistics data, including container number; • Detects and reports a breach in any part of the container in real-time or close to real-time; • Tracks the container through the supply chain; • Identifies authorized personnel unsealing container; and • Accommodates disparate logistics programs in communicating critical data. So far, only European Datacomm (EDC), and GlobalTrak in the United States can today provide these smart containers.
The Costs of Smart: None One presumes that the pharmaceutical industry already knows the costs of counterfeit products, theft, contamination, loss, fraud, and supply chain inefficiencies. And one way or the other, the private sector really pays for all of this. Even our government, in trying to encourage smart container usage recognized that there would be a push back from the private sector. Knowing this, Customs and
Border Protection (CBP) commissioned the University of Virginia to determine the cost/ benefit outcome to taking security measures. Published in a 2007 cost/benefit survey report, CBP reported the following with respect to benefits of simply participating in it Customs Trade Partnership Against Terrorism (C-TPAT) program: 1. Fewer examinations (34.4% decrease) 2. Better supply chain visibility (29.4% better) 3. Predicting lead-time (24.3% better) 4. Tracking orders (22.2% better) 5. Disruptions in supply chain (28.9% fewer) Unfortunately, it seems that the return on investment (ROI) is either not known to, appreciated by, or significant enough to the user to employ smart containers. Or the user is simply focusing on the costs involved in using smart container technology, not weighing the bottom-line benefits of a visible supply chain and the automatic positive impact on counterfeiting activities and other supply-chain related costs. Yet, it is recognized that, at a minimum. there will be a positive financial impact and savings through Customs expedited treatment of containers using smart container containers as defined in the SAFE Port Act. The benefits of expedited shipments, alone, vary from $600 to $700 per container per move (Bearing Point Study, 2003); and $1150 per move (AT Kearney Report, 2005). Therefore, if a smart container costs you an additional $100 from origin to destination, and you save $1000 on the expedited treatment, what was the cost? Costs are associated with the loss or delay of cargo; diversions; increased insurance premiums; supply chain disruptions; increased labor to reship or replace the cargo; business downtime; loss or delay in medication release; or the loss of sales. Benefits include minimizing financial risks, reduced inventory carrying costs, protection against counterfeiting; reduced or eliminate diversion costs, reduced out of stock, and reduced insurance costs.
Conclusion There is no argument that the loss of a 40’ container of Viagra worth millions, or its counterfeiting, or its contamination, or its delay, or its pilferage is significant. There
Stanford Study A Stanford University recent study revealed that quantifiable benefits of security controls and technology included: • Improved Product safety – 38% reduction in theft/loss/pilferage, 37% reduction in tampering; • Improved Inventory management – 14% reduction in excess inventory, 12% increase in reported on-time delivery; • Improved Supply chain visibility – 50% increase in access to supply chain data, 30% increase in timeliness of shipping information; • Improved Product handling – 43% increase in automated handling of goods; • Process improvements – 30% percent reduction in process deviations; • More efficient Customs Clearance – 49% reduction in cargo delays; • Speed Improvements – 29 % reduction in transit times; • More Resilience - 30% improved response time; and • Higher Customer Satisfaction – 26% reduction in customer attrition and 20% increase in new customers. Other sources offer different, but compelling, benefits to using smart container technology to include the U.S. Congressional Budget Office, in March 2006. In a 2006 A.T. Kearney survey report, respondents stated that “…they need realtime data for accurate visibility into their supply chains.” Since accurate data do not exist within the current logistics industry, smart boxes can provide that missing data deemed important to shippers. The report further revealed that the U.S. Department of Defense is now utilizing smart containers even though they are not the smartest containers. These smart boxes “…reduced overall losses (military supplies) to less than 8 percent.” There is a favorable bottom line to using smart boxes based on speed alone. The A.T. Kearney, Bearing Point, Stanford, and Congressional Budget office all, in one way or another acknowledged that control and speed through the supply chain, and especially through ports, pay off.
also is no argument that smart containers, especially those that provide the chain-ofcustody process are available to solve these problems. Finally, there is no argument that additional revenue results from using smart containers. It simply appears that the pharmaceutical industry’s executive and
security leadership has failed to respond to fundamental supply chain vulnerabilities. It also suggests that the insurance industry is willing to pay claims even though the shipper may be at fault for not taking appropriate available action to secure the shipment–but that’s another story!
