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SPOTLIGHT RAIL LOGISTICS

REPORT GST

SPECIAL FEATURE THE TALKING WAREHOUSE

LogisticsTimes www.logisticstimes.net

November 2011

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Blue Dart's Double Punch

Going beyond its dominant position in domestic air express, the company has now set its eyes to emerge as ground express major as well. Clearly it wants to have best of both worlds.

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NDIA'S MOST VALUED LOGISTICS MAGAZINE

exclusive interview: tony lugg


RNI No. DELENG/2011/39329


Logistics Times

CONTENTS

All about Transportation, Distribution & Infrastructure

Volume 2: Issue No.7 * November 2011 Editor in Chief

Raj Misra rajmisra@logisticstimes.net

Editor

Ritwik Sinha ritwik@logisticstimes.net

Sub Editor Photographer Design Consultant Designer Circulation & Distribution Legal Advisor

Neha Richariya Anil Baral S. Athar Hussain Kausar Syed Kamruddin SaiďŹ Rakesh Garg

Our Bureau Mumbai Rahul Kumar rahul@logisticstimes.net Bangalore B Shekhar shekhar@logisticstimes.net Chennai N Raju raju@logisticstimes.net Hyderabad Sudhir Kumar sudhir@logisticstimes.net 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 Sanjay Upendram Founder & Chairman, Amarthi Management Consulting Swaran Singh Soni Consultant (Oil Industry) Arif Siddiqui Chairman, Coign Consulting

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COVER STORY BLUE DARTS Double Punch

Marketing & Sales Outthink Strategies Ph: 65177214, 26412476, 9818097385 Email: sales@logisticstimes.net Printer & Publisher Deepa Misra for

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

www.logisticstimes.net

Edit Note

8

News Briefs

10

Quick Chat

44

Events

47


12 INTERVIEW

40 SPECIAL FEATURE

Tony Lugg

Talking Warehouse

34

16

SPOTLIGHT

REPORT

Rail Logistics

GST: Ready. Steady.Go?


EDIT NOTE

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Best of both worlds As a business journo, I have always found it quite satisfying to undertake what we in our parlance say corporate cover story because there are valuable take aways at several levels. It certainly gives you the chance to dig a little deeper (go beyond the perception façade) by picking up the grey cells of important functionaries, you get to understand the basic DNA of the company from close quarters and you are enriched in terms of impressions which are slated to stay with you for a long time. Seven-eight hours of long formal conversations (on a cumulative basis) and you never know when a small hint would drop in from some corner telling you something contrarian to what the popular perception is. Ever since Logistics Times was launched in April last year, Blue Dart has been on my radar for a cover story coverage. And there have been factors which ignited this desire. In early 90’s during my college days, I knew somebody who had joined this company as a fresher. Then I completely lost touch with him (blame it on ‘Life in a metro’ syndrome). About two years back ( a few months before this publication was born), I met him accidently at a function. “ Where are you these days?,” I shot the question after exchanging plesantaries. “ Blue Dart,” was his crisp reply. “ You haven’t changed now that this sector has expanded and there are more players?” my voice must have been littered with heavy overdose of surprise. “ Why should I? It’s a good company which is only getting better now that it is part of DHL family,” was his firm reply. Now I move on to another conversation which though had a different context. Around the end of last year ( the manufacturing sector was in double-digits and there were discernible smiles on the faces of logistics industry representatives unlike the present day), I was involved in an informal chat with an industry friend and he was explaining that when volumes shoot in an unprecedented manner, all quality standards go for a toss. “Even Blue Dart can’t manage the quality in such situations,” was his defining statement. At the surface level, this statement might appear out to be an unkind cut but is that precisely the case? I don’t think so. In fact, it could be taken as a serious compliment meaning the company is looked upon as a benchmark. And being a benchmark certainly is the strongest driving force of Blue Dart top brass, as I learnt from my two days of free-wheeling interaction with them at the company’s headquarters in Mumbai last month. My sense is: the company has successfully toyed with some new ideas in past five years (both to devise new growth paths for itself as well as to be that valuable cog of DHL’s extended family in India), and today is filled with a new sense of confidence to make it further big in the future. The most significant sub-plot, of course, is the addition of strength in ground express. If we talk about a medium term scenario, then the serious intent to deliver a double-punch (further enhancing its leadership in air express and becoming a challenger in ground express) in the marketplace is not difficult to trace. Leaf through the cover story for details… Hope you would enjoy reading this edition. Waiting for your feedback. Ritwik Sinha ritwik@logisticstimes.net LOGISTICS TIMES August 2011


NEWS BRIEFS

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Major slump in exports growth India’s exports growth slumped signifincantly in October, as demand slackened particularly from the European Union. Exports grew 12.4 perrcent to $19.9 billion in October , much slower than spectacular growth figures of 36.5 percent in September and 52 percent in the April-September period. “We have been saying that exports are going to slow down in the second half of the fiscal. It happened a month late, but the chickens have come home to roost,” Commerce Secretary Rahul Khullar said. According to government data, the slowdown has been across the board. The debt crisis in the European Union has started resulting in lower demand from the zone. Export of electronic goods, which go mostly to the region, dropped by as high as 18 percent in October. Reacting to sharp dip in export growth, apex chamber of exporters’ fraternity FIEO maintained that trade will continue to suffer in the remaining part of the current fiscal. President, FIEO particularly expressed his concern over drop in exports in value term for important products such as engineering, which was averaging about US$7.73 billion in first six months but dropped to US$5 billion in October, 2011. The drop in exports of petroleum products on a monthly basis is also significant with the average going down from US$ 4.5 billion just a few months go to about US$ 4.3 billion now.

Cost of poor logistics infrastructure According to leading industry chamber Assocham, national losses due to inefficiencies in logistics infrastructure could mount to a staggering Rs 7 lakh crore per year by 2020 compared to over Rs 2 lakh crore at present. Assocham released an analysis paper last month which maintained that economic losses due to bad condition of roads are conservatively estimated at over Rs 30,000 crore per year. A potential annual saving of Rs 800 crore can be made by merely shifting the movement of goods through multi-axle and trailer trucks. According to the paper, over half of the motorised traffic is carried by 2-axle trucks that constitute 30 per cent of vehicles on the highways. Truckers ignore the real negative economics of overloaded vehicles in search of short-term gains, and add to inefficient fuel and road usage all along. “The government should set up a time-frame for all drivers of commercial vehicles to be trained on modern equipment. Well-equipped driver training schools could be set up in all states as part of the National Skill Development Programme,” said a senior official of the chamber. While the Railways carry 30 to 32 per cent of total goods traffic, road surface transport carries nearly 65 per cent. Even if all highways in the country adopt concrete pavement, fuel savings per kilometre work out to be Rs 6.7 lakh per km. ASSOCHAM also urged the government to improve turnaround time of Indian Railways through the proposed dedicated high-speed corridors and related industrial hubs so that more road transport traffic can shift to the Railways.

LOGISTICS TIMES November 2011


WB loan for DFCCIL

Kandla inching close to 100 MMT milestone The Union Minister of Shipping, G. K. Vasan has expressed hopes that Kandla Port would soon achieve the critical milestone of 100 MMT annual capacity. The minister recently laid the foundation stones for new PPP projects at three berths as well as IFFCO jetty at the Port. Speaking with the local officials and stakeholders of port on the ocassion, Vasan maintained that the proposals of developmental activities are being pursued with concerned Ministries. Meanwhile the three berths for which the foundation stones were laid, are expected to be developed at an estimated cost of Rs. 544 crore.

100% e-AWBs

In a significant development late last month, the World Bank signed a US$ 975 million loan agreement with Dedicated Freight Corridor Corporation of India Ltd. (DFCCIL) to set-up the Eastern Dedicated Freight Corridor-I that will help faster and more efficient movement of raw materials and finished goods between the Northern and Eastern parts of India. The agreements were signed by Venu Rajamony, Joint Secretary, Department of Economic Affairs, on behalf of the Government of India; Anshuman Sharma, Project Director , on behalf of the DFCCIL; and Roberto Zagha, Country Director for India on behalf of the World Bank. World Bank financing for the EDFC will cover a route length of 1,130 kilometers (out of a total corridor length of 1,839 kilometers) and will be provided in three phases. The Project signed by the World Bank last month will finance the first phase, which is the 343 kilometer section that runs between Khurja and Kanpur. Emirates SkyCargo, which has been in the forefront of implementing e-freight, has now announced 100 percent use of electronic air waybills (e-AWBs) for all shipments from its Dubai hub. The IATA e-AWB initiative aims to remove the requirement for paper air waybills (AWBs) – the contracts used for the transportation of air cargo. “The transition to e-freight is a massive challenge for both the industry and Emirates SkyCargo. Change of this scale requires time and many steps have been made, but this really is a giant stride forward,” said Pradeep Kumar, Emirates’ Senior Vice President Cargo Revenue Optimisation & Systems. “Eliminating paper AWBs from our hub demonstrates our commitment to meeting IATA’s deadline and bringing enhanced operational efficiency to the supply chain.” LOGISTICS TIMES November 2011

NEWS BRIEFS

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EXCLUSIVE INTERVIEW

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}India needs better cargo security environment

~ LOGISTICS TIMES November 2011


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The Transported Asset Protection Association or TAPA is a global forum that unites manufacturers, logistics providers, freight carriers, law enforcement agencies, and other stakeholders with the common aim of reducing cargo losses due to security gaps and other related inadequacies in the supply chain. The association has around 700 members worldwide and now has decided to open an India chapter. Senior officials of TAPA were recently in India to participate in the debut conference of the agency in the country and editor Ritwik Sinha caught up with Tony Lugg, Vice Chairman of TAPA Asia to get a sense of the agency’s network worldwide as well as its plans for the Indian market. Edited excerpts of this conversation: To begin with, give me a historical sense of TAPA. How did it come into existence and what is its scale of operations on a global basis? TAPA was formed in 1997 in the US because many global manufacturing majors have their base there. These companies had been suffering enoromous losses in supply chain which included theft, burglary, etc. The insuarance claims were enhancing and insurers were finding it difficult to settle those claims. So insurers

told manufacturers that they need to do something about it. As a result, a group of high-tech manufacturers came together and they brought in security specialists who in turn formulated a set of security requirement guidelines which they wanted to be deployed in supply chain processes. In practical terms, it began on a low scale with small procedures introduced in warehousing management first. But this resulted in some buying members (manufacturers) making it mandatory for service providers and supplying vendors

to adhere to those standards. But initially logistics services providers did not like it because they took it as cost burden. But after persistent efforts a few leading companies like TNT and DHL eventually agreed to adopt TAPA standards. And the first batch of members soon reported a dramatic reduction in losses. Words soon got out and suddenly we found ourselves in a sitaution wherein we had Nokia, HP, IBM, Motorola, Intel, etc. all big players becoming our members. Manufacturers then pressed on the need of alignment with LOGISTICS TIMES November 2011


