IndIa’s LeadIng LOgIstIcs MagazIne www.logisticsweek.com January 2011 Vol. 4 — No.5 October 2010 | Vol. 4 – No.2 INDIA `100 ` 100 amit mukherjee, Vicepresident (iT and supply chain) and group cio at rpg, has deployed exemplary supplychain strategies at spencer‘s retail >> page 34 Method In Motion Sonic Boom Ericsson India Director (HeadSupply) Tej Nirmal Singh leads the exciting task of managing supply chain for the company in these demand-crazy times. Page 40 TElEcom logisTics 20 LEARNINGS 2010 Movement of telecom 26 network equipment opens Critical lessons we learned a window of opportunity from industry leaders. low NEglEcTEd adopTioN 24 waTErways 44 AT CEMAT: The expo and the seminar. A ring-side view...20 inland Why WMS still does India is ignoring not have enough waterways at its own TOUGH LOVE: Pharma logistics is challenging yet rewarding...50 takers in India peril ICE BUFFER: How cold-chain can help contain food prices...56 eDITORIAL > What’s Up T echnically, this Log.India issue signifies the end of 2010. So it’s time for an annual review, something on the lines of ‘the year that was’. But it’s said that it’s only ghosts who look back while walking forward. And last I checked, I was a real person. So I am going to look ahead while I walk and instead of a recap, I am going to try and predict significant trends that will influence the logistics and supply-chain industry in the year 2011. Disclaimer: You must to take these predictions, like you usually do – with a fat pinch of salt. As you know, most such predictions are truisms. A truism is a general statement that could be true for anybody, but when said to a particular person, it appears true for him in particular. Newspaper astrologers use truisms all the time, like ‘You will meet your soul mate today, but if you are not alert, he or she may walk past you and you wouldn’t know’. Even a lot of pop-scientific studies are truisms, like, ‘Good listeners attract more women, says study.’ Nonetheless, predicting trends, and reading them, is fun, so now I’ll hazard some foretellings for the logistics industry for 2011. Here they go. Logistics will become fashionable It’s been a long time coming. In the same way that Information Technology caught people’s imagination in India somewhere around 1999. But fear not, it will become famous not because of some impending catastrophe like Y2K, but due to all the good reasons. This will help us on many fronts – attracting talent, policy, infrastructure, finance, etc. Aanand Pandey The year of corrections Editor One big surprise could be the plateauing of the telecom industry. The total subscription base has already reach 70 crore in a country of 100 crore people. Moreover, all the 2G-scam outcry will go to curb the enthusiasm of the policy makers and the investors alike. Then a real-estate bubble has been building up for a long time. All the signs point to a crash. However, I reckon that the real estate bubble will not burst in our faces. With booming rural-to-urban migration numbers, real estate will continue to flourish, but the prices will be corrected. Also, automotive industry has been predicted to grow at 20 percent. I think that is a tad ambitious. The Dependables Pharma, bulk commodities (like coal, cement, etc.), retail, and agriculture. In that order. Retail is on the list, because support for retail FDI looks to be gathering steam. Even if the FDI does not become a reality this year, the local, large retail players are bound to scale up to meet the demand. Agriculture, on its part, could attract significant private investment this year, giving a boost to agri-logistics. GST or not, we’re investing I see a sense of disenchantment in the industry that GST could be nothing but a pipe dream. Correct me if I am wrong, but with a weak government at the center and the lure of state taxes, the case for GST looks very weak, unless the logistics industry comes together and tries to convince all stakeholders, especially the general public. Nonetheless, I believe that, with the increasing pressure on supply-chain due to the rising consumer demand, companies that were waiting for GST to invest in warehouses, will go ahead and do it anyway. The areas which will see the most investment will be automation, and technology tools that ensure data visibility across the supply-chain. Cold chain will be hot You know what I mean. Time for coastal shipping This area, with the draft policy on the sector expected anytime, would be a hot topic of discussion this year. India’s freight movement, highly skewed towards roadways (that pull 57 percent of the total lot), needs saviors, and waterways – coastal shipping as well as inland – could well provide the answer. More so, since both roadways and railways are not able to keep up with the growth – both the sectors have reported high incidences of cost overruns and project delays, as data collated by ministry of program implementation has shown recently. As for aviation, it goes without saying that one can’t expect to see much action there anytime soon, due to the near-absent infrastructure in the interiors. Have a glorious year ahead. Aanand Pandey
[email protected] www.twitter.com/logisisticsweek www.facebook.com/logisticsweek INDIA | January 2011 | www.logisticsweek.com 5 Contents 18 upShot Recent Events Two events that caught our eye were the INMARCO-INAvation 2010 and SCLC's for retail summit at which industry veterans discussed logistics challenges in shipping and food retail. 40 Cover Story Always Within Reach Ericsson India's USP is managed services, which means handling supply-chain for its customers in addition to its core services. 20 event report CeMAT 2010 Hannover Milano Fairs India Pvt Ltd’s CeMAT India 2010 was an opportunity for logistics companies to launch new products. The event also hosted a seminar jointly organized by Log. India and HMFI. 24 CoLumn The Bigger Picture The knowledge of macroeconomics is necessary to optimize production outcomes and minimize costs. 40 50 Feature the Big Break Although several pharmaceutical companies refrain from using LSPs, there are a number of LSPs waiting to break into this sector by increasing the number of services. 26 LearningS 2010 Live And Learn Priceless insights from our cover stories of the year gone by. 50 6 INDIA | January 2011 | www.logisticsweek.com January 2011 56 gueSt CoLumn sub-Zero Logic A better cold-chain infrastructure can have a sobering effect on rising food prices and empower the farmer. ADVeRtIseR InDeX Arham Logiparc ...................................................... IBC BLR Logistiks .......................................................... 35 Capricorn ................................................................13 Drive India Enterprise Solutions .............................. 45 Emirates Skycargo ......................................Back Page Godrej Storage Solutions ..........................................17 Greenearth Translogistics........................................ 43 Hormann ..................................................................15 Man Force Trucks...................................................... 3 Orange City Logistics Park ...................................... 23 Ports Finance International...................................... 53 Radhakrishna Foodland ........................................... 57 Round The Clock ...................................................RHS Safexpress ...............................................................11 Schaefer Systems International ................................. 9 Shree Rajlaxmi Logistics ................................... 31, 33 State Bank Of India ................................................ IFC 56 60 BooK eXtraCt Let's Hear those Ideas Voice-enabled technologies can make warehouse management effective. THE The Reverse Logistics and Returns Management .... 55 Uniworld Logstics .................................................... 39 Venture Intelligence ..................................................14 Vijay Logistics ........................................................... 4 DeCemBer 2010 IndIa’s LeadIn g LOgIst Ics www.lo MagazIne gisticsweek.com TALKING WAREHOUSE An eBook by Roger Byford and David Maloney Decem October ber 2010 | Vol. 2010 Vol. 4 – 4 — No.4 No.2 INDIA ` 100 ` 100 Understanding How Voice Unleashes Higher Performance in Product Distribution Chapter 1: The Talking Warehouse amit mukh erjee, Vicepresident (iT and supp ly chain) and group cio deployed exem at rpg, has plary supp chain strate lygies at spen cer‘s retail >> page 34 Method In Motion Movement of What is the right telecom network equipm term? Is it logistics? a window of Orent it supply chain? is opens opportunity TElEcom WHAT‘S IN A logisTics 20 NAME 22 GCPL suppl y-chain’s reple holds many nishment takeaways model for peer comp And the man in the thick anies. Sinha, COO of the action (Marketing is Rakesh & Consumer Products Ltd. Operations), Godrej (GCP Mission Replenish L) >> < FEATURE Order Acc ura c e s D am Billin ag Why Why benchm WMS still does not have enough arking must be made takers in India in the industry a norm low BEST AMON G adopTioN EQUALS 24 24 g E r rs ro y 5 1 ue al V 4 3 2 t un cco Manage A ac y A c cu ro an ce d sse M s ar gin s India is ignoring An in-depth look waterways at inland security measur at its own peril cases-in-point es and NEglEcTEd PLAYING IT waTErway SAFE 44 s 44 Page 34 Assets Additio S P s e al n s r 20 20 INDIA | December 2010 | www.logisticsweek.com news reguLarS 08 events JANUARY 2011 70 66 panorama Wide View Books, Journals, Blogs, Technology - a look at what's new in and for the supply chain industry. INDIA | January 2011 | www.logisticsweek.com 7 < news TRAIN OF THOUGHT OPERATIVE INDEX* CII, KPMG, GECL, AFL, TCI, Concor, ILSPL ..................... 12 Siesta Logistics, Alchemy Partners, Ashmore Investments, Schneider Electric, Airbus, Fujitsu, ITC, UB Group, SBQ Steel, Philips, Parle Agro, Lakhani, Lilliput, Videocon, ShivVani Oil, Thermax, Everest, Jubilant Organosys, FedEx Express..................................15 Shreyas Shipping, Tata Motors, Shreyas Relay Systems, Gateway Rail, Concor. ..... ... 16 *Key entities mentioned in the news section The Shipping Trade Practices Bill when legislated will usher in a more transparent and efficient regime for the shipping industry. — gk vasan, minister for shipping, at CII Logistics Summit 2010. Logistics is expected to contribute 12 pc to India’s GDP of $5 trillion in the next ten years. That means we have an addressable market of $600 million. — vg siddhartha, Founder, cafe coffee day, on acquiring Sical Logistics, in Times of India. I was with the chief executive of LG and he said... the biggest challenge he faces is logistics... the fact that it is so fragmented, and there are all these complexities of octroi, taxes, etc. — capt gr gopinath, cmd, deccan 360, referring to the importance of logistics, in Times of India. Call For Integrated Infrastructure, Logistics Policy The message that emerged from The Surface Transport-2010 was clear. India needs an integrated transportation and logistics policy as a first step towards an integrated transportation department at the central level. I ndia needs an integrated infrastructure and logistics policy to keep up the growth of its gross domestic product. The country’s robust growth has not only put a tremendous load on infrastructure, but has put the spotlight on the critical need for building more. These were some of the observations made at “The Surface Transport-2010”, CII’s Transport Infrastructure Summit, and the fi rst of its kind in the country that was organized in Mumbai on December 21, 2010. prime challenges Shyamalkumar Mukherjee, Joint Managing Director, MaINDIA | harashtra State Road Development Corporation (MSRDC) put the focus on infrastructure when he said that considering the developing nature of the country, India needs to invest $300 billion in urban infrastructure. “There is a huge stress on current infrastructure which can be mitigated by massive investments.” One of the prime challenges facing logistics sector in India is the presence of multiple interface points across the Centre and State, said Gopal N. Sarma, Partner with Bain & Company India. “Having an integrated transportation and logistics policy as a first step towards an CEO’s Interactive Roundtable at CII Surface Transport Summit 2010 Moderated by Mini Menon, Executive Editor, Bloomberg UTV. L-R: Arjun Dhawan, President, HCC; J P Nayak, Chairman – Surface Transport 2010 and Whole-time Director & President, Larsen & Toubro Ltd; Karunakaran Ramchand, MD, IL&FS (Transportation); and Rajesh Sharma, VP, Escorts. 8 January 2011 | www.logisticsweek.com Non-compliant to new OHS regulations Non-compliant to new OHSplanning Inefficient warehouse regulations Inefficient warehouse planning Outdated storage systems Outdated storage systems Labour intensive operation Unable to meet KPI Labour intensive operation Unable to meet KPI Lack of local support Lack of local support Poor use of available headroom Infinite InfiniteLogistics Logistics Solutions Solutions Poor use of available headroom Too many error in piece picking operations Too many error in piece picking operations Non-compliant to FEM safety standards Non-compliant to FEM safety standards Schaefer Provides You With The Logistics Success Formula. Schaefer Provides You With The Logistics Success Formula. 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[email protected] Schaefer_Formula 5_LOG_216x270mm.indd 1 12/8/2010 12:35:09 PM < news integrated transportation department at the central level is the key.” Highlighting the opportunity that the Indian logistics industry provides for development given its inadequacies, JP Nayak, Larsen & Toubro Ltd’s Whole-time Director and President (Machinery & Industrial Products), said: “Formulating a national integrated logistics policy, targeting a greater share of freight to rail, increasing energy efficiency, building dedicated freight corridors, coastal corridors, last mile roads, multimodal logistics park, skill development etc. It is a complex task with the involvement of multiple stake holders and a stead of assistance”. In a roundtable, “Building Integrated Sustainable Infrastructure for Tomorrow’s India”, the executives said that though private sector firms have made inroads into Indian logistics space, opportunity remains untapped due to lack of clarity on Government guidelines. Suggesting solutions for the problem, Nayak said the situation requires “formulating a national integrated logistics policy, targeting a greater share of freight to rail, increasing energy efficiency, building dedicated freight corridors, coastal corridors, last mile roads, multimodal logistics park, skill development, etc.” One of the prime challenges facing logistics sector in India is the presence of multiple interface points across the Center and State. cross ministerial group would be required to drive it.” As per figures mentioned in logistics reports, in the US, logistics cost is 70 percent less for coastal freight and 30 percent less for road transport compared to India. Nayak, also the Chairman of Surface Transport-2010, said this waste is assessed at $45 billion or 4.3 percent of our GDP. “Indian infrastructure is insufficient, ill-equipped and illdesigned to sustain the rapid rate of growth. Yet, this is also an opportunity where the magnitude is such that two third of the required infrastructure has to be newly created. If we do not improve, by 2020, it will increase to $140 billion or 5 percent of GDP.” The CEOs of logistics companies raised concern over government “interference in- COMPANY NEWS Service Tax On Rail Freight Deferred to April 1, 2011 New Delhi T he Centre has for the third time this fiscal deferred the implementation of service tax levy on transport of goods by rail. This levy will now come into effect from April 1. The earlier proposed date was January 1. Also, the service tax exemption on certain goods carried by Railways - such as pulses, foodgrains, petroleum products for PDS, organic and chemical manure and motor vehicles - will now come into effect from April 1, along with the 70 percent abatement. It would also come as a relief for the domestic cement and steel industries who would have otherwise been required to fork out higher freight rates for movement of coal, cement and steel by rail. The Railways Ministry, The service tax exemption on certain goods carried by Railways will now come into effect, along with the 70 percent abatement. which had opposed the service tax levy, is also understood to have persuaded the Finance Ministry in going for the deferment. The Railways had (after the budget) indicated that it would have no choice but to pass on the tax burden to its freight customers. Again, the Finance Ministry had in June this year taken a decision to defer the implementation of service tax levy to January 1. The projected annual freight earnings of the Railways for 2010-11 are `62,489 crore. The Finance Ministry was looking to garner close to `1,000 crore from the service tax levy on railway freight. Meanwhile, the Indian Railways registered a 6.54 percent growth in freight revenue for the Apr-Nov period this fiscal against the same period last year. But the corresponding growth in freight tonnage during the period was 3.31 per cent. In November alone, the Indian Railways garnered `5,163.57 crore as freight revenue. For the eight-month period (Apr-Nov), the approximate earnings were `59,804.93 crore. Western Railway, alone, registered a growth of about 16 percent in terms of tonnage for the fiscal year 2009-10.Officials attributed this to the development of the Mundra and Pipavav ports. This fiscal, up to October, freight traffic went up by 6.19 percent bringing the total freight load carried by Western Railway to 35.99 million tonnes. So far this fiscal, container traffic increased by 34.5 percent, while that of imported fertilisers went up 18.92 percent. corrigendum In the December issue, in the Benchmarking feature (Page 30), the Warehouse Benchmarking Parameters box was printed without giving due credit to DIESL’s quality program, Project Caliper, which shared these parameters with Log. India. The error is regretted. indian roads handle almost 80% oF passenger traFFic and 65% oF Freight 10 INDIA | January 2011 | www.logisticsweek.com 91 11 26783281 91 11 26781481 82 110 037 < news CII Logistics Summit 2010 Raises Infrastructure Issues New Delhi T he Confederation of Indian Industries’ (CII) “Logistics Summit 2010” in Delhi highlighted the theme “Building India’s Logistics infrastructure - Investment, Operation, Growth”. At the event, KPMG collaborated with CII to publish a research paper titled “Adding Wheels: Investing in the Indian transportation & logistics industry”. While unveiling the paper together with GK Vasan, Union Minister of Shipping, Manish Saigal, Executive Director and Head of Transportation & Logistics, KPMG said, “The paper aims to encapsulate opportunities and complexities in the Indian transportation and logistics sector towards the benefit of a wide group of stakeholders but especially investors.” Key highlights of the paper include: *There is a shift in the government’s focus on its planned spend on infrastructure. In the 11th five year plan, the infrastructure spend is targeted to be $500 billion out of which 28 percent is expected to be spent on transportation infrastructure. This spends in the 12th five year plan is expected to double to $1 trillion. *The government expects private investors will provide most of these planned spends. *India’s transportation sector suffers from an unfavorable modal mix with 61 percent of its cargo traffic using roads as opposed to only 30 percent using rail. This signifies gross underinvestment in rail and coastal shipping. *KPMG believes there is significant investment interest for coastal shipping and has recommended that the Ministry of Shipping issue private investment friendly guidelines. Speaking at the event, the Shipping Minister said the challenges for the industry are the infrastructural bottlenecks and the high logistics cost. He added that the government has taken measures to support the growth of the logistics infrastructure, such as, opening up the industry to 100 percent FDI, removal of CST, introduction of VAT, promotion of Speakers at the Summit stressed for investment friendly guidelines across all transport infrastructure. multi-modal transportation network, and PPP. Other initiatives include the NHDP, inter-connectivity of the 12 major ports, eastern and western rail freight corridor that adds up to 2,700 km rail lines, higher rail freight handling capacities, and the Dedicated Delhi-Mumbai Corridor. Vasan said the Shipping Trade Practices Bill when legislated will usher in a transparent regime for the industry. On this occasion, CII Institute of Logistics and Global Coalition for Efficient Logistics (GECL) signed an MoU whereby GECL will partner the Indian lo- gistics industry in the adoption of digital soft infrastructure. Earlier, Cyrus Guzder, CMD of AFL Pvt Ltd, said in his address that infrastructural bottlenecks lags in logistics are costing the national economy around $50 billion. With rail infrastructure not properly aligned with the new production and distribution centers, there is excess dependence on road infrastructure. He said that while the government is developing 5-7 expressways of 100-300 km, the current need is for 20 expressways. There is additional need for 750 new last mile road links. TCI And Concor JV, ILSPL, Commences Operations New Delhi T he joint venture company of Concor (49 percent) and Transport Corporation of India (51 percent), Inf inite Logistics Solutions Pvt. Ltd (ILSPL), has commenced operations. The new company will create synergies between the two most widely used modes of transportation and offer end-to-end multimodal logistics solutions and establish an integrated rail-road cargo service. The JV will offer comprehensive solutions to customers by offering seamless services using Concor’s rail infrastructure and TCI’s road infrastructure. It will also run operations on dedicated routes and based on specific needs of customers offer customized solutions. TCI will ensure the first and last mile delivery of the cargo. Moreover, the containerized multi-modal door-todoor transport which ILSPL will offer would prove to be a cost effective solution for heavy cargo over medium and long distances. The mission of ILSPL will be to become the Preferred Logistics partner for companies seeking responsive and sustainable multi-modal logistics solutions. The USP of the company will be the pan India presence, huge asset and strong infrastructure base and the ability to offer solutions to all product segments. Fedex was the First to equip delivery vans withand 70%by valuetrack packages about 90% oF india’s external trade by volume technology to is moved by sea 12 INDIA | January 2011 | www.logisticsweek.com Siesta Logistics Raises Funds To Increase Reach Bengaluru T hree years into existence and Siesta Logistics Corporation Limited has sought to leverage growth opportunity in the Indian logistics industry. Siesta Logistics, a part of the diversified Siesta Group, has raised $10 million in private equity from Ashmore Alchemy India, a joint venture between Alchemy Partners LLP and Ashmore Investments (UK). The minority stake investment by Ashmore Alchemy will be utilized to increase global reach and service capabilities across the global logistics hub. Headquartered in Bengaluru, Siesta Logistics has a wide network supported by 20 global agents, besides 10 freight and customs outlets. SLCL has successfully built a strong network of clients over the years, which includes Schneider Electric, Airbus, Fujitsu, ITC, UB Group, SBQ Steel, Philips, Parle Agro, Lakhani, Lilliput, Videocon, Shiv-Vani Oil, Thermax Industries, Everest Industries, Jubilant Organosys, among others. The Siesta Group is a diversified business conglomerate with interests in hospitality, fine dining, retail, agri-business and logistics. Industrial sectional doors with dock levellers and dock shelters FedEx Starts Import Services In India Mumbai edEx Express, a subsidiary of FedEx Corp., has begun providing Import services in India. FedEx will meet the needs of Indian importers looking for reliable and customized import express services. The service will provide door-to-door, customs-cleared, customized and time-definite services, which empower consignees in India control their import shipments. With a transit time of typically two to three business days, the new services are available from more than 220 countries and territories worldwide. The services also enable customers to raise invoices and make payments in Indian Rupees. Importers in India can now have access to the complete portfolio of FedEx services for express and economy shipments including dangerous goods, perishable and valuable shipments. They can also consolidate multiple packages into one shipment for ease of customs clearance and then deconsolidate into individual shipments. Simultaneously, the company has expanded premium domestic express delivery service to include 331 destinations, up from 58 destinations. The FedEx India domestic express service offers customers multi-point package status tracking with Proof of Delivery, competitive transit times, FedEx money-back guarantee and on-call pick-up facilities. F Everything from a Single Source: Logistics Solutions from Hörmann Intelligent solutions are called for wherever smooth work processes are needed. With Hörmann, you can find everything you need from a single source: dock levellers, dock shelters, loading houses and industrial doors. All are perfectly adapted to each other, providing you with the right system for any situation. Flexible high-speed doors with SoftEdge crash protection Doors for Home and Industry www.hormann.in | More Information: INDIA 1-800-102-DOOR •
