SCMPro July 2015 by Jayaram Nair

P R O F E S S I O N A L

10th July 2015 | Volume 1- No.4 | Rs.200

Samir Shah

Managing Director and CEO, NCDEX

LEAD STORY

Empowering Farmers Through Mobile Technology

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INDUSTRY INTERFACE 4PL-The Next

HUMAN RESOURCE

Generation Supply Chain

2015 A Year of Expectaions

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editorial The Time for India The world around us is in turmoil. Greece is a trouble spot. And tagging along, Britain is looking at the pros and cons of moving out of the Euro Zone – possibly triggering other exits and an eventual truncation of European Union. This has the potential to upset the fragile global growth. While nearer home, China is facing an unprecedented slowdown – growth has slowed to 6 percent. Manufacturers are looking at countries to re-locate their manufacturing. The Chinese nation is slowly losing its competitive edge. Japan is still in trouble. US on the other hand is doing well.

The structural imbalances that face us cannot be resolved with short term measures. Hope the government stays true to the course.

This is good news for India. The only country which can provide an alternative to China as a manufacturing base is India. We have the land, the people and the resources. But we lack infrastructure and our ease of doing business is poor. Fortunately for us, the government is seized of the matter – all stalled infrastructure projects are being revived. We are moving fast on ease of doing business. The one unfinished agenda will be land – India will have to allow corporates to acquire land for building manufacturing facilities. In that respect the land bill is a priority. Our psyche is to keep the poor tied to their lands and poverty. China recognized that to move people out of poverty, they need to industrialize. It is time we do so too. Else as the adage goes – we will turn Goddess Lakshmi away from our door step. Hope better sense prevails. Happy Reading

GIRISH V S

Editor girish.vs@scmp.in

Executive Publisher Jayaram Nair Jayaram.nair@scmp.in Mobile:9821732929 Editor Girish V S girish.vs@scmp.in Graphic Designer Sidhi Jadhav sidhi.jadhav@scmp.in Advertising Riddhi Solanki riddhi.solanki@scmp.in 022 60020157 Bhavi Shah bhavi.shah@scmp.in Administration & Subscription Sanjay Gupta sanjay.gupta@scmp.in 022 60020159 Editorial Advisory Board Dr. John Gattorna Dr. Mahender Singh Dr. Rakesh Singh

Media Group D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (W), Mumbai 400062. INDIA. Printed and Published by Jayaram Nair on behalf of B2B Media Group. Printed at Kalakshi Printing Works, 205 Gopal House IB Patel Road Goregaon (E) Mumbai 63. And Published at D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (West), Mumbai 400062. INDIA. No part of this Publication may be reproduced or transmitted in any form or by any means including photocopying or scanning without the prior permission of the publisher. Such written permission of the must also be obtained from the publisher before any part of the publication is stored in a retrieval system of any nature. No liabilities can be accepted for inaccuracies of any description, although the publishers would be pleased to receive amendments for possible inclusion in the future editions. Opinions reflected in the publication are those of writers. The publisher assumes no responsibilities for return of unsolicited material or material lost or damaged in transit. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Mumbai only. Annual Subscription Rate: INDIA: Rs. 2000/Editorial Partner:

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content Feature

Interface Unlocking the Agri Value Chain

06 SCM News

36 Book Review Dynamic Supply Chains

Lead Story Rural and Agri Value Chains Out of the Box Ideas for the Future

45 Feature

July 2015 | Volume 1 | No. 4

Serving the After Market Services in IT

12 LSP Focus Building a House of Logistics for the Next Generation Thomas Reuter, Huned Gandhi, Edoardo Podesta

30 Industry Interface 4PL-The Next Generation Supply Chain

38Technology

A Strategists Guide to the Internet of Things

Taking Care of the

Darryl Judd

Small Guy

42 4

46SME Corner

Human Resource 2015 A Year of Expectations

48SCM Updates

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SCM News

3D Printing to be Commercially Feasible 3D printing is a slow process, which takes hours to create a product and produces a huge amount of heat. Due to this it has not found a place on the factory floor. But all that is set to change. According to news reports, the Sheffield University is building a GBP one million 3D printer that will be able to produce plastic parts, which can be used in a production line. The printer will be able to produce a part in seconds and will not heat up like the current crop of 3D printers. The machine is capable of printing parts as large as a washing machine. This development will enable 3D printers to be deployed in production lines. At these speeds, it can compete with the traditional injection moulding machines. A 3D printer builds parts up in layers using lasers. The new technology being developed – called High Speed Sintering – uses an infrared rays. The machine will paint infrared ray absorbing ink on to a powder bed. Once the part is exposed to infrared rays, the powder fuses creating the part. The printer is expected to be available by 2017, and ready for production by early 2018. Move over conventional practices – a viable 3D printer is round the corner!

APICS Finalizes Merger with American Society of Transportation and Logistics A press release by APICS announced that the boards of directors of APICS and American Society of Transportation and Logistics (AST&L) have approved an agreement under which AST&L will merge with APICS upon ratification by an AST&L member vote. The merger will expand, extend and deepen the end-to-end supply chain body of knowledge that fuels APICS’s global supply chain research, education and certification programs. Together, APICS and AST&L will offer unmatched content and subject matter expertise that will enable individuals and organizations to meet key supply chain and logistics challenges. Following the close of the transaction, APICS intends to integrate AST&L with its existing operations. Abe Eshkenazi will remain the chief executive officer of APICS and Laurie Hein Denham, AST&L president, will join APICS as a senior director. “This agreement acknowledges the importance of transportation and logistics, and the tremendous innovation impacting delivery processes today,” said Alan G. Dunn, CPIM, chair of the APICS board of directors. “It also reflects our commitment to keeping our content and capabilities at the forefront of our industry, providing our members, customers and the supply chain community at large with the most up-to-date, relevant and complete body of knowledge.”

Ocean Cargo may be Supply Chain’s Weakest Link This Year As the world slowly tries to come out of the slowdown, Ocean Cargo may not be in luck. A recent McKinsey & Company report outlined the many challenges ocean carriers face for the remainder of 2015. According to analysts with the firm, container shipping has been unprofitable over the past five years. There are a number of reasons for this – for one, the global trade has to yet recover, thanks to a slowdown in China and Europe’s on going crisis. This has prompted firms to cut costs. Moreover, the excesses of the boom up to 2008 is now coming home to roost. Shipping companies went on a ship building spree and now are faced with a glut, depressing prices. What can shipping companies do – quite a lot it seems. For one, they can optimize their route – there are new and powerful route planning software that will allow firms to make effective decisions about their networks. Second, firms need to identify the value added services which their customers are willing to pay for and charge for them. And most important, ensure carrier schedule reliability. All said and done, the world has no alternative to shipping. They need to find a sweet spot.

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ING

the

Agri Value Chain One of the most important functions of any government is to ensure food security to its citizens. There are many players in the food ecosystem – the producers, brokers, financiers, warehouses, processors, markets, transporters and the consumers. Commodity exchanges provide a set of unique services – from price discovery – where the farmer gets to know the current and future price of the commodity, to ensuring transparency and trust in the markets. In keeping with the theme of this month – Agri value chains, SCMPro spoke to Mr. Samir Shah, Managing Director and Chief Executive Officer of NCDEX. We bring you excerpts from the interview. Samir Shah

Managing Director and CEO, NCDEX

he final report of the 1996 World Food Summit states that food security “exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life”. Food security has many facets – from ensuring that the farmers produce the required crops, ensuring an equitable pricing for the produce and distributing this with minimal wastage. Central to these is a vibrant

and transparent market which aids price discovery and affords some element of hedging opportunity to the producers and the processors. The Indian Agri Commodity Value Add The Indian commodity markets, in my view, started on the wrong track – they focused more on the derivative side rather than the cash market side. We forgot that we cannot have a vibrant derivative market unless we have a vibrant cash market. We skipped the cash SCMPr JULY 2015

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Interface markets and jumped straight on to the derivative markets. Having said that, I believe that the commodity markets have been a reasonable success in India, and not a runaway success, if we look at it through the prism of derivatives. Our commodity exchanges are around 12 years old. We are still developing. But, we should not look at exchanges from the standalone component of Derivatives. Exchanges are meant to bring price efficiency between the producers and consumers. The convergence between producers and consumers has to happen. Hedging efficiency has to improve. Price discovery and planning process have to improve. We have fallen far short of our goal of realizing the fundamental impact a commodity exchange can have on the economy. I believe, one of the basic reasons that has not happened is the lack of focus on the cash markets. Another issue with the commodity markets has been the tepid regulatory support. The commodity markets have not received full regulatory support it deserves. Politicians have allowed the commodity markets to exist, not flourish. On the contrary, there have been a number of interventions â&#x20AC;&#x201C; a number of derivative contracts have been banned or delisted. Of course, there has been a balanced regulatory regime over the past two years, bringing in some stability. FMC deserves fulsome compliments for that.

some commodity will either be banned or delisted. To sum up, the Indian commodity market has seen reasonable success in derivative segment, we have largely ignored the cash market and the kind of regulatory support that should have been there was largely absent, in spite of the strategic impact it can have on the economy. Basically, the commodity markets have an impact on the resources economy of the country. Like the capital markets serve the efficient raising of capital, the commodity markets ensure the efficient allocation of natural resources. That purpose has not been achieved. The next ten year agenda for the

commodity market should be to improve the strategic impact of the markets. I am quite hopeful that with the move from FMC to SEBI things will improve. FMC has done a commendable job in the face of the constraints it faced from the political class and a weak FCRA act. The move to SEBI will give the markets an autonomous, mature, experienced, and credible regulator, backed by a more mature piece of legislation â&#x20AC;&#x201C; the Securities Contract Act. I am sure that the next phase of reforms will be quite positive for the markets. The Lack of Participation by Farmers The Indian commodity exchanges have seen very little farmer

At the other end, there have been very little intervention in the nonagri markets. The non-agri markets are not linked to the physical markets and have little strategic impact. I often wonder about the real utility of the non-agri markets, as they are not linked to the physical markets. The agri markets, on the other hand, are linked to the physical markets and have strategic impact on the economy. But, the agri market development story in India is one of starts and stops â&#x20AC;&#x201C; every time there has been some decent progress,

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participation in trading at the exchanges. This continues to be a challenge. Allow me to focus on solutions, not challenges, today. Some very interesting solutions are emerging from. Make no mistake, farmers have benefitted immensely from the agri commodity markets in India. The primary benefit being price discovery. There is no doubt that exchanges should see greater participation by farmers. A few farmers do participate, but they are the exception rather than the rule. I do not think it is fair to judge the agri commodity market from the perspective of direct participation by farmers, because the indirect benefit to the farmer has been tremendous. Over the past couple of years, we have seen a significant change in the farmer’s behavior - they have started to use the price discovery mechanism at exchanges. If you go to any APMC or mandi which is linked to a commodity exchange today, the farmer and the trader there gets a complete look at prices of commodities traded there. Prior to the exchanges, a farmer would leave for the mandi by 5.00 AM, reach the mandi by about 8.30 AM and start his sales or auction process. Today, no sales or auction starts before 10.00 AM when the exchange opens. They will get the first cue from the exchange and only then will the commercial activity in the mandi start. In fact the derivative markets have started affecting the primary market. It should have been the other way round. But because the primary markets are fragmented and in some cases non-existent, the derivative markets have started to influence the primary markets. The farmer takes his cue from the derivative market and uses that to negotiate with the trader. This is one indirect benefit. How that indirect benefit has translated into the behavior of the farmer is interesting to see. Traditionally, the farmer would bring 70 to 80 percent of the produce to the market within two to three months of the harvest.