EXCLUSIVE INTERVIEW

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LSPs and security providers for realising the full benefit of our standards and this is how the organisation grew globally. The organisation today has some 700 plus blue chip companies as its members. The overall turnover of TAPA members was something in the region of $1 trillion last year. On a broader level, the success of the freight security requirements because of dramatic reduction in losses in warehousing unit graduated to crime displacement. While there was reduction in losses at warehouse levels, we suddenly noticed dramatic increase in losses on roads. It was incredible. So TAPA then designed truck security requirement which was first published in 2006 and the next version was released in 2008 which

by your colleague from TAPA underlined that every year cargo worth a staggering $60 billion are lost in theft, pileferage, highway highjacking, etc. And this is an FBI analysis. It looks like a scary scenario. The trouble is generally the freight crime or cargo crime is very low down the priority list for law enforcement agencies. Law enforcement agencies even do not have time to investigate frieght crime. And as you heard in that presentation, sometime they can’t even find out if the loss actually took place. So you end up with a situation where crime is happening in the supply chain but you can’t identify where actually it is occuring. Plus, not all

Organised crime especially in the west is funding itself by robbing the supply chain, highjacking the trucks, etc. Remember, what they rob is hard cash for them. Freight crime also funds other crimes. was adopted by several companies. You have given a broader picture of its evolution. Now give me a sense of how it works at continental level. It started off in US and then chapters were opened in Europe and Asia. The Asian chapter is 11 years old now. Then more chapters were opened considering the strategic regional importance. For instance, in Asia we have a Japan chapter. Similarly, we have decided to now also open an Indian chapter since this has become a very important market. If India has to attract more manufacturing companies, it will have to improve security infrastructure and here we can play an important role. One

of

the

slides

LOGISTICS TIMES November 2011

presented

the frieght crimes are reported. But our own analysis earmarks that organised crime especially in the west is funding itself by robbing the supply chain, highjacking the trucks, etc. Remember, what they rob is hard cash for them. Freight crime also funds other crimes. Of this $60 billion colossal cargo theft loss, how much is Asia’s share? I would like to understand the magnitude of this problem in Asian countries. The difficulty is that with Asia, there is no historic data base. We are fishing in the dark. As you know in many countries, the police set up is poor. Cargo crime is reported under other crime. Most of the times, they are not even reported or registered. The trouble is it distorts the whole figure. We know it from our members that we have

significiant security issues in the region. And so far, TAPA figures peg the loss in Asia atleast at $80 million. But this is the minimun figure we could think of. I wanted Asian perspective because the manufacuturing base is gradually shifting to Asia. Japan is the traditional powerhouse, China has emrged prominently on the global manufacturing scene and now India is also arriving. So the security issues must be becoming more pronounced now in this continent. It depends on which country you operate in. For instance, if you operate in China, highjackings are very low. But if you look at Malaysia or Phillipines, violence on road in robbing freight trucks is quite high. Similarly, India too is reporting high degree of violent crimes on roads. Even that incident wherein a truck driver was killed by a cop recently somewhere in India is very distrubing. From my experience, I can tell you China has a lot of control in place today. Its custom process has become very strict. Straightway, we can see the reasons why we don’t have much highjacks in China and opposite scenario in countries like India and Malaysia. But it is time for India to improve the security environment. As I have mentioned, more manufacturing firms are coming in the country and its infrastructure is growing at a rapid pace. When you are looking at investing in a specific country, individual companies do look at these security risks. For instance, at one point in time, some foreign firms operating in Malaysia had decided to pull out because of rampant highjacking. Malaysian police force had to pitch in very aggressively to salvage the situation. India stands to gain big time because many companies are finding China expensive and infrastcuture is not ready in many other Asian countries especially those which are looked upon as emerging economies. They are also suffering from high degree of corruption. Explain it to me in simplest of terms, what are the precise solutions you u


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offer to your members? How much of pro-active approach you have? Plus, your success would also be a function of the kind of support you could manage to get from local law enforcement agencies. How do you manage to forge partnership with them? Look at the Malaysian example which I mentioned. We consistently persited with the Malaysian government to improve security environment for cargo transportation and ultimately they realised that if the country wants to have a robust economic enviornment, it need to bring the changes. We convinced them that if they do not ensure risk-free environment, companies are not going to pour in money and resources in the country. So valuable lessons of this nature, we need to apply them here in India now. We need to go to key people in the government and tell them that TAPA standards can make India a more competitive player on the global stage. Let me rephrase my question. I am a local transporter and a member of TAPA. A vehicle of mine has been stolen here. I report it to the local authorities and I also report it

to you. How will you help me? In this kind of scenario, we can help you in several ways. On the pro-active front, we will collect all data. For instance, you and other companies may have been victims of similar kind of crime. In such a scenario, we will help you not as an individual but as an association reporting these incidents to the local law enforcement agencies and asking them to act. At the same time, we will also approach local government and make representation. We can also pitch in sharing our experience in telling the local police what cargo crime is? More often than not, they do not understand it comprehensively. We can identify regional speciďŹ c risks and make sure that when we have our next generation of freight security requirements, we can close those gaps. Our support is not always front end but back end also. We also undertake the vital excercise of communities networking which become so important to ensure risk-free environment. Are you saying that TAPA in some way is a pressure group too? We would never want to be called a pressure group. We would like to be considered as partners. The trouble is when you approach individually at the

local level, it may not cut much ice. But when we approach as a global association, we are able to show the government and the local police the impact of supply chain crime to the whole world. For instance, we know that if people can steal from airports and move products out of there, then probably they can also get dangerous devices within the airport. And that’s a major concern. So authorities can learn lessons from us as well. We can bring global experience to help them. You don’t need to repeat the mistakes which security agencies in other countries have done. Finally, when will your Indian chapter come into existence? What precisely are your India plans. I think, our Indian chapter would be up and running in next six months. Here also I think, our service would be driven by manufacturers. They will demand better security environment in terms of risk free supply chain systems and that would work. Leaders in the upper crust of manufacturing would be giving us the start. From our perspective, we are entering in the country at the right time because infrasctuture has considerably improved.

LOGISTICS TIMES November 2011


REPORT

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Noted consultancy firm KPMG has recently released a report on Goods and Services Tax (GST) comprehensively encapsulating its evolution in the country, the progress made so far and how it would be impacting players in the logistics industry. KPMG has also made its recommendations on some critical points. The report has been authored by Manish Saigal, Partner and Head (Transportation & Logistics), KPMG India. Excerpts: Change in business strategies for logistics and warehousing service providers Currently, the decision to base inventory and distribution models are based on levy of Central Sales Tax and varied state-Value Added Tax (VAT) rates and provisions. Tax optimization and administration is often considered over the operational and logistics efficiency. However, under the GST regime the tax will be levied on stock transfers and full credit will be available on inter-state transactions. This will free the decisions on warehousing and distribution from tax considerations and decisions will be based purely upon operational and logistics efficiency. This will lead to change in dimensions for logistics requirements of the clients forcing logistics service providers to rethink their business operations including creating new warehousing and logistics locations and expanding / closing existing warehouses at certain locations. LOGISTICS TIMES November 2011

GST: Ready. Steady. Go?

In fact, networks and infrastructure associated with warehousing and logistics hubs are expected to be most impacted in the entire supply chain. Network and infrastructure related businesses would get drastically realigned, ensuring proximity to manufacturing locations or consumption markets and ultimately resulting into several hub-andspoke models. From the infrastructure perspective, the scenario would consist of lesser number of warehouses but with larger sizes, amounting to consolidation of currently widely spread warehouses almost one in each state. This would translate into expansion of some of the existing warehouses, development of new ones and indeed shutting down of several existing setups. In addition, locations of strategic significance for warehousing and logistics networks would eventually also turn out to be critical transportation hubs. Such impacts would command fulfillment of certain pre-requisites pivoted around

infrastructure including land availability, road/rail/multimodal connectivity, power, etc. This would in turn require all stakeholders – Logistics Service Providers (LSPs), end users, industry associations and the government – to plan in advance so that foreseeable issues could be addressed in time and would help evolve a more agile, efficient, flexible and futuristic supply chain. LSPs and their end users both would need to re-engineer their supply chains, focusing on optimal locations for warehouses and logistics centres. Some of the target regions would include Chennai-Bangalore belt in the South, Nagpur region in the Central part and Mumbai-Gujarat-RajasthanNational Capital Region (NCR) corridor in the North-West, driven by the high potential for upcoming manufacturing activities and the planned Delhi-Mumbai Industrial Corridor (DMIC). Recommendation In order to assist industry players to


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providers.

optimally develop and successfully implement revamped supply chains, government may commission an exhaustive study to identify tactical locations for logisticscumtransportation hubs, multimodal opportunities, crucial haulage corridors and related infrastructure requirements. Findings of such a study would help the Government to be ready with the infrastructure requirement once GST is introduced and would also alleviate the concerns and nervousness that industry players currently witness regarding the expected benefi ts and unforeseen challenges GST may bring up. Cash Impact Planning Currently, abatements are available to transport service providers under the Service Tax law. These are not likely to continue in the GST regime. Also, the liability to pay tax may shift from the recipient of service to provider of transport service requiring it to pay full taxes on accrual basis. On account of this, a major impact will be seen on the cash flow for transport service providers who generally operate on marginal profit basis. Businesses need to quantify the cash impact and realign their working capital strategies to reduce / mitigate the cash flow impact.