[email protected] call January 2011 | www.logisticsweek.com 15 < news Shreyas Forays In Bulk Shipping; Signs MoU with Tata Mumbai S hreyas Shipping & Logistics Limited has forayed into coastal bulk shipping operations. The company has deployed M/V Unity, an Indian flag coastal bulk vessel. The vessel is a single decker, bulk ship strengthened for heavy cargo. With coastal route costs being one-third in terms of operational cost when compared with railways, and one-tenth with that of road transport, the entry into bulk coastal shipping would ensure its position as an integrated multi-modal LSP. In a bid to de-risk its business from volatile international freight and charter rates, the company has diversified into domestic logistics. It is adding capacities and now services both the Indian coasts. It has further set up five warehouses and also has more than 4,000 contain- ers which are used for domestic multi-modal transportation. Shreyas Shipping is handling maximum coastal containers since inception of its coastal container service and has deployed presently three vessels of 1200 TEUs (Twenty Equivalent Units) on coast. In another move, Shreyas Shipping, through its wholly owned subsidiary Shreyas Relay Systems Limited (SRS), has signed an MoU with Tata Motors for acquisition of 50 trailers. The company plans to invest Rs 17 crore at regular intervals for acquiring 50 trailers. This is a part of plan to acquire 100 such trailers soon to emerge as India’s preferred integrated logistics solutions provider. The trailers to be acquired by Tata Motors are new age vehicles with cutting-edge tech- With bulk shipping, Shreyas plans to de-risk its business from volatile freight and charter rates. nologies. The fleets of trailers have GPS connectivity, providing real time information to the clients about cargo, container and other key aspects. Besides this, Shreyas has also sealed an agreement for a warehouse and domestic cargo distribution center at Tuticorin. The facility at Tuticorin will be operational within the next few weeks. Shreyas Shipping & Logistics Limited has also firmed up plans for establishing similar facilities at Mundra and Cochin almost immediately. Gateway Rail To Invest `25-cr In Cargo Handling Chandigarh Third-Party Liability Cover For Commercial Vehicle Drivers New Delhi he drivers of commercial vehicles may soon get third party liability cover. This will be examined by a panel headed by M Ramaprasad, Member (Nonlife), set up by Insurance Regulatory and Development Authority (IRDA) on third party liability cover to commercial vehicles. The committee, which would submit its report in three months from now, would also study the pricing mechanism to provide the necessary adequacy and reasonableness of third party insurance cover. The modalities to be adopted for creat- C ontainer train operator Gateway Rail Freight will infuse Rs 25 crore to boost its container handling capacities, even as the logistic provider aims to clock total business volume of `1,500 crore in 2010-11. The company is adding two more rail sidings at Inland Container Depot at Sahnewal in Ludhiana. The new rail sidings will reduce turnaround time (for container handling) from 12-14 hours at present to 5 to 6 hours. Gateway Rail has also sought approval of Railway Board for connecting its upcoming rail sidings with main rail link. At present, it has two rail sidings for loading and unloading of containers and handles 20,000 TEU per month at Ludhiana ICD. Gateway Rail set up Punjab’s first rail linked Logistics Park cum ICD in private sector at Sahnewal with in investment of Rs 150 crore last year. Prior to this, only CONCOR had ICD at Ludhiana, with rail linked facility. The company claims to have captured 40 percent market share in cargo handling business in Punjab. T ing declined pool of commercial vehicles to ensure the availability of third party liability cover to all commercial vehicles, would also be looked into besides a general review of current arrangement to third party motor liability pool. Offering motor third party liability cover to commercial vehicles has been a challenge for non-life insurers in view of the tariff controls prevailing and non-availability of credible data. Since 2006, issues relating to the premium charged for the cover were brought to the notice of the Authority. ‘horn please, on kerosene’ on trucks was used during wwii to avoid explosions 16 INDIA | January 2011 | www.logisticsweek.com < upshot Out Of The Well The INMARCO-INAvation 2010 saw high-profile shipping executives raise the issues that shipping and the shipbuilding industry faces. Solutions here could lie with better formulations of laws by the government of India. Frewin Francis reports. entations covered topics pertaining to shipping operations and policies, environment, logistics, chartering & brokering, and tapping potential of inland water transportation. The presentations by Rolls Royce, ClassNK, Wärtsilä, and others demonstrated advancements in shipbuilding, navigation and allied industries. The panel discussions on the opening and closing day of the event saw an energetic crowd and a panel that boasted of the heavyweights in the shipping industry. Concurrently with the conference, the organizers also held an exhibition, where companies displayed marine-related offerings and services. there are motorways, it is possible that authorities can push for sea lanes. Urging the need to tap the unused potential at captive ports, Rajiv Nayyar, Head (New Shipbuilding), Essar Shipping, said this could decongest traffic at other ports in the country. Abdul G Serang, General Secretary of National Union of Seafarers, spoke of the escalation of threats at sea by pirates at the Horn of Africa. This year alone has witnessed around 1,300 attacks. Moreover, better formulation of rules could help avoid endangering seafarers where there are accidents or unforeseen incidents. Elaborating Serang’s point, Captain MM Saggi, Nautical Advisor, Government of India, said that piracy issues become complicated when it involves foreign waters. The International Ship and Port Facility Security (ISPS) code created to be the best instrument to fight against piracy attacks has proved unsuccessful. Cleaning and sanitizing of the Somalian Coast and adoption of best management practices by the armed guards would be helpful, he added. The CMD of SCI, S Hajara, said the maritime industry must reduce turnaround time at ports. Delays result in damages of goods and also goodwill for not only the company, but also the country. Dr Satish B Agnihotri, DG of Shipping & Ex. Officio Addl. Secretary to the Govt. of India said, “Innovation would be best facilitated when the government and the private sector work together. The Indian maritime industry should change the outlook of being the frog in the well to the whale in the sea.” From l-r: Abdul Serang, Gen. Secretary, National Union of Seaferers of India; Dr. R Vis, Director, Viswa Lab; Rear Admiral MK Badhwar, AVSM, VSM, IN (Retd), Pipavav Shipyard; Capt. MM Saggi, Nautical Adviser, DG Shipping; S Hajara, CMD, SCI & Pres. INSA; Mangala Yapa, MD/CEO, Colombo Dockyard; A Banerjee, Chief Surveyor, GOI; V Kumar, MD, Bharati Shipyard; and Prof. R P Gokarn (earlier Prof. at IIT Kharagpur). Date: December 9 – 11, 2010 Event: INMARCO – INAvation 2010 Organizers: Marine Engineers (India); The Institution of Naval Architects Venue: Tata Theatre, NCPA, Mumbai What they said Vijay Kumar, Chairman and Co-Managing Director at Bharati Shipyard Ltd, cited India’s rich history in shipbuilding with the building of the world’s first tidal dock around 2300BC. "One way to increase India’s presence in shipbuilding was by bringing in foreign shipbuilders. There has also been a decline in transportation of cargo by ships. This has further declined to 5 percent or possibly even less." In his presentation, BK Mandal, Director of Finance at SCI, stated that innovations could be pushed by way of new financial approaches. Maritime companies face problems in getting loans sanctioned. He added that the Government should be proactive in promoting the industry by setting up a maritime finance fund. Commodore Jitendran, CEO, Pipavav Shipyard, emphasized on the importance of utilizing the huge potential of inland waterways. Just like T he Institute of Marine Engineers (India), Mumbai Branch, and Institution of Naval Architects hosted the International Technology Conference and Exhibition “INMARCOINAvation 2010” at the Tata Theatre, National Centre of Performing Arts (NCPA) in Mumbai from December 9 – 11, 2010. Minister of Shipping, GK Vasan, presided over the event. It is for the first time that the two institutes have come together to jointly organize the two conferences. Since 1982, The Institute of Marine Engineers (India), Mumbai, has been organizing the “International Maritime Conference” (INMARCO) once every four years. Similarly, Institution of Naval Architects (India) had been planning an international technical conference cum exhibition at the same time. The technical pres- 18 INDIA | January 2011 | www.logisticsweek.com Testing Times For Food Retail The Supply Chain Leadership Council organised a summit at which industry veterans discussed logistics challenges in food retail and innovations in packaging. Pamela Cheema reports O n Dec. 3, 2010 the Supply Chain Leadership Council organized the first Food Retail, Logistics and Packaging Summit and Awards at Regus Business Centre, Bandra Kurla Complex, Mumbai. The summit spanned the entire gamut of food retail and its supply chain, discussing ways to manage logistics challenges in food retail in the frenetic business environment, while spurring innovation in packaging simultaneously. The summit also focused on the role of cold chains in warehousing, expatiating on the neglect of this opportunity in Indian logistics. optimisation of transport. It has also introduced a packaging initiative like heat wave bags for better temperature retention while delivering pizzas. Dominos has installed GPS tracking system and the hydraulic tail gate lift which is under trial in north India. Innovations In packaging Most packaging trends in India are of recent vintage. Thick, bulky packing has been replaced with silky matte packing for chocolates and candies. Sameer Mehendale, Associate VP, Packaging Development, Indian subcontinent, Cadbury, underscored in his presentation that “the opportunity to touch and feel the product wasn’t there earlier, hence the development of silky matt finish which our new products Silk and Bournville chocolates give. The product shape and size was also modified to suit the multipack option - a requirement of modern trade.” Adityendra Kumar, Sr. Manager, Food and Agribusiness, Research and Advisory, Rabo Bank, India, disclosed that the cold chain industry is growing at 20-25 percent and “is expected to touch `400 billion by 2015". However, corporates are vary of investing due to high capital costs, large payback periods, erratic power supply and the single biggest deterrent across the country, land acquisitions. Participants of the panel discussion were (l to r)Vivek Sarbhai (Cadbury-Kraft), Pradeep Dubey (Snowman), Girish Deshpande (RK Foodland) Food Retail Grows The keynote address was delivered by Ramesh Srinivas, Executive Director, KPMG. KPMG has predicted that the $70-bn food retail business will more than double to $150-bn by 2025. Interesting presentations were made by industry specialists like Lt.Col. Vijay Nair, GM, Supply Chain, Hypercity Retail (India) Ltd, Ashu Khanna, Head-Supply Chain, Marico and Vivek Sarbhai, VP (Logistics & Customer Operations), Cadbury India. Sarbhai emphasized that “an end-to-end cold chain is required to drive consumer satisfaction through reduced heat damage complaints. At least 69 percent of our consumer complaints are due to heat damage.”He advocated constant monitoring and managing of temperatures throughout the cold chain. Varun Sharma, Manager-Supply Chain, Jubilant Foodworks, the parent company of Dominos, said his corporate which has 370 stores in 71 cities in the country has opted for the multiple hub and spoke model for greater Date: December 3, 2010 Event: Food Retail, Logistics & Packaging Summit and Awards Organizer:Supply Chain Leadership Council Venue: Regus Business Centre, Mumbai tellectual discourse earlier in the day! And the awards went to: 1. Food Supply Chain Manager of the Year (manufacturer/processor): Cadbury and Pepsico. 2. Food Supply Chain Manager of the Year (QSR): Yum Restaurants. 3. Food Supply Chain Manager of the Year (Modern Format Retailer): Future Value Retail. 4. Food Logistics Personality of the Year: Ashok Kumar of Pepsico. 5. Cold Logistics Service Provider of the Year: Snowman Frozen Foods. 6. Cold Chain Personality of the Year: Pawanexh Kohli, Chief Cold Chain Solutions Officer, Gati. 7. Cold Logistics Tech Enabling Company of the Year: Bristlecone. 8. Food Packaging Innovating Company of the Year : Yum Restaurants. 9. Food Supply Chain Innovating Company of the Year: Marico. INDIA | Industry Award Winners The summit wound up with cocktails and an awards function which was hosted by TV host, Cyrus Broacha, who set the evening alive with his inimitable style peppered with jokes, starkly different from the dense in- January 2011 | www.logisticsweek.com 19 < EVENT REPORT Sharing Automation Ideas Hannover Milano Fairs India Pvt Ltd’s CeMAT India 2010 was not only an opportunity for logistics companies to launch new products, but also a vibrant place for creating business opportunities. The event also hosted a seminar jointly organized by Log.India and HMFI. Frewin Francis reports. C eMAT India was held concurrently with MDA India, an international trade fair for motion, drive and automation hydraulics and pneumatics; Industrial Automation India, an international trade fair for process and production automation and industrial building automation; Energy India, a trade fair for energy efficiency and decentralized renewable and conventional energies; and Surface India, an international trade fair for surface technology. Companies that were present with their range of material handling equipment were Godrej, Voltas, ACE, FERRO Tiger, Kardex, VDMA, Avalon Technologies, Acer Engineer, Elite material Handling, among others. Also present was SICK India Pvt. Ltd. with its sensors and automation solutions for the logistics sector. Schaltbau displayed their range of charging connectors specifically designed to meet the demands of modern material handling vehicles. Present at the exhibition venues were the Indo-German Chamber of Commerce and the Italian Trade Commission. Their presence facilitated business opportunities between India and Germany, and India and Italy respectively. Date : December 15 – 18, 2010 Event: CeMAT India 2010 Organizer: Hannover Milano Fairs India Pvt Ltd Venue: Bombay Exhibition Center, Goregaon Drawing From Knowledge Alongside the exhibition, Log.India along with HMFI hosted a seminar on “Vision Next: Emerging Key Trends in Materials Handling and Logistics” on December 16, 2010. Prominent industry leaders who made presentations were Ajay Chopra, CEO of DIESL; Cavas Dumasia, Chief General Manager (Marketing & Sales), Godrej Material Handling; K. Ashok Kumar, Sr. Manager (Consulting and Business Development) of Godrej Storage Solutions; and Ron Farr, VNA and Warehouse Systems Manager at Yale. Chopra spoke about the increasing need for integrating 3PL, and if it was truly possible in India. The increasing levels of outsourcing have resulted in a need for integrating 3PL services down to the last mile. He discussed how, as compared to developed nations, 3PL contribution in overall logistics activity in India is still at a nascent stage. Integration of 3PL would depend on several factors. The supporting ones being government initiatives to improve 20 INDIA | January 2011 | www.logisticsweek.com logistics infrastructure, the opening up of rail freight operations, and a uniform tax regime. The negative factors were the huge size and geographical diversity of India, infrastructural limitations and the current tax structures. The adoption of an integrated 3PL model would bring about a reduction of five percent of costs in overall logistics operations. Cavas Dumasia laid down some of the best practices in the material handling sector. Technologies such as WMS (warehouse management system), FMS (fleet management system), RFID (radio frequency identification), AS/RS (automatic storage and retrieval system) and voice enabled warehouses are best practices that logistics companies must employ. He added that adoption of best practices must consider some basic rules. It should improve safety, boost productivity, ensure sustainability and keep costs low. Ashok Kumar of Godrej Storage Solutions spoke about the changing scene of warehousing. The muchawaited GST and infrastructure development initiatives would facilitate growth in the warehousing sector. Demand drivers would primarily be agricultural and manufacturing sectors. A close scrutiny could tell us that warehouses have made progress from being unorganized to being customer driven. Cubic space utilization and delivery speed are key parameters that can improve warehouse efficiency. Ron Farr of Yale explained the emerging trends in warehouse processes and design. Stressing on the significance of warehouse storage justification, he held forth on how front-end analysis and planning coupled with warehouse simulation helped in optimizing operations and adopting best practices for achieving maximum efficiency. The most anticipated event of the evening was the Panel Discussion. Members at the discussion comprised Dr. Rakesh Singh, Director, Durgadevi Saraf Institute of Management Studies; K. Ashok Kumar of Godrej Storage Solutions; and Ron Farr of Yale. Aanand Pandey, Editor of Log.India moderated the discussion. Singh spoke at length on the various macroeconomic fundamentals with respect to managing the supply chain. He pointed out the dangers of a linear model of planning capacity in the supply chain. An objective model was advocated for using macroeconomic data for formulating supply chain decisions. Kumar talked on a micro level about the trends in demand and bottlenecks in the supply chain with respect to India’s growth rate. He discussed the spurt of investments in integrated warehouses particularly in the auto and FMCG sectors. Farr from Yale emphasized that it’s not only training for people who operate material handling equipment, but also the technology adoption that determines performance. Ajay Chopra, CEO, DIESL stressed that there's a need for integrating 3PL services down to the last mile. Ashok Kumar, Sr. Manager at Godrej Storage Solutions spoke of the changing scene at warehouses New Products Launched Along the sidelines of CeMAT 2010, Toyota Industries Corporation set up Toyota Material Handling India (TMHI), a fully-owned subsidiary of Toyota Industries. The initiative is a result of the demerger of Kirloskar Toyoda Textile Machinery Pvt. Ltd. (KTTM) to form TMH India. The company unveiled its Z series forklift prototype which will be fine tuned to the demands of the Indian market before being launched in India, when the new company becomes operational in May 2011, explained Akihiki Nimura, General Manager (Overseas Sales & Marketing), Toyota Industries. The models will cater to the midsegment of the overall lineup. With sales touching 6,000 units in the last four years, Toyota expects to reach 20,000 units by 2012. Toyota will break into the Indian Ron Farr, Warehouse Systems Manager at Yale spoke of trends in warehouse processes. market with the Z series. Virendra Oberoi, General Manager (Marketing), Toyota Material Handling India, stated that corporate spending varies starkly from those of SME’s. Hence, the company will decide the final price of the product after a INDIA | January 2011 | www.logisticsweek.com 21 < EVENT REPORT Although Toyota ME India will import the equipment now, there are plans to set up a manufacturing unit in India. careful research of the Indian market. Subsequently, Toyota intends to launch an electric forklift in India. T. Parabrahman, Managing Director of Kirloskar Toyoda Textile Machinery Pvt. Ltd. stated that the company would initially set up seven offices for sales and services. Toyota also intends to change the hitherto Bengaluru centric business model to pan India model. Currently, Toyota’s largest markets Cavas Dumasia, Chief GM (Marketing & Sales), Godrej Material Handling, laid down some of the best practices in the material handling sector. for material handling equipment are China and the USA. In India, it intends to adopt Maruti’s friendly neighborhood strategy to win over customers. Officials present at the launch stated that although the equipment would be imported now, there are plans to set up a manufacturing plant in India. In terms of pricing, Toyota prices its products marginally higher and supports it with better reliability, longer life, high quality and safety. The material handling equipment sold in India will be Euro 3 compliant. At the event, Maini Materials Movement Pvt Ltd also announced its tie up with the world’s third largest forklift and materials handling equipment manufacturer, Nacco Material Handling Group (NMHG), USA. The partnership includes the manufacture of specific Yale products within India, besides representing those made overseas. The two launched the co-branded product of Yale and Maini - ERP15RCF. They have also launched the 8T model of Tow Tractor, the TT Series. The ERP15RCF (1.5t) is a 3-wheel, rear wheel drive, electric forklift truck for medium duty application Maini will utilize its knowledge of the local market to introduce NMHG's products in India. requirements. It is compact and highly maneuverable, ideal for use in confined areas. Maini Materials will be responsible for sales and service, and customer support for YALE’s range of products in India. NMHG, on the other hand, will provide product design and engineering expertise to the Maini Group. The expertise will be provided through its engineering center in Pune which focuses on product design, special purpose application design (SPED) and FEA analysis. For 2011, Maini will look to expand its manufacturing, sales and service footprint. Existing facilities are expected to be expanded to accommodate new product introductions. All in all, the event was a fulfilling experience for participants and visitors waiting to tap new business opportunities. Readers can view the seminar organized by Log.India and HMFI on http://www. youtube.com/user/logisticsweek. 