Sources Staff Reporter, Fake Viagra found in Australia’s legitimate supply chain, June 21, 2010, http:www.SecuringPharma.com. Counterfeiting Facts and Stats, Protection from Brand Infection, CMO Council, April 28, 2009, http://www.cmocouncil.org/ programs/current/protection/protection_counterfeit_stats.asap, May 26, 2009 Frederick Balfour, Ami Barrett, Diane Brady, Kerry Capell, Paul Magnusson, Carol Matlack, Dexter Roberts, William C. Symonds, and Johnathan Wheatley, Fakes!, Business Week, February 2005. http://www.businessweek.com/magazine/content/05_06/ b3919001_mz001.htm, May 26, 2009. Reuters, Counterfeit drugs on the rise, pose global threat: WHO, May 2010, http//www.reuters.com/ articleidUSTRE6416G120100519. Phil Taylor, Rogue pharmacies turning to Twitter to peddle drugs, May 6, 2010, http://www.SecuringPharma.com For an expanded treatment of smart containers, see Dr. Jim Giermanski, Smart containers: their use, their payback, WCO News, October 2009, pp. 23-25; and for an expanded technical treatment see Dr. Jim Giermanski, Container Security: Is it working?, Logistics Management, October 2009. Robert W. Kelly, JD, Containing the Threat: Protecting the Global Supply Chain Through Enhanced Cargo Container Secuity, The Refore Institute, October 3, 2007, pp.8-9. Abdoulaye Diop, Ph.D., David Hartman, Ph.D., Customs-Trade Partnership Against Terrorism Cost/Benefit Survey Report of Results, Weldon Cooper Center for Public Service, University of Virginia, August, 2007, p. 47. Barchi Peleg-Gillae, Gauri Bhat, and Lesley Sept, Innovators in Supply Chain Security The Manufacturing Institute, Stanford University, July 2006, p. 4. Smart Boxes, A.T. Kearney, July 28, 2006, p. 1. Smart Boxes, A.T. Kearney, p. 2.
LOGISTICS TIMES December 2010
@ Rampur, Himachal Our photographer Anil Baral simply lost the appetite for food - except apples, once we began our journey from Delhi to visit Adani Agri Fresh’s multi-crore state-of-the-art apple procurement & processing facility at Rampur in Himachal Pradesh situated 125 km away from Simla. With Sanjay Mahajan, Head of operations in Himachal in tow, the young and energetic lensman captured more than 300 digital images. Anil and designer Kausar Syed had tough time selecting frames for this two-page photo feature. What about a detailed story? Keep your ﬁngers crossed. It will be out soon. That’s a promise. Thanks, Sanjay! And a special thanks to Mr Srinivasa Ramanujam, Business Head at Ahmedabad, who enabled this visit to this superb facility. By the way, the Adani’s Farm Pik was delicious.
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Wanted: a dedicated TV Channel
hy canâ€™t India have a full fledged and dedicated supplychain channel? Or at least time slots of say 20-40% of the total air time dedicated for supply-chain logistics? Also, why canâ€™t the entire supplychain logistics industry get together to form a non-profit industry evangelisation group like RAI, ATMA, COAI, CREDAI? Is the bickering between operators or thin margins of operating profit or just ego issues compounding as an obstacle in the way of forming such a
good initiative? When we have channels for News, non-News entertainment, Finance & investment, Music, Lifestyle, Movies, Regional, Devotional, History, Fashion, Travel, Geography and lot more which is otherwise not mentioned in the list, why not a channel dedicated for the industry vertical which is consistently cutting the flab to reduce its logistics spend to climb the value chain propositions? Why should NOT the eyeballs capturing prime, ideal and idle time be channelised
for improving both awareness as well quality of the services in the supplychain and logistics? If we compare the GDP contribution of supplychain against Music, Fashion, Lifestyle etc, the absolute contribution to GDP of supplychain would be much more than the contribution of many of these sectors put together.