Recommendations An alternative model for taxing transport service providers will have to be evolved to mitigate the cash fl ow implications on the transport service providers. Petroleum Products – Impact of exclusion from GST The most important benefit under the GST regime would be availability of credits across goods and services on all purchases and inputs used in the course of business with denial of input tax credits in very exceptional circumstances only. This will help achieve the goal of introduction of a truly consumption tax, reduction in the operating costs for businesses and rationalization of the cost of goods and services It is proposed that petroleum products will be out of the GST net. This will have severe implications on the Transportation sector, where motor spirits constitutes the largest cost component for the business (almost 55-60 percent2). On the other hand, GST at the full rate will be payable on the transport harges. Exclusion of petroleum products from the GST net will break the chain of credits thus adding to the costs. Recommendations Petroleum products should form part of the GST regime albeit with a higher of rate of tax. Input tax credit should be fully allowed to transportation service

Place of Supply, Tax Administration and Input Tax Credits The most important change will be the transition from the present central tax regime (service tax) to the dual GST regime requiring payment of taxes simultaneously to the Centre and States and compliances across the country. The Place of Supply rules will govern the State where the tax will be payable on any transaction of Transportation & Logistics. In the case of warehousing, the Place of Supply can be defi ned as the place where the warehouse is situated. On the other hand, for transportation contracts, taxes may be levied by each State through which the goods move, perhaps based on the distance traversed in each State or alternatively in the State from where the journey of transport commences. The latter that is, the State from where the journey of transport commences, would be an ideal basis for taxation. Though being a simplistic model, the same would pose challenges to the transportation service providers such as registration and compliances requirements across all the locations from where the goods are loaded and dispatched. Also, another challenge envisaged is the ability of the transportation service providers to capture credits in respect of the expenses incurred enroute. Transportation service providers may incur expenses in different States during the journey from one location to another and it will be essential to avail input tax credits on such costs. In the event, appropriate rules are not framed under the GST law for claim of these credits, the transportation sector will have to be ready to absorb the impact on account of these tax costs. Recommendations It will be essential to evolve a mechanism for centralized registration and compliances, the absence of which will add to the administrative costs of the service providers. Scrutiny of records, LOGISTICS TIMES November 2011


REPORT

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etc. by multiple States will complicate tax compliance. On the other hand, States may fi nd it diffi cult to track and tax the transactions taking place in their respective territory. Similarly, only centralized registration will enable transportation service providers to claim and utilize credits on expenses incurred enroute. In the absence of such mechanism, there could arise situations requiring claim of refunds from different States. Tax jurisdiction of locations on the Continental Shelf and Exclusive Economic Zone Locations on the Continental Shelf and Exclusive Economic Zone of India (e.g. Bombay High), which do not currently come under jurisdiction of any specific State, will have to be considered separately under GST regime. Receommendations Though GST discussion currently does not address this particular area, appropriate administrative mechanism LOGISTICS TIMES November 2011

will have to be established to provide for taxation of services provided to or from such locations Rapid emergence of organized service providers With the clear availability of credits, GST will score over the existing regime especially in the Transportation & Logistics industry, where a tendency is seen to engage with the unorganized players for tax considerations. The GST regime will usher in the emergence of the organized service providers since taxes will no longer be added costs for the businesses. Given the highly fragmented nature of the Indian transportation and logistics industry (the leading 10 listed players command less than 5 percent3 of the overall market), implementation of GST is expected to unleash plethora of opportunities for organized players. Further, the players in the unorganized sectors too would be expected to improve their service levels if they intend to successfully grow in the likely ‘shape up’

or ‘shape out’ competitive landscape. The post-GST regime is in fact likely to offer many more unseen opportunities for unorganized players to tie up/collaborate with established players. This may ultimately result in a win-win scenario for both the collaborating parties and the industry at large. Recommendations All industry stakeholders – LSPs, both organized and unorganized, and end users of logistics services - ought to set up dedicated teams to understand and implement the best possible strategy to leverage the benefi ts of increased penetration of organized services. Key constituents of such a strategy may include plans to raise funds, classify strategic locations for warehousing, optimize transportation options and identify a potential partner for supply chain collaboration. Taxability on the basis of ‘Negative List of Services’ GST is likely to bring in taxation of


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services on the basis of ‘Negative List’ (no tax will be levied on services in ‘Negative List’, whereas all others will be taxed). Taxability on the basis of ‘Negative List of Services’ will bring within the tax fold the services in relation to export of goods, which are exempted as of now. Examples of these could be handling of export cargo or ocean freight. There could be some such unintended levies resulting in increase in cost of business especially export of goods. Recommendations Appropriate rules will be required to zero rate services in relation to export of goods. Conclusion As India prepares for a transition to the next level of logistics growth trajectory, regulatory policies need to evolve well ahead of the introduction. Further, on account of the delay in implementation of GST, it is critical to gauge the advantages the industry at large and the various stakeholders specifically are currently losing out. It is in this context that this paper analyzes the key fiscal as well as business implications of the proposed GST. The adjacent table summarizes the key business implications that may accrue to the wider industry owing to increased organization in post-GST scenario. (Courtesy Courtesy:: KPMG) KPMG LOGISTICS TIMES November 2011


COVER STORY

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Blue Dart’s Double Punch Further widening its market leadership gap in air express segment and emerging as a formidable challenger in the ground express space, Blue Dart is getting ready to add more power to its punch in the marketplace. Being part of the DHL formation seems to have only added wings to its big-ticket dreams. Ritwik Sinha reports‌ LOGISTICS TIMES November 2011


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s a journo, you do not come across such situations quite often where the first question of a formal conversation has been volleyed to you rather than other way around. “You have been talking to key functionaries of this company for the last two days. What is the sense you have got?,” asked Anil Khanna, Managing Director, Blue Dart as soon as I entered in his fourth floor chamber at company’s spacious headquarters (68,268 sq. ft. to be precise) near Sahar Airport, Mumbai last month. As is my wont when it comes to turning the cover feature spotlight on a noted firm, the top man of the company is always the last person to be quizzed and I was face-to-face with Khanna after picking up grey cells of more than half a dozen officials formally and scores of others informally. “Your people seem to be extremely confident about the future,” that was the crisp reply I could think of then immediately. But in hindsight, could I have given any other answer? Don’t think so, really! My spontaneous response had

emanated more from the off the record conversation with the bunch of mid-level employees at the headquarters during the lunch break mostly while sharing a fag. And unmistaken optimism was at once palpable. “We are working for the best firm in its space,” the message was conveyed to you in no uncertain terms. Quite remarkably, most of them have lived with this company for more than ten years, some even more than two decades (I was later told that 17 percent of employees have spent more than ten years with the company). The land of shifting sands – this is how logistics sector is more or less viewed when it comes to flock management and hence on that parameter, having a dedicated work pool in itself speaks volumes about the company. Looking at the affairs of the company from close quarters today, a critical point which can’t be missed by anyone is the fact that its distinguished three decades old history has two distinctive spells – pre-2005 and post-2005. That is - when it was on its own and when it became part of the DHL family after acquisition.

And talking to the original Blue Darters makes it clear that good platform created so arduously in the pre-acquisition phase (running into two and a half decades) has been capitalised to the hilt on all fronts. The arrangement with DHL itself is unique. By being part of DHL formation, Blue Dart has become part of the whole and at the same time it is a whole in itself. No attempt has been made to dilute its identity and it’s branding even as at the operational level, concrete modules have been put in place wherein Blue Dart is lending helping hands to the other three units – DHL Global Forwarding (DGF), DHL Supply Chain (DSC) and DHL Express (DHLE) and vice-versa. Mutual leveraging play is at once pronounced and the developments of last five years clearly underline that Blue Dart when looked upon as a separate entity has begun to nurture and achieve big ticket vision. A sense of re-invention almost seems to be the defining feeling when you look at the recent trends. Reinvention Mode Facts speak for themselves sending the LOGISTICS TIMES November 2011


COVER STORY

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Anil Khanna, MD of Blue Dart narrates the churning process within the company after its entry into DHL family in 2005. In a candid conversation with Ritwik Sinha, he, however, strongly hints that best is yet to come. Edited excerpts:

We have ambitious plans

You have been associated with this company for nearly two decades now. Tell me how would you explain the difference in pre- acquisition and post- acquisition spells? Blue Dart has always made a conscious effort to create a bond with its customers. Perhaps, because of this, the brand has, today, become synonymous with value, quality, speed, efficiency, responsiveness and service excellence. To answer your question, in my opinion the biggest difference has been the leveraging of the human talent, energy and drive to propel the ‘CAN DO’ spirit. LOGISTICS TIMES November 2011

Blue Dart has taken on so much more, over the past 4-5 years. The progress has been exceptional. The company has broadened its service portfolio to include ground express to its air express dominance. Aligned to the vision, our customer centricity has improved with new product launches, newer features, investments in infrastructure to cater to the growth. People Focus has been one of the focus pivots of the organization. We have undertaken various initiatives to make our people happier. If you look at our employees satisfaction survey scores, this year has been best ever. In terms of shareholders, you can see what the share price was in 2005 and you can see where it is now - almost four times appreciation. And whatever feedback, we get after every meeting either with senior officials from Deustche Post or DHL from Bonn or Singapore, it has been extremely positive. They have turned back and said they are delighted and they can’t think of anything which we can’t do. On the CSR front, we have consciously worked hard to contribute substantially in the areas of GoTeach, GoHelp and GoGreen. I am pleased to share that we have two Blue Edge-Empowering Lives schools in Mumbai and Chennai that deal with young adults from marginalized sections of the society, along with DHL we closely work with Teach for India, apart from various other initiatives. Our customer centricity and service quality focus has been