22 INDIA | January 2011 | www.logisticsweek.com Ready to Occupy Available Lease Ready toto Occupy Available on onLease Ready Occupy - --Available on Lease Logistics Park Offers: Logistics Park Offers: Logistics Park Offers: Total Warehousing Capacity of of more than 10 Lacs Sq. Ft Total Warehousing Capacitymore than 10 Lacs Sq. Sq. Ft Total Warehousing Capacity of more than 10 Lacs Ft Ready to occupy Build up facility Lacs Sq. Ready to to occupyBuild upup facility Lacs Sq. Sq. Ft. Readyoccupy / / / Build facility 1 11 Lacs Ft.Ft. Construction of another lacs Sq. Ft is in swing Construction of of another lacs Sq. Sq.is is in full swing Constructionanother 1 11 lacs Ft Ft in full full swing Strategic location with good road, rail and air connectivity Strategic location with good road, rail rail and connectivity Strategic location with good road, and airair connectivity Ample truck parking area with dormitory Ample truck parking area with dormitory Ample truck parking area with dormitory Commercial complex featuring, ATM, bank , restaurants, dispensary and Commercial complex featuring, ATM, bank , restaurants, dispensary andand Commercial complex featuring, ATM, bank , restaurants, dispensary stationery shop stationery shop stationery shop Sufficient office area on ground mezzanine Sufficient office area onon ground and mezzanine Sufficient office area ground andand mezzanine Computerized weigh bridge Computerized weigh bridge Computerized weigh bridge Fire hydrants for safety FireFire hydrants safety hydrants for for safety Battery charging area for MHE’s Battery charging area for MHE’s Battery charging area for MHE’s DG for 24 7 power back DG DG 2424 7 X 7 power back up for for X X power back upup Sky lights for minimum electricity consumption and Turboventilators SkySky lights minimum electricity consumption andand Turboventilators to lights for for minimum electricity consumption Turboventilators to to maintain temperature maintain temperature maintain temperature High compound wall for safety. High compound wall for safety. High compound wall for safety. Site: Khasra 80, 81, & & 82, Shivmadka, Village-Gumgaon, Site: Khasra No. No. 80, 81, & 82, Shivmadka, Village-Gumgaon, Site: Khasra No. 80, 81, 82, Shivmadka, Village-Gumgaon, Tahsil-Hingna, District-Nagpur(MS), India Tahsil-Hingna, District-Nagpur(MS), India Tahsil-Hingna, District-Nagpur(MS), India Office: Sheikh Ali Ali Sultan Ali, Lohaoli, Itwari, Office: Sheikh FidaFidaSultan Ali,Ali, Lohaoli, Itwari, Office: Sheikh Fida Ali Sultan Lohaoli, Itwari, Nagpur (MS) 440002 Tel 0712-2763079 Nagpur (MS) – 440002 TelTel 0712-2763079 Nagpur (MS) –– 440002 0712-2763079 Email:
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[email protected] Contact us Contact usus at Contact at at Zafeer Ahmed +91-9372636510 Najmuddin Fidvi Zafeer Ahmed +91-9372636510 & Najmuddin Fidvi Zafeer Ahmed +91-9372636510 && Najmuddin Fidvi +91-9373102959 +91-9373102959 +91-9373102959 & http://oclp.in & & http://oclp.in http://oclp.in < OpiniOn The Bigger Picture Awareness of macroeconomic picture and related downside risks is necessary to optimize marketing and production outcomes and minimize costs. Rakesh singh Director and Professor of Economics and SCM at Durgadevi Saraf Institute of Management, and Chairman, ISCM A At the Automotive Logistics Seminar in Chennai, the senior consultants from known consulting firms while speaking on the state of the automobile industry predicted that the industry will grow at a pace of 25 - 30 percent in the initial phase, and stabilize at around 12 – 14 percent growth. they called upon the automobile companies to quickly double up their capacity, as the number of vehicles that will be sold will increase from 2.8 million to 5.2 million by end of 2015. neglecting Macroeconomic View this analysis truly reflects the sentiments about india and its growth story. it seems india is an economy which will grow linearly over the next couple of decades, till it becomes one of the top economies in terms of GDP by the year 2050. the auto industry is upbeat as it has seen growth of around 30 percent in the last quarter. Such linear thinking is common when the going is good. the problem is however, they often ignore macroeconomic downside risks. Businesses are most often ignorant about the larger macroeconomic picture of the economy and the downside risk associated with it. even if an economy is in the growth phase, outrightly ignoring the downside risks may derail businesses. A linear prophecy like above can be dangerous and all players in the automotive businesses should be aware that this could lead to an unprecedented rise in production capacity, and if the economy tumbles, they will find themselves 24 INDIA | January 2011 | www.logisticsweek.com immersed in the pool of inventory. Some awareness of the downside risk is necessary in order to optimize both marketing and production outcomes, as well as minimize the costs associated with this downside risk. cit will be hard to sustain when the recovery in other economies will start, as capital may flow to these economies for better return. Why Watch Out incorporating macroeconomic fundamentals into supply chain planning and business planning can help business not to smoothen demand, but to incorporate the risks in their forecasts. this downside risk has been underplayed primarily because of the earlier than expected recovery of the indian economy with effect of the global crisis and a prediction of the return of 9 percent growth rate witnessed in the 2003–08 period. But a glance at the recent macroeconomic data clearly warns us against such linear thought processes. in the second quarter of the monetary policy for the year 2010-11, the RBi Governor Subbarao has clearly indicated the following downside risks: While growth in india is supported by domestic demand, the prospect of a slow recovery process in advanced economies may have an impact on india’s growth performance as well. While india’s exports as a percentage of GDP is relatively low, a persistent downtrend in global trade will have its effect on the manufacturing and service sector. 5 Government profligacy is at its peak. Fiscal deficit today stands at around 10 percent of the total GDP with revenue deficit reaching a level of 4 percent. All this will put pressure on capital expenditure. infrastructure will be the first casualty. Not only this, to fund Fiscal deficit, the government will have to borrow from the bank. this will hurt growth as interest rates will rise. 6 in terms of good macroeconomics, the situation that existed before the crisis of 2008 no more exists and the economy may slip down. Albeit temporarily, or for a few quarters or even a slow down. the above analysis clearly indicates that the consultants’ foresight of a vibrant linearly growing economy is full of prophecy and less of realism. if the auto industry takes their advice and goes ahead with an increase in capacity, the first impact of this down risk will create a 1 2 the current inflation scenario is a serious matter of concern. even though the wholesale price index has fallen to 7.64 percent, the food inflation clearly has remained in double digits. in a poor economy like india, where a large number of people live below the poverty line, such an unprecedented increase in inflation can be detrimental to the demands that have driven india’s growth. it is not possible in any case for this inflation to reduce to its comfort zone of 6 percent. the RBi will have to increase its policy rates and hence the interest rate in the future to tame inflation and this in turn will have a moderating impact on growth. An unprecedented increase in inflation can be detrimental to the demands that have driven India’s growth. huge amount of inventory situation, killing these players in future. this is what we call in Supply Chain management as the Bull Whip effect. this Bull Whip effect is not because of business driven variables as commonly understood, but arises due to ignorance about the macroeconomic environment. Businesses will be smoothening demand whereas the larger cake in terms of annual GDP may take a downward turn. this is macroeconomic bullwhip which may derail the business and create excessive inventory all along the supply chain spectrum. i feel an understanding of the impact of macroeconomic environment, variables and policy on the economy, is a fundamental pre-requirement for business. macroeconomics ignorance is abounding. But, ignorance is not bliss any more. 3 Quantitative easing by uS and other economies has led to large scale capital flow to economies like india. these have increased the money supply in the country and are making indian banks complacent and prone to risk, as these funds are being loaned out without proper scrutiny. these funds will also have an impact on the Rupee value and the exchange rate. Balance of payment (BoP) will deteriorate as an outcome. 4 BoP is already showing a sign of imbalance. Current Account Deficit (CAD) is approaching the economic crisis level of 1990-91. A three percent current account defi- The author can be reached at
[email protected] INDIA | January 2011 | www.logisticsweek.com 25 < LEARNINGS FROM 2010 < LEARNING FROM 2010 Learnings 2010 We bring to you priceless insights from supply-chain leaders we interviewed for our cover stories in the year gone by. This one is for keeps. JANUARY Lionel Stanton On retail logistics Organized retail constitutes only 6 percent of the Indian retail market, but is set to grow to 26 percent of the market in the next five or ten years. Similarly, organized Indian logistics in the retail sector which constitutes only 4 percent will grow to 26 percent in the next decade. Chief Operating Officer, Future Supply Chain Solutions On skill-gap The availability of quality skilled labor whether in the cities or rural areas of the country just does not exist. Often, companies hire and train labor intensively and the next day they are just not there. Indian warehouses, in particular, suffer from an acute scarcity of female labor due to the stigma attached to working women in conservative sections of Indian society. The only city where this does not exist is in Bangalore. I have seen that women pickers do a far better job than the men. The retail industry must cultivate a logistics-centric pool, even if it is more expensive then hiring manpower from outside the industry. On infrastructure The level of maintenance of roads is very bad, while the speed breakers are vicious. That affects the fleet movement. In most developed countries, only minor roads in residential areas have speed breakers. If you come as a European and work with the ideas which succeeded in your own country, you will fail here. On expats If you come as a European and work with the ideas which succeeded in your own country, you will fail here. You need to know and work with the Indian way of thinking. Don’t get bogged down with the conditions here, you have to move forward despite constraints. After all, it can’t get worse, it can only get better. 26 INDIA | January 2011 | www.logisticsweek.com FEBRUARY Pawan Goenka On the commercial vehicle segment Commercial vehicles (CV) in the industry have a seven-year (crest and trough) cycle. This trend can be seen by referring to data of the last 40 years, which follows this pattern. When I look at a 10-year graph I believe the industry will grow faster – maybe around 10 percent for the next 6-7 years. Therefore the kind of numbers we expect to see in 2013, 2014, and 2015 will happen in spite of the hiccups like the one we saw in the recent past. President, Automotive Sector, Mahindra & Mahindra On new launches If you look at the new heavy commercial vehicle launches clearly everyone is counting on them. All the new and existing players have launched signif icantly upgraded trucks. The industry is counting on customers moving up in terms of trucks. We are concentrating on the extra value our trucks bring in terms of cabin comfort, cost of operations, service reliability, and the price difference from the current products. On selling trucks We believe the most important USP is performance, which also has sub-elements. It is to do with the turnaround time which is the most important area to the fleet operator. It is about how well the truck can go up the gradient. The second element is fuel consumption. We hope to be offering better fuel consumption than what is available. The industry is counting on customers moving up in terms of trucks. The third element is reliability. We have put tremendous effort in making sure that our trucks are reliable and have a longer life. Then the element that comes into play is the off-road or off-product offering. For that we are going to use the Mahindra ecosystem, a powerful tool. Another important factor is the overall operating cost. That must be kept low with better fuel efficiency, maintenance and reliability and turnaround time. So how long will it take for a trip from Bombay to Delhi and back? This question becomes more important once we have the Golden Quadrilateral in place and the highways. But how do I convince the buyers? The most common recourse is talking to f leet operators. We will need the early adopters who will buy our trucks and we have to prove to them the worth of our trucks. After that it will be word-ofmouth. Once we do the initial ramping up, then the product is a saleable story. INDIA | January 2011 | www.logisticsweek.com 27 < LEARNINGS FROM 2010 < LEARNING FROM 2010 MARCH Kamal Nath On 20-km-a-day goal This has been accorded topmost priority by me from day one. The task ahead (the stated goal of building 20 km of road everyday) is not an easy one and would require concerted efforts from all sides. To achieve this, not only the processes and procedures have to be geared towards it, but also it is very essential that the work culture at NHAI needs to change. Minister for Road Transport and Highways Microwave (Passive), 5.8 GHz Microwave (Active) and Communication Air-interface Long and Medium Range infra red (CALM-IR) are to be studied. Electronic tolling would reduce the delay at the toll plazas due to reduced transaction time, thereby improving the operational efficiency of the national highways. This will also make the transactions more transparent, fair and accountable by automatic classification of vehicles and applying the approved rates of tolling. The costs associated with delays and congestion would also reduce. On electronic toll points We have planned three pilot studies for electronic toll collection during the year 2010. They are likely to be completed in the year 2010-11. Three locations have been identified for the pilot project for technology options. These are Panipat-Jalandhar section of NH-1 in the states of Haryana and Punjab, Gurgaon-Jaipur section of NH-8 in the states of Haryana and Rajasthan and Surat-Dahisar section of NH-8 in the states of Gujarat and Maharashtra. In the pilot studies, different technologies such as 5.8 GHz On quality of highways Though the density of our highways is similar to what can be obtained in advanced countries like the USA, the quality of highways in India is not sufficient to carry heavy vehicles of international standards. One of the objectives of NHDP is to ensure that construction of highways confirm to IRC standards. Further, the projects are currently being awarded predominantly in the BOT mode under which the concessionaire is also responsible for the O & M in accordance with IRC (Indian Road Congress) standards. Hence we are of the view that the issues related to poor quality construction will not be a recurring feature. The work culture at NHAI needs to change. On according industry status to transport sector The issue of according industry status to the road transport sector was earlier taken up by the ministry of finance. The ministry of finance says that the financing of the transport sector – including the transport of passengers by road or by water – has been covered in the relevant provisions of the Industrial Development Bank of India Act, 1964 and Small Industries Development Bank of India Act, 1989 and thus already enjoys industry status. On tax breaks to multi-axles The issue of encouraging the use of multi-axle vehicles was discussed in the Transport Development Council meeting. The state governments had agreed to give 25 percent concession on the composite fee on national permit in respect of multiaxle vehicles with a view to promote their use. Keeping in view the benefits associated with the use of multi-axle vehicles such as low per unit transportation cost, lower damage to roads etc, it would be beneficial for the country if other incentives such as reduction in excise duty and other tax components are considered by the ministry of finance at the central level and the states themselves. 