Visual Media Visual media is of course a capital intensive, aggressively-to-be-marketed LOGISTICS TIMES December 2010
service commodity in order to breakeven in a decent time frame. The packaging of programmes, contents offered, presentations and anchor persons, learned and knowledgeable reviews would define a fine path of maturity as well as viewership addition. Supplychain news, IT section for Supply chain, Tax & Financial implications of supplychain, history and evolution of supplychain, funny and benchmarking events of supplychain, military related aspects, embezzlements and judicial complex and best practices of various industries, brands which were bulit on the sheer supplychain muscle, Davids and Goliaths of the supplychain industry - what all kind of information can be served which will also duplicate with an entertainment and to some extend an educational/continuing education appeal. This list will be endless. This will automatically improve the advertisement revenues. Just like TV advertisement revenues improved the revenue streams for cricket as a mass entertainment sports, at least the quality of programmes and the depth of research for programmes also would be improved. We can’t, anyways, expect a niche or specialist vertical of an industry coverage would get a huge fan following like a mass entertaining and climax oriented outdoor sports. Our country offer challenges as well as satisfaction levels as good as an entire continent like Europe in a supplychain logistics scenario. Our 20+ states for an outsider is as good as 20+ countries. Still, in the education space, India has not matured enough to offer 3 or 4 year logistics or materials management courses (basic graduation courses) which would act as a stepping stone for any 18 year old with right attitude and aptitude, to make logistics her or his career as a professionally trained executive.
Benefit Bouquet A few institutions offer alternate ways of continuing education like, MDP, Distance learning, Online training. This gap can be effectively mitigated if this visual medium along with supplementing online media LOGISTICS TIMES December 2010
take up deep researched programmes and knowledge or information sharing programmes as the main plank of dissemination. In a lighter vein, sting operations can bring out the integrity and corrupt issues at various levels of supplychain logistics of both public and private sectors which are continuing for a long time but continue as like unnoticed. Global best-in-class practices, various other innovative operating and management activities across the country as well as across the globe can be brought to the environs of our homes, offices, canteens and mobile phones in this era of IPTV. Also, its high time both country and supplychain logistics industry to get an association of top management stalwarts. This would augment the general market growth path and also a most required “conscience of the country” for supplychain logistics universe. This body can have tie-ups with similar bodies existing in other countries which would forge an industry-to-industry relations which always makes right noises about trade and other exchanges between any countries. This body would channelise the goodfor-country, good-for-industry policy initiatives which may or may not require national or statewise legislations. This body or a subset congregation can act as a neutral arbitrator in case if required to resolve both intra as well as inter industry disputes. A holistic view encompassing various logistics mazes like ports, rail and intermodal transport tariffs, international and national port-to-port customs policies, warehouse and distribution, infrastructural development, knowledge documentation and all similar subsets of this vast industry would slowly but steadily come out from this impartial, pro-active body. Statistical, legal, knowledge supports also could be mustered from this associateship on a charge for non-members and on discounted charge for members. Network studies now being done separately done for various enterprises of the same class of products by different service providers
can be collectively done. Tweaking and customization required as per the business calls of sales can be accomplished by the individual firms, which would take much lesser time, at a much more lesser cost.
Value-Added Services Cash outflow from client side enterprises can be reduced which could be a value added proposition for the end-customers. Market would become more competitive, robust and zone based overall inclusive growth can be planned and executed if SEZ’s, logistics parks, roads and other infra are better planned based on the utility requirements arising out of abovementioned macro level industry focussed network studies. There is a huge demand supply gap expected and already in play hurting almost all enterprises with regard to the trained human capital available exclusively for supplychain logistics industry. Much required, more anticipated Industryacademia interaction can be spearheaded by this group. Training materials, Trained Trainers, aptitude testing, certification and base courses, tie-ups with universities and institutions - all are just a small list of activities which can be implemented if a concerted effort is initiated. Interaction with academic strata would bring in many qualitative and quantitative changes which would herald a golden era for the entire industry. Dreaming of a golden era itself is so soothening, wherein all stake holders of our industry is guarded and mentored by the broad minded industry body ably supported by a visual media with journalistic base as a much required fourth estate. Service utilizing enterprises getting a quality service, service providers able to provide same or better service at a better cost, better understanding, indirect beneficiaries having better living conditions, better and structured tax inflow into government coffers, a neatly planned, well monitored infrastructural development - so good, at least feeling better. —Deeyem (The author is a 17-year veteran in the logistics and supply chain industry. He will appear on these regular pages occasionally to share his observations and insights.)