Over the past couple of years, there has been a significant difference in the patterns of mandi arrivals. They have now started to even out throughout the year. Even now, 40 to 50 percent still arrives in the first three months. But it is no longer 70 to 80 percent. This means that the farmer has learned to hold back his produce from the market, has learned to make economic decisions on where and how much to sell based on the cues he is getting from the futures market. That, in my view is a huge strategic shift and strategic empowerment that has happened over the last two years. This is yet another example of the indirect benefit to the farmer. To help this, NCDEX has created a chain of warehouses. The farmer can now hold back and also store the produce under scientific storage conditions. The next phase is going to translate the indirect benefit to direct benefit. NCDEX has proposed two solutions – both of which have started. We realized that the physical markets have to develop for the derivative markets to flourish. We launched a new segment for the first time in the history of exchanges – the forward segment. Not the futures segment. The FCRA was meant to be a Forward Contract Regulation Act – not Futures Contract Regulation Act. The forward contract is trying to get the physical market activity on to the exchange, and enable farmers to directly participate on exchanges. NCDEX created a new category of members called FPO – Farmer Producing Organizations. Today there are 16 FPOs who are active on the exchange. Farmers, through the FPO mechanism are directly participating on the exchange. The Rahstriya E-Market Services (REMS) Experiment The second solution we have proposed is the Karnataka model of Rahstriya E-Market Services Ltd - where NCDEX and Karnataka Government have partnered. The mission of this firm is to modernize

primary markets. Already 50 percent of the primary markets have been modernized. This model is being studied as a potential for agri market reforms and the proposed national agri market. These are two early but powerful success stories which are showing us how the primary market and physical market reforms need to happen. Remember, APMC has both positives and negatives. The positive is that there is an aggregation of produce at a physical location, and a sense of a market exists. Bihar, for example has repealed the APMC act, but have not replaced it with any alternate. The repeal of APMC, which many felt was bad, has been extremely bad for Bihar. The bad part of APMC is that it has not evolved to become a modern market. The market structure is very arcane, the price discovery is not efficient, and they are limited to a small physical area. Even in a state, two APMCs will behave differently. They will have two different prices for the same underlying commodity. The farmer will not be able to take advantage of better prices, even if the market is mere 50 KMs away. Because once a farmer comes to a particular APMC, he is a captive. These are some of the issues REMS is trying to solve. In an APMC, once the farmer brings the produce to the market, a few traders will encircle the product and force a price on to the farmer. Second, the price will be based on the physical inspection by the trader. This is an inefficient way of price discovery. REMS has changed this to an electronic auction mechanism. In an e-auction, traders cannot form a cartel. They have to independently bid for the produce. Third, early stages of testing the product has started. Instead of visual inspection by the trader, samples are being drawn and sent to an assaying unit in the APMC. A Grade and quality specification is assigned to the produce, and the trader will now bid on graded produce. The trader is now willing to bid at a higher price. This SCMPr JULY 2015

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Interface is a small beginning. Today, for the same produce, the farmer is getting a higher price, just because it is graded. Today, most of the payments happen in cash. In certain markets, payments are now handled through bank accounts. In these markets, the trader pays the APMC committee, which in turn deposits the money in the farmers account. The settlement cycles have shrunk. The robust practices of an exchange are now being implemented in APMCs. The APMC is now behaving like a true market or exchange. Under this scheme, even the APMCs benefit as there are no more leaks in transactions through under declaration. 100 percent of the trade is now being registered and the APMC cess collections are up.

NCDEX is now extending the REMS model to other states. The second state will be Andhra Pradesh. It is the same model, the same platform, centrally hosted, that will be extended to states. And as more states come on board, a farmer need not sell to one APMC, but can sell to a trader across the states. A trader in Himachal Pradesh can bid for a produce in Andhra Pradesh as physical presence is no longer required. The residual problem of interstate movement of goods can be solved by GST hopefully. We can now see the contours of a solution appearing – we can see the foundations of a national agri market now possible. Of course, enabling legislation like GST has to happen, states have to adopt this model, but the process has started.

traditional role. What is new is focus on marketing – how to enable a farmer market his produce across three dimensions – time, space and grade. A farmer should be able to freely sell his produce – whatever be the grade, wherever he wishes, whenever he wants. That is where the real innovation is happening in exchanges. Embedded in the marketing platform is storage – where the warehouse reform is beginning to happen.

Addressing the informal Value Chain There are two value chains operating in the Indian agri markets – the formal and the informal value chains. The agrarian crisis affects the informal value chains more. Exchanges can add value to the informal value chains too. Exchanges are playing a central role in price discovery. That is a

Apart from price discovery and marketing, the third area where an exchange can make a difference is financing. Exchanges are playing a critical role in financing. NCDEX has developed a technology solution – COMTRACK – which allows complete visibility of the quantity and quality of a produce stored in a warehouse. By ensuring complete visibility, banks are now willing to

extend financing arrangements for the produce stored in a warehouse, because the threat of fraud is now remote. Banks can now extend financing through electronic pledging through COMTRACK. Through price discovery, marketing and financing, exchanges add value and complete the informal value chain. The exchanges gearing up to create a true national market, focused on the physical market. Add to it the technology support and the robust risk management practices at the exchange and the intermediaries. These changes will cumulatively unlock the potential of the Indian Agri Commodity for all the stake holders – the processors, traders and most important – the farmers. It does not matter whether the farmer is a large farmer or a marginal farmer. The benefits will be available to all.

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Lead Story

Rural and Agri Value Chains Out of the Box Ideas for the Future

ural India is a mystery to most corporates. For long, it was believed that rural markets were not lucrative for a corporate to penetrate by itself. Rural distribution was left to the rural denizens. The formal supply chains ended with the super stockist. In that respect, the Indian rural supply chain has elements of both push and pull. Push to the super stockist and pull to the retail out let in the villages. Management gurus like C K Prahalad introduced rural markets to corporate India in his seminal work – Fortune at the Bottom of the Pyramid. But more than a decade later, the formal rural supply chains are singularly absent. It is the informal supply chains that exist.

For this issue of SCMPro, we decided to examine the rural and Agri value chains. This is a precursor to the one day seminar we will hold on the 21st of August in Mumbai on the supply chain response to unlocking the value in rural and agri value chains. When we speak of rural India – popularly called Bharat - a predominant part of it is the agri value chain. It is very difficult to separate the two. We are aware of the challenges to the value chain in Bharat. Every challenge has been

the topic of discussion on many fora – most often held in urban settings. From lack of connectivity, poor infrastructure, lack of concentrated economic activity, lower per capita consumption, poor access to credit, and most troubling, exploitation of the farmer by the trader and the middle men – we are aware of it. Your magazine has decided to take a different approach – we will not speak about the challenges – we will seek solutions. With this in mind, we approached a few luminaries and requested them to speak of the solutions they believe will add value to the agri and rural value chains. From what we have heard and seen, agri and rural supply chains are poised for a makeover – driven by forces of globalization and technology. As urban India talks of digital markets and the technology convergence called “Nexus of Forces” or SMAC, rural and agri value chains are poised to reap the benefits. Affordable technology, backed by a sagacious political leadership, (a view expressed by the experts we interacted with) is set to re-write the value chain. We hope you find this collection of articles interesting.

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Modernizing Indian Agricultural Value Chain The Oxford English Dictionary defines modernization as: The process of adapting something to modern needs or habits. Indian agriculture, its value and the rural economy is still trapped in the traditional practices. Hardly anyone uses pre-coolers to prevent the degradation of fresh produce. Produce is tested for quality by running it through fingers. The list is endless. To ensure viable employment, improve our productivity and reduce wastage, we need to introduce best practices from across the world – in short modernize. Team SCMPro takes a look at the necessity and challenges in modernizing Indian agricultural value chain.

ndia is the largest or second largest producer of many agri commodities. But our productivity is poor. According to World Bank Data, in 2013-14 our cereal yield (measured as kilograms per hectare of harvested land, includes wheat, rice, maize, barley, oats, rye, millet, sorghum, buckwheat, and mixed grains) was 2962. Compare it with China (5893) or New Zealand (8122) and we get the real picture. This is true across segments. An apple orchard in US yields around 120 tons per hectare against our 10 tons. The most important question we need to ask ourselves is - what is it we need to do to get our productivity figures in the top 10 percentile? Let us look at some of the figures. 68 percent of our population is rural. And roughly 51 percent of our population is engaged in agriculture. Agriculture contributes just 15 percent of India’s GDP. Which means USD 30 billion of our GDP supports 650 million plus population. Not a viable way to earn

a living. The Ministry of Agriculture has correctly identified the challenges to the agri value chain as: Inefficient/insufficient Agricultural Infrastructure; Lack of value added quality products (Food Processing) and Lack of integration of food value chain. One side of the story is modernizing Indian agricultural practices – the journey from seed to harvest. No doubt this needs attention. In this series we are concerned with the value chain elements. Mahatma Gandhi had stressed the need to improve our Agri value chain, by setting up village based agro industries. We are witnessing increased focus on value chain development. In an interview with SCMPro, Samir Shah, MD and CEO of NCDEX had outlined the plans to modernize the price discovery, marketing and delivery mechanisms in India. (You can read about it in the interface section.)

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Lead Story The factors that drive development of value chain are – One, modern retail has spurred the development of cold chains, warehouses and efficient transportation. Two, the consumption pattern of Indians is changing. From a time when people would consume local produce, today we see even rural households consuming packaged foods. Three, there has been a shift from cereals and pulses to milk, eggs and meat proteins in the consumption basket. This calls for a re-think on the value chain elements. The Indian agri value chain was developed when the Indian consumption was geared more towards cereals and pulses. The changing consumption patterns call for re-design of the supply chain. For example, transporting milk requires chiller units and trucks with cooling units. Transporting meat requires cold chains and reefer trucks. And they are mutually exclusive.

SaaS model from IT – PaaS or PreCoolers as a Service, where the farmers can schedule harvests and hire pre-coolers for it.

Ever wondered why the fruits and vegetables in retail shelves in developed nations look so tempting – with uniform color? They use technology to sort and grade their produce, with the result, the consumer gets consistent quality. As opposed to this, we do visual inspection at the mandis. No wonder our quality is inconsistent. India needs to urgently invest in setting up modern assaying units where the farmer can take her produce, and get it graded and sorted. The Indian agri sector needs to embrace technology in a bigger way. But the Indian farmer lacks knowledge of emerging and appropriate technology. First, most Indian farmers lack the wherewithal to collect information on new technologies and inputs The agenda for modernization should which have the potential to increase start from the harvest process – we production. Second, small and need the right tools for harvest. marginal farmers are hesitant to Table 1: Some features of the agro-industry sector in india Industries

The use of warehouse management solutions can help the movement of goods in a first in first out process, thereby ensuring lower spoilage. Apart from this, we need cold chains for fresh produce, including meats. The produce needs to be transported in temperature controlled vehicles to ensure freshness. And finally, as income levels rise, we will see the rise of the food processing industry. With the right processing, we can ensure year round availability of seasonal produce. A paper by Vasant P. Gandhi, Indian Institute of Management, Ahmedabad, India includes data from the Annual Survey of Industries (India Ministry of Planning, 2013) which shows that 37 percent of all factories in India are agro-industries that contribute 18 percent of the manufacturing value added and 37 percent of manufacturing industry employment. Every aspect of the agri value chain needs modernization – in terms

Percentage share No. of factories

Employment

Net value added

Agro-based food industries

19.0

12.5

8.4

Agro-based non-food industries

18.3

24.04

9.4

Total agro-based industries

37.3

36.54

17.8

Other (non-agro) industries

62.7

63.46

82.2

All industries

100.00

Source: India ministry of Planning (2013), Annual Survey of industries 2011-2012 For example, we prefer to harvest mangoes and apples by hand, cutting it off with a knife. As opposed to it, orchards in US use specially designed pickers, which will reduce damage to the fruit. Every aspect of the value chain needs attention. Precoolers are a de rigueur in developed economies, to prevent degradation. However, the fragmented land holding in India (where average farm sizes are around 1 or 2 acres) make investments in pre-coolers prohibitive. We need to borrow the

invest in new technologies. Third, they lack funding avenues. Storage – visuals of rotting grains stored in open yards are a familiar sight in India. 25 to 30 percent of produce is wasted due to improper storage. The modernization agenda should include scientific warehousing. Fortunately, NCDEX, the commodity exchange, in conjunction with the Government has come out with norms for agri warehouses. NCDEX currently audits warehouses and certifies them.

of technologies used, processes followed, people involved, knowledge base and practices. The rapidly changing consumer tastes call for a rapid response. The Government of India has identified a roadmap for the future that includes setting up a national agricultural market, inviting private sector participation in infrastructure development and technology acquisition loans. Hopefully, we will be able to turn around our ailing agri value chains.

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Empowering Farmers through Mobile Technology One of the biggest threats to food security in India is the routine distress faced by farmers. Drought and excess or unseasonal rainfall is one side of the story and cannot be prevented. However, there is a far more sinister force at work – something that can easily be avoided – the lack of information. Timely information is worth its weight in gold. Vijay Iyer – VP- Enterprise Revenue, Reuters Market Light, explores how mobile technology can change the face of farming in India. “My wheat produce grown on 5 bigha land, was lying open in the ground. I received RML weather alert of possibility of rainfall on my phone. I immediately moved my produce to the warehouse. In evening, it rained heavily. Thanks to RML, I saved my entire produce worth Rs.40,000/-‘’ says Mr. Bhurabhai Bhanabhai, a farmer in Gujarat who could save his losses by following just one message delivered on his mobile phone. In emerging economies, hundreds of millions of farmers often suffer economic losses due to lack of timely, unbiased, localized and accurate information on crop prices, weather, relevant government schemes, subsidies and right crop advisory. These issues all contribute to comparatively lower yields and lower price realization in many emerging markets. Overcoming these challenges is critical, since it is driving livelihood of 60% of Indian population directly or indirectly. Vijay Iyer VP- Enterprise Revenue, Reuters Market Light

Mobile technology has great potential to overcome the many challenges and improve the agricultural ecosystem in emerging

economies. Mobile products and services have the ability to deliver real-time information directly into the farmer’s hand to enable agricultural ecosystem to operate more efficiently. At each stage of the agricultural value chain, mobile can help to improve communication and efficiency, supporting better price realization, increased food production and better livelihoods.