28 INDIA | January 2011 | www.logisticsweek.com APRIL Ajay Chopra On growth during recession and after Our competitors focused on asset creation and thus became asset heavy, while we remained asset light because we structured everything in keeping with a shaky economy. This gave us energy and nimbleness. We are also attached to the telecom, retail, chemical and plastics industries which are growing fast and that helped us to grow fast too. Chief Executive Officer, Drive India Enterprise Solutions Limited (DIESL) deliveries would begin from 2:30 pm to 6:30 pm, with the largest number of orders being from 4 pm to 6 pm when everyone wanted to ship out goods at that time. Our trucks would also arrive for unloading between 11 am to 12 pm. We found that truck drivers were fighting with each other, saying, “I want to leave fi rst, since I arrived here fi rst.” We soon found out that the problem was with the lack of docking areas at the warehouse. Whenever you buy or construct a warehouse you have to check out how work is going to flow there – the amount of time taken in picking, storing, and dispatching – before you can say you have a good facility. On agri-parks The need is to bring together people who deal in seeds, fertilizers, chemicals, tractors, water pumps, in short, anything required by the rural sector. In fact, one could create an entire logistics sector which could cater to the rural areas and this would lead to economies of scale. On ethics and competition Despite being a Tata company, DIESL does not have exclusive rights as a logistics service provider to cater to other corporates in the Tata Group like Tata Motors or Tata Chemicals. We are a very young company, just about six or seven years in the industry. Group companies like Tata Motors and Tata Steel have huge expectations. Of course, we are constantly adding to our growth with interests in areas like telecom and retail and all this contributes to our 100 percent growth. One could create an entire logistics sector which could cater to the rural areas and this would lead to economies of scale. On warehouse audit DIESL assesses the performance of its warehouses across the country through a unique quality audit module which comprises 156 questions. The module has been devised to ensure minimum error and appears to have achieved its goal of excellence in performance, for DIESL today is an ISO 9000-2001 certified company. Most customers don’t even ask for certification, but we tried hard to get it because we wanted to assess ourselves. On warehouse design Design is critical. If you do not have the right design, everything you do will fail. To give you an example, we took up a facility which we felt would be good for a warehouse. Typically, INDIA | January 2011 | www.logisticsweek.com 29 < LEARNING FROM 2010 < LEARNINGS FROM 2010 LEARNING FROM 2010 MAY Shashi Kiran Shetty On his formative years My experience (in port operations, cargo handling, etc.) gave me an exposure to multiple ports and ships that called in various ports in the country. That was the time when the ports would be very congested, there would be berthing delays. It was quite a struggle. I worked at entry-level jobs – that’s how my career started. Chairman and Managing Director, Allcargo Global Logistics ning a war and not battles. So we lost a few battles, but won the war. We were able to integrate the company. Today it is known to be a far better managed company. To maintain the lead in LCL, it is important to leverage brand. Obviously we need to put in a very strong development team round the globe. To attract the right talent, we have to identify the right people with the right attitude – an attitude to learn, to have ownership over what you do and a good sense of value system. On starting his business What I did was, bring in the right people, set up the equipment and I was there to make sure that things worked. The struggle was (present) everywhere and in everything. To get the business was not easy. To have the cash flow in the system was very difficult. But we were able to stay on course since we did a good job on a sustainable basis. The NVOCC (Non-Vessel Operating Common Carrier) business was a low-investment, high-returns business, but there was no big Indian player in the field. So we began offering The right customers something they were attitude (is about unused to. Quick service, quicker response, competitive rates, a bethaving) an attitude ter credit period – all this helped to learn, to have established our business in two ownership over what years time. On surviving recession During the recession last year (20082009), companies drastically cut down on inventory. This worked well for us. you do and a good sense of value system. On acquisitions and managing talent Ours is a service industry. When you buy a company, you are buying people. If you have the right people at the right place, you can put your plans to work. We didn’t try to change too many things (in our acquisitions). You need the local expertise, the local relationship, the local language, so sending someone from here to the various off ices around the world wouldn’t have made sense. I did send some people in the area of f inance and human resources to integrate ECULine cargo better. We did a lot of things (across divisions), but did them carefully, gradually. But when you want work done strategically, it is a question of winINDIA | 30 January 2011 | www.logisticsweek.com < LEARNING FROM 2010 < LEARNING FROM 2010 JULY Lt. Col. Vijay Nair (Retd) On technology HyperCity has invested heavily in technology. The supply chain team… uses a range of solutions including the merchandise management system (MMS), the warehouse management system (WMS), the automatic store replenishment module (ASR) and the automatic warehouse replacement module (AWR), among others. For material handling, the DC uses battery operated pallet trucks which increase productivity considerably…We are big believers in technology. We have put our thoughts to RFID. But it's just not viable because of the costs involved. The larger products don’t get lost and for smaller products it (RFID) is just too costly. For the moment we are not even considering it. General Manager, SCM, HyperCity Retail (India) Ltd. On productivity and efficiency People often mention that cash incentives increase costs, but I tell them that in the long-term a happy work force reduces costs. HyperCity Retail pays its octroi taxes online which slashes its transport costs, waiting time of trucks at checkposts and allows the hypermarket to service its other stores simultaneously. The online payment of octroi has improved the turnaround and utilisation rates, and reduced the transportation cost. Earlier a truck driver would go to the Malad store first and by In the longthe time he had gone term a happy through the octroi, work force he was not fit enough to travel to Thane. reduces That has changed costs. today. With one vehicle I am managing two stores. Make sure your workers at the DC are cost conscious and how do you make them conscious? Anything that moves must be recorded at the DC. If a truck comes, take its weight and volume and go through the processes of optimization. Retail logistics can benefit from looking at what the army does well...good leadership, managing individuals and teams and learning how to relate information and data to ground realities. On fill rates If a category is doing well and seeing business of 99 percent or 100 percent fill rate, we do not audit that slot. But if a category is not doing well and is doing just 92-93 percent, we audit that slot and the fill rate automatically improves. On suppliers From the current year, HyperCity has embarked on a new exercise known as the supplierrelationship programme, Where we meet the top 15 vendors and try and create a relationship, so the next time I pick up the phone, I know who they are and then automatically there will be a difference in the relationship. On inventory management Finding out the reason for high inventory and learning from it is important; but equally important is the strategy that you must have to liquidate the surplus. The timing of liquidation is a very, very important part of the strategy. INDIA | 32 January 2011 | www.logisticsweek.com < LEARNING FROM 2010 < LEARNING FROM 2010 AUGUST MR Sundaresan On Dell’s supply-chain model The made-to-order model gives us the benefit of knowing what exactly the customer wants. We would be the first to understand what the changes in the market are – we are the fastest to have our products reach our customers. General Manager, Dell India On advantages of scale Our supply-chain team utilized the scaling up of India's business to reduce the warehousing costs for all the nodes. With more scale, we could negotiate much better with the LSPs. Dell India’s next big strategic push on the manufacturing front would be to attract big suppliers so they set up bases in India. The government (of India ) is an important partner in this endeavor of ours. Dell, along with the Manufacturers’ Association for Information Technology (MAIT), is involved in discussion with the government in that how do we collaboratively convince suppliers, say, in China, Malaysia, Taiwan to set up Dell’s buildthe supplier base here. On vendor managed inventory All the components from suppliers are stored as VendorManaged Inventory (VMI) in the Supplier Logistics Center (SLC) facility. As the Dell manufacturing team receives the customer order, it accordingly pulls the specified inventory from the SLC. The title of the material is transferred to Dell only the material is pulled from the SLC. Inside the factory we don’t have more than four hours of raw materials inventory at any point in time. On consumer behavior and relationships Globally, we have realized that a lot of consumers want to touch and feel a product before they buy it, more so in the emerging markets like India. We talk regularly to our customers – directly, online and through our partners. This offers us tremendous insights as well as data to figure out the demand patterns for direct as well as indirect sales. to-order route gives it a lead when it comes to demand forecasting. On selling through brick-and-mortar In India we are in the retail space for the last two years. We are available in all kinds of retail formats. We have presence in all the top markets – Tiers 1, 2 and 3 cities through the IT retail channel. We also have kiosks at a number of retail outlets where consumers can place the order online. On demand forecasting Dell’s build-to-order route gives it a lead over others when it comes to demand forecasting. The advantage is two-fold. One is, we are able to see market changes quickly and prepare our supplychain accordingly – for example, I can go and prepare my LCD vendors, seeing a surge in LCD demand. The other advantage is that Dell is able to shape demand based on its knowledge of its inventory. Our direct relationship with the customer helps us in responding to inventory surplus issues, where we are able to offer such inventory with better pricing or with a faster delivery time. On track and trace At every part of the supply chain, we expect the LSPs to have track and trace. So the customer is aware at any point where his product is. INDIA | 34 January 2011 | www.logisticsweek.com New Year Wishes & Greetings May this new year bring all our clients & associates, infinite joy & prosperity < LEARNINGS FROM 2010 < LEARNING FROM 2010 OCTOBER Amit Mukherjee On cost containment At times we (the supply-chain managers) do get carried away with some of the supply chain management (SCM) objectives like cost containment, but the larger objectives of business also have to be kept in mind. SCM is part of the larger business. There could be situations when SCM objectives (like cost savings) are compromised on, but then we need to keep in focus organizational objectives. From the Group CIO at RPG and VicePresident (Supply Chain & IT) Spencer’s Retail Limited strategy point of view, I would rather err on inventory than lose on sales. I tried a pilot with RFID. It was not much of a success. “As a user industry, there is little clarity on adopting RFID at the right places and time, apart from the theory. There needs to be a set of protocols for RFID to work well. That is yet to happen.” From the strategy point of view, I would rather err on inventory than lose on sales. On supply-chain efficiency The objective is keeping warehousing costs proportionate to the freighting area. Remember, we are talking of f inite resources. We want to make the automated replenishment system more robust, so we can maintain leaner inventory at a higher rate. We need to improve on our forecasting model and promotion factor. The best of class models typically operate at 12-15 percent. Today one of the biggest problems in the DC is that vendors come in and bunching happens. The turnaround time of the vendor increases. I want to move into a system by which I will be able to give him timely, maybe hourly appointments. I want to be able to give him time at that hour so that I can evacuate. And this should be automated. 36 INDIA | January 2011 | www.logisticsweek.com NOVEMBER Prem K Verma On green measures In an effort to set new paradigms for eco-friendly initiatives, the chassis of Tata Motors’ medium and heavy commercial vehicles are transported by trailers to the company’s stockyards. The trailers are open bodied unlike like the ones used for cars. This has resulted in a substantial decrease in pollution, fewer traffic snarls and a sparing use of fuel. Since the trailers can be used for chassis transportation only, our biggest concern is of having a return load. But despite the transportation costs, we are willing to pursue it in the larger interests of the country. Chief Executive Officer TML Distribution Company Limited stocking needs – the hubs would be managed by a 3PL who would be appointed in consultation with the OEMs and SIAM and provide logistics support to all the OEMs. It is my opinion that as the volume game intensifies, none of us will have much of a choice in the automobile industry as well as other industries, but to accede to such options. As cost and customer service are the two important Cs in any industry, we will be driven to collaborate with each other. On demand drivers for LSPs The automotive, FMCG, electronics and pharmaceutical industries initially fuelled the demand for 3PLs, with IT hardware now being one of the largest users of such services. 3PL activity is still in a nascent stage in India and is less than 10 percent of the total logistics cost in India as compared to say, Japan, where it is 80 percent of the cost. Collaborative logistics is the future in case you want to keep your costs low and improve your service levels. On collaborative logistics Collaborative logistics is the future in case you want to keep your costs low and improve your service levels, and this holds true not just for the automobile industry, but any industry which has the problem of empty hauls. The step taken by some OEMs in this direction with the support of the Society of Indian Automobile Manufacturers (SIAM) might look like a pie in the sky at the moment, but it is the right step and futuristic. The OEMs could use a common auto hub for their loading, unloading and On SCM practices We should go one step ahead of all western countries and not blindly follow their supply chain practices, as many of them may not work in our country. INDIA | January 2011 | www.logisticsweek.com 37 < LEARNINGS FROM 2010 < LEARNING FROM 2010 DECEMBER Rakesh Kumar Sinha On replenishment model Five years ago, we switched to a complete replenishment model. That’s when we partnered with Dr Goldratt…Perhaps it was the mindset of the management that made Dr Goldratt choose us over others. Mindset is very important for companies who are required to give away forecasting and work with replenishment. According to Goldratt, the main bottleneck for FMCG companies is the marketplace. And the main ways to empower the bottleneck are to increase and fulfill the consumer demand. As per Goldratt’s estimate, a remarkable 50 percent of the demand generated by FMCGs in India gets lost because of non-availability. To fulfill the potential market, one has to be super efficient. It also means that all the marketing inputs – advertising and other means – will give us double the inputs if our products are made available to meet the total demand generated. One can no longer look at weekly distributor sales or weekly production schedules. Everything has to be made dynamic on a daily basis. Hub and spoke, because we want to service each node on a daily basis. Unless we consolidate the products at the hub, there won’t be enough stock to service the downstream node on a daily basis. And we don’t want to sacrifice the daily services. That’s part of the replenishment philosophy. However, if a particular depot does well, we will even bypass the hub and send across the material directly. Chief Operating Officer (Marketing & Operations) Godrej Consumer Products Ltd. On rural growth “The rural growth has been faster than the urban growth. Now about 42 percent of our sales come from the rural areas, which used to be 32 percent when we started our replenishment model five years ago. On transport modes The good part is that the company regularly evaluates railways versus road-transport rates for every route, and opts for the mode that is cheaper. It works well because road transporters know we have an alternative. When we started using railways, the road transporters also brought down their rates. On quality and cost containment Companies ask vendors to comply with their product specifications, but vendors may have their own set of specifications to keep supply costs down. Cost saving here is a three-way street – between the vendor, the procurement and manufacturing department, and the R&D (Research and Development). The specification of a product must be tailor-made for the least cost. That’s called the total cost of ownership. On the manufacturing side, focusing on quality is more paying than is normally understood. A learning has been that every time we improve quality, the costs come down. On efficient storage We are also piloting some advanced stacking and racking systems for using them in areas where the rentals are high. In such areas, it makes sense to go in for vertical storage, while in areas where rentals are low, it doesn’t make sense to opt for vertical stacking. That would also require palletization, which would be an additional cost. It’s a question of looking at saving any additional cost we may incur. Every time we improve quality, the costs come down. On international acquisitions Where we get the first-cut benefits (from acquisitions) is sourcing – strategic sourcing of raw materials, packaging material, that’s where we have had some savings. For example, if the same item is supplied to Indonesia (Megasari) as is to (GCPL) India, we can negotiate with suppliers to reduce the rates due to increased volumes. So the modern trade management – dealing with a chain of stores and being able to negotiate with store chains, ensuring the efficacy of promotions, how to do a midcourse correction if the plan is not going well, or how to step it up if it is doing very well – these are some very good learnings we have got from our acquisitions in South Africa and Argentina. 38 INDIA | January 2011 | www.logisticsweek.com Imprint Feature Uniworld Marches Ahead in 2011 “Uniworld Logistics Private Limited the company which specialised in freight forwarding and Total Logistics solutions , having 35 offices in 10 countries ,launched its warehousing and distribution services in February 2009 with the unique concept of Uniworld Integrated Logistics Park ( UILP) in, Sipcot Industrial Area, Irungattukottai, Sriperumbudur, Chennai, to serve its customers better. The park is spread across 22 Acers of land with an Internal Container Depot , Bonded ware house, General Warehouse and Temperature controlled ware houses to give its customers the best of both bonded and general warehousing under one roof. The facilities are designed as Green facilities keeping the current environment norms with all Safety and Security measures implemented to world standards. The customers are benefited with Bonding , Debonding ,customs clearance and value addition services like storing, sorting, kitting, repacking and distribution under the same roof giving the advantage of time and cost. Uniworld is happy to be a part of the expansion plan of Danfoss India. Currently Uniworld operates 4 such Integrated Logistics Parks in Chennai , Delhi ( Dharuhera ) , Mumbai ( Panvel) and Bangalore ( Bommasandra Industrial Estate) offering 1 Million sqft of space to customers.” Recently the top officials of Danfoss were in India to discuss on the growth of Danfoss India. With the market identified and investment plans being discussed, Danfoss wanted a logistics player to support them in their expansion plan. Logistics being the core support area in any market driven plan it was but imperative to choose a partner who understands the Indian market and the laws well to support them in movement of goods so as to reach the customers seamlessly. Who else could have been a better choice than a Home Grown Logistics Company who offers the end to end solution in Logistics. Uniworld Logistics P Ltd was the choice to handle their Complete domestic Logistics ( 3PL ) in India. #225, ST bed Extn., 5th Main Koramangala, 4th Block, Bangalore 560034, India, www.Uniworld-logistics.com < Cover Story Photo: Ramlath Kavil INDIA | 40 January 2011 | www.logisticsweek.com Beneath The Wings The supply chain function of Ericsson India entails meeting spiraling expectations of a booming market. The man at the helm, tej Nirmal Singh, Director (Head-Supply), ericsson India, not only manages the supply chain of the telecom-equipment giant, but also that of its customers across the country. Jayashree Mendes reports. upply chains of companies are tuned into continually sprucing up services so that it can meet customer needs without consuming cash. But few vendor companies would immerse themselves in the task of managing its customers supply chain, not to mention carrying out the task of meeting exacting targets that could be demanding. For the past six years, Ericsson India has carried it off with great panache. Consider the exponential increase in the number of mobile subscribers in India in the last few months. In June 2010 alone, telecom operators in the country added 18 million subscribers; July an additional 17 million; in August another 18.18 million; a further 14 million in October; and 17 million in November. Service providers are also on the brink of launching 3G services, and although the numbers here are uncertain, telecom equipment providers are gearing up with supplies. In such a situation, how do telecom equipment manufacturers negotiate month after month to unpredictable demand from customers? “That is our USP,” says Tej Nirmal Singh, Director (Head-Supply), Ericsson India, a soft-spoken man with a pleasant demeanor, when we met up with him at his office in Gurgaon. “We attribute our ability to manage our customers to our experience and the team. The hands-on approach by our parent company in Sweden helps us make quick arrangements for equipment from any of our five global factories when we need it at short notice.” Singh points out that the $30-billion telecom equipment manufacturer is not new to India. The Swedish company made its presence in India way back in 1903 when it supplied manual switchboards to the government of India. While Ericsson may go back a long way in India, but telecommunications was a new ballgame for Singh when he joined Ericsson India in 2004. “But that was not a deterrent. Whatever be the product, any supply chain has near similar complexities,” he says. Singh’s career path in supply-chain was more fortuitous than planned. After completing his Mechanical Engineering from NIT in Raipur, he spent the first INDIA | S Tej Nirmal siNgh Director (Head - Supply), Ericsson India January 2011 | www.logisticsweek.com 41 < Cover Story At A Glance revenue (2009): $2 billion Supply-chain division employees: 270 Number of office locations: 21 No. of Manufacturing Units: 5 (Jaipur (India), Sweden, Brazil, China, and Croatia employees: 6,428 technology at Warehouses: SAP Number of Managed Warehouses: 52 Number of LSPs: 20 three years of his career with Yamaha Motor Division (of Escorts). His move to a project consultancy firm, Mantec Consultants Pvt Ltd, a firm that helped start-ups in setting up, gave him his first brush with supply chain where he helped customers to identify the technologies they would require, import them, and install the equipment. When he moved to Titan Watches in 1992, his job profile demanded helping set up the factory for Timex Watches in Noida. As project engineer, Singh was later entrusted with distribution at Timex. The experience helped him imbibe yet another supply chain, so when the offer to head the materials division at Bausch & Lomb came, he was in familiar territory. The materials division at Bausch & Lomb handles the logistics function of the company. Singh says, “It was a different industry and my first meet with fashion. Our success was indigenizing the brands that Ray-Ban sought to produce at its factory in Bhiwadi in Rajasthan. I worked there for almost eight years - my longest stint at a single workplace, and was even heading the IT department of the company, not to mention the company’s supply chain in India.” In 2004, when Singh got the offer from Ericsson, he realized the challenges the job would bring due to the sheer size of the company. “I was used to working with smaller organizations, and here we had 475 people even then. The attraction was the growing telecom industry. At the interview I was INDIA | told that we have roll-outs happening for one customer. It was Bharti Airtel. I joined as head of logistics, and within a year was entrusted with supply chain. Since then the industry has grown, the telecom market has grown, and the company too has grown.” Ericsson India has 6,500 employees in India, and reported a turnover of $2 billion in 2009. The supply-chain division employs 270 employees currently, up from 43 in 2004. To give an understanding of the magnitude of the tasks handled by the company, Singh recalls an account soon after joining the company. There was a customs duty of `1 lakh on equipment up for payment to cus- mand forecasting, order processing, and production are taken in counsel with the parent company. Even the Ericsson India’s factory in Jaipur reports directly to Sweden while keeping the India office in the loop. Its supply-chain ambit covers four countries – India, Bhutan, Nepal and Maldives, and is managed under RINA (Ericsson term for ‘Region India’). In fact, the company manages two supply chains — one from its factory to the warehouses; the other for its customers (mobile service providers) by managing their networks for them. “The supply chain from our factory starts with demand planning, order processing, and order fulfill- The Experience Center within the Ericsson premises is a proof-of-concept area where the vendor defines the scope of the technology to customers. toms. When Singh approached his boss for the procedural sanctioning of the payment, he was asked to check on the figure again. Singh found the amount to be `1 crore. “I was used to counting in lakh of rupees, and it took me some time to understand that there are companies that pay customs duty running into crore of rupees.” Large, Nimble-Footed Due to its virtue of being a large global MNC, and for administrative purposes, all Ericsson companies round the world report to the headquarters in Sweden. Decisions related to de- ment. In terms of value, the Jaipur factory produces only about 70 percent of our supplies; the rest we import from our other factories based out in Sweden, China, Brazil, or Croatia,” says Singh. The Indian factory manufactures only those products that have volumes or critical mass. For instance, new products are imported and only after meeting a certain level of technology adoption is it manufactured locally. Since technology products cannot be produced en masse, the parent company maintains a prudent eye on production and supply to all its 42 January 2011 | www.logisticsweek.com PAN India Warehousing (3PL/4PL) Reverse Logistics Primary & Secondary Transportation In-transit Damage Reduction Solutions Partnership in Road Safety Programs Logistics BPO Logistics Staffing Services Logistics Consultancy & Training Audits & Benchmarking E-04, Devashree Garden, Rutu Park Service Road, Majiwada Naka, Thane (W) – 400601. Maharashtra Contacts : (+91) 99879 22244/9820761645 E-mail:
[email protected] < Cover Story branches and subsidiaries. In order to meet the increasing demands for new technological equipment, Ericsson has been keeping a ready eye out for buying out companies. Last year it completed its acquisition of Italian company Marconi that gave it access to optical networking equipment, broadband access products, radio access products, soft-switch as well as research and development operations. In 2010, it took over the wireless equipment unit of US-based Nortel. “That brings the vast locations from where we get our supplies,” he adds. as Vodafone, Aircel, Idea, BSNL, Uninor and Etisalat. This is also part of Ericsson’s managed services contract in which the company runs the network for its customers. “When we say we run it for them it means all the services they should be doing, are managed by us,” adds Singh. Services could also include acquiring the Wireless Planning & Coordination (WPC) licenses, which is issued only to operators. Acquiring a license requires meeting officials of the Wireless and Planning Co-ordination Wing of the Department of Telecommunications (DoT). The department is responsible for identifying and allocating frequency spectrum to telecommunications services provider, based on which the service provider can start providing wireless services. In 2004, an increasing demand from customers to help them manage their services gave Ericsson India the idea to start a managed services division. The service is run through an NOC (Network Operating Center) where a separate manpower keeps a keen eye on the frequency radiation of all the towers in a particular area. “That’s a technical thing to manage. Service providers have different spectrums for different circles and we need to stay within the allotted network.” So what areas do the service providers manage at the backend? “They manage the customer service, and marketing and sales at the backend. It’s prudent on the part of our customers to avoid incurring the huge manpower cost needed for running the networks and concentrate instead on acquiring and serving consumers.” list of equipment supplied To Customers n Radio n RBS Base Station 2G (GSM) 3G Node B n Microwave /Transmission n Switches n Broadband Equipment n Antenna n Batteries n 3PP as per needs At your Service Ericsson India’s largest supply chain undertaking is mainly that for its customers. It manages certain parts of its customers’ supply chain functions. For instance, Ericsson oversees the order processing for Bharti Airtel, and constantly advises them on the equipment they need to buy. Likewise, the company also manages networks in varied ways such as integrating and installing equipment, network design, operation and maintenance of networks, among other things, for its other customers such telecom service providers about the increase in the number of subscribers expected next month, they can’t predict. It will take a while to gather the information and then may come up with a figure of, say, 1-1.5 million. But then they come up with three million with the current rate of growth. While it’s a good thing to plan for one million and get three, it puts pressure on the supply chain,” says Singh. The equipment vendor, after receiving this tentative figure, gets into an order-fulfillment mode for equipment such as towers, DGs, cables, batteries, etc. This is accomplished in the first half of the month. “If the sea- lsPs That make it Work Global LSPs n DHL n Kuehne + Nagel n Schenker n Panalpina Local LSPs n UPS n TNT n Om Planning Ahead The telecom service industry is growing at a breakneck speed – this month the total subscriber base in India reached a whopping 70 crore – demand forecasting becomes a challenging job. “If you ask any of the Ericsson manages its stock inventory at warehouses through its LSPs or DSPs Telecom Logistics Logistics n Seagull Logistics n NWCC n Vision Freight n Sigma Supply Chain Services n East India Transport n DRS Transport n Varuna Roadlines n Prakash Parcel Services n Safexpress n Blue Dart n AFL n ATC Logistics n Core 44 INDIA | January 2011 | www.logisticsweek.com < Cover Story son is good and buying sentiments are strong, we will see a request for another 1.5 million. What is more, the roll-out has to happen by the end of the month,” adds Singh. The services contract also encompasses ‘Managed Capacity’ where based on the customer’s growth plan, the vendor would provide technical solutions, supply equipment and install/integrate the same. The result is the customer gets the required capacity (Erlangs: a unit of traffic density in a telecommunications system) in the respective cities/ towns/ area, and helps to get their business plan rolling. For instance, a customer could see an increase by a certain amount the number of customers, say, in Agra in the next three months. Within Agra, there would be a need for a higher frequency tower ‘near Taj Mahal’. “That’s a wish list. We need to keep ready equipment to deploy within a specific time. Then we need to do the network design.” Network design involves looking at requirements within a certain area so that the expected number of subscribers can hook onto the network. The requirement within a particular geographical region could mean 15 base stations, towers, and such other equipment. The supply chain has to ensure that its factory in Jaipur can cater to these requirements within a specified period of time. On a lighter note, Singh says that sometimes he wishes he could create a shopping mall for telecom equipment that would allow a customer to walk in with a shopping card and pick up whatever they want. But this would forever remain a fantasy since telecom equipment is customized. With equipment usually being a with the forecasts that the production team in Sweden swings into action. An MRP (Medium Range Production Plan) call is taken and the factories are given the go-ahead to begin manufacturing. The micro-level forecasting, called Near Time Facts (NTF) pertains to the order processing at its Jaipur factory. Sometimes cancelled orders placed with the factory in Sweden could still be supplied elsewhere, but orders cancelled from the Jaipur factory can cause a problem. “If I cancel an order from the Jaipur factory, an inventory turnover (ITO) issue crops up. So we run an NTF meeting with them every week, where issues they might have or delayed deliveries are discussed,” reasons Singh. ericsson India uses a total warehouse area of 1.4 million sq ft across 52 locations. product that requires long lead time, Ericsson India adopts a three-stage forecasting method. In the longrange forecast (6 months to 2 years) endeavor called Scenario Planning Workshop, its stakeholders meet every six months to discuss projects they are working on. “Here we work on a request for proposal (RFP). For instance, a service provider could be working on a 4G LTE (long term evolution), and although LTE will not be available before 2012, we need to be ready. We need to understand the requirements of products and the infrastructure needed,” says Singh. The medium-range forecasting involves a monthly discussion of projects in the execution stage. Called Supply Planning Tool (SPT), this type of exercise entails stock-taking of components to be purchased and orders to be placed. Meanwhile, its demand planning team takes note of requirements such as the product type, numbers, the month of delivery and installation, etc. from its customers. The exercise is conducted for equipment of other technologies too. Post the SPT Freeze, the demand planning team does a mammoth follow up with customers. “Sometimes customers forget to give you forecasts of products they consider insignificant, and come out directly with orders. But it’s in our vested interest to do this kind of due diligence.” The information gathered from the SPT Freeze is then discussed with the parent company. It’s only after both the teams are satisfied Inside out The growing strength and breadth of Ericsson India has pushed it to outsource portions of its own supply chain. While attending to order fulfillment, demand planning, and manufacturing in-house, it manages warehouses of customers, while customs clearance and freight forwarding are taken care of by agents. Ericsson India uses a total warehouse area of 1.4 million sq ft across 52 locations. Warehouses are managed by LSPs such as DHL, Kuehne + Nagel, DB Schenker, and Panalpina and the distribution service providers (DSPs). The large LSPs are also those used by all the Ericsson offices worldwide. Besides this, the India office has roped in smaller LSPs such as TNT, UPS and several others (See Box: LSPs That Make It Work) for smaller packets in Tier II and III cities and remote locations. While the global philosophy has been to assign one DSP for a set of LSPs, it hasn’t been able to get down to doing this in India. Singh says, “The global offices are content using five large LSPs. This is not feasible in India as we have several remote locations to service. Our smaller LSPs too do not have the large Customers n Bharti n Vodafone n Aircel n Idea n BSNL n Uninor n Etisalat 46 INDIA | January 2011 | www.logisticsweek.com infrastructure to manage warehouses in remote small towns. So we then appointed 18 LSPs in small states.” Some of the warehouses are managed by its customers. On the other hand, some of its customers are content with advice about what they need to kit and send to the site. The contracts with customers not only cover supplies, but also installing the equipment at the sites. “There are key performance indicators (KPIs) to be met such as no call drops, no cross lines, etc. We align ourselves to customer needs. Sometimes we even do the spare parts management systems (SPMS) for them.” Because of the size of the equipment, the company uses only road transport for moving goods. However, as is much known, India has its unique problems of taxation, permits, excise and so on. “In India, service providers are keen that the service tax paid would be available for utilization as CENVAT credit. This could be up to 10 percent, which means we need to get documentations in order.” Unique to Ericsson is also high seas sale, which is basically transit sale for import of goods. Here the company sells the goods to a thirdparty when the shipment is still with the airline/shipping line at the point of origin, so that the title of the goods are transferred to the end user when the goods are on high seas or in midair in the case of air freight. The company is keen that trips to a site remain steady and be kept low. Two years ago, about three trucks would go to a site before the equipment is up and running. Today it is down to 1.5, and the company is ultimately looking at a milk run a couple of years down the line. In terms of value, the Jaipur factory produces only about 70 percent of our supplies. the rest we source from our global factories. visibility Is Key Managing the huge supply chain of the company and its service providers is SAP, a platform that will soon be aligned with a warehouse management system (WMS) by end-2011. “When we took the decision to implement WMS, we were apprehensive that it could be used only if we own the warehouses. But this has been customized,” smiles Singh. The SAP developed is purely for the Indian company and its customers. Earlier, inventory management used LSPs tools such as access-based inventory management. The Order Monitoring Tool (OMS) developed in MS Access is an online tool that helps the company track customer’s order status. “Currently, our LSPs provide us a daily online inventory stock report. We have a warehouse vertical within the organization that looks at processes, does audits, stock accuracy, etc. There’s a pan-India warehouse manager who reports to me,” adds Singh. Sometimes customers forget to give you forecasts, and come out directly with orders. But it’s in our vested interest to do demand forecasting While it's a good thing to plan for 1.5 million subscribers and ger 3 million, it puts pressure on the supply chain. Inventory turn Technology obsolescence is a big concern for any telecom equipment provider. This could be a reason that could prolong inventory turns. “In some cases, inventory turns are so long we have to look at recycling the products. At times, our customers order products for a site and are unable to deploy it. So inventory starts piling up. Sometimes, by the time the products reach the sites, other operators are offering a new technology. So our equipment is of little use.” This is a problem mainly for new operators who have licenses for fewer circles. Old operators having a pan- services Offered n Network n Network Design Deployment n Network Optimization n Operations & Maintenance n Managed Services: Single vendor & Multi-vendor n Managed Capacity n Software as a service n Multimedia, VAS Applications, TV n SPMS In terms of delivery, ericsson India is firm that customs clearance to delivery to the warehouse must not take more than 2.5 days. INDIA | January 2011 | www.logisticsweek.com 47 < Cover Story India license could send the spares to be used in rural areas. Singh prides himself on being able to maintain an inventory accuracy of 99.96 percent. “Our warehouses are actually a merge in transit place. We buy several pieces of equipment and all this has to be kitted and go to the site.” With the size of equipment increasing, it has to contend with the problem of faulty units. The company has set up a repair center to shorten the lead time of repair, that is being expanded to its factory in Jaipur. a diversion, and this could create a traffic jam. They want to make a call, and the call does not mature because of lack of infrastructure in that area. Here the KPI goes for a toss. The decision to build a flyover was unknown to Bharti and me. If my KPI average for that month goes for a toss, I get debit notes,” rues Singh. A regular benchmarking exercise that the company conducts in-house could also relate to demand planning, order processing, delivery, stock accuracy, SPMS and quick repair and return. The company benchmarks the difference from the time of the order places to delivery. “Our orders are customized products. We have tools through which balance of quotations (BOQs) are prepared. Our customers are people in a hurry. So we need to reduce the time from receiving the order to delivering it. Sometimes the factories are not able to meet our requirements, but yes, we do benchmark our performance,” adds Singh. In terms of delivery, Ericsson India is firm that customs clearance to delivery to the warehouse must not take more than 2.5 days. Admitting that the target is high, Singh says that sometimes at the time of order processing the client too has applied for a WPC license, so that it can begin offering wireless services, which could take up to three days. As the equipment could be high-radiation, it is imperative that installation happens quickly enough. Under its Accredited Clients Program (ACP), it has been allowed a green channel facility at five ports in India. This allows it to quickly move goods out of the ports to the integration site. Benchmarking does not leave out spare parts management system. A delivery of four hours is the norm. Warehouses for storing spare parts are separate and mostly run by TNT and DHL from 65 forward stocking locations. It is also the same with quick return of repaired goods. Singh prides himself on the low return rates of goods. “We have an average of five days to repair and return the goods to the sites. Currently, we have a tie up with Bengalurubased Elcotech, but we plan to take this to our factory in Jaipur.” Elcotech is a provider of electronics manufacturing services in communications technology, and is the first global company to manufacture telecom equipment in India. Going Green Some time ago, considering the nature of the equipment, the CEO of Ericsson committed to the New York Stock Exchange about its decision to reduce CO2 emissions. The green targets are present in all domains, including supply chain. The company ensures that almost 70 percent of the goods coming from its factories outside India are brought in by sea. This is a part of the benchmarking process for every employee. Similarly on reverse logistics, some of the returned products require recycling. Although it has globally-approved recyclers in Chennai and Singapore, there are times it is required to recycle products belonging to other service providers outside its ambit. Its CSR efforts include spreading technology to places most needed. The delivery of spares to rural areas had given the company an insight into the economic conditions of these areas. As a step, it decided to show the Ministry of Telecom the dire need to step up technology in these areas. Through Gramjyoti, it demonstrated how the 3G technology could help offer the poor access to healthcare. Meanwhile, Ericsson India has been awarded deals by four operators (Bharti Airtel, Aircel, Vodafone Essar, and Idea) covering 21 separate 3G licenses and is all set to ramp up the supply-chain to meet demands of the about-to-explode 3G market – yet another invaluable supply-chain experience for Singh. Standards ops An upshot of managing the networks for subscribers is meeting KPIs. Customers have set various KPIs that the supply chain needs to meet, and one that could vary every month. The KPIs involve customers’ demand of no-call-drops, no-crossed networks, constant uptime, etc. At the monthend, Ericsson is required to prove that each KPI has been met. For instance, Bharti has an exclusive tie up with Ericsson and Nokia Siemens Networks (NSN), the Finnish-based telecommunications company, for managing its network. Of the 23 circles awarded to Bharti, 15 are managed by Ericsson and the rest by NSN. The KPIs for each circle will vary depending on criticality. “Sometimes performance of KPIs can fall due to lack of knowledge. For instance, meeting the no-call-drop KPI. Suppose the Delhi government starts work on a flyover. They create Near-Term Plans n Enhanced focus on Green Supply Chain [Reduced Carbon Emission] n Focus on Sea /Surface Transport n Reduction in Trips per site for domestic distribution n Initiative towards environment n Recycle concept for reverse logistics/ scrap handling n Focussed Cost Reduction Program n Year-on-Year reduction in Total cost 48 INDIA | January 2011 | www.logisticsweek.com < feature We Work Alone Although several pharmaceutical companies refrain from using LSPs, there are a number of LSPs waiting to break into this sector by increasing the number of services. Remya Philip tells us how. 50 INDIA | January 2011 | www.logisticsweek.com the Department of Pharmaceuticals India, the total pharmaceutical market size in the country was `89,335 crore in 2008-09, contributing around 1.2 percent of India’s GDP. In 2009-10, the industry registered an estimated growth of 18 percent over the previous year, taking the size to `1,05,415 crore. Due to the sensitive nature of pharmaceutical products, the supply chain in this industry needs to be managed with utmost care. The products need to be handled and dealt with specific norms set out for each product and storage necessities must be met stringently in dedicated warehouses. Since it is an industry with such widespread requirements, pharmaceutical companies continue to remain apprehensive about using logistics service providers (LSPs). Working