LOGISTICS TIMES September 2010
Now a reality Crates eliminates dirt, dust, and the trash clean-up associated with expendable packaging, says Pranil Vadgama, President, Chep India. Over the past 2 years we have studied the impact of returnable packaging in market sectors such as FMCG, Retail and Automotive in India. With various level discussions with OEM’s, Tier 1 suppliers, Retailers, 3PL’s and Manufacturers a like we have identified quite clearly some major advantages of returnable packaging (crates and pallets) for the Industry: General saving advantages of returnable packaging; • Reduces total cost of ownership (end to end of the supply chain) • Improves product protection • Improves workers safety • Improves housekeeping • Improves space utilization • Improves environmental impact
generated by looking at the total cost of managing pallets and not just comparing purchase costs versus lease costs in a pooling model.
Improves product protection Returnable crates are constructed to support heavy loads and to provide excellent resistance to impact, resulting in better protection of the product carried inside. A well-designed returnable package can often provide more handling and storage protection then an expendable packaging. A higher quality pallet specification will provide durability and stability especially in warehouses where we have observed racking. A sub-quality pallet has too many risks associated to it in racking.
Reduces cost Cardboard boxes (cartons) are typically used once and then thrown away. The cost of this package is added into the product unit cost. Returnable packaging eliminates this recurring cost. If your packaging will remain constant for a long period, returnable crates are frequently lower in annual cost than expendables. From a pallet perspective savings are LOGISTICS TIMES December 2010
Returnable crates and pallets provide handles and smooth grasping areas for ease of use and reduce worker injuries. A returnable can often be fitted with material-handling features, like handles, that would not be economically feasible with an expendable container. As previously mentioned regarding pallet quality in racking systems, we have observed several “near misses” of product falling through the racks due to the quality and specification of the pallet itself.
Improves housekeeping Returnable packaging (crates) eliminates dirt, dust, and the trash clean-up associated with expendable packaging. Higher quality pallets are also easier to
manage and specially in a pooling model where the maintenance and repair is outsourced to the pooling operator. Improves space utilization Returnable packaging is typically built to support heavy loads and stack high in the warehouse and trailer, saving space and eliminating the damage from crushed product. Foldable crates are a real positive especially where there are capacity constraints and every space counts!
Improves environmental impact Returnable packaging reduces the amount of trash going into the landfill. A package reused is one less package that will wind up in the solid waste stream. With fewer returnables going into landfills over a given period of time, the cost of packaging material disposal is greatly reduced. Important note note: The principal driving force since the 1980s has been pressure from environmental sources. Pooling has been proven to show that fewer trees are felled to support the system as the pallets are effectively shared amongst the entities of the pool. In full dynamic pool cO2 emission are also reduced based on few transport legs. We have observed very encouraging signs in the Industry as many major players in several market sectors have already moved onto pooling / returnable packaging. In the Automotive Industry there has been major sponsorship from the key OEMs and in FMCG very similar with the top players too. What was previously 2/3 years ago seen as a concept is now becoming a reality and norm as one enabler to gain supply chain efficiencies and cost.