The two biggest changes in the ecosystem are farmer empowerment and direct financial benefit in way of increased farmer incomes. Due to penetration of technology, farming in the developing world is changing and becoming more advanced as it goes through a very interesting phase. Modern techniques and better technology are leading this change with mobile phones as a medium to bring about the much needed revolution in the sector. It enables small SCMPr JULY 2015

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Lead Story farmers to increase efficiency and productivity and provide necessary access and tools, even in remote rural communities, to information, financial services and markets that help them with better income by way of savings or higher realization. Growing number of Indian farmers are now using mobile phones to update themselves on subjects such as market prices, crop statistics, weather forecasts and agriculture advisories. Due to mobile technology, many farmers like Mr. Bhurabhai Bhanbhai could save their losses and plan farming better. Information and Communication Technology (ICT) in agriculture acts as a driving force in the development process.

Within 8 months of launch, myRML has over 3 lac registered users and is adding thousands each day. myRML has been hugely popular in agri ecosystem and has received thumping response from farmers. . These farmer users amount to 6 million sessions every month and over 57% farmers coming back at least 10 times a month and spending more than 4 mins every week on the app to consume information around mandi prices, weather, advisory and news.

RML Reach

●● 12% reduction in the price differences between markets due to RML service – Vodafone Foundation Study, 2015 ●● 8% increase in price realization for RML subscribers who sold directly to traders – World Bank Study, 2011 ●● 9% higher price benefit observed among younger farmers – World Bank Study, 2011 ●● 12% reduction in price dispersion across markets due to

RML is a personalized, actionable and timely agri information to the Indian farming community via multilingual SMS and mobile application allowing farmers to take informed decisions. Expert information around market rates, weather, crop advisory including livestock, dairy, news, financial inclusion is delivered daily to the

Growing number of Indian farmers are now using mobile phones to update themselves on subjects such as market prices, crop statistics, weather forecasts and agriculture advisories farmer’s mobile phone in a time bound manner. It covers every stage of the crop cycle, from pre-sowing to harvest and selling of crops. In addition, myRML provides district level trader information, daily updated audio agri news on RML Vani and detailed farming information on Library for selected crops. The application also gives farmers of the same district / or growing same crops to chat within the application and share their knowledge with each other.

These features revolutionized the way farmers accessed and used information to reduce their agricultural risks, increase productivity and enhance income from their farm output. RML has over 1.5 million registered users across 50,000 villages in 18 states of India. It is estimated that through sharing, the impact of RML has reached nearly five to seven million farmers across India, besides the even bigger indirect impact of creating this sector itself. Mobile information serviced can offer significant benefits to farmers – as evidenced by a series of studies independently validated by several world renowned organizations. ●● Farmers using RML have increased their income by an average 5-15% - Vodafone Foundation Study, 2015

availability of RML service – LBS Study, 2013 ●● 5-25% increase in income of RML Subscribers interviewed – ICRIER Report, 2009 ●● 80% changed information sourcing behaviour after using RML – USAID report, 2011

The two biggest changes in the ecosystem are farmer empowerment and direct financial benefit in way of increased farmer incomes. Such mobile services enable farmers to make the choice on where and when to sell their commodities, type of agri input to use and by extension, farmers are able to increase their earnings due to more informed decision making.

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Role of Technology in changing Agri and Rural Market This is the age of technology â&#x20AC;&#x201C; or more precisely, the digital age. We hear of digital banking, digital businesses, and digital governance. But for some strange reason, rural and agri markets have not embraced the digital era. There has been some efforts made to introduce technology to the rural markets. Yet, a lot more needs to be done. Mr.Veerendra Jamdade, CEO, Vritti Solutions Ltd looks at the role of technology in changing agri and rural markets.

Mr.Veerendra Jamdade CEO, Vritti Solutions Ltd

Definition of Rural defines the area where more than 70% population is dependent of agriculture. Till date it is holding good to a large extent. Large population is yet dependent on agriculture as prime income. Over the last 4-5 years what has changed is the mindset, culture of

this population. These citizens are no more thinking the way it was few years back. I put up this preamble to bring clarity of technology requirement in rural. There are two types of need, 1 â&#x20AC;&#x201C; for personal consumption 2 â&#x20AC;&#x201C; for business consumption. SCMPr JULY 2015

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Lead Story

On personal consumption they need Television, Mobile, Washing machine, Mixer, Solar water heaters and so many other household gadgets. Use of these gadgets is on rise in the rural market. Surveys show that share of rural in sales of certain categories is in the range of 60-70%. This shows the dominance and adaption of technology products by rural market. Rural population is equally aware and aspirant to bring the change in lifestyle. In every house in village also, birthday is celebrating by cutting cake. This cake will have attractive icing and will be bought from the bakery in nearby town. Farmers are adapting to various techniques and technologies in farming. Large portion of farmers are doing away with traditional labor intensive practices and adapting newer technology solutions. Apart from the farm productivity improvement labor availability and cost are making farmers invest in technology. When we talk of technology primarily we think of Information Technology. Information technology has a major

role to play in rural marketing. When I say rural marketing it is both ways. Goods sold to and from rural market. With very level smart phone usage and governmentâ&#x20AC;&#x2122;s initiatives to make internet available in rural access to information technology has immensely increased in rural market. Mobile apps are being developed to connect to farmers and provide them requisite information on weather, market rates and crop advisory. This is also provided through SMS, but applications are becoming popular. The major challenge for these applications is the quality and authenticity of the source of information. In India we are missing on accurate localized weather forecast. Some companies are making attempt to make weather forecast available at Taluk level. Our administrative zones many times do not match with the weather zones. These predictions are not reliable and usable. Same is with the market rates data. On request crop advisory will be welcomed by farmers. Companies need to setup a 24 x 7 response mechanism to provide solution to

farmerâ&#x20AC;&#x2122;s request. One single platform which will connect all companies to farmer will be very useful. Information technology is enabling farmer direct marketing to consumers. This is particularly helping in perishable categories. In place earlier cooperative, producer companies are established. These companies are equipped with advance transportation vehicles with battery operated cooling cabin to deliver fresh goods. Few companies have advance IT infrastructure to allow their consumers to book their orders through portal and mobile app. Based on the demand is sourcing the requisite quantities from its member farmers. Goods are pre-packed on high quality grading and packing machines. These are delivered to the consumer in fresh condition. More and more of rural youth are now thinking that if farming is done using right technology farming will be economically viable. Cost of technology will remain imperative factor in the next 10 years before farming becomes sustainable. Possibilities are immense for those who want to be part of it!

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Lead Story

Rural Credit and Rural Agri

Value Chains

Rural and Agri value chains are linked to the rural ecosystem. Till a year back, rural India was largely unbanked. Roughly 50 percent of Indians did not have a bank account. And therefore, they were out of the formal credit markets. Rural India depends on informal means of financing- the ‘mahajans’ or ‘saukars’ – the money lender. The interest rates for these borrowings are around four percent per month, at a very conservative estimate. This at a time when the banking system can provide them Agri credit at four percent per annum. Clearly, rural India needs avenues of competitive credit to flourish. Girish V S looks at the role of rural credit in the value chain.

Girish V S Editor SCMPro

ndia has done remarkably well in its agriculture – we have had a green revolution, a white revolution, a blue revolution and a yellow revolution. We are the world’s largest producer of fruits and cashew nuts and the second largest in milk, rice, tea and vegetables. Yet we have one of the lowest productivity! Productivity increase requires investments and that means access to finance.

improve our agricultural productivity. A second issue is the loss of produce due to improper transport and storage. It is reported that 40 percent of the total food production, fruits and vegetables is wasted and does not reach the consumer. Around 21 tons of wheat is wasted every year in India – compare that with Australian production of 23.2 million tons! And the value of the food wasted is INR 58000 crores.

One of the biggest challenges facing India is ensuring food security. As India develops and the income levels rise, we can expect consumption of food to rise. Even a modest 10 percent rise in consumption across the board will mean severe food shortages. In spite of bring the largest producer of pulses, we have to depend on imports. With rising income levels and consumption, this will be a challenge. If we have to ensure our ability to feed our billion plus population, we will need to

We need to urgently raise our productivity and also ensure proper transportation and storage of the produce. And this requires significant investments. For example, in the last one year, the developed world invested USD 15 billion in cold chains. The figure for India is not available. But if my experience with trying to raise a mere USD 15 million for a cold chain expansion is an example, it cannot amount to much. There was no interest among the PE and VCs in India for a cold

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chain! Not only is there a lack of access to credit, there are regional disparities in the flow of credit to the agri sector. The single biggest enabler for improving the agri and rural value chain – from improving yields to proper harvest, to transport to storage to distribution – is the ability to channel investments to the sector. Accessibility of rural credit is crucial for the value chain development. Unfortunately, the formal channels for credit – the banking system – is not able to extend the necessary help. With the result, the rural citizen has to depend on informal channels – the money lender – at usurious rates. The Pradhan mantra Jan Dhan Yojana has done a seminal work by providing banking services to the unbanked. The rural household is now connected to the banking system. We now need to extend it to credit side. Credit to the rural and agri sector is not limited to just crop loans – it encompasses loans for a variety of needs – infrastructure, warehousing, cold chains, logistics, food processing and the like. The debate in India is limited to agri loans – loans to farmers. One factor that needs recognition is – who is the borrower in the rural value chain.

The farmer or producer is definitely a part. But a far bigger player is the logistics and infrastructure provider. And they are most often urban, corporate borrowers. Keeping with the spirit of this series – that of providing solutions, rather than listing challenges, some of the solutions can be: Credit Pricing – Credit is available from the formal system – the banks at interest rates that range from 12 to 16 percent – we are looking at the expanded understanding of the rural value chain – from the banks. Is interest rate a deal breaker? The answer is no. But it can render a business with slim margins vulnerable to ecosystem changes. The agri and rural value chain businesses are low margin. One of the significant contributors to success of Chinese enterprise is the accessibility to low cost credit. A 100 basis point (one basis point is one hundredth of one percent) lowering of rates will render these projects viable and will help them flourish. This will mean the net interest margin of the banking system will reduce. But the economic activity will improve. Lending Ratio – Even when agriculture and infrastructure have been classified as priority sector

for banks – with specific targets, credit off take is very slow. Banks prefer the safer option of investing in bonds by NABARD, ILFS etc. One way to improve credit flow to the end user is to simply disallow investments into such bonds, or cap it at some percentage of the actual exposure. This will force banks to lend more, and hopefully improve the accessibility of finance. Similarly, fixing a sectoral C/D ratio (Credit Deposit Ratio) would force banks to lend to this sector. This might seem a throwback to the earlier controlled

The World Competitiveness Report from the World Economic Forum survey reveals that access to financing is the number one problem for doing business in India. India ranks poorly on both accessibility and affordability of financing SCMPr JULY 2015

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Lead Story

Government of India Reserve Bank of India NABARD Commercial Bank

Rural Co operative Credit Institute

Regional Rural Bank

Long Term Credit

Short Term Credit Structure

State Co operative Agriculture and Rural Development Banks

State Co-operative bank District Central Co-operative Bank

Primary Co-operative Agriculture and Rural Development Banks

Primary Agriculture Credit Societies

Depositors and Borrowers

Source: RBI Bulletin rate regime. Let us face it, we need to get banks to lend directly to the sector. Any measure that will help it is welcome. Alternate Investments – If we have to avoid the wastage of INR 58000 crores in wasted food, we need to improve the value chain. While speaking to CEOs of warehouses and logistics players, one thing was clear – they face tremendous challenges in raising the required finance for expansion or new projects. Private Equity players do not have any interest in this sector. In fact a PE investor asked me if I could integrate an e-comm story into cold chains. That, according to him, would get investor attention. Yet another option for channelling funds to the rural and agri value chain is to develop capital market products – a mutual fund that will invest in say warehouses and transportation firms. This will help the warehouse and logistics firms raise capital.

Risk Mitigation Measures – Investors will be willing to invest if they have an avenue to mitigate the risk they assume when financing rural value chain. Today, banks are not allowed to participate in commodity exchanges. Allowing banks to hedge their commodity exposure on an exchange is a smart move. But our regulators do not see eye to eye. RBI wants to allow banks to hedge their exposures in the commodity markets, while FMC does not. Having access to risk mitigation avenues will reduce the impact of defaults and banks will be able to lower the lending rates. Ease of getting Finance – like we have the ease of doing business, we need to develop an ease of getting finance for the sector. Simplification of the process can be achieved. More than physical access, it is the process of obtaining credit that is important. The World Competitiveness Report from the World Economic Forum

survey reveals that access to financing is the number one problem for doing business in India. India ranks poorly on both accessibility and affordability of financing. At least in this case, banks have to focus on their reach to improve their score. Clearly, India needs to develop the rural and agri value chain to meet its food security goals. And access to credit at the right price, in the right quantum, at the right time is a must for this. We are developing markets where price discovery and quality assurance can be ensured. Now we need to develop both access and affordability to financing. Gentle measures have not helped. Perhaps, for the greater good, we may have to fall back on a set of mandated targets to push credit down the rural value chain. Or risk mortgaging our food security and condemning half our population to poverty.