Without LSPs Alembic Limited, an integrated pharmaceutical company has manufacturing facilities in Baroda and Baddi (Himachal Pradesh) in India. Raw materials to the manufacturing plants are brought from the outskirts of Mumbai and from Himachal Pradesh. The finished products are then distributed by first reaching them to a central stock point which includes the areas of Viragpur in Punjab and Baroda in Gujarat. From this point on, clearing and forwarding agents (C&FAs) come into the picture to take care of the distribution to the various retailers. Transportation for the same is arranged for by the company itself on full truck load basis. Alembic also provides courier services in case of emergencies. Asked why the company does not use LSPs, Masud Shaikh, HeadDistribution and Logistics, Alembic said, “Involving LSPs in the supply chain makes it an expensive affair. Our internal set-up with all the infrastructural specifications in place helps us carry out the entire process smoothly, keeping a check on the cost factor.” At Dr. Reddy’s Laboratories Ltd, the global pharmaceutical company, raw materials are imported from China and brought in by air or sea. Rhodia Pharma and GE Healthcare are some of Dr. Reddy’s suppliers. Rajender Babu, Senior Executive (SCM), says this way they have more control on the system when they manage their own supply chain. “Sudden changes that may need to be implemented, as well as emergency situations can all be dealt with more easily when the logistics the Current reality While LSPs speak hopefully of a promising future, the analysts have a different story to tell. Frost and Sullivan report brought to light that this year about 53 percent of Indian pharma companies reported that they could not gain notable (5 percent or more) improvement in their logistics efficiency, despite using third party logistics (3PL) providers. Srinath Manda, Program Manager (Logistics & Transportation Practice), Frost & Sullivan, said, “Although a few LSPs are providing multiple services nationwide for a select few clients in the Indian pharmaceutical industry, majority of the LSPs are still not considered to be adding any notable value to the supply chains of the industry.” The reasons for this are plenty, ranging from the lack of nationwide presence and international affiliations of most LSPs to the lack of capabilities to add value to the supply chain efficiency through process improvements, and the lack of abilities to deliver on time. ith the establishment of a new dedicated pharma zone at the Rajiv Gandhi International airport, Hyderabad, India’s pharmaceutical industry is scaling new heights. While this is definitely a step forward for India’s pharma trade, the question to be answered is, is it all good for Indian pharma? According to a Frost and Sullivan report, the Indian pharmaceutical industry accounted for around 10 percent of the global production and two percent of the world pharmaceutical market in 2010. As per W reasons for absence of LSPs Lack of LSPs with nationwide presence Lack of LSPs with international affiliations n Lack of capabilities to add value to supply chain efficiency n Lack of abilities to deliver on time n n INDIA | January 2011 | www.logisticsweek.com 51 < feature is managed in-house”. The supply chain at Lupin Limited, producers of a wide range of affordable generic drugs, branded formulations and APIs, works in the same manner. The raw materials, apart from those available in India, are mostly imported from China, Europe and USA by air or sea. The distribution network consists of CFAs who aid in moving the products to the stockists and then to the retailers and chemists. for LSPs.” products. “No mixing of products or using bare hands, and constant tracking and maintenance of temperatures are all stressed on gravely,” assures Raosahib. The transportation requirements are outsourced to Blue Dart with whom they have a long term contract. Blue Dart provides services by both road and air all over India. For the distribution, the products first reach the main metros from where they are moved to the specific locations by Blue Dart. At present, except for areas in the north east, Indelox reaches most parts of India in the north, south and west. For the IT system, Raosahib said that Blue Dart provides a track and trace system. “We are constantly linked to the information and hence have full access to details of where a particular vehicle is and when it reaches the destination.” Deccan 360 also known as Deccan Cargo & Express Logistics began operations in November 2009 and has been serving several prominent pharma brands. Some of these include GSK, Astra Zeneca, Ranbaxy, Cipla and Cadilla. Their area of work involves carrying the goods from the manufacturers to the hospitals. Deccan has not yet ventured into cold chain services but have plans of doing so in the near future. In order to ensure that there are no cases of product damages, the products are kept safely according to temperature specif ications and are not mixed with other products. For all the transport involved, Deccan has dedicated vehicles. Maruti Omni vehicles are used for speedy deliveries while Mitsubishi Canters are used for rest of the deliveries that require products to be stored in a bigger area and moved without much shaking. Dry ice is used in these vehicles whenever required to enable proper storage. LSPs On the Scene Despite this, the presence of LSPs is not completely absent in the industry. Several LSPs do provide services at least partially, if not fully. Indelox Services is one such LSP providing end-to-end supply chain functions. Jeevan Raosahib, Managing Director, Indelox said, “We are not directly involved with pharmaceutical companies yet, but we are talking to a few big companies and we hope to Photos: KNAPP Dispatch sorter systems at pharma DCs. Dimple Parikh, Head-Logistics, Lupin states, “The parameters that need to be met by LSPs in order to carry out services for pharmaceutical products are laid out by the WHO and the FDA. These parameters are too extensive to be provided by an LSP because of the fragmentation within the various pharmaceutical products and the industry itself.” However, Parikh thinks there is a future for LSPs in Indian pharma. “If each area in the industry can be studied with respect to all the requirements right from sourcing to distribution, and an LSP can set out to provide product specific services, there definitely is room January 2011 | www.logisticsweek.com have some of them on our list by the next financial year”. Some of their existing customers include Sun Pharma, Dr. Reddy’s Laboratories, Biocon and Jubilant. The storage and temperature regulations are adhered to by providing 2-8 degrees to -70 degrees of storage facilities. The products are also transported in specific temperature sensitive conditions using reefers. With the help of various gels, dry ice, and wet ice, the products are stored in such a manner that they can be preserved without any damage for 24 to 72 hours. Labor used at the warehouses are trained on the classification and handling of pharmaceutical 52 INDIA | Port Finance International India 19-20 January 2011 Novotel Mumbai - Juhu Beach Investigating Solutions and Opportunities throughout Indian Ports for Growth and Investment Focus sessions on Ports throughout the entire Indian continent – Senior Government and Port Authority speakers to be announced. INR 32000 (+10.3% Service Charge) for Indian nationals, citizens and residents of India* GBP £895 (+10.3% Service Charge) for all other conference delegates Please quote ASP187 at the time of booking. **Terms & conditions apply.** Port Finance International India will cover a wealth of topics related to the rise of investment in public and private ports, and will look at the wider ports infrastructure as well as an assessment of where India’s ports and their development sit in the world market. Additional case study presentations from both Indian and International ports and experts will provide illustration of investment and development issues while key subjects will be addressed in workshop themed sessions. Please go to www.portnanceinternational.com for more information, or email patrick@portnanceinternational.com to secure your 20% discount on the delegate fee. Logistics Companies Asset Owners Private Equity Firms Fund Managers Investment Banks Project Financiers Project Consultants Ports and Terminals Government/Industry Authorities Who should attend Shipping Companies Infrastructure Developers Investors Engineering and Construction Companies Transport Operators Conrmed speakers to date include: ;Atul Kulkarni, Chief Executive Ofcer, Chowgule Ports & Infrastructure Pvt. Ltd ;Sanjeev Kaushik, MD & CEO, Vizhinjam International Seaport Ltd ;M.L.N Acharyulu,Executive Director, Marine Vertical, Marg Group ;Dr. Parakrama Dissanayake, Chairman/CEO, Aitken Spence Maritime ;Milind Joshi, Managing Director Investment, IDFC ;Gordon Rankine, Partner, Beckett Rankine ;Marten van den Bossche, Chairman, ECORYS Nederland BV ;Suren Vakil, Managing Director, BMT Consultants ;Ishtiaq Ali, Partner, ALMT Legal, Advocates & Solicitors ;Jamie Simpson, Director, GHK International ;Ravi Unni, Infrastructure Specialist ;Martin Mannion, Global Head of Maritime and Ports, URS/Scott Wilson ;Vijay Kalantri, Chairman and MD, Balaji Group ;S.N. Srikanth, Sr. Partner, Hauer Associates - Maritime & Port Consultants ;K A Ramakrishnan, Director, Avalon Consulting ;With many others to be announced... For information on how you could participate in this event and join the exclusive alumni group of Port Finance International attendees please contact patrick@portnanceinternational.com With thanks to our partners: Magazine partner Trade media partners INDIA Online: www.portnanceinternational.com In India/Asia please contact: Email: cheers@portnanceinternational.com Tel: +91 22 6772 5768 In UK/Europe/US/Middle East please contact: Email: patrick@portnanceinternational.com Tel: +44 20 7017 3411 Easy Ways to Register < feature Products are moved by air or in temperature controlled environments with temperatures being controlled as per requirements within the f lights. They are packed and stored in pallets inside containers that are cylindrically shaped just like the f light, to ensure uncongested storage with least movement. Recently, Deccan inducted two airbuses to serve the pharma logistics sector. The labor involved is specially trained at training programs conducted by Air India, based on guidelines laid down by the DGCA. Deccan’s reach is not too broad since they have only come into business a year back but they nonetheless provide pick-up and delivery solutions in all prominent locations like Mumbai, Chennai and Himachal A-frame picking automat for fast moving products at Aragofar, Spain. the CaGr for the pharma industry is expected to be around 12-13 percent from 2010 to 2016. Pradesh. Deccan functions as a major corridor to the Indian cargo movement as well, providing services to 87 percent of the cargo movement. KNAPP AG, providers in warehouse logistics and automation solutions, caters to companies like Astra Zeneca, Phoenix Healthcare, Alliance Healthcare, Pfizer, United Drug and AAH Pharmaceuticals. Although KNAPP does provide services in India, the response so far has been disappointing, mirroring various structural issues. Dr Emmerich Moser, Regional Sales Manager, KNAPP AG explained, “We provide end-to-end solutions INDIA | pertaining to automation and logistics in warehousing of bulk stock and fine picking of individual orders from pharmacists, doctors, hospitals as well as e-commerce orders”. Depending on the turnover of individual SKUs, the stock for order picking is stored in static racks (slowmovers) or flowracks (fastmovers). The labor employed at the warehouses is trained on the basics of hygiene. In highly sophisticated warehouses equipped by KNAPP, pickers are instructed electronically, e.g. by R/F-Terminals, Pick by Light or Voice Terminals. “The best practices in the pharma sector are met with facilities like industrial floor, closed windows / air condition and using re-usable plastic containers or fresh cartons for picking and shipping of customer orders, instead of re-using bulk cartons,” stated Moser. Time sensitive deliveries are ensured using various measures. One of them is Zone Picking whereby the individual picker stays in his dedicated picking zone and focuses on picking, not walking along with his order. The transport of order totes in the warehouse is done by intelligent conveyors and not humans. The Warehouse Control system (WCS) software calculates in advance the entire handling time of an order, from release until arrival in dispatch. Based on the results, orders with longest processing time are released first. WCS can also prioritize urgent orders. Finally, the dispatch sorter delivers the finished order to the delivery vehicle automatically. In the case of damaged products, the product’s barcode is scanned at final inspection to obtain a printed instruction of where to find a replacement in the warehouse and is suitably replaced. the Path ahead Frost and Sullivan analyses highlight the expected CAGR for the industry between 2009-10 and 2015-16 to be around 12-13 percent. Due to the steady rise of exports by Indian pharmaceutical companies, the large share of revenue growth for LSPs from this industry is expected to come from the transportation and freight forwarding segments. The growth projections prove that there is potential for the increase of logistics services revenues as well. It can thus safely be said that we are only at the threshold of expansive growth bound to take place in the Indian pharmaceutical industry. 54 January 2011 | www.logisticsweek.com The Reverse Logistics and Returns Management Asia Conference In a nutshell, the conference promotes an integrated, customer-oriented supply chain by promoting best practices in reverse logistics and returns management, two areas that can significantly reduce your operational costs, and improve customer loyalty to your brands. In the world of supply chain and operations, strategies to reduce cost and ensure customer satisfaction have reached a new level of sophistication. Major brands are moving their manufacturing capabilities to Asia to reduce costs, meanwhile strengthening their customer service presence to make the most of Asia’s growing consumption power. In this process, a complete supply chain strategy that emphasizes reverse logistics and returns management becomes extremely relevant: Streamlining processes in a stretched supply chain with multiple suppliers, manufacturers, distributors and outsourcing partners Shortening response time to ensure customer satisfaction, while tackling transport logistics constraints given the challenging infrastructures in emerging markets Developing strategies for returns prevention and compliance within increasingly stringent consumer protection laws Improving customs compliance practices in a market where regulations are not clearly defined and tax for imports/exports can have a significantly negative impact on your bottom line Ensuring smart waste management, recycling and disposal to avoid penalties, and to exact maximum value for increased profitability The Reverse Logistics and Returns Management Asia conference brings together key stakeholders in Asia to present best practices and explore future strategies that will significantly impact the supply chain bottom line. For more information email us at
[email protected] or visit www.reverselogisticsasia.com 18 -1 9 Researched & Developed By: MAY Media Partner: NG 2010 • HO O K Finding the silver lining in SCM - turning reverse logistics and aftermarket services into a profit centre G N < Guest feature < Guest feature Frozen inCold Time Case for every single day. While fruits and vegetables are subject hisseasonalis in continuation of a to article production and have my year-long consumption, milk and 2010 issueaof article in the August meat have small shelfthis magazine. The encouraging life. In terms of transportation, there are only feedback to that article has about 5,000 reeferlook deepermove non-milkof tempted me to trucks that at the issue commodities across the country. Then there cold chain in India. is the fabled 30 percent wastage. Around 25A strong cold-chain infrastructure for 35 percent of the total produce of fruits and fruits and vegetables (F&V) – sorely lacking vegetables (F&V) worth `35,000 crore are in India – could be a win-win for everybody. wasted. One vegetable – the potato – accounts F&V are seasonal and highly perishable. The for almost 90 percent of the total volume of Piyush shah bulk of the output arrives at a market within a Piyush shah cold infrastructure. Assistant Professor span of three to four months every year. Since Assistant Professor Guided by such statistics, an integrated Operations, the market during these months is flooded Operation, cold chain seems to be the obvious answer. SP Jain Institute of with supply, farmers do not get a good price. SP Jain Institute of A topic that has been subject to numerous Management and Research The the eight Management and Research trade long chain of middlemen anddebates, conclaves, academic papers, months of no supplyso many years of hard ensure that the final conetc. However, after sumer has to pay a high to have reached deliberations we seemedaverage price for the commodity. nowhere. India’s global food export stands at A one storage has buffering function. a merecold percent of itsaproduction in spite F&V canthe world’sand released into the marof being be stored second largest producer ket at controlled rates. Thus, there is no imof fruits and vegetables. A significant mediate pressure on the for the to dispose the majority of the exports is farmer less qualitygoods, and he can get conscious Gulf region. a good price. Cold storages will have low wastages and significantensure only We two companies, ly higher quantity of F&V reaching the conRadhakrishna Foodlands and Snowman, sumer. This is bound to of the cold chain in dictating a small segmentbring the price down and also cause consumption to go up. poultry. There is no comprehensive national policy that promotes farm to fork cold chain. Challenge involved Technically speaking, we continue to use But all technologies and poorly designed archaic this is in a perfect world which unforcold storages. not exist. There are solid chaltunately does lenges to actually ensuring a strong cold chain network in the country. Cold chain does not INDIA | September 2010 | www.logisticsweek.com 58 only mean reefer trucks or temperature-conINDIA | Cold Chain Cold Chain I T Despite the hundred percent FDI in cold storage infrastructure, the cold chain story is yet to take off A big reason for the rising prices of food and vegetables is the near-absence of a solid cold-chain infrastructure in ndia consumes more than 14,000 the scene today India. Even for a private playerThebe it a principal orhas obviously – cold supply chain business an LSP truckloads of vegetables, 9,000 – running a cold-chain entails challengesits promise. to India. truckloads of fruits, and milk enough not lived up to unique The grassroots to fill 89 Olympic-size swimming pools, level revolution that has been However, the rewards far outweigh the challenges.on eve for so long just did not happen. Our cold storage in isolation. It means both trolled warehouses story dates back as far back them together. And,in Meerut forthem it inof as 1938. It was set up along with storing potatoes.pre-cooling, blast cooling, etc. cludes There has been no significant change in thefor example, have to be stored at Apples, last 70 years. Overall, our cold storages can store around 22 million metric for around negative 18 degrees centigrade ton. Of this,storage facility has to be pre-cooled which the Uttar Pradesh and West Bengal have 65 percent of the installed capacity. and then blast-cooled to this sub-zero temperWhile we have one case of McDonalds in India ature. A separate chamber then maintains the which uses smart temperature-controlled apples at this temperature. This chamber can supply and distribution, we also have many merely maintain the apples at low temperature companies whose food stock is met with and not cool them to the temperature. A slight rejection in Europe. power outage can completely throw the sysSo except for a few examples, India has tem out of gear. Similarly, when transferring a totally un-integrated cold supply chain. In the fruits from the storage to a reefer truck, some pockets, individual entrepreneurs have care has to be taken to ensure that the fruits ventured into the cold storage business. Most stay at negative 18 degrees. of these are of poor technical design and do not It is very difficult for a single player to adhere to the international standards of storing be in all areas of the temperature-controlledin and stacking. Pharmaceutical companies supply chain USA are constrained the inefficiency Asia and the and because of this,by laws to use on the part of any one player can have India the cold chain for their supply chain; in a drastic impact on the quality of food. Cold the companies hardly use the cold chain. supplychainsregards to significantly higher there of With require a the dairy industry, level coordination and reliability. And reliability is are few large organized players – despite the definitely one of the creams, small players year long demand. In icemajor problems with Indian logistics. percent tremendous effort have as much as 35It takes of the market share. to get disparate players with different supply Overall, the scene in the cold chain motives to work together the cooperate. chain seems like and next big thing that never The a sort also needs cooperation from happened,chain of broken promise. power generating and distribution companies Regulations in cold storage infrastructure to 100 percent Foreign supply. The chronic allowensure uninterrupted Direct Investment (FDI). This consists of coolers, warehouses, to power deficient situations that we manage survive in makes getting such cooperation very difficult. We may need new research into cooling methods so that fruits can survive the 56 January 2011 | www.logisticsweek.com YOUR TRUSTED PARTNER IN PROVIDING INTEGRATED SOLUTIONS FOR SUPPLY CHAIN CHALLENGES Our Services Warehouse Management Transport Management Value Added Services Project Management & Consultancy. 