LOGISTICS TIMES December 2010
The Power of One Vinod Kaul Group GM Group Concorde
LOGISTICS TIMES December 2010
The start of the biennial TIACA ACF 2010 event was not very auspicious with the current chairman Ulrich Ogiermann, declaring his decision not to attend the 25th Air Cargo Forum at Amsterdam, from November 02-04, 2010. This stunning development followed the pronouncement of some indictment on allegations of price ﬁxing by a US court, shortly before the event. From this rough patch here, the expo went through its course, fairly smoothly. The attendance here makes it the best Air Cargo Event of 2010. Since the recession, which has plagued the industry in the recent past, appears to be dissipating, it portends well for the big daddy of them all – Air Cargo Europe and Transport Logistic, to be held in Munich, in May 2011. The best attended booths were, of course, the ones offering hospitality and F & B freely. The booths with better than average footfalls were WFS, Virgin Atlantic, Turkish Airlines, Etihad, Atlanta City, Lufthansa, etc. The hours of exhibition were ofﬁcially up to 8 p.m., but after 6 p.m. it was practically over, for the day. The gala dinner on 3rd November was a fairly classy affair organized by the city of Atlanta, which is hosting the next TIACA ACF 2012. They had even brought in a band to play their special kind of music. However the last day on Nov. 04 was more meaningful business-wise, with a press conference to announce the forming of the unique new advisory group consisting of IATA, TIACA, FIATA and GSF (Global Shipper Forum) The signing ceremony of the letter of intent was the subject of the ﬁrst portion of the morning’s program. Desmond Vertannes, IATA Global Head - Cargo, Jean Claude Delen, FIATA President and Michael Steen, TIACA ViceChairman, signed the agreement on behalf of
their respective organizations. The idea is to combine the strengths of all three, for the greater beneﬁt of the air cargo industry. This group formed will present a uniform single voice in front of regulatory authorities worldwide. Seen in the background of the persecutions in the US, it appears a very positive move. The signing part completed, Martin Steen declared that the business part was now over, which drew a mock protest from the next speaker, Peter Bakker, Chairman of TNT, a company in the 10 billion euro club, “Am I the entertainment?” Nevertheless, he carried on in the same inimitable, self depreciating vein and delivered his impression on the “Future of Air Freight - Chances and opportunities “ He recalled speaking at CNS, (Cargo Network Services), a couple of years back where, after a late night party, he had predicted the end of the industry. However, this time not having seen him at the gala dinner the night before, it can be assumed that he had a good night’s rest before he came to give his presentation. Crisply, using the bright visual slides as a prop he waded into uncharted territory and gave his opinion of what the future is going to look like. As Chairman of the world’s fourth largest Express Organization, with network spread across 200 countries, with 155,000 employees in 64 countries, including India, he may have a pretty good idea of the trends. Peter Bakker added his voice to the global security concern and feels that security measures should be risk-based, as some shippers are more reliable than others. He also felt it should be layered and based on intelligence and globally coordinated and lead to a one stop security concept. He believes that 100 percent screening is not the only answer and that a two way sharing of intelligence with government agencies is the way forward.
Peter Bakker strongly believes that increasing carbon emissions caused by usage of fossil fuels, are among the main issues the air cargo industry will have to come to grips with, in the coming years. He would prefer one global ICAO supervised system for emission trading, to deal with the problem. He believes that just working at the mechanism alone, is only the start. What is required is concrete action. IATA has made a tangible move by setting targets - a 1.5% average annual improvement in fuel efﬁciency from 2009 to 2020, carbon neutral growth by 2020 and a 50% absolute reduction in carbon emission by 2050. It is expected that airplanes will continue to ﬂy on fossil fuels for several decades more. However, there is growing consensus in the industry that the only option to dramatically reduce emissions in the near future, are bio fuels. Bio fuels need to be highly sustainable. Peter is keen to ensure that bio fuels used in the planes have no adverse impact on the food chain, or any other environmental or social area. He made it clear that only a genuine demand from airlines for sustainable bio fuels can create the scale required and accelerate the commercialization of aviation bio fuels. Peter Bakker is very optimistic about the aviation sector to technologically innovate solutions. He referred to the impressive track record of the air transport cluster, which has improved fuel efﬁciency by 70% per passenger km, over the past forty years. Peter thinks it is high time to reconsider
our entire global supply chains. He feels it is just ludicrous, that personal computers, iPods, iPads, etc., are transported from Asia to Europe. In his opinion, these supply chains should be greatly shortened to avoid unnecessary emissions and kerosene use. We should move to “regionalize” the production of these electronics. This would mean that for instance in the case of Europe, they would be produced in Rumania or Bulgaria, countries with low cost labour, and then be distributed across the region. This would make for a shorter, cheaper supply chain. Of course, stated Bakker, this would make air travel clean. This Swiss electrical plane, the Solar Impulse, just made its maiden ﬂight in September, this year. Solar Impulse is able to carry just one person at an average speed of about 50 kilometres an hour. It is clear that this is not going to provide us with emission-
free sustainable air transportation the near future, but probably in 40 years down the road, perhaps it could be commercially viable. Peter Bakker emphatically felt that the industry needs to create demand for sustainable bio fuels and must play a key role in kicking off this market. Can the pressure from users, develop this market to make air transport sustainable? To this question, he answers with the TNT tag line, which existed before President Obama re-invented it – Sure we can. The overall program was fairly satisfying in this fairy-tale city which caters, so explicitly, to the satisfaction of human carnal need. The primary purpose of such events is to network, exchange cards and kick start any possible co-operation between synergistic organizations. In a world where, not too long ago, violent intervention was an accepted negotiating option, we have come a long way.