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Untitled-1 1

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Lead Lead Story Story

Rural is more about doing it the right way:

Effective Execution of Strategies Rural India is the next growth destination. The aspirations of today’s rural consumers, who are “better-connected” and “more-aware”, are rising. They are fuelled further by their increasing incomes. “Why” marketers should go rural is not a question anymore… The task now is to devise strategies that can seize this opportunity. The “how” of it!. S. Shivakumar Divisional Chief Executive of the Agri Business Division, ITC speaks on four key issues in rural marketing.

Sivakumar Surampudi Divisional Chief Executive of the Agri Business Division, ITC

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While some marketers have hopped on to the rural bandwagon early, many have started exploring more recently. Strategies that worked in rural markets, as also those that didn’t, have been well documented. Riding on the increasing penetration of mobile devices and Internet, social media and e-commerce are no longer the things of the future in rural India. While there has been a number of strategies put forward, it is a complex task to pick a few widely recommended “hows” (the strategies). For the rest of the article, I will share my thoughts on “how exactly” does one go about implementing them. As a starting point, I pick four “hows” and will try to prescribe “how exactly” based on the lessons from ITC e-Choupal experience How 1: Because rural is a ‘connected community’ and the rural people are ‘social’, you must work through “Opinion Leaders” to influence the buying decisions of rural consumers. A number of Opinion Leaders have been put forward – they could be Panchayat Presidents, Large Farmers, Shop Keepers, Teachers, and so on. How exactly does one go about finding the right Opinion Leader relevant to the firms offering and its context? Step 1 is to figure out the exact role such a person would play in the business model, and accordingly determine the relevant profile. For example, it could be a Value Chain Intermediary who is making up some missing infrastructure to improve efficiency. Like the way the village money lender knows whether or not to extend an additional loan when the previous loan has not been repaid. Despite the missing credit rating infrastructure, he would know what to do because he knows whether the crop has failed, or if an unforeseen domestic expense has come up, or if the farmer simply wants to renege despite having cash on hand. Or

the way an Adathiya in the Mandi knows if the lot of agri produce has to be priced higher or lower than the average. Despite the missing laboratory infrastructure, he would know whether the lot has more of good, bad or ugly material. With one look!

The Choupal Sanchalak was the “go to” person for both the villagers (when they had an issue with the companies riding on the e-Choupal platform) as well as the companies (when they had an issue with the villagers). Sanchalak was “one of us” for both the parties!

That’s how the role of Samyojak came into being in ITC e-Choupal system. One of the roles of Samyojak, located at Choupal Saagar (the hub of the hub & spoke e-Choupal architecture) is to disburse cash to farmers. While the Banks offered to do this job at a cost of 1.0% of transaction value (accounting for the cost of a bill clerk, a cashier, and a security person, working in two shifts to service our working hours of 07002100), the adathiyas were ready to do this at 0.25% by combining all three roles into one! We found a Samyojak

To my mind, this unique institution of Sanchalak is a bigger innovation in the ITC e-Choupal model than bringing Internet to the villages when most of them hadn’t even seen telephones! The social capital of the Choupal Sanchalak is further enhanced through a public oath he takes in front of the whole village that he would act a like trustee etc. How 2: Although the rural consumer’s aspirations are more urban-like, you must tailor-make products for rural consumers and

When the farmer goes to a mandi to sell his produce, four transactions are rolled into one. Price discovery, Sales, Delivery, Cash Collection. The sunk cost of transportation he has incurred even before discovering the price forces him to sell at whatever he is offered in the adathiya. He was making up for the missing cash-less transaction ecosystem. One day, when the infrastructure is in place, Banks will be able to do this more effectively. Another example could be an Influencer who demonstrates the value of an offering through personal usage. Sort of a “lead consumer”. It is important that the rest of the consumers perceive this person as “one amongst them”. Not the Agent of a Company, promoting their offerings. Nor should the companies see him as a Leader of the farmers / consumers as in a Trade Union context. Thus, a medium sized farmer became a Sanchalak in the e-Choupal system. Not a large farmer, nor a shop keeper or a teacher with whom the majority of the farmers cannot identify with.

their contexts because rural is heterogeneous (eg. single razor vs multi-blade systems) You must co-create with rural consumers, because you can’t otherwise keep up with the speed with they are changing. They are not urban consumers with a standard time lapse, as someone said. How exactly do you co-create? This is an often-used but hardly understood phrase! It may be easier to understand co-creation, if we first understand what is not ●● Co-creation is not more research. It is not bringing consumer voice to the boardroom. ●● Co-creation is not crowd-sourcing ideas. ●● Co-creation is not even marketers SCMPr JULY 2015

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Lead Story immersing with consumers and developing empathy. ●● Co-creation is not testing company-centric product designs with the consumers. ●● Co-creation is giving consumers the tools and structure that allow them to become designers! Sanchalaks – as lead consumers (of crop management knowledge, for example) – were integral part of the e-Choupal web portal design team. It was at their instance that a typical “best practices’ content was structured as “current practices, what is right or not right with them” and “why some practice needs to be changed, and then the recommended practices”. This helped add credibility to the portal that the scientists panel understood their context and then only were recommending something else, rather than a conventional expert style instruction. The structure of periodic village meetings with all the farmers, further rolled up into Sanchalak Sammelans, helped embed their insights and inputs into the continuously evolving design of e-Choupal on an ongoing basis instead of an occasional feedback system It was a pleasant realization that the brand “e-Choupal” was owned by the community, and that ITC was a mere trustee, when such a co-creation process articulated the brand tagline as “kisanonke hithme, kisanonka apna” in the very second year of the initiative. The highest level any brand can attain, to my mind. When everyone was looking for a low-cost-last-mile to reach the rural markets, ITC e-Choupal was working on an intelligent-firstmile by working together with the communities. How 3: You must forge partnerships to win in the “high-cost-to-reach but low-ticket-size” rural markets Partnerships are relevant from many angles, how exactly do you

determine what kind of a partnership does one forge? ●● I have a product, you have the channel. Let’s partner to expand outreach? ●● I have a product targeted at a market. You have a non-compete product for the same market. Let’s partner and go to market together and cut costs? All such partnerships are eminently worthwhile. But the best partnership potential is in creating what is called a meta-market.

How 4: You must leverage technology to operate in the rural markets, because it can cut costs through remote delivery as well as personalise offerings There is so much technology around me, how exactly do I use technology? Mobile advertising, geo-coding? Simple! You understand the unfulfilled consumer needs and the current business processes first, and then see what role technology can play. Not the other way round.

There is a fundamental disconnect in the conventional markets. Consumers think in terms of activities; companies think in terms products / services. For example, a car buyer would think in terms of information to understand the features of cars available in the market, source of credit, dealer in the vicinity, insurance, RTA etc. Each of these belong to a different industry, each trying to reach the consumer independently!

For example, when the farmer goes to a mandi to sell his produce, four transactions are rolled into one. Price discovery, Sales, Delivery, Cash Collection. The sunk cost of transportation he has incurred even before discovering the price forces him to sell at whatever he is offered. Taking the produce back doubles his transportation cost with no guarantee that he would fetch a better prices next time he comes to sell.

What a meta-market does is to cluster such complementary products / services and offer a complete solution to the consumer.

ITC e-Choupal brought price discovery process to his doorstep using Internet (supplemented by the quality testing by the Sanchalak) empowering him to decide when and

The structure of periodic village meetings with all the farmers, further rolled up into Sanchalak Sammelans, helped embed their insights and inputs into the continuously evolving design of e-Choupal In the context of agriculture, farmers think in terms of weather forecasts, market prices, access to farm inputs, credit, insurance, markets for the produce, and so on. The ITC e-Choupal ecosystem assembled all these players from diverse set of industries on one platform to offer a seamless market experience to farmers / consumers at one place, right in the village! As many as 160 organisations ride on this platform today!

to whom he would sell without the pressure of a sunk cost. When he sells to ITC, we have the ability to stack the produce of different farmers in different lots pooled as per our quality norms rather than the random aggregation done by the adathiya in a mandi. This helps preserve identity and maintain product integrity, so critical for the success of our brands.

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WAREHOUSE COMPENDIUM 2015

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arehousing in India has been evolving rapidly from traditional ‘Godowns’ to modern storage facilities. Driven by growth in production and consumption, the demand for warehousing space is increasing. However the overall growth potential is limited by several challenges. The Warehousing Compendium 2015 by SCMPro is a resourceful informative handbook with well researched articles on various aspects of warehousing & inventory management. With high referral value and long shelf life the ‘Warehouse Compendium’ is a must have reference handbook for the stake holders of the logistic & supply chain industry.Some of the Chapters in the compendium is as follows: 1. 2. 3. 4. 5. 6. 7. 8.

The Warehousing Scenario in India Role of the warehouse in the supply chain Elements of warehousing strategy New warehouse technologies Warehouse functions Warehouse management issues Warehouse planning Warehouse cost management

9. 10. 11. 12. 13. 14. 15.

Performance management and improvement The Challenge of Warehousing Distribution Network Systems Personnel Planning Achieving Warehousing Excellence Cold Chains Agri Commodity Warehouses

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Lead Story

Minimizing Food Loss Leading the Cold Chain Revolution

One of the core challenges to food security in India is to minimize the loss of the produce from the farm to the fork. Ensuring proper transport, storage and distribution can ensure lower wastage and better produce to the consumer. Given the state of the transportation infrastructure in India, this is easier said than done. Building a world class fresh produce supply chain is a complex task. SCMPro spoke to Mr. Tarun Arora, Director of IG International, one of the largest fresh produce dealers in the country on the agri supply chain solutions. â&#x20AC;&#x153;The key to price stability is to match demand with supply. If demand exceeds supply, prices tend to rise. Balancing demand and supply is a complex process. The starting point of ensuring food security is to map demand and supply. Tarun Arora Director IG International

India is seeing a jump in the consumption of food across the board. A combination of growing

middle class and the success of Government programs like MNREGA has boosted the spending capacity of Indians. India is short on key commodities. India has to increasingly depend on imports to meet this growing demand for food. India is one of the largest producer of pulses, yet has to import it. India is the fourth largest producer of apples,

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yet has to import apples from USA to meet its demand. And if Make in India is a success, we will see further increase in demand. A second factor that affects demand is the changes in our lifestyle – the trend to healthy living. We are seeing an increasing trend to consume fruits for dessert – especially in South India. Which again points to robust demand for fruits. This is the easier part. The problems are acute when we look at the supply side. The recent unseasonal rains- which could not have been forecast - have destroyed crops in a large part of the country. There is a vacuum with the shorter arrivals of produce in the markets. With the result, the demand exceeds supply. India needs to move to dynamic decision making. At IG, we change the decision based on the factors we see. To better understand the factors, IG has embarked on an extensive mapping exercise. This will help us understand the supply situation three to four months in advance. IG uses satellite imaging to map the flowering pattern for fruits across the country. Based on the satellite images, it is possible to estimate the production. The images provide data on the acreage under cultivation, and the density of flowering. From the density data, the estimated yield can be calculated. And from there, the probable output can also be estimated. The next step is to factor in the vagaries of nature. The output can be scaled based on the evolving climatic conditions. To sum it up – we have a volatile supply situation, a growing demand and a distribution system that is under equipped to handle the demand. The only factor that can be addressed is distribution. The first step is to build infrastructure. Given the weather pattern, we can safely assume that this year we will see a shortfall in arrival. Therefore we need to look at alternate supply to feed the demand. This demands infrastructure that can hold that kind of produce. (Which is why IG

invested in enhancing its capacity to hold 40000 tons, as there is a latent demand). Figures show that the CA cold storage capacity in India is just 2 percent of the production. Crops are seasonal. Around 90 percent of the crop is traded during a narrow harvest season. This leads to price volatility. And at harvest time no one makes money – definitely not the farmer, who does not have the financial capability to hold on to the stock, nor the infrastructure to store it without loss in quality. For comparison, let us look at the US markets. This year the US had a bumper harvest of apples. India produces between 60 to 80 million cartons per annum – roughly equivalent to 12 to 16 lakh tons. Just Washington state in the US produced 145 million cartons, equivalent to 29 lakh tons. Last year it was 125 million cartons, equivalent to 26 lakh tons. A year before that it was 110 million cartons, or 22 lakh tons.

Giving an average growth of 3.5 lakh tons a year. But they never panicked. Reason – they

had 110 percent of CA capacity – they can hold the produce. Everything they produce comes to the pack house and goes into the CA. Compare that with India – as a country we produce anywhere up to 16 lakh tons a year. And we have a CA capacity between 50,000 to one lakh ton – or roughly 2 percent of the harvest. The Indian market still works along traditional practices. The government has done a remarkably good job in incentivizing cold chains. But the people who have taken these subsidies have not been able to run the cold chains efficiently. Probably because running a cold chain requires certain expertise. And people in the country are not willing to share that expertise. One aspect that firms forget is their social responsibility. It is not enough to be profitable, but it is important that we propagate our learnings to the other firms in the ecosystem. For example,

when you visit a grower overseas, they will show you their latest techniques and technologies lie pre-sorter, grader, color machine, the techniques to grow 120 tons per hectare against our yield of 10 tons per hectare.