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[email protected] < Guest feature Almost 70 percent of food output in BrAzil is processed. for indiA this numBer is At Around 5 percent. www.gscoldstorage.com Cold storages will ensure low wastages and significantly higher quantity of food and vegetables reaching the consumer. variation in temperatures due to power outage and other reasons. the indian Problem Going by my current level of research and discussions, I feel that the issues for cold chains in India point to a much deeper problem. It has to do with the way agriculture is carried out in our country, the way farmers are remunerated and the way the existing supply chain is designed. While tomato prices are shooting up because of low supply, some farmers are giving up tomato production because of low returns. This anomaly points to a middle-man-driven manipulation and control of the supply chain. The marginal farmer who is still struggling with basics can hardly be expected to use the cold infrastructure. And on the other end are the super-rich large farmers who are in certain cases also performing the role of middle men. The manipulation ensures very high margins leaving farmers disinterested in cold chain based supply chains. Most of the farm produce in India is consumed without processing. Almost 70 percent of food output in Brazil is processed. For India this number is at around 5 percent. Thus the entire post-harvest activity is directed towards consumption. Processed foods have higher margins. Such high margin foods can easily support expenINDIA | sive cold chain technology. Absence of food processing infrastructure has a major dampening effect on the need for cold chain. The cooling requirements of foods for direct consumption and those for processing are generally separate. This is because the foods to be processed may be stored in a semi-processed stage. There is a distinction between the quality of foods that are used for consumption and those processed. Good quality produce is generally used for direct consumption and lower quality output is processed. The low quality does not necessarily have to do with the nutrition value of the fruits and vegetables, but could rather be related to factors like size and colour. To be able to process food and have them use cold storage would need a scientific grading mechanism close to the farmer. The farmers’ remuneration and his motivation to improve the quality of food are directly linked to this grading. Given the extremely fragmented farms in India, the quality even in one small village shows high disparity. Getting this grading mechanism at every market is a problem. Without proper grading, the foods cannot be directed to the right storage. The price realisation of the stored produce is therefore 58 January 2011 | www.logisticsweek.com less because of inconsistent quality of produce. It was mentioned in the first article that storage and use of cold chains entail additional costs. If the sale of stored foods does not lead to realisation of the additional costs, farmers would not use the cold chain. The low realisation is thus a demotivator for farmers or entrepreneurs to use the services of cold chain. The last and most important issue with cold chain pertains to the government and government-sponsored bodies. Bodies like the Agriculture Processed Food Products Exports Development Authority (APEDA), the state agriculture boards, agriculture research centres, etc. have significant resources. However, there are times when these bodies work in isolation. This causes the level of agriculture development staying low and hence constraining the use of cold chains. harvest, harvest as well as post-harvest side. Jain Irrigation also helps with issues like crop insurance. It has research laboratories and positively influences farming practices through definite interventions. It has managed to help farmers get a productivity of around 80 ton per hectare, which is significantly higher than other parts of the country. It has also helped improve and benefit farmers of onions, cottons and mangoes. Lessons Learnt For cold chain business to grow and sustain, the agriculture practices have to improve. Like seen in the cases of Mahagrapes, McDonald’s and Jain Irrigation, the farmer has to benefit. He has to be incentivised to change his work methods and improve his earning. A farmer freed from the mundane troubles of finding the right price for his produce is more likely to use services of cold chain infrastructure providers. Mahagrapes is a cooperative based model. Some set of producers helped themselves and other farmers improved. McDonald’s is a clear case of patience, persistence and investment by a user. It leveraged the high business level to influence practices of its vendors. Jain Irrigation is an intervention from an integrated player. They have helped farmers improve returns from their land and in turn also improve business. All three examples successfully use cold storages and cold transportation. However, they did not start by getting infatuated with the idea of cold chain. They achieved success because cold chain for them was a means to an end rather than an end itself. They designed business models that were scalable and suitable for India. In spite of working with marginal and new farmers, they still used world-class technology. They had a clear idea that their benefit lies in the benefit of their vendors and farmers. A weak man cannot be made fit by merely transplanting a strong heart. The root cause of the weakness will ensure that the transplanted heart weakens in some time. In the same, there are huge opportunities in India’s coldchain sector but to avail of them, the entrepreneurs will need to strengthen the roots of this business, by thinking of ways to incentivise the small marginal farmers. the silver Lining Mahagrapes in Maharashtra has positioned itself in the post-harvest space of the supply chain. Mahagrapes as a venture is the joint effort of some individuals and bodies like APEDA, government of Maharashtra, National Horticulture Board, etc. It sources grapes from many cooperative grape growing societies and tries to get good prices internationally for the produce. Mahagrapes started with a focus on scientific postharvest practices and quality control. They were able to influence all the cooperative growing societies to install pre-cooling and cold storages in their respective areas. Grape export from Maharashtra has shot up to almost `13 crore in 2007-08 from `4.5 crore earned from exports in 2001-02. McDonald’s vendors like Trikaya Agriculture and Radhakrishana Foodlands have significant investments in cold chain infrastructure. This came about because of McDonald’s focus on quality. McDonald’s supply-chain design extended right up to the farm for all its food vendors. McDonald’s is said to have invested around `450 crore over seven years in the supply-chain before starting the first restaurant. Today, all their vendors are themselves very strong and are in a position to profitably serve other customers besides McDonald’s. Jain Irrigation has its own cold chain. It was one of the first companies to use the contract farming mode and is an integrated player in agriculture. They help farmers on the pre- mcdonAld’s is sAid to hAve invested Around `450 crore over seven yeArs in the supplychAin Before stArting the first restAurAnt. The author can be reached at piyush.shah@ spjimr.org INDIA | January 2011 | www.logisticsweek.com 59 < Book EXTRACT Let's Hear Those Ideas Vocollect, a developer of voice solutions for mobile workers, has launched an educational series with The Talking Warehouse. The book is meant to help supply chain professionals gather a greater understanding of voicedirected workflow. An extract. THE TALKING WAREHOUSE An eBook by Roger Byford and David Maloney T Understanding How Voice Unleashes Higher Performance in Product Distribution Chapter 1: The Talking Warehouse THE TALkING WAREHoUSE An E-Book By Roger Byford and David Maloney Contact:
[email protected] he building of the great pyramids, the Parthenon, the Roman network of roads – all required that supervisors speak directions to their workforces to coordinate tasks. Once the electronic age was ushered in, companies relied on spoken communications, particularly the telephone, to conduct business. It is interesting to note that the first words spoken over the telephone, “Mr. Watson – come here – I want to see you,” were uttered to direct a worker. Electronic communications have since come a long way. Today computers and the Internet allow spoken words to assist in performing open heart surgery thousands of miles distant, to coordinate complex engineering feats, and to direct repairs at an orbiting space station. And our technology also makes it more efficient to get the products we use every day through the supply chain productively. Just as it was from the beginning of man’s existence to this pre-Star Trek age in which we live, there continues to be a need to communicate clearly and concisely to accomplish work. Voice-enabled technology used in warehouses and distribution centers represents another progression in work-directed communications. Since its introduction in the distribution sector nearly 20 years ago, voice technology has dramatically enhanced the ability of thousands of leading companies across a wide range of industry verticals to achieve greater business results from their distribution processes. All over the world, companies using voice are attaining 15-30 percent improvements in throughput, achieving 99.99 percent and higher accuracy rates, notably improving safety for their workers, and reducing new employee training times by more than 50 percent. Their customers are happier with more accurate and timely shipments. Their employees are also happier, often gaining the ability to earn greater f inancial rewards with stronger performance. And these organizations f ind that voice benef its the bottom line by providing a low total cost of ownership and a very favorable return on investment that 60 INDIA | January 2011 | www.logisticsweek.com T T N N T Pi Pa CoNT HNaao Por orTNdliNg? eway ai CoN aPaT PorT P S N P krirMug aMraal Ha dia gaT HeNN riSHMugaoaMra k Ma rT dH Teri ed iNMiTed C orT T Mar rT dH P Po PT Ma liMiTalS li Ndra a PorgHi Po N JN iLOG.INDIA aM MLogisticsweek present you vaTe rMiN andgu aNdl rT di iCori PrCal Te PaTN ab kal Po a TuT ‘Roadmap to Performance Excellence’, a Si SakHa PorT araik iP go vi Mbai orTk Parad on Indian Ports. Handbook Mu CHi P PorT ko ldia Ha The handbook looks into all the issues related to the major Indian ports with experts’ views of a roadmap to possible solutions for ports infrastructure and performance excellence. The main topics to be covered will be: Por t i In dNa BOOK f D so HA • Need for Mechanization at Indian ports • Draft Constraints (which hinder entry of large vessels to most major ports) • The Policy Conundrum • Regulatory Issues (The TAMP Factor) • Labor Management at Ports • PPP: Challenges and Opportunities • Major and Non-Major ports: Lessons to be Learned Soon!NDBOOK oming HA C Book your copy NOW and avail of the early bird discount Email:
[email protected] w in hous are g ur ook Yo w! B o Copy N We Transport Information www.logisticsweek.com INdIa < Book EXTRACT is normally less than a year and is often as little as six months. Yet despite its worldwide acceptance, with thousands of companies singing its praises, voice-enabled work in the distribution/supply chain arena still is not fully understood. Many supply chain professionals tell us they are familiar with voice, but few understand how it works and how it can benefit their operations. Some may have investigated voice technology in its early years and found that its capabilities were limited. And that may have been the case two decades ago. Yet as with any emerging technology, early adopters saw enough benefits to drive voice forward to the point where all those initial concerns have since been addressed in the efficient, mature systems now availtors that drive the attractive return on investment available with voice. Users report productivity improvements well above 20 percent, depending on the systems that voice replaces (often paper/label systems or RF scanning environments). Greater productivity means that more products can pass through a facility in a given amount of time. In some cases, the greater throughput capabilities have allowed companies to forego plans to increase the size of their buildings. The ability of voice systems to deliver accuracy in excess of 99.99 percent also means that there are fewer returns to process, less credits to provide for those returns and happier customers who will recognize the difference voice has made in providing them with more accurate orders. Voice allows distributors to make the order correct the first time and to actually meet the demands of that elusive “Perfect Order.” Voice allows distributors to make the order correct the first time and to actually meet the demands of that elusive “Perfect order.” Global Market Today’s voice technology continues to alter the distribution landscape. Vocollect, which holds the lion’s share of the global voice market, accounts for more than 300,000 users worldwide. These users operate in some 60 countries and receive their voice directions in more than 35 different languages. Aggregated, these customers process more than $3 billion worth of goods to customer locations on a daily basis. So clearly, voice has impacted distribution operations in nearly every part of the world. And these are fig- able. Voice-directed work has come of age, refined through many years of research, development and practical use in distribution facilities worldwide. Today’s voice systems are robust, productive and highly accurate, in every distribution environment, from grocery freezers to pharmaceuticals to apparel manufacturers. And this holds true, regardless of the spoken language and dialect. So, what exactly is voice in the warehouse, you may ask? In a voice-enabled warehouse, distribution workers wearing headsets and purpose-built, wearable mobile computers are directed to the tasks they must perform. It is like having someone whispering in their ears, telling them the next task to be completed. But voice is more than just listening to directions over an earpiece – it is a system of interaction. The worker uses a microphone attached to the headset to speak back to the voice system. Recognition software within the system then analyzes their responses to determine if the work they are performing is appropriate. The result is a highly accurate and efficient system for enabling distribution work. While voice offers many benefits to distribution center (DC) operations, speed and accuracy are the two facINDIA | Distribution workers at large warehouses could perform their tasks better if they listened to instructions. 62 January 2011 | www.logisticsweek.com ures for Vocollect alone. Yet even with such a large user base in place, voice still is a relative unknown. A 2008 survey by DC Velocity Magazine showed only 12 percent of respondents use voice-directed systems in any capacity. More than half – 53 percent – still are paper-based operations. More than 30 percent are picking with paper labels. These numbers align with industry estimates which show overall that voice still has only penetrated 10 percent of its potential global market. Much of this can be attributed to a lack of understanding of voice and its potential value to distribution operations. The more managers are aware of voice and its positive implications, the more likely they are to feel it is an appropriate technology for their business. While voice technology has a multitude of applications in manufacturing, product inspection and healthcare, for our purposes, we are focusing on the use of voice in warehouse and distribution applications. The Emerging Era of The Voice-Enabled Warehouse During the past decade, many distribution processes moved from “paper-centric” to “RF-centric.” Now they are moving to a “voice-centric” approach. Voice is increasingly used across many workflows, tasks and processes, and is now becoming the starting point for workflow planning. Companies are discovering that voice is work process-driven and is the technology that can best help them optimize human/computer interactions. Full voice solutions are purpose-built to service the vast and varied potential areas of need throughout the distribution environment. Voice can be seamlessly integrated with warehouse management and ERP systems, along with additional tools required by mobile workers, including barcode scanners, printers, displays and RFID. amount of manual interaction. Picking relies on people to go to the right location, to select, to count and to verify – all of which are tasks subject to mistakes if not administered properly. Voice is extremely suited for efficient picking, as workers’ hands are free to perform their tasks. They do not have their hands occupied with paper, scanners, labels, pencils or anything else. Instead, their hands are readily available to pick product. Because workers are listening instead of reading a paper, label or screen, they can focus on the product being picked, which again speeds up their work for greater productivity. It also reduces the chances for errors, as they are not glancing back and forth between the paper or screen and the product location. And since their eyes are not glued to a screen or paper, workers are more aware of their surroundings, which greatly improves their safety. In addition to picking, voice also is deployed in receiving, shipping, cycle-counting, inventory management, and many other distribution center and warehouse applications. Some facilities operate entirely on Voice is extremely suited for efficient picking, as workers' hands are free to perform their tasks. Voice-Driven Benefits The most widely used and best established application for voice in warehouses and distribution centers is for picking, otherwise known as order selection. This is where voice first established itself in the distribution arena, and it continues to be the point of entry for most voice customers. It’s usually the area where the greatest numbers of employees are positioned in the warehouse and where the company can have the most direct impact, and typically, the most immediate and measurable return on investment. Picking is a very labor-intensive operation. It is also the place in the DC/warehouse that is highly prone to human error, as it is usually the point with the greatest voice and have completely eliminated paper, labels, most scanning, and all other task-directed methods. Instead, voice directs and manages almost every aspect of work. Besides directing work, voice systems also capture a wealth of data used for improving facility operations. Since voice operates in real time, there is a constant flow of accurate data generated by the system. All tasks can be tracked continuously as workers move through their assignments. The time duration of each task is measured as it is performed, allowing managers to accurately track their workforce productivity throughout the day. In addition to determining overall productivity, voice systems give managers precise data as to which workers are more prone to errors, and who is meeting expectations and who is not. This allows managers to address problems immediately before they become customer service issues. Further, the management software’s ability to provide a view on worker performance allows supervisors to INDIA | January 2011 | www.logisticsweek.com 63 < Book EXTRACT identify process bottlenecks early on and other potential areas for improvement. The software helps to provide fair and accurate data for a company’s incentive program, often driven by labor standards. Associates also benefit from voice. No longer do they have to carry bulky RF scanners as they perform their work. Instead, their hands are free to focus on their tasks. Voice is easy to learn and easy to use. While it often takes weeks to train an operator to use a screen-based RF device, workers using voice can be productive within an hour and proficient within days. Training time and costs can be cut dramatically, in excess of 50 percent in many cases. Companies with a high degree of turnover or temporary labor can get new members working faster and at peak performance sooner. Workers also prefer voice to other methods. Time and time again, workers who may have been reluctant to adopt a new technology confess they never want to go back to the old way of doing things. They cannot imagine working with anything else other than voice. They consider it a “cool” system that puts them at the cutting edge of new technology. They recognize that their companies have given them the best tools available to do their jobs, and that their employers are willing to invest in them to enhance their individual skill sets. Voice also brings consistency to a company’s operations. Not only can the same technology be used within the four walls of a facility, but it can be easily deployed at every facility within the company’s network – anywhere in the world. This allows for consistent processes and easily allows benchmarking and comparison from one operation to the next. Language is also not an issue, as any language or dialect can be supported. So voice truly Since voice eliminates huge amounts of paper and the printers and ink that go with it, voice is a socially responsible alternative. is a worldwide technology. Lastly, voice is a green technology. Companies today are seeking solutions that not only save costs, but help to save the environment as well. Such green technologies allow them to be good neighbors as they perform their work. Since it eliminates huge amounts of paper and the printers and ink that go with it, voice is a socially responsible alternative. Favorable RoI Most companies find it relatively easy to calculate return on investment with voice. It is very common for a voice system deployed in a Western nation to pay for itself within a few months. Almost every company reaches its payback within eight to 14 months. In lower-wage sectors of the world, while the ROI is not as immediate, the notable accuracy improvements, as well as the drive to attain operational excellence and consistency in their processes, provide justification for the purchase of a voice system. In this age of tightening budgets, businesses must be able to quickly see their investments produce results. Voice clearly achieves this goal. Companies also find that since voice makes their current work more productive, they can avoid the need to hire additional labor at today’s ever-increasing costs of salary and benefits. In future chapters we will discuss in detail the many benefits of voice and how many leading companies are deploying the technology to take their distribution to the highest possible levels of productivity. But first, it would be good to learn a little of where voice came from. The history of the voice systems used in distribution today can be traced to research and development conducted at Westinghouse Electric Corporation in Pittsburgh back in the early 1980s. Westinghouse had established a number of research teams which worked on “intrapreneurial” pursuits. These groups were charged with developing new solutions for problems that Westinghouse faced internally. It was also hoped that some of the solutions these teams discovered would have the potential to be marketed elsewhere. Voice is a green technology. It can help companies save on costs too. INDIA | 64 January 2011 | www.logisticsweek.com THE WAREHOUSE HANDBOOK- II : Managing Change LOG.INDIA and DIESL presents you a updated handbook on the Warehousing Industry which would cover the entire spectrum of Indian market Are we ready to embrace various tectonic shifts that are happening in the warehousing sector -in policy (GST), in client expectations, in infrastructure, in technology, in scale of operations, in risk management, security issues, in automation, etc. So the tentative topics covered in the handbook will be as under is nt vironme The siness en positivity, In a bu towards weledging ll be a slowing book wi and use Hand logistics Wareho l for the th erence too ustry. Also, wi come ref ind T aited GS ly-chain -aw the supp e much move ge of th ses will the passa warehou ated 2010, autom in April to highly ll impact wi steps up several res which ok tion Cent e Handbo Distribu line. Th the ’s bottom- perspective on industry eame a new s giv try to str will thu le indus and enab esses. subject and proc the book erations ters of line its op us chap specialThe vario by noted le purwritten en th the so have be m ustry wi e ind sness fro nebulou ists in th . removing logistics business pose of of the gamut aspects e entire major , covers th e industry ndbook th The ha state of of a e present processes from th sign and tion, de site selec flap) k The ok andbo ouse h Wareh which India’s Warehouse Landscape: A reality check GST: Are we ready? Changing Customer Expectations ed on bac (continu Gold Sp onsor Gold Sp Publishe d by onsor areho The W use arehaod b o o k h n The W use ha Before The Take Off: Are the basics in place -- location, design, automation, technology? Changing technology paradigms: To Adopt Or Not Handling Risk ndboo k DV Group V Media Book! Now To Advertise / book your copy,