The Chosen One When DP World’s Vishaka Container Terminal wanted to talk to the media for the ﬁrst time, do you know whom they chose?
Your Best Friend
LOGISTICS TIMES December 2010
round May I was talking to Sanjay Upendram, Founder and Chairman of Amarthi Consultancy, over phone and the conversation quietly veered around to his assignments. The exKPMG honcho mentioned about his engagement with Sri Kailash Logicity near Chennai. So, it was but natural when I bumped into him at Auto SCM 2010 in Chennai a few weeks later to enquire about the progress of this. The handsome consultancy guru did not waste time and took me to the stall put up by the project owners where I was handed over some colourful brochure. No doubt, it was quite impressive. In November as I was reaching Chennai
for my 8-day, 2,800 km journey to understand the logistic challenges onroad for car-carriers, Sanjay and I decided that a visit to Oragadam where SKL is coming up would be an ideal proposition. Though born and brought up in Chennai, I never heard of this place until Sanjay broached this subject. Nonetheless, we motored down 55 kilometres on a cloudy day with Bijoy Nambiar of SKL as an escort. Hardly three or four kilometres after we passed the Nissan plant, our vehicle stopped and we got out. As we entered the barricaded site, there was no concrete ediﬁce in place. Land levelling machines and dumpers were in action. Fencing was done. I could easily sight
workers all around. “Recent heavy downpour has halted construction work,” explained the Gulf-returned Bijoy in a heavy Kerala accent. The visit got over in no time after gulping down a tender coconut at the security ofﬁcer’s tent and we headed back to Chennai city for an interaction with Raj Kumar, vice chairman of Sri Kailash group.
Face Off The 1958 born Raj was returning from a business meeting with his marketing head R Mohan, an industry veteran himself. Due to a forthcoming wedding in the family, Raj was being pulled in different directions, but the Kochi
LOGISTICS TIMES December 2010
University post graduate in commerce and pursing a thesis on the grand theme of “Transition of Family Owned Businesses”, sat down for a serious conversation. He knew of my visit to Oragadam that morning and also he sensed that my enthusiasm was low. “The phase I of our project spread over 17 acres and 4 lakh sq.ft will be ready before March next year,” he said. I have seen project executions in India and wherever there is a personal supervision and commitment by the promoters, the deadlines were invariably met because early launch automatically translated into early cash ﬂow. Pure common sense. I never heard of Sri Kailash Group until I met Sanjay. But that does not mean, SKG did not exist. In fact, SKG is a well established company from the south with interest in paper, construction and residential projects. Of course, logistics in the sense that SKG owns a ﬂeet of 45 vehicles for transporting cement and distillieries since 1983. Perhaps that is where Raj’s father – a secretary in the government of Kerala earlier and Chairman of the group now – realized the importance of warehousing and decided to become a “facilitator”. “Oragadam we chose because it was well connected and in the proximity of auto manufacturers of global repute in this belt (Sriperumbudur/ Irungattukkotai),” elaborates Raj, sporting a caterpillar kind of moustache – thick and trimmed properly – while seated in his residence in the bustling Mahalingapuram area of Chennai. He’s not off the mark. Consider this: just about 55 km on National Highway 5. It is well connected by road and rail. Fifty kilometres from Ennore Port. 100 km from Krishnapatnam Port. 75 km from Chennai and Tirupati International Airports. And, easy access to the largest talent pool of Tamil Nadu and Andhra Pradesh.
Perfect Logic “Heard of Just In Time (JIT) concept?” asks he rhetorically. He does not wait for my response because he is fully aware of what my response would be.