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LSP LSP Focus Focus

Building a House of Logistics for the Next Generation Thomas Reuter – COO, Air and Sea Logistics Huned Gandhi – Managing Director India Edoardo Podesta – Managing Director Air and Sea Logistics Asia Pacific

The German Logistics Service Provider Dachser is in the midst of a management transformation. A year back, Dachser completed acquisition of 100 percent shares in the Indian subsidiary. This has led to a tighter integration of Indian operations with global operations. What does it mean for the future of Indian operations and more important, how will customers benefit? In a wide ranging interview with our Editor, Girish V S, Thomas Reuter – COO, Air and Sea Logistics and Edoardo Podesta – Managing Director Air and Sea Logistics Asia Pacific and Huned Gandhi – Managing Director, India spoke about the transformation underway at Dachser and why it will benefit customers. We bring you excerpts from the interview. 30

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term commitment to stakeholders, and is seen in the proportion of profits ploughed back into the business. Dachser is a privately held firm. Yet to ensure that profits are not withdrawn from the business, there are clear rules on how much can be withdrawn and by whom. To help this, Dachser is now a Societas Europaea (SE) firm. By providing a modern holding structure, the legal form of the SE offers the familyowned company an ideal framework in which to combine its corporate structure with subsidiaries in Germany and abroad.

On the Management Restructuring From its humble beginnings in 1930s, Dachser has grown to 25000 employees at 437 locations across the globe. Last year the Indian operations were merged with the global operations, with Dachser acquiring 100 percent of the shares of its Indian arm. This has brought a renewed vigor in the firm. Dachser, globally, is on a firm growth trajectory and would soon grow to 35000 to 40000 employees. The challenge for Dachser is to manage this growth, keeping the firm private. Dachser identified the need to lay down a professional structure to achieve this. The firm has laid the foundation for this in the “preparing Dachser for the next Generation” program. This reiterates the long

This change provided Dachser an opportunity to streamline the firm to prepare for the future. The structure that has evolved will last a generation – and as growth happens, the responsibilities will be distributed. This has created a scalable, decentralized structure, which will serve for twenty years or so. The decision making process will be with the entrepreneurs at the branches and countries. The executive board has defined a framework, within which the managers are encouraged to take decisions. This is because decisions have to be taken by people closest to the customers – and that is the local management. The transformation of Dachser is to streamline it in a way in which it can be managed, but not lose the ability to be close to the customer and have motivated people taking decisions. On Customer Centricity Customers are changing rapidly. The new normal is defined by volatile customer demands and changing needs. The trigger for this transformation was the anticipation of what will come. But Dachser realizes that markets develop differently. What it does in Germany, will not work in India as far as trucking and services are concerned. For instance, in Germany, if a truck leaves Munich for Frankfurt, the arrival time is known and usually is

not delayed. In case of a delay, there is a penalty attached to the branch. But with the conditions in India, it is not possible. It is a different world and that has to be respected. That apart, the Indian customers are more transaction driven – each shipment is an event and there is huge amount of communication back and forth, with a number od status enquiries. Indian customers tend to drive a hard bargain. In Germany, you go to a customer who may have 100 shipments a day – you provide a quote and that is it – no bargaining. And the price is fixed for a certain period of time, maybe with a fluctuation of fuel surcharge. This is not common in this part of the world. We are in agreement that there are cultural differences – however, we need to recognize that Indian customers are very transactional, with a heavy demand on customer service – multiple calls a day for tracking consignments, and prone to bargaining. And as wages rise, India will shift from labor oriented process to quality of service. Firms in India will have to change their operations processes. Things have started to change and the change will accelerate. But it may take some time. On Food Supply Chain Food will be one of the fastest growing segments in Indian transport sector. Anecdotal evidence suggests that 60 percent of the agri produce in India is wasted. The idea was to build a supply chain with warehouses and cold chain. The question was on the quantum f investments required to set it up. But Indians prefer local produce. Take an example of yoghurt. If we can estimate the price a rural inhabitant is willing to pay for yoghurt, we can estimate the number of warehouses you can build for this amount and how much yoghurt will be consumed. There was demand, but the rural inhabitant preferred the local produce to the processed one. It is quite complicated. There have been Indian firms who have SCMPr JULY 2015

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LSP Focus

managed to build a food supply chain. There are a few reasons – for one Dachser cannot raise the billions of Dollars needed for setting up a viable, quality food supply chain. Another aspect is that Dachser stands for quality of services. The question we need to ask is – is India willing to pay for the quality of services that Dachser can offer. And third – is the customer willing to pay a market price. Dachser focuses on international trade and so food supply chain is off the table for now. On the Promise and Delivery Dachser looks at the opportunities offered by India, mainly in air and ocean freight. If any country wants to start a new vertical – say contract logistics – we are willing to discuss. But one thing is clear – it has to be at the service standards applicable in Europe. Multinational companies expect the same level of service – be it in Germany or India. This means we will need some time to build the necessary skills locally. Till that happens, we do not start any business. We believe there is a high demand for a combined warehouse and transport service in India. We have a team, which we send to the country to explore how a warehouse in India look like, can we offer the service to the customer, do we have the IT support and so on. For example, when we started contract logistics in China, way back

in 2007 in Shanghai, we transferred people from Germany, implemented our proprietary warehouse management system. For the first few years it was a tough learning curve, but today we are doing very well. If we spot any opportunity in India, we will do the same. We like to deliver what we promise. If we cannot promise, we prefer to say no. We prefer to know where the demand is. It will take some time to build it up. To help the process along, Dachser has competence centers, or go to people in the network. If we feel there is a potential business to go after, we will do it in a very professional way. For example, in India we realized there is a potential for life sciences business. We invested in it, hired some of the best people, and today we can cater to the complete supply chain solutions to the life science industry. On Stepping up to a Value Added Role The Indian customer is still finding his feet when it comes to supply chain. The customer may not be aware of the challenges to the supply chain. The day is not far off when they will need a service provider who can be a business partner, rather than a mere service provider. Dachser does this routinely in Europe. These services are at a

charge. To merely trade in services is a commodity play. We tell our customers, come tell us your problem and we will find a solution. It could be cost, transit time, solution, whatever, we will try to find a better solution. Dachser would like to partner with a customer, develop a supply chain plan and implement it – but it has to be a three year contract. Else, it does not justify the expenses involved. Unfortunately, the number of Indian firms who will share actual data is very limited. Dachser can undertake such partnerships if there is a company who values such partnership and is willing to pay a charge for the service. Here again, it depends on whom you interact with. The top management may appreciate the value of a supply chain service. But the operational team is more interested in saving a five percent to the firm – not realizing that a supply chain optimization could probably save 20 percent. On the Positioning of Dachser Dachser is today perceived as a quality service organization. We are known for promising what we can and delivering on that promise. Dachser is too large a firm to be a niche player and not big enough to play the volume game. Dachser is a quality player, where a promise is a promise.

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Next Generation The

The Supply Chain

As India Inc looks to spread itself across the flobe, it is time to move to the next generation of supply chains. Time to introduce 4PL services. Girish V S, Editor SCMPro spoke to Mr. Prem K. Verma, CEO of Tata Motors Limited Distribution Company Limited (TMLD). In a freewheeling chat he holds forth on a range of issues that affect the logistics and supply chain sector in India and in particular the role of LSPs in the current changing environment. We carry the edited excerpts from the interview. 4PL – The Next Generation Supply Chains As India Inc looks to spread itself across the flobe, it is time to move to the next generation of supply chains. Time to introduce 4PL services. Girish V S, Editor SCMPro spoke to Mr. Prem K. Verma, CEO of Tata Motors Limited Distribution Company Limited (TMLD). In a freewheeling chat he holds forth on a range of issues that affect the logistics and supply chain sector in India and in particular the role of LSPs in the current changing environment. We carry the edited excerpts from the interview.

Mr. Prem K. Verma CEO of Tata Motors Limited Distribution Company Limited (TMLD)

The last decade has witnessed a change in distribution pattern of goods / products. In today’s environment outbound transportation is no more merely a cost and efficiency initiative but more of a strategic objective. Logistics cannot be relegated just as a sub function of finance, marketing or procurement but is more of a strategic tool.

I have always maintained that supply chain management is guided by some basic principles and concepts which have not changed much over the centuries. Napoleon made a remark several centuries

There are various challenges faced by organizations in establishing collaborative relationships and most of these concerns are related with entire organizational structure ago that “An army marches on its stomach” – he clearly understood the importance of what we call as a supply chain, as unless soldiers are fed, an army cannot move. What has changed - and the process is still continuing - is the emerging need to develop the skills and equipping SCMPr JULY 2015

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Industry Interface the users (self or outsourced) to efficiently use the hardware and software to its optimum utilization. Consolidation and practice of Supply Chain Management concepts had led the logistics service providers to play a more comprehensive and integrated role with its clients. This trend has led to new role configurations such as logistics integrator’s which are being now more commonly known as 4PL which combine the management and operation of supply chain logistics. Logistics organizations are redesigning their structures and relationships by creating a knowledge chain which besides facilitating data and information also does the coordination which helps in planning and decision making. It would be an incorrect assumption that one cannot optimize unless one outsources (appoints 3PL / 4PL) but one also needs to evaluate the benefits between numerous bitty players of similar or even related industry and common service provider who could be not only common to a particular industry but even with industries having resemblance in operations across various industries which may not be having any dissemination / merchandise synergy but can still be advantageous to all stakeholders as they need not reinvent the wheel / do fresh investment in terms of time and money for certain improvement in efficiencies and optimization. However for any such arrangement to succeed in the long run it has to be aligned with the corporate strategy with a complete buy in of all stakeholders. While business strategy constitutes the overall direction of an organization, supply chain strategy institutes the tangible operations of the organization hence extremely important to align supply chain with the corporate strategy – we all know that Napoleon and Hitler were defeated on the road to Moscow and Stalingrad – though they both

knew the significance of supply chain but same was not aligned with strategy as they overstretched their supply lines. Synchronization and collaboration are the key constituents of 4 PL activity as the concept of 4PL very much emphases on working together with client through redesigning end to end the supply chain for efficiencies transformation. Scope of work will determine how it will go forward but it may also evolve to overall the business processes and internal organization as outsourcing has to be a strategic objective of the organization and not a functional objective. There are various challenges faced by organizations in establishing collaborative relationships and most of these concerns are related with entire

Progression of LSP is through interface and integration between clients and various 3 PLs who are responsible for various logistics activities organizational structure. These can be grouped into 4 major dynamics, besides senior management commitment, availability of resources, and organizational influence, perception and trust factor is a critical factor for successful collaborative relationship. Lack of trust may trigger opportunistic behavior due to which both parties may lose. Unfortunately general perception is that Logistics Service Providers (Whether 3 PL or 4PL) basically provide services and therefore cannot become strategic partner. This might be due to the past experiences relating to its business partners or even an orientation towards relationship marketing with its own customers could consequence into organizations having biases against

collaborative relationships. 4PL has to act like an arbitrator capable of proposing original solutions to probable conflicts of interest among various stakeholders. While lot has been said / debated about collaboration in various logistics and business forums and though we all do agree in principle but have been found wanting when it is time to practice. While you do have quite a few examples in same industry and in varied also but they are more by default than design and one can count them on fingers. We also do have some rare examples in certain industries where OEMs have collaborated with each other without the involvement of LSP but these arrangements are limited to physical distribution or warehousing activities. Would not like to blame anyone for that as despite the desire we struggle as we need to realize that in today’s environment collaboration is no more a choice but a certain need and can be achieved through LSPs (3PL / 4 PL) as benefits of real collaboration would be realized when it would not be just confined to physical distribution but also gets extended for specialized services, knowledge and research which will benefit all stakeholders. While would not like to sound as if propagating for 4 PLs and though may not look impossible but unfortunately so far that there are hardly any occurrences where two large companies of similar or diverse industry have been able to have effective supply chain collaboration without a LSP. The right LSP can be the common thread which can run across organizations and bring them together by taking care the interest of all stakeholders and till he is creating a win-win situation for all stakeholders he is well within his rights to take care of his interests also. As organizations world over have started realizing the same they are more getting into long term