23

further strengthened by our commitment to the First Choice (a six sigma based quality) programme and the world standard NPS process. In short, we have done more in the last five years than earlier – on all fronts practically. Do you think, belonging to DHL family has given that self-belief that now you can chase big-ticket dreams? Yes, definitely. It was a perfect marriage. DHL was the largest in international express and Blue Dart was the largest in domestic express. If you look at the vision and the values, they are quite similar. The good thing DHL did was to recognize the strengths of Blue Dart, its brand equity and success story and allow the brand to further prosper in market. And I think, we have also responded well by adopting DHL’s benchmarks when it comes to operations and performance. You are slated to end the present fiscal in the range of Rs. 1400-1500 crores. And this is over four times jump in topline in comparison to your sales number when Blue Dart was acquired by DHL in 2005. My question is: what is that next milestone number the company has set for itself? We have very ambitious and aggressive growth plans for the next five years. And we had drawn a lot of these plans towards the end of 2009. So the plan basically talks about increasing our market share both in the air business as well as ground express. I can’t precisely share the numbers with you being a public listed company. But as per A T Kearney estimation, our air freight market share was 39 percent in 2009 and we said we must improve it year on year. On ground express, we were 5 percent and we said we must take that higher too by 2015. Obviously, to grow market share you will have to grow faster than the industry. The plans are very, very ambitious and we have identified growth drivers which will take us there. If you were to ask me within 2009 to 2011, our market share in air express has gone up– from 39 percent to around 44 percent. And from 5 percent to over 10 percent in ground express. So we seem to be heading in the right direction. And the good thing is that we have also improved our margins. We have not reduced our margins to improve the market share. I very firmly believe that you must improve your market share but not at the cost of your bottom-line. How serious you are about pushing this ground express vertical to the extent of making it a robust business line? Blue Dart is focused on being the one-stop-solution for our customers for their express needs. Ground Express is a critical component in the express distribution system. We have the finest product offering in the space and our core brand values which have made us leaders in air express are all invested in the ground express product. To meet our ground express aspirations, we have invested in the product, features, infrastructure and people. Our market intelligence,

clearly indicate that we are now seen as a key player in the ground express, and that’s good news. Are you looking at a scenario where both air and ground would be at par with each other? Is that the big ticket vision? Ground Express industry is growing faster than air express industry. And if the industry is growing faster, then at some stage the contribution of ground express for Blue Dart could well become the larger share of our pie. Presently our ground express contribution to the top line is around18-20 percent. It may go up to 30-35 percent by around 2015. However, we will continue to strengthen our market leading position in air express segment and meet our market share aspirations. So with a hefty market share of 30-35 percent, your image might change. Today when I say Blue Dart, what comes to my mind immediately is your freighter. But when your ground express division becomes equally robust, I might think of something else as well. In my above statement, I spoke about the product-mix and not market share. However, we strongly are determined to not dilute the brand values but to further enhance it by stronger brand loyalty, confidence of customers of our competency in each area of product offering, perceived quality, and positive brand associations. The core values on which the brand was built - value, quality, speed, efficiency, responsiveness and service excellence will remain firm in the midst of all growth plans. How much more you will have to do on infrastructure front given the kind of targets you have? All our investments are aligned to customer requirements. We are committed to infrastructure development – aircraft induction, more warehouses and facilities, network runs and leveraging the benefits of increased automation. Somebody recently remarked to me that Blue Dart is the luckiest company in Indian logistics space. The players who have shown signs of becoming your formidable competitors had to shut their shops. Do you see hands of providence somewhere behind your success? (Smiles) We would like to believe that we have done some things well over the past 28 years to create this enviable position for ourselves in the segment. Having said that, I would like to state that we take competition very seriously and never underestimate anyone. The real reason for our success can be attributed to the immense faith our customers put in our services, our people – who through their entrepreneurial spirit take ownership to provide customer delight, our strong brand equity. Yes, some players have made mistakes. And to that extent, I don’t know whether it is right to say that Blue Dart has been lucky. But we have never taken our competition lightly. I still keep on saying that others may have failed but don’t expect everybody would fail. We are the best but still I could see a lot of room for improvement. LOGISTICS TIMES November 2011


COVER STORY

24

Blue Dart Factsheet: 2006 - 2010 2006

2007

2008

2009

2010

Employees

4,877

5,596

6,313

6,035

6,806

Revenue (INR millions)

6,680

8,087

9,745

9,052

11,474

Destinations Serviced

14,400

17,600

21,077

21,479

25,646

Air Support (freighters)

2 Boeing 757 3 Boeing 757 3 Boeing 757 3 Boeing 757 & 5 Boeing 737 & 4 Boeing 737 & 4 Boeing 737 & 4 Boeing 737

3 Boeing 757 & 4 Boeing 737

Ground Support (vehicles) 3716

4,800

5,658

5,412

5,351

Tonnage handled

191,875

231, 9000

267,000

338,000

152,600

message loud and clear that in post-2005 or post-acquisition phase, Blue Dart has displayed leap frogging tendency or trajectory on key growth parameters (see the accompanied factsheet). From sub5000 level in the number of employees at

destinations covered within the country (the latest estimate puts the location count at a staggering 27,000). The company’s market share in its stronghold area of domestic air express has seen an improvement of over five

quietly but formidably ground express is promising to emerge as the new pillar of the company going ahead (see market share chart). And as a cumulative impact of strength addition in core services, the tonnage capacity of the company has

“One should not make the mistake of taking DHL and Blue Dart as co-brands. These are two strong brands in association with each other.” Malcolm Monteiro (Senior Vice President & Area Director, South Asia, DHL Express) the end of 2006, the headcount number saw an increase of over 2000 four fiscals down the line. In the same period, the topline numbers grew robustly – from Rs. 668 crores to Rs. 1147 crores. And there has been nearly 80 percent increase in LOGISTICS TIMES November 2011

percent at over 44 percent in the first quarter of the current fiscal. And what is equally impressive is its stride in the ground express segment, a relatively new focus for the company in the true operational sense. In fact, almost

more than doubled in just a short span of four years. Yes, the company was bogged down a bit by slowdown crisis in 2008-09. But barring that, over 20 percent growth trajectory on all key indices on year-onyear basis has been the key calling card of


25

in line with the same vision that we had earlier which was basically the vision of being the best and setting the pace in the industry,” he says (read his interview). Malcolm Monteiro, former MD of the company who is now serving as Senior VP & Area Director (South Asia), DHL and is believed to have played a crucial role in bringing Blue Dart and DHL together on the Indian stage says the positive developments of recent years prove that it has been a very successful alliance. “This marriage has been highly successful because both the companies have similar brand attributes.” The master-stoke, of course, seems to have been no attempt on DHL’s part to subdue brand Blue Dart. In fact, it has been the other way round particularly in terms of sharing of best practices to help the domestic partner aim for higher scale. The domestic partner, in turn, has been helping its parental firm in making full use of its reach especially to the hinterlands as heads of other business units testify (refer to Partners’ its performance. So has the changeover from being on its own to a member of DHL family turned out to be that ultimate catalyst for Blue Dart? Anil Khanna, who has been spearheading the company since 2007 (he has been associated with Blue Dart since 1991) believes that change in attitude has been that significant shift which has scripted new success story for an existing platform that had shown brilliance in the past. “I would say the one big difference has been the change in mindset of our people from having a renewed attitude of ‘Can Do’. When I say ‘Can Do,’ it’s all to do with customers and our people and taking on new initiatives. But that ‘Can Do’ attitude is

“There is no debt on our balance sheet and we have positive cash flows. Our working capital cycle is good. And this is a fact which our competitors often talk about, almost enviously.” COO and Finance Director, Blue Dart Express Ltd

LOGISTICS TIMES November 2011


COVER STORY

26

Partners’ Point T

he uniqueness of the DHL set-up in India is that with four business units, we practically cover everything in logistics on an end- to -end scale basis from small letter and envelops to the biggest consignments. On one side, we have Blue Dart being so well entrenched in terms of covering Christoph Remund the entire country, CEO, DHL Global Forwarding complementing and working together with DHL Supply Chain which has warehouses which you need across the country when it comes to distribution by road. And then we have DHL Express and DHL Global Forwarding for international connectivity. Collectively, we ensure connectivity for our Indian customers to all parts of the globe and full access of Indian market to all our global customers. Blue Dart primarily complements the other three units in distribution out of India especially in linking customers who come from hinterlands from where we need goods to be collected and brought to our international hubs before being shipped out to their destinations. That Blue Dart is a domestic air express company comes from tradition where it occupies the pole position. But I think in the last couple of years, they have successfully established a very strong road express service network which is being expanded every year and I think this unit has grown faster than the rest of the market. Today, we can say that even on the roads Blue Dart is one of the leading players in India. The expansion of its surface service is a major plus since it is helping us tremendously on the ocean freight side where people don’t want to move their goods by air.

LOGISTICS TIMES November 2011

I

t’s a partnership of two strong market leaders to deliver unmatched reach and quality for our customers. Apart from being able to offer seamless domestic and international express services to its customers, there are several areas where this partnership is active. Blue Dart helps connect DHLE shipments to the international air network through its domestic air and surface cargo network - which is one of a kind. Further Blue Dart also does pick up and deliveries for DHLE in close to 600 locations across the country helping DHL to increase the international reach to tier II and III towns. DHLE and Blue Dart together have stitched up a combined retail footprint of close to 450 service points where walk in customers can avail domestic and international express service. DHL and Blue Dart are together developing several industry leading offerings R.S. Subramanian and innovations Country Head, DHL Express India in India like Te m p e r a t u r e Controlled Logistics products and the recent pilot on Smart truck to name a few! This win-win partnership gives both DHL and Blue Dart significant edge over competition - helping each other grow stronger in the market.


27

W

hen we talk of collaboration between our unit and Blue Dart, I find it happening at several levels, like, in devising new products. For instance, we are presently trying to collaborate on a project to create specialist products in the marketplace which would be helpful for service sector business and which could probably workout on different weight breaks. This would not be a standard product and air segment would be the main focus here since we fly our own planes. We can especially do something new for the technology industry b e c a u s e the average weight of their consignment is 2-2.5 kg. And with the kind of weight breaks which are available in the market right now, Vikas Anand sometimes COO, DHL Supply Chain customers end up paying for the minimum weight. We believe that with the kind of volume we have, we can probably bring a product at a lower rate break and make an impact in the marketplace. We are also working jointly under a programme called Sales Stimulation to expand our base of SMEs. We are also trying to create a joint customer review programme where we understand the voice and pain points of the customers jointly and address them through a collective approach. In addition to that, we understand that Blue Dart does a lot of work where their hubs are getting connected by FTL movements. Since DHL Supply Chain aspires to be a large FTL player which would include asset heavy quotient as well, we will be basically providing support to Blue Dart.