[email protected] +91-22-40155947 www.hamburg.co.in | +91 22 40155937 INDIA INDIA < PanoRama OFF THE SHELF Enterprise Networks And Logistics For Agile Manufacturing W ang and Koh, in their book, “Enterprise Networks and Logistics for Agile Manufacturing” present a focused collection of quality chapters on stateof-the-art research efforts in the areas of enterprise networks and logistics, as well as its practical applications towards agile manufacturing. The book consists of two major sections: the first presents a broad-based review of the key areas of research in enterprise networks and logistics; the second focuses on an in-depth treatment of a particular methodology or system relevant to the book title. The authors take into account the need to pose intellectual challenges while retaining a balanced approach in terms of scope versus depth and theory versus applications. enterprise networks and Logistics For agile manufacturing By Lihui Wang, S.C. Lenny Koh Publisher: Springer Price: `7,800 The Shipping Point: China At The Forefront Of Supply Chain Innovation G lobalization of markets and cost benefits associated with outsourcing of production has made retail supply chains increasingly complex. This, in turn, has given rise to new technologies and logistics processes that have helped lower costs, reduce cycle times, and increase speed to market. The authors utilize the knowledge and expertise of leading supply chain and retail professionals from around the world, seeking them to share today's successful supply chain management programs, and to provide insight on the new industry ideas that are abreast. The book has eleven chapters that cover the latest programs, processes, and technologies found in international logistics today, as well as the concepts and ideas that will be at the forefront of supply chain innovation in the decade ahead. Topics include, China postponement strategy, multi-country consolidation in China, the impact of Packaging Re-design on Supply Chain Cost, China domestic distribution, using China as an international distribution hub, and ocean carrier innovation in China, among others. the shipping Point: china at the Forefront of supply chain Innovation By Peter J. Levesque Publisher: Wiley Price: `2,300 Enterprise Supply Chain Management S ehgal's book, "Enterprise Supply Chain Management: Integrating Best in Class Processes" is ideal for IT, f inance, business, or sales executives working for an organization where supply chain is a strategic discipline. The book provides a comprehensive mapping of supply chain processes and associated solution architecture. Its design makes it ideal for anyone who wishes to have a better understanding of the overall scope of supply chain functions, technology, and its impact on fi nance in an INDIA | enterprise, without the need to get into the algorithms behind the supply chain solutions. Divided into 4 parts, the book explains different aspects of the supply chain in detail. What Is a Supply Chain? Supply Chain Planning, Supply Chain Execution and Supply Chain Collaboration respectively. enterprise supply chain management: Integrating Best in class Processes By Vivek Sehgal Publisher: Wiley Price: `2,300 66 January 2011 | www.logisticsweek.com BLogosPheRe Joining Forces in an emergency - Logistics emergency teams Blogger: World Food Program In their blog, the World Food Program (WFP) writes on the efforts of three players in the logistics and distribution sectors and their efforts at providing aid during natural disasters. UPS, TNT and Agility created Logistics Emergency Teams (LETs) to support humanitarian relief efforts during natural disasters. Their deployment in Haiti in January 2010 has subsequently led to the formation of LET training units. The LETs are groups of experienced logistics personnel (such as warehousing, fleet, air and reports officers) ready to be deployed to an emergency area within a timeframe of 48 hours after WFP’s request made on behalf of the Logistics Cluster, for which WFP is the lead agency. The Cluster coordinates the logistical response of the humanitarian community at times of disaster. The LET training takes place yearly. It aims at preparing a pool of these companies’ logistics personnel on a standby roster for potential deployment to an emergency environment. LET recruitment is done internally and staff voluntarily sign up for a two-year commitment. Chosen personnel read through LET booklets and guidelines and build an understanding of what is operationally expected from them. What novices do not expect is the sudden upturn their lives will face once on the ground. search tags: WFP, logistics cluster, logistics emergency the complexities of carbon reporting Blogger: steve Banker Banker, in his blog, emphasizes on how companies are trying their best to maintain ethical levels of corporate social responsibility (CSR), through maintaining carbon reporting. Although carbon reporting is gaining ground, it comes with its share of complexities. Currently there’s no single, agreed upon standard on how to calculate carbon emissions. According to a report by Cefic, The European Chemical Industry Council, “The simplest and most accurate way of calculating these emissions is to record energy use and employ standard emission factors to convert energy values into C02.” From an emissions standpoint, ocean and rail are better modes of transport than road and air. But since most companies don’t have a private fleet, they need to take an “activity-based approach”—i.e., take the tons transported and the average distance traveled and apply various emissions factors to come up with a number. Shippers often do not know the route of their intermodal shipments, nor the split between the different modes, and not all carriers are capable of providing this data. The steeper the gradients encountered, the higher the carbon emissions. There are also boundary questions: Who owns the carbon emissions, the shipper, carrier, or consignee? And which emissions should each party own for a multi-leg shipment? search tags: terrorists and logistics, Adrian Gonzalez ResouRce centeR Accelerometer for Train Applications By Colibrys Accelerometer's sensors detect various forms of mechanical motion including inertial force, tilt, vibration or shock. In the railway technology market, microelectromechanical systems (MEMS) capacitive accelerometers are well recognized for their high reliability in harsh environment and are qualified for safety critical railway applications. One of the applications of MEMS capacitive accelerometers has been measurement of bogie tilt. Other applications include rolling vibration measurements, position monitoring of magnetic levitation train, control systems, health and usage monitoring system (HUMS), shock monitoring during transportation, and seismic railway track monitoring system for safety and maintenance. Journals, Case Studies, Research Reports The sensors operate from a single power supply voltage (between 2.5V and 5.5V) with low current consumption (< 0.5mA at 5V). The output is a ratiometric analog voltage that varies between 0.5V and 4.5V for the full-scale acceleration range at a voltage supply of 5V. Operation ranges for these sensors go from -55°C to +125°C and can withstand shocks up to 6000g without performance degradation. growth of 1.19 billion deadweight tons (dwt), and world container port throughput grew by an estimated 4 percent to reach 506 million TEUs. While globalization may have acted as a catalyst for the growth of commerce, it has also unleashed and aggravated disparity. An examination of the impact of globalization reveals that the sea-based trading system is vulnerable to piracy, drug trafficking, fraud, illegal fishing and pollution, which can all disrupt maritime supply chains. This paper examines the threat of piracy and terrorism to maritime supply chains. It begins by identifying the geography of operation of pirates and terrorists, i.e. littorals, and highlights the threats and challenges posed by non-state actors. It then elaborates on the regional and international cooperative initiatives targeting the problem of piracy. Finally, the paper argues for a UN-mandated force for anti-piracy and counter-terrorism. — Compiled by Frewin Francis INDIA | Security threats and challenges to maritime supply chains By Vijay Sakhuja, Director (Research) at the Indian Council of World Affairs, New Delhi The United Nations Conference on Trade and Development’s Review of Maritime Transport 2009 notes that in 2008 world sea-borne trade increased by 3.6 percent to reach an estimated 8.17 billion tons, global fleet tonnage witnessed year-on-year January 2011 | www.logisticsweek.com 67 < PanoRama LaunchPaD Ramco on-Demand eRP New Products, Technologies, Solutions ODE is Ramco’s first full-fledged ERP to be delivered as a service. The solution streamlines and integrates multiple functions and systems into one solution, giving total visibility and control of operations. It can be accessed from anywhere by a web-browser. Ramco On-Demand ERP is configured to specific business requirements and takes less than a week’s time to deploy. The solution is built on the powerful Ramco VirtualWorks platform and offers a comprehensive user interface and customization capabilities. RODE can handle many business transactions and How RODE integrates multiple functions to Web. complex functionalities such as Material tions, currencies and business units. The sysRequirements Planning (MRP), across tem also supports regulatory compliance. different industries. The solution’s modular nature allows it to be seamlessly scaled-up as business require- Manufacturer: Ramco ments grow to accommodate multiple loca- Solution: RODE (Ramco On-Demand ERP) R shuttle XP T he Shuttle XP is a high density storage from Kardex for increased order picking productivity. It is fully automated and simultaneously measures, weighs and allocates products to be stored in the most space efficient location. The system is a dynamic vertical lift system with flexibility in terms of height with units available up to 30 meters high. One unit can carry a gross load of approximately 60 tons or more. Another interesting feature is its several access openings and operations on several floors. While using Shuttle XP over several floors access openings can LV series connectors ompanies that maintain their own lift truck fleet have realized that battery management is crucial in sustaining truck uptime in their distribution centers. The modular design of some of the charging connectors offers a flexible, scalable solution for the vehicle - battery - charger constellation. Multifunctional adapters allow automatic water topping up of the battery cells C through the coupled connector during the charge. For this purpose module holders can be attached to the connector shell in various positions to accommodate the adapters. The connectors also permit electrolyte circulation. This reduces the rate of airflow sent to the battery cells thereby preventing electrolyte stratification and airflow shut off when connector is disengaged. A data link is also provided between the battery and charger via auxiliary and pilot contacts. The socket contacts have an increased contact area which allows for higher amperage, reduced temperature rise of contacts, and low contact resistance during continued operation. This results in high contact forces that do not deteriorate over time as well as less wear and tear when mating and unmating. Connectors are also intermateable with all commercially available charging connectors of comparable design - even with option for electrolyte circulation systems. Manufacturer: Schaltbau Solution: Multifunctional adapters for charging connectors The high density storage solution Shuttle XP. be integrated at any point on the front or the rear of the system. These can also be changed at a later time. The integrated lift doors in each access opening prevent air draft from entering and reduce traveling noises. Shuttle XP increases the productivity in the storage with transfer rate of trays at 2.3 m per second. The high travelling speed of trays in the Shuttle XP reduces waiting periods and increases the order picking service. Manufacturer: Kardex Solution: Shuttle XP LV series connectors provide electrolyte circulation while charging batteries. 68 INDIA | January 2011 | www.logisticsweek.com www.logisticsweek.com July 2010 GET YOUR FREE COPY OF WAREHOUSE HANDBOOK Ma y ww 200 9 w.l og-i n Vo dia l. 2 - N .co o.8 m INR :10 0/- MO 4 TO FR68 ROLA & FR 6000 NEW LAU NCH 1 Vol. 3 - No.10 Rs 100 Germany Bulgaria Middle East I N D I A ’ S N O .1 L O G I S T I C S M A G A Z I N E INDIA (continued from front flap) w Ha it n h d ca l e r e warehouse, to storage and material handling, information technology and automation of a warehouse and the grossly neglected area of security. Whether you are in the boardroom or on the warehouse floor, this handbook aims to set you thinking about new concepts in warehousing and the urgent need to incorporate them in your business. OU Logi E ND prov stics 20 a ne ider softw w ag Four are enda Soft for has se 2009 t . TU R TIM NAR .... .... .... .... .... .... .... .... .... .... .... .... ... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... IND .... .... .... ... .... U .... .... WA STR .... .... Y .... TC A cl .... .... H .... .... the ose lo 50 .... . .... af te autom ok at .... rmar otiv .... .... ket e .. in In dia. RIG HT EX PE Don CT unle ’t shak ATIO enou ss th e ha N 3 gh ere nds 8 reas is a on good to do it. 24 30 34 42 46 The Warehouse handb The Warehouse handbook EYES FRONT VITAMIN M 26 Few realize the role maintenance plays in transporters’ profit margins In a business environment slowing edging towards posit Warehouse Handbook will b come reference tool for the log the supply-chain industry. A the passage of the much-awa in April 2010, warehouses w several steps up to highly a Distribution Centres which w industry’s bottom-line. The H will thus give a new perspecti subject and enable industry t line its operations and process The various chapters of have been written by noted ists in the industry with the pose of removing nebulousn major aspects of the logistics The handbook covers the ent from the present state of the site selection, design and proc (continued o The HyperCity supply-chain team led by Lt Col. Vijay Nair (Retd) is putting up an inspired show >> Page 34 FUEL SUPPLY 46 Exploring oil-andgas upstream and midstream supplychain biz Presented by Gold Sponsor INDIA Published by Gold Sponsor The Warehouse handbook BACKING UP 32 How reverse supply chain can make or break a company’s position in the market DVV Media Group Save Money PLUS Get A FREE Warehouse Handbook Subscribe to at a special price Period 1 1 yr year 1,200 (121200 (12 issue) issues) 1,600 2 years 2,400 (242400 (24 issue) 2 yrs issues) 2,500 3 yrs 3 years Yearly Cost (Rs) You Pay (Rs) 3,600 (36 issues) 3,300 3600 (36 issue) Save You Rs 1,300 + FREE Warehouse Handbook costing Rs1,000 Effective Save 2880 2040 20% 15% 1080 Rs 600 + FREE Warehouse10% Handbook costing Rs1,000 Rs 900 + FREE Warehouse Handbook costing Rs 1,000 20% 3 years 2 years 1 year Fill in BLOCK LETTERS w w w.logisticsweek.com INDIA INDIA Name: Company Name: Address: Designation: Industry: City: Country: Telephone: Mobile: DD / Chq. 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[email protected] www.hamburg.co.in | +91 22 40155937 NDIA < EVENTS J a n u a r y 2 0 11 January 6 - 8, 2011 SME Expo - LogiSticS & MatEriaL HandLing 2011 chennai trade centre SME Expo - Logistics & Material Handling 2011 is India’s leading international logistics and material handling exhibition. The expo is aimed at providing a common platform for small & medium enterprises (SMEs) in logistics to explore fresh business opportunities and to exchange their ideas and expertise. This expo will offer an opportunity to exhibit the most up-to-date trends in the logistics & material handling sectors. organized by: INIS Enterprises Private Limited Tel: +91 22 28763111 January 7 and 8, 2011 rEtaiL tEcHnoLogy SHow - tHE FuturE SHop the grand oberoi, Kolkata Retail Technology Show - The Future Shop presents concepts of global technology providers with futuristic retail prototypes. At The Future Shop, some of the world’s leading service and solution providers flaunt the technological advancements that are changing the face and back-end of retail molding technology in line with consumer expectations. organized by: Images Multimedia Private Limited Tel: +91 11 26015683/26015686 January 8, 2011 SuppLy cHain india MEEt 2011 Hotel Stars parade, chembur, Mumbai The Supply Chain Management Development Council (SCMDC) is organizing a one-day forum, Supply Chain India Meet, where practitioners, professionals and academicians of supply chain management will share their value added experiences in the area of consumer durables, engineering, petroleum, FMCG, courier, pharmaceutical, retail and logistics industries. SCMDC is one of the non-aided and not-for-profit higher educational forum in the field of logistics and supply chain management in India. organized by: SCMDC Email:
[email protected] January 7 - 9, 2011 coLd cHain & LogiSticS Expo pragati Maidan, new delhi Cold Chain & Logistics Expo will showcase and help to understand the most vital aspects of supply chain management. Postharvest management of fresh fruits & vegetables using emerging technology will be one of the biggest business opportunities in India. The exhibits will include cold chain equipment, cold room & refrigeration appliances, cold storage INDIA | A PUBLICATION OF HAmBUrg mEDIA grOUP machinery, environment & combustion control system, cooling pads & heat extractors, cooling towers & equipment. organized by: Media Today Pvt Ltd Tel: +91 11 26682045 / 26681671 January 16 - 18, 2011 gLobaL StEEL Hotel taj palace, new delhi Global Steel 2011 is being organized to address the challenges before the Indian steel industry. The conference would analyze the Indian steel mills’ proposed expansion plans and discover how supporting logistics and infrastructure networks are preparing themselves. One of the prime focus this year would be raw material security. Increasing price of raw materials like coking coal and iron ore and scarce supply worldwide has become one of the key concerns of steel makers around the world. Global Steel 2011 would analyze the global trend, also the effect of China which is a dominant force in the steel spectrum, to chart a clear strategy for India’s steel vision. organized by: Critical Mass Multilink Private Limited Tel: +91 33 22891471 January 19 and 20, 2011 port FinancE intErnationaL india novotel, Juhu beach, Mumbai The Port Finance International India conference is designed to offer an in-depth understanding of innovative financing solutions and practical advice. Additionally, the conference will place a spotlight on Indian ports and their plans for expansion and development, whilst also investigating opportunities for growth and investment. organized by: Port Finance International Tel: +91 22 6772 5768 FEbruary 16 – 19, 2011 LognEt gLobaL annuaL conFErEncE na Jomtien, thailand Lognet Global is holding its annual group meeting in Thailand, a forum to connect with fellow members and build relationships that help grow and develop one’s business with trust. The meeting will focus on “One on One” sessions to ensure that members of the group have the opportunity to meet face to face and explore areas of new business for mutual benefit. Lognet Global offers member to member confidence by providing financial protection and a vast suite of professional services to help enhance the member’s business. It is a forum that can help members to manage the risks seen in the freight forwarding industry by building trusting relationships and to discover new opportunities to expand business. organized by: Lognet Global Ltd Tel: +66 2 714 4551 INDIA www.logisticsweek.com Hamburg media Private Limited Bldg.4/6, Sona Udyog, Parsi Panchayat Road, Andheri (East), Mumbai -400069 INDIA Phone :+91-22-40155947 / 40155944 international office: Red Dot Building 28 Maxwell Road, #03-05 Singapore 069120 publisher: Jacob Joseph Puthenparambil
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