“The Japanese, Korean and German auto makers who have set shop are ﬁrm believers in JIT. An auto component manufacturer operating out Delhi/ Gurgaon belt or Pune would be most unsuitable to meet their JIT demand. What’s the next option? Auto makers cannot do without these components. So, they would invariably go for a 3PL arrangement which in turn would need a state of the art warehousing facility closer to the manufacturing site. Bingo, we will be there soon with ours to cater to their demands,” elaborates Raj without taking a breathing break. Perfect logic. Though the facility is not ready yet, the blue prints and brochure tells and sells a dreamland that would be lapped up by 3PL players. Globally renowned BPS Global is providing support in erecting the logistics park. BPS Global is known for its insightful planning and adherence to best practices with four completed projects. Once again, the empty landscape that I had visited this morning ﬂashes on my mindscreen. Well, every project goes through these stages. With the GST roll out in the near future, Raj is hopeful even FMCG companies would jump at his logistics park to service the southern market. Once the Oragadam project is up and running, he has set his sights on creating similar ediﬁces in Salem, Kochi, Nagpur, Pune and Gurgaon – to create a Pan-Indian presence. Where is the money going to come from? IPO, pat comes the reply. For the time being, most of it is coming from group companies with a small portion of loan from banks.
concerned about business which he feels would automatically ﬂow in. The rising land price is a big boon, no doubt. What is his management style or philosophy? Delegation, claims Raj. I prod him to share some of his thoughts that is creeping into his thesis. “Wait till it is ready and submitted to the University,” he responds. Nonetheless, he believes that if there is managerial talent within the family to run any business, that should be exploited fully. Wherever that is missing, he does not mind acquiring the best talent. Pragmatic, indeed. As I take leave off him as night has already set in, Raj escorts me to the iron gate of his bungalow and tells, “Keep a day for us in end February or early March. We want you to revisit Sri Kailash Logiticity when it is ready for roll out”. I make a mental note. Just 100 days away only. I will, Raj! μRamesh Kumar
No Blues The Oragadam land of 25 acres was bought when the land price was hovering around Rs.65 lakhs per acre. Today, the land price alone has doubled almost: Rs.1.25 crore. “Any newcomer will think twice,” argues the Vice chairman of SKG. He is not LOGISTICS TIMES December 2010
PPP in Warehousing Leading industrial chamber ASSOCHAM organized a national conference on publicprivate partnership in the area of warehousing on November 15th. The conference titled as “ Warehousing in Semi-Urban & Rural India – Issues & Solutions” saw participation by heads of some leading agencies dealing with public distribution as well as noted experts. The main speakers at the conference were: Siraj Hussain, CMD, FCI; B B Patnaik, MD, CWC: B D Narang, Former CMD, Oriental Bank of Commerce, A P Dwivedi, GM, Central Bank of India and Prof. Saurabh Agarwal, Vice Chairman, Indian Institute of Finance. The representatives of several logistics services providing companies were also present in the conference.
Trucker’s Utsav TCI Foundation (TCIF), the social arm of Transport Corporation of India, organised a “Trucker’s Utsav” simultaneously at 7 locations across the country on 27th November. The activity was organised under a national HIV / AIDS prevention programme for long distance truck drivers and helpers called “Project Kavach” which is an endeavour to arrest the spread of AIDS amongst the trucking community. The Utsav saw participation from truckers in the seven centres (Delhi, Hyderabad, Bangalore, Indore, Nagpur, Varanasi and Icchapuram) who vowed to ﬁght against HIV/AIDS by practising safe sex. ‘Trucker’s Utsav’, an infotainment event, forms one of the core activities of ‘Project Kavach’ as it acts as catalyst for communicating behavior change messages to sizable groups in a fun, peersupportive context. This is done through the medium of concert, street plays, songs dance, games quizzes and special award for audience participation. The Utsav had various multi-specialty health camps and parallel competitive events like Joshilay Janbaaz (Arm Wrestling), Jaanbaaz Khiladi (Bucket Lifting), Sangeet Samrat (Singing Competition), Chamakte Sitare (Best Maintained Truck) took place. LOGISTICS TIMES December 2010 LO
LOGISTICS TIMES July 2010
RNI No. DELENG-17848/2010-TC
LOGISTICS TIMES July 2010