Point). Monteiro sums up the brand positioning of the two associated entities in these words, “One should not make the mistake of taking DHL and Blue Dart as co-brands. These are two strong brands in association with each other.” And there is a well-structured functional eco-system to get the maximum benefit of mutual leveraging play. According to Monteiro, there is an apex body to supervise the four units of DHL including Blue Dart comprising four business heads who meet once in a month to devise ways and means for better integration between four companies. The endeavour, of course, is to popularise the First Choice concept for customers by exploring the modalities to bring the existing customer of one specific unit as customer of other units as well. You get everything under one roof – that is the core business philosophy which DHL units and Blue Dart are collectively promoting. And this formula is not only applicable for top notch corporates but also for SMEs in farflung areas through nearly two dozen regional councils. That Blue Dart has become a vital cog in grabbing the greater share of customers’ wallet for group DHL in India is a fact which heads of other business units underline in no uncertain terms. “Blue Dart primarily complements the other three units in distribution out of India especially customers who come from hinterland where we need goods to be collected and brought to our international hubs before being shipped out to their destinations,” says Christoph Remund, CEO, DHL Global Forwarding . According to Vikas Anand, COO, DHL Supply Chain, collaboration with Blue Dart finds manifestation at several levels and a key common area where they are working together is to introduce new products. “A significant project on which we are collaborating right now is to see how we can create specialist products in the marketplace primarily for services sector which could probably workout on different weight breaks. This should not be a standard product.” R. S. Subramanian, Country Head, DHL Express (India) defines the collaborative approach of the two units in these words, “ Blue Dart helps connect DHL shipments to the international air network through its domestic air and surface cargo network - which is one of a kind. Further Blue Dart also does pick up and deliveries for DHLE in close to 600 locations across the country helping DHL to increase the international reach to tier II and III towns.” Top officials of both DHL units and Blue Dart assert that this collaborative approach across business units has helped the group in consolidating its leadership positioning on the Indian logistics turf. A senior functionary of the group who did not wish to be named confirmed to Logistics Times that brand DHL with Blue Dart in tow is just on the verge of becoming first logistics company in India to clock $1 billion topline by the end of the present fiscal. Certainly a significant feat given the fact that logistics players in the Indian market are often believed to get exhausted after they cross their first four digit crore mark. And how much is the share of Blue Dart in this overall projected pie? Quite significant. According to Yogesh Dhingra, COO and Finance Director, Blue Dart Express Ltd., maintaining a 20 percent plus growth trajectory, Blue Dart’s topline is expected LOGISTICS TIMES November 2011


COVER STORY

28

to be in that range of percentage growth at the end of the present financial year. Dhingra also asserts the fact that the company now has a robust balance sheet which is a major plus in pursuing its larger goals. “There is no debt on our balance sheet and we have positive cash flows. Our working capital cycle is good. And this is a fact which our competitors often talk about, almost enviously,” he tells you with a broad smile on his face. Emergence of a new pillar Probably the most shining sub-plot of Blue Dart’s rapid stride story post-2005 is addition of strength in ground express services. Though it was not a new service area for the company altogether, nonetheless it was a small operation for the company in the past – particularly where providing the first mile and the last mile connectivity was a compulsion beyond metro points where its freighters were touching down. Says Monteiro, “It was a small part of the business just playing a supporting role to our mainstay, i.e. domestic air express.” But all that has changed now. Around 2007, a conscious decision was taken to grow the ground express division to a scale wherein it becomes a formidable player in the space which is much larger in the country than air freight business. The German logistics giant was also looking at leadership in the surface transport business. This necessitated contemplating strategic routes wherein the option to promote ground express service under Blue Dart’s wings also came up. And in the interest of the group’s business, that option was finally given the go ahead. “As far as I know, the choice was between inorganic and organic routes. We got the go ahead after we presented a comprehensive plan as to how we would be nurturing this unit with critical differences vis-a-vis competition. We were best suited to do this given our grounding and understanding of the Indian market and even a noted consultancy fi rm which was involved as advisor had supported our claim,” Khanna recalls. Cut to the present day. On the third floor LOGISTICS TIMES November 2011

of Blue Dart headquarters, there is a dedicated network control centre laced with giant screens reflecting movement of vehicles all across the country both in reds and greens. The cell is manned by 10 odd staff at any point of time during the 24 hour cycle as all vehicles are equipped with GPS devices. So where has the company reached in terms of attaining its objective of emerging as a ground express major as well? Dhingra answers, “On any regular day, over 5000 vehicles of Blue Dart are criss crossing the length and breadth of the country.” Well, that is the network strength. What about hard numbers? Dhingra explains further, “Our market share has nearly doubled since we started reaching the double digit mark now. In terms of topline contribution by this unit, it would be broadly in the range of 18-20 percent.” So in practical terms, within a very short span, the ground express division has almost emerged as a new pillar for the company and holds a lot of promises for the future. But building up this unit has not precisely been a cakewalk for the company, especially on the HR front. Today the ground express division has a headcount of over 1000 but talk to Barttanu Das, Senior VP - Human Resources, Blue Dart Express Ltd. and he will tell you it has been quite an exercise. “Ground express was almost a new area for us and it has different functional competencies in terms of the network, the warehouse units, the infrastructure, the vehicle, the drivers, the damages, the equipments which you use, the service level, the score card, etc. So from personnel point of view, we had to really create and develop the right competencies and skillsets. We created an organisational structure in order to drive this unit. This coupled with adopting some advanced training module has worked for us,” he underlines. Operational Excellence Automation, high degree of IT adaptability and efficient customer care mechanism have always been considered to be the hallmark of Blue Dart operations and according to top officials

Barttanu Das, Senior VP Human Resources

“For ground express business, we had to really create and develop the right competencies and skillsets. We created an organisational structure in order to drive this unit. This coupled with adopting some advanced training module has worked for us.”

Arun Nangpal, Senior VP Customer Care

“I don’t think any other player has the kind of complaint module which we have. In fact, nobody is even doing complaint audit which is a key touchstone of our operations.”


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31

of the company, further consolidation in its market positioning also owes to embracing upgraded processes in recent years. Yogesh Dhingra who has spent 19 years with the company says IT inclination has been an inherent component of Blue Dart’s DNA. “Way back in 1991, Blue Dart had become the

first company in its space which had put in an e-mail network within the company. We were also the first entity to introduce track and trace in 1992-93,” he informs. Last five years have seen addition of new features to reinforce the point that when it comes to serve the customers, Blue Dart has faster and better modules.

Dhingra further elaborates, “We have now adopted handheld scanners which facilitate confirmation of delivery within two-three minutes to the customers. Today we have deployed a large number of devices and in the near future all couriers would be deployed with handheld devices.” Another critical

Essence of ‘Blue Dart Country’ In the middle of 2010, Blue Dart adopted a new punchline – ‘Blue Dart Country’ which has drawn tremendous attention in the industry. Ketan Kulkarni, VP & Head - Marketing, Corporate Communications and Sustainability explains the core message which the company is trying to convey… In a simple one line statement, all we are trying to say to the customer through ‘Blue Dart Country’ is that it is a leader in express logistics that you have selected to partner with, and please expect from this brand everything that you would from an innovator and trade facilitator. We at Blue Dart feel that the brand essentially belongs to employees first. The brand needs to be strongest in the minds of the employees and then the customers. With that essence, what we observe today is that our customers are spread across the country and need us as trade facilitators. We want customers to expand and reach to newer markets which possibly they would not have done due to restrictions in their logistics capabilities with other service providers. But with Blue Dart, they can fulfil those ambitions. Year on year, we are increasing our reach to newer locations. Today we connect over 27,000 locations – a staggering jump from 14,000 five years ago. So in the last five years, we have given customers options in terms of taking their products and services to more locations through various modes. We have been the strongest air express operator. So essentially

we had Blue Dart country covered by air before and better than anybody and we still do that. Apart from air, we also offer our customers a very strong ground express service. We were not able to do this a few years ago because ground express was a last and first mile service for our air products. But that has changed. Apart from those two products which are core to the company, we also have various other multi-modal options which were introduced last year. Hence Blue Dart Country has been covered in its entirety through time and day definite products.

Through ‘Blue Dart Country’ we also want to express our intention to take ownership of the national geography in terms of improving our customers’ governance. So the term has emanated more from a customer-centricity point of view rather than an internal intent. It manifests more what customers expect from us. We would like our customers’ businesses to grow exponentially and successfully within the Indian borders. And in other to enable them to do that support with logistics capabilities and solutions under a single roof, will be our offering. (As told to RS)

LOGISTICS TIMES November 2011


COVER STORY

32

Blue Dart has three distinctive sets of programme for its CSR initiatives.

process differentiation which would be introduced soon is more number of WDL machines at the gateway points. Dhingra points out that with growing volumes, expeditious measurement of dimensions of cargo has emerged as a key challenge. But the company has now found a cutting edge technological solution. At the gateway points, on the conveyor belt, these machines would be installed that would capture the boxes while on the move. “Just imagine the time it would save. It has been developed by a firm from Denmark on our special request,” Dhingra specifies. Another critical IT element which Blue Dart is slated to introduce soon is a new track and trace system. “The existing track and trace system is on an older platform which is a decentralised operational structure. As against this the new-age application will provide service on a centralised basis.” Khanna points out that consistent delivery of new IT-based solutions is a key pursuit of the company and for this Blue Dart has a strong IT department comprising around 350 professionals. “Every year, we are investing more and more in this department and our IT expenditure has consistently gone up. This is one area where we never make any compromise,” Dhingra maintains. Move on to another dimension of Blue Dart’s operational excellence – customer care and here again you would find LOGISTICS TIMES November 2011

a well planned system in place. Arun Nangpal, Senior VP, Customer Care, Blue Dart Express Ltd. (incidentally she is the first day employee of Blue Dart) explains the nitty gritty of connecting modalities with customers wherein the core objective is to tell them every time that they are dealing with a responsible business partner in the real sense of the term. “We build strategies on the basis of our understanding and consideration of the five Rs - relationship, retention, recovery, revenue and responsiveness. These parameters define the broader vision of the customer care department,” she tells you. And what does it mean in manifestation terms? Well, here is the list. Customer calls have to be picked up in three rings, there is a specific mechanism wherein customers are asked to give their feedback and rating on Blue Dart’s performance, complaints are audited, and there are special services for topnotch clients. Blue Dart’s customer care department attends nearly 42, 000 calls everyday up from 22,000 just three years back and the department comprises a workforce of 380 personnel with major concentration being in Mumbai and Delhi – two of the critical hubs of the company. Next big thing in the pipeline is the introduction of the Interactive Voice Response (IVR) application, in regional languages. Arun proudly claims that Blue Dart clearly has an edge in terms of the processes it has adopted to deal with the

ever expanding customer base. “I don’t think any other player has the kind of complaint module which we have. In fact, nobody is even doing complaint audit which is a key touchstone of our operations.” Where to now? The moot question now is: where is the company heading especially in the backdrop of a comprehensive plan formulated in 2009 with specific timebound goals by the middle of this decade. Monteiro responds for the air freight business. “Today our carriage capacity is close to 400 tonnes per night. And we want to double it in next three-four years. Our plane configuration is expected to remain in the 757 category or higher. I personally feel that 800 tonnes is a conservative projection. It should be around 1000 tonnes the way I see the whole scenario. There would be new addition of freighter and we would consider connecting directly to some happening tier-2 and tier-3 markets as well. We clearly want our market share figure to inch up further.” Monteiro is fully entitled to hope so given the fact that none of the players who had entered into the domestic air freight segment in the last five years have really managed to make a decisive mark. That includes the likes of Gati and Air India which at one point in time had planned a specific cargo division. Though Anil Khanna refuses to be drawn in any kind