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sustainable partnerships with the service providers than just one-off transactional relationship. Besides strategic, operational and financial factors the environmental factor like change in regulatory environment may also prompt organizations to tweak parts of their business modelsor may even completely redesign it. Gradually as we are finding commonness in the products and services that are being offered by the companies they are more or less becoming a commodity. Cannot resist mentioning when in one of the attended session, organization selling DTH connections compared their product with commodity like coal as any new innovation in terms of technology, pricing or even bundling was quickly getting copied by the competition and they were finding it difficult to maintain a competitive advantage for too long of their offerings . In the current environment where competition is becoming fiercer by the day everyone is trying to protect its competitive advantage by their offering which though may not be differentiated as a product but by creating a cluster of services around the product through its supply chain to give itself a competitive advantage in the market place. Forecasting model is gradually losing its significance and organizations are moving away from it to demand driven planning model with some even adopting a replenishment model for certain fast moving categories. The forthcoming revolution in retail industry will bring along with-it certain unique challenges. Expectations of all these customers will be entirely different as they would have already experienced different and grander service levels, advanced IT systems and seamless supply chain. Bearing in mind the current fragmented nature of Indian logistics system, LSPs / 4 PL who will equip themselves with the right

organizational skill, infrastructure and knowledge will be able to garner a lionâ&#x20AC;&#x2122;s share for them due to the first mover advantage. Through 4 PL even smaller companies can have similar advantages which will help them in competing with their big brothers as through LSP they not only get the benefits of cost erosion and efficiency improvement but even have the advantage of utilizing the expertise of LSPs and the advantages of economics of scales by aligning their logistics requirements with larger players. Besides the elementary anticipations from LSPs like evolving into a solution provider for entire supply chain, expanding servicing for its clients, continuous improvement in IT, in times to come 4PLs will have to prepare themselves to handle varied and different products of their current customers as the

Consolidation and practice of Supply Chain Management concepts had led the logistics service providers to play a more comprehensive and integrated role with its clients planned products may not be within the precincts of the current supply chain. Progression of LSP is through interface and integration between clients and various 3 PLs who are responsible for various logistics activities. It is his responsibility to comprehend the product and services its client is servicing and accordingly manage the resources and other capabilities and dove-tail the same with other complimentary service providers.

these farm out partners with whom they not only share the risks and gains but who will take them to places where they would have never imagined to reach with their own wherewithal and will give them an opportunity to concentrate only on their own core competency. This super service provider who would have pool of 3 PLs as his service providers and would be a single point of contact for the organization and through his expertise would manage the resources and procuring services from various service providers and leveraging the solutions shaped by 3 PL without owning much of the assets. In the current environment, organizations are progressively looking for solutions and not only just services and significant dissimilarity between any LSP and 4 PL has to be his unique ability to deliver his client the value across the supply chain and act as an industry innovator / solutions integrator. Everyone has been overcautious in their prognostication about the future potential of 4 PL and rightly so because of their not so very satisfying experiences of certain 3 PLs some of them were just glorified goods movers but research after research has shown the huge potential especially in certain verticals like auto, pharma, retail etc. Though some may have already started writing the epitaphic of 4 PL but it is definitely one concept whose time has come now and it will be a major next step in the progression of supply chain management.Â

Does this also mean that it is being advocated that organizations should lose their identity, absolutely N0 â&#x20AC;&#x201C; rather organizations should have SCMPr JULY 2015

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Book Lead Review Story

Dynamic Supply Chains How to Design, Build and Manage People Centric Value Networks; 3rd Edition By John Gattorna

or decades, the supply chains were designed for the product. And therefore tended to be a “one size fit all” approach.” But, the consumer paradigm has changed. The third edition of Dynamic Supply Chains by Dr. John Gattorna is a culmination of four decades of experience with supply chains. Starting with a distribution management focus, which was product centric, supply chains have to evolve to a dynamic alignment concept.

framework which can be adopted by firms. The Dynamic alignment principle shows us that there is only one “right” way to segment customers – according to their dominant buying behavior. The book helps firms identify the dominant buying behavior and link behavioral segments at the customer end and the suppliers at the source end, with a network optimization model that allows a clear line of sight on the best cost-to-serve pathway through the network to customers.

Today, customer preferences are changing quickly. To survive in volatile markets, firms need to align their supply chains with customers, suppliers and service providers. Most firms that serve customers need at least four or five supply chain configurations to cover 80 percent of the market. The book starts with the necessity of a new paradigm in supply chain design. As we move into the new normal of volatile markets, it raises the fundamental question – are firms doing enough to fully engage with their customers and suppliers to understand their expectations. And are firms using these insights to re-design the enterprise supply chain?

Once the range of behavioral segments in a product- market combination have been identified, the book leads the reader through the relatively simple task of developing the equivalent value proposition and corresponding operational strategies. To do this effectively, the firm has to build internal capabilities to transform the supply chain. This will help the firm map the subcultures in the enterprise to identify the specific subcultures that are necessary to implement the firms supply chain strategies. The author explores the concept of “capability areas” that can be tailored to different supply chain types. This can be achieved only if the firm has an inspired leadership. The book identifies the appropriate mix of styles in the top team and the necessary organization structure to guide the transformation.

The second chapter describes the starting theory around customer and their behavior. Dynamic Alignment of extended supply chain is not easy to achieve. A lot of pieces must be engineered into position if the alignment of the various internal and external stakeholders is to take place. The good news is this book lays out a clear and concise

The reader is provided with a detailed treatment of each of the commonly observed types of supply chain configuration – Continuous Replenishment, Lean, Agile,

Campaign and Fully Flexible. The Campaign mode is a new addition. It seeks to fill the gap between theory and practice for supply chains when it comes to serving largescale capital projects – especially solutions to challenges involved in linking suppliers and project sites, over a long and carefully staged timeframe. From there the book develops the thinking around suppliers and expands the treatment of the ‘hybrids’ – combination of demand side and supply side supply chain components to take account of the campaign supply chain. It revisits the contemporary issue of outsourcing models, and in particular examines ways that 3PL service providers will have to develop if they are to have a meaningful role in future outsourcing operations. A new addition is the treatment of Service Sector Supply chains – why service sector organizations have not fully embraced supply chain principles developed for tangible products. The service sector will benefit from dynamic alignment in the same way as product firms – segment customers and suppliers and establish tailored supply chain configurations. It explores the major supply chain issues facing firms in future and takes a fresh look at how firms can and should move away from the old logistics operations mindset to a business transformation mindset. That should be the goal. And the book shows you how. For Book Enquiry: sparrowbooksinfo@gmail.com

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r u o ! Y w t o e N G n o i t p i r c s b u S

P R O F E S S I O N A L

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Ind ia for Supply Chain SCMPro, India’s only Enterprise monthly magazine Professionals from Service Users and Enterprise Service Providers. The magazine contains specialist articles, news and information designed to update the readers on the developments in supply chain industry. Specialized articles are contributed by the Industry leaders and Academicians. Besides, there are other updates published to keep the readers keep pace with the Industry. Published every month, the magazine is distributed to the readers through courier. Currently the print copy of the issue is available only for readers based in India. Cover Price Rs.200/SCMPro_Pg_1.indd 30

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Technology

The digital interconnection of billions of devices is today’s most dynamic business opportunity.

A Strategist’s Guide to the Internet of Things Frank Burkitt is a senior executive advisor with Strategy& based in Los Angeles. He leads the Internet of Things and digital operations services for Strategy &’s Digital Services. He was formerly the CEO and founder of ReleasePlan, a cloud-based enterprise software company. (This article was originally carried in the Strategist. Reprinted with permission from Business Standard. It will be carried as a three part series. The concluding part will appear in the next issue of SCMPro.) Technologies of the IoT

Frank Burkitt International Supply Chain Consultant and Associate at Gattorna Alignment

To deliver these products and services requires a combination of five major types of technological offerings. As you progress up the technology “stack,” the devices become more complex and their connectivity increases.

1. Endpoints are the single-function sensors and actuators that reach out and touch the world around them, monitoring for changes and providing feedback to adjust to those changes. Their connectivity enables two key capabilities: gathering and analyzing data from

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the environment, and reaching out through the Internet to control objects. 2. Simple hubs are the devices that connect endpoints to broader networks. When integrated into products such as vehicle engines; washing machines; or home heating, venting, and air conditioning (HVAC)

Enhanced services will make use of the information collected and analyzed by other platforms and services to deliver broad-based interactive functions systems, the computing intelligence and storage embedded in a simple hub allows these products to adapt over time to the user’s behavior and to optimize for efficiency. The Nest is a good example of a simple hub. It acts as a joining point for a relatively small number of sensors and actuators, typically located near one another. A single building might have several simple hubs, each controlling one function: HVAC, electricity, lighting, water, entertainment, communications, or security. Each of these simple hubs might be connected to the Internet. For example, electricity hubs that monitor usage and cost can feed data to electric power utilities, which can then suggest the best times to use power hungry appliances. Lighting hubs can pick up information from multiple window sensors about the amount of sunlight, and adjust the brightness of the artificial lighting accordingly. 3. Integrating hubs that connect simple hubs and outside connections are relatively complex devices providing a diverse array of services that fit more or less seamlessly together. In May 2014, Apple introduced one of the first truly integrating hub offerings. Called the

HomeKit, this platform is designed to bring together simple hubs from different vendors and present all of them in a single user interface on a smartphone or tablet. A HomeKit hub might integrate functions such as electric power (SolarGuard solar power systems), security (Goji smart locks and Leviton motion and video monitors), HVAC (the Nest), appliances (LG smart refrigerators), window shades (QMotion’s electric shading systems), entertainment (Roku audio and video streamers, which use set-top boxes as hubs), and personalized lighting (Hue). A family member might press the “bedtime” button on his or her iPhone, and the service would then dim or turn off certain lights, lock the doors, set the security system, close the garage door, and lower the thermostat, all at the same time. Apple’s role here isn’t to provide the underlying HVAC or lighting service, but rather to offer the softwaredevelopment kit—much like the guidelines and tools it publishes for developers of iPhone and iPad apps— that developers can use to connect their services with the HomeKit platform. The company also debuted what it calls the Health Kit, designed to integrate all the simple hubs being developed for the quantified self. Several other major companies have begun to develop integrating hubs. Google recently introduced a collection of standards for the Nest that will connect to a wide range of home services from other companies. Oracle has a sophisticated integrating hub, which it may or may not offer commercially, but which has already helped win the America’s Cup yacht race, in October 2013. The Oracle-sponsored foiling catamaran that won the race was equipped with more than 300 sensors and video cameras that monitored position, wind direction, boat speed, pressure on the wing sail, and more. While the boat was sailing, the team’s technology specialists collected data on more than 3,000 variables per second — a gigabyte of raw data and

200 gigabytes of video daily—and analyzed it on Oracle servers reached through high-speed wireless data connections. The system sent the analysis back to the boat’s controls to improve its performance almost instantaneously. Integrating hubs of far greater scope are also under way. The digital city concept, for example, is being developed by the MIT Media Lab, the World Foundation for Smart Communities (based at San Diego State University), and private companies like the LED streetlight manufacturer Sensity Systems. It would install integrating hubs with data analytics at a neighborhood or citywide scale to monitor and control mass transit, traffic controls, streetlights, and many other services and systems. Barcelona is teaming with Cisco Systems to develop one such system, which will manage lighting, parking, local WiFi networks, and other critical city functions. 4. Network and cloud services provide the infrastructure of the Internet of Things. They can either be public (accessible to the population at large) or private (protected behind an organization’s firewall). These services deliver the seamless and transparent connection to the Internet that hubs require, along

It would install integrating hubs with data analytics at a neighborhood or citywide scale to monitor and control mass transit, traffic controls, streetlights, and many other services and systems with the cloud computing power needed to collect, store, and analyze vast amounts of data from myriad endpoints. They can also provide the infrastructure needed to build or connect to social networks, so that users of the IoT can compare experiences and share data. SCMPr JULY 2015

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Technology Some network and cloud services, like RacoWireless, manage machineto-machine connectivity. They enable IoT devices to communicate with one another across a variety of transmission channels, including Wi-Fi, cellular, and Bluetooth. They also provide data management services: collecting, moving, tagging, and aggregating information. Other network and cloud services provide software platforms, including highlevel programming languages that can be used for IoT delivery and development. ThingWorx offers one such platform. It provides endpoint connectivity, networking capabilities, and data storage and analytics, as well as a software development kit used to write apps for customers. 5. Enhanced services is a nascent category, comprising the most technologically sophisticated components of the IoT. Enhanced services will make use of the information collected and analyzed by other platforms and services to deliver broad-based interactive functions. For example, today’s single-company telematics systems, like Progressive’s Snapshot system, are integrating hubs, connecting monitors on automobiles with software that links insurance rates to driver performance. Enhanced services for automobile-based monitoring could go much further. They could collect data on multiple cars, aggregating it all with historical

and actuarial data to create new types of analytics related to overall insights about auto accidents. The insurers themselves might not be involved in the collection of that information, only in making use of it in the services they offer. Enhanced services could also lead to more sophisticated “connected car” applications, in

When integrated into products such as vehicle engines; washing machines; or home heating, venting, and air conditioning (HVAC) systems, the computing intelligence and storage embedded in a simple hub allows these products to adapt over time to the user’s behavior and to optimize for efficiency which real-time digital connection enables automobiles to exchange signals with one another and the environment, thereby reducing accident risk or enabling better traffic coordination. These five technological options, from endpoints to enhanced services, provide a menu of diverse opportunities for companies building IoT businesses. Some might start

making stand-alone endpoints, and move up to producing hubs. Others might parlay their expertise at integrating hubs into providing network and cloud services — or vice versa. With all these possibilities, companies run the risk of moving in too many directions at once—and thus being overwhelmed by more focused competitors with more distinctive IoT-related capabilities. Hence the importance of the three IoT strategic models — Enablers, Engagers, and Enhancers. Few companies can take on more than one of these ways of creating value. The Enablers will focus on the underlying technologies and services, from endpoints to network and cloud services. The Engagers will make use of hubs and network and cloud services to provide marketfacing offerings. The Enhancers will focus on value-added enhanced services that extend and enrich customer engagement (see diagram below). The IoT Ecosystem The overall IoT market will be divided among Enablers, Engagers, and Enhancers. These three kinds of companies will interact, working together to provide the technology and services needed by all—both to market the IoT and to deploy it for their own operations.