33

Blue Dart is in the forefront of adopting advanced technological processes. Pictures of WDL Machine and Handheld Scanner.

of fact finding exercise on the failure of others and splendid success of Blue Dart, he does succinctly underline that the company would continue with its point-to-point connectivity strategy (production and consumption points) and that it does not see merit in any hub and spoke model. Moving on to another recently emerged vibrant plank; Khanna assures that further strengthening of the ground express division is a certainty. So the target for 2015 is to capture higher percent of the market share. “The way we have grown in ground express, our target now is to nearly double in next three-four years. Of course, this would mean grabbing market share from other established players. But I won’t be surprised if the broader topline ratio between air and ground is in the range of 70:30 or even 65:35 by the end of fiscal 2015,” he says. In fact, the way the ground business is growing, Sr. VP, Barttanu is looking at the headcount of the division jumping up to 3000 in the medium term. So what could the projected scenario translate in terms of actual topline for the company which already has a market capitalisation of over Rs. 2700 crores today? The question goes unanswered with Khanna and other officials citing the compulsion of not divulging financial projections, with Blue Dart being an enlisted firm. But smiles on their faces probably tell you enough. Over Rs. 2000 crores is now being looked upon as an easy target. Clearly, the top brass of Blue Dart are not only dreaming big but fairly convinced that they are poised to make the best of both worlds – air and the ground. LOGISTICS TIMES November 2011


SPOTLIGHT - RAIL LOGISTICS

34

Chugging into future Today, we live in a global economy which is getting highly integrated and where the options to source raw materials, production source, intermediate finished goods and markets for finished goods vary dynamically in time and space. A transforming Indian economy is shifting from a primary bulk commodity production system to a specialized manufacturing system with increasing contribution from the services sector. This calls for integrated management of logistics and supply chain management. How should the railways gear itself to meet these dynamic challenges and continue growth and market leadership in the coming future? Prof Samir K Srivastava of IIM Lucknow responds...

LOGISTICS TIMES November 2011


35

Prima facie, Indian railways is a service organization in the business of logistics and transportation of freight and passengers. It transports more than 25 lakh tonnes of freight and about two crore passengers daily between seven thousand stations spread across 17 zones. It owns over two lakh (freight) wagons, 60 thousand coaches, nine thousand locomotives and Optical Fibre Cable (OFC) network of 30 thousand routekilometres. This makes it one of the largest and busiest rail and telecommunication networks in the world. Presently, 70% of its revenues and most of its profits come from the freight sector. During the last few years, Indian railways has shown remarkable growth in terms of expansion and upgradation of products and services; increased revenues, profits and fund balances; lower operating ratio and the like which has often been termed

as ‘turnaround’. The turnaround aimed at changing mindsets about costs, revenues, investment and business models and success was achieved mainly by innovative initiatives supported by in-house technical and managerial capabilities. Innovative measures introduced by the railways, have been credited with the success and are considered the cornerstone for future growth. There is a strong need for a continuous focus on all these and related aspects to further evolve railways as integrated logistics service provider within and outside India in the coming years. Road ahead The approach paper of the Indian railways to the eleventh plan lays down these objectives: doubling its transport capacity; reducing unit costs of operations; improving service levels; and

providing cost efficient door to door and customized services. It plans to provide logistic solutions to freight and passenger customers focusing upon investments aimed at strategic capacity expansion and institutionalizing market responsive pricing and planning policies. To meet all these, railways is investing in excess of US$ 100 billion in developing dedicated freight corridors, privatisation of container operations, establishing warehouses and logistics parks, modernisation of tracks, port connectivity, gauge conversion and public private partnerships in manufacturing locomotives and rolling stock. It is executing three big-ticket projects - a rail coach factory at Rae Bareli, the Madhopura Electric Locomotive Factory and the Mohowra Diesel Locomotive Works. Further, to meet the shortage of coaches, it is setting up a high-tech 25-ton high-axle load wagon trolley factory to manufacture 5000 wagon bogies annually. As a step towards becoming an integrated logistics provider beyond national boundries, the inter-governmental agreement intended to connect rail network of India with 27 other countries in Asia and Europe has already come into effect. Railways continuously upgrades infrastructure, services, safety and security and its various software management systems. It has implemented Crew Management System (CMS) software that maintains a database of every railway engine crew and uses biometric identification to allocate crew members to trains. Computerisation of freight operations has been achieved by implementing Rake Management System (RMS). It has started using Satellite Imaging Software for Rail Navigation (SIMRAN) at a cost of over Rs 500 crores LOGISTICS TIMES November 2011


SPOTLIGHT - RAIL LOGISTICS

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to track the moment of trains across its network to prevent collisions. L&T Infotech is carrying out two turnkey ERP projects for computerising the maintenance of rolling assets at Delhi and Lucknow. It also plans to use `high alloy mild steel’ instead of stainless steel to manufacture covered wagons. This is expected to lower costs of production by about 20%. Green initiative Since the 1990s, railways has switched from small consignments to larger bulk goods which has helped speed up its operations. It has introduced “Green Van”, a special type used to transport fresh food and vegetables and the special ‘Container Rajdhani’ or CONRAJ, for high priority freight. Refrigerated vans are also being made available in many areas. As a green policy initiative, railways has decided to use diesel mixed with 10 percent bio-diesel in its locomotives. To meet this requirement, it is setting up four bio-diesel plants in partnership with Indian Oil Corporation (IOC). Freight Focus In a bid to increase the share in freight movement, where competition from trucks has seen a decrease in the proportion of freight traffic carried by rail in recent years, railways has introduced Teevra Gati Sewa premium weekly parcel train service between Tughlakabad and Royapuram and between Tuglakabad and Vapi. It has also developed and deployed special purpose freight wagons for transporting cars in Gurgaon-Mundra Port and Gurgaon-Chennai sections. As a policy initiative, Ministry of Railways has permitted private companies to use its network to run freight trains and set up freight terminals. It also offers a wagonspecific rebate to make the rail freight business profitable for the private sector. The concession period is 20 years and can be extended by another 10 years. The policy of Automobile Freight Train Operator (AFTO) Scheme aims at attracting private investments for high capacity auto carriers. Railways has also introduced special freight train operator LOGISTICS TIMES November 2011

(SFTO) and private freight terminal (PFT) schemes to attract private investment in rolling stock and terminals. The SFTO scheme intends to increase the railways’ share in non-conventional traffic such as bulk alumina, fly ash and bulk fertilisers. The PFT scheme aims to enable rapid development of a network of freight terminals to integrate rail transport with the supply chain for providing efficient logistics to end-users. Railways is generally using the Public Private Partnership (PPP) model for investments and expansion. It plans to add 25,000 kilometres (km) of new railway lines to its network of 64,000 km by 2020 in partnership with private sector players. For this, it has chalked out two distinct financing models. Both the models will have different revenue sharing pattern and land acquisition methods. Railways will form special purpose vehicles (SPVs) for the purpose. In one model it will have 26 percent equity in the SPV. The land will be acquired by the zonal railways at SPV cost and the ownership will vest with railways. In return the private player will share revenue for 25 years for laying the line. In the second model, the private players will lay the lines on their own land and share revenue for 30 years with railways. Railways has a joint venture with NTPC for a 1000 MW project at Nabinagar in Bihar. Talks are on with various stakeholders for setting up captive power projects on railways land. The proposal to set up five wagon factories on PPP basis would benefit companies like Titagarh Wagons and Texmaco. Similarly, proposal of setting up an auto ancillary hub on a PPP model would benefit companies like Bharat Forge and Amtek Auto. Steel Authority of India Limited (SAIL) is keen to invest Rs 8000 crore in the 500 km Sonnagar-Dankuni section of the eastern dedicated freight corridor under a PPP arrangement. The Government of Andhra Pradesh is sharing 50 percent of the cost with the railways for seven railway projects worth Rs 18 billion. Beyond traditional services Railways is looking beyond traditional

transportation services into other realms too for investment and expansion and has been successfully developing collaborative synergies with different stakeholders. A ‘reverse logistics’ arrangement proposal by Binani Cements to transport its cement to the eastern region by utilising wagons returning empty after transporting coal to power plants in the northern and western regions is likely to be implemented soon. Railways also provides connectivity and infrastructure for transporting milk from Gujarat to Delhi to MDCMPU, the largest member of the Gujarat Cooperative Milk Marketing Federation. Besides saving four hours of transportation time, this also earns MDCMPU carbon credit worth more than Rs one lakh per day. Sam Pitroda has been appointed as head of an expert committee for suggesting schemes for commercial use of the 30 thousand route-km of optical fibre cable network running along railway tracks. Altering regulations and enforcing agreements may have big implications on railways’ strategies, policies and profits in future as with any service provider. For example, the likely impact of bringing goods carried by railways under the service tax net. Another example: the joint venture which operates the railways’ national enquiry call centre, has been registering losses as private network providers have not shared their call revenues with it so far; its fall-out impact on other ventures? Strategically, railways need to focus on both cost efficiency and service flexibility. For this, they may need to go for collaborative and innovative business models and contracts. They also need to reduce their non-performing assets(NPAs). They need to go for right sizing of their manpower and upgrading employee knowledge and skills in line with changing product and service requirements. Operationally, railways need to improve and expand product and services, improve resource utilisation and reduce costs. The future for railways is indeed full of challenges and opportunities. On the whole, presently they seem well positioned and geared to meet most of the challenges and leverage most of the opportunities.


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When Warren Buffett invested US$26 billion year before last to acquire control of Burlington Northern Railroad in the United States, there was a buzz around the world in logistics industry about the importance of railroad logistics. This only emphasizes the importance of Rail-Road logistics in the hinterland of every country. After all a good logistics infrastructure in the hinterland boosts imports and exports of the country in a big way. There is a lesson also for India in it that Rail-Road logistics can not be neglected any more and has a very crucial role in improving freight traffic, opines Prof Akhil Chandra of Institute of Logistics & Aviation Management.

Strategic Opportunity Today every leading country in the world including China and European countries are busy in expanding their Rail-Road network and linking it to their main ocean ports. China already has the most advanced and extensive high speed rail line in the world and soon that network will be connected all the way to Europe and the UK! China is now making plans to connect its high speed rail line through 17 other countries in Asia and Eastern Europe in order to connect to the existing infrastructure in the EU. Additional rail lines will also be built into South East Asia as well as Russia, in what will likely become the largest infrastructure project in history. There is world wide recognition now to the fact that Rail networks have a long

term optimal logistics play for the future and are vital for inevitable expansion of global trade. It is now a well known fact that logistics cost in India are among highest in the world and are of the order of 13 per cent of GDP while in developed countries, it is only 8 to 9 percent of the GDP. In China, it is 10 per cent of GDP. A higher logistics cost in India as compared to other developed nations is a major worry and is a symptom of poor logistics infrastructure of the hinterland. This is largely due to heavy congestion at the inland, road and ocean ports, higher turn around time of the cargo ships and most of all a lack of good and dedicated Rail-Road network for the movement of goods apart from modern ocean ports.

Road to rail Among various options as remedy to above problems lies in improving Rail Logistics in the country so as to shift most of the goods traffic from road to rail. As fuel prices rise, trucking will be further impacted. In contrast, rail can move product more cost effectively in most cases and will also contribute to lower carbon emissions contributing towards a green world. In India, as organized retail is to increase as and when Government of India allows multi branding retail for multinationals, the efficient movement of both raw material and consumer products will be essential to the country’s continued expansion as a rising economic super power of the 21st century. When viewing the current scenario, the national LOGISTICS TIMES November 2011


SPOTLIGHT - RAIL LOGISTICS

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highway system of India is estimated to encompass approximately 4% of the total road system of the nation, yet 40% of the cargo volume moves by truck along this network. There are inherent advantages of the Rail container transport over transportation by road and can be briefly summarized as under: i) lower transportation cost ii) reliability is higher in comparison to road iii) safer and secure movement of goods iv) reduced accidents, and v) very environment friendly Inspite of the above advantage, the present rail share in container transport is around 27% and is not increasing because of following reasons.  comparative benefits offered by road transport: faster, door to door service, aggregation of smaller volumes  lesser waiting time at ports and terminals, and  avoidance of additional handling of cargo at rail terminals All these help reduce costs in comparison to rail. We have in our country world’s second largest rail network, spread over more than 81000 Km and the freight segment accounts for roughly two third LOGISTICS TIMES November 2011

of railway’s revenue but our tonne per kilometer costs for rail freight is three times that of China which is really alarming. Some of the efforts taken by Indian railway to improve the situation in the future are as under: i) Enhance rail logistics in form of double stacked containers ii) Dedicated freight corridors connecting the hinterland iii) Private participation scheme. Let us see the benefits of each of them. Double stacked Containers Double stacked Containers technology is a cheaper way of movement of goods requiring lesser number of goods trains. Due to lower haulage cost, the rail share shall increase. This also shall match the throughput for larger ships thus leading to lower turnaround time for the vessels resulting in huge savings of handling costs at the port. This shall increase better utilization of track capacity and rolling stock. As delivery time of goods shall improve , this is bound to reduce inventory at various pockets throughout the industry.

Dedicated Freight Corridors Dedicated freight corridors for RailRoad enable the railway infrastructure to carry very high level of freight leading in reduction of transportation costs and inventory costs at Inland Container Depot(ICDs). Such corridors (DFC) are being created from Jawaharlal Nehru Port in Mumbai to Dadri and Delhi’s main container terminal at Tughlakabad while eastern DFC will run from Ludhiana to Sonnagar via Kanpur and Allahabad. Private participation scheme Indian railways have enjoyed a near monopoly but recently private players like Adani Logistics have been allowed to enter Rail Road Logistics in a big way. There is a a huge expected growth in area of textiles, handicrafts , readymade garments and many industrial products and as such greater demand for containerization is being forecasted. Industrial development is bound to increase coupled with developments of larger SEZs and industrial parks. This will help container trade to go up with private container trains assisting sufficient hinterland connectivity for ports. Rail-Road logistics is bound to play a crucial role in contributing towards higher GDP growth in the country.


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LOGISTICS TIMES September 2011


SPECIAL FEATURE

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THE TALKING WAREHOUSE Noted supply chain specialist Roger Byford* and journalist David Maloney* have authored an e-book called ‘The Talking Warehouse’ which deals with the efficacy of voice-based solution in product distribution. Logistics Times brings excerpts from the chapter titled – Solving Warehouse Challenges Using Voice published in the e-book. This feature is the second part of the series. Knowing what it is, where it is, and where to take it. A key to accurate order filling is accurate inventory. If a company does not maintain control of its inventory properly, then there is little chance that it will be able to meet customer demands of delivering the right product at the right time. Voice systems, working with warehouse management software and enterprise systems, help companies maintain users’ inventories throughout the various steps LOGISTICS TIMES November 2011

of order fulfillment. Cefrinor, a company specializing in cold product storage logistics, was facing major problems with productivity and accuracy in its picking process. Its distribution center in Salvador-Bahia, a coastal city located near the midpoint of Brazil’s Atlantic shore, provides frozen and refrigerated storage for about 30 global and Brazilian customers. The cold environment made it difficult for employees to pick from lists of paper.

Workers not accustomed to the cold temperatures of the freezers, especially with the tropical air outside, tended to tire easily. This was complicated by the fact that many of the company’s product packages and labels look very similar, making it difficult to quickly distinguish one product from another. These factors led to high error rates and lost productivity. “Our workers made a lot of errors and gave us a very low level of accuracy,”


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explains Luis Martinez, General Director of Cefrinor. “Fatigue was a factor. Reading (from paper) inside the cold storage, where we don’t have the best lighting, was also difficult.” At first the company attempted to convert its paper-based warehouse management system to a new system that supported RF order selection. While this improved accuracy, productivity still lagged far behind. The RF systems also proved to be difficult for workers to use in the freezer environment and the units required constant maintenance. Cefrinor then turned to voice as a solution to solve both its accuracy and productivity challenges. Productivity soon rose by 30percent and accuracy reached a level of excellence of 99.98 percent.“The increasing level of productivity is proving that we made the correct choice with voice-directed distribution and we are very happy with the results. It’s the productivity that pays for the investment,” explains Martinez. “Cefrinor was the pioneer in Brazil in using a voice system in refrigerated environments. Today the company is planning to integrate voice with other workflows such as inventory management and quality audits.” For London Drugs, accurate inventory and order filling are a necessity. As one of Canada’s largest retailers, the company

has grown from a single drug store to a variety retailer with 75 stores in 35 cities throughout Western Canada. Stores sell everything from pharmaceuticals and over-the-counter medicines to refrigerators, electronics, and housewares. Because medicines remain a major part of its business, accuracy has to be perfect at its two distribution centers. Without accuracy, the trust between its brand and customers would erode. ”With the voice system, very few errors are occurring, and when they do happen, it’s usually due to someone not following the simple procedures that have been put in place. And it’s easy to correct,” says Brian Best, Director of Transportation Warehousing and Distribution for London Drugs. London Drugs had used paper and labels for picking its products, and with that technology incurred an error every 300 picks on average. Now voice directs picking of full cases and split case orders. While productivity and throughput have improved by 10 percent, picking errors have decreased to less than one per 1,000 picks with voice.“I can’t overstate the importance of a quick and accurate shipping system in variety retailing,” explains Clint Mahlman, Senior Vice President of Retail Operations, Distribution and E-commerce at London Drugs. “With voice, our stores

can maintain an in-stock position for customers while reducing the costs and headaches associated with picking errors.” North American grocery chain Safeway also faced issues of accuracy. Safeway has over 1,700 full service grocery stores that it operates in the United States and Canada, mostly on the west coast. The company has been using voice for its order selection for nearly four years. “Our primary motivation was around selection quality,” recalls Safeway’s Evan Rainwater. “We already had engineered labor standards, so we did not expect as much in labor savings, though we did get a boost in that also.” Before implementing voice, Rainwater says that picking from paper yielded selection accuracies averaging about 98.2 percent. “When we got to over 10,000 cases and more, it represented a significant number of wrong picks going out of our facilities.” Safeway operates 15 full line distribution centers in the U.S., and now voice directs picking at all of them. Accuracy has since jumped to an impressive 99.89 percent. “Voice has made a significant positive impact, as errors have gone down,” adds Rainwater. “Our retail customers noticed a difference immediately and we had not even told them we were changing systems. Our claims reduced by 75 percent.” LOGISTICS TIMES November 2011


SPECIAL FEATURE

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Process standardization Distribution inefficiencies often arise from the use of disparate workflows. One process may be utilized in one facility, while a completely separate technology may require work to be conducted quite differently in another. This especially happens to growing companies that add existing distribution facilities to their network as a result of an acquisition. Working with multiple systems can be very difficult, especially when many of the distribution functions are coordinated from a centralized office. Not only does this require the home office to process information from many different sources, but the lack of a common system does not allow for true comparison of performance from one facility to another and makes it difficult to set benchmarks that can drive performance improvements. That is why many companies look to standardize their processes across all of their facilities. Among them is KPSS Inc., headquartered in Maryland in the United States and part of the German company KPSS GmbH, which in turn is owned by Japan-based