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Rural and Agricultural Supply Chain Summit 2015 21st August 2015, The Orchid Mumbai Out of the Box Strategies for the Future

Rural markets provide a vast opportunity for corporates in India. In the past companies have been flirting with rural markets without much commitment. There are three important flows in rural markets: Urban to rural for consumables and expendables, urban to rural for agricultural inputs and rural to urban for agricultural produce. Rural and agricultural marketing suffer from infrastructure, and credit constraints. Making cost of reaching rural market high. Farmers on another hand do not find access to markets directly leading to lower realization for their products. The summit will explore the evolution of Agri retail, logistics challenges, lack of access to credit and risk management. This will provide a platform to explore a collaborative out of box rural reach and development strategy which will be a win-win solution for all stakeholders.

Agenda

Why Should You Attend?

r Challenges of Modernizing Indian Agriculture - r A Macro and Micro View r The Changing Rural Consumer r r Rural Reach and Agri Supply Chains – Strengthening the Ties r Challenges of Reaching and Communicating r with Rural Consumers r Making Agri & Rural retail successful r r Role of Rural Credit / Insurance in rural Agri Supply Chain r r Rural and Agri Logistics – Cold Chains, Ware houses and infrastructure bottlenecks r Experiments in Agri Logistics – the case of ITC e-Choupal and Tata Kisan Kendra r Dynamic Alignment – Bringing Sales, Marketing a nd Operations together r Out of the Box Strategies for rural and Agri Markets

Understand drivers and enabling framework f or reaching rural markets. Understanding the role of corporate initiatives i n rural and agricultural development. Getting abreast with logistics, credit and insurance need in rural markets Develop an understanding of the challenges in Agri and Rural Supply Chain An aggregate collaborative out of box strategy f or all players in the rural Agri markets.

Initiative Technology Partner

Lanyard Sponsor

Sponsor

Partner

/ISCM.net /iscm_info /institute-of-supply-chain-management-iscm-

To Register: www.iscm-rass.com | For more details, contact info@iscmindia.net or call 022 60020157/ 9

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Human Human Resource Resource

d of st an dd e r u u i f iss the yl J r e r n a cs D Ju ed nd carri le by ogisti vey a l r L d ic ri Ap we ha n art from ry Su e h a a In t Pro, rt of avane a Sal bring a M i r p w a o . nd SC ond la N the I We n rticle i c e e s Sh , on itle. he a and cutive ame t rt of t Exe the s al pa n h wit the fi you

Darryl Judd, Global Chief Operating Officer, Logistics Executive Group, Sheila Naravane, Executive Director, Logistics Executive Group India

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2015

A yearof

Expectations Hiring already on the up Logistics Executive Group’s 2015 India Salary Guide and its recent annual Employment market survey both found positive signs in the job market with hiring rebounding strongly and planned job hire to be significantly up on 2013 and 2014. A report recently released by job portal naukri.com underlined this view with 62% recruiters and 89% consultants expecting the creation of new jobs in the first half of 2015 itself. In terms of the level, hiring at middle and senior levels will get a major boost. Most jobs are expected to be created for people with 4-8 years of work experience followed by people with 1-3 years of work experience the Nakuri report found. And it’s not just Nakuri who has evidenced signs of increased hiring demands. Monster employment index, the job employment index of job portal Monster.com registered a 19% year on year growth, with 16 of the 27 industry sectors monitored by the index registering positive year on year growth. Topping the list with a robust 35%+ year on year growth Logistics, BFSI and production and manufacturing sectors. Compared to 2014, it is clear that the job market is about to heat up. All of which is good for those seeking employment, but for employers this may have a significant impact – wage inflation as the demand for good talent strips out supply. The results of Logistics Executive Group’s annual India salary guide

found that companies are expected to reward and retain employees with an average 10-12% salary hike for their key talent. Many experts believe this could be as much as 30% by the time the appraisal season rolls around.

sentiment continues to be positive. Companies are carrying over this positive outlook to 2015 for hiring and salary hikes. Year 2015 could be most positive in the past few years and India could be the most optimistic countries in hiring.

As the Indian domestic economy veers towards steady growth and investment there has also been an upturn in the US economy. As a result, further support of the services sector is required to meet the massive demand for talent and companies need to go the extra distance to offer top-up benefits in order to contain attrition.

Separate Retention Plans for Top Talent

The overall appraisal of this cycle, is the expectation that industry on average will see an increase of around 10-12% wherein the ‘top performer’ will get a 15-20% hike, the ‘performer’ a 10-15% and ‘above average’ 6-10% increase in salary. With the e-commerce and mobility sectors booming this means the expected hikes in these industries will be 15-25% while for most others it will be slightly muted. For sectors like manufacturing and automotive, it may be very low (7%), although specialist roles within the supply chain will continue to command a premium. FMCG and consumer-oriented industries will witness some wage pressures in the range of a 10-15% increase as demand increases, particularly in key management or specialty type roles. Job scenario in 2015 is set to ring in ‘acche din’ and the overall business

However, it’s not all good news. There still remains a significant shortage of both talent and skills required to meet the market demand. Recent data shows more than 50 percent of global employers are currently reporting talent shortages. And crucially, they say the shortages significantly impact their ability to meet their client needs. The government’s skills initiative will kick start a process but it is a focus on investment in training, and most importantly retention strategies that will have the largest impact over time. And it seems a number ball is rolling. According to the latest Logistics Executive Group Survey 2015, organizations are putting in place separate retention plans and policies to keep their top talent. Analysts say there’s a catch that money is not the only retention factor and that the “scope of work” is also a big driver. According to Sheila Naravane, Executive Director India for advisory and search firm Logistics Executive Group “Appraisals - good or bad will be a big motivator for movement this year with employees weighing up the challenge of change, based on JUNE 2015 2015 SCMPr JULY

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Human Human Resources Resources factors like the work culture, and will likely move to a significantly more attractive environment than more conventional organizations”. And while the use of rewards as a retention tool continues to flow to ring-fence top talent, programmes around leadership opportunities and coaching, overseas assignments and fast-track programmes for hi–potential staffers are fast gaining prominence. The recent Aon Hewitt Salary Increase Survey 2015 found that out of the over 500 organizations surveyed, 76% indicated an increase in their ‘benefits budget’ in order to reduce attrition. In addition to topping up benefits, the Logistics Executive Group survey highlighted that employee engagement plays a key role in retention. Ensuring employees remain loyal, proactive and engaged is an important factor, which cannot be overlooked, if we are to achieve a return on investments made into skill based training programs and develop ‘home-grown’ talent. Employee engagement is the vital link to successful organizations for providing an emotional connection between employees and their organization. This emotional connection leads to improved performance (both individually and company), increased productivity, better staff retention, improved customer service and greater staff loyalty. Organizations looking to take control of future talent in-flows and control over wage inflation as a direct result of increasing talent demands will need to focus on the retention of employees and refinement of their career development programs and skills training. By focusing on these key HR elements companies will ensure they are equipped to grow and maintain market positions.

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Candidate job search behavior is changing Technology has changed the way active candidates look for jobs. They have literally dozens of channels including job boards, company career sites, social media, and increasingly, search engine job searches. So the best talent will know their worth. But, they will also know how complex the job search has become, how time consuming. Passive candidates in particularly look to understand market opportunities and seek out career guidance from specialist long before they go to market seeking a new job. It’s one of the key reasons why passive candidates continue to engage search firms like Logistics Executive Group, avoiding an invasion of privacy through these channels, discretely exploring a move or simply building relationships, well before they consider a career change. In-House recruiters may reduce the agency spend, but what about ‘quality of Hires’ and the effect of slowing down the business activity? Add to this the time taken to hire may be much more thereby impacting the business growth and last the employer brand may be at stake due to candidate experience in the hiring process and the delays in making right choices. Partnering with specialist organizations like Logistics Executive Group as example helps overcome many of these hurdles. By drawing on the sector expertise, experience and most importantly the connections with industry networks, clients are able to tap into unknown resources and the passive talent pool combining to ensure a quicker process at short notice without affecting the quality. “That’s where we come in,” says Sheila Naravane. “Sourcing right candidates, scheduling their interviews, final selection from

short listed candidates, Titles, CTC negotiations, Date of Joining, OnBoarding and feedback within a month if the candidate and employer is happy to be working together to achieve their goals” “We have access to unique talent,” says Naravane. “Those who may not be available in market and presently doing very well in their existing organization. However, they may be looking for a change for various reasons. This keep us one-step ahead in quickly providing what the organizations are really looking for. Whilst in-house or technology recruitment solutions may give some relief, but as we understand ‘talent is not an online commodity’ and such companies may be high on technology but have no touch to talent pool. We bring right talent to the hiring table within short timeframes”. HR must be more progressive. It needs to get out and in amongst the business operations, providing collaborative solutions to business issues. It needs to draw in specialised vendors who can inject the DNA required to compete for the best talent, to offer the most effective training, to provide services that free up HR resources and commit to ensure that the business leaders can get the most out of its employees. It needs to sit front and centre at the executive table, along side supply chain, finance, operations and other business centers that are not centers of profit for the organization. There is no silver bullet that will remove the talent crunch that is expected when the boom comes calling. However the development of a clearly defined attraction strategy, selecting the right recruitment and training partners and investing in programs that support retention will go a long way to ensure the organization is better positioned to grab that opportunity.

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Services in IT

Down time is an issue for any organization. Enterprises run on IT backbone. And this back bone cannot afford any glitch. It is here that the service levels kick in. Jeevan Rao Sahib, CEO of Indelox Services Pvt. Ltd. writes on the aftermarket services. In the wake of liberalization, came a flood of Manufacturing and Service Organizations. Among the services, sunrise Industry at that time was IT and ITes, which had the privilege of being given a host of concessions to explore and exploit opportunities. To serve these Companies major IT hardware companies set up operations, but a large portion of them even today do not have a direct presence in India and operate with channel partners. While they are all selling their products into Indian market, most of them imported by Indian partners, a major portion of after sales support is provided by the supplying entity abroad, deploying service providers to provide efficient service and meet commitments. High administrative costs and low installed base means even local support infeasible. Contractual liability to keep down time low and efficiently manage services remotely opens a question on the capability of a service provider and if efficiency can be predetermined. While selecting a service provider it is not enough to be aware of only the physical infrastructure that is available but also knowledge and expertise to handle imports and the current provision of law. Even though importer observes due diligence while importing, it is mandatory that transaction for warranty be applicable in this instance. A good compliance process, that keeps after sales service support efficient Jeevan Rao Sahib CEO, Indelox Services Pvt. Ltd.

●● Establish relation and identify if you are a service provider while filing Bill of Entry.

●● Verify Pricing policy and Values declared from that of commercial Cargo. ●● Produce all documentary evidence in support of the transaction of import. ●● BIS and IPR provisions are adhered to appropriately. ●● Understand the nature of transaction of service that is being supported. ●● Regulations of Import are being adhered to as per IMPORT POLICY. ●● Produce License when the goods are refurbished, wireless capable. ●● Register with appropriate VAT authority and maintain stock register. ●● A strong compliant process will establish credibility. Just because a replacement is being provided Free of Charge it does not mean that the goods do not have a value in the market. Value of goods should reflect the exact value with appropriate reduction in expenses that are typically incurred when sold. At times there are spares or bare shell imported and the value should to be established properly. Import of parts for warranty and replacement requires verification of transaction prior to import and making available all information for proper assessment with fairness in the declaration to authorities. There is an increased tendency to support services from abroad by contracting local service providers establishing FSL and SSL that caters for a 2hour delivery to NBD, or sometimes within 72 hours when it has to reach interior location. The aftermarket service provider should keep these in mind in the business. SCMPr JULY 2015

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SME SME Corner Corner

Taking Careof the Small Guy

SMEs are the flavor of the moment. The Prime Minister’s Make in India, the Mudra bank and such other initiatives are aimed at building a vibrant SME business ecosystem. Over the past one year, we have been examining various facets of the SME business eco-system. This time around, we are bringing you a unique experiment in the Indian SME eco-system – a technology based logistics service provider who aims to bring the same efficiencies of scale and performance as the large enterprises have. The secret – a technology platform that will allow the SME to combine their finance, credit and logistics needs. SCMPro caught up with Vinay Bhartia, Co-Founder & CEO and Mukesh Agarwal, Co-Founder of Mypacco.com. We bring you excerpts from the interaction.

Vinay Bhartia Co-Founder & CEO Mypacco.com

libaba, the Chinese e-commerce platform provider offers a one stop shop for all the fulfilment needs of the Chinese SME. An SME has a good product. Alibaba provides a platform where the SME can sell the product. A buyer from another country can now see the product and may want to buy it. The next step will be the transaction. Post this, a financial flow kicks in, with the buyer insisting for a LC, or a payment product or a Guarantee. The final step is the fulfilment – the actual shipment of the product from the seller to the buyer. In China Alibaba offers a service called Trade Assurance, which is a promise that if anyone wants to buy something from China, Alibaba will assure the buyer that the goods will be shipped out.

Unlike a large corporate, which can afford to hire people to chase every aspect of the transaction – customs, inspection, sea, air, road movement, the SME is not in a position to bargain for a equitable deal. The SME too needs quality service, but the quality service will not reach out to the SME. Nor will the SME try to reach a quality service provider. The only way this gap can be bridged is using technology and developing a platform where the SME and service provider can meet and transact. Provide the SME with a safe, assured platform which will ensure that its product will reach the destination in time, with the right quality. From the service provider perspective, the larger LSps do not reach out to the SME primarily

Mukesh Agarwal, Co-Founder Mypacco.com

because the cost of managing the relationship is very high. The transaction volumes are against the SME. Unlike the large corporate who may have 50 shipments a week, an SME may have 15 shipments a month. The technology platform like Alibaba and by extension MYPACCO, allows the large LSP to manage the relationship at lower cost. This enables them to serve the SME too. Referencing that to India, Alibaba launched the Trade facilitation Center for India. With the TFC, the SME in India has Alibaba as a partner and also ICICI Bank, who provide the financing and credit services and MYPACCO who provide the fulfilment part and SGS for inspection and certification. The aim is to provide the Indian SME a one stop shop for

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all its cross border transaction. In India, there is a mismatch between the availability of logistics assets and the demand for them. For example, there are hundreds of warehouses that operate below their rated capacity. On the other hand, there are a number of SMEs who cannot reach out to these warehouses to store their products. Shared services is the way forward – where the SME gets the right service at the best possible price. A number of services like labelling, billing, warehousing etc. can be delivered through shared services. The unfortunate thing is – not many SMEs are aware of this. A typical requirement could be where a product is imported into India through an international logistics provider, moved to a warehouse and finally delivered to the customer by a local LSP. The technology platform developed by MYPACCO will enable smooth handling of the entire operation as a one stop shop. The leit motif of MYPACCO is to be a customized solution provider, who can meet the special needs of the SME, at price and quality of service that are only available to the large corporate.

the communication to the buyer will be generated at periodic intervals. For the service to be effective, due diligence verification of the credentials of the service provider and the SME is a must. MYPSCCO has a team that will profile the entities and ensure sanctity of the transaction. The challenge is to build a service promise for a customer who is not accessible. The platform will help the SME evaluate the options

for logistics. Where the decision today is based on the knowledge levels of the owner, MYPACCO aims to transform it to an informed decision making. The SME will have a range of options which were not previously available to them. The future trend in technology will be analytics – the ability to provide actionable inputs to the SME which will be useful in their business. The technology is available. It needs implementation.

A good analogy will be Google Maps – with Google maps, we can now navigate any route, know the traffic enroute and do this without any external dependence. MYPACCO is developing solutions that will allow the SME visibility and the ability to track their consignment. The aim is to introduce technology to ensure the SME can be divested of the nitty gritty of track and trace. Technology today allows to tailor make services to specific needs. Today, when an SME receives an order, where a product has to be shipped from point A to Point B, the SME uploads the requirement on to the platform. The algorithm in the platform assigns a service provider who will do the job, the paper work will be generated- including the labels, invoices, bill of materials etc., SCMPr JULY 2015

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SCM Updates

JDA Unleashes Powerful New Capabilities to Enable the Seamless Supply Chain As companies in every industry seek to integrate the needs of their digital and physical supply chains — bringing them together to seamlessly serve multiple channels, JDA Software Group, Inc. today announced its latest release, version 9.0, aimed at addressing this huge challenge. By enabling a seamless supply chain that spans the end-to-end customer journey ranging from suppliers to end consumers, this release supports profitable omni-channel, improves visibility to drive intelligent fulfillment decisions, and creates an adaptable manufacturing environment that’s risk-aware and highly responsive to ever-changing conditions. “The emergence of omni-channel selling — coupled with ‘me commerce’ trends that increase the need for personalized service — have placed companies in an extremely difficult position,” said Kelly Thomas, chief product officer at JDA. “Most businesses have made significant investments in manufacturing facilities, distribution networks and technology systems to serve this complex market demand. However, too often, these disparate resources fail to work together, toward the shared goal of profitability. As a result, as demonstrated by a recent JDA study, only 16 percent of companies fulfill omni-channel demand profitably today.” This release is focused on addressing the three biggest challenges facing businesses today: Serving multiple channels profitably - The rapid emergence of omni-channel selling has left companies struggling to serve conflicting demand signals, maintain high inventory availability, process orders rapidly and move inventory quickly, while also making a profit. Making intelligent and profitable fulfillment decisions Increasingly, customers are asking for a “selfie” supply chain that’s focused on addressing their own unique product and service needs. In serving this highly specific, ‘me commerce’ demand, companies are frequently forced to make trade-offs between service level and profit margin. Creating an adaptive manufacturing environment - In today’s fast-changing demand landscape, rigid production and delivery schedules are a thing of the past. JDA’s next-generation software enables companies to create a seamless, highly adaptive supply chain that spans upstream suppliers and downstream distributors, enabling an agile and profitable response as demand and supply conditions change

Broekman Logistics offers a valuable solution for abandoned cargo In collaboration with Van Scherpenzeel, Broekman Logistics has a valuable solution for container cargo left at terminals. This concerns cargo that isn’t allowed into the country and which cannot be returned to the owner. Instead of a costly trip to the incinerator, it will cover the entire logistic process and ensure confidential destruction of the goods while recovering as many new materials as possible. The collaboration between Broekman Logistics and Van Scherpenzeel ensures a completely closed chain. Goods do not end up back on the market sold through the back door. Broekman Logistics was granted the status of Authorized Economic Operator (AEO) by Customs, meaning that it only operates following strict regulations. In addition, Broekman Logistics was approved by Customs to offer a valuable solution for abandoned cargo. Cargo is always transported directly from the terminal to Van Scherpenzeel’s processing equipment, without any stops on the way. Van Scherpenzeel’s grounds and facilities have extensive security and all staff go through a detailed screening process first. All activities are done following the strictest norms for confidential destruction (CA + NAID). The recycling process has waste paper, ISO 9001 and ISO 14001 certifications. The focus is on recovering as much material as possible. Every product has value: even a container with spoiled fruit can still be used to make environmentally friendly biogas in a fermentation plant. There are countless examples. The destruction process is always 100% safe and confidential. The end result is completely unrecognizable in all cases, but still valuable! Recycled materials are distributed to several industries throughout all of Europe. Broekman Logistics and Van Scherpenzeel bring together the power of logistics and sustainability. Complete outsourcing, with a reduced ecological footprint, at reduced costs. A valuable solution for abandoned cargo!

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Logistics Service Provider Summit and Awards 2015

An elite gathering of LSP community to celebrate their achievements 9th October 2015, Mumbai Logistics Service Providers are the unsung heroes who keep the wheels of trade moving. SCMPro wishes to recognize and celebrate the achievements of LSPs in India at a celebratory dinner on the 9th of October 2015, with a series of Awards. To make the event impactful, we have a cross section of thought leaders, consultants, Academicians and industry leaders deliberating on a few crucial issues that will decide the future of Indian LSPs. The summit will highlight the change happening in Logistics industry – driven by e-commerce and shaped by technology. We look forward to welcome you as logistics community gathers to brain storm on the way ahead.

Award Categories 1. Women in Logistics 2. Young Supply Chain Professional 3. Lifetime Contribution 4. Innovative eCom Service Provider 5. Best Express Company 6. Best Retail LSP company 7. Best Transportation 8. Best Freight Forwarders 9. Best Contract Logistics 10. Best Multi-Modal logistics 11. Best Project Cargo Of the Year 12. Promise of the Future (Emerging Service Providers)

13. Best Reverse Logistics Service Provider 14. Innovations in Sustainability 15. Best Use of Technology 16. Best Warehouse in Multi Product 17. Best Cold Chain Warehouse 18. Best Warehouse for Agri Commodity 19. Best Material Handling Equipment Manufacturer (Storage / Reach trucks....) 20. Best LSP to work with (Based on HR Policies)

21. Leading Light – Supply Chain Academics (Institution) 22. Supply Chain Performance Improvement 23. Innovative Supply Chain Management 24. Best Practices in Supply Chain Risk Management 25. CSR in Supply Chain 26. Best Supply Chain Practices-User 27. Best Material Handling Service Provider 28. Best Supply Chain Financial – Banking & Non Banking

Jury Members •• Dr. John Gattorna •• Dr. Ioannou Georgios •• Dr. loannis N. Lagoudis

•• Dr. Satish Ailawadi •• Dr. Vaidy Jayaraman •• Girish VS

For

Nominations and Registrations:

www.ls p-awards.com Knowledge Partner

D-204, Riddhi Siddhi Complex, Off. S.V.Road, Prem Nagar Road, Goregaon (W), Mumbai – 400062. Tel: 022 60020157/ 59 | info@iscmindia.net | www.lsp-awards.com

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SCM Updates

DHL plans investment of millions of Euros across Sub-Saharan Africa in 2015 DHL Express continues to see Sub-Saharan Africa as one of the most prominent areas of growth for the business globally. Although the number of foreign direct investments (FDI) fell by 8.4% in 2014, capital investment into Africa surged to US$128b, a year-on-year increase of 136%, according to the recently released EY 2015 Africa Attractiveness Survey and the average investment increased to US$174.5m per project, up from US$67.8m in 2013. Charles Brewer, Managing Director of DHL Express Sub-Saharan Africa says that this is positive for the continent’s outlook, highlighting that FDI in the region is being stimulated by a number of megadeals, instead of numerous smaller deals. “The perception of investing in Africa has traditionally been rather negative, coupled with the fear of the unknown. However, in 2014, traditional investors refocused their attention on the continent, attracted by its strong macroeconomic growth and outlook, improving business environment, a rising consumer class, abundant natural resources and infrastructure development. These factors have resulted in global capital investment and job creation hitting an all-time high during 2014 on the continent. Brewer says that efficient infrastructure is critical for ensuring the effective functioning of the continent. As it stands, underdeveloped infrastructure drives up logistics costs, and it is estimated that supply chain costs are up to nine times more expensive in Africa in comparison to other regions in the world.” “With increased FDI and continued macro-economic growth, I believe that Africa will be an economic powerhouse in the future. The region is abound with untapped opportunities and has much scope for growth.” Brewer says that it is for this reason that DHL Express continues to see SSA as one of the most prominent areas of growth for the business globally, and therefore continue to invest significantly in the region. “DHL Express continues to invest significantly in SSA in order to ‘Lift The Platform’, to expand our capabilities and cater for continued growth across all markets, with planned investment of millions of Euros across SSA in 2015. Major projects underway include upgrades to facilities and shipment handling systems in South Africa, Kenya, Uganda, DRC, Rwanda, Angola, Zimbabwe and Botswana. Later this year, we will begin planned upgrades in Ghana, Nigeria, Ethiopia, Benin, Cameroon, Guinea Republic, Gabon, Tanzania, Mauritius and Cote D’Ivoire.” “In addition to facility upgrades, we have a number of vehicle and technology upgrades taking place this year, along with ongoing employee and SME development programs.” “Continued focus and investment in market-leading infrastructure will better connect Africa to the rest of the world, and create more opportunities for African businesses, allowing them to trade across borders and with new target markets. DHL Express is committed to not only connecting others to Africa, one of the world’s largest frontiers for growth, but to making the rest of the world the next frontier for Africa,” concludes Brewer.

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2nd India Supply Chain Strategy Summit 2015

Building Supply Chain Alignment The only Supply Chain Summit in India which offers an incredible opportunity to understand the strategic issues in Supply Chain Management and craft our response to them

On 19th & 20th November 2015 Conference Partners

Conference Agenda: This year the summit will see a power packed agenda including: • Building Supply Chain Alignment • Five things you should know as you prepare your India Business Plans • Geo-Political Dynamics and the Challenge to Logistics • Will Omni Channel Strategy Create Efficiencies in Supply Chains • Aligning Your Supply Chain to Bottom of Pyramid Realities • CEO Panel – o Perspectives on Supply Chains in India

Media Partner

o Challenge of Globalization – Charting our Growth Path o Alignment in a New Networked World

Book your seats early and be a part of The Only Supply Chain Thought Leadership Summit in India More Information: info@iscmindia.net | 022 60020156/57/59 SCMPro_Pg_51.indd 1

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