LOGISTICS TIMES November 2011

Kao Corporation — a US$13 billion consumer products company. KPSS provides professional salon hair care products under the Goldwell and KMS brand names. The company has facilities worldwide and wanted to place the same technology in each to make them easier to manage. “We have a very complex supply chain with many small warehouses. We required a solution that would help us to standardize and streamline our workflow across all of our distribution sites and countries,” says Brian Hatfield, Vice President of Supply Chain North America at KPSS. KPSS chose a voice-directed system operating on rugged mobile computers for picking and replenishment functions in its facilities worldwide. Voice is ideal for such workflow standardization, as it is scalable to nearly any size of facility. When combined with a standard warehouse management package, operations can be duplicated easily just about anywhere. The first rollouts were deployed in distribution centers in Fresno, California and Toronto, Ontario, Canada with other

sites in the United States, the United Kingdom, Finland, and Australia next to integrate the technology. So far, results have been impressive. KPSS reports it has a similar process in all of its distribution centers. Voice has also helped to improve order accuracy by more than 75 percent and picking and replenishment labor has been reduced by more than 20 percent. The company was able to recapture its investment in less than a year. Changing business environments Change, in business as in life, is inevitable. Or as the writer John Simone once put it, “If you’re in a bad situation, don’t worry, it’ll change. If you’re in a good situation, don’t worry, it’ll change.” There is no avoiding a changing business environment. It is how one copes with change that is the hallmark of a company. Very few businesses have not faced major hurdles within the past few years. A changing economy dictates that businesses alter course or suffer severe


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consequences. As a result, few businesses mirror what they were even just a few years ago. Some companies have experienced rapid growth and expansion. Others have undergone business contraction, either selling off divisions or consolidating operations. And still others have had to drastically change their business models to stay competitive. Fox Racing is a company that has experienced tremendous growth. This American-based company sells apparel and accessories to race fans, motocross and BMX riders, surfers, mountain bikers, and wake boarders. It also has a line of casual wear geared for the active lifestyle. Because of explosive growth, including gains in its international business, the company’s two California distribution centers were facing extreme orders that matched the extreme sports they served. Its paper-based systems could not keep up with demand, especially as orders were picked discretely, meaning each order required its own trip through the warehouse to complete. “We had reached the point where we would be forced to turn business away

if something didn’t change, and change quickly,” recalls Robby Dhesi, Vice President of Operations at Fox Racing. “We simply did not have the bandwidth to keep pace with our rapid growth.” Today voice is used for a number of applications at Fox, including cart-based picking, envelopepicking, replenishment, slotting, and cycle-counting. In the facility that does Fox’s European distribution, voice is also used to direct receiving. And voice-directed packing is being tested in its U.S. operations. Since moving these processes to voice, Fox’s California DCs have doubled productivity, allowing the company to reduce the number of selectors from 35 to 18. Lines picked per hour have also doubled and accuracy is at 99.9999 percent. In 2010, the facilities recorded only 13 errors during the entire year. These gains have allowed Fox to experience a return on investment with its voice deployment of only six months, which was six months earlier than originally projected. “Voice helped us reach a higher level of performance on every goal we set, and now we should be able to achieve our growth objectives across North America

and internationally,” adds Dhesi. Smith Drug Company is another company with steady growth that has strained its distribution operations. This American wholesale distributor of pharmaceuticals and health and beauty products operates three distribution centers that serve more than 2,000 independent drug stores in the southeastern United States. The company’s rapid and consistent growth required it to find ways to push more volume quickly through its buildings. But its growth in volumes was hampered by its reliance on paper-based processes. Paper proved to be slow and riddled with errors, not to mention the daily environmental impact of using reams of paper to print pick lists. “It was obvious that we had to move fulfillment away from a paper system,” recalls Randy McConnell, Director of Information Systems for Smith Drug Company. “That was holding us back, keeping us from reaching the kind of productivity and service goals we knew we were capable of. (Concluding part to appear in next edition) Courtsey:: Vocollect Courtsey

* Roger Byford is Co-Founder and Chief Technology Officer of Vocollect, the world leader in voicecentric solutions for mobile workers. Roger’s career spans more than 20 years in the industrial application of voice technologies. A business journalist for over 20 years, David Maloney is senior editor of the leading North American distribution industry magazine DC Velocity. LOGISTICS TIMES November 2011


QUICK CHAT

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Telit is a noted global name in the domain of machine to machine (M2M) communication technology – a market which is slated to skyrocket to $35 billion in next five years. The company has been operating on a low-key basis in India since 2009 but has now decided to fan out on a pan-Indian basis envisaging huge potential in several sectors including logistics and transportation. Ashish Gulati, Country Sales Manager, Telit shares with Logistics Times company’s broader strategy for the Indian market:

Global Profile Telit is basically a company based out of Europe and it’s a listed company on London Stock Exchange (LSE). We are wordlwide number three in terms of market share in M2M industry and in automotive, we are number one globally. We have presence all over – Europe, US and also quite a sizeable presence in APAC. In APAC, we have headquarters in Korea with operations in China, Taiwan, India and Singapore. Our overall revenue last year was $131 million. We are mainly into GSM module business and we cater to the most of the markets in M2M like telematics, handheld terminals, etc.

Solutions for logistics industry For transportation, we have something called vehicle tracking system. That is one application whereby you can actually monitor the movement of any vehicle. With the movement of the vehicle, you can also monitor the speed of the vehilce, the distance covered, starthalt time, and driver movement. We have seen logistics companies are facing this challenge – they are not aware of the whereabouts of their fleet. That is where our application helps.

India as a fertile ground for M2M business This market has been maturing quite significantly for last five years. There are some specific areas where we see market has started growing. One such vertical is AMR where a lot of government initiatives have been taken in last few years and lot of activities are happening. In telematics, we see a huge potential because automotive segment has become a matured market in India. And this helps in telematics segment to grow. Lot of new applications are coming up like vehicle tracking, secutiry systems, etc.

Emphasis on logistics industry Today we have more than four million commercial vehicles in India. And we also have more than 12 million passenger vehicles. So all of these have the potential to be monitored. We have seen it happening in a lot of other countries. In India, already it has started. A lot of government emphasis is coming for complete monitoring of vehicles. Definitely this would be a big opportunity.

Telit’s association with India Nature of Indian market Telit came to India in 2009 and we have been working through a network of distributors. We did some market research in last two years and we could see that there have been activities from the government and the private sector as well. As I said, there are strong action visible particularly in AMR like intiatives for energy conservation. Now regarding our own operations, we have decided to get closer to customers base in India in order to support them. LOGISTICS TIMES November 2011

India is a big country – there are different regions and cultures and we definitely need to cater to their requirements. Presently we are working alongwith our distributors and design partners and we are looking forward to have more design partners particularly at regional centers to make sure the local requirements are better understood by the local players.


PRODUCT

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BOLZONI AURAMO LIFT TABLES IndiaÊs No.1 Entrance Automations & Loading Bay Equipment Company Gandhi Automations offers a wide range of Bolzoni Auramo lift tables, with their usual safety and reliability features provide an effective solution to most lifting problems. The safety of the operator during the use of our lift tables is paramount. Our tables comply with the European safety of machinery standards EN 292. Machinery Directive 98/37/EC and safety requirements for lift tables EN 1570. All models include.  Aluminium safety bar, stopping descent of the platform on contact with obstructions.  Safety clearance between scissors to prevent trapping during operation.  Safety check valve to stop the lift table lowering in the unlikely event of the hose break .  Protection against overloading  Low voltage control box with up-down buttons and emergency stop.  Maintenance props(for safe maintenance operation)  Removable lifting eyes to facilitate handling and lift table installation.

We have a wide range of tables and options available to meet different requirements. Due to our wide experience we are able to provide customized solutions. Type 1-E Ergo-lift single scissor for evenly distributed load. Designed as a „work station‰ to provide improved ergonomic conditions to ensure the health, safety and comfort of the operator together with improved productivity.  Load applied: evenly distributed  Top platform smooth surface  Max. 20 cycles per hour. One shift a day  Single acting hydraulic

cylinders with drainage  Upper and lower travel limited by mechanical stops  Self lubricating bearings on pivot points  Hydraulic power pack inside the table provided with relief valve against overloading and compensated flow valve for controlled lowering speed  Electrical equipment controlled by electronic system. With low voltage transformer and thermal overload protection  Wide range of accessories available to achieve even higher safety functions where conditions require.

For further details, Contact: Gandhi Automations Pvt Ltd, 2nd Floor, Chawda Commercial Centre, Link Road, Malad(W) Mumbai  400064, Off : 022- 66720200/66720300(200 lines), Fax : 022-66720201, Email :- sales@geapl.co.in, Website : www.geapl.co.in

LOGISTICS TIMES November 2011


9th Knowledge Millennium Summit Leading industry chamber ASSOCHAM organised its 9th Knowledge Millennium Summit on 8th of November in Delhi. The central theme of this year’s summit was agriculture and the prime issue discussed was: how to take agricultural growth in the country to 8 percent trajectory. The millennium address was delivered by renowned agriculture scientist Professor John A Pickett (Winner of Wolf Foundation Prize) and Karnataka’s chief minister D V Sadananda Gowda was the chief guest at the inaugural session. Other eminent speakers at the summit were: Anil Jain, MD, Jain Irrigation; V V Sadamate, Adviser (Agriculture & Food Processing), Planning Commission; Ramesh Srinivas, Executive Director, KPMG; and K C Mehra, Resident Director, Shapoorji Pallonji & Company. The concluding session was specially dedicated to showcase the potential of agribusiness in Karnataka.

Logistics Times was media partner of this event

LOGISTICS TIMES November 2011

EVENTS

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EVENTS

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TAPA’s debut show in India Transported Asset Protection Association (TAPA) had its debut show in India held at Leela Kempinski in Gurgaon on 2nd November. The three day debut event was structured as conference- cum- training sessions. The first day was dedicated to conferencing wherein the lead speakers were: Bhabajit Nandi, TAPA India Chapter President; Thorston Neumann, Chairman, TAPA EMEA; Tony Lugg, Vice Chairman, TAPA Asia, Garry Singh, Managing Director, Pinkertin Consulting & Investigations India; Abhishek P Rao, Chief Coach & Advisor, APRAC South Asia, etc.

Logistics Times was media partner of this event

LOGISTICS TIMES November 2011


RNI No. DELENG/2011/39329


Lt november 2011 for net